McDonald’s
¾ Presenters
–
–
–
Yoav Ickowicz
Kevin Koopmans
Rob Rachiero
Introduction - Agenda
z
z
z
z
z
z
z
Company History & Current Operations
Company Strategy
5 Forces Model
Labour & Legal Issues
Product Lines
Cultural Differences
Conclusion
Company History
¾
1954-1955
¾
¾
1956-1963
¾
¾
¾
Albert Kroc, Des Plaines, Illinois
Company Manual
Ronald McDonald, Any Language means "Fun!"
1964-1973
¾
¾
Wall Street
"Big Mac" , “Egg McMuffin”
Company History
¾
1974-1993
¾
¾
¾
¾
First Ronald McDonald House
The Happy Meal
McDonald's Express
1994-Present
¾
¾
Worldwide expansion
Website
Company Goals & Objectives
z
z
McDonald’s Mission Statement
Plan to Win
–
–
–
Operational Excellence
Leadership Marketing
Innovation
Current Operations
¾
¾
¾
¾
¾
Current CEO Jim Cantalupo (USA)
McDonald’s operates in more than 119
countries
31,000 restaurants worldwide
Each and every day they serve 46 million
people worldwide
Employ more than 1.5 million people
Distribution
Affiliated
13.64%
Companyoperated
28.93%
USA
Franchises
57.43%
APMEA
Europe
Latin America
Canada
7,555
13,491
1,304
1,605
6,070
Diversification
¾Boston Market (662)
¾Chipotle Mexican Grill (232)
¾Donato’s Pizza (181) sold in 2003
¾Pret a Manger (8)
Income Statement
$18,000
$16,000
$14,000
Millions
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
2003
Total revenues
2002
2001
O perating inc om e
2000
Net inc om e
1999
Stock Information
¾
¾
Current Stock Price - $28.91 US
Shares Outstanding = 1.3 Billion
S t o c k P ric e
50
40
30
20
10
0
A p r1 / 0 4
A pr 1/03
A pr 1/02
A pr 1/01
A pr 1/00
A pr 1/99
Business Strategy
Lower Cost
Broad
Range of
Buyers
Differentiation
Overall Low-Cost
Provider
Broad
Differentiation
Best-Cost
Provider
Narrow
Buyer
Segment
or Niche
Focused
Low-Cost
Focused
Differentiation
Five Forces
Substitutes
Strong
Weak
Suppliers
Strong
Buyers
Competition
Strong
New
Entrants
Weak
Suppliers
¾ #1 purchaser of beef, pork, and potatoes in the U.S.
¾ #1 purchaser of Coca-Cola worldwide.
¾ #2 purchaser of chicken in the U.S. (behind KFC)
¾ Global agriculture
¾ Commodity suppliers have little power
Direct Competition
U.S. Market Share
Other
19%
Wendy's
13%
Burger King
19%
Mcdonald's
49%
Substitutes
¾Corporate:
¾Sub chains, Pizza chains, Restaurant chains,
KFC
¾Independents
¾Restaurants, mall outlets, street vendors
¾Grocery Stores
¾Cafeterias
Buyers
¾Three buyer segments:
¾Children
¾Young Adults
¾Adults
Labour
¾1 in 8 Americans have been employed by
McDonald’s.
¾413,000 employees in 2002 (4.5% growth from 2001)
¾Teenagers make up the bulk of the workforce.
¾McDonald’s is notorious for anti-union activities.
Legal Issues
¾Class Action Lawsuits Against McDonald’s
¾Responsibility for Suppliers?
¾Silencing the Critics
¾McLibel Trial
Children
¾#1 Children’s Clothing line in U.S.
¾90% of American Children visit once per month
¾Largest private operator of playgrounds in U.S.
¾96% of schoolchildren can identify Ronald
¾World Children’s Day
¾Marketing to Children, continued global trend.
Product Lines
¾
¾
¾
McDonald’s is evolving to remain relevant to
consumers worldwide.
Objective = By featuring a variety of Value, Premium
and Wholesome menu offerings we can deliver the
right products at the right price for our customers.
