mcdonalds case study analysis strategic management

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McDonald's Corporation

By: Frank T. Rothaermel, John Kim

The case is set in 2023; the protagonist is Chris Kempczinski, CEO of McDonald's Corporation. McDonald's is the world's largest hamburger fast-food restaurant chain, with 40,000 restaurants in over…

• Length: 28 page(s)
• Publication Date: Mar 8, 2023
• Discipline: Strategy
• Product #: MH0081-PDF-ENG

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The case is set in 2023; the protagonist is Chris Kempczinski, CEO of McDonald's Corporation. McDonald's is the world's largest hamburger fast-food restaurant chain, with 40,000 restaurants in over 100 countries, $23 billion in annual revenue, and a net income of $6 billion. Since being appointed CEO in 2019, Kempczinski launched the Accelerating the Arches strategic initiative (MCD, also the ticker symbol): maximize our Marketing, commit to the Core Menu, and double down on the 4 Ds of delivery, digital, drive-thru, and development. Although McDonald's has significantly outperformed the broader stock market for most of the past decade, Kempczinski wonders how long this can last. McDonald's faces significant headwinds, including recessionary pressure, high inflation, supply chain problems, rising wages, and significant labor shortages.

Learning Objectives

Strategic leadership (purpose-driven vision); stakeholder strategy; diversity, equity & inclusion (DEI); strategic intent; external and internal analysis; core competencies; creating shared value; tech and platform strategy; business model innovation; business strategy (positioning); corporate strategy (geographic diversification, product-market and service diversification, economies of scale and scope); incentive alignment (franchisee and franchisor); organizational culture and structure (implementing strategic initiatives)

Mar 8, 2023

Discipline:

Geographies:

Asia, Europe, United States

Industries:

Beverage industry, Food industry, Real estate industry, Restaurants and food service industry

McGraw-Hill Education

MH0081-PDF-ENG

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How McDonald's Became The Benchmark For Fast Food

Table of contents.

The McDonald brothers developed a system to make it all happen. Yet we know them for Ray Kroc, who created one of the world's largest chains of restaurants, real estate and toy retailers, while 'outmaneuvering' the founders. 

Although McDonald's has not been the largest fast-food chain in the world since 2011, it is still the best-known brand. Even in Israel's Negev Desert, 100 kilometers from the nearest city, there is a restaurant, because franchising has given the company such a huge boost worldwide. 

A few key facts about McDonald’s:

• The Kellogg Company was founded in 1940. 
• McDonald’s and its franchise partners employ more than 200,000 people globally.
• McDonald’s reported $8.1 billion in sales by corporate-owned restaurants and $10.7 billion by franchise partners .
• The gross profit in 2020 was $4.7 billion .
• Global comparable sales decreased 7.7% in 2020 , mainly due to the COVID-19 pandemic.
• McDonald’s spent over $100 million on the international markets to boost marketing in hope of recovery. 
• McDonald's operates more than 39,198 restaurants in more than 100 countries around the world .

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You Don’t Sell Burgers! It’s A Real-Estate Business! 

The first burgers.

Richard (Dick) and Maurice (Mac) McDonald opened their first diner together, a hot dog stands in Monrovia, California, in 1937. Later, in 1940, they moved to nearby San Bernardino and opened McDonald's Bar-B-Que. Over time, the eatery became more popular and profitable, but the brothers realized they could cut a lot of costs if they rethought their concept. They developed a series of revolutionary ideas and strategic measures that proved to be closely linked: reducing the range of products, preparing ingredients properly, keeping potatoes warm with an infrared lamp, and building a kitchen where food could be prepared more quickly. They also encourage people to take their orders and target families rather than young people.

In 1948, the McDonald brothers closed a well-established restaurant and reopened it a few months later with a slimmed-down menu - and by then under the McDonald's name. They realized that most of their income came from selling burgers, so they reduced the selection to almost nothing. (To give you the full picture, the fries and milkshakes were replaced with French fries and patties for a short time.)

Effectiveness above all

Kitchen work was sped up by having only two things to bake. Washing up was also kept to a minimum, as the food was served in disposable packaging. In 1952, the restaurant was closed again for several months to remodel the kitchen so that food could be served more quickly and efficiently than before. The new kitchen and associated system allowed all orders to be filled in as little as half a minute. Since the operation was supported by the "fast system," it's not hard to guess where the term "fast food" came from.

McDonald's goal at the time was to get people to store there, but not to eat there, but to take something there. This was achieved not only by the packaging of the products but also by the fact that there was no built-in canteen in the first restaurant; if you did not want to take what you bought home with you, you could either eat your lunch in your car or sit on a bench nearby. For a while, they also experimented with serving drinks in cone-shaped cups that customers could not put down, which encouraged them to eat faster.

Thanks to this incredibly efficient and fast operation, they were able to sell burgers for 15 cents - about half the price of other places. The fast service, consistent quality, and low price amply compensated customers for the inconvenience. Soon, the McDonald brothers wanted to open more restaurants, but they were not nearly as successful as their first location. The reason was simple: they could not be everywhere; they could only be personally responsible for quality assurance at the first restaurant. At the same time, the oldest McDonald's still in operation today opened in Downey, California.

The arrival of Ray Kroc

The brothers realized that they did not necessarily have to open new locations themselves to expand, but that others would do it for them. So in 1948, they began to reform their business model and set up a franchise system. By 1954, they had sold the royalties from 21 franchises. 

1954 marked a turning point in the McDonald brothers' lives. To further speed up service, they ordered a new type of mixer that could ensure the preparation of multiple servings at once. The order put them in contact with Ray Kroc, a travel agent. Kroc was amazed at how efficiently the restaurant operated. He wanted to get into the business and eventually convinced the brothers to make him their franchise representative. From then on, he was in charge of who and where they could open new restaurants.

The new buildings were now built the way the McDonald brothers envisioned their dream restaurant. A clean, red and white exterior with a neon yellow golden arch on either side of the building attracts potential clients (aka bypassers) to the restaurant. The juxtaposition of these two golden arches became the familiar Meki logo, which also forms an "M," a reference to the initials of their name. It took on a similar look to today's image after Ray Kroc became the owner, or rather founder, of the company.

In 1955, Kroc founded the forerunner of today's McDonald's Corporation (McDonald's System, Inc.) and opened its first new restaurant. The first was followed by the second, the third, and within a year, the 18th. Kroc was entitled to 1.9% of gross sales for each of these restaurants, but under his agreement with the brothers, they were entitled to 0.5%. He could barely cover his expenses with the remaining amount. Then he met Harry Sonnenborn, who gave him a new perspective: McDonald's was in fact a huge real estate business.

Turn of events

Sonnenborn encouraged Kroc to buy the land on which he wanted to build restaurants and then lease it to operators. Kroc listened to him and took the biggest step toward owning the entire chain. This way, he received a steady stream of income and did not have to give any of it to the McDonald brothers. The latter, of course, was not happy about this situation. Everything in the restaurants had to continue to be done the way the brothers wanted, although Kroc tried to introduce several innovations. Finally, in 1961, Kroc bought out the brothers for $2.7 million. To raise this sum, he had to take out loans, 14 million of which he was later able to repay.

Years of rapid expansion

As part of the agreement, the brothers would continue to own the restaurant in San Bernardino, but they had to change the name because Kroc already owned the naming rights to McDonald's. So they continued to run the restaurant under the name "The Big M," but Kroc was upset that he could not have it. Soon after, he opened a Meki just around the corner from the M, which allowed the McDonald brothers to close the location in a few years. They probably regretted the deal for life, because, with their 0.5% share at the time, it would have guaranteed them $15 million a year until the late 1970s, while their heirs would have received $305 million in 2012. And Kroc probably got a good deal on that loan.

By 1965, the company was operating more than 700 restaurants. That year, they went public. McDonald's stock started at $22 a share, but within a week the price had risen to $49. By the end of the decade, they had 1,500 restaurants worldwide and has started at Sonnenborn's suggestion, they continued to own the land on which the Meccas operated. Now they are looking for new land with fairly high standards: it should be about 4,600 m2, with the possibility of building on 370 m2, and located on the corner of at least one, but preferably two, busy roads.

Also in 1965, the then very limited offer was expanded: the Filet-O-Fish sandwich was added to the national menu. The fish burger was invented to give Catholic customers a choice during Lent. In 1968, the Big Mac, the iconic double-decker burger, was introduced. The Egg Muffin was introduced in 1975, the Happy Meal in 1979, and Chicken McNuggets in 1983. Of these, the Happy Meal is perhaps the most interesting, as it has made McDonald's one of the largest toy sellers in the world: 1.5 billion toys are sold each year thanks to the Happy Meal.

Ray Kroc never stopped working for McDonald's until he died on January 14, 1984. To this day, McDonald's provides its customers with great-tasting, affordable food, franchisees and crew members with job opportunities, and suppliers with reliable ingredients and products.

Key takeaways

Successful market penetration does not always require a complete upheaval of the rules of the sector. The McDonald brothers did not invent any truly new dishes, but they did let awareness guide the design of their restaurants. So the number-one success factor for McDonald's is professional design and process management.

The second success factor is sales behavior. While other restaurants were slower to offer their products, the excellent policies encouraged employees to sell customers as many extras as possible. Even today, "go big" accounts for a significant portion of restaurant profits (industry rumors say 40%). 

The third approach is the real estate-based approach. The franchising system that Ray Kroc perfected is still used today, and we know from the annual report that the company makes more revenue from franchisees than it can generate itself.

The McDonald’s Products

Core products.

McDonald's core products include burgers, which typically consist of a slice of beef, cheese, and sauce sandwiched between two halves of a bun - in all combinations and sizes. The smallest product is the standard burger, while the largest is the Big Mac. The sandwiches are available with chicken and fish, as well as localized versions in many countries around the world.

