McDonald’s Global Strategy
Group One
Nov. 2, 2009
Benny
Sonny
Christina
Nadia
M987Z219
M987Z261
M987Z237
M987Z250
Rachel
Febby
M987Z226
M987Z248
Huy
McDonald’s Global Strategy
Brief History of McDonald’s
The first McDonald's was built in 1940 by the McDonald
brothers (Dick and Mac) .
Started off as a hot dog stand in CA [1937]
The McDonald brothers realized that hamburgers were
their most profitable menu item, and changed their
business to serve a limited menu.
Employing “car hops” the McDonald brothers became the
first restaurant to offer speedy service to people while
they stayed in their cars.
McDonald’s Global Strategy
Ray Kroc discovers
McDonald’s [1954]
Kroc became the first
franchisee appointed by
Mac and Dick
McDonald in San
Bernardino , California.
McDonald’s Global Strategy
In 1955 , Ray Kroc opened his
first restaurant in Des Plaines ,
Illinois (near Chicago) , and the
McDonald's Corporation was
created .
McDonald’s Global Strategy
McDonald’s has over 30,000 local restaurants in more than 120 countries
70 percent of our restaurants worldwide are owned and operated by
independent, local businessmen and businesswomen
McDonald’s serves nearly 50 million customers each day
McDonald’s has its own Hamburger University in Illinois, and the first
batch graduated in 1961
12 classes offered at Hamburger University are college accredited
In 1963, McDonald’s sold its one billionth hamburger
McDonald’s is listed on the New York, Frankfurt, Munich, Paris and Tokyo
stock exchanges
McDonald’s Global Strategy
The first McDonald’s Drive-Thru opened in Sierra Vista,
Arizona in 1975
Happy Meals were added to McDonald’s menu in 1979
McDonald’s launched the new worldwide Balanced Active
Lifestyles public awareness campaign in 2005
McDonald’s celebrated its 50th Anniversary on April 15,
2005
McDonalds Global Strategy
•1971 McDonalds really starts going global
Asian: Tokyo Ginza District, Japan
European: Netherland, Munich, Germany
•1967 - Canada & Puerto Rico (first restaurants outside
the U.S.)
•1971 - Tokyo, Japan, Amsterdam, Netherlands & Sydney,
Australia
•1979 - Rio de Janeiro, Brazil
•1990 - Moscow, Russia & China
McDonalds Global Strategy
McDonald’s, still the dominant player in the fast
food restaurant business, is being challenged by
Subway, a smaller company that has been
rapidly expanding since 1965.
McDonalds Global Strategy
Founded by Fred DeLuca in 1965.
Subway is one of the fastest growing franchises in the
world with approximately 31,949 restaurants in 91
countries as of November.
McDonald’s Global Strategy
Many restaurant analysts attribute Subway's fast growth to the growing
health concerns by restaurant customers, a trend that Subway has taken
advantage of in its marketing.
McDonald’s
Subway
Founded
Industry
1940
Restaurants
1965
Fastfood
Revenue
US$ 22.6
billion (FY
2008 )
US$ 9.0305
billion
(FY 2008 )
McDonald’s Global Strategy
Subway, riding high on the marketing message of healthy
fast food, will overtake McDonald’s in American store
locations by the end of 2009, with a shocking total of
more than 32,300 outlets.
That's something few consumers could imagine before
the sandwich chain piggybacked on huge weight loss of
Jared Fogle -- who lost 245 pounds by exercising and
eating only its sandwiches, in contrast to Super Size Me's
Morgan Spurlock, who got fat and sick eating
McDonald's food.
In the process, Subway has managed to expand its
business and profits. Now, Subway has emerged as a
healthy alternative in the market place, partially because
its modest business model allows it to open businesses
in smaller locations that cannot sustain stand-alone
restaurants like McDonald's, which depend heavily on
drive-through business for its earnings.
McDonald’s Global Strategy
PEST ANALYSIS
To analyze the current status of McDonald’s
corporation, we chose to use the PEST
method to evaluate the following categories
P
E
S
T
Political
Economic
Social
Technological
Political Challenges
•Health and Safety Guidelines
The director of the obesity program for the Children's Hospital
Boston, David Ludwig, claims that "fast food consumption has
been shown to increase calorie intake, promote weight gain,
and elevate risk for diabetes"
Center for Science in the Public Interest, a long-time fast food
critic over issues such as caloric content, trans fats and portion
sizes
Political Challenges
•
Ecological/environmental issue
– Fast food industry giants such as Wendy's, Pizza Hut, and
McDonalds are some of the largest consumers of paper
products in the US. "Every year millions of pounds of food
packaging waste litter our roadways, clog our landfills and
spoil our quality of life.
•
Home market pressure-groups
•
International pressure-groups
– Pushing for increased regulations to make companies
more responsible
Political Challenges
• Wars and conflicts
 war between countries
where the company
operates.
 They have also become a
symbol of capitalism and
Americanism meaning that
they have now become the
target of terrorist group and
attack.
Economic Challenges
• McDonald’s must consider economic
challenges when expanding internationally.
Low set up costs = rapid expansion
One of the challenge for fast food industry is that to keep the
price is low for the customer.
Franchising facilitates set ups
» McDonald’s corporation provides financing assistance and
training for new franchise owners to manage cash flow
and keep businesses profitable.
Social Challenges
• From the research plan McDonald’s
profits dropped from $1.977 million
dollars 2000 to $893 million dollars in
2002.
• The main reason is the consumers
worries had greatly
increased with health fears of
increasing obesity
• so customers now opted for more
healthier options like subway which
offered more of a variety for health
conscious customers.
