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McDonalds Corporation As A Global Company.
McDonalds Corporation As A Global Company.
Malaysia
Global Company in ASEAN
Introduction
The McDonalds Corporation
The McDonalds Corporation is said to be the worlds largest chain of fast
food restaurants. It serves approximately more than 60 million customers
daily in 119 countries across 35,000 outlets. Its headquarter is in the United
States, where the company began in 1940 as a barbeque restaurant run by
Richard and Maurice McDonald. Later onwards, in 1995, Ray Kroc franchised
the chain from McDonald brothers.
Since then, the famous golden arches of McDonalds have become a familiar
spectacle in towns and cities all over the globe. In 2014, the chain not only
had 14,350 restaurants in the United States, but a further 21,908 in
international locations. Not only that, McDonalds is one of the biggest
employers in the world with over 1.7 million employees worldwide.
McDonalds restaurants offer a substantially uniform menu, although there
are geographic variations to suit local customer preferences and tastes. In
addition, McDonalds tests new products on an ongoing basis.
McDonalds menu includes hamburgers and cheeseburgers, Big Mac, Quarter
Pounder with cheese, Filet-O-Fish, several chicken sandwiches, Chicken
McNuggets, wraps, French fries, salads, oatmeal, shakes, McFlurry desserts,
sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and
other beverages. In addition, the restaurants sell a variety of other products
during limited-time promotions (McDonald Corporation, 2013)
McDonalds restaurants in the U.S and many international markets offer a full
or limited breakfast menu. Breakfast offerings may include Egg McMuffin,
Sausage McMuffin with Egg, McGriddles, biscuit and bagel sandwiches and
hotcakes.
McDonalds background in Malaysia.
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In 1955, McDonalds Corporation was founded by Ray Kroc and opened the
first restaurant in Des Plaines, Illinois. In 1980, GOLDEN ARHCES
RESTAURANTS SDN BHD gets the license to operate McDonalds restaurant in
Malaysia from McDonalds Corporation USA in 1980. The first restaurant
McDonalds Malaysia opened at Jalan Bukit Bintang, Kuala Lumpur. Now, it
has more than 200 restaurants operated in Malaysia. . McDonalds have
created over 7000 job opportunity ever since they arrive in Malaysia over the
years. Their vision is to be our customers' favorite place and way to eat.
Two Hamburger University gold-standard training centre was opened in
Malaysia in January 2012 to cater to the increasing training and development
needs of people in Malaysia. Not only that, to meet their growth plan of 500
restaurants by 2020 in Malaysia, McDonalds will be creating 13,500 new
jobs within eight years. It has been third time in a row that McDonalds has
won the Aon-Hewitt Best Employers award; a testament to their commitment
in executing good people practices.
Company overview
Golden Arches Restaurants Sdn. Bhd. operates as a subsidiary of McDonald's
Corp.
Level 11, Menara Luxor
6 Jalan Persiaran Tropicana
Petaling Jaya, 47410
Malaysia
Phone: 60 3 711 8888
Fax: 60 3 711 3938
www.mcdonalds.com.my
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Size
Employees:
As McDonalds is the worlds largest fast food service retailer, Christodoulou
(2013) stated that there are a total of 314 restaurants which accumulated to
more than 10,000 employees in Malaysia.
Out of all the employees hired in Malaysia, the companies employ nearly
12,000 Malaysians. In Malaysia itself, McDonald serves over 13 million
customers a month in all the restaurants.
Revenue:
Amount
Increase /
Increasing/
(Decrease)
(Decreasing)
Excluding
Currency
Translation
Dollars in millions
2013
2012
2011
2013
2012
2013
2012
$ 4,512
$ 4,530
$ 4,433
0%
2%
0%
2%
Europe
$ 8,138
$ 7,850
$ 7,852
4%
0%
3%
6%
APMEA( Malaysia)
$ 5,425
$ 5,350
$ 5,061
1%
6%
2%
5%
$ 800
$ 873
$ 947
(8)%
(8)%
(6)%
(7)%
1%
2%
1%
4%
Corporate
Total
Franchised revenues:
U.S.
