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Name of Course: Strategic Management

Name of Instructor : Sir Ahmed Ali Memon
Name of Student : Sayyed Zohaib Rizvi
Student ID : 12-2715
Submission Date : 15th December 2015
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Table of Contents

Executive Summary………………………………………………………………………..Pg 3.

Strategy Formulation

 Competitors in Food Chain Industry in Iceland…………………… .Pg 4

 Competitive Profile Matrix…………………………………………………..Pg 5
 External Factor Evaluation Matrix………………………………………..Pg 5
 Internal Factor Evaluation Matrix…………………………………………Pg 6
 SWOT Analysis……………………………………………………………………..Pg 6
 Feasible Strategies Formulated…………………………………………….Pg 7

Strategy Implementation

 Market Segmentation…………………………………………………………..Pg 7
 Marketing Mix ……………………………………………………………………..Pg 8
 Product Line …………………………………………………………………………Pg 8
 Financial Statements Projection……………………………………………Pg 9
 Human Resource/Key Employees………………………………………….Pg 10
 Management Information System for McDonalds…………………Pg 10

Recommendation(s)……………………………………………………………………….Pg 10

Conclusion ……………………………………………………………………………………..Pg 11
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Executive Summary

Introduction

Iceland is an Island located in Europe, and is home to 323,002 people. While

Examining Strategic Measures that we need to undertake while opening a Branch
of McDonalds here, we need to examine many factors which include economic as
well as social.

We also need to examine the strengths and weaknesses of our Rival firms, in
order to understand the measures to gain competitive advantage over them.
Moreover, we need to cater to all aspects of our Internal Audit, our Finances, Our
Marketing Plans as well as our Research and Development Measures in order to
attract consumers towards us.

How were the Strategies formulated?

We will formulate strategies based on the Input Stage Dimensions of Strategy

Formulation which include IFE, EFE and CPM Matrices while opening McDonalds
for the First time in Iceland. We deduced KFC and Fish and Chips to be our Major
Competitors. These Matrices revealed our internal and external reviews.
Moreover, we used the SWOT Analysis to analyze our Strengths, Weaknesses,
Opportunities and Threats in Iceland. Finally, we came to 3 Alternative Feasible
Strategies.

How did the Major Strategy to be used, got finally formulated?

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Using the Quantitative Strategic Position Matrix (QSPM), we were indicated that
the best Strategy formulated is to Diversify our Products according to the
Regional Needs.

How were the Strategies Implemented?

We covered the 4 broad aspects of Strategic Management ; Marketing, Finance,

HR and MIS.

In Marketing, we found out through segmentation the narrow and specific

consumers we need to target. Moreover, we used the 4 Ps in order to cater to
the aspect of PRICING, PROMOTION, PLACEMENT and PRODUCT itself.

In Financial Area, we projected the Income Statement for the first 6 months and
the next 6 months which revealed our Net income figures.

In the Human Resources Area, we designated a Divisional Structure with

Employees and Hierarchy.

What MIS functions will be useful for implementing the Strategy?

We analyzed that Enterprise Resource Planning and other Information Retrieval

and Storage Systems will be useful to facilitate both our Customers and
Employees.

What was concluded?

Once the Formulated Strategies are evaluated, and implemented successfully,

McDonalds could be a Success in Iceland as it is still globally.

Strategy Formulation
Strategy Formulation would require us to first list down the competitors we have
in the existing Market. The following are the total Restaurants present in Iceland
today.

1.Hotel Buoir

2.Metro :
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3.Perlan :

4.Serrano

As for Fast Food Restaurants which are our DIRECT Competitors, the following 3
top the list.

1.Hamborgarafabrikkan

2.Fish and Chips

3.Naetursalan

4.KFC

Presenting a Competitive Profile Matrix (CPM) of our two big competitors KFC
and Fish and Chips in Iceland, we see:

Competitive Profile Matrix (CPM)

Competitors KFC _______ ______ Fish and ________

Chips
Critical Weight Rating Weighted Rating Weighted
Success Score Score
Factors
Financial 0.2 4 0.8 2 0.4
Position
Market 0.8 6 4.8 2 1.6
Share
Total 1.00 5.6 2.0

Based on the Above Information, we can easily judge that our Major Competitor
is KFC. Now we analyze the Situation in the Context of EFE Matrix and IFE Matrix
of McDonalds.

External Factor Evaluation Matrix (EFE)

External Factors Weight Rating Weighted Score

Opportunities
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First Mover 0.5 4 2

Few Competitors 0.1 1 0.1
Threats
Slow Market 0.1 4 0.4
Growth Rate
Increase Price of 0.4 4 1.6
Chicken
Total 1 4.1

Now that we know our Opportunities and Threats

externally, we need to do a Self-Examination of our Internal Strengths and
weaknesses of McDonalds in Iceland. Presented on the Next page is the Internal
Factor Evaluation Matrix (IFE).

