Mcuonalds Case Analysls

8uslness ollcy /8uSn412

8uSn412
Laurel Campbell

1/23/2010




CASL AnAL?SlS MCuCnALuS CC8C8A1lCn

CCMAn? nAML Mcuonalds CorporaLlon
WL8Sl1L wwwmcdonaldscom
lnuuS18? lasL lood
CCMAn? 8ACkC8Cunu
PlS1C8? Mcuonalds has been well known slnce 1940 as Lhe sLandard for ulLra convenlenL
famlly frlendly meals Accordlng Lo Lhe company's webslLe Lhe flsL resLauranL opened ln San 8ernardlno
Callfornla as a barbeque resLauranL buL elghL years laLer ulck and Mac Mcuonald resLyled Lhe resLauranL
and sLreamllned Lhe menu Lo nlne convenlenL lLems lncludlng Lhelr famous 13 cenL hamburger ln 1934
a mlxer salesman saw poLenLlal ln Lhe buslness and opened Lhe flrsL Mcuonalds franchlse ln ues lalnes
llllnols ln four shorL years Lhe chaln had grown Lo aL leasL 100 resLauranLs 1oday Mcuonalds ls an
lnLernaLlonal corporaLlon wlLh sLores ln as many as 100 dlfferenL counLrles
CLC !lm Sklnner began as Lhe currenL presldenL and CLC of Mcuonalds ln 2004 Pe worked hls way up
from resLauranL manager ln 1971 wlLhouL ever recelvlng a college degree (Mcuonalds PlsLory 2010) Pls
lan Lo Wln" sLraLegy has lncreased world wlde resLauranL sales 411 percenL from $301 bllllon Lo $70
bllllon ln 2008 maklng lL one of only Lwo uow !ones lndusLrlal Average sLocks Lo end Lhe year wlLh a
galn (Chlef LxecuLlve Magazlne 2009) 1oday lL appears reslllenL Lo Lhe currenL economlc downLurn
Mcuonalds recenLly released lLs 2009 4Lh quarLer earnlngs resulLs whlch show LhaL overall revenue rose
7 percenL Lo $397 bllllon wlLh a neL lncome of $122 bllllon or $111 per share (8err 2010)
SWC1 AnAL?SlS
S18LnC1PS Mcuonalds has a large markeL share sLrong brand name lmage and repuLaLlon CLC !lm
Sklnner and Lhe prevlous CLC !ames CanLalupo qulckly and efflclenLly enacLed a sLraLegy LhaL allowed
Lhe company Lo recover from lLs flrsL loss ever ln 2003 (uess 2007) 1he lan Lo Wln" sLraLegy focuses
on people place prlce and promoLlon 1helr wllllngness Lo please cusLomers wlLh new and healLhler
menu lLems and Lhelr repuLaLlon for convenlenL frlendly servlce ln a famlly frlendly envlronmenL are a
reclpe for success Mcuonalds has esLabllshed a sLrong global presence lmproved sales ln Lurope are
evldence of Lhelr ablllLy Lo perform ln Lhe global markeLplace
WLAknLSSLS Less conLrol over franchlsed sLores has affecLed Lhe cleanllness speed and servlce aL
some locaLlons and negaLlvely lmpacLed Mcuonald's repuLaLlon for quallLy CuLbacks ln sLaff Lralnlng
and hlgh Lurnover affecLed cusLomer servlce Medla crlLlclsm led Lo cusLomer concerns and even legal
acLlon over Mcuonald's unhealLhy food lmage and especlally Lhelr use of LransfaLs ln cooklng (uess
2007) AlLhough Lhe chaln has had a poslLlve response Lo lLs lncreased emphasls on healLhler foods Lhe
healLhy food opLlons has proven Lo have hlgher cosLs for Lhe company 1hey also suffered a serles of
fallures of new menu lLems due Lo poor promoLlonal efforLs and a lack of proper cusLomer research
CC81unl1lLS 1he growlng Lrend for healLhler foods offers Mcuonalds an opporLunlLy Lo develop
