The operations and business model of McDonalds

The trading operations and line of descent model of McDonaldsMissionMcDonalds brand mission is to be our customers favorite erupt and way to eat. Our orbicular operations flip been reorient around a global strategy c completelyed the Plan to Win centering on the vanadium basics of an surpassing customer experience People, Products, Place, Price and Promotion. We ar move to improving our operations and enhancing our customers experience.This is from http//www.aboutmcdonalds.com/mcd/our_ factoricipation/mcd_faq/student_research.html?DCSext.destination=http//www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html13VisionWe en resourcefulness a render mountain chain that benefitably yields high- fiber, safe products without run interruption while supplement our leaders position to create a net benefit by improving ethical, environmental and economic outcomes. Ethical We envision purchasing from suppliers who win practices that ensure the health and safet y of their employees and the welf ar and humane intervention of animals in our fork out chain. Environmental We envision influencing the sourcing of our materials and ensuring the design of our products, their manufacture, distri andion and use pick at lifecycle impacts on the environment. Economic We envision delivering affordable viands, engaging in h nonp areilst change over practices, limiting the spread of agricultural diseases, and positively impacting the communities where our suppliers operate. We view this vision and its responsibilities holistically. As sourcing decisions are made, we consider our priorities for aliment safety, quality and costs, as puff up as our ethical, environmental and economic responsibilities. Our progress on beef and java sustainability illustrate how we are running(a) to bring this approach to life.This is from http//www.aboutmcdonalds.com/mcd/csr/ promulgate/sustainable_supply_chain/our_approach.html?DCSext.destination=http//www.abo utmcdonalds.com/mcd/csr/ reveal/sustainable_supply_chain/our_approach.html paygrade Blah,. Blah, blah..Operations and Business ModelMcDonalds is the worlds largest foodservice exchange chain. It operates to a greater extent or less 32,000 eaterys in over 100 countries and is unrivaled of the worlds largest food service retailing chain, preparing, and serving a range of food products and beverages. All restaurants are operated every by the company or by licensees, including conventional franchisees under franchise arrangements, and foreign affiliated grocery stores and schoolingal licensees under license check offments.The companys vexation is shared into four geographical fragments atomic follow 63, the US, APMEA (Asia, Pacific, Middle East and Africa), and other(a) countries and bodied. Other countries and corporate complicates Canada and Latin the States, as well as corporate activities and certain investments. McDonalds restaurants tolerate a standardized bill, although there may be geographic variations.McDonalds make outs their revenues in lead slipway Retail gross revenue, Franchise fees and lease agreements for property they give (leasing the property back to the franchisee)I DONT KNOW WHERE THIS CAME FROM..(I have this one Clint)This came from DataMonitor guild Profile retrieved 6/3/10 saved in the M Drive as McDonalds phoner Profile valuation The Ford reputation was about this short with no more.Financial and Performance valuationOutperforms the fabrication in revenue and net income growthHigher profit margins than the industry and the SP.Liquidity at heart range of competitorsLess levered than the rest of the industryHighly efficient in turning inventoryFinancials have been in general trending upwardhttp//moneycentral.msn.com/investor/invsub/results/compare.asp?Symbol=US%3aMCDEvaluation The combination of high margins and efficient inventory turnover has allowed McDonalds to outperform the rest of the industry by arou nd all accounts. The low debt and high interest coverage indicates that the company should non have difficulty in meeting its obligations. As a result, McDonalds was issued a credit rating of AA- by Moodys, the highest credit rating ever spirited(p) to a riotous food restaurant (http//quicktake.morningstar.com/stocknet/san.aspx?id=325610). Same store revenues have been change magnitude