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McDonald’s Corporation
Case Study

MBA 729

MCDONALD’S CORPORATION CASE |

TABLE OF CONTENTS
Page
Table of Contents

i
...

II
...


1

………………………………………………
...


3-5

III
...


5

IV
...


6

V
...


6-8

A
...

VII
...

IX
...


B
...


Finance

D
...


MIS/ IT/ R&D/ Bus Development

SWOT Analysis
VI
...

………………………………………………
...


14-15

Action Plans ………………………………………………………………
...


17-19

Alternative Courses of Actions

Conclusion/Recommendations

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MCDONALD’S CORPORATION CASE |

I
...


The company's restaurants serve a locally relevant menu of food and drinks sold at various price
points in different countries
...
The
company is primarily a franchisor
...

The U
...
segment focuses on offering a platform for authentic ingredients that allows
customers to customize their sandwiches
...
The Foundational markets and Corporate segment is
engaged in operating restaurants and increasing convenience to customers, including through
drive-thru and delivery
...
In addition, the restaurants sell a range of other products
during limited-time promotions
...
Breakfast offerings may include Egg
McMuffin, Sausage McMuffin with Egg, McGriddles, biscuit and bagel sandwiches, and hotcakes
...


CASE BACKGROUND
In 1991, Dick and Mac McDonald opened their first drive-in restaurant
...
In 1948, the
introduction of self-service windows and standardization of the preparation with exact product
specifications and customized equipment took place
...

Since McDonald’s had a specialized operating system that heavily contributed to their
success, that operating system comprises of four areas of concentration that includes: (1)
improving the product; (2) developing exceptional relationship with suppliers; (3) improving
equipment; (4) training and monitoring franchisees
...
Throughout their transformation the business showed its care to the products of
its suppliers and operation method
...
Furthermore, the Senior Chairman of McDonald’s Fred Turner pointed
out the significance of menu size
...
In 1957, Turner was the first corporate employee to conduct an
evaluation and visit to each of the restaurants
...
Meanwhile, in
1991, McDonalds spent $26
...

During the establishment of McDonald’s establishment and transformation, the business
showed promising attention to detail to every part of their operations and that includes their
suppliers
...
Meanwhile, in McDonald’s franchisees, the franchise owners were able to develop
products like Egg McMuffin, McDLT and others
...
The company first monitored how
it was being cooked and founded out that there is a slight connection between the temperature
settings on the fryers and the oil’s temperature in the vat once the potatoes were dropped
...
Meanwhile, Simplot gave
an idea of using frozen potatoes and it made is organization to grow into a large frozen potato
giant
...

Meanwhile, throughout the business’ growth and success, McDonald’s became well known
for its speed of service and promising consistency across all units of the business
...
Through its years of operation, it served more than 20
million customers each day however it leaded to a question up to how they could obtain more
customers since the number of their customers is indeed large in number
...
Also, to accommodate the changing demands of customer’s demand
and opposing customer’s need, they must explore new extents
...

To sum it up, it could be stated that regardless of the issues the formula for McDonald’s
success is their willingness to innovate, consistency in their operations, their desire for customer’
s convenience through fast service and proper outlet location
...


STATEMENT OF THE PROBLEM
McDonald is one of the leading fast food franchises in the United States as well in different

countries of the world
...
McDonald global success strongly depends upon the use of franchising
...
McDonalds has to consider the
restaurant image in expanding their menu of choices
...


ASSUMPTIONS
For the purpose of this case study, the following assumptions were made:
•

The base year that we used in this case is 1992
...


•

The company already has a Research and Development department and its employees there
are engineers that would come up with innovative machineries
...


Company websites are widely used but no company uses it in fast-food chain industry
...


•

OPERATION / MANUFACTURING
In McDonald, the business strategy of the company is to make food fast available
to its customers at a very low competitive price but to get profit as well by reducing the
cost of the product and expanding the business worldwide
...
By using these strategies an
organization controls and maintains all of its operations
...
These strategies are
implemented in all the branches of the McDonald and these strategies are distributed to all

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MCDONALD’S CORPORATION CASE |

its franchise branches
...
And also supplier is part of their operation and manufacturing
...
Suppliers grew alongside McDonald’s and were
thus carefully attuned to the company’s need
...
9 million on its field service operation to evaluate
and assist each of its restaurants
...