Core products include French fries, which also come in a variety of sizes. In addition, the Happy Meal menu specifically for children, as well as shakes and soft drinks, continue to be an integral part of fast food restaurant menus in almost all countries. According to market research , an average McDonald’s menu includes around 145 items. 

Seasonal products

National holidays, Halloween, Christmas, or even Easter - whatever the occasion, McDonald's introduces new seasonal products every month in every country around the world. Some are country- or region-specific (for example, the foie gras sandwiches are made specifically for the European audience), but most products are available in other countries after a limited local testing period. 

Typically, a traditional product, such as a standard burger, is enhanced with additional ingredients (e.g., spices, additional meat, or a special design) to reflect the seasonal event.

Localized products

McDonald’s has achieved this global success through maximizing localization techniques and appealing to local audiences. The company manages the menus to fit culturally and socially accepted norms; tailoring their traditional Big Mac meals to suit a local audience with specific requirements.

• Argentina: McFiesta burgers are available at McDonald's restaurants in Argentina, which are quarter pounders with mayo instead of ketchup. There are typical US sides here like French fries and Coca-Cola. Consider getting ice cream in an Oreo cone for dessert.
• France: Typically, you'd find the McBaguette combo at Mcdonald's in France - a sandwich that is topped with two hash browns and includes breaded chicken, ham, and cheese. The 'Le McWrap' and the 'Le Menu Happy Meal' are also available. Try their apricot and lime macarons for dessert, or their cherry tomatoes as a side dish.
• Hungary: In Hungary, specialized seasonal menus are very common, both in terms of ingredients and appearance. This is also facilitated by the fact that, since 2019, Hungarian McDonald's restaurants have been managed by a centralized, Hungarian-owned company, while the American McDonald's company provides only the brand and franchise rights. Foie gras is a regular item on Hungarian menus, as is "Dotted McFlurry" (a cottage cheese-based ice cream) made in cooperation with a very popular local dairy supplier. ‍
• India: McDonald's has created the Maharaja Mac by substituting chicken patties for the traditional beef patties in its Big Macs. In India, cows are regarded as sacred animals, thus the reasoning behind this change. Indians also enjoy the Vegetable Pizza McPuff, a unique side dish. However, fries and Coca-Cola are just as popular here as they are everywhere else.

• Middle East: Specifically for Middle East dining, Mcdonald's has created the McArabia Pita, which is served with beef or chicken patties (pork is not allowed in the predominantly Muslim diet), onions, and tahini sauce. 
• New Zealand: Despite being removed from the permanent McDonald's menu in New Zealand, the 'Georgie Pie' is still available in some restaurants. With fries and frozen Coke, a square pie topped with steak and cheese is served.
• Sweden: Scandinavian countries tend to favor healthy diets, especially vegetarian food. McDonald's capitalizes on localization with its vegetarian McBean Patty. Served in a bun with lettuce, tomato, and sauce, it has cannellini and kidney beans, onions, green peppers, and carrots.
• Thailand: There is a Samurai Pork Burger on Thailand's national McDonald's menu, which is a pork patty dipped in teriyaki sauce with lettuce, onions, tomato, and mayonnaise. Besides the usual apple pie, you'll also find corn and pineapple pies that aren't available anywhere else.

Partnerships with other companies

• Coca-Cola: The story of McDonald's and Coca-Cola began in 1955 when the fast-food restaurant was looking for a soft drink supplier. The partnership has continued ever since, with Coca-Cola selling not only soda but also other products to the restaurant chain.
• Oreo: Oreo is a worldwide popular dessert brand that mainly produces biscuits. The filled biscuits have become so popular that McDonald's has become a major supplier of Oreo to Mondelez International. In most countries, the biscuit pieces are served with ice cream, but in 2019, McDonald's China team tested the market with a burger with spam and Oreo biscuits . (It was not a global hit.)
• Beyond Meat: The trend toward vegetarian diets is spreading like wildfire around the world, and McDonald's is no stranger to it. According to the BBC , the McPlant burger will be available in British and Irish outlets as early as next year. The beef patty, made with pea protein, is available in 10 restaurants in Coventry, England, in the first round since the end of September, and then throughout the United Kingdom next year. The product's main ingredient is made for McDonald's by Beyond Meat, a publicly-traded startup.
• Local suppliers: Whether we're talking about the US or any other country in the world, one of McDonald's main and most forward-thinking efforts is to source its ingredients from local suppliers. To ensure that the fish, meat, or burger bun is always made to the same standard, McDonald's applies incredibly strict and centralized guidelines. 

Healthy or not healthy?

The restaurant chain has made great strides in the area of healthy eating in recent years: think supply chain with only local suppliers or the introduction of gluten-free, lactose-free, and vegetarian options. The calorie content of a hamburger today is much lower than that of a burger from 1980. In addition, the McDonald's team places great emphasis on healthy living - and they are trying to recruit new colleagues who will promote this corporate image. But that's just one side of the big picture.

A very interesting post came to light in 2008 when Karen Hanrahan revealed a shocking picture. Out of curiosity, she had set aside a McDonald's burger she bought in 1996 to see how quickly it would disintegrate (since there were theories about "plastic" foods in the past). After 12 years, the burger looked exactly like the one she had just bought, except it had shrunk a bit.

Although this is not part of the company's strategy, the following sources have been criticized the company:

• Jamie Oliver and his legal battle against the company
• Super Size Me , a movie in which the protagonist eats only McDonald’s products 
• In 1986, Greenpeace distributed flyers against obesity, naming McDonald’s among the ones responsible.
• There are also a lot of myths (most of them already busted) around the company’s procedures and products.

The product portfolio is the company's strength, so it's no wonder McDonald's is constantly improving and perfecting its recipes. Although the company has yet to build its healthy food image, its fast service and delicious, robust flavors win over millions of customers every month. 

The range includes flagship products available in all restaurants (except were banned for religious or legal reasons). These include traditional burgers, fries, and cola.

The company also diversifies its menu with seasonal and localized items. In the latter category, offerings vary from country to country and region to region, usually in partnership with local businesses and brands.

Franchise System

What is a franchise system.

Franchising has spread throughout the world not as a separate form of business, but as a special kind of business.

Franchising is a form of business based on close cooperation in which the franchisor or the owner of the system sells a complex system that has been carefully designed professionally and commercially in every respect and successfully tested in a market environment. The system is handed over to the franchisee with full training, branding, and ongoing support and supervision. Franchisors operate the franchise system to the specifications of the transferor, in the agreed territory, for a fee, for a fixed period.

McDonald’s Franchise Costs & Requirements

When purchasing an existing restaurant or a new restaurant, an initial down payment of 40% is required. Down payments must be made from non-borrowed personal resources, such as:

• cash on hand
• vested profit sharing
• business or real estate equity

The down payment amount will vary depending on the total cost of the restaurant. McDonald's generally requires $500,000 of non-borrowed personal resources before considering a new franchise partner. With less cash available, most opportunities to participate in the program are limited and depending on the transaction's specifics, financial requirements may be much higher. Additional or multi-restaurant opportunities may be more available to those with additional funds.

Franchise financing

To purchase a McDonald's restaurant, the buyer must pay a down payment of at least 25% cash. It is possible to finance the remainder of the purchase price for a period of up to seven years. Although McDonald's does not offer funding the project, McDonald's Owners/Operators benefit from established relationships with many national lenders.

Franchise - Ongoing Fees

• Service fee: Currently, a service fee of 4.0% of monthly sales is based on the restaurant's sales performance. 
• Rent: Rent that is based on a percentage of sales monthly.

Other costs of setting up a new franchise

Costs usually range from $1,2 million to $2,2 million. Most of the costs are related to the construction of the restaurant, such as building and interior design, but the franchisee also pays for equipment, furniture, and kitchen appliances.

General franchising strategy in 2021

McDonald's restaurants provide quality food and beverages in 119 countries, which are franchised and operated by the company. At year-end 2020, McDonald's will have 39,198 restaurants, of which 36,521 are franchised, or 93 percent.

McDonald's franchise restaurants fall into one of the following categories: conventional franchises, development licenses, and affiliates. Optimal ownership structures for restaurants, trading areas, and markets (countries) depend on a variety of factors, including financial resources and entrepreneurial abilities, as well as legal and regulatory frameworks in key areas such as property ownership and franchising. McDonald's business relationship with independent franchisees is governed by standards and policies, which are of fundamental importance to the company's performance as well as its brand protection.

McDonald's franchise partners are not financial investors, but committed partners who not only put up the capital to open a restaurant, but are also willing to participate in the day-to-day operations and running of the restaurant. They know all the ins and outs of the business, but they also reinforce the McDonald's brand through their involvement in the local community.

The potential partner does not have to have a suitable location, as the location of the restaurants is always determined by the company and handed over to the franchisee.

The Company’s Old/New Strategies

Accelerating the Arches is the Company's new growth strategy for 2020. As the leading global omnichannel restaurant brand, McDonald's Strategy encompasses all aspects of the company's business as well as updated values and new growth pillars that leverage the company's competitive advantage.

Growth Pillars

• Marketing: Investing in new, culturally relevant marketing approaches to effectively communicate the brand's story, food, and purpose. Customers will be provided with more personal services through enhanced digital capabilities. 
• Products: Focusing on serving delicious burgers, chicken, and coffee. Chicken and beef will be the company's primary focus as they represent the largest growth opportunities. McCafe’s brand, experience, value, and quality will be leveraged by the markets to drive long-term growth for McDonald's.
• Digital, Delivery, and Drive-Thru: McDonald's plans to accelerate technology innovation to meet the needs of customers as they interact with the company.
• Digital Experience: Known as "MyMcDonald's", the new digital experience platform will transform the company's digital offerings across drive-thru, takeaway, delivery, curbside pickup, and dine-in options. Through the digital tools available on the platform, customers will receive tailored offers, will be able to enroll in a new loyalty program, and will have the option to order and receive McDonald's food using their preferred channel. 
• Delivery expansion: McDonald's has expanded its delivery service to nearly 30,000 restaurants in the last three years and plans to expand further.
• The increasing importance of Drive-Thru: More than 25,000 restaurants globally have drive-thrus, including nearly 95% of the over 13,000 in the U.S. This channel has gained in importance since the COVID-19 outbreak, and leadership expects that it will play an even greater role as customers demand more flexibility and choice. In the U.S. and International Operated Markets, the vast majority of new restaurants will have a drive-thru. In addition to automated order taking, the Company plans to test a drive-thru express pick-up lane for customers with digital orders and a restaurant concept that offers drive-thru, delivery, and takeaway only for customers to enjoy a faster and more convenient experience.

