Corporate Strategy Case Study

Outline
• McDonald’s Culture:
• Concepta
• Percepta

• American Culture
• Characteristics of American Firms
• McDonald’s similarities

• SWOT Analysis
• A: In the USA:
• Analysis of the firm
• Porter’s Value Chain
• Competitive Advantages
• Analysis of the Environment
• Macro Analysis (PESTEL)
• Micro Analysis of the industry
• B: Outside the USA
• General Arguments
• SWOT of McDonald’s in Lebanon

• Strategy Recommendations:
• Ansoff Strategies
• Porter’s competitive strategies
• Internationalization strategies
• Major functional strategies
McDonald’s Culture - Concepta

- Simplicity & Easiness

Simple and easy access to the outlets, minimalistic setup for better experience

- Convenience
Accessible and easily reachable: geographical proximity, drive through

- Scalability of business model

The franchise business model makes it easier to scale and expand

- Speed
Supply Chain and Fast Operations
McDonald’s Culture - Concepta

‐ Affordability
‐ McDonald’s accessible for all market segments due to its pricing strategy

‐ Consistence/Uniformity
‐ Standardization is a key element for McDonald’s brand, McDonald’s
experience is the same everywhere in the world.

‐ Leadership
‐ McDonald strives to always be the leader in terms of sales, growth, number of
branches..
McDonald’s Culture - Concepta

‐ Marketing oriented

‐ Customer (oriented):
‐ Customer loyalty is crucial within Mc Do culture, thru greeting and in-store interaction, thru
marketing campaigns, etc….whereby children grow attached to the brand’s Happy
Experience all the way into loyal customers of the brands when in adulthood, either
themselves or thru initiation of their children

‐ People Centric:
‐ Employee motivation and development and self learning: Hamburger
University for trainings..
McDonald’s Culture - Concepta

‐ Culture Evolution and Adaptation

o Social Responsibility (CRS)

o Personalization: from supersized to customized
o Natural: emphasizes that the food items do not contain additives or harmful
chemicals … reaction to the unhealthy/junk heritage of the brand during the
80s-90s, without being able to make the claim of “healthy”.. so “Natural”
comes out as believable alternative
McDonald’s Culture - Percepta

-Happiness/Fun
-The Logo, the Golden Arch of
Happiness which is in line with always
remembering the roots.. happiness is
always associated with money and
financial abilities in modern times..
McDonald’s offers a substitute to achieve
happiness without necessarily having the
financial capabilities.. for some of McDo
clients (not all) this promised Happiness
could be the illusion of a certain
unattainable financial status, on an
unconscious level
McDonald’s Culture - Percepta

- Ronald McDonald the clown:

- Childhood and Family

- Standard and uniform

architecture

- Playgrounds

- Self service
‐ Informality
Characteristics of American Firms
& Similarities with McDonald
- Profit Motive
Companies mirror the image of the American individual: Homo Economicus… they are directed almost purely by profit-
motive rather than corporate interests.
McDonald is evolving and shifting through implementing corporate social responsibility projects, as well as
employee satisfaction programs

- Efficiency
American are goal driven and goal oriented. Efficiency marks their strategies, where they are able to produce with little
expense or waste.
McDonald is an example of how the company’s strategy can be well implemented at international level with this
level of success

- Diversity and Egalitarism

American culture promotes inclusiveness and equality. American are from every color, religion, ..McDonald reflect this
value, where everyone is welcomed with no differentiation or favoritism between social or cultural classes.
Characteristics of American Firms
& Similarities with McDonald
-Competitiveness
American always thrive for being the best. They always seek new challenges and new business frontiers.
McDonald is an example of how American’s limit is the sky. The global expansion and the value of their
brand

-Speed of Execution
Americans don’t want to wait, they want immediate rewards: instant/fast gratification…
McDonald , as well as fast food chains, originated in the US, where the society places too much emphasis
on efficiency at speed of service

-Thinking Big
American think big, and always aim bigger. This is reflected in many aspects of their day to day lives.
McDonald incorporates this aspect of the American culture: Space, sales targets, number of outlets,..
All are examples of their big targets and expensive ambitions.
SWOT Analysis
• A: In the USA:
• Analysis of the firm
• I-Porter’s Value Chain
• II-Competitive Advantages
• Analysis of the Environment
• I-Macro Analysis (PESTEL)
• II-Micro Analysis of the industry

• B: Outside the USA

• General Arguments
• SWOT of McDonald’s in Lebanon
Analysis of the firm
In the following, we will be
analyzing McDonald’s firm
through its chain of activities,
and highlighting its main
strengths and weaknesses
I- Porter’s Value Chain
1- Sales

McDonald is the second largest restaurant network serving customers in over 120 countries.