Internal Factor Evaluation (IFE) of McDonalds

Internal Factors Weight Rating Score

Strengths
Established Brand 0.6 4 2.4
Name Globally
Relative Market 0.1 2 0.2
Share of 80
percent
Weaknesses
Low Employee 0.1 1 0.1
Retention
R&D not up to the 0.2 1 0.2
Mark
Total 1 2.9

Additionally, in order to Simplify things further we will do a SWOT Analysis of

McDonalds Opening in Iceland.

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

Goodwill Poor HR First Mover Mergers &
Acquisition by
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Larger Firms
Corporate Profits Service complaints Market Cold Region
Penetration
Divisional Employee Product McFlurry and
Structure motivation and Development other Icecreams
morale is low not sold
Star Rated on BCG Language Barriers Market
Matrix Development ____________
Ideal Capital
Structure _______________ _______________ ____________
Customer Loyalty _______________ _______________ ____________
_
Diversification ________________ _______________ ____________
These were the Basis of Formulating our Strategies. We have inferred 3 major
Strategies from the Data Above.

Strategy 1 : Opening McDonalds with Local as well as Foreign employees to

increase Cultural bond.

Strategy 2 : Do not Directly open McDonalds Franchise but to sell few products to
calculate earnings.

Strategy 3: Diversifying our Products to cater to the Climate, tastes and

Preferences of Icelanders.

Using the QSPM (Quantitative Strategic Position Matrix) we found out that
Strategy 3 has the Highest Sum total Attractiveness Score. And thus, will be the
Formulated Strategy to be implemented.

Strategy Implementation
Market Segmentation

We will segment our Market (the Consumers of Iceland) on the basis of the Four
Traditional means.
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In addition to this, we will Broaden our Product Line through Diversification. In

Iceland, McDonalds will be offering these Products.

1. Burgers
2. French Fries
3. Coffee (New Product)
4. Soup (New Product)
5. Fish (New Product)

The Above 3 products and many more services will be included on account
of the climate of Iceland, which is primarily cold. Also, being an Island, the
people are certainly fond of Fish. We have already seen FISH AND CHIPS as
our competitor. We can see this as an opportunity to perform related
diversification. Our Market Mix will include the 4 Ps in the following ways.

Product Place Promotions Price

Above Distribution Billboards Fairly Low
Mentioned Franchises initially
Product Line
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Impressive Brand At least 3 outlets. Internet Special

Names of new Discounts . Like
products like Mc Two Burgers and
Fish. free refill.
New Packaging Transportation Television Occasional
facilities for discounts like on
suppliers and Festivals/
retailers holidays.
Services like Play Headquarters in
Area Improved the Capital of
Iceland
_______ _________ Impressive deals _______

Financial
As per the requirements, we as Strategists now have to examine this
Opening of McDonalds in Iceland Financially by the Projection of Income
Statement and Balance Sheet for the First 6 months.

Income Statement (Projected)

Amount in 000s Amount in 000s.

First 6 months Next 6 months

Sales $100,000 $ 120,000

Cost of Sales ($80,000) ($ 95,000)

Expenses

Advertising ( $ 1200 ) ($ 1000)

Rent ($ 1000 ) ( $ 1000)

Other expenses -------- ($ 500)

Earning before Taxes $ 17,200 $ 22,500

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Taxes ($ 2000) ($ 2200)

Net Income $ 15,200 $ 20,300

Human Resources Functions

One of the Key Areas of Strategy Formulation will be our Human Resources
Function and it will be a challenging task for the HR to decide the Employees,
Hierarchial Structure etc. Hence, our main employees will be

1. Regional Head : Will be an American who will be reported by Local

Employees.
2. Zonal Head : Will be a Local Supervisor reported by other employees.
3. HR Head : Will be diversified including both Locals of Iceland as well as
Americans.

MIS Functions

McDonalds in Iceland will use Integrated Software and systems like ERP for
improving our Customer Database, and facilitate our Sales through examining our
Consumer Preferences. We will be using Management Information System which
will align all our Departments, so that they will be able to coordinate among each
other well. For example, our Database will record the Order of a certain customer
X and, in future, automate his order based on his historic choice of order.

Recommendations

The Recommendation from a Strategic Point of View is that Iceland needs to be

studied more and surveys and questionnaires should be undertaken which are
verbal. Opening an entirely new Restaurant does pose Financial Risk. At least 6
months of time should be devoted in Research of Iceland. Here is where the R & D
department of McDonalds would play a vital role. The R & D department should
focus on the following areas :
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1. How have Food Chains in Iceland performed in the Past?

2. What Improvements could be done to rectify the shortcomings?
3. What new or innovative does McDonald offer that previous restaurants
never offered?

Conclusion

The Conclusion of the Strategic Management Report is that Barriers of Language,

Communication and Climate are the only External factors that could hinder the
progress of McDonalds in Iceland. These being overcome, we have a strong
opportunity to create a Huge Relative Market Share in Iceland (About 1). It has
fewer competitors and is actually a first mover in Iceland in the Product Line of
Burgers. Thus, if the Strategy that is formulated above is implemented
successfully which does require special leadership skills and efficiency, then the
success of McDonalds in Iceland is inevitable.