McDonalds Value Chain McDonalds Value Chain

Analys is Analys is
Jeovani Zamarripa, Alicia Wylie,
Jason Flores, Conor Mullarkeyy
Mission Statement Mission Statement
McDonald's brand mission is to "be McDonald s brand mission is to be
our customers' favorite place and way
to eat." Our worldwide operations p
have been aligned around a global
strategy called the Plan to Win
t i th fi b i f centering on the five basics of an
exceptional customer experience
People Products Place Price and People, Products, Place, Price and
Promotion. We are committed to
improving our operations and improving our operations and
enhancing our customers' experience.
Company History Company History
McDonalds Bar-B-Que (1940) McDonald s Bar-B-Que (1940)
Worlds 1
st
McDonalds
Founded by Dick and Mac McDonald Founded by Dick and Mac McDonald
San Bernadino, CA
D i i & h i Drive-in & car hop service
McDonalds (1948)
N F l Name Formulates
Menu develops
15 Cent hamburger
Company Info Company Info
Corporate Headquarters: p q
McDonalds Corporation
2111 McDonald's Dr
Oak Brook, IL 60523
Employees:
Approximately 400,000 McDonalds employees globally Approximately 400,000 McDonald s employees globally
1.6 million people globally are employed through
McDonalds restaurants and their franchises
Restaurants:
32,000 world-wide, 118 countries
2009 Revenue &
k U.S. Stocks (US only)
NYSE: MCD NYSE: MCD
Current Price: $64.74
Change: $0.26 + g
(As of 2/16/2010)
2009 Revenue (mil.)$22,744.701
Year Revenue Growth 3 3% Year Revenue Growth -3.3%
2009 Net Income (mil.)$4,551.001
Y N t I G th 5 5% Year Net Income Growth 5.5%
Leadership Leadership
James Skinner
Vice Chairman, CEO
Left to Right: Jose Armario, Group President Canada & Latin America; Janice Fulds, US Chief Operations
Officer; James Skinner, Vice Chairman and CEO; Donald Thompson, President U.S.A; Jeffrey Stratton,
Chief Restaurant Officer; Mary Dillion, Global Chief Marketing Officer; Timothy Fenton, President
Asia/Pacific Middle East & Africa; Peter Bensen, Chief Financial Officer; Dennis Henequen. President
Europe; (at table) Gloria Santona, General Counsel & Corporate Secretary; Richard Floersch, Chief Human
Resource Officer.
Culture Culture
Forging new opportunities Forging new opportunities
Innovation from within
Empowered big thinking p g g
Social responsibility
Community Focus Community Focus
Responsible Purchasing
Protecting Our Environment g
Diversity
Employee Force Employee Force
McDonalds Production System McDonald s Production System
INPUT OUTPUT PROCESS
Employees
Customers
Cook and package
foods
Satisfied customers
Customers favorite Customers
Restaurants
Food Prep/Assembly
Line
Assemble meals to the
customers order
Customers favorite
place and way to eat
Provide a relaxed and
fun environment to eat
Line
Frozen foods (patties, fries,
chicken nuggets, etc.)
Produce Produce
Containers
Company image
Operational Strategic
f i i Performance Dimensions
COST
QUALITY
SPEED
FLEXIBILITY
COST COST
Make it cheap: Make it cheap:
Economies of scale
Allows McDs to pass the value to consumers Allows McD s to pass the value to consumers
McValue Dollar Menu
Party Pack
l Cost controls
QUALITY QUALITY
Make it consistent: Make it consistent:
Universal taste
Core offerings globally Core offerings globally
Order Qualifier: Make it good: Order Qualifier: Make it good:
Taste appeal to its target market
Healthy options Healthy options
SPEED SPEED
Make it fast: Make it fast:
90 second service goal
Order Qualifier: Make it dependable:
Menu items available daily Menu items available daily
Hot & Fresh
Order Qualifier: New Product Development:
R i l it Regional menu items
Healthy menu options
FLEXIBILITY FLEXIBILITY
Order Qualifier: Product design:
S/M/L/Super size S/M/L/Super size
Gender based kids meals
Happy meals vs. Mighty kids meals
P l k Promotional packaging
Order Qualifier: Product Mix:
Sandwich varieties Sandwich varieties
Soft serve offerings (milkshakes, ice cream
cones, sundaes)
Salads Salads
Order Qualifier: Production Volume:
Staffing based on consumer traffic and meal
ti time
24 Hour restaurants and drive-thru
MDs Value Chain Analysis MD s Value Chain Analysis
