Three Year Strategic Plan for 20132015
NICK CALHOUN
DARIUS DOUGLAS
BRITTANY DOUGLAS
PRESENTATION OUTLINE
I.
Introduction of McDonald’s
i.
Company Overview
ii.
Mission Statement
a)
b)
IV.
McDonald’s
Burger King
Vision Statement
Internal Assessment
I.
Company Values
II.
Financial Ratios
III.
Organizational Chart
iii.
II.
I.
II.
IV.
Current Chart
Revised Chart
Marketing Strategy
I.
II.
Current
Revised
Strengths/Weakness
VI.
IFE
External Assessment
I.
Competitor Analysis
V.
III.
I.
V.
CPM
VI.
Strategic Formulation
I.
SWOT Matrix
II.
Space
III.
BCG
IV.
Grand Strategy Matrix
V.
QSPM
VI.
Recommendations
Strategy Implementation
I.
Strategy Timeline
II.
EPS
III.
Predicted Financial Statements
IV.
Financial Ratios
Conclusion
VISION STATEMENT

Our goal is becoming customers favorite way
and place to eat and drink by serving core
favorites such as the world famous French
Fries, Big Mac, Quarter Pounder and Chicken
McNuggets.
COMPANY OVERVIEW
McDonald’s began it’s operation in 1948
 In 1963 the 500th restaurant was opened
•
 Currently
•
By 1965 the stock offering was $22.50 per shar
 Current

33,000 locations world wide
stock price is $87.97
McDonald’s now operates in 119 countries

Current Chief Executive Officer is Don Thompson
MCDONALD’S
MISSION STATEMENT
McDonald's brand mission is to be our customers' favorite
place and way to eat. Our worldwide operations are aligned
around a global strategy called the Plan to Win, which
center on an exceptional customer experience – People,
Products, Place, Price and Promotion. We are committed to
continuously improving our operations and enhancing our
customers' experience
MCDONALD’S
MISSION STATEMENT ANALYSIS

Mission Statement only includes the following components:
Market
Concern for survival, growth, and profitability
Philosophies

Mission statement are missing the following components:
Specific Customers
Specific products or services
Technologies
Self-Concept
Concern for public image
Concern for employees

Statement endorses the concept of the four p’s
Product
Place
Price
Promotion
BURGER KING MISSION STATEMENT

Every day, more than 11 million guests visit BURGER
KING® restaurants around the world. And they do so
because our restaurants are known for serving highquality, great-tasting, and affordable food. Founded in
1954, BURGER KING® is the second largest fast food
hamburger chain in the world. The original HOME OF
THE WHOPPER®, our commitment to premium
ingredients, signature recipes, and family-friendly
dining experiences is what has defined our brand for
more than 50 successful years.
BURGER KING
MISSION STATEMENT ANALYSIS



Does not show any type of technological advances
which could appeal to a younger generation
No self concept and social responsibility to go that
extra mile
Although they are the 2nd largest hamburger fast-food
chain in the world, this should not be indicated
because it shows they are not the best
COMPANY VALUES
We place the customer experience at the core
of all we do.
 We are committed to our people
 We believe in the McDonald’s System
 We operate our business ethically
 We grow our business profitably.
 We strive continually to improve

FINANCIAL RATIO ANALYSIS
Ratios
McDonalds
Industry
Price/Earnings
16.45
21.20
Quick Ratio
1.00
0.70
1.2
0.48
0.97
18.1%
16.5%
44.8%
30.3%
20.5%
21.6
133.6
1.00
0.95
1.03
8.20%
10.70%
36.70%
25.69%
15.10%
34.20
47.00
0.8
1.20
Current Ratio
Long Term debt/ Equity
Total Debt/ Equity
Net Profit Margin
Return on Assets
Gross Margin
Return on Equity
Return on Capital
Receivable Turnover
Inventory Turnover
Asset Turnover
ORGANIZATIONAL CHART (CURRENT)
President and Ceo
CBO
Executive VP and
CFO
Executive VP HRM
Social Media
VP Controller
VP CDO
COO
President Central
Division
President East
Division
President USA
VP COO
McDonald’s USA
Executive Vice
President, General
Counsel and
Secretary
President West
Division
Corporate Vice
President Supply
Chain and
Franchising
President Asia,
Pacific, Middle
East, Africa
President Europe
PROBLEMS WITH ORGANIZATIONAL CHART






