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Mc Donald's

UCM Business Economy Proyect

Pablo Rivas

on 30 October 2012

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Transcript of Mc Donald's

Mc Donald's Empire FINANCIAL ANALYSIS HISTORY COMPANY STRATEGY BRAND & MARKETING STRATEGIES 1940´s 1948 First Franchise 1953 1955 1958 - 1963 1967 5,000! 1978 1981 2005 2012 FUNCTIONAL STRATEGY COMPETITIVE STRATEGY CORPORATE STRATEGY Market Share Evaluation of McDonald´s Market Position SWOT Analysis Strong brandname worldwide
Global operations all over the world
Most reputed company for social responsibility
First company providing nutritial facts
Excellent locations in theme parks, airports, Wal-Mart stores, and along most well traveled roads.
Efficient operating guidelines in the assembly line fashion
Use of top quality beef and chicken products
Use of brand name processed items like Kraft cheese, Dannon Yogurt, and Dasani Water
Food safety guidelines are strictly adhered to
Clean environment and play areas for children which make it an enjoable place to be STRENGTHS WEAKNESS OPPORTUNITIES THREATS Failing pizza test market thus limiting their ability to compete with fast food pizza providers
Training costs are elevated due to high turnover
Large fluctuations in their net and operating profits making impacts on the investors
Not much variation in seasonal products that are offered
Quality concerns due to franchised operations Opening more joint ventures with several different retailers
Being more responsive to the social changes to healthier options
Advertising the capabilities of Wifi internet services in the branches
Expansions of business into newly developed parts of the world
Creating a more upscale appearance to attract a more upscale clientele
Open products up to allergen free options such as peanut free and gluten free foods
Continue to venture into more enticing beverage choices
Creating more play places for the children in more of the restaurants
Expanding on the advertising in regards to being more socially responsible in the environment Foreign currency fluctuation
Lawsuits for offering unhealthy foods that have alleged addictive additives
Social changes to a more balanced meal including fruits and vegetables in servings of five per day
Expensive promotional campaigns leads to limited margins to gain market share Key Success Factors Family with children
Urban customer on the move
Teenager Traditional fast food +
Healthier choices: Salad, Fruit, etc. Availability 5 Minutes walking distance or by car Affordability Competitive Advantages Assets Tangible Intangible BE THE PLACE AND THE WAY OF EATING THEIR CLIENTS PREFER. STRATEGY (cc) image by nuonsolarteam on Flickr PLAN SATISFACTION LOYALTY COMPETENCE RONALD MCDONALD -1967
-Clown mascot
-Family friendly place DOUBLE ARCH LOGO -began in 1968.
-has become a way to spot any Mcdonald´s.
-different meanings. VARIETY ON THE MENU -Different kinds of hamburguer.
-Cool drinks.
-Salads. ADVERTISING CAMPAIGNS -Fast food services.
-Low prices.
-Best products.
-“Healthy food”.
-They close late.
-They show disdainful gestures aginst Burger King in their adverts. MARKETING CHANNELS -Largest fast food chain in the world.

-They have a twitter page to show the news about McDonald´s. This will go
Anyplace! 1963 NYSE 1996 15cents 18cents 1967 1000! 1968 $10 billion!! PRODUCT DEVELOPMENT INTERNACIONALIZATION THE 4 FUNDAMENTAL ELEMENTS 1.Objectives simple and consistent and in a long-term 2.Knowledge of the competitive environment 3.Internal forces Rating:
• Countries of operation: 119
• Number of Stores worldwide: +33,000
Brand Awareness
Good reputation due to large engagement in social responsibility
Good relation with suppliers Employee Experience

Respect & Inclusion - Create a diverse and inclusive culture where everyone feels valued and respected.

Employee Value Proposition (EVP) - Enhancing our commitment to drive high levels of employee commitment.

Talent Management - Attract, develop and retain the most talented people at all levels. Human • Basis of price
• Convenience
• Service
• Menu variety
• Product quality in a highly fragmented global restaurant industry AS STATED IN THE COMPANY’S MISION STATEMENT • Foreign exchange rates
• Interest rates
• Inflation
• Industry regulations THE COMPANY FACES MANY RISKS, SUCH AS • Rising unemployment
• Declining wages
• Credit constrained
• Volatile financial markets In addition, current economic conditions described as “slowing economies make it even harder to compete in the marketplace" McDonald’s net income
$2.4 billion in 2007,
$4.3 billion in 2008,
$4.5 billion in 2009;
$4.6 billion in 2010,
$5.0 billion in 2011, But despite all these inconvenients the McDonald’s Corporation has gained competitive advantage in both national and international fast food industry. Price target sumary
Mean Target $85.56
Median Target $86.00
High Target $92.00
Low Target $73.00
Mean Target $85.56
Median Target $86.00 The following target summary shows predictions for McDonald’s stock prices Low target is $73.00
Mean target is $85.56
The “close” price at which McDonald’s stock was traded on December 10, 2010 was $77.56 with a decrease of 0.5 percent. However, McDonald’s stocks are traded less than its mean and median target value. This graph represents the trend in McDonald’s stock prices relative to its main rival, Yum Brands Inc. from November 1, 2009 to November 1, 2010: Exhibit 1 shows McDonald’s standing compared to the other companies in the fast food industry with respect to the profitability ratios. Exhibit 2 presents the industry’s liquidity ratios. Likewise, these ratios help determine McDonald’s standing among its competitors. Exhibit 3 shows the industry’s debt ratios, which are the measurements of the company’s ability to pay its debts on time. The current economic environment has increased consumer focus on value, heightening pricing pressures across the industry, which could affect ability to continue to grow sales despite the strength of brand and value proposition
Since major part of the company’s strategy is “being better, not just bigger,” McDonald’s should devote more equity and value to not only developing new markets, but also strengthening its position in the current markets. The issue is that McDonald’s is facing relates to its ability to increase market share without losing sales and operating income over both short- and long-term.

Thus, McDonald’s should pay more attention to the existing restaurants rather than opening new ones. Similarly, McDonald’s must place greater emphasis on sales rather profits and prices of its products. • heavily franchised
• less capital-intensive business model
•the amount of capital it invest and long-term returns.

This poses a problem in the current condition and market. Many of McDonald’s restaurants are situated where the housing market is still in recession. McDonald’s must reduce the amount of leases and increase the amount of the capital property.
McDonald’s strives for evolution towards Strategic Timetable
1 year
• Increase cash balance and cash on hands
• Pay-off some of the debt to increase trust of investors
• Increase acquisition of buildings
• Decrease dividends
• Invest short term the cash that was gathered from sold investments

2 years
• Increase cash balance and invest cash on hand into short term investments
• Pay-off more debt
• Increase the investment portfolio (2009 sold many investments profitably)

3 years
• Continue improving current condition and balance between debt and equity mix Here, I suggest a three-year strategic plan for improving McDonald’s financial condition, leading to increased market value. Competitive Alternatives Mc Donalds applies cost leadership strategy in combination with operational excellence, by offering basic fast food meals at low prices with a good service.

Low production costs+ low customer costs

McDonalds also applies product differentiation strategy

Added new items throughout the past years

Regionalize the products to cater local tastes
India Nutrition Customer Range Financial
•Fortune 500 listing on position 107 in 2011
•Revenues: $27,006.0 Million
•Profit :$5,503.1 Millions
•Assets : $32,989.9 Million
•Stockholders’ equity: $14, 390.2 Million
•Market value (3/29/2012) : $99,451.8 Million
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