FIRM
INFRASTRUCTURE
FIRM
INFRASTRUCTURE
HUMAN
RESOURCES
TECHNOLOGY
HUMAN
RESOURCES
TECHNOLOGY
PROCUREMENT PROCUREMENT
INBOUND
LOGISTICS
MARKETING
& SERVICES
OUTBOUND
LOGISTICS
OPERATIONS
SERVICE
INBOUND
LOGISTICS
MARKETING
& SERVICES
OUTBOUND
LOGISTICS
OPERATIONS
SERVICE
Firm Infrastructure Firm Infrastructure
Strengths:
Brand recognition Brand recognition
#1 in retail fast food industry
Leadership Leadership
Financial Strength
Company image
Intellectual property
Franchising
Weaknesses:
Lawsuits Lawsuits
Company image
Culture insensitivities
MDs Value Chain Analysis MD s Value Chain Analysis
FIRM
INFRASTRUCTURE
Brand recognition
#1 in retail fast food industry
Leadership
Financial Strength Financial Strength
Company image
Intellectual property
Franchising
Lawsuits
Company image
Culture insensitivities
HUMAN
RESOURCES
TECHNOLOGY
PROCUREMENT
STRENGTH
WEAKNESS
INBOUND
LOGISTICS
MARKETING
& SERVICES
OUTBOUND
LOGISTICS
OPERATIONS
SERVICE
WEAKNESS
Inbound Logistics Inbound Logistics
Strengths:
Economies of scale
Pass value to customer (i.e. $1 menu)
Just-in-time order & delivery Just t e o de & de ve y
Sustainable packaging
Renewable resources
P k i i i (82% bl ) Packaging composition (82% renewable resources)
Oil recycling (diesel oil)
Supply chain control y
Quality control
Freight truck inspections
Random audits Random audits
Weaknesses:
Media backlash
MDs Value Chain Analysis MD s Value Chain Analysis
FIRM
INFRASTRUCTURE
Brand recognition
#1 in retail fast food industry
Leadership
Financial Strength Financial Strength
Company image
Intellectual property
Franchising
Lawsuits
Company image
Culture insensitivities
HUMAN
RESOURCES
TECHNOLOGY
PROCUREMENT
Economies of
l
Just-in-time order
& delivery
PROCUREMENT
STRENGTH
scale
Sustainable
packaging
Renewable
resources
Supply chain Supply chain
control
Quality control
Media/PR
INBOUND
LOGISTICS
MARKETING
& SERVICES
OUTBOUND
LOGISTICS
OPERATIONS
SERVICE
WEAKNESS
Operations Operations
Strengths:
O li & it ki k j b li ti On-line & on-site kiosk job application
systems
2
nd
largest employer in the U.S. 2 largest employer in the U.S.
Reinforced information systems
Wireless headsets
Wi-Fi offered in all locations
R&D in target consumer demands and
trends trends
Corporate guidelines imposed on
franchisees
Franchisees must purchase supplies from
McDs
Operations Operations
Weaknesses:
Hi h t ( th 100%) High turn-over (more then 100%)
90 second drive-thru rule (unsuccessful)
Impersonal drive-thru greeters Impersonal drive-thru greeters
(telemarketer like, person is not in store)
MDs Value Chain Analysis MD s Value Chain Analysis
FIRM
INFRASTRUCTURE
Brand recognition
#1 in retail fast food industry
Leadership
Financial Strength Financial Strength
Company image
Intellectual property
Franchising
Lawsuits
Company image
Culture insensitivities
HUMAN
RESOURCES
Just in time order
Job appliation
systems
2nd largest U.S.
employer
High turn-over
Reinforced IT systems
TECHNOLOGY
PROCUREMENT
Economies of
scale
Sustainable
Just-in-time order
& delivery
Reinforced IT systems
Wireless headsets
Wi-Fi
Drive-thru voice
Franchsor purchase
agreement
STRENGTH
Sustainable
packaging
Renewable
resources
Supply chain
control
R&D based on
consumer demands
Corp guidelines for
Franchisees
90 second drive-thru
rule
INBOUND
LOGISTICS
MARKETING
& SERVICES
OUTBOUND
LOGISTICS
OPERATIONS
SERVICE
WEAKNESS
Quality control
Media/PR
Outbound Logistics Outbound Logistics
Distributor agreements g
Quality control
Freight truck inspections
random audits random audits
Refrigerated trucks
Reinforced Information Systems e o ced o at o Syste s
Cashier
Assembly Line
Order fulfillment Order fulfillment
Just in time order and delivery
Ensuring freshness g
Packaging quality reinforces freshness
Hot/Warm food
MDs Value Chain Analysis MD s Value Chain Analysis
FIRM
INFRASTRUCTURE
Brand recognition
#1 in retail fast food industry
Leadership
Financial Strength Financial Strength
Company image
Intellectual property
Franchising
Lawsuits
Company image
Culture insensitivities
HUMAN
RESOURCES
Just in time order
Job appliation
systems
2nd largest U.S.
