A report on “McDonald’s Company”

Prepared by: Đàm Thị Thu Uyên

Đinh Lê Hoài Thu
Đỗ Thị Mơ
Phí Kim Ngân
Trần Thị Thu Kim

November 27, 2018

 I. Company review
1. Mission, vision, core values
a. Mission
McDonald’s corporate mission is “to be our customers’ favorite place and way to
eat and drink.” This mission statement highlights the significance of customers as
the business focus, while maintaining the company as a major influence on their
food and beverage purchase decisions. McDonald’s corporate mission statement
has the following main components:

- Customers’ favorite place to eat and drink

- Customers’ favorite way to eat and drink
b. Vision
McDonald’s corporate vision is “to move with velocity to drive profitable growth
and become an even better McDonald’s serving more customers delicious food
each day around the world.” This statement is included in the growth plan that the
company introduced in 2017. The company’s previous vision statement was “Our
overall vision is for McDonald’s to become a modern, progressive burger
company delivering a contemporary customer experience.” The following are the
main components of the company’s new corporate vision statement:

- Move with velocity to drive profitable growth

- Become an even better McDonald’s
- Serve more customers delicious food each day around the world
c. Core values
- We give back to our communities
Translation: We look after the locals.
We take seriously the responsibilities that come with being a leader. We help
our customers build better communities, support RMHC, and leverage our
size, scope and resources to help make the world a better place. We are
committed to sustainable business practices and are determined to conduct
our operations in a manner that does not compromise the ability of future
generations to meet their needs.

- We grow our business profitably

Translation: Sure we're here to make dollars, but that's what keeps 85,000
of us in a job.
Our stakeholders support our ability to serve our customers. In return, we
 work to provide sustained, profitable growth for all members of our system
and our investors.
- We believe in the McDonald's System
Translation: You, the person that runs your restaurant, and the guy that
delivers the buns are all equally important McDonald’s business
model, depicted by the “three-legged stool” of owner/operators, suppliers,
and company employees, is our foundation, and the balance of interests
among the three groups is key.
- We strive continually to improve
Translation: We want to take pole position in every race.
We consider ourselves a learning organization that is green and growing
which anticipates and responds to changing customer, employee, system and
community needs through constant evolution and innovation.
- We operate our business ethically
Translation: We give everyone a fair go, and tell it like it is
Sound ethics is good business. At McDonald’s, we hold ourselves and
conduct our business to the highest possible standards of fairness, honesty,
and integrity. We are individually accountable and collectively responsible.
- We place the customer experience at the core of all we do
Translation: We treat every customer like a celebrity.
Our customers are the reason for our existence. We demonstrate our
appreciation by providing them with high quality food and superior service,
in a clean, welcoming environment, at great value. Our goal is outstanding
QSC&V for each customer every time.
- We are committed to our people
Translation: Macca's cares about you.
We provide opportunity, recognize talent, and develop leaders. We believe
that a diverse team of well-trained individuals working together in an
environment that fosters respect and drives high levels of engagement is
essential to our continued success.
2. Company scope
a. Slogan
- McDonald’s mein hai kuch baat (Oct. 13. 1996- 1999)
- Toh ajj. Mmmmmmmmmm! McDonal’s hoyaje. (1999- 2003)
- I’m lovin’ it (2003- present)
b. Company scope
- an American fast food company, founded in 1940 as a restaurant operated
by Richard and Maurice McDonald, in San Bernardino, California, United
States
 - 17 restaurants in Vietnam
- McDonald's restaurants are found in 120 countries and territories around the
world McDonald's operates 36,899 restaurants worldwide, employing more
than 375,000 people as of the end of 2016. There are currently a total of
5,669 company-owned locations and 31,230 franchised locations, which
includes 21,559 locations franchised to conventional franchisees, 6,300
locations licensed to developmental licensees, and 3,371 locations licensed
to foreign affiliates, primarily Japan.
3. Company portfolio
4. STP analysis

Type of Segmentation
segmentation criteria McDonald’s target segment

Region Domestic/international
Geographic
Density Urban/rural

Age 8 – 45

Gender Males & Females

Bachelor Stage: young, single people not living at home

Newly Married Couples: young, no children
Full Nest II: youngest child six or over
Life-cycle stage

Income Low and middle

Demographic
Occupation Students, employees, professionals

Degree of
loyalty ‘Hard core loyals’ and ‘Switchers’

Benefits sought Cost benefits, time efficiency

Personality Easygoing & careless

Behavioral User status Potential and regular fast food eaters

 Social class Lower, working and middle classes

McDonald’s targets Resigned, Struggler and Mainstreamer individuals

according to Cross Cultural Consumer Characterization developed by
Psychographic Lifestyle Young & Rubican

