Strategic Management - McDonald's

1. Strategic
Management
CLASS2-GROUP3
Tran Nguyen Ngoc Tam #362719
Le Thi Thu Huong #362702

2. Brief Introduction
The world’s largest chain of hamburger fast food restaurants.
Serving around 86 million customers daily in 119 countries.
2

3.  Headquarters: Oak Brook,
Illinois and United States
of America.
 Founded: May 15th, 1940
 CEO: Donald Thompson.
 Founders: Richard and
Maurice McDonald.
3

4. McDonald’s Mission Statement
To be our customers' favorite
place and way to eat and drink.
4
“
”

5. 5
McDonald’s Vision Statement
Our overall vision is for McDonald’s
to become a modern, progressive
burger company delivering a
contemporary customer experience.
“
”

6. Strategic Objectives
 McDonald's main aims are to serve good food
in a friendly and fun environment.
 To be a socially responsible company.
 To provide good returns to its shareholders.
6

7. Competitors
7

8. McDonald’s Primary Competitor
8

9. o Striving to be cost leaders
and cannot be matched
by their competitors.
o The speedy delivery of
food.
o Strong global presence
and largest market share
in fast-food industry.
o They have been in the
fast-food business for a
longer time than their
competitors.

10. SWOT Analysis
10

11. 11
 Strong brand
image.
 High market
penetration.
 Moderate
differentiation
of products.
 Global
Operations.
 Decrease in
consumers’
purchasing
power due to
crisis.
 Cross-cultural
difference.
 Increasing
trend toward
healthy food.
 New
programs of
rivals
(promotion,
new menu,..).
S T
 Easily imitable
business.
 Limited
product mix.
 Low control
on franchise
model.
 Large
franchisees.
 Target
consumers by
understanding
social needs.
 Expansion in
emerging
market.
 Increasing
interests in
healthy food.
 Prosperous
developing
markets
(China,
Hongkong,
Russia,..)
W O

12. Demographic of HCMC
by age structure
Population: 8.426.000 (July 2016) 12
3.808.552
1.407.142
2.005.388
690.932
513.986

13. Demographic by gender
Population in 2015: 8.224.000
13
4.276.480
3.947.520

14. 14
Demographic by income level
9.2
Million (VND) / month
7.6 7
20
2.3
2.5

15. Religions
15
85.5%
6.8%
2%

16. Description
Cultural diversity
Changing demand is different in society to society and
country to country. In order to fulfil the customers'
expectation, McDonald's needs to research the market
and also needs to provide effective food menu.
While people in western countries such as the United
States may enjoy hamburgers and French fries,
 In India, Hindu people prefer vegetable, Muslim
people avoid pork.
 In Vietnam, Thailand, Hongkong, people prefer rice.
16
The Sociocultural Segment

17. Description
Healthy lifestyle
trend
The healthy lifestyle trend is always been a threat
to McDonald’s because many of McDonald’s
products are often criticized for their negative
health effects. Customers do not only want a fast
and convenient meal, but also a healthy one.
Nonetheless, the company has the opportunity
to improve the healthfulness of its products.
17
The Sociocultural Segment

18. 18
Cultural Values

19. 19
Cultural Values
Score Viet Nam The United States
Power Distance
70
Vietnam scores high on this dimension
(score of 70) which means that people
accept a hierarchical order in which
everybody has a place and which
needs no further justification.
40
The fact that a society’s inequality is
endorsed by the followers as much as
by the leaders.
Individualism
20
Vietnam, with a score of 20 is a
collectivistic society
91
The American premise of “liberty and
justice for all.” This is evidenced by an
explicit emphasis on equal rights in all
aspects of American society and
government.
Masculinity
40
Vietnam scores 40 on this dimension
and is thus considered a Feminine
society
62
A low score (Feminine) on the
dimension means that the dominant
values in society are caring for others
and quality of life

20. 20
Cultural Values
Score Viet Nam The United States
Uncertainty Avoidance
30
Vietnam scores 30 on this
dimension and thus has a low
preference for avoiding
uncertainty.
46
Americans tend to be more tolerant of
ideas or opinions from anyone and allow
the freedom of expression. At the same
time, Americans do not require a lot of
rules and are less emotionally expressive
than higher-scoring cultures.
Long Term Orientation
57
Vietnam scores 57, making it a
pragmatic culture
26
American businesses measure their
performance on a short-term basis, with
profit and loss statements being issued on a
quarterly basis. This also drives individuals
to strive for quick results within the work
place
Indulgence
35
A low score of 35 on this
dimension indicates that the
culture of Vietnam is
characterized as Restrained
68
Work hard and play hard.

