Mcdonalds Corporation

A Written Analysis Case

Presented to the Faculty of School of Business and Governance
Ateneo de Davao University
E. Jacinto Street, Davao City

In Partial Fulfillment of the Requirements for the Subject

Mgt. 426: Strategic Management

SUBMITTED BY:
CAETE, ALYANNA ROSS
DORADO, EDISSAH SHERYLL NICOLE
POLICARPIO, WILBUR CHAD
TANUDTANUD, SHEENA MAE

SUBMITTED TO:
MR. RENANTE T. TIMAJO, MBA

A. POINT OF VIEW
Marketing in a service industry is becoming an increasingly complex challenge.
The paradigms of service marketing demand a passionate understanding of customer
expectations and perceptions, and linking them to product design and delivery as well
as operational planning. This is where McDonalds has excelled due to its ability to
successfully integrate the customers perspective in its products and operations in a
comprehensive manner. The menu bin in India is an example of McDonalds strategy of
integrating the customers perspective in its products. And, the operational integration is
clear from McDonalds emphasis on its suppliers as its customers as well as its
treatment of its consumers as co-producers of services.
B. IDENTIFY THE MISSION AND VISION
Mission:
McDonald's Corporation aimed to provide best quality, service, cleanliness and
value (QSC&V) for each and every customer for every moment.
Vision:
Continuing to develop new menu offerings that provide their customers with a
range of choices that correspond to their needs and preferences and can fit into a
balanced diet. To provide the customer a better welcoming environment. We are
committed to our people. We provide opportunity, nurture talent, develop leaders and
reward achievement as they believe a group of well-trained human power will is
essential to their continued success.

C. THE BUSINESS MODEL OF THE COMPANY

Business model, according to McDonalds is franchising. McDonalds is famous
for its value proposition: food of a constant quality that is served quickly and
consistently across the globe, with their main customer segments that are families,
youngsters, the elderly and business people.McDonalds main strategic partners are its
franchise holders together with its suppliers the company's model is based on a threelegged stool: suppliers, franchisees and McDonalds. Each leg must thrive for the
business to be profitable. The key activities McDonalds engages in is the marketing and
selling food and beverages and the key resources are the companys employees and its
restaurants on a-locations. The cost structure consists of employee loans, restaurant,
raw materials procurement and marketing costs and revenues are generated at the
restaurants owned by the company itself and those owned by its franchise holders.
D. COMPETITIVE ADVANTAGE
As we all know, fast food restaurants proved to be a very competitive industry.
Mcdonalds, from its first day has always tried to have strong competitive advantage
over its rival, which is their only way to survive in globalized environment. Mcdonalds
strong rivals such as KFC, Dominos and Pizza Hut are also operating in India as well as
in the USA.Mcdonalds is trying to improve its graph for customer satisfaction and they

are investing heavily throughout the world including India.Mcdonalds Indian menu offers
very competitive strategy wherethey included vegetarian products, Halal and nonvegetarian products for its customer that is unique and successful idea in India.
Mcdonalds in its competitive strategies is emphasizing to target customers in the new
urban areas.The company was unwilling to completely abandon the model that turned it
into the one-of-a-kind international success that it is today. However, due to local
demand, McDonalds adapted and curtailed its model to the local culture. Meanwhile
other companies apparently assumed that expansion would be easy. They failed to
consider the cultural differences between the American and Indian markets and
recognized that its American corporate strategy would never work in India where in the
other rival companies cannot afford to underestimate these marked differences. Failure
to adequately assess and adapt to the market, and ignoring cultural sensitivity can be a
death blow to any company wishing to expand into India or any other country.
McDonalds recognized the unique problems and opportunities of the Indian market.
The company then took its time, adapting its products and just as importantly its
corporate strategy, and has been hugely successful since.
E. PROBLEM STATEMENT
The main problem for McDonalds in India is how to gain more profit even though
there are limited dishes that they can prepare for the people of India.
F. COMPANY GOALS AND OBJECTIVES
McDonald's main aims are to serve good food in a friendly and fun environment,
to be a socially responsible company, and to provide good returns to its shareholders.
Also, it aims to provide its customers with food of a high standard, quick service and
value for money. Above all, serving quality food that our customers can trust is
McDonald's number one priority. But McDonald's is about more than just the number of
restaurants we operate. It's about our suppliers, franchisees and employees working
together. Our restaurants are very much part of the local community. We lead and
support a range of community activities from litter picking patrols to charity events and
local football matches.
G. AREAS TO CONSIDER/KEY RESULTS AREAS
Develop
a
better
delivery
system
rather than
using
bicycles

