McDonalds Strategic Evaluation

Wajahat Hussain
Roll No. 20
MBA-BBA (marketing)
19/03/12


McDonald's Corporation (NYSE: MCD) is the world's largest
chain of hamburger fast food restaurants, serving around 68 million
customers daily in 119 countries.

Headquartered in the United
States, the company began in 1940 as a barbecue restaurant
operated by the eponymous Richard and Maurice McDonald; in
1948 they reorganized their business as a hamburger stand
using production line principles. Businessman Ray Kroc joined the
company as a franchise agent in 1955. He subsequently purchased
the chain from the McDonald brothers and oversaw its worldwide
growth.
A McDonald's restaurant is operated by either a franchisee,
an affiliate, or the corporation itself. The corporation's revenues
come from the rent, royalties and fees paid by the franchisees, as
well as sales in company-operated restaurants. McDonald's
revenues grew 27 percent over the three years ending in 2007 to
$22.8 billion, and 9 percent growth in operating income to $3.9
billion.
McDonald Primarily sells;
hamburgers, cheeseburgers, chicken, fries, breakfast items, soft
drinks, shakes, desserts, salads, wraps, smoothies and fruit.


History of McDonald
The business began in 1940, with a restaurant opened by brothers Richard and Maurice
McDonald in San Bernardino, California. Their introduction of the "Speedee Service
System" in 1948 furthered the principles of the modern fast-food restaurant that
the White Castle hamburger chain had already put into practice more than two decades
earlier. The original mascot of McDonald's was a man with a chef's hat on top of a
hamburger shaped head whose name was "Speedee." Speedee was eventually
replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark
on a clown shaped man having puffed out costume legs.
McDonald's first filed for a U.S. trademark on the name "McDonald's" on May 4, 1961,
with the description "Drive-In Restaurant Services," which continues to be renewed
through the end of December 2009. In the same year, on September 13, 1961, the
company filed a logo trademark on an overlapping, double arched "M" symbol. The
overlapping double arched "M" symbol logo was temporarily disfavored by September
6, 1962, when a trademark was filed for a single arch, shaped over many of the early
McDonald's restaurants in the early years. Although the "Golden Arches" appeared in
various forms, the present form as a letter "M" did not appear until November 18, 1968,
when the company applied for a U.S. trademark.

McDonald's corporate logo used from 1968 to 2006. It still exists at some restaurants.
The present corporation dates its founding to the opening of a franchised restaurant
by Ray Kroc, in Des Plaines, Illinois, on April 15, 1955, the ninth McDonald's restaurant
overall. Kroc later purchased the McDonald brothers' equity in the company and led its
worldwide expansion, and the company became listed on the public stock markets in
1965. Kroc was also noted for aggressive business practices, compelling the McDonald
brothers to leave the fast food industry. The McDonald brothers and Kroc feuded over
control of the business, as documented in both Kroc's autobiography and in the
McDonald brothers' autobiography. The site of the McDonald brothers' original
restaurant is now a monument. With the expansion of McDonald's into many
international markets, the company has become a symbol of globalization and the
spread of the American way of life. Its prominence has also made it a frequent topic of
public debates about obesity, corporate ethics and consumer responsibility.
Vision
To be the best and leading fast food provider around the globe
Mission
McDonald's brand mission is to be our customers' favorite place and way to eat, and
improve our operations to provide the most delicious fast food that meet our customers'
expectations.
Objectives of McDonald
Profitability
Quality Service
Customer Satisfaction
Reputable Image
Community Outreach

Vision Proposed
To be the best and leading fast food provider around the globe

Mission Proposed
McDonalds brand mission is to be our customers favorite place and way to eat, and
improve our operations to provide the most delicious fast food that meet our customers
expectation.






External Audit



EFE Matrix (External Factor Evaluation)

Internal Audit
Strength Weakness
1. Strong brand name, image and
reputation.
2. Large market share.
3. Strong global presence.
4. Specialized training for
managers known as the
Hamburger University.
5. McDonalds Plan to win focuses
on people, products, place,
price and promotion.
6. Strong financial performance
and position.
7. Introduction of new products
8. Customer focus (centric)
9. Strong Performance on the
global marketplace

1. Unhealthy food image.
2. High Staff Turnover including
Top management
3. Customer losses due to fierce
competition.
4. Legal actions related to health
issues; use of trans fat & beef
oil.
5. Uses HCFC-22 to make
polystyrene that is contributing
to ozone depletion.
6. Ignoring breakfast from the
menu.
IFE Matrix (Internal Factor Evaluation)
Analysis of EFE
EFE Matrix shows it is managing its opportunities and threats average.
Actions:
1. Acquire small food companies to attract heavy traffic
2. Make contracts with major educational institutions and corporations
3. introduce healthier products with low calories and fats

Analysis of IFE
IFE Matrix shows that McDonalds is managing strength and weaknesses very well
Actions:
1. It should maintain its leadership position to overcome its weaknesses
2. Should provide the healthy low calories food
3. Should disclose the proper information to customers to avoid legal actions
CPM (Competitive profile Matrix)

