Professional Documents
Culture Documents
Cost Leadership:
Supply chain: McDonalds buys supplies in bulk and, to get
lower prices
Real Estate: McDonalds leases land and property they own to
franchises
Marketing: McDonalds is such a well-known brand name and
Ronald McDonald such a well-known mascot McDonalds has to do
much less advertising than many other chains to maintain
awareness of their brand.
Differentiation
McDonalds does not believe in opening its restaurant without any knowledge
of the local culture and tastes. The company caters to a large customers
market with varying tastes and thus cant afford to introduce products
without familiarizing itself with provincial presences in food. For this reason,
McDonalds distributes its products in foreign locations with the help of
franchises who are well aware in of that works in their country.
This is an extremely intelligent distribution method because on the one hand,
it doesnt create rifts between governments and McDonalds official, and on
the other hand, it helps in providing people with the kind of products they
desire. It is important to understand that McDonalds doesnt change its
basic product range for any country but tries to introduce certain changes in
secondary products in order to make them suitable for local tastes.
McDonalds predominantly sells hamburgers, various types of chicken
sandwiches and products, French fries, soft drinks, breakfast items, and
desserts. In most markets, McDonalds offers salads and vegetarian items,
wraps and other localized fare. On a seasonal basis, McDonalds offers the
McRib sandwich. Some speculate the seasonality of the McRib adds to its
appeal. Various countries, especially in Asia, are currently serving soup. This
local deviation from the standard menu is a characteristic for which the chain
is particularly known, and one which is employed either to abide by regional
food taboos (such as the religious prohibition of beef consumption in India) or
to make available foods with which the regional market is more familiar
(such as the sale of McRice in India).
Inbound Logistics:
1) McDonalds purchases raw vegetables and other raw materials from its
fixed, pre- defined suppliers only, therefore by increasing capital and labor,
their production will increase proportionately. McDonalds has practiced a
backward vertical integration,
by replacing most of its suppliers. It has done so for two reasons:
To reduce costs, and
To ensure that its products are of top quality.
These supplies include beef and milk to be used in its products, which it gets
from its farms.
Other suppliers include local grocery stores that supply McDonalds with
fresh
vegetables. Soft drinks are supplied exclusively by Coca-Cola. McDonalds
supplies also include raw material such as flour, sugar, yeast etc.
2) McDonalds own information: McDonald import some beef raw materials
from Australia and New Zealand.
Operations :
A very large grill where one person could cook lots of burgers
simultaneously
burgers
The Process:
The mass-production process requires each restaurants chain to have a
distribution network to carry the food to every restaurant. Warehouses store
enormous amounts of everything a restaurant needs. Including foods, paper
products and cleaning supplies. The warehouses the ship supplies to each
restaurant by truck. Warehousing and distribution, just like the management
of chain, is centralized rather than handled by each restaurant.
Outbound Logistics
McDonalds is committed to providing the highest quality food and superior
service, at a great value, in a clean and welcoming environment. Thats why
we work with our employees, franchisees, and suppliers to serve a balanced
array of food choices and provide the nutrition information needed for
customers to make sound decisions.
At the restaurant level, McDonalds is focused on energy conservation,
sustainable packaging, and waste management. We are dedicated to
innovation and improving our operations in order to build an even more
sustainable, environmentally friendly, and profitable business. And we will
continue to optimize our menu, modernize the customer experience, and
broaden accessibility to our brand, so that consumers will always enjoy the
maximum McDonalds experience.
Services
McDonalds meal now comes with complimentary Wi-Fi. Get some work done,
check email, and connect with friends for free. With free Wi-Fi at more than
11,500 participating restaurants, customers can access the Internet using
their laptops or PDAs at no charge.
Arch Card
The Arch Card is a pre-paid card that gives customers a quick and convenient
way to pay at McDonalds. Arch Cards also make the perfect gift for holidays
or any special occasion. Arch Cards come in denominations of $5, $10, $25,
and $50. They can be purchased for the first time or reloaded later at
participating McDonalds restaurants nationwide. They are also available at
retailers including Safeway, Kroger, SuperValu and Ahold. McDonalds Arch
Cards never expire, and there are no penalty or dormancy fees.
Play Places & Parties
If anyone bring their kids then McDonalds make the party. Super-fun for the
kids, stress-free for the customers theyve got this party thing down to a
science: Happy Meals, cake, decorations, party favors. Talk to your local
McDonalds manager to make arrangements. Depending on location, anyone
can have their childs party at a McDonalds Play Place for even more fun!
Support Activities
Firm Infrastructure
McDonalds Infrastructure is modern an sophisticated, they using the
advanced IT and yet theyre still maintaining the green activities.
Procurement
McDonalds E-Procurement System McDonalds E-Procurement System is
basically a main reason for their successful supply chain management. It is
so efficient that it provides the backbone not only to all the logistics but the
whole McDonalds supply chain management.