21. Political Segment
21
Increasing international trade agreements
(opportunity).
Pending tax reform (opportunity).
Evolving public health policies (threat and
opportunity).

22. Economic Segment
22
Cost of capital is the main
determinant of the firm
escalation and growth.
The discrepancies between an
industrial development and
countries in different periods of
economic have a huge effect on
price setting.

23. Technological Segment
23
Provides free
wireless internet
access.
The most
outstanding
innovation:
drive-thru
section and a
touch-activated
screen.
Provide features:
music at queuing
vehicles, a wall
of window on
the drive-thru
side...
 McDonald’s has more outstanding than others
because it has strong financial capital, global
reputation and good relationships with the local
authority.

24. Who are our
consumers?
24
Kids
(3 – 7
years
old)
Family
with
children
Students
Busy
adults
 Happy Meal
with toys.
 Play ground
 Birthday party
 Weekend outings
 Happy Meal
 Drive-thru
 Lunch break or
dinner with
friends.
 A place to
study.
 Student Meals
 “Grab and go”
 Drive-thru
 Take-away
coffee.

25. Value Chain
25
Inbound
Logistics
Operation
Outbound
Logistics
Marketin
g & Sales
Service
Procurement
Technology Development
Human Resource Management
Firm infrastructure
Margin
Support activities
Primaryactivities

26. 26
Primary Activities
Description
Inbound Logistics
• McDonald’s 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.
Operations
• Instead of having lots of different equipment and stations for preparing a wide of variety
food.
• The kitchen had a very large grill, a dressing station where people added the same
condiments to every burgers, a fryer where one person can made french-fries, a soda
fountain and milkshake machine for desserts and beverages.
• The mass-production process requires each restaurants chain to have a distribution network
to carry the food to every restaurant.
• Warehousing and distribution are centralized rather than handled by each restaurant.
Outbound
Logistics
• Macdonald’s restaurants operate in the following formats: sit-down restaurants, drive-thru,
counter-service outlets in food courts.
• The process of obtaining meals in sit-down restaurant format is conventional process of
dining out in a restaurant and it involves a waiter or waitress taking order and delivering the
food. McDonald’s does not offer home delivery services yet.
Marketing & Sales
• You can find McDonald’s in 119 countries around the world. McDonald’s operates over
31,000 restaurants worldwide.
• The company makes significant use of billboards and signage, usual media (television, radio,
and newspaper) and sponsors sporting events.
Service
• Free Wi-Fi, Gift Card, Play round, Birthday parties.

27. Description
Procurement
• 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.
• It is a procurement hub launched in 2001 allow all of McDonald’s franchises
across the globe to buy everything needed to run their restaurants.
Technology
development
• Focus on modernizing restaurants, evolving the menu and engineering value.
• McDonald’s enters five-year IT support deal with Fujitsu.
HRM
• Working at McDonald’s could be said to offer advantages for some employees
who want flexible hours and are engaged in other activities and responsibilities.
Firm infrastructure
• Providing eco-friendly workplaces and restaurants that reflect sustainability
goals and demonstrate environmental stewardship in the workplace.
27
Support Activities

28. Porter’s 5 forces
28
Force Influence Factors
Threat of
competition
High
• Very similar products in the Fast Food industry.
• High competitors advertising capabilities.
• Location of outlets are close.
• Major competitors – Burger King and YumBrand INC.
Threat of new
entrance
Moderate
• Easy to enter.
• Low setup cost.
• Lack of ability to compete with McDonald’s ( cost efficiency, customer awareness).
Threat of
substitutes
High
• Easily substituted by others: meals prepared at home, restaurants, deliveries, and
stores.
• Customers have become more aware of the health effects of fast foods.
• Other substitutes are becoming more and more attractive.
Bargaining power
of suppliers
Low
• World largest restaurant chain in sales.
• Most of them owe McDonald’s for their own existence.
• Low power of suppliers – lower the cost of raw materials and high competitive price.
Bargaining power
of buyers
High
• The customer has so many options on the fast food chains.
• Have to maintain prices very competitive.
• Keep the level of customer services better.

