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McDonalds Global Strategy

Group One

Nov. 2, 2009

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Benny

M987Z219

Nadia

M987Z250

RachelM987Z226

Sonny

M987Z261

Christina

M987Z237

FebbyM987Z248

Huy

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Brief History of McDonalds

The first McDonald's was built in 1940 by the McDonaldbrothers (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 theirbusiness 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.

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Ray Kroc discovers

McDonalds [1954]

Kroc became the first

franchisee appointed byMac and Dick

McDonald in San

Bernardino , California.

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In 1955 , Ray Kroc opened his

first restaurant in Des Plaines ,

Illinois (near Chicago) , and the

McDonald's Corporation was

created .

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McDonalds 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

McDonalds serves nearly 50 million customers each day

McDonalds 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, McDonalds sold its one billionth hamburger

McDonalds is listed on the New York, Frankfurt, Munich, Paris and Tokyo

stock exchanges

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The first McDonalds Drive-Thru opened in Sierra Vista,

Arizona in 1975

Happy Meals were added to McDonalds menu in 1979

McDonalds launched the new worldwide Balanced Active

Lifestyles public awareness campaign in 2005

McDonalds celebrated its 50th Anniversary on April 15,

2005

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1971 McDonalds really starts going global

Asian: Tokyo Ginza District, Japan

European: Netherland, Munich, Germany

1967 - Canada & Puerto Rico (first restaurants outsidethe U.S.)

1971 - Tokyo, Japan, Amsterdam, Netherlands & Sydney,

Australia

1979 - Rio de Janeiro, Brazil

1990 - Moscow, Russia & China

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McDonalds, 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.

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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.

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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.

McDonalds Subway

Founded 1940 1965

Industry Restaurants Fastfood

Revenue US$ 22.6

billion (FY

2008)

US$ 9.0305

billion

(FY 2008)

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Subway, riding high on the marketing message of healthyfast food, will overtake McDonalds 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 andeating 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 ahealthy 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.
http://en.wikipedia.org/wiki/Jared_Foglehttp://en.wikipedia.org/wiki/Super_size_mehttp://en.wikipedia.org/wiki/Super_size_mehttp://en.wikipedia.org/wiki/Super_size_mehttp://en.wikipedia.org/wiki/Super_size_mehttp://en.wikipedia.org/wiki/Super_size_mehttp://en.wikipedia.org/wiki/Super_size_mehttp://en.wikipedia.org/wiki/Jared_Fogle

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PEST ANALYSIS

To analyze the current status of McDonalds

corporation, we chose to use the PESTmethod to evaluate the following categories

P Political

E Economic

S Social

T Technological

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Political Challenges

Health and Safety Guidelines

The director of the obesityprogram 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 fatsand portion

sizes
http://en.wikipedia.org/wiki/Obesityhttp://en.wikipedia.org/wiki/Children's_Hospital_Bostonhttp://en.wikipedia.org/wiki/Children's_Hospital_Bostonhttp://en.wikipedia.org/wiki/David_Ludwighttp://en.wikipedia.org/wiki/Weight_gainhttp://en.wikipedia.org/wiki/Center_for_Science_in_the_Public_Interesthttp://en.wikipedia.org/wiki/Food_energyhttp://en.wikipedia.org/wiki/Trans_fathttp://en.wikipedia.org/wiki/Trans_fathttp://en.wikipedia.org/wiki/Food_energyhttp://en.wikipedia.org/wiki/Center_for_Science_in_the_Public_Interesthttp://en.wikipedia.org/wiki/Weight_gainhttp://en.wikipedia.org/wiki/David_Ludwighttp://en.wikipedia.org/wiki/Children's_Hospital_Bostonhttp://en.wikipedia.org/wiki/Children's_Hospital_Bostonhttp://en.wikipedia.org/wiki/Obesity

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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 foodpackaging 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

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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 thetarget of terrorist group and

attack.

