STRATEGIC MANAGEMENT

SHAD3053 / SBSD4033

MCDONALD

CASE ANALYSIS

STUDENT NAME 1. MALAR A/P RAVE (SX190061HACS04)

2. TELAGAVATHY A/P KALIAPPAN (SX190067HACS04)
3. BALA SARASWATHY A/P RAJENDRAN (SX190050HACS04)
4. VIKNESWARY A/P MANOGARAN (SX190043HACS04)
5. RITAH A/P SARAVANAN (SX190063HACS04)

COURSE NAME STRATEGIC MANAGEMENT

COURSE CODE SHAD3053 / SBSD4033

LECTURER NAME DR.EBI SHAHRIN SULEIMAN

DATE SEPT 2019

CONTENTS

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INTRODUCTION OF MCDONALD..................................................................................................3
VISION...................................................................................................................................................4
MISSION................................................................................................................................................4
CORE VALUES.........................................................................................................................................4
ORGANIZATIONAL STRUCTURE..............................................................................................................6
ANALYSIS OF FAST FOOD INDUSTRY......................................................................................................6
FINANCE ANALYSIS................................................................................................................................8
MARKETING STRATEGY........................................................................................................................10
COMPETITORS.....................................................................................................................................14
INTERNAL & EXTERNAL ISSUES............................................................................................................17
FUTURE PLAN......................................................................................................................................17
VISION & MISSION ANALYSIS...............................................................................................................19
EXTERNAL AUDIT (OPPURTUNITIES)....................................................................................................22
EXTERNAL AUDIT (THREATS)................................................................................................................27
COMPETITIVE PROFILE MATRIX...........................................................................................................30
EFE MATRIX.............................................................................................................................................
INTERNAL AUDIT (STRENGTH)...............................................................................................................6
INTERNAL AUDIT (WEAKNESSES)...........................................................................................................6
IFE MATRIX............................................................................................................................................6
SWOT ANALYSIS.....................................................................................................................................6
IE MATRIX..............................................................................................................................................6
STRATEGY RECOMMENDATION.............................................................................................................6
REFERENCES..........................................................................................................................................6

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INTRODUCTION OF MCDONALD

HISTORY
McDonald's Corporation is an American fast food company, founded in 1940 as a
restaurant operated by Richard and Maurice McDonald, in San Bernardino, California,
United States. They rechristened their business as a hamburger stand, and later turned
the company into a franchise, with the Golden Arches logo being introduced in 1953 at
a location in Phoenix, Arizona. In 1955, Ray Kroc, a businessman, joined the company
as a franchise agent and proceeded to purchase the chain from the McDonald brothers.
McDonald's had its original headquarters in Oak Brook, Illinois, but moved its global
headquarters to Chicago in early 2018. McDonald's is the world's largest restaurant
chain by revenue, serving over 69 million customers daily in over 100 countries across
37,855 outlets as of 2018. The McDonald's Corporation revenues come from the rent,
royalties, and fees paid by the franchisees, as well as sales in company-operated
restaurants. According to two reports published in 2018, McDonald's is the world's
second-largest private employer with 1.7 million employees (behind Walmart with 2.3
million employees).

PRODUCTS AND SERVICES

McDonald's is best known for its hamburgers, cheeseburgers and french fries, they also
feature chicken products, breakfast items, soft drinks, milkshakes, wraps, and desserts.
In response to changing consumer tastes and a negative backlash because of the
unhealthiness of their food, the company has added to its menu salads, fish, smoothies,
and fruit. Products are offered as either "dine-in" (where the customer opts to eat in the
restaurant) or "take-out" (where the customer opts to take the food off the premises).
"Dine-in" meals are provided on a plastic tray with a paper insert on the floor of the tray.
"Take-out" meals are usually delivered with the contents enclosed in a distinctive
McDonald's-branded brown paper bag. In both cases, the individual items are wrapped
or boxed as appropriate.

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Since Steve Easterbrook became CEO of the company, McDonald's has streamlined
the menu which in the United States contained nearly 200 items. The company has also
looked to introduce healthier options, and removed high-fructose corn
syrup from hamburger buns. The company has also removed artificial
preservatives from Chicken McNuggets, replacing chicken skin, safflower oil and citric
acid found in Chicken McNuggets with pea starch, rice starch and powdered lemon
juice.

In September 2018, McDonald's USA announced that they no longer use artificial
preservatives, flavors and colors entirely from seven classic burgers sold in the U.S.,
including the hamburger, cheeseburger, double cheeseburger, McDouble, Quarter
Pounder with Cheese, double Quarter Pounder with Cheese and the Big Mac.
Nevertheless, the pickles will still be made with an artificial preservative, although
customers can choose to opt out of getting pickles with their burgers.