How McDonalds Uses E-procurement Systems Emac Digital:(Internet
procurement site designed for McDonalds Corporations 27,000
franchises)Emac Digital Company is E-Procurement website which is jointly
owned by McDonalds and Accel-KKR Internet Co.
It is a procurement hub launched in 2001 allow all of McDonalds franchises
across the globe to buy everything needed to run their restaurants. From
uniform to HamBurger
Aside from being faster and more convenient for franchisees, the
procurement site also allow business owners to buy supplies and materials at
a discounted price, ultimately reducing costs for McDonalds. E-Procurement
allows 85% cut in costs according to McDonalds supply chief Edwards.
Benefits for the Suppliers McDonalds works with two types of suppliers.
Major Suppliers and Small Suppliers
SWOT Analysis
Strengths:
order online. This will create a more efficient process that will reduce the
amount of lag time between a customers orders and pick up of the order.
- Good marketing strategies:
No matter the continent, children and adults know the face of Ronald
McDonald is synonymous with the colossus restaurant chain. This results in
wonderful marketing strategies among management which conducts a very
thorough market analysis, resulting in much success around the globe.
Weaknesses:
- Unhealthy food image
McDonald's has been impacted by negative press like the documentary
"Supersize Me" by Morgan Spurlock in which he contributed our societys
obesity to McDonald's and other fast food chains. In fact, each McDonalds
dishes provides large amount of calories but not too much nutrition.
- Customer loses due to fierce competition
McDonalds has to compete with many strong brand name in fast food
industry such as Wendys, Burger King or Yum!Brands. This fierce
competition makes McDonalds loose a large number of customers who prefer
favor of other brands.
- Problem related to health issue
McDonalds use Trans - fat and beef oil in their food. Although it is not illegal,
it affects badly on customers health because Trans fat is causes of some
kind of cancer. Consequently, a number of customers who care about their
health stop eating at McDonalds restaurants. It makes revenue of company
decrease.
- Legal action:
McDonalds has been involved in a number of lawsuits and other legal cases
in the course. For example, there are many case which involved with
trademark issue. McDonalds force many others restaurant, company of just
a coffee shop to change their brand name because of keeping Mc letters.
- Unbalance meals:
Although McDonalds tries to update its menu by healthy criteria, McDonalds
meals are still unbalance. For example, there are many dishes with chicken
(both grilled and fried), bacon, beef, rib or egg. Besides, just several dishes
are salad with vegetable and fruit. Moreover, amount of fruit or vegetable is
not much.
- High employee turnover rate
Although McDonalds has many good managers as well as skillful employees,
the turnover rate is still high. Every year many of their employees are fired
out of the restaurants. Moreover, many others quit their jobs, especially part
time employees because of low salary as well as too high working pressure.
- Action related to environmental issue
McDonalds uses HCFC 22 to make polystyrene that is contributing to ozone
depletion. The company has to repair this weakness if doesnt want to be
criticized.
- Dissatisfied Franchisees:
Franchisees are beginning to become very dissatisfied with the fees that
McDonalds are forcing them to pay. As the company continues to expand,
they are also increasing the amount of fees franchisees have to pay for the
use of the notorious fast-food brand. Many people are not very happy about
this and as a result many franchisees are selling their businesses.
Opportunities:
- Growth of the fast food industry
Fast food industry now is developing significantly. The change of lifestyle
leads to the change in people eating habit. In the past, if just workers, drivers
or someone who had to work busily and didnt have enough time for a home
meal choose fast food; nowadays, almost people eat fast food and a major of
them like fast food very much. It is a huge chance for fast food brand to
increase their revenues, especially McDonalds.
- Conservation:
McDonald should research green energies and green packaging solutions and
incorporate these finding as a part of their marketing strategies and
advertisements.
Threats:
- Intensity competitors
Along with the development of fast food industry, there are many new fast
food brand enter to the market. It is nothing to say if there is no strong brand
which can compete with McDonalds. However, in fact, there are some and
they are stronger gradually, for example Yum!Brands, Wendys or Burger
King. Although market share of these brand are lower than McDonalds, they
try to gain more customers from McDonalds. Moreover, more casual dining
restaurants increase their burger offering and decrease the price. If we are
not really hurry, we may choose this kind of restaurant instead of fast food
restaurants. They also become the competitors of McDonalds.
- Public health crisis
With a growing number of obesity cases among Americans, fast food chains
like McDonalds will continued to be overshadowed by their previous products
offerings, for example Supersized Meal, no fruit or yogurt, slim salad
selection. Besides, people nowadays are facing heart problem more seriously.
As a result, they require nutritious and healthy food as well as lifestyle.
- Economic recession
The company's revenue streams are diversified, but depending on the length
of this "recession", they will inevitably be negatively impacted by the
trickledown effect. Recession or down turn in economy may affect the
retailer sales, as household budgets tighten reducing spend and number of
visitors.
- Serious environmental issue:
Environment is one of the hottest topics all over the world. Any action which
influence on the earth and human life is criticized strongly. Consequently, if
McDonalds keep using HCFC -22, it may lose customers, especially who really
care about the earth.