The operations and business model of McDonalds

The trading operations and business model of McDonaldsMissionMcDonalds brand mission is to be our customers favorite place and way to eat. Our world(a) operations take up been aline around a world-wide scheme called the Plan to Win centering on the five basics of an exceptional customer experience People, Products, Place, Price and Promotion. We atomic number 18 committed to improving our operations and enhancing our customers experience.This is from http//www. intimatelymcdonalds.com/mcd/our_ high society/mcd_faq/student_research.html?DCSext.destination=http//www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html13VisionWe envision a supply cooking stove that profitably yields high-quality, safe products without supply interruption while leverage our lead position to create a net benefit by improving ethical, environmental and economic out advances. Ethical We envision purchasing from suppliers who follow practices that meet the wellness and safety of the ir employees and the welf are and humane treatment of animals in our supply range. Environmental We envision influencing the sourcing of our materials and ensuring the target of our products, their manufacture, distribution and use minimize lifecycle impacts on the environment. economic We envision delivering affordable intellectual nourishment, engaging in equitable shell out practices, limiting the spread of agricultural diseases, and positively impacting the communities where our suppliers operate. We view this vision and its responsibilities holistically. As sourcing decisions are made, we run into our priorities for food safety, quality and costs, as well as our ethical, environmental and economic responsibilities. Our progress on beef and coffee sustainability illustrate how we are workings to fetch this approach to life.This is from http//www.aboutmcdonalds.com/mcd/csr/report/sustainable_supply_chain/our_approach.html?DCSext.destination=http//www.aboutmcdonalds.com /mcd/csr/report/sustainable_supply_chain/our_approach.htmlmilitary rating Blah,. Blah, blah..Operations and disdain ModelMcDonalds is the worlds largest foodservice retailing chain. It operates approximately 32,000 remnantaurants in over 100 countries and is one of the worlds largest food service retailing chain, preparing, and serving a float of food products and beverages. All restaurants are operated either by the company or by franchisees, including conventional franchisees below franchise arrangements, and foreign affiliated markets and developmental authorizees under license agreements.The companys business is divided into four geographic divides Europe, the US, APMEA (Asia, Pacific, set East and Africa), and other countries and incorporated. Other countries and corporate includes Canada and Latin America, as well as corporate activities and certain investments. McDonalds restaurants offer a standardized menu, although there may be geographic variations.McDonalds mak es their revenues in ternary ways Retail sales, Franchise fees and lease agreements for property they own (leasing the property back to the franchisee)I DONT KNOW WHERE THIS CAME FROM..(I have this one Clint)This came from DataMonitor Company Profile retrieved 6/3/10 saved in the M Drive as McDonalds Company ProfileEvaluation The Ford paper was about this short with no more.Financial and Performance EvaluationOutperforms the industry in revenue and net income sumitionHigher profit margins than the industry and the SP.Liquidity within range of competitorsLess levered than the rest of the industryHighly efficient in turning inventoryFinancials have been generally trending upwardhttp//moneycentral.msn.com/investor/invsub/results/compare.asp?Symbol=US%3aMCDEvaluation The gang of high margins and efficient inventory turnover has allowed McDonalds to outperform the rest of the industry by almost all accounts. The low debt and high interest coverage indicates that the company should not have difficulty in meeting its obligations. As a result, McDonalds was issued a credit rating of AA- by Moodys, the highest credit rating ever assumption to a fast food restaurant (http//quicktake.morningstar.com/stocknet/san.aspx?id=325610). Same store revenues have been increasing quarter over quarter and year over year, assisted by strong sales in countries other than the US. Despite the recent recession, McDonalds has performed well and seems poised to capitalize on the opportunity.Macro EnvironmentKey TrendsEconomy planetary economic issues from the US stock market, to Greece, to Chinas economic slowdownPotential weak dollar/poor exchange ratesVaried market conditions per country engine roomDifferent cultures