Professional Documents
Culture Documents
MANAGEMENT
Dhobighat, Lalitpur
Report on McDonalds
Submitted by :
Supervised by :
Ginish jung Dahal
Sujan Aryal
Urusha Joshi
Faculty of International Business
Hem Ghimire
Abinash Adhikari
Rojeet Maharjan
Ezen Shrestha
Acknowledgement
We would like to offer our sincere thanks to all the people who have devoted their precious time
and effort in the course of preparing this report.
We would also like to offer our gratitude to our college, Nepal College of management for
incorporating the project in BBA program. We are thankful to Mr. Sujan Aryal, international
business instructor for providing us with this opportunity and also provided us with constant help
and guidance.
This project has provided with the opportunity to implement our academic knowledge into the
real world and broaden our horizon.
Thanking you
Executive Summary
This project was carried out to ascertain the requirements that are to be fulfilled while opening a
multinational company, i.e. McDonald in developing country like Nepal. The report covers about
the mission, vision and goal of establishing the franchise of McDonald in Nepal. The
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving
around 68 million customers daily in 119 countries across 35,000 outlets.
We have performed a detail study on the potential market in developing counties like Nepal and
how McDonald is to cope with the other companies in the same industry like KFC, etc. the
SWOT analysis prepared would help McDonald to cope up with the present and future
difficulties. the financial plans would help to accumulate the costs and the revenue generated by
the outlets and marketing plan would help to foster and broaden the Nepalese market of
McDonald in the food industry.
Through our project, we can conclude that the McDonald is one of the largest outlet in the food
industry and McDonald has a very immense chance of broadening its market in the Asian
countries like Nepal and Nepalese market could also be benefitted by the entry of McDonald as it
would improve the economic obstacles which has been a serious problem in the Nepalese
market.
Table of Contents
1.0 Introduction of Mcdonalds
1.0.1
History of Mcdonalds
McDonald's fast food restaurant is one of the largest franchises in the United States as well as
aboard. Their top menu items include: hamburgers, cheeseburgers, McNuggets, and French fries.
They are also known for one of their popular desserts: the apple pie and their breakfast sandwich:
the Egg McMuffin. There are more than 35,000 McDonald's restaurants serving in 119 countries.
More than 75% of McDonald's restaurants worldwide are owned and operated by independent
owners.
McDonald's has several ethical and social responsibility policies in place
throughout their solely owned and franchised companies. These policies include placing the
customer experience at the core of what they do, committing to their employees by nurturing
their talent and rewarding their achievements, maintaining high standards regarding the conduct
for business, and giving back to the communities in which they are established.
Risk management is imperative to McDonald's. They have a risk assessment tool that
they use to determine the country risk: which pertains to the specific country/region they are
located in; industry risk: pertains to supplies produce; and facility risk: which is a combination of
both country and risk groundwork. These factors are all part of the risk assessment tool that is
used in each of their companies to help them with risk management.
Security features in McDonald's includes their security camera systems
within the facilities to continuously monitor all activity in and around the restaurants to ensure
the safety for the workers as well as customers. McDonald's use these security cameras also in
regards to workers compensation claims or liability lawsuit claims from consumers. McDonald's
also monitors their computer software systems with an ACS system that monitors the
technological factors of their business.
Origins In 1917, 15-year-old Ray Kroc lied about his age to join the Red Cross as an ambulance
driver, but the war ended before he completed his training. He then worked as a piano player, a
paper cup salesman and a Multi-mixer salesman.
In 1954, he visited a restaurant in San Bernardino, California that had purchased several Multimixers. There he found a small but successful restaurant run by brothers Dick and Mac
McDonald, and was stunned by the effectiveness of their operation. They produced a limited
menu, concentrating on just a few items: burgers, fries and beverages, which allowed them to
focus on quality and quick service.
Kroc pitched his vision of creating McDonalds restaurants all over the U.S. to the brothers. In
1955, he founded McDonalds System, Inc., a predecessor of the McDonalds Corporation, and
six years later bought the exclusive rights to the McDonalds name. By 1958, McDonalds had
sold its 100 millionth hamburger.