$4,33
$4,28
$4,90
1%
5%
1%
5%
Europe
9
$3,16
4
$2,97
6
$3,03
6%
(2)%
4%
5%
APMEA (Malaysia)
2
$1,05
7
$1,04
4
$958
1%
9%
8%
8%
1
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$678
$662
$625
2%
6%
8%
11%
$9,23
$8,96
$8,71
3%
3%
3%
6%
U.S.
$8,85
$8,81
$8,59
0%
3%
0%
3%
Europe
1
$11,3
4
$10,8
2
$10,8
4%
(1)%
3%
6%
APMEA (Malaysia)
00
$6,47
27
$6,39
86
$6,01
1%
6%
3%
6%
7
$1,47
1
$1,53
9
$1,57
(4)%
(2)%
0%
0%
$28,1
$27,5
$27,0
2%
2%
2%
5%
06
67
06
Corporate
Total
Total revenues:
Corporate
Total
Comparing the total revenues from 2011, 2012 and 2013, McDonalds Corporation
has appeared to have an increase in its total revenue to $28,106 in 2013 from
$27,006 in 2011 in total (worldwide).
Market
Market Trends
As one of the trends in the world is fast food culture, around 98 percent of
Malaysians adults eat at take-away restaurants. Countries that have the
highest percentage of fast food restaurant consumers around the world
compare to America which count 97 percent are Malaysia, Philippine and
Taiwan (ACNielsen, 2005). Due to having commitments on work and having a
busy life, consumers tend to spend less of their budgets on the grocery store
while most of their food budget ended up in cash registers at the restaurants
and fast food outlets (Kara, et. Al., 1999). Around 59% of Malaysian eating
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takes away every week. Even the state of one's health has become primary
concerns for consumers, but it does not affect the way consumers choose to
eat. It has become a part of their life to eat fast food, particularly in Malaysia,
Hong Kong and United State.
Since this trend has become part of the consumers life, McDonalds will be
able to increase their target markets in Malaysia. McDonalds can have a
better performance if Malaysians customers suggestions can be fulfilled as
54 percent of Malaysian prefer convenience location to eat (ACNielsen, 2005)
4 Ps (Marketing Mix)
Product
The food served in McDonalds is halal and serves local taste as McDonalds
takes into account cultural factors in serving Malaysian consumers. Even
though they served a wide range choice of menu similar with Burger King,
seasonally McDonalds serve the prosperity burger for celebrating Chinese
New Year. McDonald's also serves healthy food but this will effect on the
taste and consumers eating experience. For instance, saturated oil that now
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is replaces with Trans-fat oils have changed the taste of the McDonald's
famous fries (UK Essays, n.d)
Price
McDonald's have more price reduction compared to KFC and Burger King.
They offer a very competitive food prices. They have the Value Mc Savers
and the Mc Value Meal. KFC do have their value meal called Jom Jimat
Everyday and Burger King but in term of their price, McDonald offers the
best price for fast Food. However, McDonalds, they offered only during
certain period of time there-for rise the question of its availability.
Place
In terms of distribution, McDonalds have more than 200 restaurants in
Malaysia. As Malaysians are likely to enjoy shopping, McDonalds are built
mainly in retail areas like shopping malls. In some strategic places,
McDonalds also opens in several local gas stations such as PETRONAS Mesra.
They open an express caf that serve some popular products where they can
satisfy the hunger of consumers such as, working executives on-the-go and
motorist.
Promotion
In order to achieve good profit and high customer satisfaction, promotion is
one of the main factors. According to Kara, Kaynak and Kucukemiroglu
(1999) fast food buyers are seeking price deal and promotions before visiting
a fast food restaurant.
Competitors
Naturally, rivalry among fast food industry is strong as the competition
focuses on providing the best service and product variety. Other competitors
such as KFC and A&W create an intense rivalry among the fast food provider
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One of the factors that could cause the company to make less profit is the
limited choice of product offered. Hence, many people will go to substitute
products. The substitute products for McDonald's will be the other fast food
chain, for example: Burger King and road side burger stalls. Although
McDonald's has applied 24 hours all around, however, road side burger stall
that operates until late at night and other fast food restaurant is also
operating 24 hours service.