essential different foods/ menus than U.S so must invest in RDPolitical/LegalEver changing climates with 100 governments to deal withVaried laws (trade, finance, safety, labor, etc.)Socio-CulturalThe rest of the world emergencys what the U.S. has and food is one of the itemsPressures to have healthier foodsDemographicsMore baby boomersRecent higher unemploymentNew demographics to deal with (Brazil, Russia, India, China)GlobalizationPeople say they want to loose weight, but most people are gaining itNatural EnvironmentPressures to go green (packaging, reduced carbon footprint, etc.)ThreatsContinued competitionImpression they that sell unhealthy foodsPoor economic conditions and globular unrestOpportunitiesExpand in the coffee (McCafe) marketContinue with healthier foods and lifestyles first mate with retail fetter (i.e. like Starbucks has done with grocery stores and Target)These are our thoughts, so no reference, agreeEvaluation intentness AnalysisMcDonalds is in the quick service restaurant segment and its defined as the sale of food and drink for immediate consumption either on the premises or in designated eating areas apportiond with other foodservice operators, or for consumption elsewhere. Their main competitors are Burger power a nd Wendys/Arbys. The global fast food market generated total revenues of $154.7B in 2008, representing a compound annual result rate (CAGR) of 6.6% for the period spanning 2004-2008. The performance of the market is forecast to decelerate, with an anticipated CAGR of 5.3% for the five-year period of 2008-2013. Reference is the Datamonitor paperFive Forces Substitutes (Moderate)Home cookingConvenience storesGrocery Stores (i.e. salad bar, pre-cooked diners, etc)Suppliers cause ( disordered)No uniqueness to productsRaw materials readily availableSwitching costs are lowBuyer Power (High)Buyer IndependenceLow sack costsTendency to switchNew Entrants (Low)Local franchise may be impacted by competition, but not nationally/globally in like manner much capital needed to compete with McDonaldsHard to match branding powerRivalries (High)Little product differentiationLittle price differentiation galore(postnominal) competitorsThese are our thoughts, so no reference, agree I agree, unless yo u want to reference Grant textbook.Market segmentStrategic Groups / Competitors by Market (DM)Consumer Packages Good IndustryFood (Cargill, Inc., Nestle SA, The Proctor Gamble Company, Japan Tobacco, Inc., Unilever)Leisure and Arts IndustryHotels and Restaurants (TUI AG, Jardine Matheson Holdings Limited, Compass Group PLC, Sodexo S.A,., Burger King Corporation)Food Service (Compass Group PLC, Sodexo S.A., Loews Corporation, ARAMARK Corporation) speedy Food Restaurants (Yum Brands, Inc., Autogrill S.p.A., Chick-fail-A, Inc., Jack in the Box Inc., Wendys/Arbys Group)Kristie found this..I found this at Datamart retrieved 7/10/10Competitor AnalysisMcDonaldsBurger KingWendy/ArbysStrategy represent leadership (low cost, industry wide) strategyStrategy is to offer menu variety at affordable prices such as Happy Meals, budget-minded Value Menu, espresso coffee drinks, payoff smoothies, premium chicken sandwiches and salads, our premium sandwiches that come with chicken, or grilled chick en as a choice in terms of managing caloriesRestaurant development strategy is to pick locations within the marketplace to billow its target customers such as restaurants in local neighborhoods as well as at airports, malls, toll ways, and colleges. (DM) king- size of itd scale of operation and ability to customize menu provides the ability to penetrate upcoming markets with minimal effort and lifts its revenue generation capacity (DM)De-emphasize Partner Brands concepts in order to tension on the McDonalds brand (SP)Cost leadership (low cost, industry wide) strategyStrategy is to focus its product development and marketing to customers in the 18- to 34-year-old male demographic. It has added a number of premium-priced items to its menu, including the Steakhouse Burger made with Angus beef. (Hoovers)Uses a number of online marketing techniques, including viral videos, to reach its target audience (Hoovers)Cost leadership (low cost, industry wide) strategy (WA, DM)Improving severa l core products such as sandwich buns, French fries and bacon by differentiating in quality in the QSR burger segment. (WA, DM)Focus on our fresh, never frozen beef and premium chicken. (WA, DM)Install a disciplined product development and testing process (WA, DM)ObjectivesCompete in the global fast food industry continue its Plan to Win corporate strategy that it commenced in 2003 (SP)Fixing operating inefficiencies in existing restaurants victorious a more integrated