For decades, McDonald's sales efforts focused on the cash register and drive-thru. One of the strongest elements of this was the introduction of the "Go Large" theme. By sizing and pricing the products, even those who had no real need chose the largest product, believing it to be the best and most appropriate offering. 

Today, in addition to physical sales, digital sales have become a priority. An app developed by the company not only speeds up the ordering process but also offers additional discounts that can further increase the cart value per customer.

With the introduction of home delivery, McDonald's has begun working with several partners including UberEats, FoodPanda, and Wolt. For a long time, these online marketplaces did not offer fast food products like McDonald's, but they have now become serious players in the market. The company's offering is particularly strong when it comes to speed: on average, food is delivered in 15-20 minutes, compared to 50-80 minutes for a traditional restaurant.

There are several cornerstones of the company's marketing strategy that have contributed greatly to McDonald's success:

• The Ronald McDonald figure: An owner of a McDonald's franchise introduced Ronald McDonald in 1967. To appeal to children, franchise partners decided to use a clown icon as an advertising tool. 96% of American children knew the name Ronald McDonald by 1973. Ronald McDonald is the second most recognizable fictional character among US schoolchildren, behind Santa Claus.

• The McDonald’s logo: There's no doubt that McDonald's golden arches are one of the most recognizable logos in the world. It was created in 1940. During the '60s, McDonald's decided to simplify their logo and focus on branding the company. A brilliant move was choosing the golden arches as the logo for the fast-food restaurant. The McDonald's logo looks very much like two golden-brown French fries bent into a letter M, and this is one of the most effective design features of the logo. McDonald’s is advertising one of its most popular menu items without viewers even noticing it.

• “Para PaPa Paaaa… I’m lovin’ it”: McDonald's has been using this jingle for a very long time. McDonald's jingle highlights a positive dining experience. The musical theme makes the diners feel at home during their meals there, as well as conveys how friendly and helpful the staff is.
• Promotion campaigns: Television advertising has become a favorite field for all fast-food restaurants with the proliferation of TVs. To this day, McDonald's is a loyal advertiser on channels aimed at children and their parents. Its campaigns focus on delicious food, fun, natural ingredients, and health. 

The company is one of the biggest innovators in the food industry and is credited with inventing or perfecting the following:

• McDonald's put in place order-taking kiosks in 2015, making it one of the first fast-food chains to do so. A touchscreen machine located near the front of restaurants lets customers place their orders without the need for a cashier.
• The introduction of specialty coffee at McDonald's changed McDonald's from a fast-food restaurant to something more. McDonald's introduced its specialty coffee line in mid-2007.
• The company separated a part of larger restaurants and re-branded it as McCaffes, a place where customers can buy coffee and desserts. Now it competes with Starbucks for coffee-lovers.
• McDonald's was one of the first fast-food chains to organize even the smallest details of its operations in a manual. This manual is still being improved today.

The 2020 growth plan contained nothing new compared to the path taken a year earlier. The key elements were digital customer access, which was a key driver of the company's continued growth during the COVID epidemic.

Sales and marketing go hand in hand at McDonald's: over the past 80-plus years, the techniques used have been perfected, all aimed at getting customers to buy. Advertising builds on this image of cheap and healthy food.

Final Thoughts And Key Takeaways

Growth by the numbers.

McDonald's has seen steady growth since its founding. Because of the relative cheapness of its products, it is a truly crisis-proof company, which even COVID could not bring to its knees - unlike millions of small catering businesses.

The company has emerged from the crisis as a winner, thanks in particular to digital developments, drive-thru, and the spread of home delivery.

Key takeaways from the McDonald’s story:

• Real estate business: The McDonald's business model has evolved from a restaurant to a complex system in a relatively short period, with some revenue coming from franchise fees, some from land leases, and some from food sales. 
• Thoughtful processes: While other restaurants are constantly experimenting with food, McDonald's has focused on improving its production technologies from the beginning. In addition to innovative machinery, internal processes have also been organized to ensure that products reach customers as quickly and consistently as possible.
• Franchise system: Behind the amazingly dynamic growth of McDonald's has been a well-constructed franchise system, the foundations of which were laid by the McDonald brothers, but perfected by Ray Kroc. 
• Core, seasonal and localized products: The main feature of the company's product range is that it is extremely consistent, as we can also get fries and cola in the farthest corners of the world. At the same time, local companies, at their discretion, can launch the menu with seasonal and localized products, enabling them to engage their customers even more.
• Strong marketing: Mcdonald’s has consciously built up the dining experience - regardless of whether we’re eating a hamburger in the car, in a restaurant, or at home. The logo, the iconic clown figure, the company’s theme song, the packaging, the internal design, and many other elements add up to become an unforgettable experience.
• Home delivery: Delivery was the largest innovational step from McDonald’s for decades, and partnering with food delivery startups, like UberEats or Wolt helped the company not only to survive the pandemic but get in shape for rapid growth.

Consumer opinion on McDonald's is certainly divided: some say it's plastic, others say it has grown up to meet consumer expectations. As a publicly-traded company, the owner of the golden arch has no choice but to march forward, pioneering innovation as it has throughout its history. What does the future hold for the company? An even broader product range, a stronger home, and digital experience - and, investors expect, continued revenue growth.

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About The Author

Joshua D. Margolis

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Journal of emerging technologies and innovative research

Pooja Darda

This research paper basically contains the marketing strategies adopted by the McDonald’s in India and in other countries like US,Russia, Japan and China. It will exclusively discuss about the marketing strategies differences in India and in other countries.

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McDonald’s Case Study Freshest Ideas – Strategic Management, Global Marketing, etc.

Have you ever wondered how McDonald’s became world-famous for selling sandwiches and potatoes?

McDonald’s Corporation is a leader in the fast-food industry, an extremely competitive market. This article will discuss various factors that brought the restaurant chain to success. We will answer all your questions for the McDonald’s case study: strategic management, marketing, competition, crisis management, etc. Let’s start!

• 🦸 McDonald’s Facts
• 🌿 McDonald’s Case Study Ideas
• 🍔 Marketing
• 🥤 Strategic Management
• 🧸 McDonald’s Staffing
• 🍟 McDonald’s Vs. Burger King
• 🤢 McDonald’s and Obesity
• 🥻 McDonald’s in India
• 🤠 Crisis Management

🎉 McDonald’s Case Study – 50 Best Examples

🔗 references, 🦸 5 crazy facts about mcdonald’s.

We bet you didn’t know most of these facts:

• French fries are the best-selling item on the menu. No, not everyone’s all-time favorite Big Mac. But it is pretty popular too, in second place.
• US military inspired Mcdonald’s to create McDrive. Some of the soldiers on duty were not allowed to leave their cars. That is why a Mcdonald’s restaurant near a military base developed a drive-through system that spread to other branches.
• Mcdonald’s sells around 75 hamburgers in a second. More than 750 hamburgers will be in customers’ hands only before you finish reading this article.
• Some countries banned McDonald’s. Bermuda, Iran, Macedonia, Yemen, Montenegro, North Korea, Zimbabwe, Bolivia, and Iceland don’t have a single Mcdonald’s restaurant on their territories.
• McDonald’s is the biggest toy distributor in the world. The company gives kids more than 1.5 billion toys yearly, thanks to Happy Meal.

🌿 McDonald’s Case Study – Fresh Ideas

McDonald’s is an excellent research field. It’s a big and famous company with many departments and a long history. Don’t know what to begin with? Check McDonald’s case study starters below:

• Advertising campaigns.
• Pricing strategies.
• Human resource management.
• McDonald’s hiring process in 2021.
• Creative marketing campaigns.
• Ronald McDonald House Charities.
• Corporate environment.
• International markets strategies.
• Fast-food industry problem statement.
• McDonald’s financial summary.
• Food shortage in local markets.
• Benefits for employees.
• Supply chain.
• Sustainability.
• Community connection.

🍔 McDonald’s Case Study Marketing – Idea #1

Take a look at key marketing focus areas of McDonald’s:

• Quarter Pounder
• Filet O’Fish
• McDonald’s advertising The advertising budget is constantly growing and expanding to new markets. The company spent $1.62 billion on ads in 2020.
• McDonald’s branding The fast-food chain developed a string brand using red and yellow colors, “M” golden arches and copywriting. You probably know McDonald’s world-famous slogan, “I’m loving it.”
• Marketing for children segment Happy meals and marketing campaigns targeted at children made McDonald’s No1 fast-food restaurant for families.
• McDonald’s franchising model The company was one of the pioneers in franchising. It also implemented a unique quality control system and adapted menus to regional tastes.

🥤 McDonald’s Case Study Strategic Management – Idea #2

McDonald’s constantly sets new goals and reviews current strategies to maintain its position in the market. Here is what you can research:

• McDonald’s strategic objectives Apart from generating revenue, McDonald’s focuses on its mission and vision. The company aims to become its customer’s favorite restaurant with excellent service.
• McDonald’s strategic management in HR The company devotes much attention to employment and workforce management planning. McDonald’s also implements innovative technologies to automatize HR processes.
• McDonald’s strategic investments McDonald’s continues to invest in core menu positions’ marketing as they make roughly 70% of the sales. They plan to integrate more bestsellers into regional menus.
• McDonald’s strategic innovations The company prioritizes 3Ds (Digital, Delivery, and Drive-Thru) in its current growth strategy. The company works on social and digital client interactions to create a better customer experience.
• McDonald’s financial strategies McDonald’s financial goal is to maximize its revenue by offering more straightforward financial solutions to its partners. The company supports suppliers and franchisees to help local economies recover after the COVID-19 pandemic.