International menu variations

Restaurants in several countries, particularly in Asia, serve soup. This local deviation
from the standard menu is a characteristic for which the chain is particularly known, and
one which is employed either to abide by regional food taboos (such as the religious
prohibition of beef consumption in India) or to make available foods with which the
regional market is more familiar (such as the sale of McRice in Indonesia,
or Ebi (prawn) Burger in Singapore and Japan).

In Germany and some other Western European countries, McDonald's sells beer. In
New Zealand, McDonald's sells meat pies, after the local affiliate partially relaunched
the Georgie Pie fast food chain it bought out in 1996.

In the United States and Canada, after limited trials on a regional basis, McDonald's
began offering in 2015 and 2017, respectively, a partial breakfast menu during all hours
its restaurants are open.

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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.”

MISSION
McDonald’s corporate mission is “to be our customers’ favorite place and way to eat
and drink.”

CORE VALUES
We place the customer experience at the core of all we do

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

We provide opportunity, recognise 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.

We believe in the McDonald’s® System

Owning a 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.

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We operate our business ethically

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 give back to our communities

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

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 strive continually to improve

We consider ourselves a learning organisation that is green and growing which

anticipates and responds to changing customer, employee, system and community
needs through constant evolution and innovation.

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ORGANIZATIONAL STRUCTURE

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McDonald’s Corporation has a divisional organizational structure. McDonald’s
organizational structure has the following characteristics, arranged according to
significance in affecting food service business operations:

Global Hierarchy. McDonald’s Corporation has a global hierarchy to cover all its
operations worldwide. This feature of the organizational structure emphasizes corporate
control in the context of managerial control and direction. For example, McDonald’s
CEO directs the activities of all business areas through this structural characteristic.
Mandates and directives are passed from the CEO down to middle managers, and to
the restaurant managers and personnel in company-owned operations and among
franchisees. This feature of McDonald’s corporate structure is typical of most global
business organizations.

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Performance-Based Divisions. Performance-based divisions are the most distinct
feature of McDonald’s corporate structure. Prior to its reorganization on July 1, 2015,
McDonald’s had the following geographic divisions in its organizational structure: (a)
U.S., (b) Europe, (c) Asia/Pacific, (d) Middle East and Africa, and (e) Other Countries &
Corporate (OCC) including Canada, Latin America and Corporate. After the
reorganization, the company used performance as basis for the new divisions in its
organizational structure: (a) U.S., (b) International Lead Markets, (c) High Growth
Markets, and (d) Foundational Markets and Corporate. The United States division
provides the biggest regional sales revenues to McDonald’s. The combination of
international lead markets also represent a major chunk of the company’s revenues.
The high-growth markets account for a small minority of McDonald’s revenues, even
though these markets present considerable potential for business growth based on
rapid economic development.

Function-Based Groups. McDonald’s maintains function-based groups in its corporate

structure. For example, in corporate operations, the company has a People group for
human resource management, and a Supply Chain and Sustainability group for supply
chain management and sustainability endeavors. Each group is under the leadership of
a corporate executive or senior manager. This organizational structure characteristic
enables McDonald’s Corporation to address the basic functions in its business. Groups
may be added or changed as the company grows and its target markets change.

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FAST FOOD INDUSTRY GROWTH IN MARKET
The global fast food market is expected to be worth more than $690 billion in 2022 with
a compound annual growth rate of 4.2% from 2017 to 2022. More hectic lifestyles
among dual-income households and an increased preference for cheap food with no
waiting time also is expected to positively impact fast food growth.

A shift in preference for natural and healthy food due to the rising occurrence of obesity
in developed countries could negatively impact the growth of fast food, according to the
report. With the fast food industry reaching saturation levels in the U.S., many chains
have been increasing their international footprints to keep growing.

A growing middle class with more disposable income, especially in Asia-Pacific, as well
as time-strapped youth turning to fast food for a quick food option, has helped the
growth of the market abroad. While the fast food industry in the U.S. is expected to slow
to about a 2% annual growth rate through 2022, fast food isn't exactly falling out of favor
with Americans, either. Nearly half of all consumers will grab takeout or hit up a fast food
joint once per week.

Expectations for speed of service and quality have risen, and overall customer
satisfaction declined among fast food customers over the last year, according to
American Customer Satisfaction Index Report. Many fast food restaurants have
been turning to new technology, including self-order kiosks, voice-automated drive-
thrus and mobile apps, to help increase speed of service. All of these innovations will
help increase efficiency and help fast food restaurants growth their same-store sales as
well.