while focusing on growth, with an emphasis on increasing sales, margins and returns in existing restaurants and ensuring the right operating structure and resources are aligned with priorities that create benefits for customers and restaurants. (SP)Customize product to suit tastes and preference of consumers in local markets (DM)Well-positioned to expand global footprint, invest in reimaging political platform and deliver operations excellence every day.Marketing campaigns and menu options give focus on the brand equities that provide a distinct competitive advantage flame-broiled taste, quality and size at affordable prices. (DM Wendy)Long-term strategies remain on course and committed to respond to an ever-changing consumer dynamic.Same-store sales growth by increasing transactions and intermediate check.Margin expansion through advanced operational execution and control of costs.Begin a rollout of a Breakfast menu to attract market share in day segment.New restaurant development with an emphasis on franchise growth.Expand internationally in markets such as Latin America, the Middle East, and Asia- Pacific.AssumptionsInternational segment has supplied much of its earnings growth over the past two decades (SP)Diversified geographic presence provides opportunity to gain from economic growth in emerging markets (DM)Restaurants sub-industry is negative and will continue as high jobless ratios and an ongoing troubled housing market (SP)The full-service restaurant segment will be negative spec ifically for the restaurant locations in states where the housing markets prices are weak and unemployment is above the national average causing continued pressure on sales and customer preference for less expensive menu choices. (SP)Challenging consumer environment will continue due to high unemployment levels resulting in a reduction in out-of-home eating expenditures.Resources385,000 Employees (SP)Cash 1,796 Million (SP)41,320 Employees (SP)Cash 122 Million (SP)67,500 Employees (SP)Cash 592 Milliom (SP)Kristie found this..everything in the boxes aboveI saved the Company profiles on the M private road. I used the company profiles from Datamonitor (DM) for McDonalds, Wendys/Arbys Group, Inc, and Burger King Corporation retrieved 7/3/10.HooversBurger King Holdings, Inc. (15 July). Hoovers Company Records,54531. Retrieved July 3, 2010, from Hoovers Company Records. (Document ID 168241971).SPMcDonalds Corp. (20 July). Standard and Poors NetAdvantage Company Profile. Retrieved July 3 , 2010, from Standard and Poors NetAdvantage Company Profile.Burger King Holdings, Inc. (20 July). Standard and Poors NetAdvantage Company Profile. Retrieved July 3, 2010, from Standard and Poors NetAdvantage Company Profile.Wendys/Arbys Group. (20 July). Standard and Poors NetAdvantage Company Profile. Retrieved July 3, 2010, from Standard and Poors NetAdvantage Company Profile.Evaluation Company/Division AnalysisWE PROBABLY NEED TO throw THIS/MAKE IT OURS, NOT SO MUCH FROM THE ANNUAL REPORT.Key ResourcesTangibleFinancial (cash securities, borrowing capability)Revenues exceed $22,700 million2009 comparable sales increase pronounced the sixth consecutive year of positive sales in every geographic segment of our business.Physical (plant, equipment, land)Operated in over 100 countries 32,478 McDonalds restaurants80% of McDonalds restaurants worldwide owned and operated by commutative local men and womanNatural ResourceHas some agriculture operations in RussiaIntangibleTechnology ( i ndulgentware, patent, copyright, trade secrets, data)Product/Menu Innovationcustomizes its product to suit tastes and preference of consumers in local marketscompanys product line in India comprise of non-beef based burgersDevelopmental licenseLocal entrepreneur owns the business, including control of the real estate, and uses their capital and local knowledge to build the McDonalds Brand and optimize long-term sales and profitability.The company collects a royalty, which varies by market, based on a percentage of salesReputation (brands, relationships)Well-established brand that appeals to all customers of all age groups and nationalities 1Provides acceptability in new markets 12009 6th place in the top 100 global brandsPredictable value, family fun and familiar tasteCultureLeadership culture that embraces change and rejects self-satisfactionContinually focused on what is working and then leveraging our scale around the world for the overall good of their customers and their Syste m.Human ResourcesSkill / know-how / Training at McDonalds UniversityRelationshipStrength of the alignment between the Company, its franchisees and suppliers (collectively referred to as the System) has been key