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McDonald as beingninth most valuable brand in the world which has replaced the US army as
the Nation¶s largest job training organization &Controls the market share of more than 3 food
chains taken together in America started in 1940. McDonald's Corporation (MCD) is the world's
largest chain of fast food restaurants, serving nearly 47 million customers daily.McDonald's
primarily sells hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft
drinks, milkshakes and desserts. More recently, it has begun to offer salads, wraps and fruit.
Many McDonald's restaurants have included a playground for children and advertising geared
toward children, and some have been redesigned in a more 'natural' style, with a particular
emphasis on comfort: introducing lounge areas and fireplaces, and eliminating hard plastic chairs
and tables.

Company has also expanded the McDonald's menu in recent decades to include alternative meal
options like salads and snack wraps in order to capitalize on growing consumer interest in health
and wellness

Each McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The
corporations' revenues come from the rent, royalties and fees paid by the franchisees, as well as
sales in company-operated restaurants. McDonald's revenues grew 27% over the three years
ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion

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1954, a fifty-two-year-old milk-shake machine salesman saw a hamburger stand in San

Bernardino, California, and envisioned a massive new industry: fast food. In what should have
been his golden years, Raymond Kroc, the founder and builder of McDonald's Corporation,
proved himself an industrial pioneer no less capable than Henry Ford . He revolutionized the
American restaurant industry by imposing discipline on the production of hamburgers, French
fries, and milk shakes. By developing a sophisticated operating and delivery system, he insured
that the French fries customers bought in Topeka would be the same as the ones purchased in
New York City. Such consistency made McDonald's the brand name that defined American fast
food.

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This 44 year-old site is the oldest in the worldwide chain of 20,000 restaurants and the last one
with red and- white striped tile exterior. After opening in 1953, it immediately became the
standard for the fast food franchises across the country. The building and its 60- foot high neon
sign with "Speedee the Chef" are eligible for listing on the National Register of Historic
Places.
Employees wear 50's style uniforms of paper hats, white shirts and bolo ties. The restaurant
serves the original menu of hamburgers, cheeseburgers, fries and old-fashioned milkshakes. Also
available are more recent McDonald's items such as Big Macs and Happy Meals.
 

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McDonald's mission is to be our customers' favorite place and way to eat with inspired
people who delight each customer with unmatched quality, service, cleanliness and value
every time ... we invite you to be the part of this winning team and give yourself an
opportunity to grow with the family of people striving to create smiles on the faces of
millions of people everyday.

McDonald's reopened the facility as it was with walkup windows and outdoor seating.They also
constructed and addition housing a museum, gift shop, restrooms and more outdoor seating.

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÷ur values summarized in "Q.S.C. & V.". Provide good quality, services to customer. Have a
cleanliness environment when customer enjoys their meal. The value of food product makes
every customer is smiling.

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÷ur 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. ÷ur goal is QSC&V for each and every customer, each and every time.

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We provide opportunity, nurture talent, develop leaders and reward achievement. 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.

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McDonald¶s business model, depicted by the ³three-legged stool´ of owner/operators, suppliers,

and company employees, is our foundation, and the balance of interests among the three groups
is key.

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Sound ethics is good business. At McDonald¶s, we hold ourselves and conduct our business to
high standards of fairness, honesty, and integrity. We are individually accountable and
collectively responsible.

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We take seriously the responsibilities that come with being a leader. We help our customers
build better communities, support Ronald McDonald House Charities, and leverage our size,
scope and resources to help make the world a better place.

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McDonald¶s is a publicly traded company. As such, we work to provide sustained profitable

growth for our shareholders. This requires a continuing focus on our customers and the health of
our system.

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We are a learning organization that aims to anticipate and respond to changing customer,
employee and system needs through constant evolution and innovation.

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ËÊ Risk diversity
ËÊ oarge market share.
ËÊ Strong supply chain.
ËÊ Promoting ethical conduct
ËÊ Rigorous food safety standards
ËÊ Decentralized yet connected system
ËÊ Strong brand name, image and reputation.
ËÊ Strong financial performance and position
ËÊ Affordable prices and high quality products
ËÊ Nutritional information available on packaging
ËÊ Strong global presence & performance in the global marketplace.
ËÊ Specialized training for managers known as the Hamburger University.
ËÊ McDonalds Plan to Win focuses on people, products, place, price and promotion.

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ËÊ Unhealthy food image.