A Unique Philosophy Ray Kroc wanted to build a restaurant system that would be famous for
providing food of consistently high quality and uniform methods of preparation. He wanted to
serve burgers, buns, fries and beverages that tasted just the same in Alaska as they did in
Alabama
To achieve this, he chose a unique path: persuading both franchisees and suppliers to buy into his
vision, working not for McDonalds but for themselves, together with McDonalds. He promoted
the slogan, In business for yourself, but not by yourself. His philosophy was based on the
simple principle of a 3-legged stool: one leg was McDonalds franchisees; the second,
McDonalds suppliers; and the third, McDonalds employees. The stool was only as strong as the
three legs that formed its foundation.
System First and foremost, Kroc advocated adherence to the system approach. So while many of
McDonalds most famous menu items like the Big Mac, Filet-O-Fish and the Egg McMuffin
were created by franchisees, the McDonalds operating system required franchisees to follow the
core McDonalds principles of quality, service, cleanliness and value.
The Roots of Quality McDonalds passion for quality meant that every single ingredient was
tested, tasted and perfected to fit the operating system. As restaurants boomed, the massive
volume of orders caught the attention of suppliers. Kroc shared his vision of McDonalds future
with potential suppliers and they agreed to supply the nascent organization with product that met
McDonalds prescribed standards. As other quick service restaurants began to follow,
McDonalds high standards rippled through the meat, produce and dairy industries. Again, Ray
Kroc was looking for a partnership, and he managed to create the most integrated, efficient and
innovative supply system in the food service industry. These supplier relationships have
flourished over the decades; in fact, many McDonalds suppliers operating today first started
business with a handshake from Ray Kroc.
Hamburger University In 1961, Kroc launched a training program, later called Hamburger
University, at a new restaurant in Elk Grove Village, Illinois. There, franchisees and operators
were trained on the proper methods for running a successful McDonalds restaurant. Hamburger
U. also had a research and development laboratory to develop new cooking, freezing, storing and
serving methods. Today, more than 80,000 people have graduated from the program.
The Legend Lives On Right up until he died on January 14, 1984, Ray Kroc never stopped
working for McDonalds. His legacy continues to this day as the system provides McDonalds
customers with great tasting, affordable food; crew and franchisees with opportunities for
growth; and suppliers with a shared commitment to provide the highest quality ingredients and
products.
From his passion for innovation and efficiency, to his relentless pursuit of quality, to his many
charitable contributions, Ray Krocs legacy continues to be an inspirational and integral part of
McDonalds today and into the future.
.
3.0.1 Strengths
Brand recognition:
Companys brand is the most recognized brand in fast food industry in world as well as
Nepal and is valued at $40 billion. McDonalds is also famous by the Ronald McDonald
clown.
Children targeting
Our business successfully targets very young children through offering playgrounds, toys
with its meals and advertisements.
3.0.2 Weakness
Negative publicity:
McDonalds is heavily criticized for offering unhealthy food to its customers, stimulating
obesity and strong marketing focus on very young children.
Low differentiation:
McDonalds products are no longer able to substantially differentiate it from other fast
food chains and opt to compete by price rather than by additional features.
3.0.3 Opportunities
3.0.4 Threats
Currency fluctuations:
The business receives a part of its income from foreign operations. The profits that are
sent back to US have to be converted into dollars and may be affected by the exchange
rates, especially when the dollar is appreciating against other currencies.
4.0
Business plan
4.0.1 Vision
Eat Healthy, Live Healthy
4.0.2 Mission
To be our customers' favourite place and way to eat and drink. Our worldwide operations are
aligned around a global strategy called the Plan to Win, which centered on an exceptional
customer experience People, Products, Place, Price and Promotion. We are committed to
continuously improving our operations and enhancing our customers ' experience
whether that is our numbers, our employees, our cleaning and food standards, or our
commitment to customers, we will not succeed and thrive.
4.0.4 Goals
Good food, good people and good neighbor are the ultimate aim of McDonalds. Main aims
are to serve good food in a friendly and fun environment, to be a socially responsible company
and provide good returns to our shareholders. The company aims to provide its customers with
food of a high standard, quick service and value for money. They also wish to be more ecofriendly and to serve healthier food.
Some of the goals are illustrated as follows:
1. Profit maximization:
Maximizing sales revenue or profit is an aim we will use in our business. this helps to
the success of the business . This is where the business will seek out to gain and increase in their
income from the customers.
