McDonald’s
Chase Mueller
Tanner Gilreath
Olivia Erwin
Paige Stone
Ashley Hoptay
Anna Rendon
Brandon Laviage
Overview
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Analyzed McDonald’s and its three competitors,
YUM! Brands, Burger King and Wendy’s, to
assess the company’s standing in the industry.
Focused on the key company characteristics, its
financial situation, each company’s
organizational flexibility and culture, strategies
used, and their ability to be able to compete in
today’s market and economy.
Corporate Social Responsibility
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Has become a way of doing business.
Understand that they must deliver responsible
food to its consumers.
How it serves food.
 Where the food comes from.
 What people want from it.
 Therefore, the company works closely with its
suppliers, franchisees and employees to ensure
products are safely delivered to consumers.

Corporate Social Responsibility

McDonald’s goes green:
Since 2000, the company has opened up multiple
“green” restaurants.
 Rebuilding restaurants with a more innovative and
efficient design that will reduce the use of water and
energy.
 Enhancing its packaging – 82% of its packaging is
made from renewable resources
 “Closed Loop Hierarchy for Packaging and Waste”
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Corporate Social Responsibility

McDonald’s is…healthy?
Three aspects involved: provide consumer-friendly
nutrition information, bring consumers high-quality
choices, and communicate responsibly
 Offer salads, wraps, smaller portions and healthier
sides. Zero grams of Trans fat in fried foods.
 Can find all of the nutrition information on the Web.
Also implementing a new packaging design where the
nutrition information will be placed on the wrapper.
 Strengthening its Global Children’s
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Marketing Guidelines
Corporate Social Responsibility
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McDonald’s makes its presence known:
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Gets involved with its communities in four ways:
Ronald McDonald House
 Sponsorships
 Owner/Operator Involvement
 Disaster Relief
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Corporate Social Responsibility
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Quality every step of the way:
Takes great prudence to ensure that every aspect of
the supply chain positively contributes to the safety,
quality and availability of its products.
 Uses a Social Accountability program to uphold its
strict standards for its suppliers.
 Not afraid to leverage its size and influence to raise
questions about the suppliers’ methods and to
encourage improvement in their practices.
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Forecasting and Speed of
Response
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McDonald’s plays a large part in its communities,
and the company is constantly searching for new
ways to get involved or help the environment. The
company also tries to project future needs to lessen
the impact that its business has on its communities.
McDonald’s is able to quickly respond to its
communities’ needs and wants:

McDonald’s was the only quick service restaurant to
make Health Magazine’s list of America’s Top 10
healthiest meals at limited-service restaurants”
Entrepreneurial Orientation
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78% of McDonald’s restaurants are operated by
franchisees.
Creates a strong entrepreneurial feel.
 The only competitor with a larger mix of franchisees is
Burger King – 90% of restaurants are operated by
franchisees.
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Very selective when granting franchises or licenses.
Will not franchise to passive investors that do not
appear capable of matching the goals and
requirements that McDonald’s sets for all of its
locations
Attraction and Retainment
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Make that a McCareer please.
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Supports development from the crew room to the board room.
Promotes from within.
Provides training for all levels.
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Service level receive on the job training where they learn the technology as
well as customer service techniques
Provide college level classes at Hamburger University for management
training
McDonald’s Leadership Institute provides almost 200 employees from the
McDonald’s system to partake in the accelerated programs and learn how to
be a corporate leader in the company
Ranked as one of the Top 20 Global Companies for Leaders in
2007 by Fortune
Super Sizing Value
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Value menu: no value cost trade-off
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Maintain a supply of high quality ingredients
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Dollar Menu, Yen for Great Value in Japan
Ensured by the company’s size and strength over its
suppliers
Variety and selection of menu items to satisfy all
tastes
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Research and Development is essential to growth