Diversified income stream:

Real estate/ being Landlord of its locations : McDonald’s has a multi-billion real estate empire. Imagine having
thousands of premium locations around the globe. As of end of 2018, it has 37,855 restaurants in 120 countries,
out of which 35,085 are franchises and rest are company-operated restaurants. McDonald’s franchise works
slightly differently. McDonald’s not only provides their brand name, recipes, ingredients, processes to franchisees
but also owns the land and operates as a landlord and makes revenue through rent payments. (Strength)

2-Procurement/Supply Chain:
McDonald presents a leverage when it comes to price negotiation with the suppliers.
The streamline of its supply chain and its process standardization puts it in an advanced position
(Strength)
I- Porter’s Value Chain

3-HR Management:

- At McDonald’s, HR has become about People. A strong focus is put on people training. The McDonald’s
university is a proof of how far McDonald went in this field (Strength)

- High employee turnover. Most jobs at McDonald’s are low skilled and low paying. As a result, there is a
significant amount of employee turnover. Many employees don’t take the job seriously, or only do it for
short periods of time, and this leads to lower performance. Since there is so much turnover, training costs
are high. Due to recent employee right revolutions worldwide and increased wage limits, many
organizations have faced critical dissatisfaction from employees. Recently McDonald’s has faced extreme
backlash from their workforce. The workers went to several protests and strikes with a demand to
increase their minimum wage to $15 an hour, causing the company reputational harm (Weakness)
I- Porter’s Value Chain

4- Operations management and Technology:

McDonald’s standardization and strong efficiency is observed at many levels:

- Standard operating procedures
- Efficiency in the number of staff
- Logistics and Support: warehousing, transportation,
- Acquisition of many companies in order to excel in technology adoption (Dynamic Yield, Plexure,
Apprente)
- Ordering Kiosks, Online Delivery, Global Mobile Application
(Strength)

5-R&D:

- Creation of McDonald’s Tech Labs in silicon valley to develop data science and digital adoption
- Use of AI to optimize recruitment strategy: ex: enable job applications thru Alexa and OK GOOGLE voice
commands (Strength)
I- Porter’s Value Chain

6-Marketing :

- Global presence/convenience & proximity: McDonalds has strong global presence and is
considered as a market leader in both the domestic as well as the international markets
(Strength)

- Strong Brand Recognition/Image: McDonald’s the Tenth Most Valuable Brand in the world. With
an incredible brand value worth of $126.04 billion in 2018. No other brand, in the fast food
category, was even close to McDonald’s worth as Starbucks, which was the second most
valued brand had a worth of just $44.5 billion.
II- Competitive Advantages
1-Brand (Strength):
• A global brand that owns 34,000 restaurants serving in 119 countries.
• Of these 34,000 restaurants at least 14,000 restaurants are situated in the US.
• It is the No. 1 fast-food company by sales. 5.6% sales growth located itself in major airports, cities, highways,
tourist locations, theme parks.
• Large amounts of investment have gone into supporting its franchise network, 75% of stores are franchises.
II- Competitive Advantages
The large size of the company’s restaurant network is a strength that provides many advantages over
competitors, including:

-Economies of scale
-Market power over suppliers and competitors
-Wide audience reach
-Huge gains from implementing best practices;

SLIDE |
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II- Competitive Advantages
2- Capabilities/Competencies:

 Research & Innovation (Strength)

 Firm’s infrastructure & organizational chart/decision making is slow (Weakness)
 International Management through Franchise (Strength)
 Corporate Social Responsibility (newly introduced).
 Adaptability to market tastes and requirements:
 Even though McDonald’s standard signature is embedded in its brand, it adapted to local tastes
of newly entered markets (Strength)
 Improved Quality Control and Health Protocols.
 McDonald’s’ quality standard has always been its strong point. The Company enforces complete
food safety and quality protocols before buying the ingredients from third-party intermediaries.
Recently McDonald’s has begun restricting the use of the high-value human antibiotics. It
was established by the World Health Organization (WHO) as “highest priority critically important
antimicrobials” (HPCIA) to human medicine, in its global chicken supply since 2018.
II- Competitive Advantages
 Technology Development and Integration for managing franchises and also customer experience and
for faster production at lower costs)… . McDonald’s is taking revolutionary technology initiatives to
make their ‘Experience of the Future’ dream come true.
 Initiatives like implementing self-service with kiosks, mobile order and payment systems are
benefiting McDonald’s image as the ‘restaurant of the future.’……………. Acquisition of Dynamic
Yield: The company’s latest acquisition of ‘Dynamic Yield’ is another step towards enhanced
personalized marketing and customizations. Dynamic Yield is an Israeli startup that assists
brands like McDonald’s to boost their customer experience with brands personalize offerings.
B- Analysis of the Environment
I-Macro Analysis (PESTEL)

