Balance Scorecard
Internal Business objectives
Financial objectives
- Develop Products with Low Costs
- Highly Effective New Product Development
- Improve Supplier Efficiency
- Improve Line Efficiency
- Improve Technology Efficiency
- Increase sales
- Increase market share
- Improve Operating return on assets
- Increase Gross Margin
Customer objectives
Innovation and Learning objectives
- Increase Number of new customers
- Reputation As Leading Low Cost product
- Competitive Price for customers
- Increase Customer New Products
- Reputation for Innovation & Technology
- Improve the Quality of Suppliers
- Improve Understanding of Product Cost
- Improve in technology knowledge
- Improve in developing new products
Performance Disappoint
External and Internal Analysis
SWOT
McDondals shares fell more than 3%.
Earnings down from $1.31 billion last year's 3rd quarter
Whom to blame?
Competitors Analysis
- Soft restaurant industry traffic
- Food at home is cheaper
- Labor costs are increasing
- Lower growth in consumer expenditure on casual dinning and fast food - inflation
- Dynamic consumers unsatisfied
Trading value decreases
Porter's 5 Forces
Promotions implemented fail
- Competition: Chipotle & Shake Shack
- All day breakfast (more than a year), McPick 2, new Chicken Nuggets (no preservatives)
- Sales increase, single customers spend more
- Growth rate firm downward
- Traffic momentum is critical
Quick Overview
- Headquartered in Oak Brook, Illinois.
- World’s largest food service retailing chain.
- Known for its taste of burgers and fries.
- Offers a standard menu at all locations, however some locations have menu variations based on geographic location and taste preference.
- Operates over 31,370 fast food restaurants in over 118 countries, employing 390,000 people.
- A majority of the restaurants are operated by franchisees.
- McDonald’s owns the land used for each of the franchises, then builds and secures a long-term lease for the restaurant site.
- Franchisees then provide a portion of capital by investing in the equipment, signs, seating and decor of the restaurant .
- The company also operates restaurants under the brand name 'The Boston Market‘, acquired in May of 2000.
McDonald's Variety
Recommended Strategic directions
Innovate the menu
Target the more health conscious costumers by introducing new items in the menu and advertising its nutritive benefits.
Improve beef quality, fresh instead of frozen.
Networking
Re-franchising
Increase expenditure in networking by creating initiatives to reach customers outside the restaurants; while heightening the degree of customization through mobile ordering and self paid kiosks.
Establish more locations in developing economies where there is no market presence.
Recent Strategic Directions
Improve Menu
- New products slowed down operations
- Focus on core products: Burgers
Marketing
Digital
- Marketing lead for beef and chicken
- Improving mobile orders and payments
- Reinforce loyalty program
Generic Strategy
Change over time to ensure viability
Primary
Secondary
- Cost leadership
- Competitive Advantage
- Backward Vertical Integration
Differentiate from competitors
Business Model
From assembly line food production style to franchise operation - super sized business formula
How is the true value delivered?
Brand positioning
Chinese Restaurant Model
Firm Infrastructure
- Modern & sophisticated
- Advanced IT systems
- Eco-friendly
Firm Infrastructure
Human Resources Management
- Flexible hours
- For marginalized in the labor market
Human Resources Management
Support
Activities
Technology Development
- modern restaurants
- 5 year IT support - Fujitsu
Margin
Procurement
- McDonalds E-procurement system - backbone of logistics and supply chain
- 2001 hub - franchises buy from uniform to hamburgers
- convenient and fast, supplies and materials at a discounted price, low costs
1. Target Consumers: friendly families (narrow scope)
2. Frame of reference: Fast-food
3. Point of difference: Quick service through consistently generating the same food quality at a low price in high volumes
4. Reason to Believe: low costs, efficient employees, family friendly ads
Margin
- Low priced and convenient
- Low profit margins
- low Costs
- High turnover
- Franchise benefits makes it successful
Marketing
and sales
Inbound
logistics
Outbound
Logistics
Service
Operations
- free Wi-Fi
- arch card: gift card or prepaid card
- high quality food
- superior service
- great value
- clean environment
- 119 countries, 58 million daily customers, 36,000 restaurants
- extensive marketing campaign
- t.v. (central), radio, newspaper
- billboards
- sporting events: olympics games, local events
- social media - customer choice
Assembly line :
- Large grill, high volume of burgers
- Dressing station - same condiments
- Fryer
- Soda fountain and desserts
- Counter for orders
- Raw Materials from pre-defined suppliers
- Backward vertical integration - beef and milk
- Drinks exclusively by Coca-cola
Primary Activities
McDonald's Strategic Management Plan
Based on Jim Harvey's speech structures