to McDonalds success over the years. This business model enables McDonalds to consistently deliver locally-relevant restaurant experiences to customers and be an entire part of the communities we serve. In addition, it facilitates their ability to identify, implement, and scale innovative ideas that meet customers changing needs and preferences.MotivationMcDonalds customer-focused Plan to Win-which is centered around being better, not sound bigger-provides a common framework for our global business yet allows for local adaptation. Through the execution of multiple initiatives surrounding the fiveKey drivers of exceptional customer experiences-People, Products, Place, Price and Promotion-they have enhanced the restaurant experience for customers worldwide and grown sales and customer visits in each of the last six years. This Plan, coupled with monetary discipline, has delivered strong results for shareholders.Capacity for communication and collaborationCross-fertilization of ideas and innovations, our leaders are better able to assume new challenges and responsibilities on behalf of the Company.Kristie found this above launch this on McDonalds Annual Report 2009 Retrieved 6/4 Saved the file in the M Drive as McD_2009_AR_Final_032910..Capabilities/Value ChainPrimary inbound LogisticsNo difference from competitionOperations (Competitive Qualifier)Makes food as fast as competitionOutbound Logistics (Competitive Qualifier)Located in Metro areas, easy to drive into/out of, one on every corner (per se)Marketing/Sales (Value Add)Gives customers more options (hamburgers, salads, coffee, deserts, etc.) along with free Wi-Fi, and is more recognizable than competitionSecondary radicalDid not find and advantage or disadvantageHuman Resource Management (Value Ad d)Has McDonalds University for Management, others do notTechnology (Value Add)Come out with new products first. I.e. tolerant Mac, Breakfast foods, coffee, now smoothiesProcurement (Competitive Qualifier)Owns/grows little to none, buy and assembles everythingCustomer ServiceThey have Customer Service like the competitionOur thoughts..Core Competencies The bundle of resources and capabilities that add value to a customer and may serve as a source of sustainable competitive advantage. It is answered by the follow Established Yes. McDonalds is a global company that started over 70 years ago and is still growing. Tremendous branding.Sustainable Yes. They actually grew and made profits during the recession of 2008 and continue to outpace the competition by nearly 8 fold over Wendys/Arbys and 10 fold over Burger King REFERENCE http//www.dailyfinance.com/quotes/mcdonald-s-corporation/mcd/nysInimitable the products, yes, the experience no. They have come out with new products first (i .e. competitive coffee, healthier foods, etc.) and have the branding that the competitors cant touch. Ronald McDonald is second to Santa Claus in recognition.Our thoughts..(one reference above)Evaluation VII. Corporate Social visit..This was less than a page for FORDthat is because they know what they are doing and I dont lol.THINK WE NEED TO SCALE THIS DOWN, APPLY TO CONCEPTS IN THE BOOK. MAKE IT NOT FROM MCDONALDS VIEW, moreover OUR VIEW.sustainability project to improve conditions for farm workers in the Florida tomato industry in 2007, which in turn promotes good environmental practices in its land-based agricultural supply chain and makes the farm a sustainable business. Although McDonalds purchases only 1.5% of Floridas tomatoes annually, McDonalds and its suppliers instituted industry-leading grower standards that improved working conditions in these farms and made the farm a sustainable business.http//social-corporate-responsibility.suite101.com/article.cfm/corporate-soci al-responsibility-at-mcdonaldsFlagship Farms Initiative (FAI) in Europe. The program showcases seven progressive farms employing innovative domain practices across Europe and carries out research into how ethical farming practices can be incorporated into commercial farming systems.http//social-corporate-responsibility.suite101.com/article.cfm/corporate-social-responsibility-at-mcdonaldsSustainable Fisheries program which is in collaboration with the Sustainable Fisheries Partnership. This program defines sustainability standards that guide all of McDonaldss purchases worldwide for wild-caught fish that goes into making those Fillet-o-Fish and make the relevant fishery a more sustainable business.http//social-corporate-responsibility.suite101.com/article.cfm/corporate-social-responsibility-at-mcdonaldsIn 2005, the Center launched a new unique educational opportunity, in partnership with fast food giant McDonalds, giving Haas MBA students