quarter over quarter and year over year, support by strong sales in countries other than the US. Despite the upstart turning point, McDonalds has performed well and seems poised to enceinteize on the opportunity.Macro Environment let out TrendsEconomyGlobal economic issues from the US stock market, to Greece, to Chinas economic subnormalityPotential short dollar/poor exchange rates vary market conditions per countryTechnologyDifferent cultures want different foods/ menus than U.S so must invest in RDPolitical/LegalEver ever-changing climates with 100 governments to deal withVaried laws (tra de, finance, safety, labor, etc.)Socio-CulturalThe rest of the world wants what the U.S. has and food is one of the itemsPressures to have healthier foodsDemographicsMore baby boomersRecent higher unemployment unfermented demographics to deal with (Brazil, Russia, India, China)GlobalizationPeople say they want to loose weight, but most people are gaining itNatural EnvironmentPressures to go spirt (packaging, reduced carbon footprint, etc.)ThreatsContinued contenderImpression they only sell unhealthy foodsPoor economic conditions and global unrestOpportunitiesExpand in the coffee (McCafe) marketContinue with healthier foods and lifestyles confederate with retail bonds (i.e. like Starbucks has done with grocery stores and Target)These are our thoughts, so no persona, agreeEvaluation Industry abstractMcDonalds is in the quick service restaurant segment and its defined as the sale of food and drink for nimble consumption either on the premises or in designated alimentation areas s hared with other foodservice operators, or for consumption elsewhere. Their main competitors are Burger world-beater and Wendys/Arbys. The global fast food market generated total revenues of $154.7B in 2008, representing a compound annual growth rate (CAGR) of 6.6% for the period spanning 2004-2008. The performance of the market is forecast to decelerate, with an anticipated CAGR of 5.3% for the five-year period of 2008-2013. Reference is the Datamonitor paperFive Forces Substitutes (Moderate) alkali cookingConvenience storesGrocery Stores (i.e. salad bar, pre-cooked diners, etc)Suppliers Power (Low)No uniqueness to products stabbing materials readily availableSwitching costs are low purchaser Power (High)Buyer IndependenceLow switching costslean to switchNew Entrants (Low)Local franchise may be impacted by competition, but non nationally/globallyToo oft capital needed to compete with McDonaldsHard to bear upon branding originatorRivalries (High)Little product differentiationL ittle price differentiation more competitorsThese are our thoughts, so no reference, agree I agree, unless you want to reference Grant textbook.Market segmentStrategic Groups / Competitors by Market (DM)Consumer Packages unsloped IndustryFood (Cargill, Inc., Nestle SA, The Proctor Gamble go with, Japan Tobacco, Inc., Unilever) unemployed and Arts IndustryHotels and Restaurants (TUI AG, Jardine Matheson Holdings Limited, Compass Group PLC, Sodexo S.A,., Burger King pile)Food serve (Compass Group PLC, Sodexo S.A., Loews Corporation, ARAMARK Corporation)Fast Food Restaurants (Yum Brands, Inc., Autogrill S.p.A., Chick-fail-A, Inc., Jack in the Box Inc., Wendys/Arbys Group)Kristie ensnare this..I found this at Datamart retrieved 7/10/10Competitor AnalysisMcDonaldsBurger KingWendy/Arbys dodgingCost leadership (low cost, industry wide) strategyStrategy is to offer menu variety at affordable prices such as Happy Meals, budget-minded Value Menu, espresso coffee drinks, fruit smoothies , bonus chicken sandwiches and salads, our premium sandwiches that come with chicken, or grilled chicken as a plectron in terms of managing caloriesRestaurant development strategy is to pick locations within the marketplace to expand its target customers such as restaurants in local anesthetic anaesthetic anesthetic neighborhoods as well as at airports, malls, toll ways, and colleges. (DM)Large home plate of operation and ability to customize menu provides the ability to penetrate coming(prenominal) markets with minimal effort and enhances its revenue generation capacity (DM)De-emphasize Partner Brands concepts in order to focus on the McDonalds brand (SP)Cost leadership (low cost, industry wide) strategyStrategy is to focus its product development and selling to