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SWOT Analysis:
1. Strengths:
Strong brand name, image and reputation
McDonald's was the most valuable fast food brand in the world with an
estimated brand value of about 85.71 billion U.S. dollars (The Statista Portal,
2015). It has built up vast brand equity. It is the no 1 fast food company by
sales, with more than 30,000 restaurants serving burgers and fries in almost
120 countries. As McDonalds is a well-known fast food sector, the brand
image itself is recognized everywhere. This brand is in top ten of the most
powerful brand names in the world with Samsung, Coca-Cola and Burger
Kings.
Large market share
While Wendys or Burgers Kings are losing market share in 2006,
McDonaldss market share is increasing which this indicates that McDonalds
is considered the largest player in size and global reach. Market share of
McDonalds in 2010 is about 12.70% while Yum! Brands Inc. is 9.70%,
Wendys is 6.60% and Burger King is 5.10% (The Statista Portal, 2015)
Specialized training for managers
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McDonalds is very serious on training managers. This company has its own
program to train managers the most professionally, which is called
Hamburger University. As a result, McDonalds has many good managers who
can help company development well. Not only that, 85% of managers at
McDonalds restaurants in Malaysia started at the crew level.
Introduction of new production
Being considered as the first one to enter fast food industry, McDonalds has
initiates other brand to enter this industry. As a result, customers will always
think of McDonalds when it comes to fast food. In fact, McDonalds is the first
choice of a large number of customers in some developed countries,
especially in United States.
Product Innovation
The strong global present becomes one of the biggest strength McDonald's
has. It makes McDonald's able to capture large market in other countries
such as Malaysia. McDonald's expand their market has proven successful
which is supported by the brand recognition. It generated more sales and
gain market share. McDonald's product innovation is the other strength it
has. The innovation of fast food which is different in every country it enters is
a good strategy for localizing the taste and preference of customers.
McDonald's offers Ayam Goreng which is only available in Malaysia and
McCurry Pan in India. McDonalds also offered 24 hours delivery services
which enable consumers to enjoy foods during midnight if they feel hungry.
This is the core competencies for McDonalds over its competitors where KFC,
Subway, Burger King and others do not have 24 hours delivery.
2. Weaknesses:
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are salad with vegetable and fruit. Moreover, amount of fruit or vegetable is
not much.
High employee turnover rate
Although there are many good managers and skillful employees, the
turnover is still high where this caused layoffs. Furthermore, with a high
working pressure but low salary too made many others to quit their jobs.
Dissatisfied Franchisees:
Franchisees are beginning to become very dissatisfied with the fees that
McDonalds are forcing them to pay. As the company continues to expand,
they are also increasing the amount of fees franchisees have to pay for the
use of the notorious fast-food brand. Many people are not very happy about
this and as a result many franchisees are selling their businesses.
Products varieties:
McDonald's has low width of product caused by the saturated market in food
industry has make McDonald's difficult to add new outlets in their menu lists.
The last breakthrough for McDonald's is their chicken nugget in 1983. The
increase of competition such as KFC, A&W, Burger King, and Subway, has
created a tight price competition. McDonald's unable to earn much revenue
from this price competition. Health concern becomes one of the major
weaknesses of McDonalds where many people complaint with the oily foods
that are offered.
3. Opportunities:
Growth of the fast food industry
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4. Threats:
Intensity competitors
Along with the development of fast food industry, there are many new fast
food brand enter to the market. It is nothing to say if there is no strong brand
which can compete with McDonalds. However, in fact, there are some and
they are stronger gradually, for example Yum!Brands, Wendys or Burger
King. Although market share of these brand are lower than McDonalds, they
try to gain more customers from McDonalds. Moreover, more casual dining
restaurants increase their burger offering and decrease the price. If we are
not really hurry, we may choose this kind of restaurant instead of fast food
restaurants. They also become the competitors of McDonalds.
Public health crisis
With a growing number of obesity cases among Americans, fast food chains
like McDonalds will continued to be overshadowed by their previous products
offerings, for example Supersized Meal, no fruit or yogurt, slim salad
selection. Besides, people nowadays are facing heart problem more seriously.