new menu opLlons Lo meeL cusLomer concerns and sLlll remaln a favorlLe opLlon for Lhe growlng number
of busy famllles who rely on Lhe convenlence of fasL food ullbacks ln consumer spendlng have had
llLLle effecL on sales for Mcuonalds and have even been a beneflL as consumers look for lnexpenslve
eaLlng opLlons CLher opporLunlLles for Mcuonalds lnclude expandlng Lhelr global presence ln counLrles
llke Chlna and lndla Clobal efforLs focused on franchlslng allow expanslon Lo new locaLlons wlLh llLLle
overhead and cosL Lo Lhe company (Mcuonalds MCu 2010)
1P8LA1S naLurally one LhreaL Lo Mcuonalds ls lLs compeLlLors such as 8urger klng Wendy's and oLhers
as Lhey compeLe for markeL share boLh lnLernaLlonally and domesLlcally Clobally Lhey have Lo endure
anLlAmerlcan senLlmenLs and Lhe effecLs of global recesslon and flucLuaLlng currencles uomesLlcally
Lhey have Lo malnLaln a relaLlonshlp beLween Lhe corporaLe level and Lhelr franchlse dealers ln order Lo
ensure LhaL hlgh sLandards are meL by all sLores wlLh Lhe Mcuonalds name (uess 2007) 1he fasL food
lndusLry as a whole ls sLruggllng Lo meeL Lhe expecLaLlons of cusLomers Loward healLh and
envlronmenLal lssues PealLh professlonals and consumer acLlvlsLs accuse Mcuonalds of conLrlbuLlng Lo
Lhe counLy's healLh lssue of hlgh cholesLerol hearL aLLacks dlabeLes and obeslLy
C81L8'S llvL lC8CLS MCuLL
1P8LA1 Cl nLW Ln18An1S AlLhough Mcuonalds has a sLrong brand ldenLlLy LhaL ls hard Lo
compeLe and ls Lhe leader of Lhe fasL food lndusLry ln Lerms of revenues generaLed and resLauranLs
esLabllshed lL faces compeLlLlon from new enLranLs Lo Lhe fasL food lndusLry as well as oLher esLabllshed
chalns offerlng new producLs
8A8CAnlnC CWL8 Cl 8u?L8S Consumer preferences LhaL gravlLaLe Loward more nuLrlLlonal
food could decrease Lhe appeal of eaLlng aL Mcuonalds
8A8CAnlnC CWL8 Cl SuLlL8S Mcuonald's earnlngs are senslLlve Lo prlces of commodlLles
such as beef corn cheese and poulLry CompeLlLlon prevenLs Mcuonalds from passlng Lhe rlslng cosLs
on Lo consumers
Su8S1l1u1L 8CuuC1S C8 SL8vlCLS Mcuonalds musL also compeLe wlLh oLher nonhamburger
based fasL food resLauranLs LhaL offer convenlenL cholces for consumers llke plzza or sub shops coffee
shops supermarkeLs or even sLreeL vendors
ln1LSL 8lvAL8? lasL food cusLomers can easlly be swayed from one chaln Lo anoLher lf a
compeLlLor can offer beLLer quallLy healLhler cholces a beLLer value or a convenlenL famlly frlendly
envlronmenL Mcuonalds keeps ahead of Lhe compeLlLlon wlLh a sLrong brand lmage and varleLy of
quallLy producLs
S18A1LC? uSLu
Mcuonalds lan Lo wln" sLraLegy focuses on quallLy and allows Lhem Lo creaLe and susLaln a
compeLlLlve advanLage wlLh fasL frlendly servlce and an all around en[oyable experlence for Lhe whole
famlly CLC !lm Sklnner's efforLs have focused around reLralnlng employees and franchlsees for beLLer
cusLomer servlce and updaLlng older sLores Pls plans lnclude cuLLlng back on openlng new ouLleLs