Double titles of Top executives; such as CEO and President
Some of the titles are obscure, such as “President USA” and “Executive Vice
President HRM”
President title of Asia, Pacific, Africa, and Middle East should be broken up
into two presidential positions for more effective leadership and region
concentration
No research and development business unit
Unnecessary positions such as “CDO (Chief Diversity Officer)” and “Social
Media”.
Chart shows two COO’s, one for the overall company and one for
McDonald’s USA
REVISED ORGANIZATIONAL CHART
TOP LEVEL MANAGEMENT TITLES

CEO- Chief Executive Officer

COO- Chief Operating Officer

CBO- Chief Brand Officer

CFO- Chief Financial Officer

General Counsel and Secretary

CROO- Chief Restaurant Operations Officer

HRM- Human Resource Manager

Supply Chain Development and Franchising

Research and Development
ORGANIZATIONAL CHART IMPROVEMENTS

Eliminates double titles

Addition of a Research and Development Function

Shows all divisional presidents reporting to the COO

Eliminates the extra COO for McDonald's USA and other unnecessary
positions

President over Asia, Pacific, Middle East, and Africa is broken up into two
positions:


President Asia and Pacific
President Middle East and Africa
PRESENT MARKETING

A restaurant that offers a consistent value menu.

Using a worldwide market and adapt to the needs of their many locations.

President figures in USA, Asia, Europe, Pacific, Middle East, Africa, and even
Latin America
Advertising Channels:







Internet
Radio
Television
Direct mail
Billboards
-Current Target Market- Families in all cultures
MARKETING POSITIONING MAP
MARKETING POSITIONING MAP
NEW MARKETING STRATEGIES

-Advertise more on social media sites such as Instagram and also on
mobile apps such as Pandora.

-Offer more weekly giveaways such as $1000 for one lucky
contestant or a $100 McDonald’s gift card.

-Correlate McDonald’s with both basketball AND football.

-Offer different side items for individuals who do not have a desire for
french fries. Wendy’s for example offers a variety of side items which
can cater to everyone’s needs.

-Invest more in African countries such as Guana. It is one of the more
profitable countries in the continent
UPDATED MARKETING SLOGAN
PROGRESSION PLAN



An official progression plan is needed in order to maintain the
success of McDonald’s as the #1 fast-food restaurant in the
world and stay current with an ever-growing world population.
We suggest that each top level manager meet with one another
four times out of the year due to some of them being fairly new
to their positions.
CEO Don Thompson should use an experienced advisor for his
first 2 years in order to ensure accurate running of the
company and command of subordinates.
MCDONALD’S
BURGER KING
Co unties with Burger King
Co untries without Burger King
MAP OF STORE LOCATION
HOW MUCH IS MCDONALD’S WORTH?
Method 1: Stock Holders' Equity (in millions) (2011)
Common Stock
Additional Paid-In Capital
Retained Earnings
Goodwill & Intangibles
16.6
5487
36710
-2653
Net Worth
39560.6
Method 2: Net Profits
2007
2008
2009
2010
2011
7905
8639
8792
9637
10690
5-Year AVG
9132.6
Method 3: Price-Earnings Ratio
PE Ratio
AVG Net Inc 5-Years
16.09
9132.6M
Worth
146943.5
Method 4: Outstanding Shares
# of Outstanding Shares
MKT Price per Share
AVG of 4 Methods
157M
$93.20
14632.4
52567.28
~52 Billion
WEBSITE
WEBSITE
MCDONALD’S WEBSITE ANALYSIS

Homepage shows current promotion
o


Categories are clearly listed on the left side of the website
The topic food is at the top showing that it is their main priority
o
o