Develop
healthier
food that
is
prepared
according
to
standard

Key Factors

Weight

AS

TAS

AS

TAS

Strengths
1.A market leader in fast food industry
2.A very strong brand image
3.Expansion to 125 countries with more

.15
.16
.12

4
-

.60

2
-

.30

than 33000 outlets

4.Has one competitive advantage and that
is Strategic Location
5.In India they are located in busy shopping
malls, Airports, and busy drive thru.
Weaknesses
1. Market segment is too focused to kids
2. Mcdonalds is often related to unhealthy
food and obesity.
3. Employee turnover rate is so high.
Total
Opportunities
1. Better home delivery
2. Increasing demand for healthier food
3. Respond to social changes
4. Indian regional food preferences and
regular product development
Threats
1.Major Competition between its rivals KFC
and Burger King
2.Local curry shops are offering great
challenge to Mcdonalds
3.Press associating Mcdonalds with obesity
destroys their image
Total

Key Factors

Strengths
1.A market leader in fast food industry
2.A very strong brand image
3.Expansion to 125 countries with more
than 33000 outlets
4.Has one competitive advantage and that
is Strategic Location
5.In India they are located in busy shopping

.10

.30

.10

.16

.32

.16

.09

.09

.36

.12

.12

.48

.10

.14

.56

.14

.15
.15
.13

1
1
1

.15
.15
.13

4
2
3

.60
.30
.39

.12

.14
.17

1.00

.17

2.59

.68
3.5
1

Develop
various
curry based
dishes
to
reach out to
other
markets

Reach
out
to the older
market
segment to
gain
more
patrons

Weight

AS

TAS

AS

TAS

.09
.10
.08

1
-

.09

3
-

.27

.08

.08

.16

.06

.12

.18

malls, Airports, and busy drive thru.

Weaknesses
1. Market segment is too focused to kids
2. Mcdonalds is often related to unhealthy
food and obesity.
3. Employee turnover rate is so high.
Opportunities
1. Better home delivery
2. Increasing demand for healthier food
3. Respond to social changes
4. Indian regional food preferences and
regular product development
Threats
1.Major Competition between its rivals KFC
and Burger King
2.Local curry shops are offering great
challenge to Mcdonalds
3.Press associating Mcdonalds with obesity
destroys their image
Total

.09

.09

.27

.12

.24

.12

.08

.09

.09

.27

.11
.15

.11

.33

.13

.26

.26

.12

.11

.13

1.00

.13
1.21

.13
1.99

H. ALTERNATIVE COURSES OF ACTIONS

S-O Strategy
Develop a better delivery system rather than using bicycles
W-O
Develop healthier food that is prepared according to standard
S-T
Develop various curry based dishes to reach out to other markets
W-T
Reach out to the older market segment to gain more patrons
I. EVALUATION OF ALTERNATIVES
J. RECOMMENDATION
Based on our QSPM the strategy that is most attractive to let McDonalds in India
gain more profits is to develop healthier food options.