👔 McDonald’s Staffing – Case Study Idea #3

McDonald’s offers various jobs, from the front counter and drive-thru to top management careers. How are employees treated in McDonald’s? Let’s find out:

• 2021 measures to fight labor shortage At the beginning of 2022, McDonald’s announced that in 2021, it had significantly grown its number of employees. The reasons were wage increases, more benefits, and additional bonuses.
• McDonald’s recruiting The company uses various selection, screening, and testing techniques depending on the career a person applies to. Hiring managers have many responsibilities, as McDonald’s employs around 200,000 people yearly.
• McDonald’s human resource management There are more than 1,7 billion McDonald’s crew members around the world. McDonald’s provides training and performance appraisal.
• Career ladder in McDonald’s Based on the results of its employees, there are multiple career growth opportunities at McDonald’s.
• Diversity and inclusion in McDonald’s McDonald’s works on key factors that are equal pay, supplier and franchisee diversity, and other sustainability goals. The company implements its DEI (Diversity, Equity & Inclusion) strategy in its departments and supply chains.

🍟 McDonald’s Vs. Burger King Case Study – Idea #4

Burger King is one of McDonald’s main competitors on the market. You can compare these fast-food chains using the following aspects:

• McDonald’s and Burger King’s customer service Burger King greets each customer when they enter its restaurants. In addition, Burger King replies to unsatisfied McDonald’s customers on social media and offers their coupons.
• McDonald’s and Burger King’s pricing strategy In general, McDonald’s prices are a bit lower. But there is no significant difference in their pricing strategies.
• McDonald’s and Burger King’s menu positions Burger King offers more balanced options than McDonald’s. On the contrary, McDonald’s is the leader in the breakfast menu and has many healthy options.
• McDonald’s and Burger King’s advertising McDonald’s implements better branding decisions and consistent advertising. Burger King creates more memorable and witty TV commercials.
• McDonald’s and Burger King’s coffee McDonald’s offers better coffee with a broader menu, especially in McCafe. Burger King’s coffee is not as popular.

🤢 McDonald’s and Obesity Case Study – Idea #5

McDonald’s and other fast food generally contain many calories, leading to weight gain. This problem is especially prominent in the US, where fast food is much more popular than in Europe.

• McDonald’s responsibilities As the most popular fast-food chain, Mcdonald’s can set trends in the industry that other chains will follow.
• McDonald’s nutritional information presentation In 2022, Mcdonald’s changed its calorie legislation. You can see calorie and macronutrient information about all the menu items in all customer touchpoints.
• McDonald’s and childhood obesity The company aims to reduce the amount of sugar, salt, and fat on the Happy Meal menu. McDonald’s also promotes healthy and balanced eating habits in its ads for children.
• McDonald’s accusations Advertisements, loyalty programs, and discounts motivate people to buy more. That is why much of McDonald’s marketing is criticized because it makes people buy bigger portions and more menu items.
• McDonald’s healthy meals The restaurants offer different salads, healthy breakfasts, low-fat milk, apple dippers, and other region-specific options.

🥻 McDonald’s in India Case Study – Idea #6

Indian culture and eating habits were a challenge for McDonald’s. Now we can see that the restaurant has successfully conquered the market.

• Mcdonald’s expansion to India McDonald’s opened its first restaurant in Delhi in 1996. Before McDonald’s entered the market, Indians didn’t even consider a burger as a meal.
• McDonald’s menu in India You can find many spicy burger options, spicy fries, kebabs, pizza, and rice bowls on the menu.
• Domino’s Pizza
• Dunkin Donuts
• Burger King
• Vegetarian market Indians don’t eat beef or pork at all. Nearly half of the Indian population is vegetarian. That is why McDonald’s made adjustments to its branding and ingredients.
• McDonald’s opportunities in India Indians’ eating habits have changed over the last few years. More of them choose to eat out and eat western food.

🤠 McDonald’s Crisis Management Case Study – Idea #7

McDonald’s regularly faces controversies and scandals that they have to deal with. Here are some examples of such cases:

• McDonald’s crisis response in 2020 During the Covid-19 pandemic, McDonald’s provided financial support to its franchisees and employees. It also continued operating and ensured no delays in the supply chain.
• Steve Easterbrook lawsuit The former McDonald’s CEO was fired because of an affair with an employee. Later, the company discovered he had three other relationships with his employees.
• McDonald’s discrimination scandals Multiple sources alleged that David Fairhurst, former Chief People Officer, sexually harassed female employees. He also was forced to leave his job.
• McDonald’s transparent investigations After the scandals that involved higher management, McDonald’s implemented new policies. They include public and transparent actions and a proactive position in the investigation.
• Million-dollar nugget lawsuit A man from Florida cracked his tooth because of a bone in a nugget. Currently, he is trying to sue McDonald’s for the damage.

And here are some case study samples for you:

• Individual, Group and Organizational Concepts in McDonald’s. Discover how work culture, motivation, and group dynamics influence McDonald’s performance.
• Comparative Financial Statements of McDonald’s. In this case study, you will find an analysis of financial metrics, an explanation of McDonald’s trends, and a description of possible decisions.
• McDonald’s Business Principles: Employment Violations. The paper discusses the problems of McDonald’s business ethics, rights, and duties. There are also possible solutions to the issues.
• McDonald’s Human Resources Management Practice. This case study defines the external and internal factors that affect McDonald’s HRM, the company’s strengths, weaknesses, and opportunities.
• McDonald’s, Tesla and Apple: Segmentation, Targeting, and Positioning. The paper compares strategies these giant companies use to define and interact with their target customers.
• McDonald’s Company Marketing Practices and Strategies. Here, you will find an overview of the factors influencing McDonald’s marketing performance. There is also a detailed analysis of the company’s marketing activities and supply chains.
• McDonald’s Strategic Management of Human Resources & Innovation. Discover the approaches McDonald’s uses to work with its employees and the problems it faces.
• McDonald’s and Wendy’s International Inc.: Financial Performance. This case study compares the financial statements of the two prosperous fast-food chains.
• McDonald’s and Chipotle: Corporate Social Responsibility. Discover how the companies implement their ethical values in the internal and external environment.
• McDonald’s Company International Expansion. The paper explains, analyzes, and evaluates McDonald’s actions to conquer various markets.
• Employees Management: Restaurant Team Recruitment. In this sample, you will find information on the recruitment stages and training provided for different positions in the restaurant business.
• McDonald’s Company’s Marketing Strategies. Read about McDonald’s marketing mix, the effectiveness of the marketing strategies, and future opportunities.
• Microsoft Corporation and McDonald’s Corporation: Financial Performance. The case study’s analysis is based on calculations and explanations of the provided ratios.
• McDonald’s Accounting Information System. The topic of the case study covers the transactional cycles in Mcdonald’s, their examination and management, and problems.
• McDonald’s, Starbucks, and American International Group. The study discusses the financial performance of the companies and summarizes the figures.
• McDelivery Management. Discover the methodology, objectives, and benefits of the McDelivery project in McDonald’s performance.
• Best Buy, Starbucks, and Yum Brands: The Effect of Operations Management. The sample analyses the lean management systems and quality management systems in the food industry.
• Quality Management in McDonald’s Restaurant. Learn about the customer benefit package of McDonald’s service and the opinion of one of the managers.
• Business Ethics and Social Corporate Responsibility for McDonald’s. Here, you will explore the role of CSR, customer satisfaction, responses, policies, and loyalty in the fast-food industry.
• McDonald’s Corporation’s Talent Management Program. The case study digs into the history of the techniques Mcdonald’s implements to maintain and motivate their employees.
• Food Industry: McDonald’s Company. The paper provides information about the elasticity of the fast-food market goods and services and McDonald’s competitiveness.
• McDonald’s Company Case Analysis. Read about the significance of operations strategy and the perspectives Mcdonald’s uses.
• McDonald’s Company HR Management Practices. Exploring this case study, you will find out how Mcdonald’s manages diverse employees and the HR planning methods it implements.
• Strategic Planning Process in McDonald’s Company. The paper evaluates the current McDonald’s strategies using SWOT analysis and marketing research.
• McDonald’s Strategic Management and Analysis. The case study offers different approaches to assess McDonald’s strategic management, including SWOT, PESTEL, and Porter’s five forces.
• McDonald’s Organization: Operation Management. Discover the roles of human resource and job design, supply chain management, just-in-time practices, and more.
• McDonald’s: Marketing Mix Segments. This paper tells us about the 4Ps of the marketing mix in McDonald’s, its market segmentation, and its pricing strategy.
• Industry Analysis on the Global Fast-Food Industry. The case study sample provides an overview of the current state of the fast-food market, competition, and competitive forces.
• McDonald’s Corporation’s Porter’s Five Forces Analysis. Read the extensive analysis of the market entry ease, competition, substitutes, suppliers, and buyers.
• Marketing Analysis: McDonald’s Company. The study refers to several articles that discuss the impact of customer-centering business processing, relationship, and service.
• McDonald’s Coffee Spill Heard Around the World. In this paper, you’ll discover more about one of the most famous lawsuits in the restaurant business that led to changes in the industry.
• Mcdonald’s vs. Wal-Mart’s Strategic Choices. The case study describes the companies’ strategic decisions and evaluates their causes and effects.
• McDonald’s Company Operation Management. Learn the operation management concept and its role in McDonald’s service and business processes.
• McDonald’s Company’s Strategic Management. The paper analyzes the implemented strategies and suggests different growth strategies.
• McDonald’s Company Human Resource Strategy. Find out how the company’s mission, vision, and goals connect with human resource approaches.
• Kentucky Fried Chicken (KFC): Strategic Management. This sample describes and analyses one of McDonald’s key competitors, its internal environment, and strategy changes.
• Business Strategy Analysis McDonalds. The paper covers various aspects of business strategies’ directions, from marketing and store formats to community involvement.
• Mcdonald’s Marketing Strategies in the UAE. Discover how McDonald’s managed to expand to UAE and the opportunities and challenges it faced.
• U.S. Fast Food Industry: Economic Growth. The study includes an analysis of economic factors that led to fast food market expansion and the challenges of this process.
• McDonald’s Corporation’s Business Ethics. In this paper, you’ll find a description of the organizational communication standards in the internal and external environment of the company.
• Mcdonald’s Company: Human Resource Functions. This paper discusses McDonald’s HRM practices, including recruitment, selection, training, and performance evaluation.
• McDonald’s Company Information System Performance Managing. Discover various approaches to analyzing information technologies that operate in McDonald’s.
• Wendy’s Fast-Food Restaurant: Marketing Research. The sample explores the fast-food industry, customer profiles, and market segmentation.
• McDonald’s Company’s SWOT Analysis. The case study uses McDonald’s strengths, weaknesses, opportunities, and threats to identify problems and offer solutions to them.
• Mcdonald’s: Financial Analysis. In this case study, you will find several approaches to analyzing financial activities, financial appraisal methods, and financial statement evaluation. Download this PDF file to be updated on the current situation.
• Multinational Corporations in Different Countries. This sample is a comparative strategic analysis of McDonald’s and KFC on the international market.
• Mcdonald’s Entering Estonia Case Analysis. Discover the peculiarities of the Estonian market and the course of action McDonald’s took to expand there.
• Lord of the Fries: Business Analysis. Lond of the Fries is an Australian fast-food chain that offers vegetarian and vegan food to its customers.
• Marketing Research at McDonald’s. This paper analyses the role of marketing research in McDonald’s in different areas, such as competition in the market, customer satisfaction, and investment decisions.
• McDonald’s Company Performance Measurement. Read about the performance measurement systems and models used in McDonald’s.
• What is Human Resources
• McDonald’s Marketing Strategy: The Rise Of The Golden Arches
• McDonald’s Financial Information
• McDonald’s Workforce Grew in 2021 Despite the Labor Shortage
• Commitment to Quality: Our Sustainability Goals | McDonald’s
• Tom Watson urges McDonald’s to cancel ‘danger to health’ campaign | McDonald’s | The Guardian
• How McDonald’s conquered India – BBC News
• McDonald’s vs. Burger King: What’s the Difference?
• McDonalds Does Crisis Management the Right Way

