Business CUEGIS

McDonalds

Background

 36,000 stores in over 120 countries.

 As a restaurant service, it is in the tertiary sector.
 Uses franchises to rapidly expand globally.
 Founded April 15, 1955 in California, USA
 Founded by Maurice and Richard McDonald
Change
Positive
 Regularly changes strategies to keep up with market demand and remain competitive in the
market.
 In the last few years, it has made many changes, such as making major changes to the menu.
Adding and removing various dishes around the world.
 There have been plans to add more breakfast dishes and begin serving healthy breakfast every
day of the month.
 The change to retail stores in 2012 increased profits by around 5% in the first quarter, as more
positive brand image of being more ‘modern’ occurred and being less cheap.
 This is a market-orientates approach. Through extensive market research, they have adapted to
meet the needs of consumers, i.e. breakfast menus, healthier food, etc.
 In countries like Singapore and Australia, McDonald’s introduced “Gourmet McDonald’s”
allowing customers to customize their dishes, with a multiple selection option.
 The food is brought directly to the table rather than waiting for it. This creates a USP for
McDonald’s as they can provide healthier food to the customer without making large menu
changes.
Negative
 Bloated menus, leading to too much choice and slower customer service.
- McWraps take 60 seconds to make compared to 10 seconds for a burger.
- They later cut items like the Deluxe Quarter Pounder, as it had fewer sales, and the growing
of the menu by 40% from 2007 was worrisome.
 Employees must be retrained to properly make the new products, as well as obtaining new
equipment, which costs time and money.
 New products sometimes do not sell well (McWrap or Deluxe Quarter Pounder), so some
changes are simply not worth it.
Culture
Positive
 Before deciding to enter the Indian market, they decided to omit beef and pork from the menu to
aid in the prevention of Indians being offended.
 Research in 2003 showed that of 100 meals eaten in a month, only 3 were eaten out.
 They introduced a 20-rupee burger called Mc Aloo Tikki, a burger with a cutlet made of mash
potatoes, peas and flavored Indian spices.
 “It’s something you would find on Indian streets; it was essentially the McDonald’s version of
street food. The price and taste together, the value we introduce, was a hit. It revolutionized the
industry in India.”
 Eating has gone up to 9-10 times per 100 meals and McDonald’s in India has more than 320
million customers a year.
 Entire menu has been customized after extensive market research. Over 70% of the menu has
been changed to vegetarian to cater to customers.
 Even competitors like Burger King and Subway have followed by dropping beef and pork.
 They have greatly changed the way they plan, make decisions and implement strategies because
of the country they are entering.
- Advertising with specific consumer profiling traits – religion, customs, etc. (‘McArabia’)
Negative
- Could be a loss of culture to countries involved, e.g. ‘Americanization’
- The culture of fast food is highly unhealthy, and which could be detrimental to worldwide
health.
- Effectively finding out the culture of a market takes quite a lot of time and/or money,
especially if they went with primary research.
- There is a risk of hurting brand image by misunderstanding the culture, such as when a
Japanese McDonald’s advertisement was criticized by some for being too Korean.
Ethics
Positive
 In ethics, CSR comes into play, which every business must do as part of its social responsibility:
- Specifically, in India, to remain ethical, McDonald’s has begun investing in an eye care
hospital, to create an image that is socially responsible, thus making it stand out from its
competitors.
- It has also provided ‘fresh beef’ and local products which is advertised in the UK promoting
CSR.
- Likewise, the focus on equality in the workforce (25% women/minorities in leadership)
- Ronald McDonald’s Houses also help sick children and their families recover and give vital
facilities to aid their situation.
- Before they decided to enter the Indian market, they decided to omit beef and pork from their
menu to avoid offending Indian citizens.
Negative
 People have been fighting for their working rights due to cases such as wage theft, poor
management and bad working conditions.
 Ethical issues with the food come in too. There have been cases in which McDonald’s have given
the cows steroids to make more beef.
 These worsen the image of McDonald’s, potentially leading consumers to believe it is an
‘economy’ product rather than a ‘bargain’ product on the product positioning map.
 The positives above all lead to high costs for McDonald’s, especially with fresh beef (JIT
production – reducing production times and response times from suppliers and to customers.)
Globalization
Positive
 McDonald’s is prime example of globalization.

 Originating in the USA, and slowly expanding into markets and regions where the concept of fast
food is obscure.
 It targeted the middle-class segment since it saw a niche. It kept same interior design, service and
food quality throughout the world, generating its amazing brand image.
 These allowed for seamless globalization, making it one of the largest multinational corporations
running today.
 According to Forbes, McDonald’s is the world’s 9th most recognizable brand.
Negative
 Franchising is very effective at global growth., however there is a loss of control towards the
franchisees, as there is less profits to be make for McDonald’s using franchising.
 There is a risk that laws may be put in place (e.g. fat tax) or trends against unhealthy food could
damage the brand globally.
 Loss of culture and smaller businesses unable to compete.
Innovation
Positive
 Innovation is key to remaining competitive.

 Nearly all dishes in the McDonald’s menu have been innovated and designed completely by
them.
 Many trends have begun just by McDonald’s. These trends aid in creating the brand image of
McDonald’s, which highly compliment the sales.
Negative
 Making new products requires a significant amount of time and money to be involved in the
business’ research and development.
 There is no guarantee that the new, innovative product will be profitable.
Strategy
Positive
 The company deals with 3 strategic issues.

- How to deal with growing competition.
- How to deal with financial issues such as high franchisee fees in contrast with geographical
expansion goals.
- How to deal with the worldwide economic crisis.
 They deal with competition by using aggressive marketing strategies. You will never go a day
without noticing a sign that leads you to McDonald’s or viewing an ad about it.
 Financial issues are dealt with the spreading of risk through globalization. There are many
franchises that if one goes into loss, there are hundreds of others ready to cover up the loss and
make remarkable profit.
 The worldwide economic crisis is something affecting every business; therefore, it is not much of
a problem for McDonald’s as it is already established.
 It can prove to be advantageous as competition is killed off and it is very difficult for new
competition to arise.
 As this affects every business, even the competitors deal with the same struggle, evening out the
‘battlefield’.
https://docs.google.com/document/d/1QRgXL-0fwFT0Ez4OWRkXFtDovjodk3u-IAEsPCmel3c/edit

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McDonalds

 36,000 stores in over 120 countries.

 McDonald’s is prime example of globalization.

 Innovation is key to remaining competitive.

 The company deals with 3 strategic issues.

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