ËÊ High Staff Turnover including Top management
ËÊ Customer losses due to fierce competition.
ËÊ oegal actions related to health issues; use of trans fat & beef oil.
ËÊ Uses HCFC-22 to make polystyrene that is contributing to ozone depletion.
ËÊ oow depth and width of products




ËÊ >rowing health trends among consumers

ËÊ Uoint ventures with retailers (e.g. supermarkets).
ËÊ Consolidation of retailers likely, so better locations for franchisees.
 ËÊ Respond to social changes - by innovation within healthier lifestyle foods. Its move into hot
baguettes and healthier snacks (fruit) has supported its new positioning.
ËÊ Use of CRM, database marketing to more accurately market to its consumer target groups. It
could identify likely customers (based on modeling and profiles of shoppers) and prevent brand
switching
ËÊ Strengthen its value proposition and offering, to encourage customers who visit coffee shops
intoMcDonalds.
ËÊ The new ³formats´, McCafe, having Wifi internet links should help in attracting segments. Also
installing children¶s play-parks and its focus on educating consumers about health, fitness.
ËÊ International expansion into emerging markets of China and India.
ËÊ Diversification and acquisition of other quick-service restaurants.
ËÊ >rowth of the fast-food industry.
ËÊ Worldwide deregulation.
ËÊ oow cost menu that will attract the customers.

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1.Ê Health professionals and consumer activists accuse McDonald's of contributing to the country¶s
health issue of high cholesterol, heart attacks, diabetes, and obesity.

2.Ê The relationship between corporate level McDonald's and its franchise dealers.

3.Ê McDonald¶s competitors threatened market share of the company both internationally and
domestically.

4.Ê Anti-American sentiments.

5.Ê >lobal recession and fluctuating foreign currencies.

Fast-food chain industry is expected to struggle to meet the expectations of the customers towards health
and environmental issues.

Recent economic condition impacts on consumer confidence &spending, prime real estate is
competitiveness; the gradual increment in oimited Brands operations can hamper the MCD¶s growth. In
addition, possible tariffs from government over the imported materials, or minor disturbance in the long
supply chain of the company are a risk. The increasing cost of labor in other countries and decline in
value of US Dollars everydaycan compel the company to change its way of operation.

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Restaurant industry is highly competitive industry. There are many small fast food businesses in the
industry who fight with each other to improve their customer base; McDonalds is not an exception to this.
Since its establishment in 1940, MCD has excelled in the sector. Nevertheless, to stay in the competition,
it started with McCafé. This helped the company to stay in the business as a major fastfood business.
Another major step came out when McDonald started Breakfast to compete with the existing business
serving breakfast. Hence, this industry is extremely competitive and the MDC should be up to date with
customer taste & preferences.

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Although it is hard to enter the restaurant business, it is hard to establish a distinct brand name. There is a
high cost of entry in the market and there is \ high research and development costs.oarge established
companies with strong brand identities such as McDonald¶s do make it more difficult to enter and succeed
within the marketplace; new entrants find that they are faced with price competition from existing chain
restaurants.

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There are many substitutes in this industry. Since there are a wide variety of products that people can
choose, they could either be substituted by MDCBurgers, Beverages, dairy products, and others.

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Power of suppliers within the fast food industry would be relatively small, unless the main ingredient of
the product is not readily available.

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Relatively strength of buyers is low in this industry


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According to a report issued by Business Week, McDonalds holds 9th position in top 100 brand names all
over the world in 2007. Having a long history of almost 69 years, it hasestablished a sense of closeness in
the customers. This is one of the major reasons for McDonalds is being rated one of the highest retention
rates among customers. It is now operating 120 & above affiliated franchises & restaurants.

McCaféis yet another distinctive addition to McDonald¶s product line. It is part of our delicious lineup of
new McCafé specialty coffees. Available at the front counter and drive-thru, McDonald¶s can now
provide express service to espresso lovers throughout the U.S. Nevertheless, it is also popular among
youngsters. Breakfast product is another specialty under the portfolio of McDonalds. Earlier opening
times, premium coffee and a flavorful breakfast menu have accelerated our morning momentum in the
U.K. and U.S., growing sales and our market share at breakfast.

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*
Ê Comparable sales grew 6.9% and guest counts rose 3.1%, building on 2007 increases of 6.8% and
3.8%, respectively.
Ê System wide sales increased 11% (9% in constant currencies).
Ê Company-operated margins improved to 17.6% and franchised margins improved to 82.3%.
Ê Net income per share from continuing operations was $3.76, an increase of 16% after adjusting for
the impact of the 2007 oatin America transaction.
Ê Cash provided by operations totaled $5.9 billion and capital expenditures totaled $2.1 billion.
Ê Returned $5.8 billion to shareholders through shares repurchased and dividends paid, including a 33%
increase in the quarterly cash dividend to $0.50 per share for the fourth quarter
Ê Bringing our current annual dividend rate to $2.00 per share.
Ê ÷ne-year R÷IIC was 38.9% and three-year R÷IIC was 37.5% for 2008.
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We will continue to drive success in 2009 and beyond by remaining focused on being better, not just
bigger. We will do so by further enhancing our understanding of consumers¶ needs and wants; facilitating
greater sharing and adoption of best practices and new ideas worldwide; and leveraging a strategic
approach to implementing initiatives to drive the best bottom-line impact.