Numerous popular fast-food chains, which once only offered unhealthy meals, now
include healthy salads, wraps and snacks at a fraction of the price of fast-casual
restaurant's menu items. This can dampen the fast-casual segment's momentum by
eliminating loyal fast-food customers' incentives to stop visiting their favorite chains. The
average cost for a lunch at a fast-casual restaurant ranges from $10 to $15, which can
be too expensive for people struggling to keep their expenses under budget.

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FINANCE

HOW DOES MCDONALD’S MAKE A PROFIT?

McDonald’s has two sources of profit:

• Sales made by company-owned restaurants

• Rental and royalty income from franchised restaurants.

1) Restaurant Sales

McDonald’s retains all of the profit earned by company-owned restaurants. An example

Profit & Loss Statement for a restaurant is shown left and highlights how food and
labour constitute a restaurant’s largest costs. In addition to variable costs, which
increase or decrease depending on the level of sales, McDonald’s also incurs costs that
are largely fixed, for example utilities and advertising, which need to be paid for even
before the restaurant makes any sales. Increasing sales and controlling costs are
fundamental to ensuring the profit of each restaurant is either maintained or increased.

2) Franchise Rental & Royalty Income

The owner of each franchised restaurant, known as the franchisee, keeps all of the
profit they make through sales after paying McDonald’s a royalty for trading under the
brand name and rent for operating in a McDonald’s owned property. The benefit to
McDonald’s of operating franchised restaurants is that these restaurants guarantee a
stream of income for McDonald’s at a reduced level of risk while enabling the company
to maintain a single brand presence. The risk to McDonald’s is reduced because much
of it is borne by the Franchisee. The Franchising Accounts team works closely with
franchisees to provide the support they require to grow their profitability.

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McDonald's annual/quarterly revenue history and growth rate from 2006 to 2019.
Revenue can be defined as the amount of money a company receives from its
customers in exchange for the sales of goods or services. Revenue is the top line item
on an income statement from which all costs and expenses are subtracted to arrive at
net income.

 McDonald's revenue for the quarter ending September 30, 2019 was $5.431B,
a 1.14% increase year-over-year.
 McDonald's revenue for the twelve months ending September 30, 2019
was $20.890B, a 1.47% decline year-over-year.
 McDonald's annual revenue for 2018 was $21.025B, a 7.87% decline from 2017.
 McDonald's annual revenue for 2017 was $22.82B, a 7.32% decline from 2016.
 McDonald's annual revenue for 2016 was $24.622B, a 3.11% decline from 2015.

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McDonald's - 30 Year Dividend History | MCD

Historical dividend payout and yield for McDonald's (MCD) since 1989. The current TTM
dividend payout for McDonald's (MCD) as of December 10, 2019 is $5.00. The current
dividend yield for McDonald's as of December 10, 2019 is 2.56%.

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MARKETING STRATEGY

The first restaurant opened by McDonalds Company was in San Bernardino, California
way back in 1948. At this moment, McDonalds is the world’s finest and leading food
service company with more than $40 billion sales from 30, 000 outlets all over the
world. However, this company didn’t grow quickly because of fortune. McDonalds has
reached where they are now due to hard work and effective marketing strategies.

Marketing Strategy: 5P’S

After analyzing the market condition, finding the main factor, target segment as well as
understanding the demand of the market, every company requires coming up with an
offers or such kind of plan which speed up the development of the business. For that,
McDonalds 5P’s marketing strategy that follows product, place, price, promotion and
lastly people.

1) Product

Product consists of how the company must design, manufactures the products which
improve the experience of every customer. Product refers to physical product and
services provided by the business to its patron. McDonalds includes specific aspects of
its service and products like packaging, looks and desirability. This includes non-
tangible and tangible features of the services and product.

McDonalds has intentionally kept its product depth and width limited. McDonalds had
studied the manners of the Indian clients and totally provided various menus as
compare to its menu presented in world market. The company eliminates beef, mutton
and pork burger from their menu. India is just country wherein McDonalds offer
vegetarian menu. As well as the cheese and sauce use are pure vegetarian.

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The company constantly improves its product and service in accordance to the fast
changing desires and tastes of its consumers. One of the good examples is the
launching of Chicken Maharaja Mac and the Chicken McNuggets.

2) Place

The place for the most part includes distribution outlet and channel of the business. It is
very essential because the service or the product should be accessible to the
consumers at the right time, right place and right quantity. In United States almost 50%
of McDonald’s outlets are located three minutes away from each other. There are
specific level of happiness and fun which McDonalds offers to its consumers. It offers
value position that based on the requirement of the consumer.