II. Situation analysis

1. Review the marketing campaign and activities
2. Micro environment
a. Competitors: the two biggest component of McDonald’s are
Lotteria and KFC.
 Lotteria
 Strength:
- Lotteria’ menu contain similar flavor to the taste of Vietnamese customers,
which cause the easy adaptability of customers to the food.
- Stores are available in almost every center of urban areas across the country,
which helps Lotteria maintains the top position in market share.
- Reasonable cost, cheaper than other competitors, Lotteria attracts the variety
of target segments and owns high market share
- Lotteria keep its high food hygiene and safety, which create a good image in
customer’s mind as an environment-friendly service and product.
- Lotteria offers home delivery service, thatoffer more convenient service for
customers.
 Weakness:
- Although Lotteria is fast-food restaurant but sometime, the customers have
to wait a long-time for their orders. Therefore, Lotteria should improve its
service more fast and convenient.
- Although hamburgers are main menu which make Lotteria stand-out; there
is few promotion for this products. Hence, Lotteria should develop continual
long-term promotion for burger product category.
 KFC
 Strength:
- Strong global presence with more than 15000 restaurants: KFC has a strong
global presence with its more than 15000 restaurants running worldwide in
 2015. Its Parent brand Yum! also has an impressive global presence. KFC is
a franchise led brand and globally it has acquired a strong brand presence.
- Fast growth in Asia: In Asia too, the brand has seen very fast growth, with
China being at the center of its Asian expansion story. It opened 743
restaurants in China in 2015 and was planning to open 600 more in 2016.
Overall, it has more than 5000 restaurants open across more than 1100 cities
in the country. China holds strong long term potential and KFC is working
aggressively to exploit it.
- Strong financial performance: Globally, the financial performance of KFC
has been strong. While the other brands under Yum! have also performed
well during the past few years, KFC alone generated $16 billion in system
sales in 2015. Its performance in Russia, Central and Eastern Europe has
also remained strong. Russia has been particularly good in terms of sales and
revenue from 2011 onwards.
- Significant lead over competing brands: In the Chinese market, KFC has
acquired significant lead over the competing brands. Not just in China but in
other emerging markets too KFC has been able to acquire a significant lead
over its competitors.
- Variety in menu: KFC’s menu has grown increasingly diverse over the past
few years. Apart from the non-veg items it has also included vegetarian
items in its menu to lure more customers. Its lunch box and meal items have
also acquired great popularity.
 Weakness:
- Food quality related issues: Food quality has always been a major issue for
the fast food brands whether it is KFC or McDonalds. In past KFC has faced
significant criticism over its use of trans fats in the cooking of non-veg
items. For the modern customers health is a priority. They are looking for
products cooked in safe and hygienic oils without any trans-fats. The fats in
its fast food items, still continues to trouble KFC. Since it meals in chicken
items mainly, its menu is bond to remain calorie heavy.
- Franchisee operations related issues: Franchisee operations related issues
are also common across quick service restaurant brands. It is not just about
KFC but such troubles are also common with Burger King and McDonalds.
Disputes related to the Menu and operational issues have always troubled the
 franchisee owners and remained a reason of disagreement and discontent for
both the management and franchise owners.
- Managing franchisees: Franchisee management is one of the critical issues
in the success of the fast food chains and due to conflicting operational
issues between KFC and its franchisees many of its outlets got closed since
its inception.
b. Suppliers

McDonald’s works with a number of large suppliers such as Coca-Cola Company,

Clorox Company, Dr. Pepper Snapple Group Inc. McCormick & Company Inc.,
International Paper Company, Sealed Air Corporation and others. McDonald’s
Corporation and its affiliates and subsidiaries generally do not supply food, paper
or related items to any McDonald’s restaurants. The Company relies upon
numerous independent suppliers, including service providers for the supply of food
and other related items. A set of important factors such as an abundance of
potential suppliers, low level of uniqueness of products provided by suppliers and
the importance of volume of order for each supplier reduce the bargaining power
of McDonald’s suppliers.
c. Buyer:
In the 21st century, the bargaining power of the customers has grown very high.
McDonalds focuses on every aspect from marketing and product quality to
customer service and customer convenience to manage its reputation. Overall, the
bargaining power of customers is high. However, there are also factors that
moderate this bargaining power of the customers. McDonalds is present globally
and also has a great reputation among its customers. Its brand image is an
important factor that moderates the bargaining power of its customers.
d. New entrants:
The threat of new entrants is moderate. It is because the barriers to entry are not
too high. However, in case of McDonalds the threat gets moderated by the fact that
it is a well-known brand and to erect such a big brand is not easy. There is a large
investment in supply chain, operations and marketing as well as human resources.
This limits the threat from the entrants. However, a brand can still make an entry at
a smaller level locally. So, the threat remains but gets moderated by the brand’s
size and image.
e. Substitutions:
There are many substitutes to McDonald’s products, such as products from
artisanal food producers and local bakeries. Also, consumers can cook their food at
home. In the Five Forces analysis model, this external factor contributes to the
strength of the threat of substitution in the fast food service industry. In addition, it
is easy to shift from McDonald’s to substitutes because of the low switching costs.
For example, shifting from the company to substitutes typically involves
insignificant or minimal disadvantages, such as slightly higher costs per meal in
some cases, or additional time consumption for food preparation. Moreover,
substitutes are competitive in terms of quality and customer satisfaction (high
performance-to-cost ratio). In this element of the Five Forces analysis of
McDonald’s Corporation, external factors make substitutes a major strategic issue
that requires approaches like product quality improvement. In relation, the
company’s efforts include encouraging people to eat in fast food restaurants
instead of resorting to substitutes. Such efforts are evident in McDonald’s
corporate mission and vision statements.

