McD o n ald s Valu e Ch ain

An alys is
Jeovani Zamarripa, Alicia Wylie,
y
Jason Flores, Conor Mullarkey

Mission Statem ent

McDonald's
McDonald s brand mission is to "be
be
our customers' favorite place and way
p
to eat." Our worldwide operations
have been aligned around a global
strategy called the Plan to Win
centering
t i on the
th five
fi basics
b i off an
exceptional customer experience
People Products,
People,
Products Place
Place, Price and
Promotion. We are committed to
improving our operations and
enhancing our customers' experience.

Com pany History

McDonald s Bar-B-Que (1940)
McDonalds
Worlds 1st McDonalds
Founded by Dick and Mac McDonald
San Bernadino, CA
Drive-in
D i i & car hop
h service
i
McDonalds (1948)
Name
N
F
Formulates
l
Menu develops
15 Cent hamburger

Com pany Info

Corporate
p
Headquarters:
q
McDonalds Corporation
2111 McDonald's Dr
Oak Brook, IL 60523

Employees:
McDonaldss employees globally
Approximately 400,000 McDonald
1.6 million people globally are employed through
McDonalds restaurants and their franchises

Restaurants:
32,000 world-wide, 118 countries

20 0 9 Revenue &
U.S. Stocks
k
(US only)

NYSE: MCD
Current Price: $64.74
Change:
g $0.26 +
(As of 2/16/2010)

2009 Revenue (mil.)$22,744.701

Year Revenue Growth -3.3%
3 3%
2009 Net Income (mil.)$4,551.001
Y
Year
Net
N t Income
I
Growth
G
th 5.5%
5 5%

Leadership

James Skinner
Vice Chairman, CEO

Left to Right: Jose Armario, Group President Canada & Latin America; Janice Fulds, US Chief Operations
Officer; James Skinner, Vice Chairman and CEO; Donald Thompson, President U.S.A; Jeffrey Stratton,
Chief Restaurant Officer; Mary Dillion, Global Chief Marketing Officer; Timothy Fenton, President
Asia/Pacific Middle East & Africa; Peter Bensen, Chief Financial Officer; Dennis Henequen. President
Europe; (at table) Gloria Santona, General Counsel & Corporate Secretary; Richard Floersch, Chief Human
Resource Officer.

Culture
Forging new opportunities
Innovation from within
p
big
g thinking
g
Empowered

Social responsibility
Community Focus
Responsible Purchasing
g Our Environment
Protecting

Diversity
Employee Force

McDonaldss Production System

McDonald
INPUT

PROCESS

Employees

Cook

Customers

foods

Restaurants

meals to the
customers order

Food

Prep/Assembly

Line
Frozen foods (patties, fries,
chicken nuggets, etc.)
Produce
Containers
Company

image

and package

Assemble

OUTPUT

Satisfied

customers

Customers
Customers

favorite
place and way to eat
Provide

a relaxed and
fun environment to eat

Operational Strategic
Perform
f
ance Dim
i ensions
i

COST
QUALITY
SPEED
FLEXIBILITY

COST
Make it cheap:
Economies of scale
Allows McDs
McD s to pass the value to consumers
McValue Dollar Menu
Party Pack

Cost controls
l

QUALITY
Make it consistent:
Universal taste
Core offerings globally
Order Qualifier: Make it good:
Taste appeal to its target market
Healthy options

SPEED
Make it fast:
90 second service goal
Order Qualifier: Make it dependable:
Menu items available daily
Hot & Fresh
Order Qualifier: New Product Development:
Regional
R i
l menu items
it
Healthy menu options

FLEXIBILITY
Order Qualifier: Product design:

S/M/L/Super size
Gender based kids meals
Happy meals vs. Mighty kids meals
P
Promotional
l packaging
k

Order Qualifier: Product Mix:

Sandwich varieties
Soft serve offerings (milkshakes, ice cream
cones, sundaes)
Salads

Order Qualifier: Production Volume:

Staffing based on consumer traffic and meal
time
ti
24 Hour restaurants and drive-thru

MDs
MD
s Value Chain Analysis
FIRM
INFRASTRUCTURE

HUMAN
RESOURCES
TECHNOLOGY

PROCUREMENT

INBOUND
LOGISTICS

OPERATIONS

OUTBOUND
LOGISTICS

MARKETING
& SERVICES

SERVICE

Firm Infrastructure
Strengths:
Brand recognition
#1 in retail fast food industry
Leadership
Financial Strength
Company image
Intellectual property
Franchising
Weaknesses:
Lawsuits
Company image
Culture insensitivities

