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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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McDonalds Global Strategy
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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McDonalds Global Strategy
Ray Kroc discovers
McDonalds [1954]
Kroc became the first
franchisee appointed byMac and Dick
McDonald in San
Bernardino , California.
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McDonalds Global Strategy
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 Global Strategy
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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McDonalds Global Strategy
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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McDonalds Global Strategy
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 Global Strategy
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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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.
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McDonalds 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.
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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McDonalds Global Strategy
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_Fogle8/13/2019 2009_11_2c3f0cea
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McDonalds Global Strategy
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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/Obesity8/13/2019 2009_11_2c3f0cea
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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 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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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 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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Technological Advantages
Touch Order Allows You To Place Order At
McDonalds Via Handset
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Technological Advantages
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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Technological Advantages
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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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
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Discussion Questions
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/8/13/2019 2009_11_2c3f0cea
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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.
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Discussion Questions
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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Discussion Questions
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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Questions for the Class
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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Questions for the Class
With the current Mad Cow scare, are you
more afraid of eating beef?
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Thank You!