UNIVERSITY OF MAKATI

College of Business and Financial Science

McDONALD’S
A Company Case Study

Presented to the Faculty of the

College of Business and Financial Science
UNIVERSITY OF MAKATI
Makati City, Philippines

In Partial Fulfillment of the MIDTERM Requirements for the Subject

STRATEGIC MANAGEMENT
by
GROUP 1
CHAN, Henry S.
DY, Maria D.
BACHELOR OF SCIENCE IN ACCOUNTANCY (BSA)

Submitted to

Dr. DOMINGO T. BALSE, JR.

Course Adviser

March 27, 2022

Revision of this document should undergo the standard procedure and should be approved by Dr. Domingo T. Balse, Jr. (document creator).
Page 1 of 7
 UNIVERSITY OF MAKATI

College of Business and Financial Science

I. Statement of Facts

This case study is about McDonald’s, in full McDonald’s Corporation, American fast-

food chain that is one of the largest in the world, known for its hamburgers. Its headquarters
are in Oak Brook, Illinois.

McDonald’s is more than a restaurant chain. It has become a part of the lives of millions of
people by developing its own culture. It operates more than 24,000 restaurants in 114
different countries; and holds 21% of the fast-food industry market in the US. In 2005, the
company plans to open 10,000 new restaurants. McDonald’s pioneered the new industry
trend of co-branding and satellite locations.

At present, McDonald’s should decide whether to continue its tried-and-tested (and

successful) standardization strategy or promote flexibility to its operations so as to remain
competitive and provide better products and services. The case happened in October 2014

II. Viewpoint
The case is viewed as if we were the Marketing Managers of McDonald’s.

III. Statement of Problem

A. General Problem:
How can McDonald’s adapt to changing market conditions to sustain the
growth it had experienced?

B. Specific Problems:
1. Mcdonalds’ have bigger menus that would affect kitchen operation more
complex giving some customer a longer wait for their fast food fixed.
2. Health issues regarding fast food chains are arising and can decrease sales.
3. Mcdonald’s has a reputation for paying its staff poorly.

IV. Objectives

A. General Objective:
The main objective of the McDonald's corporation is to be the customer's
favorite place to eat. The company aims to provide its customers with food of a
high standard, quick service and value for money. It aims 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.

B. Specific Objectives:

1. Move with velocity to drive profitable growth

2. Become an even better McDonald’s
3. Serve more customers delicious food each day around the world

V. Areas for Consideration

 Products and services innovation. Because of the continuous changes in customer
needs and wants, new and existing products will be developed to continue satisfying
clients.
 Cost-efficiency. Able to be effective in executing the plan with no or no minimal
waste.
Revision of this document should undergo the standard procedure and should be approved by Dr. Domingo T. Balse, Jr. (document creator).
Page 2 of 7
 UNIVERSITY OF MAKATI

College of Business and Financial Science

 Sustainability on objectives. Capacity to endure and support the fulfillment of the

set objectives.
 Timeliness of expected result. How fast this ACA can get its objective

VI. Alternative Courses of Action

Generating strategic options using SWOT/TOWS

Strengths (S) Weaknesses (W)

S1: Very high brand W1: High employee turn-over.

recognition and world’s
most recognized logo W3: Less focused on Healthier
Products.
S2: Excellent Locations
 
Opportunities (O) SO Strategies (MaxiMax) WO Strategies (MiniMax)

O1: Expansions of ACA#1: S1&O1. Maintain ACA#5: Locate the employees

business to newly the Brand’s dignity and to the near branches of Mc
developed parts in the pride to have continuous Donald’s where their houses
world loyal customers. are near and improve
employees benefit programs
O2: Growing take-away ACA#2: Maintain and so that they will be more
and home delivery provide safety gears and committed and more
market insurance for the deliverer compassionate to their certain
of the products to the tasks.
customers. ACA#6: Maintain the fast and
ACA#3 safe services to the customers
and eliminated the fatty oil
used to fry products that can
causes some type of cancer.
Threats (T) ST Strategies (MaxiMin) WT Strategies (MiniMin)