1-Political Factors:
• Governmental recommendations and guidelines for health habits
(threat and opportunity)
• Public health policies (threat and opportunity)
• Governmental regulations leading to Increase in cost of operations
due to rise in cost of production and wages (Threat)
• Fear towards American brands/products due to politics (in some
countries).. could curb expansion/competitiveness (Threat)
I-Macro Analysis (PESTEL)
2- Economical Factors
• Slow but stable growth of developed countries (opportunity)
• Slowdown of the Chinese economy (threat)
• Rapid growth of developing countries (opportunity)

3- Socio Cultural
• Rising disposable incomes (opportunity)
• Busy lifestyles in urban environments (opportunity)
• Increasing cultural diversity (threat and opportunity)
• Healthy lifestyle trend (threat & opportunity)
I-Macro Analysis (PESTEL)

4-Technological Factors
• Moderate R&D activity in the industry (opportunity)
• Increasing business automation (opportunity)
• Increasing sales through mobile devices (opportunity)
• Increasing innovation in the AI industry (opportunity)
I-Macro Analysis (PESTEL)

5-Ecological/Environmental Factors :

• Rising interest for corporate environmental programs (opportunity)

• Increasing emphasis on sustainable business strategies
(opportunity)
• Changes in climate conditions in some regions (threat)
• In March 2018, environmental activists proposed the board of directors of
McDonald’s to abandon the use of plastic straws in its over 37,000
restaurants worldwide due to explosion of plastic pollution
I-Macro Analysis (PESTEL)
5-Ecological/Environmental Factors : COVID 19 Impact

• All over the world, restaurants have been forced to adapt to changing guidelines from
governments and health officials in recent weeks. McDonald's has been steadily limiting its
offerings in other countries due to the ongoing COVID-19 outbreak and in some places where
distancing was difficult to apply McDonald closed.
• McDonald's restaurants have mostly remained open for drive-thru, carryout and delivery
services, even in cities like New York City and Los Angeles where residents have received
guidelines not to leave their houses for nonessential activities.

Pandemic circumstances presented high threats to the food industry in general, and to fast food
chains in particular. At the same time, the opportunity it presented while requiring a business
transformation towards safe delivery.
I-Macro Analysis (PESTEL)

6-Legal Factors
• Increasing health regulations in workplaces and schools (threat)
• Increasing animal welfare regulations (threat & opportunity)
• Rising legal minimum wages (threat)
II-Micro Analysis of the industry
• Major Competitors
II-Micro Analysis of the industry
• Market Analysis:

• Consumer shift to organic and natural foods (Weakness)

• Price competition with the competitors results in low revenue (Weakness)

• There is a lack of disruptive innovative products on the menu (Weakness)
• Lower class perception (excluding New York and metropolitan cities) (Weakness)
• Mc Do is so big of a company (US an Internationally): introducing change across the
entire network is time consuming and not easy to implement systematically (Weakness)

• Examples:
• McDonald’s often for millennial is considered an old school with its traditional menu and
taste. In this situation, food chains like shake shack and Wendy’s take full advantage with
their often experimented menu and recipes to include variety.

• For example, McDonald’s failed to compete with Wendy’s “Signature-Crafted Burgers.”

and hence had to stick with its conventional Quarter Pounders to save face
II-Micro Analysis of the industry
• Industry analysis

McDonald’s spent
McDonald’s vs competitors advertising spending (in US$ millions)
US$532.9 million on
Company 2017 2016 2015 advertising and related
expenses in 2017.
McDonald’s 532.9 645.8 718.7

Starbucks 282.6 248.6 227.9

Yum! Brands 245 260 255

The same as the other
3 largest competitors
Burger King 7.4 5.5 13.7 combined.
II-Micro Analysis of the industry
• Growing trend for Healthy Food , Vegan/Vegetarian (veggie grill,
copper branch) (threat)

• Changing Behavior of Millenials and Z-Generation: experience driven,

tastes, healthy, etc..(threat)

• Focus on family & children: risk of alienation of singles (all age groups),
or young couples (not married or no children) (threat)
II-Micro Analysis of the industry
Opportunities:
- Innovative Products:
- McDonald’s must put efforts to introduce new, innovative items on their menu to make customers choose them instead
of the new fast food outlets.In 2018, the company started to serve an exclusive beverage – MIX by Sprite Tropic Berry
in their New York outlets. It became an instant hit and is likely to be served in all of the US.
Launching more items like this according to the geographical conditions and culture can help McDonald’s maintain their
charm for a longer period of time.