•

HR
Turner was the first corporate employee to visit and evaluate each restaurant and,
as early as 1957, he summarized his evaluations by assigning a letter grade to a restaurant’s
performance in three categories: quality, service and cleanliness (QSC)
...
Menu diversification offered the greatest area of
experimentation
...
McDonalds are also looking for
new ways to address nutritional concerns revolving around calcium deficiency and sodium
and fat reduction
...
Research is an important
step in the process
...
This research shows what customers want from the restaurant chain
...


SWOT ANALYSIS

STRENGHTS

WEAKNESS

•

Worldwide operations

•

•

Strong brand recognition

•

Good customer service and product quality

•

Consistency and uniformity of service and

complicated preparation processes for

products

new products

•

Has an efficient operating system

•

Has a strong relationship with its partners

Has an operating system which is built
around a limited menu
...


and suppliers
•

Extensive and careful product development

•

Use of advanced technology

•

OPPORTUNITIES

THREATS

Responsiveness to customers' changing wants •

Demographic trends

•

Existing competitors

and needs
•

Business expansion through enhanced variety •

Entry of new competitors

•

Offering new and potential product lines (Ex
...


•

Strong brand recognition
McDonald’s had distinguished itself in the quick-service industry through its remarkable
consistency across all units
...


•

Good customer service and product quality
The company is known for its pleasant, fast service and tasty, inexpensive food
...
Thus, the company became remarkable for its consistency across all its units
...


•

Has a strong relationship with its partners and suppliers
McDonald's patrolled suppliers and franchisees scrupulously
...
Thus suppliers grew
alongside McDonald's and were carefully attuned to the company's needs
...
They made

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MCDONALD’S CORPORATION CASE |

sure that their 'partners' would make money before the company did
...

•

Extensive and careful product development
Careful product development, closely gauged to customer tastes, again formed the focus of
attention as McDonald's turned to suppliers and franchisees for assistance
...
In
conjunction with Keystone and Auburn University, it developed the first ever 91 per cent
fat-free burger, McLean Deluxe
...


WEAKNESS
•

Has an operating system which is built around a limited menu
...
If the chain intended to offer a wider variety of foods,
such as spaghetti and meatballs or baked chicken, it could disrupt an operating system built
around a limited menu
...


•

High turnover rate
...


OPPORTUNITIES
•

Responsiveness to customers' changing wants and needs
McDonald's drew on its traditional strengths to respond to competitors' challenges and
customers' new habits
...


•

Business expansion through enhanced variety
Increasing variety posed another potential dilemma for McDonald's
...


•

Offering new and potential product lines (Ex
...
Only 20 per cent of McDonald's
sales came from dinner, and to entice customers to visit the golden arches for dinner required
a new menu - as it had for breakfast - and even a different ambiance
...
Competitors could tout
their specialties and thus respond easily
...


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MCDONALD’S CORPORATION CASE |

•

Being more responsive to environmentalism
A new challenge had been growing which is no other than to protect the environment
...


THREATS
•

Demographic trends
Demographic trends were reshaping American eating habits while competitors were attacking
the quick-service giant from all sides
...
7 per cent in 1985 to
16
...


•

Entry of new competitors
The once simple quick-service market had been complicated by the entry of specialist
competitors who had emulated McDonald's strategy to capture their own segment of the
market
...
Increasingly, though, consumers were becoming more
conscious of nutrition and dietary options without compromising taste

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MCDONALD’S CORPORATION CASE |

VI
...

Inability to engage in
complicated preparation
processes
for
new
products
High turnover rate

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Responsiveness to customers'
changing wants and needs
Business expansion through
enhanced variety
Offering new and potential
product lines (Ex
...
Collaborate with web creators to 1
...

from
...
Use good customer service
customers location
quality and product quality
- View promos and avail them
...
Create new product line that could
counter) the calorie(s)
provide refreshing taste for
content of each menu items
customers and accommodate their
for the awareness of
demands and wants
...
(S3, S8,T4)
to McDo customers and other
means
...
(W1,W2,O1,O3,O4)
stabilize and strengthen the
business’ operations against
existing and new competitors
...