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MacDonald Change Management Case Study

McDonald’s, one of the most recognizable fast-food chains in the world, has undergone significant changes in recent years to adapt to changing market trends and consumer preferences. 

These changes required a comprehensive change management strategy to ensure a smooth transition and successful implementation. 

In this case study, we will examine external and internal factors that forced McDonald’s to initiate changes, key steps taken to implement those change, and the results of the change management.

Let’s start with overview and background of MacDonald.

Overview of MacDonald History 

McDonald’s is a global fast-food chain that was founded in 1940 by Richard and Maurice McDonald in San Bernardino, California. 

The original concept was a small drive-in restaurant that served burgers, fries, and milkshakes. 

In the 1950s, Ray Kroc, a milkshake machine salesman, became involved in the business and helped to transform it into a franchise model, which rapidly expanded across the United States and eventually the world. 

Today, McDonald’s operates over 38,000 locations in more than 100 countries and serves approximately 69 million customers daily. 

Over the years, McDonald’s has faced many challenges and has adapted to changes in the market and consumer preferences, which has required the company to implement significant changes in its business model and operations

External factors that caused change 

There were several external factors that contributed to the need for change at McDonald’s. Here are a few examples:

• Changing consumer preferences: Consumers are becoming more health-conscious and are demanding healthier food options. As a result, McDonald’s had to adapt its menu to include more salads, fruits, and vegetables to appeal to these consumers.
• Increased competition: There is intense competition in the fast-food industry, and McDonald’s faces competition from both traditional fast-food chains and newer, more innovative brands. To stay competitive, McDonald’s had to find ways to differentiate itself and offer unique value propositions to customers.
• Economic factors: Economic downturns and changes in consumer spending habits can have a significant impact on fast-food sales. McDonald’s had to adapt to changing economic conditions and find ways to maintain sales growth during challenging times.
• Technological advancements: Advancements in technology have transformed the way that consumers order food and interact with restaurants. McDonald’s had to embrace new technologies such as mobile ordering and delivery services to meet the changing needs of its customers.

Internal factors that caused change 

There were several internal factors that contributed to the need for change at McDonald’s. Here are a few examples:

• Declining sales: McDonald’s experienced declining sales in certain markets, which prompted the company to re-evaluate its business model and operations.
• Operational inefficiencies: McDonald’s had become too reliant on its traditional business model and was struggling to keep up with changes in the industry. The company had to find ways to streamline its operations and make them more efficient to remain competitive.
• Cultural resistance to change: McDonald’s had a culture that valued consistency and uniformity, which made it challenging to implement significant changes. The company had to overcome this cultural resistance and find ways to foster a culture that supported innovation and change.
• Employee engagement: McDonald’s recognized that its employees play a vital role in the success of the company and had to find ways to engage and motivate them during the change management process. The company had to communicate effectively with its employees and provide them with the tools and resources needed to embrace the changes.

What were 03 biggest changes that Macdonald successfuly implemented

There were several significant changes that McDonald’s successfully implemented as part of its change management process. Here are three of the most significant changes:

• Menu diversification: McDonald’s recognized the need to adapt its menu to changing consumer preferences and introduced a range of healthier menu items such as salads, fruit, and grilled chicken sandwiches. The company also expanded its breakfast menu to include all-day breakfast and introduced new menu items such as the McWrap to appeal to a wider range of customers.
• Digital transformation: McDonald’s recognized the importance of embracing new technologies and embarked on a digital transformation strategy. The company introduced self-service kiosks in its restaurants, mobile ordering, and delivery services. McDonald’s also launched its own mobile app, which allows customers to order and pay for their food from their mobile devices.
• Restaurant redesign: McDonald’s recognized the need to create a more modern and appealing restaurant experience to attract younger customers. The company invested in a redesign of its restaurants, which included a more contemporary design, comfortable seating, and interactive features such as touchscreen ordering. The company also introduced table service in select locations to improve the customer experience.

These changes were significant and helped McDonald’s to remain competitive and appeal to changing consumer preferences. The successful implementation of these changes required a comprehensive change management strategy that involved collaboration with employees, effective communication, and a commitment to innovation and continuous improvement.

MacDonald’s leadership role in implementing change initiatives

McDonald’s leadership played a crucial role in the successful implementation of change initiatives. The company’s leadership recognized the need to adapt to changing consumer preferences and competitive pressures and committed to a comprehensive change management strategy to drive growth and improve performance.

One of the key leadership roles was played by Steve Easterbrook, who served as the CEO of McDonald’s from 2015 to 2019. Under Easterbrook’s leadership, McDonald’s implemented several changes, including menu diversification, digital transformation, and restaurant redesign.

Easterbrook was instrumental in driving the company’s innovation agenda and creating a culture of continuous improvement. He encouraged employee engagement and empowerment, which helped to drive innovation and ensure that employees were invested in the changes.

Easterbrook also prioritized effective communication, ensuring that employees and customers were informed about the changes and that feedback was solicited and acted upon.

In addition to Easterbrook, McDonald’s leadership team was also instrumental in the successful implementation of change initiatives. The company’s leadership team provided the vision, strategic direction, and resources necessary to implement the changes effectively. They also provided the support and guidance necessary to overcome resistance to change and ensure that the changes were embraced by employees and customers.

Results of the successful change management implemented by MacDonald

One of the biggest outcomes of the changes implemented by McDonald’s was an improvement in its financial performance. The changes helped the company to increase sales, improve profitability, and strengthen its competitive position in the fast-food industry.

For example, McDonald’s menu diversification strategy helped to attract new customers and retain existing customers who were looking for healthier food options. The introduction of digital ordering and delivery services also made it easier for customers to order from McDonald’s and increased the convenience factor, which helped to drive sales growth.

In addition, the restaurant redesign helped to create a more modern and appealing restaurant experience, which helped to attract younger customers and improve customer satisfaction. The successful implementation of these changes helped McDonald’s to achieve its financial goals and improve its overall performance.

Another significant outcome of the changes was the improvement in McDonald’s brand perception. The company’s menu diversification and focus on healthier food options helped to improve its reputation and attract customers who may have previously avoided McDonald’s due to concerns about the nutritional value of its food.

The introduction of digital ordering and delivery services also helped to improve the customer experience and create a more positive perception of the brand. Overall, the changes implemented by McDonald’s helped to strengthen the company’s brand and improve its reputation in the market.

Final Words 

McDonald’s change management process provides an excellent case study for other companies looking to implement significant changes to remain competitive and adapt to changing consumer preferences. By following a comprehensive change management strategy that involves employee engagement, effective communication, and a commitment to innovation and continuous improvement, companies can successfully implement changes that drive growth, improve profitability, and strengthen their competitive position in the market.