- Global Expansion
McDonald’s rules over the US, but it is often that it struggles in the international market. However, the company has high
potential to continue its global expansion by focusing more on international markets rather than different states of America.

-Mobile order and McDelivery

McDonalds has initiated a partnership with UberEats and Door dash for US food delivery. These mobile order and delivery
initiatives help McDonald’s to reach and fulfil customer’s ever-changing needs.
Personalization options for the menu.. to attract the new generation of millennials and z-generation..
Create a different and unique Experience
 II-Micro Analysis of the industry

Threats:
• New Burger Concepts: the gourmet burger trend

• Price war by other competitors: stress on margins

• Local burger concepts, and local QSR concepts (other than burgers.. local staple food): taking market share

• Food Trends: such as growing affinity for Chicken in both Muslim, Hindu, ASIAN, and even Western nationalities
(within US population).. ex: the rise of Chick-fil-A
• Supply chain interruptions: McDonald’s being one of the busiest food chains often faces issues due to disruption
in the supply chain. Also, it limits the availability of products, which are critical to the operations.
• Therefore, when a franchise experiences such interruptions, the operational expense increases, which there by
results in reduce revenue and lower profitability.
 SWOT
Threat:
Strength:
Covid 19 and Pandemic strategies
Diversified Income Stream: Food and Real Estate
-Guidelines for healthy habits and Public health policies
-Market Power over suppliers
-Political affiliation and association with the United States western policy
-Strong supply chain function
- Slowdown of the Chinese Economy
-Adoption of Best Practices
-Climate changes and impact on people behavior
-People management and training processes
-Increasing health regulations in workplaces and schools
-Technology Adoption
-Increasing animal welfare regulations
-Strong R&D
-Rising legal minimum wages
-Marketing: most valuable brand in the world
-Growing trend for healthy food
- Global Presence through Franchise Model
-Price war
-Locations: Proximity
Local and trendy burger concept stores
-Adaptability to local market taste
-Supply chain interruptions

Weakness: Opportunity:

-High Turnover Rate -Rapid growth of developing countries

-Lower class perception
-Huge organization structure:
complexity when introducing a new concept or a change
-Lack of innovative Products
-Low revenue due to price competition
-Consumer shift to organic and natural products
-Busy Lifestyles in urban environments
- Rising disposable incomes
-Moderate R&D activity in the industry
-Increasing business automation
-Increasing sales through mobile devices
-Increasing innovation in the AI industry
-Increasing emphasis on sustainable strategies
- Need to attract millennials and teens
-Innovative products
-Market Expansion
-Global delivery
B: International SWOT
COMPLEXITY OF INTERNATIONAL SWOT EXAMPLES
• EACH MARKET HAS ITS UNIQUE SWOT:

• The macro environment and the specifities of each region and country require a different analysis and a different
approach in formulating a company’s strategy.
• Here are some examples of incidents that affected McDonald’s business in the world and type of competitors that it had
to face:

o Withdrawals from some markets such as Bermuda 1995 , Bolivia in 2002 , Barbados in 2005, Jamaica in 2005 , and Iceland 2009
o International expansion did not always allow an exact replication of the American Model ( different flavors preferences , Negative
feelings towards American products)
o Burger Wars in 1980 ( RED OCEAN)
o During the Mid-80s, McDonald in in China and Japan suffered a lot from Food scandals. And had to work on regaining the customer
trust by improving its supply chain management. Local firms benefited a lot from the bad publicity.
o As of 1987 the rise of new Competitors : Quick in Belgium and France , Joeys and Nordsee in Germany , Yoshinoya in Japan. Other
competitors: Bakeries offering snacks or salads, as well as with butcher shops that provide dishes of the day. Turkish or Arabic kebab
outlets or individual Italian, Thai or Chinese fast food outlets in Berlin and Paris. In Japan, 7-Eleven, pizza restaurants such as
Napoli’s Pizza.
B: International SWOT