3) Price

Pricing strategy is one of the most significant aspects when it comes to marketing. This
includes price breakdown, when any discount service or payment available. Business
should also consider the possible reactions from its rivalry when it comes to pricing.
Pricing strategy was developed in order to attract middle and lower class individual and
the result can clearly be seen the customer base which McDonalds has at present.

McDonald’s restaurant has specific value pricing as well as bundling strategy like
combo meal, happy meal, family meal and happy price menu in order to improve total
sales of the service and product.

4) Promotion

The endorsement activities implement by the Company aids communicate effectively

with the potential consumers. Ad targeted to catch the interest of the people it reaches
to massive number of customer at a time. Ad plays an important role for product
promotion such TV advertisement, billboard and posters which also used by some
ground breaking business including Apple Company.

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5) People

McDonalds understands the significance of both consumers and employees. It

understands the truth that happy workers can serve properly and led in happy
customers. McDonald’s restaurant constantly does Internal Marketing as this strategy
becomes effective it will lead automatically to the success of external marketing.

COMPETITORS
KFC or Kentucky Fried Chicken is the second largest restaurant chain in the world. It
was founded by Harland Sanders in 1930 in Kentucky. The image of Harland Sanders
widely uses in advertisements and logo of KFC. Now KFC has 18875 stores in 118
countries. KFC gets nearly 8 million customers everyday from US alone.

The recipe of pressure fried chicken pieces, signature product of KFC still unknown to
outer world. It is kept in a safe in Louisville in Kentucky State. In order to ensure
freshness, KFC discard the chicken pieces those has not been sold within 90 minute.
Main products within KFC’s menu also include chicken burgers, popcorn chicken and
various finger foods.

Subway fast food service operates in 107 countries, has 42174 restaurants in total.
Submarine sandwiches and salads are main products of subway. There are 38 million
subway sandwich options available for the customers. It serves 7.6 million
sandwiches on daily basis. In fact, subway makes enough sandwiches in an year that
could cover the Earth for 14 times.

Submarine sandwich is the signature product of subway. But products from service
varies in accordance with the location. Roasted chicken, tuna, subway club, subway
melt, chicken teriyaki are other popular products from subway.

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Pizza hut is the largest pizza delivering service in the world. It has 6000 restaurants
in US itself and 5139 stores in other 93 countries. It was founded in 1958 by Dan and
Frank Carney, in Kansas city.

In 2001, Pizza hut became first ever company to deliver pizza to international space
station, launched on Soyuz spacecraft. Every year Pizza hut uses 300 million pounds
of cheese from 360 million gallons of milk.

INTERNAL & EXTERNAL ISSUES

NEW YORK—Times are getting leaner for McDonald’s.

McDonald’s said Tuesday sales fell 3.3 per cent globally and in the U.S., marking the
fourth straight quarter of declines for the world’s biggest hamburger chain. By contrast,
Chipotle reported a 19.8-per-cent increase in sales at established locations a day
earlier.

McDonald’s (14,000 U.S. locations) is far bigger than Chipotle (1,700 locations), making
it more difficult for the chain to boost sales. But McDonald’s nevertheless acknowledges
it needs to work on fixing some problems.

Here is a look at five problems McDonald’s is facing:

Bad food image

To defend the image of its food, McDonald’s launched a social media campaign last
week inviting customers to ask questions about the ingredients it uses. Showing just
how bad perceptions can be, among the first questions McDonald’s addressed were
“Why doesn’t your food rot?” and “Do you use real chicken in your Chicken
McNuggets?”

The company has run similar programs in Canada and Australia, where it says the
program has built trust with customers.

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Lack of flexibility

Consistency has long been one of McDonald’s attractions — people like knowing
exactly what they’ll get when they order a Big Mac. But now people are gravitating
toward places like Chipotle that let people tailor their orders. To offer greater
customization down the line, McDonald’s recently rolled out prep tables in its kitchens
that can hold more toppings and sauces.

The company is also testing a “Build-Your-Own-Burger” offering in Southern California

that lets people pick the bun, patty and toppings they want. In Australia, McDonald’s has
already said it plans to roll out the format nationwide.

Slow, inaccurate service

McDonald’s executives have said they introduced too many items too quickly last year,
such as McWraps and the option to substitute egg whites for its breakfast sandwiches.
That slowed down service and led to inaccurate orders. On Tuesday, McDonald’s said it
would focus on a simplified menu that highlights its most popular items but did not give
specifics.