“Monopoly Game”
The food section of the website list all of the various items McDonalds
has to offer
It provides nutritional information
The website is clear and concise with only the important pieces of
information
Website is more interactive in comparison to competitor
The background of the website does not possess much detail that
may attract a customer
Not a clear link to McDonald’s Company website
BURGER KING HOMEPAGE
BURGER KING WEBSITE ANALYSIS
Menu options are listed at the top of the website
 Offer social network options

 Twitter
 Facebook
Offers an option to help find customers the closest
restaurant
 Company Information is accessible from main
page
 Option for careers is not easily found on the
website
 Offers a mobile website and application

STRENGTHS








Operates in 33,000 locations
Has reduced sodium by 10% in various chicken items on
the menu
Restaurants have increased the amount of cardboard
recycled by 20%
On average 15.8 menu items per market share include
a 1/2 serving of fruit
Created a new division line of product such as McCafe
Serves over 47 million customers daily
Created a partnership with the Olympics
Sales have increased by 2.94 billion dollars in 2012
WEAKNESS
Turnover rate for employees is 44%
 Quality control throughout the different franchise
 Top level management is new to the company
 Only operates in three countries in the continent of
Africa
 Difficult to become a franchisee
 Very little training is offered to employees
 Website only shows top level management but not
the organizational chart

STRENGTHS (IFEM)
WEAKNESSES (IFEM)
COMPETITIVE PROFILE MATRIX
McDona lds
Cri teri a
Bra nd Name
Wei ght
Burger Ki ng
Wei ghted
Score
Ra ting
Wi eght
Wei ghted
Score
Ra ting
Wendy's
Wei ght
Wei ghted
Score
Ra ting
0.25
4
1
0.2
3
0.75
0.18
2
0.5
0.2
2
0.4
0.19
3
0.6
0.21
4
0.8
Pri ce
0.08
4
0.32
0.09
3
0.24
0.11
2
0.16
Advertising
0.05
4
0.2
0.06
3
0.15
0.09
2
0.1
0.2
2
0.4
0.25
4
0.8
0.23
3
0.6
# of Loca tions
0.15
4
0.6
0.06
2
0.3
0.1
3
0.45
Va ri ety of Menu i tems
0.07
2
0.14
0.15
4
0.6
0.08
3
0.24
2.92
1
2.84
1
Product Qua lity
Cus tomer Service
Total
1
2.61
OPPORTUNITIES
3% in worldwide population
 Fast food industry growth by 5%
 25% of consumers eat fast food everyday
 Not as many grocery stores in urban areas
 Release of new Disney movies
 Unemployment rates falls to 6%

THREATS
Multiple stores in a geographic area
 Society views on fast food
 Fast Food restaurants are required to show
nutritional information.
 Imitated by competitors
 Sales at local grocery stores
 Unemployment rate rises to 9.9%

EFE MATRIX
Opportunities
3% increase in worldwide population
Fast-food industry growth by 5%
Increase in the number of franchisees
Release of new Disney movies could create
new marketing opportunities
25% of consumers eat fast-food everyday
Urban areas struggle to get grocery stores
Economic growth of 5% in Guana, Kenya, and Angola
Invest more in northwest areas that lack a restaurant
Calorie count on menu allows more nutritional info
The multitasking of Generation Y allows for
more
fast food sales.
Wieght
Wieghted
Score
Rating
0.09
0.05
0.09
3
4
3
0.27
0.2
0.27
0.05
0.09
0.02
0.01
0.02
0.06
3
2
3
1
3
4
0.15
0.18
0.06
0.01
0.06
0.24
0.01
2
0.02
0.04
0.06
0.07
0.07
0.03
0.06
0.05
0.05
0.02
0.06
2
3
1
4
2
1
4
3
1
4
0.08
0.18
0.07
0.28
0.06
0.06
0.2
0.15
0.02
0.24
Threats
11. Multiple stores in one geogrphic area
12. Society's view on fast food
13. Being imitated by compettitors
14. Displaying Nutritional data
15. Competitors have more side items for meals
16. Gas prices up 14%
17. Society's perception of fast food
18.Competitors offer online ordering
19. Family sized meals
20. Sales at local grocery stores
Total
1
2.07
STRATEGIC DIRECTION

The strength of the alignment among the Company, its franchisees and
suppliers (collectively referred to as the System) has been key to McDonald’s
success. This business model enables McDonald’s to deliver consistent, locallyrelevant restaurant experiences to customers and be an integral part of the
communities we serve. In addition, it facilitates our ability to identify, implement
and scale innovative ideas that meet customers’ changing needs and
preferences.