o As of 2001, McDonald faced harsh criticism and allegations about its exploitation of employees and the
environmental damage Tasty meals vs wholesome food, the experience of dining quickly vs dining comfortably.
o Competitors in Europe and USA , such as Subway, which promised healthy and fresh products, and Starbucks,
which offered a relaxed and cozy atmosphere U.S. market, and Europe.
o In USA McDo broadening its product range and include lower-fat burgers, salads and fruit. Promoting sports
and a healthy lifestyle. Supersize Menu’ was removed in USA
o McCafé Australia + Germany was a success while In the United States, in contrast, Starbucks and McDonald is
engaged in an extensive fight for market predominance often referred to as ‘Coffee Wars’. RED OCEAN
o Despite all efforts , McDonald name is still linked to unhealthy food , and the recent success of burger chains
offering premium quality and table service such as Five Guys in the USA or Hans im Glück’ in Germany also
demonstrate that customers’ dining behavior has change
SWOT - Lebanon
Strengths:
Proximity
Known for its outstanding offers
Unparalleled branches when it comes to being modern,
technologically driven and tidy and clean
“Big Mac” is a top of mind product in the country
Branches spread across almost all regions
Availability of delivery to almost all regions of the country
Has strategic locations such as Bliss street next to AUB and other
More notable and buzz worthy communication and campaigns that
are very locally relevant.
SWOT - Lebanon

• Weaknesses:
Perception of cheap
Limited margin of manoeuver in the adaptation to the local market, due
to the franchise model
Offers and bundles are not competitive enough to KFC
Doesn’t appeal to a big audience (Dahyeh and surrounding) because
of low availability of branches there
Cannot compete with Lebanese fast food chains in any way
SWOT - Lebanon
• Threats:
Economical Situation
Substitutions by Lebanese fast food and local chains
A big part of the population boycotts all embodiment of American companies
representing American’s culture

• Opportunities:
Lebanese trust foreign brands and await their opening in the middle east,
even till today
Lebanese are a delivery and convenience appreciating people
Reshape the brand for the young generation
The lebanese economy is in a bad shape, people will chose more affordable
eating out options
Local manufacturing and recycling of material
 SWOT - LEBANON
Strength:

Proximity
Threat:
Known for its outstanding offers
Unparalleled branches when it comes to being modern,
Economical Situation
technologically driven and tidy and clean
Substitutions by Lebanese fast food and
“Big Mac” is a top of mind product in the country
local chains
Branches spread across almost all regions
A big part of the population boycotts all
Availability of delivery to almost all regions of the country
embodiment of American companies
Has strategic locations such as Bliss street next to AUB and
representing American’s culture
other
More notable and buzz worthy communication and campaigns
that are very locally relevant.

Weakness: Opportunity:

Perception of cheap Lebanese trust foreign brands and await their

Limited margin of manoeuver in the adaptation to the
local market, due to the franchise model
Offers and bundles are not competitive enough to KFC
Doesn’t appeal to a big audience (Dahyeh and
surrounding) because of low availability of branches there
Cannot compete with Lebanese fast food chains in any
way
opening in the middle east, even till today
Lebanese are a delivery and convenience
appreciating people
Reshape the brand for the young generation
The Lebanese economy is in a bad shape,
people will chose more affordable eating out
options
Local manufacturing and recycling of material
 Strategy Recommendations
 In terms of Ansoff’s approach to Market & Product Diversification:
 Vertical Diversification:
 Accelerate the development of Mc Café thru two simultaneous scenarios:
• Spin-off Mc Café as stand-alone concept with full identity & specific brand image, to capture a larger segment of the
huge global coffeeshop market where Mc Do can compete on prices, as well as to target the clientele who are not
consumers of typical fast-food meals. Mc Café could also be the perfect vector to create, incubate, & test “healthy”
menu items (such as gourmet salads, gluten-free muffins, vegan sandwiches) as well as to test, elaborate and
expand the Drinks Menu where Mc Do still has a huge potential (on both standard and healthy options) due to the
limitations of current beverages’ menu.
• Reinforce the presence, visual identity and seating zone segregation of Mc Café section within typical Mc Do
locations), in markets not-yet mature enough for complete spin-off; albeit there would not be the possibility for having
an extensive menu for Mc Café in such context, in order not to conflict with &/or dilute the main standard McDo outlet,
but it will help increase sales throughout longer periods of the day and broaden the visiting customer base. (some of
these products can be also served within the stores, such as a healthier soft drink version under the label of Mc Cola),
and will be highlighted under Porter’s segment