As a result, they require nutritious and healthy food as well as lifestyle.
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Economic recession
The company's revenue streams are diversified, but depending on the length
of this "recession", they will inevitably be negatively impacted by the
trickledown effect. Recession or down turn in economy may affect the
retailer sales, as household budgets tighten reducing spend and number of
visitors.
Serious environmental issue:
Environment is one of the hottest topics all over the world. Any action which
influence on the earth and human life is criticized strongly. Consequently, if
McDonalds keep using HCFC -22, it may lose customers, especially who really
care about the earth.
P.E.S.T.L.E ANALYSIS
1. POLITICAL
Concerning health issues such as cardiovascular, cholesterol, and obesity
among the young and children in the country have made the government to
control the marketing of fast food restaurant. This action has affected the
operations of McDonalds. Not only that, government also control the license
that is needed to open fast food restaurant or other business regulation that
needed to be followed such as for a franchise business. However, good
relationship with government in giving mutual benefits such as employment
and tax is a must for the company to succeed in any foreign market.
McDonalds should also protect its workers by ensuring all the hiring,
compensation, training or repatriation is according to Malaysian Labor Law as
stipulated.
2. ECONOMICS
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card payment, wireless internet, cozy and relaxing ambient place, and other
attraction for their hangout and eating which all these needs should also be
taken into consideration. There is not much difference between cultural and
the purchase of products in a single country but for different countries
cultural sensitivity should be upheld. For example in India people (Hindu) do
not take beef, Muslim countries do not take pork, German like beers, Finnish
like fish type of food menu, Chinese like to associate food with something
good (for example prosperity), Asian like rice and Americans eat in big-sized
menu. So far McDonalds has shown good efforts in localization of its menu to
suit local taste but it should constantly survey and learn about local culture
to better understand and design the best product for them.
4. TECHNOLOGY
For a fast food restaurant, technology does not give a very high impact on
the company and it is not a significant macro environment variables.
However, McDonalds should be looking to competitors innovation and
improve itself in term of integrating technology in managing its operation.
For example in inventory system, supply chain management system to
manage its supply, easy payment and ordering systems for its customers
and wireless internet technology. Implementation of technology can make
the management more effective and cost saving in the long term. With these
changes, consumers will be happy if cost savings results in price reduction or
any campaign that will benefits them from time to time.
5. LEGAL
In Malaysia, they are bound with the Syariah law which states all food
served must be Halal. McDonald's is one of the many fast food chain
restaurant in Malaysia gained Muslim consumers confident. McDonald's in
Malaysia underwent rigorous inspections by Muslim clerics to ensure ritual
cleanliness; the chain was rewarded with a halal (clean and acceptable)
certificate, indicating the total absence of pork products.
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Other legal requirement that the business owner should follow as stipulated
in laws are such as operating hours, business registration, tax requirement,
labor and employment laws and quality & environment certification (such as
ISO) in which the outlet has been certified. The legal requirement is
important because the offenders will be fined or have their business
prohibited from operating which can be disastrous.
6. ENVIRONMENT
Malaysia natural environment is considered good. Based on the report by
Department of National Environment Energy and Resources, the Air Pollution
Index is in the status of good in many areas in the country.
In relation to this, McDonalds around the world has always been a company
which practice to protect the natural and community resources that support
and are affected by their activities. McDonalds promotes recycling and
energy conservation. Since 1990, they had recycled 2 billion corrugated
cardboard, purchased more than $3 billion in products made from recycled
materials and eliminated several million pounds of packaging (McDonalds,
2009).
However, as one of world largest consumer of beef, potatoes and chicken,
McDonalds always had been critics for world environmentalist. This is
because high consumption of beef causing the greenhouse effect by
methane gasses coming from the cows ranch. Large scale plantation has
effect the environment and loss of green forest opening for plantation
activities. Vegetarian environmentalist criticizes the fast-food giant for
cruelty to animals and slaughtering.