Price sensitivity

Raising prices without driving away customers has been tricky for McDonald’s. At one
time, for instance, the popular Dollar Menu included a Big N’ Tasty, which was made
with a quarter-pound of beef. But over the years, McDonald’s has had to swap out items
as costs for beef and cheese have climbed.

Late last year, McDonald’s revamped its Dollar Menu to be called the “Dollar Menu &
More,” with a range of prices up to $5.

Increased competition

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In addition to newer players like Chipotle, longtime rivals Burger King and Wendy’s have
been intensifying competition, too. And Taco Bell launched a national breakfast menu to
go after the growing breakfast market, which McDonald’s has long dominated.

FUTURE PLAN

McDonald’s has made significant progress on its Experience of the Future

redesign in recent months.

McDonald’s Experience of the Future redesign is getting a $6 billion boost. The

company announced Tuesday in a series of separate statements that, along with its
franchisees, it plans to invest $6 billion in total to modernize most of its U.S. units by
2020. The statements outlined McDonald’s plans for 2018 and 2019.

The revamp includes digital self-order kiosks, remodeled counters for new table service,
bright and easy-to-read digital menu boards, designated parking sports for curbside
pick-up through mobile order and pay, and expanded McCafé counters and larger
display cases.

In one article, a 16-unit McDonald’s franchisee in Camarillo, California, told The Los
Angeles Times that the changes would not result in job losses, and could even
represent a potential increase in opportunities.
Among the investments:

 McDonald’s and franchisees are pouring about $320 million in New York to
modernize more than 360 restaurants.

 California is getting a $390 million upgrade for 550 locations.

 They are investing $163 million in Virginia for more than 250 restaurants.

 McDonald’s is forking up about $214 million in North Carolina for more than 430
restaurants.

 Texas will be home to a $448 million investment for 840 restaurants.

 McDonald’s plans $317 million for 410 spots in Illinois.

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  The company is investing $19 million in Washington, D.C., for more than 15
units.

 Maryland is getting $104 million for 135 restaurants.

 McDonald’s is spending $251 million in Ohio for 380 restaurants.

 It’s investing $143 million in Massachusetts for 140 restaurants.

 Indiana and 270 restaurants are costing $168 million.

 Florida is receiving an investment of $186 million for 240 restaurants.

 McDonald’s plans $170 million in Georgia for 340 restaurants.

 The company is investing $266 million in Pennsylvania for 360 restaurants.

McDonald’s posted its slowest U.S. same-store sales growth in over a year in the
second quarter, with domestic comps lifting 2.6 percent at units open for at least 13
months. The gains still gave the chain 12 consecutive quarters of positive same-store
sales.
McDonald’s has made significant progress on its Experience of the Future redesign in
recent months. It converted 1,300 restaurants to the look in a 90-day Q2 stretch. That
measures to roughly 10 additional restaurants every day. At the end of Q2, McDonald’s
had more than 5,000 updated units, north of one-third of its U.S. footprint.

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 MCDONALD'S
McDonald’s has made significant progress on its Experience of the Future
redesign in recent months.

McDonald’s Experience of the Future redesign is getting a $6 billion boost. The

company announced Tuesday in a series of separate statements that, along with its
franchisees, it plans to invest $6 billion in total to modernize most of its U.S. units by
2020. The statements outlined McDonald’s plans for 2018 and 2019.

The revamp includes digital self-order kiosks, remodeled counters for new table service,
bright and easy-to-read digital menu boards, designated parking sports for curbside
pick-up through mobile order and pay, and expanded McCafé counters and larger
display cases.

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In one article, a 16-unit McDonald’s franchisee in Camarillo, California, told The Los
Angeles Times that the changes would not result in job losses, and could even
represent a potential increase in opportunities.
Among the investments:

 McDonald’s and franchisees are pouring about $320 million in New York to
modernize more than 360 restaurants.

 California is getting a $390 million upgrade for 550 locations.

 They are investing $163 million in Virginia for more than 250 restaurants.

 McDonald’s is forking up about $214 million in North Carolina for more than 430
restaurants.

 Texas will be home to a $448 million investment for 840 restaurants.

 McDonald’s plans $317 million for 410 spots in Illinois.

 The company is investing $19 million in Washington, D.C., for more than 15 units.

 Maryland is getting $104 million for 135 restaurants.

 McDonald’s is spending $251 million in Ohio for 380 restaurants.

 It’s investing $143 million in Massachusetts for 140 restaurants.

 Indiana and 270 restaurants are costing $168 million.

 Florida is receiving an investment of $186 million for 240 restaurants.