• Create a Retail Brand Division by launching retail products (FMCG) to be sold in major chains: such as Mc Do
Ketchup, Mc Do Chicken Nuggets, Big Mac Secret Sauce, Mc Cola etc…). This will also help increase the brand
penetration and loyalty, and allow brand awareness to reach countries where physical Mc Do restaurants do not
exist yet, but where retail products could be distributed. (this could also be categorized under Porter’s approach
to strategies, with regards to product)
Strategy Recommendations
 In terms of Ansoff’s approach to Market & Product Diversification:
• Concentric Diversification:
• JV or Acquisition of leading Kitchen Equipment Manufacturers, whereby Mc Do can capitalize on its recent acquisition of Apprente (company specialized in
Artificial Intelligence; www.apprente.com) and of Dynamic Yield (company specialized in data mining and machine learning; www.dynamicyield.com ) in
order to develop a fully automated product cycle within the Mc Do restaurants, starting from interacting with AI’ hologram cashier thru voice-based
conversational systems, then having Smart Machinery to cook, fry, wrap and dispatch the products without human intervention (some components of this
approach will be echoed in Porter’s segment, with regards to hygiene, and sanitation, especially during & post COVID-19 pandemic which caused major
shifts in several established paradigms.
• JV or Acquisition of Beyond Meat (with whom Mc Do has already started collaboration for meatless patties, www.beyondmeat.com) or other similar
companies developing meatless food products; this will support Mc Do in developing its meatless offering on the menu and face competition, while this
could also be an opportunity for creation of meatless Retail Products discussed in Vertical Diversification.
• Acquisition or Investment into major global Agri-Alimentary producers & industries in a way to cover key zones linked to future geo-politics and geo-
economies: this will help Mc Do maintain an uninterrupted supply chain within each of the regions & continents, in light of the de-globalization trend and the
recent stress on world supply chains & global logistics during Covd-19 pandemic. (it will also surely be synergetic with the launching of Mc Do’s retail
brands for FMCG).
• JV or Acquisition of Food Safety & Sanitization/Hygiene companies, in light of the changing consumer behaviors due to recent pandemic. This will allow Mc
Do to leverage on same in its overall customer experience whether in-store, drive-thru or delivery (the same will also be discussed under different angles in
Porter’s approach).
• JV or Acquisition of Online Delivery Platforms & Delivery Logistics companies, in tandem with development of Mc Do CLOUD KITCHENS (BLACK
KITCHENS) across geographies where physical store are not yet established or cannot be established (for profitability reasons, or any other reason). In
recent years, and more to the point post-Covid19 pandemic, the “DELIVER IT” business model will be reinforced by social distancing and changing
consumer behaviors, as well as other already existing factors such as convenience, speed etc… This investment into DELIVERY formats will enable Mc Do
to expand faster into new geographies and gain further market share, at lower Capex for either the Principal or the Franchisees (could be remote cities or
low-density districts which both don’t support a profitable brick-&-mortar Mc Do restaurant and are within countries where Mc Do restaurants have already
opened, or completely new countries where Mc Do brand has not entered yet). Not to mention that the investment of Mc Do in Apprente, Plexure, and
Dynamic Yield could be crucial and highly synergetic to develop a state-of-theart online ordering & delivery platform and logistics chain.
Strategy Recommendations
 In terms of Ansoff’s approach to Market & Product Diversification:
• Conglomerate Diversification:
• Strengthen Mc Donald’s leadership & core positioning as “THE” BRAND for families & kids:
- Acquisition or Investment in Family Entertainment companies in order to either spin-off McDonald’s Fun Zone into a stand-alone Family
Entertainment Center (similar to Nickelodeon, but with flexible formats from Edutainment modules of 200 sqm, and all the way to full-
fledged FEC of 2000+ sqm), or roll-out newly acquired FEC concepts. These FECs could be adjacent to Mc Donald’s restaurants in key
shopping malls or other prime locations within cities & communities; and will create an efficient synergy and cross-selling between
businesses.
- Acquisition or Investment into established chain of Schools: not only will it be a safe and lucrative investment given the perpetual nature
of this education business segment, but it’s a perfect means for Mc Donald’s to strengthen the following:
• Social Responsibility: brand association with schools and educational institutions is a dream scenario to enhance the perception
and implementation of Social Responsibility practices for Mc Donald’s as a brand, as well as a corporation.
• Brand Loyalty: ideally this could allow Mc Donald’s corporation to contemplate opening Mc Café in every school where Mc Do has
a stake and subsequently to promote Healthy & Kids-Friendly meals & beverages, in lieu of the typical boring school canteen.
Having access to and being present in the minds and daily experience of children and teenagers at such early stage, is a powerful
tool to build brand loyalty; not to mention, that the emphasis on Healthy Food in Mc Café locations within schools, will contribute
to the change of paradigm whereby Mc Donald brand shift its perception from a former rather “unhealthy” fast-food brand to a new
healthy one.
• Transform McDonald’s into a Fun Brand and not just a Food Brand
• JV or Acuisition of Online Gaming company: the global gaming industry being in the range of $150 Billions globally with sustainable
growth pattern (Newzoo’s Global Games Market Report www.newzoo.com ), and knowing that Mc Donald corporation respectively
invested into and acquired Plexure (leader in mobile engagement software, www.plexure.com) and Dynamic Yield (specialized in
Artificial Intelligence; www.dynamicyield.com); the same will enable Mc Do to enter the Gaming market with an established competitive
edge technologically, but most importantly Games would be another strong medium for Mc Do product placement and creates another
valuable means to reach a database of hundreds of millions of teens and young adults across the globe.
• JV or Acquisition of Hotels &/or Resorts chain: whereby Mc Do enters the global Hospitality & Tourism business with an existing strong
brand equity, by creating the Mc Donald Hotel (three star format) and/or Mc Donald Resort brands where it would offer Families around
the world affordable resort experiences and would also cater thru its 3* Mc Do Hotel to a growing teenager and young adult hospitality
market where this segment is looking for a funky and cost-effective stay during tourism or business travel.
Strategy Recommendations
 In terms of Porter’s approach to Cost Leadership & Product Diversification:

