Table of Contents

Topics Page
Introduction 3
History analysis 3
Vision, Mission, Value 4
The Five Forces Framework 5
PESTEL Framework 6
External Audit 7
CPM-Competitive Profile Matrix 8
External Factor Evaluation (EFE) Matrix 9
Financial Ratio Analysis 10
Internal Audit 12
Internal Factor Evaluation (IFE) Matrix 13
SWOT Matrix 14
SPACE Matrix 15
Grand Strategy Matrix 16
The Boston Consulting Group (BCG) Matrix 17
The Internal-External (IE) Matrix 17
The Quantitative Strategic Planning Matrix 18
(QSPM)
Recommendations 20

Introduction:
McDonald's Corporation is the world's largest chain of fast food
restaurants, serving nearly 47 million customers daily through
more than 31,000 restaurants in 119 countries worldwide.
McDonald’s sells various fast food items and soft drinks
including, burgers, chicken, salads, fries, and ice cream. Many
McDonald's restaurants have included a playground for children
and advertising geared toward children, and some have been
redesigned in a more 'natural' style, with a particular emphasis
on comfort: introducing lounge areas and fireplaces, and
eliminating hard plastic chairs and tables.

Each McDonald's restaurant is operated by a franchisee, an

affiliate, or the corporation itself. The corporations' 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% over the three years ending in 2007 to
$22.8 billion, and 9% growth in operating income to $3.9
billion.1

Historical Analysis:

 The business began in 1940, with a restaurant

opened by brothers Dick and Mac McDonald in San
Bernardino, California.
 Their introduction of the "Speedee Service System" in
1948 established the principles of the modern fast-food
restaurant.

 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 in 1963.
1
http://en.wikipedia.org.
2
  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.

 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.2

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.

Values

Our values summarized in "Q.S.C. & V.". Provide good quality,

services to customer. Have a cleanliness environment when
customer enjoys their meal. The value of food product makes
every customer is smile.

2
http://en.wikipedia.org.
3
The Five Forces Framework

The Threat of Entrants

Large established companies with strong brand identities such

as McDonald’s BKC, YUM, and WEN do make it more difficult to
enter and succeed within the marketplace; new entrants find
that they are faced with price competition from existing chain
restaurants.

Bargaining Power of Buyers

Low bargaining power of buyers.

Bargaining power of suppliers

4
Bargaining power of suppliers within the fast food industry
would be relatively small, unless the main ingredient of the
product is not readily available.
Threat of Substitutes

This could range from a competitive fast food restaurant to

family restaurant to a home cooked meal.

Competitive Rivalry

The strength of competition in this industry is very high; the

main rivals are BKC, YUM, and WEN. They compete with
international, national, regional, local, retailers of food products
(restaurants, quick service, pizza, coffee shops, and
supermarkets).

PESTEL Framework:

Political:

• The international operations of McDonald’s are highly

influenced by the individual state policies enforced by each
government.

Economic:

• McDonald’s has the tendency to experience hardship in

instances where the economy of the respective states is hit by
inflation and changes in the exchange rates.
• Market leader.
• Very high target market.
• Low cost and more incomes.
• The rate at which the economy of that particular state
grows determines the purchasing power of the consumers in
that country.

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Social:

• Working within many social groups.

• Increase employments.
Environmental:
• Quality packing.
• Local manufacture using foreign supplies.

Legal:

• Legislation for product.

• Sustained logo.

Technological

• Advanced technology development.

• Quality standards.

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External Audit:

Opportunities Threats
Growing health trends 1. Health professionals
among consumers and consumer activists
accuse McDonald's of
1. Globalization, contributing to the
expansion in other country’s health issue of
countries (especially in high cholesterol, heart
China & India). attacks, diabetes, and
2. Diversification and obesity.
acquisition of other quick- 2. The relationship
service restaurants. between corporate level
3. Growth of the fast- McDonald's and its
food industry. franchise dealers.
4. Worldwide 3. McDonald’s
deregulation. competitors threatened
5. Low cost menu that market share of the
will attract the customers. company both
6. Freebies and internationally and
domestically.
discounts. 4. Anti-American
sentiments.
5. Global recession and
fluctuating foreign
currencies.
6. Fast-food chain
industry is expected to
struggle to meet the
expectations of the
customers towards health
and environmental issues.