 McDonald’s plans $170 million in Georgia for 340 restaurants.

 The company is investing $266 million in Pennsylvania for 360 restaurants.

McDonald’s posted its slowest U.S. same-store sales growth in over a year in the
second quarter, with domestic comps lifting 2.6 percent at units open for at least 13
months. The gains still gave the chain 12 consecutive quarters of positive same-store
sales.
McDonald’s has made significant progress on its Experience of the Future redesign in
recent months. It converted 1,300 restaurants to the look in a 90-day Q2 stretch. That
measures to roughly 10 additional restaurants every day. At the end of Q2, McDonald’s
had more than 5,000 updated units, north of one-third of its U.S. footprint.

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“When it's a full modernization [Experience of the Future] here in the U.S., we're getting
mid-single digit sales uplifts,” CEO Steve Easterbrook said at the time. “When it's just
adding the EOTF elements on modernized restaurant, we're still getting 1 to 2 percent
uplift.”

Hungry for a quick meal but don’t want to sit down to eat it? McDonald’s has a solution.
The fast food giant is known for its quick drive-thru service, but now it’s taking things a
step further with a new to-go location that only serves food with no seating. Think of it
as McDonald’s of the future that has the potential to revolutionize fast food and
restaurants.

 McDonald’s recently opened a to-go location in London.

 Customers order via touchscreen kiosks and quickly pick up their food to
go—there’s no seating in the restaurant.

 The concept leverages technology to make ordering easier and faster.

 McDonald’s is providing an option for busy customers on the go to get

their food even faster than before.

 The concept is already expanding to retail stores and could soon be done
by other restaurants.

A Smaller McDonald’s, With Screens

Instead of being full of tables and chairs, the restaurant features touch screens for
customers to order. The pilot location is London is much smaller than a typical
McDonald’s. Even the menu is streamlined with only favorite items like fries, chicken
nuggets and the classic Big Mac. After ordering, customers move over to the collection
area, where they wait for their order. Since customers can only order through the kiosks,
all human employees work on fulfilling the orders, which gets the food to customers
much faster.

It’s the biggest change to McDonald’s since it introduced the drive-thru in the 1970s,
and it has the potential to set the pace for a new wave of restaurants. Today’s

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consumers are busy and constantly on the go. They want quick, convenient solutions
that cut the fluff and streamline as much as possible. But trimming the menu,
employees and seating frills, McDonald’s offers customers a quick way to get their food
and get going with their busy lives. Experience locations are becoming a trend in the
retail space, with stores like Walmart and Nordstrom opening pick-up only locations with
a similar concept to McDonald’s to-go restaurant.

A Potential Future of Only To-Go Locations

The to-go location works on a busy London street full of professionals, city-dwellers and
tourists who are anxious to fuel up and keep going. McDonald’s has yet to announce
plans to expand the to-go location to other parts of the world, instead saying it is
committed to the original restaurant brand while also wanting to serve customers in the
best ways possible. However, if the to-go location is successful, we’ll likely see them
pop up in other busy areas.

The Dangers of Too Much Technology Too Soon

Some grocers have abstained from self check out technology, and lead with the human
touch. Trader Joe’s is one example that continues to lead with human service, and
customer service is an attractive part of shopping this chain. Companies must be careful
not to throw technology up too quickly without thinking about how you will make both
employees and customers feel in the process. Walmart has implemented robots in
many of its stores, and an article in the Washington Post highlighted how much both
employees and customers hate the robots. With its takeout location, McDonald’s is
leveraging new technology and touchscreen ordering. McDonald’s creative solution
makes the technology an integral part of its business operations, which could prove
incredibly successful.

Getting fast food to go could soon be a lot easier. More restaurants need to follow in
McDonald’s footsteps by using new technology to think outside the box and create
innovative and convenient solutions for customers.

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What is McDonald's future?

Aside from the continued evolution of its food toward using healthier, more natural
ingredients, McDonald's plans to change its in-store experience. This effort, called
"Experience of the Future" has been developed largely outside of the U.S., letting the
company get things right before rolling it out in its home market.

"We're also modernizing the customer experience in markets around the world as we
evolve to the Experience of the Future," Easterbrook said. "In Canada, we're engaging
with customers in simpler, less stressful ways, offering them more choices in how they
order or pay."

Those changes, which have also been tested in parts of Europe, involve using dual-
point service and self-order kiosks. These two efforts change the traditional McDonald's
experience. Dual-point service means that customers order in one place while picking
up their food in a second location. That, along with the use of kiosks featuring
tablets/touchscreen computers for ordering, lets the company do more with fewer
people.