Have three food studios located in Munich, Hong Kong and
Chicago where chefs test and create their new concoctions
Delivering Value
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Convenience and accessibility are important aspects
that bring consumers more value
Located in close proximity to each other
 Found in areas with a high customer concentration
 Expanding the number of 24 hour locations
 Opening drive-thrus in areas such as Russia and China
and adding double drive-thrus in the US
 Kiosks in India and Indonesia
 Delivery service in Singapore, Egypt and other Asian and
Middle Eastern countries
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Reimaging Value
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Feel that its restaurants are the best way for the
company to express its brand and create the
ultimate customer experience
Renewed about 10,000 restaurants within the
past five years
Design is contemporary and eco-friendly
Burger King is also re-investing in the design of
its restaurants
Marketing and Promotions
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Relevant marketing and promotions strengthen its
connection with its customers and build brand
awareness and loyalty
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“I’m Lovin’ It” campaign
Promotions such as Monopoly and Uno evoke
customer interaction and get them involved with the
brand
Burger King is advertising more and is utilizing a
more viral campaign
Financial and Accounting
Analysis
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Quantitative accounting disclosures are intended
to effectively communicate the financial
statements’ numbers
Certain legal manipulations and disclosures
could give a company an unrealistic value as well
as mislead its investors.
Tools
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Financial Ratios
Ratio Analysis
Current Ratio
McDonalds
Burger King
Wendy's
Yum! Brands
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2004
2005
2006
2007
2008
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It is used to show the resources a firm and its ability
to cover their current assets with current liabilities.

The higher a firm’s current ratio is, the more able a
firm is to pay off its liabilities.
Ratio Analysis
Quick Asset
McDonalds
Burger King
Wendy's
Yum! Brands
1.4
1.2
1
0.8
0.6
0.4
0.2
0
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The quick asset ratio, or acid-test, uses the firm’s most
liquid assets than can quickly be turned into cash for their
book value amounts to pay off current debts.
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The assets included in this ratio are cash, marketable
securities, and accounts receivable.
2004
2005
2006
2007
2008
Ratio Analysis
Working Capital Turnover
McDonalds
Burger King
Wendy's
Yum! Brands
40
20
0
2004
2005
2006
2007
2008
-20
-40
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-60
Working capital turnover is determined by dividing a
company’s sales by its working capital: current assets less
current liabilities.
-80
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It evaluates how efficient a company uses its working
capital balance to create sales.
Ratio Analysis
Net Profit Margin
McDonalds
Burger King
Wendy's
Yum! Brands
20%
10%
0%
2004
2005
2006
2007
2008
-10%
-20%
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It simply gives profit as a percentage of net sales.
It shows how much of each dollar of product sold is profit.
By having a small percentage it shows that the company is not
utilizing their resources well and their cost to produce the item
are too high.
-30%
Ratio Analysis
Return on Assets
McDonalds
Burger King
Wendy's
Yum! Brands
20%
10%
0%
2004
2005
2006
2007
2008
-10%
-20%
-30%
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The firm uses
the previous year’s assets to better reflect profitability
-40%
for the current year.
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This is done because profits with the new assets will not be recognized
until the next fiscal year and that is how it gives people a better
understanding on how they either helped or hurt the company.
Ratio Analysis
Z - Score
McDonalds
Burger King
Wendy's
Yum! Brands
4
3.5
3
2.5
2
1.5
1
0.5
0
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2004Z-score
2005is to help
2006 us make
2007 calculations
2008
The purpose of the
that help us
to understand where a company stands with their credit risk.
A company is considered to be bankrupt when their Z-score is below
1.81. When a firm’s score exceeds 2.67, the firm is considered to have
low risks in the bankruptcy and credit categories.
Marketing and Management
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McDonald’s once focused on children for their advertising, but
recent law suits and documentaries resulted in the company’s
innovation and major changes to health related product ranges.
Now more teenagers and adults rule the McDonald’s ad world.