CPM-Competitive Profile Matrix

McDonald's Burger King Yum Brands Wendy's
Critical Weight Rating Weight Rating Weight Rating Weight Rating Weight
Success ed ed ed ed
Factors Score Score Score Score
Price 0.15 4 0.60 3 0.45 3 0.45 3 0.45
Financial 0.08 4 0.32 3 0.32 3 0.24 2 0.16
Position
Consumer 0.10 4 0.40 3 0.40 3 0.30 2 0.20
Loyalty
Advertising 0.10 3 0.30 3 0.30 4 0.40 2 0.20

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Product 0.10 4 0.40 3 0.40 4 0.40 2 0.20
Quality
Innovation 0.15 3 0.45 3 0.45 3 0.45 2 0.30
Market 0.10 4 0.40 2 0.20 3 0.30 2 0.20
Share
Manageme 0.07 4 0.28 3 0.21 3 0.21 3 0.21
nt
Global 0.15 4 0.60 2 0.30 3 0.45 1 0.15
Expansion
Total 1 3.75 3.03 3.20 2.07

External Factor Evaluation (EFE) Matrix

Key External Factors Weight Rating Weighted

Score
Opportunities
Growing health trends among 0.08 3 0.24
consumers

8
Globalization, expansion in other 0.12 4 0.48
countries (especially in China & India).

Diversification and acquisition of other .04 3 0.12

quick-service restaurants.

Growth of the fast-food industry. .10 3 0.30

Worldwide deregulation .04 2 0.08

Low cost menu that will attract the .08 2 0.16

customers.

Freebies and discounts. .08 1 0.08

Threats
Health professionals and consumer 0.10 3 0.30
activists accuse McDonald's of
contributing to the country’s health
issue of high cholesterol, heart
attacks, diabetes, and obesity.

The relationship between corporate 0.09 3 0.27

level McDonald's and its franchise
dealers.

McDonald’s competitors threatened 0.12 4 0.48

market share of the company both
internationally and domestically.
Anti-American sentiments. .07 2 .14

Global recession and fluctuating .04 3 .12

foreign currencies.

Fast-food chain industry is expected .04 2 .08

to struggle to meet the expectations
of the customers towards health and
environmental issues.
Total 1.00 2.85

Internal Audit

Strength Weakness

9
 1. Strong brand name, 1. Unhealthy food image.

image and reputation. 2. High Staff Turnover

2. Large market share. including Top management

3. Strong global presence. 3. Customer losses due to

4. Specialized training for fierce competition.

managers known as the
Hamburger University. 4. Legal actions related to health
5. McDonalds Plan to win issues; use of trans fat & beef oil.

focuses on people, products, 5. Uses HCFC-22 to make

polystyrene that is contributing
place, price and promotion. to ozone depletion.

6. Strong financial 6. Ignoring breakfast from the

menu.
performance and position.

7. Introduction of new products.

8. Customer focus (centric).

9. Strong MCD's
performance in the global
marketplace.

Internal Factor Evaluation (IFE) Matrix

10
Key Internal Factors Weight Rating Weighted Score
Strengths
Strong brand name, image 0.12 4 0.48
and reputation.
Large market share. 0.10 4 0.40
Strong global presence. 0.04 3 0.12
Specialized training for 0.04 3 0.12
managers known as the
Hamburger University.

McDonalds Plan to Win 0.12 4 0.48

focuses on people, products,
place, price and promotion
Strong financial performance 0.08 4 0.32
and position.
Introduction of new products. 0.06 4 0.24
Customer focus (centric). 0.06 4 0.24
Strong performance in the 0.08 4 0.32
global marketplace.