VISION AND MISSION ANALYSIS

VISION (PROPOSED)
McDonald's vision is to be the world's best quick service restaurant experience. Being
the best means providing outstanding quality, service, cleanliness, and value, so that
they make every customer in every restaurant smile

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MISSION (PROPOSED)
McDonald’s brand mission is to be their customer’s favourite place and way to eat (1) by
providing them with high quality food and superior service, in a clean, welcoming
environment at great value (2). We provide opportunity, recognize talent and develop
leader and drives high levels of engagement is essential to our continued success (9).
We hold ourselves and conduct our business to the highest possible standards of
fairness, honesty and integrity (7). We help our customers build better communities to
help make the world a better place (8). 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 (6). We work to provide
sustained, profitable growth (5) for all members of our system and our investors in
markets (3). 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 (4).

1. Customers

2. Products and services

3. Markets

4. Technology

5. Concern for survival, growth and profitability

6. Philosophy

7. Self-concept

8. Public image

9. Employees

EXTENAL AUDIT (OPPURTUNITIES)

1. The global fast food market is expected to be worth more than $690 billion in 2022
with a compound annual growth rate of 4.2% from 2017 to 2022.

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 2. In addition to growth in sales from drive-thrus, the adoption of Western fast food in
emerging economies is expected to help grow this market further

3. More hectic lifestyles among dual-income households and an increased

preference for cheap food with no waiting time also is expected to positively
impact fast food growth.
4. A growing middle class with more disposable income, especially in Asia-Pacific,
as well as time-strapped youth turning to fast food for a quick food option, has
helped the growth of the market abroad.

5. Many fast food restaurants have been turning to new technology, including self-
order kiosks, voice-automated drive-thrus and mobile apps, to help increase
speed of service.

EXTERNAL AUDIT (THREATS)

1. A shift in preference for natural and healthy food due to the rising occurrence of
obesity in developed countries could negatively impact the growth of fast food,
according to the report.

2. While the fast food industry in the U.S. is expected to slow to about a 2% annual
growth rate through 2022, fast food isn't exactly falling out of favor with
Americans.
3. Expectations for speed of service and quality have risen, and overall customer
satisfaction declined among fast food customers over the last year, according to
American Customer Satisfaction Index Report.

4. Numerous popular fast-food chains, which once only offered unhealthy meals,
this can dampen the fast-casual segment's momentum by eliminating loyal fast-
food customers' incentives to stop visiting their favorite chains.

5. The average cost for a lunch at a fast-casual restaurant ranges from $10 to $15,
which can be too expensive for people struggling to keep their expenses under
budget.

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COMPETITIVE PROFILE MATRIX

KFC MCDONALDS PIZZA HUT

Critical Weight Rating Score Rating Score Rating Score
Success
Factors
Advertising 0.05 4.00 0.20 3.00 0.15 3.00 0.20

Product Quality 0.20 4.00 0.80 2.00 0.40 3.00 0.60

Product Variety 0.10 3.00 0.30 4.00 0.40 3.00 0.30

Price 0.20 2.00 0.40 4.00 0.80 2.00 0.40

Competitivenes
s
Financial 0.05 3.00 0.15 4.00 0.20 3.00 0.15
Position
Customer 0.10 2.00 0.20 3.00 0.30 4.00 0.40
Loyalty
Global 0.10 3.00 0.30 4.00 0.40 4.00 0.30
Expansion
Customer 0.20 4.00 0.80 3.00 0.60 3.00 0.60
Service
TOTAL 1.00 3.15 3.25 3.00

 McDonalds scores high 3.25 which performing slightly better than KFC and
significantly better than Pizza Hut according to CPM above.
 This mean McDonald has strong position in the fast food industry.

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EFE MATRIX

OPPURTUNITIES WEIGH RATING WEIGHTED

T SCORE
1. The global fast food market is expected to be 0.15 4 0.60
worth more than $690 billion in 2022 with a
compound annual growth rate of 4.2% from 2017
to 2022.

0.05 3 0.15
2. While the fast food industry in the U.S. is
expected to slow to about a 2% annual growth
rate through 2022, fast food isn't exactly falling out
of favor with Americans.
3. More hectic lifestyles among dual-income 0.15 3 0.45
households and an increased preference for
cheap food with no waiting time also is expected
to positively impact fast food growth.
4. A growing middle class with more disposable 0.09 4 0.36
income, especially in Asia-Pacific, as well as time-
strapped youth turning to fast food for a quick food
option, has helped the growth of the market
abroad.
5. Many fast food restaurants have been turning to 0.07 3 0.21
new technology, including self-order kiosks, voice-
automated drive-thrus and mobile apps, to help
increase speed of service.
SUBTOTAL 0.51 1.77

THREATS WEIGH RATING WEIGHTED

T SCORE

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1. A shift in preference for natural and healthy food 0.15 2 0.30
due to the rising occurrence of obesity in
developed countries could negatively impact the
growth of fast food, according to the report.

