Presentation

on
McDonalds
Polishing the Golden
Arches
Presented by
Darji Divya R (14)
Makvana Jignasa J (25)
Patel Dipali K (39)
Vyas Rajal P (61)

Introduction
McDonalds came in 1937 drive-in opened by Dick
and Maurice Mac McDonald in San Bernardino, California.
By 2002 McDonalds had a 33% share of U.S. fast food market
with 13,491 units in the United States and 16,534 outlets in 120
countries.
The companys problems were due partly to mounting
competition (including price wars and other market
tactics)initiated by fast-food rivals dissatisfied with their market
share and partly to changes in consumer eating preferences.
McDonalds Plan to Win aimed at five key
drivers of success: people, products, place, price, and promotion.

characteristics of the
Mcdonalds

Market Size and Growth Rates

Scope of Rivalry
Stage of Industry Life Cycle
Number and Size of Competitors
Product Differentiation
Economies of Scale
Customer Characteristics
Entry Barriers
Industry Profitability

Porters five forces model

5-forces analysis
Rivalry Among Competing Sellers:
Very Strong
Threat of Entry: Relatively Weak
Competition from Substitutes: Very
Strong
Bargaining Power of Suppliers: Weak
Bargaining Power of Buyers:
Moderate to weak

Conclusion concerning the overall

strength of competitive pressures
The market is crowded with rivals and
outlets and growth is slow.
there is likely to be sustained profitability
because of the weak power of
consumers, weak power of suppliers and
weak threat of
entry, overall industry profitability will
be kept in check due to strong rivalry and
mounting competition from substitutes.

factors for critical to competitive

success in the fast-food industry

Prime locations
Product innovation and improved
menu items
Brand reputation
Quality
Marketing & Customer Service
Value

McDonalds strategy has evolved

under
each of its CEOs.

McDonald brothers:
Created Speedy Service System
featuring self-service restaurant with
a limited menu, a kitchen that
utilized an assembly-line layout, and
a $.15 hamburger that allowed
families to eat out more often
Focus on uniformity of operations
and cleanliness

Sonneborn & Kroc:

Formed McDonalds corporation
Implemented real estate holding segment
of business model
It is interesting to note that Kroc and
Sonneborn had a falling out and Sonneborn
does not appear in any of the official
McDonalds history posted on their
website.This is especially interesting given
the importance of McDonalds real estate
element to the companys business model.

Fred Turner & Kroc:

First international expansion

1,000th restaurant opened
System-wide introduction of Big Mac
McDonalds began to serve breakfast
First McDonalds Playland

Michael Quinlan:
Quinlan was one of the first CEOs to face the
problems that led to McDonalds
decline.
Faced with changing customer preferences due to
technological changes and health consciousness
Increased competition from other quick service
restaurants as well as nontraditional
outlets like grocery stores and convenience stores
Several menu items were introduced as an
attempt to cope with changes.

Jack Greenberg:
Introduced 40 new menu items to combat
rivals innovation, all of which failed
Made for You cooking system implemented
and failed
closing underperforming overseas outlets
Posted first quarterly loss since 1965
Greenberg was criticized for taking the
company too far from its core business and
for starting too many initiatives without
focusing on their implementation.

Jim Cantalupo:
May use IPOs in other countries to
raise revenue
Tentatively offering retail
merchandise for sale in certain stores
Installing computers in restaurants
in partnership with Freddie Mac
Implementation of Plan to Win

McDonalds current
strategy
low-cost leadership
best-cost provider
a best-cost strategy is designed to
give customers more value for their
money by combining an emphasis on
low cost with more than minimally
acceptable quality, service, features
and performance.

SWOT analysis
Strengths
Strong financial position as the industry leader
Widely recognized market leader with large
customer base
Proven production methods
Excellent supply chain management skills
Strong global distribution capability
Strong alliance (group) with other companies
Strong brand name awareness
Access (right ent) to economies of scale
Great bargaining power due to large size.

Weaknesses

Lack of product offerings to meet

varied
customer
tastes
and
preferences
High employee turnover(income)
Many restaurants are outdated
New restaurants cannibalizing sales
in established locations

Opportunities
Increasing
international
demand
provides
opportunities for increased international
Expansion (growth)
Expansion of menu to meet healthier consumer
preferences
Falling global (universal) trade barriers in
attractive markets
Advances in production technology
The strength of the dollar has help international
profits when translated into U.S. dollars

Threats
Loss of sales from substitutes like eating at home
and casual dining
Unstable international economic conditions could
slow entry into some markets

McDonalds fails to meet healthier menu

preferences of consumers, forcing them to go to
competitors
Increasing competition among rivals continues to
squeeze profits
Younger generations may have little connection
with the All American image of McDonalds.

Conclusions
McDonalds is the dominant domestic
and global leader in the QSR food
industry
It has outstanding brand awareness,
access to large economies of scale, a
proven production system, and a
large customer base. However,
McDonalds has been weakened by
low customer service/product quality
scores.

McDonalds Plan to Win

Increasing financial profitability in the
presence of a nearly domestic market
Rebuilding the companys reputation
for fast, friendly service and
cleanliness
Implementing the Plan to Win
Maintaining product and marketing
innovation to protect the core market
from rivals and from substitutes

Specific areas of focus:

Customer Service
Product Quality
Restaurant Modernization
Productivity/Value
Brand Loyalty

McDonalds can maintain its

leadership position
Leverage brand awareness and advertising to
ensure that customers respond.
Offer healthier menu selections for adults and
children, possibly choosing a popular diet
program and creating selected items to cater to
consumers on the program. Advertise healthy
offerings for children.
Internally, McDonalds needs to continue
focusing on its core business, and streamlining
internal processes to ensure focus is on uniform,
clean, quality, service oriented restaurants.

THANK YOU