Weaknesses
Unhealthy food image. 0.08 1 0.08
High Staff Turnover including 0.04 1 0.10
Top management
Customer losses due to fierce 0.04 1 0.04
competition.
Legal actions related to 0.04 2 0.08
health issues; use of trans fat
& beef oil.
McDonald's uses HCFC-22 to 0.04 2 0.08
make polystyrene that is
contributing to ozone
depletion.
Ignoring breakfast from the 0.06 1 0.06
menu.

Total 1.00 3.16

SWOT Matrix

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 Strengths Weaknesses
1. Strong brand 1. Unhealthy food
name, image and image.
reputation. 2. High Staff
2. Large market Turnover including Top
share. management.
SPACE Matrix 3. Strong global 3. Customer losses
presence. due to fierce
4. Specialized competition.
training for managers 4. Legal actions related to
known as the health issues; use of
Hamburger University. trans fat & beef oil.
5. McDonalds Plan
to Win focuses on 5. Uses HCFC-22 to
people, products, make polystyrene that is
place, price and contributing to ozone
promotion. depletion.
6. Strong financial 6. Ignoring breakfast
performance and from the menu.
position.
7. Introduction of new
products.

8. Customer focus
(centric).

9. Strong performance in
the global
marketplace.

Opportunities S-O Strategies W-O Strategies

1. Growing health trends 1. Focus on Plan to win to 1. Minimize
among consumers. attract customers and customers losses by
2. Globalization, expansion in other countries provide low cost menu
expansion in other (S5, O2, O6). and discounts (W3, O6,
countries (especially in 2. Expansion in market share O7).
China & India). by more investments in Asia
3. Diversification and (S2, O2).
acquisition of other quick-
service restaurants.
4. Growth of the fast-
food industry.
5. Worldwide
deregulation.
6. Low cost menu that
will attract the customers.
7. Freebies and
discounts.
Threats S-T Strategies W-T Strategies
1. Health professionals 1. More control on 1. Applying 0 grams
and consumer activists franchise dealers to Trans fat in all
accuse it of contributing to maintain McDonald's worldwide McDonald's
the country’s health issue reputation and quality (W1, W4, O1).
of high cholesterol, heart (S1, T2). 2. Transfer from
attacks, and diabetes. 2. Provide new HCFC-22 to HFC
2. The relationship product and keep (hydrofluorocarbon)-free
between corporate level innovation (S7, T3). (W5, T6)
McDonald's and its
franchise dealers.
3. McDonald’s
competitors threatened
market share of the
company both
internationally and
domestically.
4. Anti-American
sentiments. 12
5. Global recession
and fluctuating foreign
currencies.
6. Fast-food chain
industry is expected to
Financial Strength Rating Environmental Stability Rating
Return on investment 4 Rate of inflation -3
Leverage 4 Demand Changes -3
Net Income 6 Price Elasticity of demand -1
EPS 5 Competitive pressure -3
ROE 5 Barriers to entry new -3
markets
Cash Flow 4 Risk involved in business -2
Average 4.67 Average -2.5
Y-axis 2.17
Competitive Advantage Rating Industry Strength Rating
Market share -1.00 Growth potential 5
Product Quality -1.00 Financial stability 5
Customer Loyalty -1.00 Ease of entry new markets 4
Control over other parties -2.00 Resources utilization 4
Profit potential 5
Demand variability 3

Average -1.25 Average 4.33

X-axis 3.08

Directional vector point is :( 3.08, 2.17)