0.05 1 0.05
2. While the fast food industry in the U.S. is
expected to slow to about a 2% annual growth
rate through 2022, fast food isn't exactly falling out
of favor with Americans.
3. Expectations for speed of service and quality have 0.10 2 0.20
risen, and overall customer satisfaction declined
among fast food customers over the last
year, according to American Customer
Satisfaction Index Report.
0.09 2 0.18
4. Numerous popular fast-food chains, which once
only offered unhealthy meals, this can dampen
the fast-casual segment's momentum by
eliminating loyal fast-food customers' incentives to
stop visiting their favorite chains.
0.10 2 0.20
5. The average cost for a lunch at a fast-casual
restaurant ranges from $10 to $15, which can be
too expensive for people struggling to keep their
expenses under budget.
TOTAL 1.00 2.70

EXTERNAL AUDIT (STRENGTHS)

1. McDonald's is the world's largest restaurant chain by revenue, serving over 69
million customers daily in over 100 countries across 37,855 outlets as of 2018.

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 2. According to two reports published in 2018, McDonald's is the world's second-
largest private employer with 1.7 million employees (behind Walmart with 2.3
million employees).
3. The company has also looked to introduce healthier options, and removed high-
fructose corn syrup from hamburger buns.
4. In September 2018, McDonald's USA announced that they no longer use artificial
preservatives, flavors and colors entirely from seven classic burgers sold in the
U.S.
5. McDonalds is the world’s finest and leading food service company with more
than $40 billion sales from 30, 000 outlets all over the world.

EXTERNAL AUDIT (WEAKNESSES)

1. McDonald’s sales fell 3.3 per cent globally and in the U.S., marking the fourth
straight quarter of declines for the world’s biggest hamburger chain
2. Social media addresses question to McDonald why doesn’t their food rot and are
they really use real chicken in their meal preparation.
3. Customers are lack of flexibility and they are more gravitating toward places like
Chiptole that let people tailor their orders.
4. McDonald introduces too many items too quickly last year that slowed down
service and led to inaccurate orders.
5. Raising prices without driving away customers has been tricky for McDonalds.

IFE MATRIX

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 STRENGTHS WEIGH RATING WEIGHTED
T SCORE
1. McDonald's is the world's largest restaurant 0.13 4 0.52
chain by revenue, serving over 69 million
customers daily in over 100 countries across
37,855 outlets as of 2018.

2. According to two reports published in 2018, 0.10 3 0.30

McDonald's is the world's second-largest private
employer with 1.7 million employees
(behind Walmart with 2.3 million employees).
3. The company has also looked to introduce 0.09 3 0.27
healthier options, and removed high-fructose corn
syrup from hamburger buns.
4. In September 2018, McDonald's USA announced 0.10 4 0.40
that they no longer use artificial preservatives,
flavors and colors entirely from seven classic
burgers sold in the U.S.
5. McDonalds is the world’s finest and leading food 0.12 3 0.36
service company with more than $40 billion sales
from 30, 000 outlets all over the world.
SUBTOTAL 0.54 1.85

WEAKNESSES WEIGH RATING WEIGHTED

T SCORE

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1. McDonald’s sales fell 3.3 per cent globally and in 0.05 2 0.10
the U.S., marking the fourth straight quarter of
declines for the world’s biggest hamburger chain

2. Social media addresses question to McDonald 0.12 1 0.12

why doesn’t their food rot and are they really use
real chicken in their meal preparation.

3. Customers are lack of flexibility and they are more 0.16 2 0.32
gravitating toward places like Chiptole that let
people tailor their orders.
4. McDonald introduces too many items too quickly 0.05 2 0.10
last year that slowed down service and led to
inaccurate orders.
5. Raising prices without driving away customers 0.08 2 0.16
has been tricky for McDonalds.
TOTAL 1.00 2.65

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REFERENCES

 en.wikipedia.org/wiki/McDonald (Wikipedia)

 mcdonalds.com.my/company/mission-vision

 panmore.com/mcdonalds-organizational structure analysis

 Mathur, S. (2017). Glocalization in Fast Food Chains: A Case Study of

McDonald’s. In Strategic Marketing Management and Tactics in the Service
Industry (pp. 330-347). IGI Global

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