employer
High turn-over
Reinforced IT systems Refridgerated trucks
TECHNOLOGY
PROCUREMENT
Economies of
scale
Sustainable
Just-in-time order
& delivery
Reinforced IT systems
Wireless headsets
Wi-Fi
Drive-thru voice
Franchsor purchase
agreement
Refridgerated trucks
Reinforced IT
Just-in-time order &
delivery
Distributor agreements
QC
STRENGTH
Sustainable
packaging
Renewable
resources
Supply chain
control
R&D based on
consumer demands
Corp guidelines for
Franchisees
90 second drive-thru
rule
QC
Packaging
INBOUND
LOGISTICS
MARKETING
& SALES
OUTBOUND
LOGISTICS
OPERATIONS
SERVICE
WEAKNESS
Quality control
Media/PR
Marketing & Sales Marketing & Sales
Strengths: Strengths:
Product
Health and wellness campaign & product p g p
offerings
Consumer and market research
P i Price
McValue Dollar Menu
Party pack Party pack
Promotion
Disney and Nickelodeon license agreements y g
Coca-Cola endorsement
Feeding the athletes Olympic sponsorship
Marketing & Sales (contd) Marketing & Sales (cont d)
Strengths: Strengths:
Place
New upscale MDs p
MDs goes green
McCafe
Wi-Fi
McDonalds Play Place
Ronald McDonald
Community outreach Community outreach
Marketing & Sales (contd) Marketing & Sales (cont d)
Weakness: Weakness:
Supersize Me movie
Media/PR
Adaptation to global culture and customs
Product failures
MDs Value Chain Analysis MD s Value Chain Analysis
FIRM
INFRASTRUCTURE
Brand recognition
#1 in retail fast food industry
Leadership
Financial Strength
C i
HUMAN
Company image
Intellectual property
Franchising
Lawsuits
Company image
Culture insensitivities
Job appliation
systems
HUMAN
RESOURCES
TECHNOLOGY
E i f
y
2nd largest U.S.
employer
High turn-over
Just-in-time order
& delivery
Reinforced IT systems
Wireless headsets
Wi-Fi
Drive-thru voice
Refridgerated trucks
Reinforced IT
Just-in-time order &
delivery
Consumer Research
McValue Dollar Menu
Party Packs
PROCUREMENT
Economies of
scale
Sustainable
packaging
Renewable
resources
Supply chain
control
Quality control
Media/PR
Franchsor purchase
agreement
R&D b d
Distributor agreements
QC
Packaging
Party Packs
Cartoon Affiliations
Coke
Olympic Sponsor
Upscale MD's
Going Green
M C f
STRENGTH
R&D based on
consumer demands
Corp guidelines for
Franchisees
90 second drive-thru
l
McCafe
Wi-Fi
MD's Play Place
Ronald McDonald
"Supersize Me"
Media/PR
INBOUND
LOGISTICS
MARKETING
& SALES
OUTBOUND
LOGISTICS
OPERATIONS
SERVICE
WEAKNESS
rule Global expansion issues
Product failures
Service Service
Strengths:
Fast food service
Order accuracyy
Clean environment
Friendly customer service y
Weaknesses: Weaknesses:
Lack of customer service
Employee apathy Employee apathy
Dissatisfied customers
MDs Value Chain Analysis MD s Value Chain Analysis
FIRM
INFRASTRUCTURE
Brand recognition
#1 in retail fast food industry
Leadership
Financial Strength
C i
HUMAN
Company image
Intellectual property
Franchising
Lawsuits
Company image
Culture insensitivities
Job appliation
systems
HUMAN
RESOURCES
TECHNOLOGY
E i f
y
2nd largest U.S.
employer
High turn-over
Just-in-time order
& delivery
Reinforced IT systems
Wireless headsets
Wi-Fi
Drive-thru voice
Refridgerated trucks
Reinforced IT
Just-in-time order &
delivery
Consumer Research
McValue Dollar Menu
Party Packs
PROCUREMENT
Economies of
scale
Sustainable
packaging
Renewable
resources
Supply chain
control
Quality control
Media/PR
Franchsor purchase
agreement
R&D based on
Distributor agreements
QC
Packaging
Party Packs
Cartoon Affiliations
Coke
Olympic Sponsor
Upscale MD's
Going Green
M C f
Fast food service
STRENGTH
R&D based on
consumer demands
Corp guidelines for
Franchisees
90 second drive-thru
rule
McCafe
Wi-Fi
MD's Play Place
Ronald McDonald
"Supersize Me"
Media/PR
Order accuracy
Clean environment
Friendly customer
service
Lack of customer
service
INBOUND
LOGISTICS
MARKETING
& SALES
OUTBOUND
LOGISTICS OPERATIONS SERVICE
WEAKNESS
Global expansion issues
Product failures
Employee apathy
Dissatisfied
customers
Core Competence Core Competence
McDonalds strength lies in the operations and firm
i f infrastructure.
McDonalds core competency is the production and
d li d f ff d bl f d t l b f delivery speed of affordable food to a large number of
customers to support a low cost, high speed, and
consistent quality strategy
McDonalds strategy is supported by its strong financial
resources, brand image, market leadership, buyer supplier
relations, and product value. p
Competitive Advantage Competitive Advantage
#1 Fast food restaurant in industryy
Customers
Value and affordable menu
Convenience
Franchisee base
Fun Facts Fun Facts
Aprox.. 9 million pounds fries served p 9 p
daily
380 sesame seeds on a sesame bun
Approx. 82% of consumer packaging is
made from renewable materials
C t il i t bi di l f l Convert oil into biodiesel fuel
Logo differs between green locations
and traditional locations (green and traditional locations (green
background vs. red color)
Beer served in Germany McDonalds y