FS

Conservative Aggressive

C
A IS

Defensive Competitive

ES

Grand Strategy Matrix

13
 Rapid Market Growth

Quadrant II Quadrant I

Weak
Competitive Strong
Position Competitive
Position

Quadrant III Quadrant IV

Slow Market Growth

The Boston Consulting Group (BCG) Matrix

Relative Market Share Position

MCD
Stars Question Marks
Industry
Sales
Growth
Rate
Cash Cows Dogs

The Internal-External (IE) Matrix

The IFE Total Weighted Score

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 Strong Average Weak
3.0 to 4.0 2.0 to 2.99 1.0 to
1.99
I II III

High
3.0 to 3.99

IV V VI

The EFE Total

Medium
Weighted Score
2.0 to McDonald's
2.99

VII VIII IX

Low
1.0 to 1.99

The Quantitative Strategic Planning Matrix

(QSPM)

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 Strategy 1 Strategy 2

Expand Applying 0
further in grams Trans fat
Asia by in all worldwide
adding 500 McDonald's
restaurants restaurants

Key Internal Factors Weight AS TAS AS TAS

Strengths
Strong brand name, image and 0.12 4 0.48 4 0.48
reputation
Large market share 0.10 4 0.40 2 0.20

Strong global presence 0.04 4 0.12 2 0.08

Specialized training for managers 0.04 - - - -

known as the Hamburger University
McDonalds Plan to Win focuses on 0.12 4 0.48 4 0.48
people, products, place, price and
promotion
Strong financial performance and 0.08 4 0.32 4 0.32
position
Introduction of new products 0.06 - - - -

Customer focus (centric) 0.06 1 0.06 4 0.24

0.08 3 0.24 1 0.08

Strong performance in the global
marketplace
Weaknesses
Unhealthy food image 0.08 1 0.08 4 0.32
High Staff Turnover including Top 0.10 - - - -
management
Customer losses due to fierce 0.04 3 0.12 1 0.04
competition
Legal actions related to health issues; 0.04 1 0.04 4 0.16
use of trans fat & beef oil
Uses HCFC-22 to make polystyrene 0.04 - - - -
that is contributing to ozone depletion
SUBTOTAL 1.00 2.34 2.40

16
 Strategy 1 Strategy 2

Expand Applying 0
further in grams Trans fat
Asia by in all worldwide
adding 500 McDonald's
restaurants restaurants

Key External Factors Weig AS TAS AS TAS

ht
Opportunities
Growing health trends among consumers 0.08 1 0.08 4 0.32

Globalization, expansion in other 0.12 4 0.48 1 0.12

countries (especially in China & India)
Diversification and acquisition of other 0.04 - - - -
quick-service restaurants
Growth of the fast-food industry 0.10 4 0.40 4 0.40
Worldwide deregulation 0.04 4 0.16 1 0.04

Low cost menu that will attract the 0.08 - - - -

customers
Freebies and discounts 0.08 - - - -

Threats
Health professionals and consumer 0.10 1 0.10 4 0.40
activists accuse McDonald's of
contributing to the country’s health issue
of high cholesterol, heart attacks,
diabetes, and obesity
The relationship between corporate level 0.09 4 0.36 1 0.09
McDonald's and its franchise dealers
McDonald’s competitors threatened 0.12 4 0.48 4 0.48
market share of the company both
internationally and domestically
Anti-American sentiments 0.07 - - - -
Global recession and fluctuating foreign 0.04 - - - -
currencies
Fast-food chain industry is expected to 0.04 1 0.04 4 0.16
struggle to meet the expectations of the
customers towards health and
environmental issues
SUBTOTAL 1.00 2.10 2.01
SUM TOTAL ATTRACTIVENESS SCORE 4.44 4.41

17
Recommendations

Expand further into Asia markets over a 2-year period

by adding 500 restaurants per year at a cost of $4
billion annually, and applying 0 grams Trans fat in all
worldwide McDonald's restaurants.

References
1. www.mcdonalds.com
2. www.moneycentral.msn.com
3. www.mcdonalds.ca
4. Strategic Management concepts and cases by Fred
David 12 edition
5. Exploring Corporate Strategy text & cases 8th edition
6. U.S. Environmental Protection Agency

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