SWOT analysis:

Strengths Weaknesses

1. Market leadership in the US 1. Unhealthy food on the menu

2. Brand value and brand awareness 2. Declining brand image
3. Sustainable business model 3. High employee turnover
4. High level of profitability 4. Negative publicity
5. Global presence 5. Low differentiation

Opportunities Threats

1. Enhancing focus on nutritional menu 1. Food safety concerns

 2. Home delivery of meals 2. Fast food market saturation in developed
countries
3. Product differentiation
3. Lawsuits against the company
4. Improving CSR aspect of the business
4. Currency fluctuations
5. Increasing the extent of localization in
international markets 5. Competition from quality burger chains

3. Macro environment
a. Political
- First, MC Donald’s brought a rather huge capital to Vietnamese fast food
industry, following the encouragement of Vietnamese government to FDI
enterprises in Decree No.103/NQ-CP.

- Second, Vietnam is a country with a stable political institution that facilitate

doing business in Vietnam, a peaceful country without war and terrorism

=>opportunities: increasing FDI; stable market; create international

relations…
=>Challenges: the number of complicate procedures and documents,
unfair competition (because Vietnamese administrative controlling
system are not explicit, the corruption still exists in a variety levels of
authority…)
b. Economic

- In 2006, Vietnam joined The World Trade Organization (WTO)

- In 2007, Government promote and support the business activities of
Vietnamese enterprises
- 3 growth motivations: increased FDI inflows, consumption growth and
GDP
- =>Opportunities: expand market (with 90 million people), increase
consumptions …
- =>Challenges: the increase of competition and WTO regulations; tax rate
with import product …
c. Social- cultural
 - Population and age: people in working age (15-64) account for nearly
70% of population. Vietnam’s population is quite young, almost citizens
were born after the war.
- Population: growth rapid

- Culture: traditional food, healthy food and affordable price

=> Opportunities: abundant labor force, young and dynamic people

easily accept and adapt new trends from western countries…
=> Challengers: high price, fast food not good for the health some
people, it would not be easy to change eating habits of Vietnamese
because of different tastes between western and eastern cuisines…
d. Technological
- Internet system is large, McDonald’s provides free wireless internet
access inside of their outlet
- The most outstanding innovation of McDonald’s came from their drive-
thru section with a touch-activated screen
- McDonald’s has not had an official online website in Vietnam
=> Opportunities: the customers can easily browse internet while eating,
it easier for customers to order, they only need to punch in their orders
without queuing
=> Challengers: it more difficult for customers who want delivery service
to order while other rivals have online selling systems; difficult in small
city….
III. New campaign

Besides the previous products of Biti's Hunter series, in order to overcome the
problems of product quality, meet the tastes of consumers and have a sustainable
position in the Vietnamese footwear market, we design and produce a new collection
of sneaker shoes called "Biti's Hunter Classic" with the slogan "Our Shoes - Your
Style". Products are produced according to the criteria: simple but different design,
beautiful, trendy, easy to combine with many styles of dress, suitable for many
people and still retain the old value of Hunter series (durable, lightweight, active,
...). Biti's Hunter Classic continues to advance the advantages of the older
generation, adding to the improvements to improve the defects left over and listen
to some of the customer feedback on the market to launch good products about both
quality and appearance. The new collection is designed in the trend of streetstyle,
expressing youthfulness, dynamic, never out-of-date, and aiming to become the
typical sneaker model of the Made in Vietnam brand. But besides that the price of
products is still affordable, consistent with the cheap criteria that the quality of the
customer. The expected price of product is from 500.000 vnd to 600.000 vnd.

Topic: How to McDonald’s become the first choice fast food in

Vietnam?
Theme: Launch new product and solve some challenge

In Phase 1: Awareness( week 1, December, 2018)