T1: Health issues ACA#3: S1,S2 -T1. Change ACA#7: Enforce trainings and
the mindset of the seminars throughout all
regarding the fast food
customers and possible branches of Mcdonald’s for
chain. customers towards the their employees.
T2: Emergence of major product by setting new
healthy meal and an ACA#8: Set new healthy meal
fast food competitors
effective advertisement of that remains the appealing
the new idea. appearance and flavorsome of
ACA#4: Use the good the brand “McDonald’s” for
location of the business kids and also for adults.
and attract more possible Eliminate the Trans Fat oil
customers not just the used in fryers.
loyal customers but also
new ones. Promote

Discounts, Promos and

Unique Promotional
strategies to get the
attention of the customers
of other companies.

Revision of this document should undergo the standard procedure and should be approved by Dr. Domingo T. Balse, Jr. (document creator).
Page 3 of 7
 UNIVERSITY OF MAKATI

College of Business and Financial Science

The SWOT Analysis of McDonald’s, which was created as a team, is explained and the strategy
revealed from it for the ‘Products’ is discussed.

STRENGTHS

 Very high brand recognition and world’s most recognized logo:

McDonald’s is the number 9 best global brand in the world and it had the most
recognized logo with Coca Cola and Nike in the world (The World’s Most Recognizable
Symbols and Trademarks & the 100 Top Brands 2012). Strong brand recognition and
robust brand equity enable the company to keep its leading position, opening new
restaurants and increasing the product numbers (McDonald’s Corporation, Company
Profile 2011).

 Excellent locations

As we experience, McDonald’s restaurants are located at the locations where the

people visit mostly. (theme parks, train stations, airports…)

WEAKNESSES

 High employee turnover:

In comparison to its competitors, McDonald’s has the highest employee
turnover rate which is one of the reasons for having the lowest customer service
ranking among its competitors (Pae et al. 2005).
 Less focus on healthier products (Only fries / Burgers):
McDonald’s has recently started introducing healthier products, but basically
the focus products are still fries and burgers (Hitt et al. 2011)

OPPORTUNITIES

 Expansions of business to newly developed parts in the world:

According to James Cantalupo who was the CEO of McDonald’s International in
the past developed a formula seen below to forecast the potential market for the
growth of McDonald’s (Yu, L. 1999).
 Growing take-away and home delivery market:
According to the forecast of Euromonitor, the household consumers will
increase in Western Europe by 3.2% over the period of 2010-2015. The expenditure
forecast for Germany is 1.5% (Foodservice Profile Western Europe 2011).

THREATS

 Health issues regarding the fast food chain.

 Emergence of major fast food competitors: Burger King, Starbucks, Wendy’s, Taco Bell,
KFC.

Tool to Evaluate Alternative Courses of Action

1. Cost-Benefit Analysis
Revision of this document should undergo the standard procedure and should be approved by Dr. Domingo T. Balse, Jr. (document creator).
Page 4 of 7
 UNIVERSITY OF MAKATI

College of Business and Financial Science

Alternative Benefits Cost Net Explanation Rank

Course of Action Total /
(ACA) Justification
ACA#1: Maintain the Increase Monthly Cheaper 3rd
Brand’s dignity and Monthly product because all
pride to have Income: 50,000 maintenanc +20,000 we must do
continuous loyal Cost savings: e: PHP. is to
customers. 10,000 40,000 maintain the
(monthly) brand’s pride
TOTAL and dignity
BENEFIT: PHP TOTAL
60,000 COST:
PHP.
40,000
ACA#2: Maintain and Growth of Insurance: +7,000 It is also 2nd
provide safety gears takeout orders: PHP. 1,500 Effective to
and insurance for the PHP: 28,500 (per decrease the
deliverer of the employee) high
products to the TOTAL employee
customers BENEFIT: Safety turnover and
28,500 Gears: PHP to develop
20,000 the delivery
market.
NET
TOTAL:
21,500
ACA#3: Change the Advertisem +50,000 Green/ 1st
mindset of the Increase Sales: ent: PHP. Vegetable
customers and PHP 150,000 50,000 products are
possible customers Endorser: cheaper
towards the product 50,00 compared to
by setting new healthy TOTAL fat products.
meal and an effective BENEFIT: PHP
advertisement of the 150,000G TOTAL
new idea. COST:
PHP.
100,000