McDonald’s customer-focused Plan to Win provides a common framework for
our global business yet allows for local adaptation. Through the execution of
initiatives surrounding the five elements of our Plan to Win – People, Products,
Place, Price and Promotion – we have enhanced the restaurant experience for
customers worldwide and grown comparable sales and customer visits in each
of the last eight years. This Plan, combined with financial discipline, has
delivered strong results for our shareholders.
SWOT MATRIX
SO Strategies
Offer more franchises in states with the
least number
Provide healthier meal combinations
ST Strategies
Offer family sized meal that have four
servinngs
Increase dividends by 5%
Create an iPhone app that shows
store with shortest lines
Ceate more side items and desserts
Offer jobs to teenagers
Aquire smaller fast food chains
Increase advertising spending by 15%
Offer table service to customers that
dine-in
SWOT MATRIX (CONTINUED)
WO Strategies
WT Strategies
Increase MCD stock trade volume
Build more stores in African Countries
Incrase treasury stock
Offer servings that are beloew 400
calories
Create more McCafe products
Create a new and imroved organiztional
chart
Hire more experienced leaders for top
management
Make the company's website more
interactive
Buy fruits and vegetables locally if
they are availabe
Offer catering at major events
SPACE MATRIX
FS
Conservative
Aggressive
6
5
4
3
2
1
CA
-6
-5
-4
-3
-2
-1
1
2
3
4
-1
-2
X Plot
2.8
-3
-4
-5
Y Plot
2.2
-6
Defensive
ES
Competitive
5
6
IS
SPACE MATRIX DATA
Financial Position (FP)
Return on Investments
Brand Name
Earnings Per Share
Net Income
Working Capital
6
7
4
6
3
Environmental Position (EP)
Technological Changes
Demand Variability
Competitive Pressure
Barriers of entry into market
Rate of Inflation
-2
-1
-3
-6
-3
Financial Position Avg.
5.2
Environmental Position Avg.
-3
Competitive Position (CP)
Product Quality
Customer Loyalty
Technology know-how
Product Life Cycles
Market Share
-4
-1
-3
-2
-2
Industry Potential (GP)
Profit Potential
Financial Stability
Resource Utilization
Extent Leveraged
Ease of entry
7
7
4
5
3
Competitive Position Avg.
-2.4
Growth Potential Avg.
5.2
BCG DATA TABLE
BCG MATRIX
GRAND STRATEGY MATRIX
Rapid Market Growth
Weak
Competitive
Advantage
Strong
Competitive
Position
Slow Market Growth
Saturated Market
Moderate Integration
Stronger than Competitors
Slow Company Growth
QSPM (CONTINUED)
QSPM (CONTINUED)
QSPM (CONTINUED)
RECOMMENDATIONS
STRATEGICAL TIMELINE
EPIS/EPS ANALYSIS
Common Stock Financing
Recession Normal
Boom
$EBIT
900,000,000 450,000,000 900,000,000
$Interest
0
0
0
$EBT
900,000,000 450,000,000 900,000,000
$Taxes
360,000,000 180,000,000 360,000,000
$EAT
540,000,000 270,000,000 540,000,000
#Shares
1044.9
1044.9
1044.9
$ EPS
5.17
2.58
5.17
Debt Financing
Recession Normal
Boom
900,000,000 450,000,000 900,000,000
65,000,000 65,000,000 65,000,000
965,000,000 385,000,000 835,000,000