ANNEX
PORTER MODEL
Rivalry of Competitors
This industry is very competitive. Many large and small companies exist in this industry,
fighting for improving the customer base by offering a range of products and services.
Same is the situation with McDonalds in all over the world and India is not an exception.
Presence of Dominos, Pizza Hut, KFC and many of the local food companies in India
are the threat for McDonald in India. High exit barriers, and low switching costs are also
the part of the factors that increase the threats because high exit costs, on one hand,
can force the companies to compete and survive in the same industry. On the other
hand, low switching costs for consumers in the industry is a serious threat for McDonald
because availability of choices can mean more buyer power and loss of customers.
Threat of New Entrants
It is tough to come into this industry as it is difficult to create a distinctive brand name.
Further, cost of entry associated with high research and development cost makes it
difficult for the new entrants. Large reputable names in the industry such as McDonald
make it hard for the new companies to enter and succeed in a given market. Similarly,
high fixed and storage costs for perishable also are barriers to entry of the new firms in
the industry. However, in case of McDonald in India, it can be seen that though new
entrants are not the major threat, yet expansion of existing local restaurants such as
Nirulas are amongst the threats.
Threat of Substitutes
McDonalds has its own ways of surviving and growing in the markets including India,
yet many substitutes from local and other multinationals are available in form of
traditional Indian food including North-Indian and South-Indian, other Asian and
Western. And this can result as a threat for McDonald and these foods can be replaced
with Burgers, Beverages, dairy products, and others or with some new foods, low in
calories and fats.
Bargaining Power of Suppliers
The focus of McDonald on supply chain and its current supply chain structure and its
relationship with suppliers of various ingredients of food are the factors which can be
believed as strengths for the company. Seen this way, company does not seem to have
any such challenge from the bargaining power of suppliers.
Bargaining Power of Buyers
Relatively strength of buyers is less threatening, but it does not mean that it is not there.
Increasing competition and increasing substitute pose a threat for McDonalds. As
already stated the presence of Domino, Pizza hut, KFC and local food companies,

competition and threat of substitution is increasing. Hence, the bargaining power of the
buyer is also on increase.
SWOT MATRIX
Strengths
1.A market leader in fast food industry
2.A very strong brand image
3.Expansion to 125 countries with more
than 33000 outlets
4.Has one competitive advantage and that
is Strategic Location
5.In India they are located in busy
shopping malls, Airports, and busy drive
thru.
Opportunities
1. Better home delivery
2. Increasing demand for healthier food
3. Respond to social changes
4. Indian regional food preferences and
regular product development

Weaknesses
1.Market segment is too focused to kids
2.Mcdonalds is often related to unhealthy
food and obesity.
3. Employee turnover rate is so high.

Threats
1.Major Competition between its rivals
KFC and Burger King
2.Local curry shops are offering great
challenge to Mcdonalds
3.Press associating Mcdonalds with
obesity destroys their image

EFE & IFE

(IFE) Key Internal Factor
Strengths
1.A market leader in fast food industry
2.A very strong brand image
3.Expansion to 125 countries with more than 33000
outlets
4.Has one competitive advantage and that is
Strategic Location
5.In India they are located in busy shopping malls,
Airports, and busy drive thru.
Weaknesses
1. Market segment is too focused to kids
2. Mcdonalds is often related to unhealthy food and
obesity.
3. Employee turnover rate is so high.
Total

Weight

Rating

Weighted
Score

.15
.16
.12
.10
.16

3
4
3
4
4

.45
.64
.36
.40
.64

.09
.12
.10

1
2
1

.09
.24
.10

1.00

2.92

(EFE) Key External Factor

Opportunities
1. Better home delivery
2. Increasing demand for healthier food
3. Respond to social changes
Indian regional food preferences and regular product
development
Threats
1.Major Competition between its rivals KFC and
Burger King
2.Local curry shops are offering great challenge to
Mcdonalds
3.Press associating Mcdonalds with obesity
destroys their image
Total

Weight

Rating

Weighted
Score

.14
.15
.15

2
2
2

.28
.30
.30

.13

.52

.12
.14
.17

3
3
4

.36
.42
.68

1.00

2.86