McDonald's Integration Presentation
Group 1
Wednesday December 10, 2014
GB214 - Section 010
Overall Business Strategy
Background of McDonald's
Rank: Professional
Vision: McDonald's vision is to be the world's best quick service restaurant experience
Mission: McDonald's mission is to continuously improve our social environmental performance
- Role of Marketing - Professional
- Clear Position in the market, various target markets, extensive consumer research and product differentiation
- Competitive appeal - Professional
- strong branding, consistently meets customer expectations
- Customer Profile - Professional
- many target markets, understands target markets' needs,
- Service Quality - Professional
- very efficient and effective service, consistently meets expectations, does not exceed expectations
- Role of Operations - Leader
- efficient supply chain, outsources 100% of supply chain, continually improving through R&D,
- Service Delivery (front-stage) - Professional
- priority is quick service, packaged for convenience, seeks to meet customers needs
- Backstage operations - Leaders
- Close communication with front-end, drives how fast food is served, procedures designed for efficiency & quality
- Productivity - Professional
- constantly improving procedures, keeps customers' standards constant
- Intro of New Technology - Professional
- communication between front and back end, constantly improving to reduce service time, quality, and costs
- Founded in 1955 by Ray Kroc
- Franchises and operates in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America
- The companies restaurants offer various food items, soft drinks, coffee, and other beverages, as well as breakfast menus
- McDonald's generates revenue through company-owned restaurants, franchise royalties, and licensing pacts
- As of September 2014, there were 35,900 locations in 125 countries
Core Competencies
Competitive Priorities
- Well known brand
- Similar dining experience anywhere in the world
- Maintain high standards of service and quality-fast, accurate, and friendly
- Well located stores with easy access, parking and drive-thru services
- Cost
- Keeps their prices low
- Difficult for other companies to compete.
- Time
- Delivers food fast
- Simple cooking process for employees.
- Quality
- Strives for consistency
- Sacrifices quality of food in order to achieve other priorities
"McDonald's believes that we should outsource everything to a company who are experts in their subject matter and then monitor their performance in a proper fashion"
--Senior Director of McDonald's Supply Chain, Abhijit Upahyde
- Sustainability - Professional
- An early adopter when sustainability promises to improve and provide a competitive edge
- CSR - Leader
- No contracts with suppliers just an agreement to continue business and full disclosure on all plans
- Ronald McDonald Foundation, scholarships etc
- Constantly strives towards profits to provide stakeholders with returns
- Does not sacrifice sustainability practices for greater profits
Supply Chain
Marketing Strategy
Operations Strategy
The physical flow of goods
The Four P's
- Tier 2 - farms
- Raw materials (i.e. produce, cattle, spices, etc.)
- These suppliers ship to tier 2 suppliers
- Tier 1 - processing facilities
- Raw materials are processed
- Made into finished goods, ready to be made at restaurants (i.e burger patties, french fries, chicken patties, etc.)
- Little to no prep required at restaurants
- Then shipped via “cold chain” of refrigerated trucks for perishable goods
- Drivers call restaurants ahead of time to ensure restaurant is ready
- Reduces time spent in parking lot up to 30%
- Treacy & Weirsema framework
- Operational excellence
- Customer intimacy
- Product leadership
- Quick service
- Pioneer in quick service
- Packaged for eating on-the-go
- First drive-thru created in 1975
- Low cost
- Efficient supply chain and relationship with suppliers allow for low costs in raw materials and transportation
- McDonald’s outsources 100% of its supply chain
- Requires trust and collaboration between
- Franchises
- Suppliers
- The brand
- Product
- Consistent quality
- Quick delivery
- Price
- Consumer perception of value
- Sales promotions
- “Bang for your Buck”
- Place
- Distribution of materials
- “Location, location, location…”
- Promotion
- Media ads
- Social network
You Don't Always have to Sacrifice Profits to Be Socially Responsible
- Put QR barcodes on products so customers can scan and see nutritional information
- Making their nutritional information more widely available for the customer while costing them nothing
Integration of Marketing and Operations
The Triple Bottom Line
Quality
Product
- Products designed for quick preparation and service
- 1st tier suppliers prepare goods ready to be cooked/assembled at restaurant
- 1st tier suppliers responsible for quality control before shipping
- McDonald's holds its supplies accountable
Cost
Price
- Low pricing is one of the main priorities
- Supply chain designed to reduce transportation costs
- Relationship with suppliers ensures raw materials can be purchased at low cost
Potential Conflicts between marketing and operations strategies
People
Profits
Planet
- Restaurants strategically placed in high traffic areas
- Prevents cannibalization
- Restaurants can choose closest suppliers from many locations to reduce transportation
Place
Supply Chain
Capacity
Promotion
- Priorities
- Reducing waste
- Reusing Material
- Recycle
- Using less energy
- Implements Architect strategy to be a pioneer in "Going Green"
- Largest Partner with the Ronald McDonald House charities
- Various scholarship opportunities for students across the U.S.
- Constant upstream communication allows for adjustment in orders with changing demand
- Frequent deliveries prevent restaurants from running out of product
- Many suppliers able to fulfill fluctuation in demand
- Generates the most annual income of any fast service restaurant
- Market share of 43.1%, next highest is Burger King with a 18.8% share of the market
- Constantly finding ways to cut costs
"At McDonald's we recognize our responsibility to protect and preserve the environment for future generations to come."
-- McDonalds website
Integration of Marketing and Operations
The Triple Bottom Line
McDonald's productivity is limited by its responsibility to uphold its corporate social responsibility. They could be far more profitable if they did not practice sustainability and business ethics