MDss Value Chain Analysis

MD
Brand recognition
#1 in retail fast food industry
FIRM
INFRASTRUCTURE Leadership
Financial Strength
Company image
Intellectual property
Franchising
Lawsuits

Company image
Culture insensitivities

HUMAN
RESOURCES
TECHNOLOGY
PROCUREMENT

STRENGTH

WEAKNESS

INBOUND
LOGISTICS

OUTBOUND
OPERATIONS LOGISTICS

MARKETING
& SERVICES

SERVICE

Inbound Logistics
Strengths:
Economies of scale
Pass value to customer (i.e. $1 menu)

Just-in-time
t eo
order
de & de
delivery
ve y
Just
Sustainable packaging
Renewable resources
Packaging
P k i composition
i i (82% renewable
bl resources))
Oil recycling (diesel oil)

Supply
y chain control
Quality control
Freight truck inspections
Random audits

Weaknesses:
Media backlash

MDss Value Chain Analysis

MD
Brand recognition
#1 in retail fast food industry
FIRM
INFRASTRUCTURE Leadership
Financial Strength
Company image
Intellectual property
Franchising
Lawsuits

Company image
Culture insensitivities

HUMAN
RESOURCES
TECHNOLOGY

PROCUREMENT

STRENGTH

Just-in-time order
& delivery

Economies of
scale
l
Sustainable
packaging
Renewable
resources
Supply chain
control
Quality control
Media/PR

WEAKNESS

INBOUND
LOGISTICS

OUTBOUND
OPERATIONS LOGISTICS

MARKETING
& SERVICES

SERVICE

Operations
Strengths:
On-line
O li & on-site
it ki
kiosk
k jjob
b application
li ti
systems
2nd largest employer in the U.S.
Reinforced information systems
Wireless headsets
Wi-Fi offered in all locations
R&D in target consumer demands and
trends
Corporate guidelines imposed on
franchisees
Franchisees must purchase supplies from
McDs

Operations
Weaknesses:
High
Hi h turn-over
t
(more
(
then
th 100%)
90 second drive-thru rule (unsuccessful)
Impersonal drive-thru greeters
(telemarketer like, person is not in store)

MDss Value Chain Analysis

MD
Brand recognition
#1 in retail fast food industry
FIRM
INFRASTRUCTURE Leadership
Financial Strength
Company image
Intellectual property
Franchising
Lawsuits

Company image
Culture insensitivities

Job appliation
systems

HUMAN
RESOURCES

TECHNOLOGY

PROCUREMENT

STRENGTH

WEAKNESS

2nd largest U.S.

employer
High turn-over

Just-in-time
Just
in time order
& delivery

Reinforced IT systems
Wireless headsets
Wi-Fi
Drive-thru voice

Economies of
scale
Sustainable
packaging
Renewable
resources
Supply chain
control

Franchsor purchase
agreement
R&D based on
consumer demands
Corp guidelines for
Franchisees
90 second drive-thru
rule

Quality control
Media/PR

INBOUND
LOGISTICS

OPERATIONS OUTBOUND
LOGISTICS

MARKETING
& SERVICES

SERVICE

Outbound Logistics
Distributor agreements
g
Quality control
Freight truck inspections
random audits

Refrigerated trucks
Reinforced
e o ced Information
o at o Systems
Syste s
Cashier
Assembly Line
Order fulfillment

Just in time order and delivery

Ensuring
g freshness

Packaging quality reinforces freshness

Hot/Warm food

MDss Value Chain Analysis

MD
Brand recognition
#1 in retail fast food industry
FIRM
INFRASTRUCTURE Leadership
Financial Strength
Company image
Intellectual property
Franchising
Lawsuits

Company image
Culture insensitivities

Job appliation
systems

HUMAN
RESOURCES

TECHNOLOGY

PROCUREMENT

STRENGTH

2nd largest U.S.

employer
High turn-over

Just-in-time
Just
in time order
& delivery

Reinforced IT systems
Wireless headsets
Wi-Fi
Drive-thru voice

Economies of
scale
Sustainable
packaging
Renewable
resources
Supply chain
control

Franchsor purchase
agreement
R&D based on
consumer demands

Refridgerated trucks
Reinforced IT
Just-in-time order &
delivery
Distributor agreements
QC
Packaging

Corp guidelines for

Franchisees
90 second drive-thru
rule

Quality control
Media/PR

WEAKNESS

INBOUND
LOGISTICS

OPERATIONS OUTBOUND
LOGISTICS

MARKETING
& SALES

SERVICE

Marketing & Sales

Strengths:
Product
p g &p
product
Health and wellness campaign
offerings
Consumer and market research
Price
Pi
McValue Dollar Menu
Party pack
Promotion
Disney
y and Nickelodeon license agreements
g
Coca-Cola endorsement
Feeding the athletes Olympic sponsorship