McDonalds

YUM BURGER
KING

Critical
SUCCESS
FACTORS
WEIGHT RATING W.SC RATING W.SC RATING W.SC
Product Quality 0.25 3 0.75 4 1 3 0.75
Price
Competitiveness
0.2 3 0.6 3 0.6 3 0.6
Market Share 0.2 4 0.8 3 0.6 2 0.4
R& D 0.05 2 0.1 2 0.1 2 0.1
Financial
Position
0.1 4 0.4 3 0.3 2 0.2
Consumer
Loyalty
0.2 3 0.6 3 0.6 2 0.4
Total 1.00

3.25

3.2

2.45
CPM shows that McDonalds is doing well as compare to its competitors
Actions:
1. It should emphasize on its product quality as it is lacking as compare to YUMS
2. McDonalds should also focus on R&D to gain competitive advantage
SWOT Matrix
STRENGTHS (S):
Value based pricing
Strong R&D
Strong global presence in more
than 100 countries
Standardized quality products
market leader in both the
domestic as well as the
international markets
Large number of loyal customer
Good CSR
Focused on customers comfort
by making different zones for
different customers
Convenient and extended hours
WEAKNESSES (W):
sued multiple times for
serving unhealthy food
weak in analyzing the needs of
customers
Do not disclose proper
information to customers
Attracting kids due to which
parents are going against
them
OPPORTUNITIES (O):
Respond to social changes - by
innovation within healthier
lifestyle foods
Joint ventures with retailers
or acquisitions
Introducing new food items
S-O STRATEGIES
introducing new menus with
nutritious ingredients
(S2,S3,O1,O2,O3)
Entering new market by
Acquisition and
Mergers(S3,S5,O2)
W-O STARTEGIES:
Providing healthier products
to avoid legal
actions(W1,O1,O3)
Providing proper information
to customers on product
ingredients through proper
advertisement (W4,O1)
and products
THREATS (T):
Consumer focus on nutrition
and healthier lifestyles.
Recession or down turn in
economy
Major competitors, like
YUM, Burger King, Wendy's
New entrants in the industry
Fluctuation in Exchange Rates
S-T STRATEGIES
Providing healthier products
through R&D (S2,S4,T1)
Reduce threat of competitors
by bringing new innovative
products through strong R&D
and by focusing more on loyal
customers (S1,S2,S3,S6,T3)
W-T STRATEGIES
Strongly analyzing the needs
of customers in order to
reduce the threat of new
entrants and of existing
competitors (W2,T3,T4)
Grand Strategy Matrix

ACTIONS:
It should go for,
Forward integration (joint ventures with retailers)
Product development (launch new innovative products such as sandwiches
with more healthier ingredients)
Market penetration by attracting non users of the product through intensive
advertising and by providing healthier products


Financial Analysis
















SPACE Matrix
ANALYSIS:
SPACE Matrix shows that McDonalds should aggressively go for
Forward integration (joint ventures with retailers)
Product development (launch new innovative products such as sandwiches with healthier
ingredients)

BCG Matrix
Company is having high market shares and high growth rate in the industry.




QSPM

STRATEGIC ALTERNATIVES

provide the healthy
low calories food
Entering new
markets through
acquisitions and
mergers
WEIGHT AS TAS AS TAS
OPPORTUNITIES:
Respond to social changes - by innovation
within healthier lifestyle foods
0.12 4 0.48 4 0.48
Joint ventures with retailers or acquisitions 0.2 3 0.6
Introducing new food items and products 0.2 4 0.8 4 0.8


THREATS
Consumer focus on nutrition and healthier
lifestyles.
0.15 4 0.6 3 0.45
Recession or down turn in economy 0.08 3 .24
Major competitors, like YUM, Burger King,
Wendy's
0.09 4 0.36 3 0.27
New entrants in the industry 0.06 3 0.18 2 0.12
Fluctuation in Exchange Rates 0.1 4 0.4
SUM TOTAL ATTRACTIVENESS OF
SCORE
1.00 2.34 3.36

WEIGHT AS TAS AS TAS
STRENGTHS
Strong global presence in more than
100 countries
0.1
4 0.4
market leader in both the domestic
as well as the international markets
0.2
3 0.6 4 0.8
Large number of loyal customer
0.08
4 0.32 4 0.32
Strong R&D
0.08
4 0.32 2 0.16
Standardized quality products
0.05
3 0.15 3 0.15
Convenient and extended hours
0.05
2 0.10
Value based pricing
0.06
2 0.12 3 0.18
Focused on customers comfort by
making different zones for different
customers
0.05

Good CSR
0.05
2 0.10
WEAKNESS

sued multiple times for serving
unhealthy food
0.15
4 0.20 3 0.45
weak in analyzing the needs of
customers
0.08
3 0.24 3 0.24
Do not disclose proper information
to customers
0.04
2 0.08 2 0.08
Attracting kids due to which parents
are going against them
0.01
3 0.03
SUB TOTAL ATTRACTIVENESS OF
SCORE
1.00 2.26 2.78

Goals for 2011-2013