289,500,000 115,500,000 250,500,000
675,500,000 269,500,000 584,500,000
1008.63
1008.63
1008.63
6.7
2.63
5.8
70% Stock - 30% Debt
Recession Normal
Boom
$EBIT
900,000,000 450,000,000 900,000,000
$Interest 19,500,000
19,500,000 19,500,000
$EBT
919,500,000 430,500,000 880,500,000
$Taxes
275,850,000 129,150,000 264,150,000
$EAT
643,650,000 301,350,000 616,350,000
#Shares
929.4
929.4
929.4
$ EPS
6.92
3.24
6.63
70% Debt - 30% Stock
Recession Normal
Boom
900,000,000 450,000,000 900,000,000
45,500,000 45,500,000 45,500,000
945,500,000 404,500,000 854,500,000
283,650,000 121,350,000 256,350,000
661,850,000 283,150,000 598,150,000
971.58
971.58
971.58
6.81
2.91
6.16
BALANCE SHEET
Assets
Cash/Short Term Investments
Accounts Receivables/Net
Inventory
Prepaid Expenses
Total Current Assets
2013
2,532.10
1,576.70
125.4
634.5
4,868.70
2014
2,943.00
1,689.90
144.2
693.1
5,470.20
2015
3,398.80
1,912.20
151.9
621.4
6,084.30
23,153.70
2,898.20
1,795.80
1,783.40
34,499.80
24,599.80
2,767.30
1,612.10
1,751.90
36,201.30
25,971.30
2,690.50
1,749.20
1,789.20
38,284.50
987.1
2,165.70
122.6
299.3
3574.7
1,097.60
1,930.10
287.4
347.9
3,663.00
1,235.40
2,276.50
398.1
287.2
4,197.20
Total Long Term Debt
Deferred Income Tax
Other Liabilities
Total Liabilities
12,961.30
1,387.20
1,745.10
19668.3
14111.7
1,412.80
1,805.90
20,993.40
15165.9
1,469.10
1,937.70
22,769.90
Equity
Preferred Stock
Common Stock
Additional Paid-in Capital
Retained Earnings
Treasury Stock-Common
Other Equity
Total Equity
0
16.6
6,711.50
37,224.80
-29,843
519.5
14629.9
0
16.6
7,054.10
39,791.60
-32643.9
743
14,961.40
0
16.6
8,248.80
42,862.70
-35780.7
613.8
15,961.20
34298.2
35,954.80
38,731.10
Prop., Plant, Equip.
Good Will
Long Term Investments
Other Assets
Total Assets
Liability and Shareholders' Equity
Accounts Payable
Accrued Expenses
Debt/Capital Leases
Other Liabilities
Total Current Liabilities
Total Liabilities and Equity
Total Revenue
23,788.0
26,589.6
2013
C ost of Revenue, Total
2014
27,173.7
2015
INCOME
STATEMENT
14,549.1
14,068.3
12,745.9
Gross Profit
9,238.9
12,521.3
14,427.8
Selling/General/Administrative Expenses, Total
2,182.7
2,054.3
1,995.2
Research & Development
0.0
0.0
0.0
Depreciation/Amortization
0.0
0.0
0.0
Interest Expense (Income), Net Operating
0.0
0.0
0.0
Unusual Expense (Income)
-10.8
-101.6
77.4
Other Operating Expenses, Total
0.0
Operating Income
0.0
0.0
10,467.0
12,432.6
7,056.2
Interest Income (Expense), Net Non-Operating
0.0
0.0
0.0
Gain (Loss) on Sale of Assets
0.0
0.0
0.0
-32.5
-41.2
-17.6
Income Before Tax
6,761.2
10,085.3
11,987.0
Income Tax - Total
1,978.1
2,122.0
2,343.0
Income After Tax
5,783.1
7,963.3
9,644.0
M inority Interest
0.0
0.0
0.0
Equity In Affiliates
0.0
0.0
0.0
U.S. GAAP Adjustment
0.0
0.0
0.0
5,783.1
7,963.3
9,644.0
0.0
0.0
0.0
5,783.1
7,963.3
9,644.0
Other, N et
N et Income Before Extra. Items
Total Extraordinary Items
N et Income
PROJECTED FINANCIAL RATIOS