Presentation of McDonalds. Case study
Universite de la Mediterrane
Aix-Marseille II
Master 2 profesionelle
Guliyev Ilkin
Introduction
The
business began in 1940, with a restaurant
opened by brothers Dick and Mac McDonald
in San Bernardino, California.
Their introduction of the "Speedy 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 "Speedy." Speedy was eventually
replaced with Ronald McDonald
in 1963
The present corporation dates its founding to the opening of a franchised
restaurant by Ray Kroc in
1954. 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. Today McDonalds is one of the largest fast food chain restaurants
with 31,000 local restaurants serving 58 million people in 118 countries in the
world. This company holds quarter of the US market share. More than 75 % of
McDonald’s restaurants that are 25,465 owned and operated by local persons.
Main market of McDonald divided in following countries.
France, Germany and the United Kingdom (U.K.), collectively, account for
approximately 55% of Europe’s revenues; and Australia, China and Japan (a
50%-owned affiliate accounted for under the equity method), collectively,
account for over 50% of APMEA’s revenues. These six markets along with the U.S.
and Canada are referred to as “major markets” throughout this report and
comprise over 70% of total revenues.
Introduction: 6 years
summary of McDonald
Company’s
Systemwide sales increased 3% in 2008. But 2007 and 2006 this number was 9 %.
Company operated sales decreased 1 % in 2008. In generally if we look at curve
there is not sharp increase in chart. This situation implies that not only
fast-food market but also McDonald’s market is going to be saturated. It is
also related with high competition in fast food market. Next slides indicate
the market share of McDonald in USA fast food market.
Market share of
McDonald is 24 percent in US market. Subway, Burger King, Starbuck capture
9%,8%,8% respectively.
From one small hamburger
to Global corporation (corporate strategy)
How McDonalds
became from small hamburger to Global corporation? What is the philosophy that
McDonald runs. This philosophy, established by a founder, Raymond Kroc, is
often described as a three-legged stool. One of the legs is McDonald's,
a second leg is franchisee partners and the third leg is supplier
partners. The stool is only as strong as its three legs. Franchisee - As I mentioned
before McDonalds restaurants operated by franchisees is 75%. McDonald
SWOT analyze of McDonald
Strong
-S1.This strong brand recognition- creates significant opportunities
for the company. MacDonald’s is able to generate more sales because of its
brand recognition. Through aggressive market planning, MacDonald’s has been
able to recapture its youth market once again.
-S2.Strong global precence -with its nearest domestic competitor being
only half its size, McDonald’s is the market leader in both the domestic and
international markets. MacDonald’s benefit from cost reduction through
economies of scale because of its enormous size and its huge global presence
allows it to diversify risk involved with the economic performance of specific
countries. In international markets, MacDonald’s is well placed to expand and
take advantage of long-term economic growth.
-S3.Supplier- McDonald made horizontal alliances with their supplier
which can contribute fast delivery system for chain. In term of this chain Mc
Donald serve 58 mln customer per day.
-S4.Strong real estate profile - The company’s outlets are located in
areas that are highly known for visibility, traffic volume and ease of access
W1-Saturated
food industry - as a result of this McDonalds has to deal with the prospect of
looming market saturation, which could make it difficult to add new outlets for
the market.
W2-Perceived lower food standards due to
fast food model.-People getting more aware lower standards of fast-food and
trying to eat restaurants or preparing more healthiest foods.
W3- People are generally tired of the same brands that they had been
using over the years, so when they do not see the expected innovation they
migrate to new brands. Moreover people see McDonalds every where and this over
exposure might also be a reason for abstinence. Moreover maintaining the
standards of such a huge chain becomes feasible and when there is lack of
quality service in one store it effects the whole brand.
Opportunities
O1-
International expansion- McDonald seeks to expand its business across the
world. Average restaurants number are 500 for the year.
O2- Economic downturn may force people to opt for less expensive
"fast food", rather then restaurant quality.
O3- Entry into the breakfast category-
It is new product that McDonald offers for customers to earn profit.
Threats
T1-Nutritional issues. People are
becoming more aware of the quality of the food they eat, and more people are
looking for "organic", natural and vegetarian alternatives.
T2- Increasing competition There is also an increasing competition driven by too many
competitors, which reduces the company’s ability to increase revenue.
Nevertheless, the swift of the company’s focus from a value menu to a more
diverse one has recently limited the negative effect of the intense price
competition that was traditionally taking place among the industry leaders.
T3. Fast food menu links with obesity- People
deviates to buy fast foods because of obesity fear.
Customers associate fast food with obesity they think fatten
problem.
All of those problems are the main obstacle of McDonalds to solve.
McDonald administration bears in mind those problems and created strategy for
2010 to pass over those problems and solve this hindrances.
Strategies and objectives of McDonalds for
2010
Strategies
Product penetration
1. Company will reimage McDonalds
restaurants for 2010. As we mentioned before McDonalds trouble with perceived
lower food standard and customer trends that is customer tired to see same
brand. Considering this, certain strategy is successful for break this stereotips.
2. Menu innovation is priority
for 2010 for the W1 saturated food industry, W3 customer trends,
O3 entry to the breakfast category, T2 increased competition
especially for the T3-obesity
Market development
The Company continually reviews
its restaurant ownership structures to optimize cash flow and returns and to
enhance local relevance. The Company expects to refranchise 1,000 to 1,500
Company-operated restaurants between 2008 and 2010, primarily in its major
markets, and by continuing to utilize its developmental license strategy. In
2008, the Company refranchised about 675 restaurants, primarily in its major
markets.
Objectives
According to meeting in 12
November 2009 investors of McDonalds defined company’s objectives for 2010 as
following:
¢ Annual
growth in sales 3-5 %
¢ Annual
operating income growth 6-7 %
¢ Increase
market share (open 1000 new restaurant)