Main Items:
¾
¾
¾
¾
Chicken McNuggets
French Fries
Big Mac
Fountain Pop
Nutrition
Menu Item
Hamburger
Big Mac®
McChicken®
Calories Total Fat (g) Sodium (mg) Carbohydrates (g)
280
10
550
36
600
33
1050
50
430
23
830
41
Quarter Pounder®
with Cheese+
540
29
1240
39
Medium French Fries
450
22
290
57
Chicken McNuggets ®
Made with White Meat (6
piece)
250
15
670
15
Sausage McMuffin®
with Egg
450
28
930
29
Product Life Cycle
Culture – McDonalds Worldwide
z
Did minor studies on 7 main countries and
have a few examples of some others:
–
–
–
–
–
–
–
Canada
U.S.A
India
Japan
U.K
China
France
CANADA
z
McDonald’s in Canada
–
–
–
–
First store June 1, 1967 Richmond BC
1,300 stores across Canada
McDonald’s Canada to offer new protein platters
Slight cultural menu adaptations
UNITED STATES
z
McDonald’s in the US
–
–
–
Stop “super-sizes” for overweight Americans
Minor differences within the country. Hawaiian
culture is testing out the use of Spam Musubi (egg,
rice & SPAM) to a menu that already includes rice
and Portuguese sausage.
Environmental issues
INDIA
z
McDonald’s in India
–
–
–
–
McDonald's does not offer any beef or pork items
Strict Vegetarian products – completely segregated
Only Chicken, even egg less mayonnaise
Big Mac = Chicken & Mutton sandwich
JAPAN
z
McDonald’s in Japan
–
–
–
–
Den Fujita – CEO McDonald’s Japan (Joint Venture
with Jack)
Viewed as a snack food not a meal
Place of leisure for adolescence
Promoted with Japanese icons only
UNITED KINGDOM
z
McDonald’s in UK
–
–
–
First opened in 1974
2.5 Million customers daily
Seen as a high standard, quick service restaurant
CHINA
z
McDonald’s in China (Beijing)
–
–
–
–
No cheese – not an acquired taste
Seen as a American modern dining experience
Revitalized local restaurants to keep up with
Standards
Strong connections to local communities
FRANCE
z
McDonald’s in France
–
–
–
–
Once seen as an American cultural invasion
Similar menu items as in a US McDonald’s
Has grown on French culture
Forced to live up to higher French standards
Other Examples
z
Sweden
–
z
McDonald’s on Ski Hills – “ski-thrus”
Greece
–
Offer lent product’s during Greek Saracosti
Logos
Conclusion
z
z
z
z
z
z
Most widely recognized brand in the world.
Pillar of American economy.
Majority of revenue from foreign operations.
Creates 1 million jobs annually.
Leader in a mature market.
Constantly evolving – “Plan to Win”
References
z
z
z
z
z
"McDonald's Japan halts sales of hot dogs made with
US beef", Associated Free Press - Business, Japan,
29/12/03.
"Shock news: McDonald's make you unhealthy",
Megan Lehmann, New York Post, USA, 22/01/04.
"US confirms first 'mad cow' case", Associated Free
Press - Business, USA, 24/12/03.
Chips Are Down For McDonald's, Reuter's, London,
26/11/03.
US Market Share information from:
http://www.newschannel9.com/vnews/consumerfinanci
al/1020726755
References
z
z
z
z
z
"Coalition Asks UNICEF To Cancel McDonald's World
Children's Day", Press release, Wednesday, July 31,
2002.
Fast Food Nation, Eric Schlosser, New-York, Houghton
Mifflin, 2001. (383 pages)
"Youngsters sue McDonald's for failing to warn that fast
food can lead to obesity", Oliver Burkeman, The
Guardian, New York, Friday November 22, 2002.
"McDonald's toy supplier in Shenzhen uses underaged
kids", Associated Press, 08/27/00 22:15.
"Big News At Burger Joints: Chickens Rule The Roost"
Associated Press, April 1st, 2004, 16:19PM EST.
References
z
z
z
z
McDonald's and Corporate Social
Responsibility", Paul Hawken, Institute for
Food and Development Policy. April 25, 2002,
http://www.foodfirst.org/media/press/2002/mcdr
esponsibility.html.
http://www.mcspotlight.org/
http://www.brandsoftheworld.com/
http://www.mcdonalds.com