2. Survival:
Survival is an aim for many businesses. We should start out by first aiming to stay in
the business by earning enough money from customers to meet all of the business expenses. We
have an aim for making enough money to cover its costs during the first year or so.
3. Market Share:
Our goal is to acquire at least 40 % share in the food market within a year.We need to
research other similar business and find out how they make customers so, that we could promote
our business and can make our business better than the competitors.
4. Growth:
We need to make profit to grow and continue the business and we also need to survive.
McDonalds has to be ahead of its market share in order to survive as well. Growth of the
McDonald branches towards Pokhara, Jhamsikhel,etc i.e. tourist destination of Nepal.
1. Our customers are the reason for our existence. We demonstrate our appreciation by
providing them with high quality food and superior service in a clean, welcoming
environment, at a great value.
2. We believe that a team of well-trained individuals with diverse backgrounds and
experiences, working together in an environment that fosters respect and drives high
levels of engagement, is essential to our continued success.
3. At McDonalds, we hold ourselves and conduct our business to high standards of
fairness, honesty, and integrity. We are individually accountable and collectively
responsible.
4. We take seriously the responsibilities that come with being a leader. We help our
customers build better communities, and leverage our size, scope and resources to help
make the workplace a better place.
5. McDonalds is a publicly traded company. As such, we work to provide sustained
profitable growth for our shareholders. This requires a continuous focus on our customers
and the health of our system.
6. We are a learning organization that aims to anticipate and respond to changing customer,
employee and system needs through constant evolution and innovation.
Appendix A
Particulars
Amount (Rs.)
Sales
36000000
5000000
100000
5100000
Gross Margin
30900000
Expenses
Payroll
7500000
Marketing/Promotion
2000000
Depreciation
1000000
Rent
1200000
Utilities
500000
12200000
18700000
Interest expenses
250000
18450000
6273000
Net income
1,21,77,000
Appendix B
Projected Balance Sheet for the year 2015
Assets
Amount
(Rs.)
Current Assets
Cash
5000000
5000000
10000000
Long-term Assets
Long-term Assets
15000000
Accumulated Depreciation
1000000
14000000
Total Assets
2,40,00,000
Amount
(Rs.)
Current Liabilities
Accounts Payable
1000000
Current Borrowing
800000
1000000
2800000
Long-term Liabilities
5000000
Total Liabilities
7800000
Paid-in Capital
Retained Earnings
4023000
Earnings
12177000
Total Capital
16200000
2,40,00,000
The aim of marketing is to know and understand the customer so well the product or service fits
him and sells itself.
- Peter F. Drucker
Todays successful companies at all levels have one thing in common that is all
successful companies are:
a) Strongly customer focused
b) Heavily committed to marketing
Our Marketing Strategy is to reach the largest amount of tourists residents, and students for
the least amount of money.
McDonalds has planned to enhance market penetration strategies by inculcating few interior
market promotions so to increase the market share by attracting competitors clients. Secondly
we will also launch few advertisement campaigns for domestic market client in Nepal.
2. Market Development
McDonalds has been the best example of market development from last many years in food
retail industry. Market development strategy which McDonalds follow is through company
expansion plans in new markets and new outlet events through which large number of clients are
attracted. McDonalds managers take actions like targeting promotions, opening sales offices and
creating alliances with other companies.
3. Service/Program Development
McDonalds has been giving intense importance to service development programs as its main
focus is over providing best services to its clients. we have analyzed the on hand markets and
have developed the customer care strategies by taking their feedbacks so to increase the number
of satisfied customers.
Product :McDonalds places considerable emphasis on developing a menu which customers want.
Market research establishes exactly what this is. However, customers requirements
change over time. In order to meet these changes, McDonalds has introduced new
products and phased out old ones, and will continue to do so. Care is taken not to
adversely affect the sales of one choice by introducing a new choice, which will
cannibalise sales from the existing one (trade off). McDonalds knows that items on its
menu will vary in popularity.
Their ability to generate profits will vary at different points in their cycle.
In Nepal McDonalds has a diversified product range focusing both on the vegetarian
products as well as non vegetarian products. The happy meal for the children is a great
seller among others.
Price :The customers perception of value is an important determinant of the price charged.