Social Considerations
• To ease customers concern about health issues,
McDonald’s has made changes to the following;
•McDonalds changed its image vastly by evaluating the current
menu and making changes to it from using organic products to
revising the whole menu
entirely by offering salads and vegetarian burgers.
•McDonald’s serves a range of high-quality foods that can fit into a
balanced diet. The accurate and accessible nutrition information
help guests make informed menu choices.
Social Considerations
• Emphasis on food safety:
Mcdonald’s suppliers have food
safety management systems in
place, including Good
Manufacturing Practices (GMP),
a verified Hazard Analysis Critical
Control Point (HACCP) plan and
crisis management, food security
and other applicable programs
Technological Advantages
• McDonald’s has taken advantage of
technology to streamline their processes and
improve efficiency. Through technology enhancements such as FPI's
Help Desk Service, network and application
consolidation, and other technology
implementations, operations of the company
are greatly improved.
Technological Advantages
• Touch Order Allows You To Place Order At
McDonald’s Via Handset
Technological Advantages
• The customers can place their order directly
from their tables, dubbed as “Touch Order”.
It’s the first self-ordering system in the world
to use RFID*
Technology
Spotlight:
McDonald's tests
Speedpass
cashless payment
system
Technological Advantages
• McDonald’s has also
implemented
technology to
improve supply chain
management, and
allows customers to
access this
information to make
more informed
decisions about what
they eat.
STRATEGY RECOMMENDATIONS
Recommendations for McDonald’s
• More Healthy Choices
• McDonald’s should develop menu choices that are
healthy and socially acceptable.
– It is possible to develop a menu that people will enjoy and
that also fits into the original “Speedy Service” model the
company introduced in the 1950’s.
– Use local food sources where possible.
» Using local sources decreases the time to market, and
also decreases the use of fuel to transport goods.
Recommendations
• Locally focused menu choices
– McDonald’s in India has specific menu items
– For the vegetarian market;
Recommendations
• Increase presence in Asian countries
•McDonald's has most certainly had a profound effect on China.
•When the first McDonald's opened in Beijing more than a dozen
years ago, 40,000 people lined up to observe a Big Mac and get
their picture taken with the infamous Ronald McDonald.
•McDonald's is growing faster in China than in the United States.
•McDonald’s owns & operates more than 600 stores across 105
cities in China.
•More than 100 more McDonald's stores will be added annually
to Chinese cities within the coming years.
Recommendations
• While offering the basic burger and
fries, McDonald’s in China also offers:
–
–
–
–
–
Szechuan-style spicy chicken wings
Seafood Soup
Rice
Oriental Sauces
Taro and Red Bean Dessert
Discussion Questions
• What do you consider to be the definition of
globalization? What forces are driving its
development?
An ongoing process by which regional economies,
societies, and cultures have become integrated
through a globe-spanning network of
communication and exchange.
The forces driving it are:
Economic, Technological, Socio-cultural,
Political, and Biological
Discussion Questions
• Identify the reasons why global strategies
sometimes fail in their objective to achieve a
global marketing advantage.
•Lack of understanding about local cultures
•Unaware of current issues
•Cannot compete with global competitors
Discussion Questions
• Companies that has failed doing global
strategies:
Coca-cola has been banned by Venezuela, because the company
didn’t declare the use of “harmful” sweetener. www.reuters.com
Imports of beef from Brazil has banned by several countries, due to
the outbreak of a foot-and-mouth disease. www.reuters.com
French, Denmark and Norway have banned Red Bull because of its
high levels caffeine and other stimulants.
www.medicalnewstoday.com
Discussion Questions
• What is the rationale behind mega mergers
and major acquisitions? How will they lead to
global competitive advantage?
Mega mergers have the effect of reducing cost and
complexity of doing business in other countries. To try
and establish a business from the ground up in
another country, you can face many challenges;
political, social, and economic. Often, the best choice
is to simply buy a similar company and reduce overlap
where possible.
Competitive advantage can be realized when merging
with a successful company in a similar business.
Discussion Questions
• What are the critical success factors
in developing a global brand? What
additional factors would you
consider to be necessary in
developing a successful global ebusiness brand?
A global brand must be “universal” in that it appeals to basic
human wants and needs without being specific to a country
or culture. Some exceptions exist, but in our opinion, a
successful global brand needs to be identifiable without
identifying where it originated from.
For an e-business, a company must display value to all
consumers. Example: E-bay
Discussion Questions
• What are the main challenges that are
faced by international managers in
managing and controlling a global
marketing strategy? What advice would
you give to a manager with this
responsibility?
Global marketing strategies require in-depth knowledge of
the communities they are trying to reach. The better the
understanding of the demographics of the market, the
better chance you have of understanding their specific
wants and needs.
Advice: Get local help! You cannot expect to do this from
a distance using Google. Find people you can trust in the
area and utilize their knowledge and connections.
Conclusion
• McDonald’s should continue to expand
internationally, but be mindful of the local dietary
needs and desire of people to eat a healthy
balanced diet.
The competition from Subway is important
to consider, but there is still a large gap
between store earnings. McDonald’s
stores earn around $2 Million each, while
Subway stores earn around $445,000. As
people begin to understand that the
“healthy” alternative offered at Subway
can be had at McDonald’s, there are few
reasons to go elsewhere.
Questions for the Class
• Do you feel that McDonald’s
food is unhealthy and toxic, or is
it more like a treat to be
enjoyed on occasion?
Questions for the Class
• Is there anything specific you would like to see
added to the McDonald’s menu in your
countries to appeal to your specific tastes?
Questions for the Class
• With the current “Mad Cow” scare, are you
more afraid of eating beef?
Thank You!