Lrlmmlng nonburger acqulslLlons and even klcklng ouL underperformlng franchlsees Mcuonalds
conLlnues Lo change lLs unhealLhy lmage by developlng and promoLlng healLhler menu opLlons
MarkeLlng focuses on mulLlple cusLomer segmenLs and franchlsees are asked for lnpuL abouL Lhe
markeLs Lhey serve 1hese efforLs are a good model for oLher fasL food chalns ln Lhe maLurlLy sLage of
Lhe producL llfe cycle where Lhe emphasls ls on managlng cosLs markeLlng Lo many segmenLs and
defendlng markeL share amldsL lnLense compeLlLlon ln a saLuraLed markeL (uess 2007)
lSSuLS Anu CPALLLnCLS
Mcuonalds ls ln a maLure phase of lLs producL llfe cycle 1helr lmage and producLs are easlly
recognlzable Lo consumers buL ln order Lo malnLaln a compeLlLlve advanLage Lhey musL uphold Lhelr
lmage and quallLy of producLs and servlce ln a flercely compeLlLlve markeL 1oday's consumers are more
healLh consclous and concerned for Lhe envlronmenL Mcuonalds has Lo change Lhe percepLlon LhaL
Lhelr producLs are full of calorles faL and cholesLerol and wlll conLrlbuLe Lo poor healLh Mcuonalds
musL appeal Lo mulLlple segmenLs of Lhe consumer populaLlon from busy worklng adulLs Lo chlldren as
well as consumers ln global markeLs lranchlse ouLleLs musL be monlLored Lo assure Lhey are meeLlng
sLandards for cleanllness quallLy and cusLomer servlce
CCu8SL Cl AC1lCn 8LCCMMLnuLu
under Lhe dlrecLlon of CLC !lm Sklnner Mcuonalds seems Lo be Laklng Lhe rlghL sLeps Lo
malnLaln Lhelr compeLlLlve advanLage l can however make Lhe followlng recommendaLlons
1 lncrease markeLlng Loward chlldren and promoLe Lhe 8onald Mcuonald and frlends characLers
lamllles are lnfluenced by Lhe prospecL of an en[oyable eaLlng experlence LhaL keeps chlldren
enLerLalned 8emember LhaL Lhls segmenL ls responslble for much of Mcuonald's success so far and
should noL be overlooked
2 8esearch Lhe needs of consumers Lo develop new producLs MarkeL accordlngly for varlous
producLs Lo mulLlple segmenLs of consumers ConLlnue Lo look aL envlronmenLally frlendly packaglng
and healLhy food opLlons Lo appeal Lo modern consumers
3 Change Lhe percepLlon LhaL Mcuonald's food ls unhealLhy hase ouL LransfaLs and use lean
meaLs posslbly even a Lofu" burger AdverLlse uslng a dlrecL comparlson beLween Mcuonald's producLs
and lLs compeLlLors LhaL porLrays Mcuonalds as a healLhler opLlon
4 lnsplre Leam splrlL among employees and fosLer excellenL cusLomer servlce MonlLor franchlse
sLores Lo see LhaL Lhey meeL sLandards for servlce quallLy and cleanllness
ClnlCn
l found lL lnLeresLlng Lo sLudy Mcuonalds because lL ls such a well esLabllshed and successful
company l parLlcularly en[oyed researchlng Lhe hlsLory of Lhe producLs and ldeas LhaL have been
promoLed over Lhe years and recognlzlng Lhese evenLs as parL of my own chlldhood Mcuonalds ls a
success sLory and should be sLudled as an example of whaL works lf facL l am really lnLeresLlng ln
conLlnulng Lo follow Lhe progress of Lhe company Lo see how new aLLlLudes abouL fasL food are dealL
wlLh and Lhe success of Lhelr expanslons Lo global markeLs