McDonald’s had begun concentrating so heavily on expansion
and growing big that it missed out on key factors like quality
maintenance and R&D.
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McDonald’s strategic plan is influencing their marketing efforts
by building better brand transparency. They want their image to
be recognized globally. They are enhancing the customer’s
experience.
Marketing and Management
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The change in the top managerial level has created a new wave in
performance and major changes have been implemented to
retain and sustain the brand quality and innovation. As the new
CEO rightly quotes:
“The world has changed. Our customers have changed. We have
to change too."
-James R. Cantaloupe,
Chairman and CEO, McDonald’s

Types of marketing mix that McDonald’s use to achieve their
marketing goals are longer operating hours, everyday value
meals, and optimizing efficiency in the drive-thru.
Business Life Cycle: McDonalds
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1948: Richard and Maurice McDonald open the first McDonald's restaurant
in San Bernardino, California.
1954: Ray Kroc gains the rights to set up McDonald's restaurants in most of
the country.
1955: Kroc opens his first McDonald's restaurant in Des Plaines, Illinois; he
incorporates his company as McDonald's Corporation.
1961: Kroc buys out the McDonald brothers for $2.7 million.
1963: McDonald's goes public.
1967: The company opens its first foreign restaurant in British Columbia,
Canada.
1973: Breakfast items begin to appear on the menu, with the debut of the
Egg McMuffin.
1974: The first Ronald McDonald House opens in Philadelphia.
Business Life Cycle: McDonalds
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1975: The first McDonald's drive-thru window appears.
1985: McDonald's becomes one of the 30 companies that make up the
Dow Jones Industrial Average.
1998: The company takes its first stake in another fast-food chain, buying
a minority interest in Colorado-based Chipotle Mexican Grill.
1999: Donatos Pizza Inc. is acquired.
2000: McDonald's buys the bankrupt Boston Market chain.
2002: Restructuring charges of $853 million result in the firm's first
quarterly loss since going public.
2003: McDonald's sells Donatos in order to refocus on its core hamburger
business.
Business Life Cycle: Wendy’s
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1969: Dave Thomas opens the first Wendy's restaurant in downtown
Columbus, Ohio.
1972: Wendy's franchising begins.
1975: First international restaurant opens in Canada.
1976: Wendy's International, Inc. goes public.
1977: Company begins national television advertising.
1978: The 1,000th Wendy's opens in Springfield, Tennessee.
1981: Thomas makes his first appearance as Wendy's advertising
spokesperson.
1984: Famous and award-winning "Where's the Beef?" ad campaign is run.
1986: James W. Near becomes president and COO and launches a major
reorganization.
1995: Wendy's International acquires Tim Hortons, a Canadian coffee and
baked goods chain.
1997: The 5,000th Wendy's restaurant opens in Columbus, Ohio.
2002: Dave Thomas dies; Wendy's International acquires a 45 percent stake in
Café Express.
Business Life Cycle: Burger King
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1954: James McLamore and David Edgerton establish Burger King
Corporation.
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1959: The company begins to expand through franchising.
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1967: Burger King is sold to Pillsbury.
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1977: Donald Smith is hired to restructure the firm's franchise system.
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1989: Grand Metropolitan plc acquires Pillsbury.
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1997: Grand Metropolitan merges with Guinness to form Diageo plc.
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2002: A group of investors led by Texas Pacific Group acquire Burger King.
Business Life Cycle: KFC
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1952: The Colonel begins actively franchising his chickenbusiness by
traveling from town to town and cooking batches of chicken for
restaurant owners and employees. The Colonel awards Pete Harman of
Salt Lake City with the first KFC franchise. A handshake agreement
stipulates a payment of a nickel to Sanders for each chicken sold.
1960: The Colonel's hard work on the road begins to pay off and there
are 190 KFC franchisees and 400 franchise units in the U.S. and Canada.
1964: Kentucky Fried Chicken has more than 600 franchised outlets in the
United States, Canada and the first overseas outlet, in England.
1966: The Kentucky Fried Chicken Corporation goes public.
1969: The Kentucky Fried Chicken Corporation is listed on the New York
Stock Exchange.
1971: More than 3,500 franchised and company-owned restaurants are in
worldwide operation when Heublein Inc. acquires KFC Corporation
Business Life Cycle: KFC
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1979: KFC cooks up 2.7 billion pieces of chicken. There are
approximately 6,000 KFC restaurants worldwide with sales of more than
$2 billion.
1982: Kentucky Fried Chicken becomes a subsidiary of R.J. Reynolds
Industries, Inc. (now RJR Nabisco, Inc.) when Heublein, Inc. is acquired
by Reynolds.
1986: PepsiCo, Inc. acquires KFC from RJR Nabisco, Inc.
1997: PepsiCo, Inc. announces the spin-off of its quick service restaurants
- KFC, Taco Bell and Pizza Hut - into Tricon Global Restaurants, Inc.
2002: Tricon Global Restaurants, Inc., the world's largest restaurant
company, changes its corporate name to YUM! Brands, Inc. In addition to
KFC, the company owns A&W® All-American Food® Restaurants, Long
John Silvers®, Pizza Hut® and Taco Bell® restaurants
McDonalds Corporate Structure
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Management gurus often cite McDonald’s corporate structure model.
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The company's highly decentralized management runs its franchises.
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McDonald’s uses a functional structure, with the Chief Executive
overseeing five major areas of activities.
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Franchise candidates must sign an agreement with the firm, which
gives them the right to operate a specific McDonald’s location for a
period of 20 years.
McDonald’s Corporate Structure
Chart
CEO/Divisional Vice
Chairman/Director
VP/Other Executive
Officer
Chairman of the
Board/Director
Geographical
President
Executive VP/ Other
Executive Officer
President/COO
President, West
Division
Director
Director
Senior Executive
VP/Other Corporate
Officer
President, Eastern
Division
Senior VP/Comtroller
CFO/Senior
Executive VP
Director
McDonalds Corporate Culture
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McDonalds vision statement is quality, service, convenience, and value (QSCV)..