first-hand moving picture to the myriad CSR challenges businesses face on a daily basis. The program is known as the McDonalds Research Fellows in Corporate Responsibility (CSR) Program.Through research, stakeholder engagement and intensifier field experiences, a globally diverse team of second-year Haas MBA students conduct a deep stakeholder engagement study on McDonalds CSR activities giving the company a fresh perspective and new insights into its business. As part of McDonalds Open Doors program, the main goal of the CSR Fellows program is to expose the students to McDonalds business and create opportunities for the company to engage and act with various stakeholders.The corporate-sponsored program provides research fellowships to each student. Recipients are known as McDonalds Fellows. The fellows work closely with a faculty director on the study and give several key deliverables that may be used broadly and at the discretion of McDonalds (web, companys corporate responsible reports, etc.).http//responsiblebusiness .haas.berkeley.edu/McDonaldsCSRFellowsProgram.htmlEducate and communicate with our supply system about sustainabilityThrough the use of targeted communication tools, an internal website, and training opportunities, we have achieved a greater understanding of, and alignment around, sustainability, including how it drives our business.Continue to integrate environmental con brassrations into our packaging design through rollout of our global packaging lineup into our nine largest marketsThe Eco-Filter 2.0 (our packaging scorecard) has been implemented in each area of the world. Packaging designers have been trained in its use. The scorecard is being used to incorporate environmental considerations, in addition to other business criteria.Increase the number of Hamburger University certified restaurant managersWe continue to focus our efforts on increasing the numbers of restaurant managers who are HU graduates with positive success. The percentage of restaurants in our top nine market s with managers who were graduates of HU in 2008 was 93.3%.Develop a comprehensive global forestry policy that will apply to all products we purchaseWe developed a global Sustainable Land Management Commitment (SLMC), using a voteless process that included global internal, supplier, and NGO input. Initial communications efforts are focused internally and with our supplier community.Measure environmental impacts in our supply chain By the concluon of 2009, the Environmental Scorecard (ES) should be completely rolled out to all of our direct suppliers of beef, poultry, pork, potatoes and buns in McDonalds top nine markets. The ES measures water, energy, be adrift and air emissions metrics and promotes continuous improvement. In addition, an initial estimate of our supply chain carbon footprint is underway and will be completed in early 2010.Further rollout of our global forestry standards for consumer packaging, expanding into other Areas of the World, specifically the U.S. and Asi a Pacific, Middle East, and Africa (APMEA). The APMEA market has partially implemented our forestry standards for consumer packaging, with full adoption planned by the end of 2009. As of the end of 2008, the North America market had completely rolled out the standards.Taken from McDonalds Corporate Responsibility Online Report, PAGE 2 I saved a hard copy of the report on the M Drive. Retrieved 7/1/10http//www.aboutmcdonalds.com/mcd/csr/report/overview.-RightParaContentTout-43872-ReportsLinkList-44436-File1.tmp/McDonalds%202009%20Global%20CR%20Report%20Overview.pdfInnovative menuIn many markets, customers can swagger and match main course, side beverage and dessert choices to create custom-tailored Happy Meals. Yogurt desserts with fruit are also available in most of the major markets, as are sugar-free soft drinks. 100% fruit juice is also on a number of menus worldwide. Market-level offerings includeMcDonalds France offers a choice of entres, three side dishes, fruit bags, nine b everages and four desserts. Sides include cherry tomatoes and two types of potato offerings. Beverages include bottled water, two juice options with no added sugar, and two soft drinks with no sugar. For dessert, customers may choose a drinkable orchard apple treesauce, a yogurt drink or sliced fruit. Happy Meal choices in the UK include carrot sticks, bottled water, juice, a soft drink with no sugar added, along with a fruit bag side/dessert and semi-skimmed, organic milk. In Hong Kong, Happy Meal choices include entirely grain corn as side and for beverages, juice, low- fat milk, or soy milk. In the U.S., Happy Meals can be ordered with Apple Dippers and 100% apple juice or 