ALTERNATIVE COURSES OF ACTIONS
Decision Matrix

ALTERNATIVE
COURSE OF ACTION

EFFICIENCY
(TIME)

ECONOMY
(COST)

EFFECTIVITY

TOTAL

1
...
Advertisement

4

1

1

6

3
...
Product line Expansion

1
...

The benefits of having a strong brand image are awareness, credibility, reputation,
customer satisfaction
...
Advertisement
The goal of advertising is to boost the business's bottom line
...
For instance, one technique of advertising is
instilling a sense of inadequacy in the consumer that can only be rectified when he
purchases the company's good or service
...

3
...
Product-line expansion can take a number of forms, including new versions of
an existing product, upgrades to existing products or completely new products
...
Invest in Research and Development
Investing in Research and Development could help McDonalds to come up with an
improved system, accurate and efficient production process in order to stabilize and
strengthen the business’ operations against existing and new competitors
...


VIII
...
However, we wanted to make McDonalds explore more, innovate
or enhance their operations to go beyond their limits and that could be possible by investing
in Research and Development
...


DURATION

2-3 days

Top
Management

3-5 days

R& D
Department
Head &
Other
Department
Heads

Plan the project
...

(Example: To improve For 3-5
months conduct a survey to
customers regarding their total
dining
experience
with
McDonalds including the speed of
service, quality of foods, attitude
of staffs etc
...
Also, get
certifications that could further
increase the brand value and
expertise in operation of McDo
that can be an additional
competitive
advantage
to
competitors
...

Specify the importance of
R&D to determine how to
further
improve
the
strengths of McDonalds
in terms of operation
...


Collaborate with the top
executives to determine
the pros and cons of each
objective including its
riskiness, price, possible
increase or decrease in
brand equity and loyalty

MCDONALD’S CORPORATION CASE |

that could give a better business
and
customer
interaction
(example: obtaining survey and
comments from them through
websites,
showcasing
the
bestseller products of McDO,
online registration for deliveries
etc
...


Continuous
unless totally
ineffective

Managers

Guide the production
staffs about the changes
to be made in the
production

Managers

Monitor if the new
production
plan
is
effective and revise if
necessary
...
The fast-food chain
has had its own peaks and valleys
...
And also, they have a strong relationship with their
suppliers and franchisees which helped them develop and innovate their products
...
Because of this,
the company cannot provide every demand of the customers
...
With this crisis, McDonalds developed new products that provides
more nutritious food such as salads, chicken and muffins but is this enough? Another

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challenge that has been growing is going green/protecting the environment
...

Various areas were taken into consideration including Marketing, Operations,
Finance, HR, MIS/ IT/ R&D/ Business Development to solve the problem of McDonalds
...
After evaluation, we, then concluded
that to resolve the problem of McDonalds in terms of making their brand as a customers’
first choice in a certain time and respond to changing business environment and changing
customers’ reference as well as the growing number of competitors, we opt to invest in
research and development to help McDonalds to come up with an improved system,
accurate and efficient production process in order to stabilize and strengthen the business’
operations against existing and new competitors
...
McDonalds own website – collaborate with web creators to obtain website for
McDonalds wherein customers could view the items offered by McDonalds, choose
from those items, and have their order delivered, view McDonalds outlets near the
customers’ location and view promos and avail them
...


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MCDONALD’S CORPORATION CASE |

2
...
They may use the website
to conduct survey to McDonald’s customers and other means
...
They can also extend the menu for
nutrition-conscious customers so that consumers will have a variety of nutritious
food to choose from
...
Continue the strong relationship with suppliers and franchisees – having a strong
bond between suppliers and franchisees helps the company in dealing with
challenges and improving the products and in return, the suppliers can improve
their services and products as well so it’s a win-win situation

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