No one portrays McDonalds culture more than Hamburger University, it is a
place where Organizational culture is franchisees, managers, and assistant
managers are indoctrinated into the culture that is McDonald's.
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This structure allows McDonalds to export successfully not only its management
system but a very distinct culture as well.
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Inspectors continually reinforce McDonald’s culture and by contests to determine
whom best reaches the standards McDonald's sets for all its franchises.
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McDonald's manuals emphasize the organization's motto, QSCV, and they define
every task an employee needs to know.
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These manuals ensure that efficiency, predictability, and control are involved in
production and customer service.
Yum! Brands Corporate Structure
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Originally an accumulation of restaurant chain accounts put together
for not only the addition of Pepsi fountain accounts, but for profit
from food sales.
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Chains were acquired and managed virtually independently, essentially
skipping the usual corporate practice of bringing them in line with the
rest of the business units.
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Now, the company operates its business through three geographical
reporting segments: the US, the International segment and China
segment.
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The US segment operates multi-brand restaurants, where two or more of the
concepts, such as KFC, Pizza Hut, Taco Bell, Long John Silver's and A&W,
are operated in a single unit.
Outside the US the company and its franchisees use decentralized sourcing
and distribution systems involving many different global, regional, and local
suppliers and distributors.
Yum! Brands Corporate Structure
Chart
Chairman
CEO and President
Yum! Brands, Inc.
President, Yum!
Restaurants
International
Sr. VP, Chief
Public Affairs
Office, Yum!
Brands, Inc.
CFO, Yum!
Brands, Inc.
SVP, Gen Counse,
Secretary, Chief
Finance Policy
Officer
Cheif People
Officer
VP Worldwide
Knowledge
Transfer
Sr. Vice President,
Investor Relations
and Treasurer
COO and Cheif
Development
Officer
Sr. Vice President Finance
and Corporate Controller
VP Public
Relations
Corporate Strategy
and Treasurer
Direct Public
Affairs
President of U.S.
Brand Building
Managing
Director of
Europe, Yum!
Brands
Chief Marketing
Officer, Indian
Subcontinent
President and
Chief Concept
Officer, KFC
President, Pizza Hut
President, Taco
Bell
Cheif Marketing
Officer, Australia
Cheif Operating
Officer, Taco Bell
Managing
Director of
Mexico
Chief Operating
Officer, KFC,
USA
Chief Operating Officer, Pizza
Hut, USA
Yum! Brands Corporate Culture
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Over the past 12 years, Yum! Brands success has been driven by their
focus on building leading brands in China in every significant category.
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They strive to drive aggressive, international expansion and build
strong brands everywhere.
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They try to dramatically improve U.S. brand positions, consistency and
returns, driving industry-leading, long-term shareholder and franchisee
value, and build a unique, fun culture led by people who love the
restaurant business.
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They created the Yum! Dynasty Growth Model.
How We Win Together Principles are their corporate values and are
built around a "People Capability First" philosophy.
Strengths
Threats
SWOT
Analysis
Opportunities
Weaknesses
Strengths
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Franchises
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Brand Recognition
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Branding allows customers to recognize icons, thus becoming
more brand loyal
Product Uniformity
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McDonald’s operates 31,377 restaurants with 20,505 of those
restaurants being operated by private owners
Offering the same consistent product creates customer loyalty
Pricing Strategy
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Value Menu
Weaknesses
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Saturation
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pricing wars against competitors has caused a
decrease in revenue
Public Perception
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unhealthy product offerings has lead to numerous
lawsuits
Opportunities
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Market share
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countries such as Latin America and the Caribbean’s,
Europe, The Middle East and North America, SubSahara Africa, and Oceana have very few McDonald’s
chains, creating a huge untapped market
Younger Generation
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tend to be on the go, and look for meals that are quick,
cheap, and convenient, thus giving a huge opportunity to
serve an adult crowd
Opportunities…
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Innovativeness
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Continuously using technological factors, perhaps
text message ordering can influence revenue or
joining the going green movement
Product Offering