Marketing & Sales

Strengths:
Place
p
MDs
New upscale
MDs goes green
McCafe
Wi-Fi
McDonalds Play Place
Ronald McDonald
Community outreach

(contd)
(cont
d)

Marketing & Sales

(contd)
(cont
d)

Weakness:

Supersize Me movie
Media/PR
Adaptation to global culture and customs
Product failures

MDss Value Chain Analysis

MD
Brand recognition

FIRM
INFRASTRUCTURE

#1 in retail fast food industry

Leadership
Financial Strength
C
Company
image
i
Intellectual property
Franchising
Lawsuits

Company image
Culture insensitivities
Job appliation
y
systems

HUMAN
RESOURCES

TECHNOLOGY

PROCUREMENT

2nd largest U.S.

employer
High turn-over

Just-in-time order
& delivery
Economies
E
i
of
f
scale
Sustainable
packaging
Renewable
resources
Supply chain
control

Reinforced IT systems
Wireless headsets
Wi-Fi
Drive-thru voice

Franchsor purchase
agreement

Refridgerated trucks
Reinforced IT
Just-in-time order &
delivery
Distributor agreements
QC
Packaging

Quality control
Media/PR

R&D based
b d on
consumer demands

STRENGTH

Corp guidelines for

Franchisees
90 second drive-thru
rule
l

WEAKNESS

Consumer Research
McValue Dollar Menu
Party Packs
Cartoon Affiliations
Coke
Olympic Sponsor
Upscale MD's
Going Green
MC f
McCafe
Wi-Fi
MD's Play Place
Ronald McDonald
"Supersize Me"
Media/PR
Global expansion issues
Product failures

INBOUND
LOGISTICS

OPERATIONS OUTBOUND
LOGISTICS

MARKETING
& SALES

SERVICE

Service
Strengths:
Fast food service
y
Order accuracy
Clean environment
y customer service
Friendly
Weaknesses:
Lack of customer service
Employee apathy
Dissatisfied customers

MDss Value Chain Analysis

MD
Brand recognition

FIRM
INFRASTRUCTURE

#1 in retail fast food industry

Leadership
Financial Strength
C
Company
image
i
Intellectual property
Franchising
Lawsuits

Company image
Culture insensitivities
Job appliation
y
systems

HUMAN
RESOURCES

TECHNOLOGY

PROCUREMENT

2nd largest U.S.

employer
High turn-over

Just-in-time order
& delivery
Economies
E
i
of
f
scale
Sustainable
packaging
Renewable
resources
Supply chain
control

Reinforced IT systems
Wireless headsets
Wi-Fi
Drive-thru voice

Franchsor purchase
agreement

Refridgerated trucks
Reinforced IT
Just-in-time order &
delivery
Distributor agreements
QC
Packaging

Quality control
Media/PR

R&D based on
consumer demands

STRENGTH

Corp guidelines for

Franchisees
90 second drive-thru
rule

Consumer Research
McValue Dollar Menu
Party Packs
Cartoon Affiliations
Coke
Olympic Sponsor
Upscale MD's
Going Green
MC f
McCafe
Wi-Fi
MD's Play Place
Ronald McDonald
"Supersize Me"
Media/PR
Global expansion issues

WEAKNESS

Product failures

INBOUND
LOGISTICS

OUTBOUND
OPERATIONS LOGISTICS

MARKETING
& SALES

Fast food service

Order accuracy
Clean environment
Friendly customer
service
Lack of customer
service
Employee apathy
Dissatisfied
customers

SERVICE

Core Com petence

McDonalds strength lies in the operations and firm

i f
infrastructure.

McDonalds core com petency is the production and

d li
delivery
speed
d off affordable
ff d bl ffood
d tto a llarge num bber off
custom ers to support a low cost, high speed, and
consistent quality strategy

McDonalds strategy is supported by its strong financial

resources, brand im age, m arket leadership, buyer supplier
product value.
relations, and p

Com petitive Advantage

# 1 Fast food restaurant in industry

Custom ers
Value and affordable m enu
Convenience
Franchisee base

Fun Facts
Facts
p
9 m illion ppounds fries served
Aprox..
daily
380 sesam e seeds on a sesam e bun
Approx. 82% of consum er packaging is
m ade from renewable m aterials
Convert
C
t oil
il iinto
t bi
biodiesel
di l ffuell
Logo differs between green locations
and traditional locations (green
background vs. red color)
Beer served in Germ any McDonalds