About The Author

Tahir Abbas

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McDonald’s Five Forces Analysis (Porter’s Model) & Recommendations

This Five Forces analysis of McDonald’s Corporation examines the external factors in the industry environment influencing the company’s strategies for international business expansion and growth. Michael E. Porter’s Five Forces analysis model provides valuable information to support strategic management, especially in addressing competitive issues in the external environment of the food-service business. These issues are based on factors external to McDonald’s, representing the degree of competitive rivalry in the industry, the bargaining power of customers or buyers, the bargaining power of suppliers, the threat of substitutes, and the threat of new entrants. In this Five Forces analysis of McDonald’s, the five forces are mainly in the fast-food restaurant industry, although the company also sells McCafé coffee products for home use and other consumer goods. As the leading restaurant chain business in the world, the company is an example of effective strategic management, especially in dealing with competition in different markets worldwide. This status shows that McDonald’s operations management and strategic direction are appropriate to the external factors identified in this Five Forces analysis.

In addressing the external factors determined in this Five Forces analysis, McDonald’s Corporation ensures that its strategies are appropriate to combat external forces. The company faces pressure from various competitors, including large multinational businesses and small local restaurants. Considering the context of this Five Forces analysis, McDonald’s generic competitive strategy and intensive growth strategies satisfy business goals in competing with Burger King , Wendy’s , Subway, and Dunkin’, as well as other food-service businesses that compete with McCafé, such as Starbucks Coffee Company .

Summary: Porter’s Five Forces Analysis of McDonald’s

In this Five Forces analysis, McDonald’s faces the effects of external factors at varying intensities, based on the variations among markets around the world. For example, the U.S. fast-food market presents a competitive landscape different from that of the European fast-food market. The restaurant chain company implements strategies to meet these external factors and minimize their negative impacts. Considering the combination of market conditions, this Five Forces analysis of McDonald’s establishes the following intensities of the five forces:

• Strong competitive rivalry or competition
• Strong bargaining power of buyers or customers
• Weak bargaining power of suppliers
• Strong threat of substitutes or substitution
• Moderate threat of new entrants or new entry

Recommendations . This Five Forces analysis shows that McDonald’s Corporation needs to prioritize the strategic issues related to competition, consumers, and substitutes, all of which exert a strong force on the company and its external environment. The other forces (bargaining power of suppliers and threat of new entrants) are also significant to the food-service business, although to a lesser extent. In this regard, a recommendation is to strengthen the business by building on the competitive advantages and strengths enumerated in the SWOT analysis of McDonald’s Corporation . This Five Forces analysis also indicates that the fast-food company’s managers must focus on reducing the effects of competitors and substitutes on revenues and market share.  McDonald’s marketing mix (4Ps) partly supports efforts for mitigating the effects of competition. Also, it is recommended that McDonald’s make its product innovation process more aggressive. Although the food-service market is saturated, new menu items can attract more customers to the company. Furthermore, based on this Five Forces analysis, McDonald’s can implement higher quality standards to address the forces of competition and substitution.

Competitive Rivalry or Competition with McDonald’s (Strong Force)

McDonald’s experiences tough competition because the fast-food restaurant market is saturated. This element of Porter’s Five Forces analysis model considers the effects of competing firms in the food-service industry environment. In McDonald’s case, the strong force of competitive rivalry is based on the following external factors:

• High number of food-service firms – Strong Force
• High aggressiveness of firms – Strong Force
• Low switching costs between restaurants – Strong Force

The industry has many firms of various sizes, such as global chains, like McDonald’s, and local mom-and-pop fast-food restaurants. This external factor strengthens the force of competitive rivalry in the fast-food restaurant industry. Also, the Five Forces analysis model considers company aggressiveness a factor that influences competition with McDonald’s. In this business case, most medium and large firms aggressively market their food and beverage products. In this context of the Five Forces analysis, such an external factor increases the intensity of competitive rivalry with McDonald’s Corporation. In addition, low switching costs are an external factor that makes it easy for consumers to transfer to other restaurants, such as Wendy’s and Burger King, thereby adding to the force of competition. Thus, this element of the Five Forces analysis of McDonald’s shows that competition is among the most significant external forces for consideration in the strategic management of the business.

Bargaining Power of McDonald’s Customers/Buyers (Strong Force)

McDonald’s marketing strategies address the power of customers in influencing business performance. This element of the Five Forces analysis deals with the leverage of consumers, and how their decisions impact food-service businesses. In McDonald’s case, the following are the external factors that contribute to the strong bargaining power of buyers:

• Low switching costs – Strong Force
• Large number of food and beverage providers – Strong Force
• High availability of substitutes – Strong Force

The ease of changing from one restaurant to another (low switching costs) enables consumers to easily influence McDonald’s business performance. In the Five Forces analysis framework, this external factor strengthens the bargaining power of customers relative to the influence of food-service firms on the market. Low switching costs are also linked to the ease of finding online information for comparing food-service providers and alternatives. Moreover, because of market saturation, diners can choose from many fast-food restaurants other than McDonald’s. In this Five Forces analysis, such a condition makes the bargaining power of buyers a strong force that affects competition and the fast-food company’s external environment. Furthermore, the availability of food and beverage substitutes is relevant in this external analysis, adding to customers’ bargaining power over McDonald’s. For example, substitutes include food kiosks and outlets, artisanal bakeries, microwave meals, and foods that consumers can cook at home. Based on this element of Porter’s Five Forces analysis, business strategies must increase customer loyalty to address the identified external factors in combination with sociocultural trends, like consumers’ increasing preference for healthy lifestyles, outlined in the PESTEL/PESTLE analysis of McDonald’s Corporation .

Bargaining Power of McDonald’s Suppliers (Weak Force)

Suppliers influence McDonald’s in terms of the company’s production capacity based on the availability of materials. This element of the Five Forces analysis model shows the impact of suppliers on firms and the fast-food restaurant industry environment. In McDonald’s case, the weak bargaining power of suppliers is based on the following external factors:

• Large number of suppliers – Weak Force
• Low forward vertical integration of suppliers – Weak Force
• High overall supply for food-service businesses – Weak Force

The large population of suppliers weakens the effect of individual suppliers on McDonald’s Corporation. In the context of this Five Forces analysis, such a weakness is partly based on the lack of strong regional and global alliances among food and beverage suppliers. Also, most of McDonald’s suppliers are not vertically integrated. This means that they do not control the distribution network that transports their products to fast-food restaurant firms. In Porter’s Five Forces analysis model, low vertical integration weakens the bargaining power of suppliers over McDonald’s Corporation. Moreover, the relative abundance of ingredients, like flour and meat, reduces individual suppliers’ influence on the company. Thus, this element of the Five Forces analysis shows that external factors combine to make supplier power weak and a minor issue in the restaurant company’s strategic management. Still, McDonald’s stakeholder management and strategy for CSR, ESG, sustainability, and corporate citizenship help in addressing this force coming from suppliers.

Threat of Substitutes or Substitution (Strong Force)

Substitutes are a significant concern for McDonald’s Corporation. This element of Porter’s Five Forces analysis model deals with the potential effects of substitutes on the growth of the restaurant chain business. The following external factors make the threat of substitution a strong force against McDonald’s:

• High substitute availability – Strong Force
• Low switching costs for consumers – Strong Force
• Low cost to performance ratio of many substitutes – Strong Force

There are many substitutes for McDonald’s food and drinks, such as products from artisanal food producers and local bakeries. Also, consumers can cook their own food at home. In the Five Forces analysis model, this external factor contributes to the strength of the competitive threat of substitution in the fast-food industry. In addition, it is easy to shift from McDonald’s to substitutes because of the low switching costs. For example, shifting from the company’s hamburger meals to substitute meals typically involves insignificant or minimal disadvantages, such as additional time consumption for food preparation, or slightly higher costs per meal in some cases. Moreover, this Five Forces analysis of McDonald’s highlights the fact that many substitutes are competitive in terms of quality and customer satisfaction with affordable prices (low cost to performance ratio), and consumers’ satisfaction with the health benefits of home-cooked meals. In this element of the Five Forces analysis of McDonald’s Corporation, external factors make substitutes a major strategic issue that requires competitive approaches, like product quality improvement. Such approaches need to be included in the company’s current efforts to encourage people to eat in fast-food restaurants instead of resorting to substitutes. Such efforts are evident in the business goals based on McDonald’s mission statement and vision statement .

Threat of New Entrants or New Entry (Moderate Force)

New entrants can impact McDonald’s market share and financial performance. This element of the Five Forces analysis refers to the effects of new players on restaurant businesses. In McDonald’s case, the moderate threat of new entry is based on the following external factors:

• High variability of capital costs – Moderate Force
• High cost of brand development for food-service companies – Weak Force

The low switching costs allow consumers to easily move from McDonald’s toward new fast-food restaurant companies. In Porter’s Five Forces analysis model, this external factor strengthens the competitive threat of new entrants against existing players in the food-service industry. Also, the high variability of capital costs in establishing a new restaurant business only partially limits the entry of new businesses into the market. This external factor leads to the moderate threat of new entry against McDonald’s. However, a major consideration in this context of the Five Forces analysis is that it is costly to build a strong brand in the fast-food industry. Many small and medium-sized businesses lack the resources to create a strong brand that rivals McDonald’s brand. Thus, the external factors in this element of the Five Forces analysis of McDonald’s show that the competitive threat of new entrants is moderately considerable but not the most important strategic issue for the multinational restaurant chain business.

• Daradkeh, F. M., Hassan, T. H., Palei, T., Helal, M. Y., Mabrouk, S., Saleh, M. I., … & Elshawarbi, N. N. (2023). Enhancing digital presence for maximizing customer value in fast-food restaurants. Sustainability, 15 (7), 5690.
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• McDonald’s Corporation – Form 10-K .
• McDonald’s Corporation – Food Quality & Sourcing .
• McDonald’s Corporation – Our Growth Pillars .
• McDonald’s Corporation’s Website .
• U.S. Department of Agriculture – Economic Research Service – Food Service Industry Market Segments .
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Strategic Management: McDonald’s Report

Introduction, organization overview, strategic recommendations, reference list.