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Economic Challenges

McDonalds must consider economic

challenges when expanding internationally.

Low set up costs = rapid expansionOne of the challenge for fast food industry is that to keep the

price is low for the customer.

Franchising facilitates set ups

McDonalds corporation provides financing assistance and

training for new franchise owners to manage cash flow

and keep businesses profitable.

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Social Challenges

From the research plan McDonaldsprofits dropped from $1.977 milliondollars 2000 to $893 million dollars in2002.

The main reason is the consumersworries had greatlyincreased with health fears ofincreasing obesity

so customers now opted for more

healthier options like subwaywhichoffered more of a variety for healthconscious customers.

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Social Considerations

To ease customers concern about health issues,

McDonalds 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.

McDonalds 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.

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Social Considerations

Emphasis on food safety:

Mcdonalds 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

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Technological Advantages

McDonalds has taken advantage of

technology to streamline their processes and

improve efficiency. Through technology enhancements such as FPI'sHelp Desk Service, network and applicationconsolidation, and other technology

implementations, operations of the company

are greatly improved.

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Touch Order Allows You To Place Order At

McDonalds Via Handset

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The customers can place their order directlyfrom their tables, dubbed as Touch Order.Its the first self-ordering system in the world

to use RFID*

Technology

Spotlight:

McDonald's tests

Speedpasscashless payment

system

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McDonalds has also

implementedtechnology toimprove supply chain

management, andallows customers toaccess thisinformation to make

more informeddecisions about whatthey eat.

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STRATEGY RECOMMENDATIONS

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Recommendations for McDonalds

More Healthy Choices McDonalds should develop menu choices that are

healthy and socially acceptable.

It is possible to develop a menu that people will enjoy andthat also fits into the original Speedy Service model the

company introduced in the 1950s.

Use local food sources where possible.

Using local sources decreases the time to market, andalso decreases the use of fuel to transport goods.

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Recommendations

Locally focused menu choices

McDonalds in India has specific menu items For the vegetarian market;

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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 gettheir picture taken with the infamous Ronald McDonald.

McDonald's is growing faster in China than in the United States.

McDonalds owns & operates more than 600 stores across 105

cities in China.

More than 100 more McDonald's stores will be added annuallyto Chinese cities within the coming years.

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Recommendations

While offering the basic burger andfries, McDonalds in China also offers:

Szechuan-style spicy chicken wings

Seafood Soup Rice

Oriental Sauces

Taro and Red Bean Dessert

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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

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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

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Companies that has failed doing global

strategies:Coca-cola has been banned by Venezuela, because the company

didnt 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
http://www.reuters.com/http://www.reuters.com/http://www.medicalnewstoday.com/http://www.medicalnewstoday.com/http://www.reuters.com/http://www.reuters.com/

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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.

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What are the critical success factorsin developing a global brand? Whatadditional factors would you

consider to be necessary indeveloping a successful global e-business brand?

A global brand must be universal in that it appeals to basic

human wants and needs without being specific to a countryor 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

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What are the main challenges that arefaced by international managers inmanaging and controlling a globalmarketing strategy? What advice wouldyou 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 specificwants 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.

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Conclusion

McDonalds should continue to expand

internationally, but be mindful of the local dietaryneeds and desire of people to eat a healthybalanced diet.

The competition from Subway is importantto consider, but there is still a large gap

between store earnings. McDonalds

stores earn around $2 Million each, while

Subway stores earn around $445,000. Aspeople begin to understand that the

healthy alternative offered at Subway

can be had at McDonalds, there are few

reasons to go elsewhere.

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Questions for the Class

Do you feel that McDonalds

food is unhealthy and toxic, or isit more like a treat to be

enjoyed on occasion?

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Is there anything specific you would like to see

added to the McDonalds menu in your

countries to appeal to your specific tastes?

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With the current Mad Cow scare, are you

more afraid of eating beef?

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Thank You!

2009_11_2c3f0cea

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