29. Foreign Exchange
29

30. Product Life Cycle
30
 The company is in the market maturity
stage of the product life cycle.
 Make products more appealing to the
consumers in order to sustain or increase
their market share
 The features of their products might be
improved by adding more items on
menu.
For example:
 More choices for customers for their
meals: soft drinks, chicken nuggets,
snack wraps or ice-cream…
 Introducing a new type of food called a
salad.
 Shown their competitors that they are
better by launching variety products in order
to gratify their customer.

31. 31

32. 1. Strengths.
Well-known brand name.
Strong financial performance.
Children targeting.
Adapted to local market.
Partnerships with the best
brands.
Independent franchisees.
2. Weaknesses.
A vulnerable and sensitive
target.
High Employee Turnover.
Unhealthy food menu.
Negative publicity.
Price competition.
Few seasonal products (salad,
ice-cream…)
3. Opportunities.
Use ‘green’ energy and
packaging.
Widen its international
expansion. Innovations in
healthier menu.
Upscale some of its restaurant
settings at luxurious locations.
More focus on CRM.
Providing coupons of healthy
menu.
4. Threats.
Emergence of numerous fast
food competitors.
Health issue pressure.
Global economic recession/
Currency fluctuations.
Heavy investments on
promotional campaigns.
Maintaining marketing
strategy that focuses on kids.
Increasing trends toward diet/
healthy eating. 32

33. 33
1. Strengths.
 Well-known
brand name.
 Strong financial
performance.
 Children
targeting.

34. 34
 Adapted to local
market.
 Partnerships
with the best
brands.
 Independent
franchisees.
1. Strengths.

35. 35
2. Weaknesses.
 A vulnerable and
sensitive target.
 High Employee
Turnover.

36. 36
 Unhealthy food menu.
 Negative publicity.
 Price competition.
 Few seasonal products.
2. Weaknesses.

37. • Use ‘green’ energy and
packaging.
• Widen its international
expansion (especially to
Asian markets).
• Innovations in healthier
menu (morning baguette,
salad, fruit, yoghurt,…)
37
3. Opportunities

38. • Upscale some of its restaurant
settings at luxurious locations.
• More focus on CRM
(specific name on bill instead of
numbers, special discount or gift
on customer’s birthday,…).
38
3. Opportunities
• Providing coupons of
healthy menu.

39. 4. Threats
• Emergence of numerous
fast food competitors.
39
• Health issue pressure.

40. • Increasing trends toward diet/ healthy eating.
40
4. Threats

41. • Global economic recession/
Currency fluctuations.
41
4. Threats
• Heavy investments on promotional
campaigns. (TV, Press, online activities,
outdoor, popular partners like Kodak,
Visa, Buyagift.com,…)

42. • Maintaining marketing strategy that focuses
on kids.
42
4. Threats

43. Product: Happy Meal
43

44. 44
Product: Happy Meal
A Happy Meal usually contains these following main items:
 Aggressive marketing to children at a very young age to
develop trust and reliance.
 Lower calories, fat-free chocolate milk, juice.
 Kids love toys  McDonald’s distributes 1.5 million toys
worldwide per year.

45. Thank You For Your Listening!
i‘m lovin’ it
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46. References
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• http://panmore.com/mcdonalds-vision-statement-mission-statement-analysis
• http://www.mcdonalds.co.uk/ukhome/Ourworld.html#close
• http://edition.cnn.com/2010/LIVING/homestyle/04/08/fast.food/index.html
• https://app.creately.com/diagram/vector/idgtujim1
• https://bigmacvswhooper.wordpress.com/2013/11/01/swot-analysis/
• http://mcdonalds600.weebly.com/pestel-analysis.html
• http://www.dailymail.co.uk/travel/article-2586011/Vietnams-McDonalds-serves-400-000-
customers-month.html
• https://www.voanews.com/a/mcdonalds-turns-1-in-vietname-asia-market-
performance/2643491.html
• https://www.entrepreneur.com/franchises/mcdonalds/282570