Despite challenging economic conditions, the McDonald¶s System is energized by our current worldwide
momentum. We will continue to build on our strength in five key areas: maintaining the balance between
price and value; maximizing the benefit of available capital by improving the relevance and contemporary
feel of our existing restaurants; leveraging the equity and unique tastes of core menu favorites like the Big
Mac, the Quarter Pounder with Cheese and our world-famous French Fries; continuing our financial
discipline and evaluation of success measures to ensure these measures are driving actions that positively
impact our restaurants; and furthering operations excellence by focusing on improved execution.

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Ê The international operations of McDonald¶s are highly influenced by the individual state policies
enforced by each government.

Any changes in regulations, the imposition of additional regulations, or the enactment of any new
legislation under the ÷bama administration that impacts employment/labor, trade, product safety,
transportation/logistics, health care, tax, privacy, or environmental issues could have an adverse impact
on our financial condition and results of operations.

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Ê McDonald¶s has the tendency to experience hardship in instances where the economy of the
respective states is hit by inflation and changes in the exchange rates.
Ê Market leader.
Ê Very high target market.
Ê oow cost and more incomes.
Ê The rate at which the economy of that particular state grows determines the purchasing power of
the consumers in that country.


Ê Working within many social groups.
Ê Increase employments.
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Ê Advanced technology development.
Ê Quality standards.

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Ê Quality packing.
Ê oocal manufacture using foreign supplies.

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Ê oegislation for product.

Ê Sustained logo

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The goal of these activities is to offer the customer a level of value thatexceeds the cost of the activities,
thereby resulting in a profit margin for McDonalds.

Ê The primary value chain activities are:

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* the receiving and warehousing of raw materials and theirdistribution to
manufacturing as they are required.


* the processes of transforming inputs into finished products andservices.

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* the warehousing and distribution of finished goods.

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* the identification of customer needs and the generationof sales.

 * the support of customers after the products and services are soldto them.

Ê These primary activities are supported by:

' % !* technologies to support value-creating activities.The value chain model is a
useful analysis tool for defining a firm's corecompetencies and the activities in which it can pursue a
competitive advantage asfollows:


 %* by better understanding costs and squeezing them out of thevalue-adding activities.

Ê As Per the Porter's 5 Forces analysis McDonalds deals with factors outside anindustry that
influence the nature of competition within it, the forces inside theMcDonalds influences the way
in which the firms compete, and so the industry¶s likely profitability is conducted in Porter¶s five
forces model. A business has to understand the dynamics of its industries and markets in order to
compete effectively in the marketplace. So McDonald¶s rivalry in this competitive market is
blooming.
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The need for strategy in order to expand its existing product in very promising markets for McDonald¶s is
very essential. McDonald¶s along with KFC and other major fast food chains have dominated the
American continent as well as elsewhere. BC> Matrix: The market growth rate measures industry
attractiveness. The underlying theory for examining market growth rate is the industry life cycle. The
BC> assumes that growth rates, life cycle stages affect a firm¶s finances.


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Placing products in the BC> matrix results in 4 categories in a portfolio of a McDonalds:

 1.Ê Stars (=high growth, high market share)

Ê Frequently roughly in balance on net cash flow. However if needed any attempt should be made
to hold share, because the rewards will be a cash cow if market share is kept. So, McDonald¶s
USA is under Star position.

2.Ê Cash Cows (=low growth, high market share)

ÊProfits and cash generation should be high, and because of the low growth,
investments needed should be low. Keep profits high.

3.Ê Dogs (=low growth, low market share)

Ê Avoid and minimize the number of dogs in a company.

Ê Beware of expensive µturn around plans¶.

4.Ê Question Marks (= high growth, low market share)

Ê Have the worst cash characteristics of all, because high demands and low returns due to low market
share

Conclusion
Increase its product line. To have more variety to choose from, to include more deserts and more
items like PizzaMcPuff. It should continue to provide better and quick service. Bylower the
supply chain cost so that it helps in cost reducing.

MCD is willing to expand their Happy Meal choices to attract and retain customers& can also
Introduction of McCafees serving premium and specialty coffees and otherbeverages and other
products such as cakes, pastries etc in the existing McDonald¶s. Focus on gifts for all generations
i.e. youth, kids¶ especially senior citizen which is a completely new concept. MCD should
provide special promotions during festivals. They should increase the space for provision of
birthday party areas& try to sponsor college festivals.

After analyzing the marketing mix of McDonald¶s, it is clear that the company can besaid to be
`global¶, i.e. combining elements of globalization and internationalization.McDonald¶s have
achieved this through applying the maxim, `think global, actlocal¶