- Cost Leadership:

- Compete on Cost Ratio and Selling Prices thru introduction of Mc Do Loyalty Scheme: weekly, monthly & yearly membership schemes
allowing the members to benefit from free meals when they reach a certain total amount spent per week, month and per year. This will
not only help increase sales but will also significantly contribute to retaining customers’ loyalty and to helping Mc Do maintain and grow
its market share vis-a-vis its competitors.

- Reduce Cost of Ingredients and Reduce Depreciation Cost of Capex thru synergies between sourcing products from local & regional
suppliers and saving on freight & custom duties, in addition to the synergy with the JV/Acquisitions of Mc Do in Agri-Alimentary industry
as well as taking into consideration the synergy with JV/Acquisition of Kitchen Equipment Manufacturers.

- Reduce Cost of Packaging, by re-thinking packaging strategy:

 Combos and meals to be served in ONE consolidated package, rather than individual packaging, while maintaining brand
image and visual identity & attractiveness.
 Adopt cheaper recyclable packaging material (tax deductible too) in order to help reduce cost, while also contributing to the
CSR efforts of the corporation and the eco-friendly perception of the Mc Do brand accordingly.
 Strategy Recommendations
 In terms of Porter’s approach to Cost Leadership & Product Diversification:
- Product & Service Diversification, allowing better margins, thru better/unique services & higher selling prices of unique
products:
- Expand the beverage menu and coffee offering: by introducing both Healthy drinks (freshly squeezed fruits, natural smoothies, natural milkshakes with organic milk or
with dairy substitutes such as Almond Milk and Soy Milk…etc), as well as novel soft drinks’ flavors such as the previously successful Sprite Tropic Berry launched in
USA in 2018. in addition, expand the Coffee menu at Mc Café, in order to position it as a major player in the coffee-shop segment and attract new clientele (this should
be coupled with enhancing the visual identity and segregating a distinct seating zone for Mc Café within Mc Do restaurants).
- Introduce Food Menu items that support specific dietary requirement: Gluten Free Burgers (already offered at Burger King), Keto Bread Buns for specific burgers,
Vegetarian/Vegan Wraps in Mc Café, Meatless burgers (both beef & chicken substitutes; in synergy with the collaboration or potential JV/Acquisition of Beyond Meat
(www.beyondmeat.com )
- Introduce Healthier Food Menu items centered around both healthier ingredients and cooking methods, :such as air-fried French fries without using oil, low-fat burgers,
low sodium burgers and meals, certified organic French fries, special burgers with certified organic beef patties and vegetables or free-range hormone free chicken…
etc
- Introduce the “freshly baked” items thru Mc Café: bakeries have always been associated with “freshness” in the sense that products are baked daily and covey a
wholesome and homey perception. Mc Donald should capitalize on Mc Café by using it s the channel to launch “freshly baked” pastries (scones, muffins, etccc) as well
as freshly baked sandwich bread (this way instrumental for Subway, for example). Not to mention that these concepts of “freshly made daily” and “bakery
wholesomeness” are attractive to a large female crowd who usually shy away from Mc Do, in addition to other categories of the consumer base such as early work
commuters looking for a morning coffee with a freshly baked pastry (which were at the core of the consumer base for Tim Horton’s in Canada for example).
- Allow in-store sales of the Retail/FMCG products of Mc Do thru attractive visual merchandising : this could be an ideal impulse driven sales revenue, which do not
require any additional CAPEX or OPEX by existing Mc Do restaurants. Imagine a child finishing his fries with ketchup, and asking his mom to buy him a bottle of Mc Do