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As was said by a former employee (2013), working in McDonald as a parttime crew in Seremban (Malaysia) was tiring but enjoyable. However, conflict
between manager and staff commonly occur in this organization (Glassdoor,
2013)
This has proven that McDonalds human resource department needs to put
more attention to such matters instead of just giving the employees training
regarding their scope of work. The employees are being trained using the
following methods:
Future growth
By the year end, Golden Arches Restaurants Sdn Bhd plans to open a new
outlet that will be placed in Putrajaya by year end. This plan required an
investment that will be accumulated to a total of MYR 17.5 million. The new
outlet is a part of the companys growth plan of having 500 restaurants in
Malaysia by 2020 (Bloomberg Business, 2014)
The construction of the restaurant with a built-area of 30,000 square feet is
expected to be completed within four months of approval of the building plan
made by the Putrajaya Corporation.
As a part of future growth, Golden Arches Restaurants Sdn Bhd were said to
open up to 35 new McDonalds restaurants at a total cost of MYR 200 million
in 2014. By doing so, McDonalds will be creating more jobs in the market.
Aside from aiming to open 500 new outlets by 2020, one of McDonalds
future growth plans is to execute the Plan to Win. Plan to Win aligns the
McDonalds System around the three global growth priorities that represent
its greatest opportunities to drive results- optimizing the menu, modernizing
the customer experience and broadening accessibility to the brand in order
to remain relevant to the consumers (McDonalds Corporation, 2013)
However, to ensure the plan will go smoothly, it depends mainly on the
following:
1. McDonalds ability to anticipate and respond effectively to trends or
2.
3.
4.
5.
6.
7.
other factors.
McDonalds continued innovation in all aspects.
The impact of changes to the value menu.
The risk associated with the franchise business model.
The success of McDonalds tiered approach to menu offerings.
Ability to drive restaurant improvements that achieve optimal capacity.
Plans for restaurant reimaging and rebuilding.
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Conclusion
In conclusion, McDonalds Corporation is still on its growth stage where it
shows that McDonalds will still manage to maintain its business for a
longer time. Besides that, for years McDonalds has become the top
ranking among its competitors. However, McDonalds still have problems
with its human resource management where this can lead to a loss of
skilled employees. Nevertheless, as a whole, McDonalds will be able to
sustain its future growth with their plans and trainings that they are giving
to the employees.
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References
Christodoulou, E. (2013). McDonalds puts people first. Retrieved on March
19th 2015, from http://mystarjob.com/articles/story.aspx?
file=/2013/5/11/mystarjob_careerguide/13043078&sec=mystarjob_careergui
de
Bloomberg Business. (2014). Golden Arches Restaurants Sdn Bhd plans to
open new outlet in Putrajaya by year-end. Retrieved on 19th March 2015,
from http://www.bloomberg.com/research/stocks/private/snapshot.asp?
privcapid=5733574
Glassdoor. (2013). McDonalds Malaysia reviews. Retrieved on 19th March
2015, from http://www.glassdoor.com/Reviews/Mcdonald-s-MalaysiaSeremban-Reviews-EI_IE573134.0,19_IL.20,28_IC2991554.htm
Kara, A., Kaynak, E. & Kucukemiroglu, O. (1999). Marketing Strategies for
Fast-Food Restaurants: A Customer View. British Food Journal 99/9 [1997]
318-324.
Nielsen. (2005). Asians the World's Greatest Fast Food Fans. Retrieved March
19, 2015, from http://my.acnielsen.com/news/20050126.shtml
McDonald USA. (2009). Environment. Retrieved March 19, 2015, from
McDonald's USA: http://www.mcdonalds.com/usa/good/environment.html
McDonald Corporation. (2013). 2013 Annual Report. Retrieved on March 19,
2015. From
http://www.researchgate.net/profile/Claudio_Vignali2/publication/235259287_
McDonalds_think_global_act_local__the_marketing_mix/links/542cf26c0cf277
d58e8c8a33.pdf
The Statista Portal. (2015). Statistics and facts on McDonald's. Retrieved on
March 19th 2015, from http://www.statista.com/topics/1444/mcdonalds/
The Statista Portal. (2015). Brand value of the 10 most valuable fast food
brands worldwide in 2014 (in million U.S. dollars). Retrieved on March 19th
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