Constantly seeking new product offerings allows
new opportunities for growth and expansion of their
brand recognition
Threats
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Economic Slowdown
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Casual Dining Restaurants
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Recessionary period and global economic slowdown has
led to currency losses, inflation or deflation
have decreased menu prices
Cheddar’s burger: $4.99
Imitation
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new formats and new menu items are being imitated
Company Assessment Summary
Focus
Product Offerings
Technology, Locations
Marketing/Advertising
Renovation of Exiting Restaurants
Overall Cost Leadership
High Marketing/ Advertising Cost
Investment of Location property
Increased Technology cost
Implement Just-in-Time (JIT)
Strategic Posture
Differentiation
Added lounges
Premium coffees
Modern facilities
Defensive
No marketshare of own company
Only focus on themselves
Competitive Scope
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Global Scale
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Local, regional, national, and international
competitors
Makes up 2.4% of 575,000 total restaurants in
U.S.
Strategic Intent
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Leader in QSR industry
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Uses advertising, marketing, and public relations
to promote brand image and focus on value,
food taste, menu choice and customer
experience
Market Share Objective
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Focus on internal growth through expanding the
number of restaurants as well as capturing new
market share from other industries.
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Ex: coffee sector
“Plan to Win”
Designed to bring more value to shareholders
 Ex: flat screen TVs, internet
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Competitive Position/Situation
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Well-entrenched
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Global leader
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Keep position through expanding the number of
stores, internal operations to new ventures, and
customer experience.
Strategic Posture
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Defensive Strategies - reactions to competition
and to defend market share
Dollar menu
 Value meals
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Offensive Strategies - proactive approach to
keep and secure its position as market leader
New market ventures
 Customer loyalty
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Competitive Strategy
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Differentiation
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Advertising and marketing
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Recognizable name and logo
Social responsibility and commitment to community
Green movement
 Safe and high quality meat
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Technology
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Speedee Service System