Ketchup to take home, etc…
- EXPERIENTIAL competitiveness: Use of Technology/Artificial Intelligence, and the synergies with Apprente (thru the newly created Mc Donald’s Tech Lab in Silicon
Valley), Dynamic Yield, and Plexure, to deliver a better EXPERIENCE throughout Mc Donald’s Dine-in restaurants, Drive-Thrus, and Delivery Platforms:
 Hygiene/Sanitation/Food Safety: post Covid19 Pandemic, customers are very conscious of these factors, and Mc Donald should elevate the “contactless”
experience of its clients at all stages of the transaction cycle, starting from ordering stage (voice recognition and AI driven communication), then thru
automation of food production , and all the way till final dispatch of goods whether in-store or drive-thru or by Delivery.
 Use Data Mining and AI to (1) target consumers basis their preferences and minimize the “per-head” reach-cost for online media and marketing
campaigns , (2) suggest to clients specific menu items basis their profile and data analysis The same will surely help in increasing the average ticket as
well and the overall sales revenues, not to mention helping to consolidate the loyalty to the brand by conveying this sense of “personalization” thru better
understanding of each and every clients preferences.
Strategy Recommendations
 Additional Recommendations to capitalize on the SYNERGIES that
should be created by the previous approaches under Ansoff and Porter:

1. CREATE THE MC DONALD’S VIRTUAL/ONLINE GLOBAL MARKETPLACE: whereby Mc Do to create a

“global” AMAZON-alike platform where customers can log-in to access the following from one single and
same application:
• DELIVERY of Food & Beverage Menus
• BOOKING into Mc Do Hotels & Resorts
• ORDERING Mc Do Retail/FMCG products
• DOWNLOAD & PLAY the GAMES under Mc Do’s JV/Acquisition of gaming companies
• ENROLL (for new students) and LOG-IN to Portal (for existing students) in SCHOOLS associated with
Mc Do’s JV/Acquisition into Education sector
• BUY Tickets and Memberships for FECs under Mc Do’s JV/Acquisition into Leisure & Entertainment
Strategy Recommendations
 Additional Recommendations to capitalize on the SYNERGIES that
should be created by the previous approaches under Ansoff and Porter:

2. MARKETING CAMPAIGNS to include (not limited to) the following emphasis globally:
• Transparency: Mc Do brand should reinforce the credibility of its messages with regards to quality
and safety of ingredients, and with regards to CSR.
• Healthy menu items and ingredients: promote the previously mentioned new products aimed at a
more health conscious crowd, with specific dietary needs and/or quality concerns.
• Cleanliness/Hygiene/Sanitization/Safety: in line with the changing behavior of consumers during
and in aftermath of COVID19 pandemic.
Strategy Recommendations
• Make or Buy:

• Insourcing:
• Have their own farms and sell meat to other suppliers to optimize cost.
• Have their own tomatoes farms. Unused tomatoes can be dried and sold to
wholesalers
• Have their in-house or J/V with advertising Agencies to manage global campaigns
i.e. Spark Agency of Land Rover/Jaguar. More cost efficient and consistency in
Branding.
Additional recommendations
Lebanon
• Recommendations:

• Post Covid:

• Delivery enhancement, contactless delivery and contactless order pickup

• Mobile App
• Loyalty Programs

- Respond to customer needs:

• Personalize the customer’s experience through greetings
• Ensure Consistency in order to stay aligned with the global brand
• Enhance the use of technology by using AI to targeted advertising campaigns as well as in the Drive Thru (“ we
know what you want to order..)

-Enlarge the market segment by providing specific Signature Items, as Mc Gourmet, offering special menu item
(special dessert, special drink)

- Focus on local suppliers for ingredients in order to optimize the costs