All businesses, irrespective of their industry, require strategies in order to be successful. High competition resulting from globalization and technological advancement has necessitated clear-cut strategies in order to survive. Strategic management has never been as important as it is today.

Through strategic management, organizations are able to identify and implement the best practices to gain competitive advantage, increase profit margin and grow (Hubbard, Rice, and Beamish 2008). Fast food industry is one of rapidly growing and competitive industry.

A company in this industry has to develop and implement successful business strategies in order to gain competitive advantage. In this report, a case study for McDonald’s is provided. The report reviews the strategies that McDonald’s has adopted in order to maintain its global position in fast food industry.

The McDonald’s has been in operation in food industry since 1954. The US based company operates a chain of fast food restaurants in more than 119 countries. Though initially established by McDonald’s brothers, McDonald’s success is attributed to its later owner: Ray Kroc. Over years McDonald’s has emerged to be a strong brand in the fast food industry. Most of its restaurants across the globe are operated as franchises.

McDonald’s chain of restaurants is renowned for its uniform and standardized menu. McDonald’s menu across its chain mainly consists of burgers, milk shakes, French fries, sandwiches, Ice cream sundaes, vegetable salads and desserts (McDonald’s Corporation 2010). The menu however changes slightly from country to country depending on culture and customer taste.

The company is renowned for its innovative products. Some of its successful products include Big Mac, Chicken McNuggets, Quarter Pounder with Cheese and the Filet-O-Fish (McDonald’s Corporation 2010). McDonald’s main target for its products over years has been children and mothers. The company has therefore adapted its products and restaurants to its main target. Besides its ‘Happy Meals’, some of McDonald’s restaurants serve breakfast offering that include coffee, Egg Sandwiches, Sausage McMuffin, biscuit and hotcake.

Though McDonald’s is generally successful, it has encountered various challenges along the way. High competition in fast food industry has been one of the main challenges in its global strategy. Apart from high competition, the company has been involved in controversies over its contribution to obesity. Increased health concerns especially in the US and UK has been a major concern to McDonald’s management.

McDonald’s has adopted various strategies in order to be successful in global fast food industry. Although McDonald’s is one of the most experienced companies in the fast food industry, established and upcoming companies have been a threat to its market share. Wendy’s is just one of the fast food companies that have been a threat to McDonald’s.

Through adopting certain strategies, McDonalds have been able to withstand competition and increase its number of restaurants across the globe. Strategic management should define an organization’s position, its desired position in the future and actions to be taken in order to achieve the desired goal.

Through its ‘plan to win’ global strategy, McDonald’s has been able to remain highly competitive despite of negative publicity over health concerns.

Increased health concerns and negative publicity resulting from health related controversies have been a major challenge to McDonald’s (Wilsher 2010). To address this, McDonald’s has adapted various business strategies. To create a healthy image for itself, McDonald’s plan to do away with soft drinks and Super French fries.

Besides, the company plans to make changes to its menu in order to reflect increases health concern. For instance cinnamon roll with a sausage burrito is considered to be the major breakfast offering in United Kingdom.

McDonald’s has been able to establish a strong brand over years. With negative publicity resulting from health concerns, the company has increased its effort to protect its brand. “Be our customers’ favourite place and way to eat” is the company brand mission (Ganapathy 2009). To ensure the mission is achieved, the company has taken firm actions from improving products, customer service to promotion.

The company has implemented a new cooking system aiming at improving quality of products served in its menu (Howard 1999). Restaurant décor to brand icon has been improved across the globe in order to ensure consistent image to its customers. In addition, McDonald’s has consistently increased its promotion effort through conventional channels as well as new technology such as the internet.

Customer service is core to success in hotel and hospitality industry (Prakash and Olsen 2003; Tse and Jogaratnam 2008). McDonald’s has taken strategic actions to ensure high customer feel. Part of the strategies includes recruitment and training of right staff.

McDonald’s staff is trained to treat customers with respect and maintain a smiling face while serving. High standard of hygiene is maintained including restaurants’ bathrooms. To show its concern for environment, McDonald’s collects dropped burger wrappings and cups using its three-wheeled vehicle (Livesey 1999).

The principle objective of strategic management is to boost an organization’s competitive advantage. It enables the management to establish plans to address current and future needs of an organization (Thompson, Strickland and Gamble 2007; Carpenter, Sanders, Rice and Martin 2010). Fast food industry has attracted many players that try to address various customer needs.

Most of these competitors exploit customers’ needs and concerns not well served in McDonald’s. McDonald’s therefore needs to put more effort to maintain its market share in the industry. Some of strategic actions that McDonald’s should take include:

• Enhance promotion and advertisement in order to overcome negative publicity
• Progressively expand its menu in order to accommodate increased customer needs and tastes, including health concerns
• Invest more on product development in order to come up with competitive products for different cultures

Strategic management approach is a necessity in all industries in the global economy. Hotel and hospitality industry is one of the industries that most require strategic management. Companies in this industry must align their products and services to rapidly changing customer needs and taste. McDonald’s success in fast food industry can be attributed to its adherence to strategic management principles.

The company is able to overcome its challenges by following clear-cut plans. Though clouded by controversy over health concerns, the company seems to maintain customer loyalty and still has high competitive advantage over other players in the industry.

Carpenter M. A., Sanders W., Rice J. and Martin N., 2010, Strategic Management: A Dynamic Perspective, Concepts and Cases , Pearson Australia, Frenchs Forest.

Ganapathy, S., 2009, McDonald’s International Strategy: Squander Brand Equity? Web.

Howard, T., 1999, The Over-Arching Strategy-McDonald’s Global Brand Strategy Task Force . Web.

Hubbard, G., Rice, J. and Beamish, P., 2008, Strategic Management Thinking Analysis, Action, Pearson, Sydney.

Livesey, S., 1999, McDonald’s and the Environmental Defence Fund: A Case Study of a Green Alliance, The Journal of Business Communication, Vol. 36

McDonald’s Corporation 2010, Travel through Time with Us . Web.

Prakash, K. and Olsen, M., 2003, Strategic alliances: a hospitality industry perspective, International Journal of Hospitality Management Vol. 22, pp 419-434.

Thompson, A., Strickland, A., and Gamble, J., 2007, Crafting and Executing Strategy, McGraw-Hill, New York.

Tse, E. and Jogaratnam, G., 2008, From the top down: strategic management in the Hospitality Industry, SAGE Handbook of Hospitality Management , SAGE London, pp165 – 191.

Wilsher, S., 2010, McDonald’s in Hot Water over Marketing Tactics. Web.

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IvyPanda. (2023, October 31). Strategic Management: McDonald’s. https://ivypanda.com/essays/strategic-management-mcdonalds/

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• McDonald’s Public Corporation Stock
• McDonald’s Company Brand Refinement
• McDonald's History of Conquest
• Employee Training and Development Investment
• Total Quality Management Implementation
• Is Knowledge Management Really Necessary?
• Improved Work Environment for Employees Working at a Production Plant
• Emergency Management in Organizations

McDonald’s SWOT Analysis

Before we deep dive into the SWOT analysis, let’s get the business overview of McDonald’s. McDonald’s is a fast-food chain founded in 1940 by Richard and Maurice McDonald in San Bernardino, California. Today, it is one of the world’s largest and most well-known fast-food chains, with over 38,000 restaurants in more than 100 countries.

The menu at McDonald’s includes a variety of items such as hamburgers, cheeseburgers, chicken sandwiches, french fries, milkshakes, and soft drinks. In addition to its standard menu, McDonald’s offers limited-time promotional and seasonal items.

McDonald’s has become known for its efficiency and consistency in delivering quick and affordable meals to its customers. It has also faced criticism for the nutritional value and environmental impact of its food and packaging, as well as for the treatment of its workers. In recent years, McDonald’s has made efforts to improve its sustainability practices and introduce healthier menu options.

How does McDonald’s make money from the franchise business model?

Here is the SWOT analysis for McDonald’s

A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business, project, or individual. It involves identifying the internal and external factors that can affect a venture’s success or failure and analyzing them to develop a strategic plan. In this article, we do a SWOT Analysis of McDonald’s.

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SWOT Analysis: Meaning, Importance, and Examples

McDonald’s is a highly successful and iconic company with several strengths, some of which include the following:

• Brand Recognition : McDonald’s is one of the most recognizable brands in the world, with its distinctive golden arches logo and well-known slogan, “I’m Lovin’ It.” The company’s branding and marketing efforts have been highly effective in creating a strong and positive image for the brand. Marketing Strategy of McDonald’s that makes you “loving it”
• Global Presence : McDonald’s has a vast global footprint with over 38,000 locations in more than 100 countries, allowing the company to reach a broad customer base and take advantage of economies of scale.
• Strong Franchise System : McDonald’s operates using a franchise model, allowing it to expand rapidly while minimizing the risks and costs associated with owning and operating its own restaurants. The company’s well-established and highly effective franchise system has helped it maintain consistency and quality across its locations.
• Efficient Operations : McDonald’s is known for its highly efficient operations, with streamlined processes and systems that enable the company to serve customers quickly and consistently. This helps to minimize wait times and enhance the customer experience.
• Innovation : McDonald’s has been innovative in introducing new products and services to its menus, such as its famous McCafé line of coffee drinks and all-day breakfast. The company has also invested in digital technology and mobile ordering to enhance customer convenience.

Overall, McDonald’s strengths have helped the company become a global leader in the fast-food industry and maintain its position as a brand for many consumers.