ACA#4: Use the good 2nd

location of the
business and attract
more possible
customers not just the
loyal customers but
also new ones.
Promote Discounts,
Promos and Unique
Promotional strategies
to get the attention of
the customers of other
companies.
ACA#5: Locate the 2
employees to the near
branches of
Mcdonald’s where
Revision of this document should undergo the standard procedure and should be approved by Dr. Domingo T. Balse, Jr. (document creator).
Page 5 of 7
 UNIVERSITY OF MAKATI

College of Business and Financial Science

their houses are near

and improve
employees benefit
programs so that they
will be more
committed and more
compassionate to their
certain tasks.

ACA#6: Maintain the

fast and safe services
to the customers and
eliminate the fatty oil
used to fry products
that can causes some
type of cancer.
ACA#7: Enforce
trainings and seminars
throughout all
branches of
Mcdonald’s for their
employees.

ACA#8: Set new

healthy meal that
remains the appealing
appearance and
flavorsome of the
brand “McDonald’s”
for kids and also for
adults. Eliminate the
Trans Fat oil used in
fryers.

VII. Conclusion

Based on the evaluation of alternatives, ACA#3: Change the mindset of the

customers and possible customers towards the product by setting new
healthy meal and an effective advertisement of the new idea is recommended.
It is highly suggested that McDonald’s venture into other business lines. The fast-
food industry is becoming more and more saturated. McDonald’s should be more
concerned on sustaining the company than maintain its market leadership. Since
McDonald’s utilized a lot of technological advancements in the past and at present,
more advancement may be more costly than venturing into other business lines.
However, diversification will require the other skills and knowledge that,
McDonald’s should learn

McDonald's is one of the largest fast food companies in the world. They
continue their path for success by keeping their consumers in mind regarding
their product selection as well as their prices. They encourage their employees to do
a good job, usually promotes from within, and offers several scholarships to
encourage education. Though McDonald's is a centralized, "wait and see" company

Revision of this document should undergo the standard procedure and should be approved by Dr. Domingo T. Balse, Jr. (document creator).
Page 6 of 7
 UNIVERSITY OF MAKATI

College of Business and Financial Science

they find ways to use technological products that will increase their productivity,
service, and sales, everywhere from using the Nintendo DS to train staff to using
New POS touch screen registers. McDonald's will certainly be around for plenty
more years to

VIII. Recommendation/Decision

Service Differentiation: McDonald’s needs to focus on service differentiation

strategy in order to position the restaurant as a superior service restaurant in the
minds of the target consumers. The service differentiation strategy implies that
McDonald’s shall offer superior services at each step of the customer touch points
right from the placement of order through the delivery of the products.
Personnel Differentiation: The availability of well-trained staff is essential for
delivery of high-quality service to the customers. McDonald's should continue to
invest in the training and development of its employees to ensure high service
quality. Well-structured training programs shall ensure the long-term growth of the
organization.
Integrated Promotional Mix: McDonald’s can implement an integrated
promotion mix that has a balance of both traditional and modern digital media for
brand promotions. McDonald’s must recognize the importance of digital media in
the promotional mix for organizations and should devise digital marketing
strategies to engage with the online customer base.
Product Augmentation: McDonald’s can offer additional product and service
features such as food on demand and home delivery so as to provide convenience to
customers. Product quality can be further enhanced with fresh ingredients.
McDonald’s should continue to invest in menu customization and menu
standardization strategies to attract and connect with target customers

References

Revision of this document should undergo the standard procedure and should be approved by Dr. Domingo T. Balse, Jr. (document creator).
Page 7 of 7