McDonalds

Presented By:
Wajiha Asad

Waseem Ahmed

Contents
1. Introduction
2. Business Model
3. Historical background
4. SWOT Analysis
5. Financial Analysis
6. Strategic Issues
7. Strategic Alternatives
8. Recommendations
9. Implementation
10.Strategy Evaluation.

Company Introduction
Worlds largest foodservice retailing chain.
Founder Dick & Mac McDonaldandRay Kroc (1940)
Headquartered in Oak Brook, Illinois.

CONT
Operates in 36,000 locations with approximately
69 million customers in over 100 countries each
day.
Approximately 440,000 employee world wide
(2013)
More than 80% of McDonald's restaurants
worldwide are owned and operated by
independent local business men and women.
Total McDonalds restaurants worldwide:
Over 57% are conventional franchisees
Approximately 24% are licensed to foreign affiliates
or developmental licensees
Over 18% are Company-operated

Products
Burgers
Sandwiches
Chicken & Fish
Salads
Snacks
Breakfast
McCafe
Beverages
Desserts & Shakes

Competitors

Mission & Vision

Statement
McDonald's brand mission is to be our customers' favorite
place and way to eat and drink. Our worldwide operations are
aligned around a global strategy called the Plan to Win, which
center on an exceptional customer experience People,
Products, Place, Price and Promotion. We are committed to
continuously improving our operations and enhancing our
customers' experience.

McDonalds Values
We place the customer experience at the
core of all we do.

We are committed to our people.

We believe in the McDonalds System.

We operate our business ethically.
We give back to our communities.
We grow our business profitably.
We strive continually to improve.

Ray Kroc Business

Model
Ray Kroc- Developed
a business model known
as

The Three Legged Stool Owner/Operator,

Suppliers and Employees

All three legs of a stool need to be equal to

support the weight, all three elements of the
McDonalds system are equally important
partners in McDonalds success.
Formula of Success
Quality + Service +Cleanliness + Value

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History

Strengths

McDonalds is well recognized brand valued at over

$85 Billion.

McDonald is the first in fast food chain which

provide nutrition information printed on all
packaging.

Large number of clients: 69 million daily customers

with global range more then 36000 restaurants in
119 countries.

McDonalds assembly line method which

guarantees high quality & consistency.

Resource innovation and lots of charity activities.

Weakness
McDonalds have high employee turnover rate,
bad press associated with low salary and high
efficiency pressure
Fast-food is often perceived as unhealthy due
high calories products and large amount of
sugar & fats.
Lack of healthy food line for more demanding
customers.
McDonald's
management
enormous size of company.

issues

due

to

Drive-thru time have slowed down as customers

are complaining.

Opportunities
Expanding delivery system and
online ordering.
Growing market for low-cost menu
in poorer societies.
Personalization of client meal with
local ingredients.
Adding more healthy food to the
menu with low amount of calories
and sugar.
Remodeling of old restaurants.

Threats
Growing healthy food consciousness
Lawsuits against McDonalds
Environmental issues might
generate bad press (unrecyclable
materials)
New eating trends (Food chain to
local slow food)
Downturn or recession in economy
also affecting the McDonalds sales.

Financial Analysis
McDonald is still successful as a market leader
despite of the global recession and tough competition
offered by Yum brands and Subway.
Efficient operations, high profitability, highly loyal
customer, broader network expansion and the value
adding menu are major factors of its success.

Financial Strength
Analysis
Year

2010

2011

2012

2013

2014

Sales

24,075

27,006

27,567

28,105

27,441

Net
Earning

4,946

5,503

5,465

5,585

4,757

Total
Assets

31,975

32,990

35,387

36,626

34,281

Market
Price

76.76

100.33

88.21

89.01

90.34

CONT.

McDonalds problems stem from operational mishaps

across the world. In particular, its business in Asia.

China Scandal.

Japanese customers have reported finding bits of

plastic and even a tooth in their food.

Russian outlets were temporarily closed.

Increased Competition.

Increase in interest and impairment expenses.

CONT
Financial
Ratios

McDonalds
Corporation

Industry
Average

Subway

Current Ratio

1.45

1.37

0.87

Quick Ratio

1.09

1.01

0.73

Inventory
Turnover

231.17

30.7

123.32

Debt to Equity

1.32

0.87

2.97

19.82

14.20

11.71

16.66

14.18

15.39

0.78

0.95

1.51

Net Profit
Margin
Interest
Coverage
Total Asset
Turnover

Strategic Issues
Win back customers who have
fallen out of love with McDonalds:
Once loyal customers have had their heads
turned by more upmarket rivals such as
Shake Shack, Five Guys and Chipotle.
Tackle the bad PR by paying staff
more:
McDonalds has moved to raise the pay of
workers at 1500 outlets it directly operates
in U.S to at least $1 above the local legal
minimum rate.

CONT

Sort out China, where it has been rocked by

food safety scandals
Last summer, a supplier to the chains restaurants in
China was accused of supplying rotting meat and
falsifying meat expiry dates.

Adding more and more items in menu and

making it imbalanced
Bigger menus have made kitchen operations more
complex, giving some customers a longer wait for their
fast food fix.

Strategic Alternatives
Slim down the menu
There is need to slim down the menu to increase the
kitchen system efficiency. There must be a balanced
and customized menu for customers and employees.

Close down underperforming

restaurants
McDonalds decided to close about 350
underperforming restaurants last quarter, primarily
in U.S, China and Japan, on top of another 350
previously planned closing worldwide Raise the pay
of Workers

CONT
Offer the best value
"Value is one of our grand pillars," Thompson said. "So we must continue to
fortify our position within this key consumer attribute."

Customer service
McDonalds acknowledged this problem and said that the company
was sending corporate representatives in for a "service reset." This
could include adding more workers and assigning new tasks to
existing ones.

Marketing
To improve public perception of the company, McDonald's is doing
a global audit of the marketing department.

Recommendation
Proper Employees Training
Training is key. Skimping on franchisee and employee training
is ignoring the most difficult element in your formula for
success.

Get International
McDonald's needs to spice up its menu by developing new
offerings

or

incorporate

differentiating its
Tex-Mex/Latin;

existing

Oriental;

menu

Indian

items

and

flavors in a more aggressive and permanent manner.

to

Russian

CONT

Social Networking

McDonald's willexpand new in-restaurant, website and mobile

communications, and marketing vehicles, making access to this
information even easier. To begin, McDonald's is now making
available its first mobile app so customers can access nutrition
information on-the-go.

Remodeling
To win more diners, McDonalds said today its trying a new global
strategy that includes investing in store remodels and technology as
well as mobile ordering and payments.

Implementation

There is a basic need to make some meaningful changes in

organizational structure for the implementation of proposed
strategies.

McDonalds decided to close about 350 underperforming

restaurants in U.S, China , Japan, on top of another 350 world
wide.

Use those $267 millions in its operating income, and

restructuring charges.

Conclusion
McDonalds continues to satisfy customers all
across the globe, efforts are continually being
made to enhance all aspects of the
corporation.
With a new emphasis on catering to local
tastes, creative talent focused on improving
food and dining experience, and compliance
with the green movement of the 21st century.

Thank You
!!!