Customers draw their own mental picture of what a product is worth. A product is more
than a physical item, it also has psychological connotations for the customer. The danger
of using low price as a marketing tool is that the customer may feel that quality is being
compromised. It is important when deciding on price to be fully aware of the brand and
its integrity.
In Nepal we will be classifying our products into 2 categories
namely the branded affordability (BA) and branded core value products (BCV). The BCV
products mainly include the McVeggie and McChicken burgers that cost Rs 180-250 and
the BA products include McAloo tikki and Chicken McGrill burgers which cost Rs100160. This has been done to satisfy consumers which different price perceptions.
Promotion :The promotions aspect of the marketing mix covers all types of marketing
communication; one of the methods employed is advertising. Advertising is conducted on
TV, radio, in cinema, online, using poster sites and in the press for example in
newspapers and magazines. Other promotional methods include sales promotions, point
of sale display, merchandising, direct mail, etc. The skill in marketing communications is
to develop a campaign which uses several of these methods in a way that provides the
most effective results.
In happy meals too which are targeted at children also. Small toys are given
along with the meal. Apart from this, various schemes for winning prices by way of lucky
draws and also scratch cards are given when an order is placed on the various mean
combos.
Place :-
Place, as an element of the marketing mix, is not just about the physical location or
distribution points for products. It encompasses the management of a range of processes
involved in bringing products to the end consumer. Our outlets will be placed in
Durbarmarga, Jhamsikhel and lakeside Pokhara.
People :The employees in our store will have a standard uniform and specially focuses on
friendly and prompt service to our customers.
Process :The food manufacturing process is completely transparent i.e. the whole process is visible
to the customers. In fact, the fast food joint will allow our customers to view and judge
the hygienic standards at our store by allowing them to enter the area where the process
takes place. The customers are invited to check the ingredients used in food.
Physical evidence :We will focus on clean and hygienic interiors of our outlets and at the same time, the
interiors will be attractive and the fast food joint maintains a proper decorum at its
outlets.
Year
2016
Year
2017
Amount
(Rs.)
Amount
(Rs.)
Sales
72000000
109000000
10000000
15000000
200000
300000
10200000
15300000
Gross Margin
61800000
93700000
Payroll
15000000
22500000
Marketing/Promotion
4000000
6000000
Depreciation
2000000
3000000
Rent
2000000
2800000
Utilities
1000000
1500000
24000000
35800000
37800000
57900000
500000
750000
37300000
57150000
Particulars
Expenses
Interest expenses
Net Income
12682000
2,46,15,000
19431000
3,17,19,000
Year
2018
Amount
(Rs.)
Amount
(Rs.)
Cash
10000000
15000000
10000000
15000000
20000000
30000000
Long-term Assets
30000000
45000000
Accumulated Depreciation
2000000
3000000
28000000
42000000
4,80,00,000
7,20,00,000
Amount
(Rs)
Amount
(Rs)
Accounts Payable
2000000
3000000
Current Borrowing
333333
500000
2000000
3000000
7333333
6500000
Long-term Liabilities
10000000
15000000
Total Liabilities
17333333
21500000
Retained Earnings
6048667
12781000
Earnings
24618000
37719000
Total Capital
30666667
50500000
4,80,00,000
7,20,00,000
Assets
Current Assets
Long-term Assets
Total Assets
Paid-in Capital
6.0 Conclusion
On the basis of entire analysis, we can now therefore conclude that being one of the
largest companies in the world, we will continue our path of success by keeping our consumers
in regarding product selection as well as price we charge for the product. We encourage our
employees to do a good job, usually promote from within, and offers several scholarships to
encourage education. Though McDonald's is a centralized, "wait and see" company, we find
ways to use technological products that will increase our productivity, service, and sales.
We turn around our business, we will look to create more excitement around the brand and
ensure that we build on our rich heritage of positively impacting the communities we serve. We
will continuously focus on good value, convenience, low prices and fast service.
We hold ourselves and conduct our business to high standards of fairness, honesty, and integrity.
We are individually accountable and collectively responsible. So, along with the strengths, there
are certain limitations as well which are to be corrected in the coming days and McDonalds
franchise in Nepal is a positive indicator for the development of the fast food sector in Nepal as
well.
7.0 References
URL : Http://www.mcdonalds.com
Http://www.wikipedia.com
8.0 Annex