While McDonald’s is a highly successful and iconic company, it also has some weaknesses, including:

• Health Concerns : McDonald’s has faced criticism for its food’s nutritional value and contribution to health problems such as obesity and diabetes. In recent years, the company has made efforts to introduce healthier menu options and reduce the amount of sodium and saturated fat in its food. Still, these efforts have not entirely resolved the issue.
• Negative Public Perception : McDonald’s has also faced criticism for its labor practices, including low wages and poor working conditions for its employees. This has led to a negative public perception of the company and calls for boycotts and protests in some regions. In 2021, McDonald’s cooks and cashiers in 16 cities in the US went on strike to demand the burger giant pay every worker across the McDonald’s system a living wage of at least $15 an hour.
• Dependence on Franchisees : While McDonald’s franchise system is a strength, it also means that the company is highly dependent on its franchisees for revenue and growth. This can create challenges in ensuring consistency and quality across all locations and managing franchisee relationships.
• Limited Menu Appeal: While McDonald’s is known for its signature items, such as Big Macs and french fries, some customers may view its menu as limited or lacking in variety compared to other fast-food chains.
• Environmental Impact : The company has also faced criticism for its environmental impact, including its use of single-use plastics and its contribution to deforestation by sourcing beef and palm oil.

Overall, McDonald’s weaknesses highlight the need for the company to continue to address issues related to nutrition, labor practices, and sustainability while maintaining its market position and profitability.

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Opportunities

McDonald’s has several opportunities for growth and expansion, including:

• International Expansion : Although McDonald’s already has a global presence, there are still many untapped markets where the company can expand. This includes emerging markets in Asia and Africa, with increasing demand for fast food.
• Health and Wellness Trends : As consumers become more health-conscious, there is an opportunity for McDonald’s to introduce new and healthier menu options. The company can also leverage its existing supply chain management and operations strengths to create more sustainable and environmentally friendly menu options.
• Digital Technology : McDonald’s has already invested heavily in digital technology, including mobile ordering and payment, which has enhanced the customer experience and streamlined operations. There is further opportunity for the company to innovate in this area and leverage data and analytics to improve its menu offerings and marketing efforts.
• Delivery and Convenience : With the rise of third-party delivery services, there is an opportunity for McDonald’s to expand its delivery offerings and increase convenience for customers. This includes exploring partnerships with popular delivery platforms and investing in its own delivery infrastructure.
• Partnership and Collaborations : There is an opportunity for McDonald’s to partner with other companies or brands to create unique and innovative menu offerings. This can include collaborations with popular food brands or local chefs, which can help to differentiate the company and appeal to new customer segments.

Overall, McDonald’s has several opportunities to continue to grow and evolve its business while addressing changing consumer preferences and societal trends.

McDonald’s faces several threats that could impact its business, including:

• Intense Competition : The fast-food industry is highly competitive, with several major players vying for market share. McDonald’s faces competition from other fast-food chains and emerging trends such as healthier eating options and plant-based diets.
• Changing Consumer Preferences : As consumers become more health conscious and environmentally aware, there is a risk that McDonald’s menu offerings may become less appealing. The company must adapt to changing consumer preferences and continue to introduce new and innovative menu options that align with these trends.
• Economic Factors : Economic factors such as inflation, changes in consumer spending, and currency fluctuations can impact McDonald’s business. Economic downturns or instability in key markets can also negatively impact the company’s revenue and profitability.
• Supply Chain Disruptions : McDonald’s depends on a complex supply chain to source its ingredients and products. Disruptions such as natural disasters, trade disputes, or supply chain breakdowns can impact the availability and cost of key ingredients, negatively impacting the company’s operations.
• Regulatory and Legal Challenges : McDonald’s faces regulatory and legal challenges related to labor practices, food safety, and environmental impact. Regulation changes or legal challenges can impact the company’s operations and profitability.

Overall, McDonald’s faces several threats that can impact its business. The company must continue to adapt to changing consumer preferences and societal trends, invest in innovation and technology, and address potential supply chain and regulatory challenges to remain competitive and profitable in the long term.

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McDonald’s Branding Strategy and Marketing Case Study

Analysis and examples of mcdonald’s identity, positioning, key messages, tone of voice, brand archetypes, customer benefits, competitors, and marketing content..

Back To The Branding Strategies Homepage

Brand Overview

• Food Service

Business Type

Physical Products

https://www.mcdonalds.com

Target Customer

Classic Fast Food Consumers

Primary Need ( Job To Be Done )

Eat the same fast comfort food I’ve had my whole life

Brand Visual Identity & Content

Primary brand colors, brand typefaces, hero content.

Hero Content Type

Content features people, brand messaging, key messages, benefit or feature focus, tone of voice, brand archetypes.

( Learn More About Brand Archetypes )

Everyperson

Brand Positioning Strategy ( Elements of Value )

( Learn More About The Elements of Value )

Aspirational

Affiliation / Belonging

Sensory Appeal

Reduces Cost

Brand Benefits

Get nearly the exact same meal from any location around the world

Eat and share the same meals that I’ve had my entire life

Save money on a quick meal that fills me up

Competition

Key competitors.

Burger King , Wendy’s, Jack In The Box, Carl’s Jr., Chipotle , Arby’s, KFC, In-N-Out, Five Guys, The Habit, Taco Bell , Subway

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Get a 10 page workbook on Purpose, Vision, and Values. Plus resources for Archetypes, Tone, Messaging, and more.

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Home » Management Case Studies » Case Study: McDonald’s Business Strategies in India

Case Study: McDonald’s Business Strategies in India

The modest beginnings of McDonald’s at Illinois in USA, turned out to be among the main brand names in the international scene.  It has been synonymous to what is widely-accepted the fast-food concept. The company operates over thirty one thousand stores all over the world to date. It was one of the first to perfect the concept of fast service in the food industry in its early days of operations in 1955. Given that the products of the company are mainly western in character; its operations have also expanded to the Asian region. The first Indian McDonald’s outlet opened in Mumbai in 1996.  In the rest of the globe, it operates thousands of store franchises that functions autonomously.

McDonald’s in India

Around the world, McDonald’s traditionally operates with local partners or local management. In India too, McDonald’s purchases from local suppliers. McDonald’s constructs its restaurants using local architects, contractors, labour and – where possible — local materials. McDonald’s hires local personnel for all positions within the restaurants and contributes a portion of its success to communities in the form of municipal taxes and reinvestment.

Six years prior to the opening of the first McDonald’s restaurant in India, McDonald’s and its international supplier partners worked together with local Indian Companies to develop products that meet McDonald’s rigorous quality standards. Part of this development involves the transfer of state-of-the-art food processing technology, which has enabled Indian businesses to grow by improving their ability to compete in today’s international markets.

McDonald’s worldwide is well known for the high degree of respect to the local culture. McDonald’s has developed a menu especially for India with vegetarian selections to suit Indian tasted and culture. Keeping in line with this McDonald’s does not offer any beef and pork items in India. McDonald’s has also re-engineered its operations to address the special requirements ofa vegetarian menu. The cheese and cold sauces used in India is 100% vegetarian. Vegetable products are prepared separately, using dedicated equipment and utensils. Also in India, only vegetable oil is used as a cooking medium. This separation of vegetarian and non-vegetarian food products is maintained throughout the various stages of procurement,    cooking    and serving.

The  McDonald’s  philosophy  of  Quality,  Service,  Cleanliness  and  Value (QSC&V) is  the   guiding  force  behind its service to the customers. McDonald’s India serves only the highest quality products. All McDonald’s suppliers adhere to Indian Government regulations on food, health and hygiene while continuously maintaining their own recognized standards. All McDonald’s products are prepared using the most current state-of-the-art cooking equipment to ensure quality and safety. At McDonald’s, the customer always comes first. McDonald’s India provides fast friendly service- the hallmark of McDonald’s that sets its restaurants apart from others. McDonald’s restaurants provide a clean, comfortable environment especially suited for families. This is achieved through McDonald’s stringent cleaning standards, carefully adhered to McDonald’s menu is priced at a value that the largest segment of the Indian consumers can afford. McDonald’s does not sacrifice quality for value — rather McDonald’s leverages economies to minimize costs while maximizing value to customers. The company has invested Rs 450 crore so far in its India operations out of its total planned investment of Rs 850 crore till 2007.

McDonald’s India Pvt. Ltd. has moved an application to the government seeking permission for payment and remittance of the initial franchise fee and royalty to Mc Donald’s Corporation. The permission has been sought on two grounds: McDonald’s India would pay an initial franchise fee of $45,000 on each of the McDonald’s restaurants already franchised or to be franchised, in the future, in India; and a royalty equal to 5 per cent of the gross sales from the operations of all its Indian restaurants on a monthly basis to McDonald’s International. They currently serve around 5 million customers a day and hope to grow at the rate of 50% to 70% a year.

Business Model

• Franchise Model — Only 15% of the total number of restaurants are owned by the Company. The remaining 85% is operated by franchisees. The company follows a comprehensive framework of training and monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value propositions offered by the company to its customers.
• Product Consistency — By developing a sophisticated supplier networked operation and distribution system, the company has been able to achieve consistent product taste and quality across geographies.
• Act like a retailer and think like a brand — McDonald’s focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation.

Challenges in Entering Indian Markets

• Regiocentricism: Re-engineering the menu – McDonald’s has continually adapted to the customer’s tastes, value systems, lifestyle, language and perception. Globally McDonald’s was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the Indian sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to suite the Indian palate.
• The vegetarian customer — India has a huge population of vegetarians. To cater to this customer segment, the company came up with a completely new line of vegetarian items like Mc Veggie burger and Mc Aloo Tikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages.

Product Positioning

“Mc Donald’s mein hai kuch baat” projects McDonald’s as a place for the whole family to enjoy. When McDonald’s entered in India it was mainly perceived as targeting the urban upper class people. Today it positions itself as an affordable place to eat without compromising on the quality of food, service and hygiene. The outlet ambience and mild background music highlight the comfort that McDonald’s promises in slogans like “You deserve a Break Today” & “Feed your inner child”. This commitment of quality of food and service in a clean, hygienic and relaxing atmosphere has ensured that McDonald’s maintains a positive relationship with the customers.

Source: Docstoc.com

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