1% low-fat milk as a beverage.McDonalds Australia Happy Meal offerings include the Seared Chicken Snack Wrap, Apple Slices, Apple Juice, Low Fat Calcium Enriched Chocolate Milk and a Sparkling Fruit Juice Drink (Apple Blackcurrant).Taken from McDonalds Corporate Responsibility Online Report, PAGE 11 I saved a hard copy of the report on the M Drive. Retrieved 7/1/10Our Global Advisory Council (GAC) is an international team of independent experts assembled by McDonalds to provide us with professional guidance in the areas of nutrition and childrens well- being. The GAC plays a pivotal role in helping us to continuously develop our thinking and approach in these areas. GAC members provide us with valuable insights, direction and recommendations about how to continue delivering a more beneficial and valuable experience to children and families. rapture Drewnowski PhD, MA Prevention Treatment of Obesity, University of Washington at Seattle, WA Paul GatelyMcDonalds makes charitable contributions through the Ronald McDonald House Charities (RMHC) which aims to create, find and support programs that directly improve the health and well being of children.According to Clara Carrier of Ronald McDonald House Charities, in particular, the Ronald McDonald Care Mobile attempts to ensure that childr en in vulnerable communities can receive state-of-the-art medical exam and dental treatment to improve their health and strengthen the whole family. This health care on wheels program attempts to change childrens lives and improve communities along the way.http//social-corporate-responsibility.suite101.com/article.cfm/corporate-social-responsibility-at-mcdonaldsAccelerate and expand food and beverage choices for kidsWe remain committed to working with our suppliers and partners to test and introduce new food and beverage items for kids on a market-by-market basis. In Spain and Australia this year we spread out the choice of Happy Meal entre items with the introduction of a new kids sized grilled chicken snack wrap, while in Portugal we launched carrot veggie rolls. On the beverage front, we introduced new fruit beverages across Latin America and in Australia and continue to look for other refreshing options appropriate for kids.Continue to enhance childrens well-being through pro grams and initiatives that provide fun with aPurposeWe have leveraged the characters from our Happy Meal promotions to encourage fruit, vegetable and dairy purchases and to inspire kids to be diligent and creative and will continue to do so in the coming years. In 2008, many McDonalds markets, including Australia, Brazil, China and Japan, created robust opportunities for kids to experience the Beijing Olympics, whether it was as an suspensor escort at the Games or sponsoring local athletic initiatives. Along with continuing to support local grassroots efforts, we use Ronald McDonald at restaurants to encourage kids to participate in activities that activate their body, mind and spirit.Continue to provide useful nutrition information in ways most relevant to todays consumersIn many markets around the world, we have enhanced our merchandising efforts to make it easier for parents to make balanced food choices for themselves and their kids. In all of our top nine markets, we continue to invest in making nutritional information available in the store, as well as online.Taken from McDonalds Corporate Responsibility Online Report, PAGE 12 I saved a hard copy of the report on the M Drive. Retrieved 7/1/10VIII. Competitive Position.this is the box (low cost, differentiator, etc.)Low CostDifferentiatorBroad cogitateI now think they are in this box. They are definitely focused of just fast food, yet they are not always the lowest. They want people to visit them because the have the best fries, the best coffee, wi-fi, etc.I sent Bryant a message on this.These are our thoughts..IX. Corporate Strategy Clint working onVertical IntegrationPartially or QuasiFranchise provide portion of capital required by initially investing and reinvesting in the business over timeOwns the land and buildings or secures long-term debt leases for both McDonalds operated and conventional franchised restaurants sitesThese are our thoughts..Geography/International Strategy Clint working onLine s of BusinessExtent of diversification NoneWhat kind of diversification NoneHow do they do it NoneExperience (good/bad) NoneFuture (when/where) NAThese are our thoughts..Evaluation StructureOrg structure.REFERENEC found in the 2009 annual Reporthttp//www.aboutmcdonalds.com/etc/medialib/aboutMcDonalds/investor_relations0.Par.6540.File.dat/McD_2009_AR_Final_032910.pdfEvaluation XI. Strategic RecommendationsWill be our thoughts.