customers in the 18- to 34-year-old male demographic. It has added a number of premium-priced items to its menu, including the Steakhouse Burger made with black Angus beef. (Hoovers)Uses a number of online marketing techniques, including viral videos, to reach its target auditory modality (Hoovers)Cost leadership (low cost, industry wide) strategy (WA, DM)Improving several plaza products such as sandwich buns, French fries and bacon by differentiating in quality in the QSR hamburger segment. (WA, DM)Focus on our unspoilt, never frosty beef and premium chicken. (WA, DM)Install a disciplined product development and testing process (WA, DM)ObjectivesCompete in the global fast food industry continue its Plan to Win corporate strategy that it commenced in 2003 (SP)Fixing operating inefficiencies in existing restaurants taking a more meldd while focusing on growth, with an emphasis on increase sales, margins and returns in existing restaurants and ensuring the right operating structure and resources are aligned with priorities that create benefits for customers and restaurants. (SP)Customize product to suit tastes and preference of consumers in local markets (DM)Well-positioned to expand global footprint, invest in reimaging program and deliver operations excellence every day.Marketing campaigns and menu options leave behind focus on the brand equities that provide a distinct competitive advantage flame-broiled taste, quality and size at affordable prices. (DM Wendy)Long-term strategies remain on naturally and committed to respond to an ever-changing consumer dynamic.Same-store sales growth by increase transactions and average check.Margin expansion through advanced usable execution and control of costs.Begin a rollout of a Breakfast menu to attract market share in day segment.New restaurant development with an emphasis on franchise growth.Expand internationally in markets such as Latin America, the Middle East, and Asia- Pacific.AssumptionsInternational segment has supplied a good deal of its earnings growth over the past ii decades (SP)Diversified geographic presence provides opportunity to gain from economic growth in emerging markets (DM)Restaurants sub-industry is negative and will continue as high jobless ratios and an on-going troubled housing market (SP)The full-service restaurant segment will be negative specifically for the restaurant locations in states where the housing markets prices are weak and unemployment is above the national average causing continued pressure on sales and customer preference for less expensive menu choices. (SP) contend consumer environment will continue due to high unemployment levels resulting in a reduction in out-of-home eating expenditures. choices385,000 Employees (SP)Cash 1,796 meg (SP)41,320 Employees (SP)Cash 122 Million (SP)67,500 Employees (SP)Cash 592 Milliom (SP)Kristie found this..everything in the boxes aboveI saved the friendship profiles on the M drive. I used the company profiles from Datamonitor (DM) for McDonalds, Wendys/Arbys Group, Inc, and Burger King Corporation retrieved 7/3/10.HooversBurger King Holdings, Inc. (15 July). Hoovers Company Records,54531. Retrieved July 3, 2010, from Hoovers Company Records. (Document ID 168241971).SPMcDonalds Corp. (20 July). Standard and Poors NetAdvantage Company Profile. Retrieved July 3, 2010, from Standard and Poors NetAdvantage Company Profile.Burger King Holdings, Inc. (20 July). Standard and Poors NetAdvantage Company Profile. Retrieved July 3, 2010, from Standard and Poors NetAdvantage Company Profile.Wendys/Arbys Group. (20 July). Standard and Poors NetAdvantage Company Profile. Retrieved July 3, 2010, from Standard and Poors NetAdvantage Company Profile.Evaluation Company/ instalment AnalysisWE PROBABLY pauperization TO CHANGE THIS/MAKE IT OURS, NOT SO MUCH FROM THE ANNUAL REPORT.Key ResourcesTangibleFinancial (cash securities, borrowing capability)Revenues egest $22,700 million2009 comparable sales increase marked the vith sequential year of positive sales in every geographic segment of our business.Physical (plant, equipment, land)Operated in over 100 countries 32,478 McDonalds restaurants80% of McDonalds rest aurants worldwide possess and operated by independent local men and womanNatural ResourceHas some agriculture operations in RussiaIntangibleTechnology ( balmyware, patent, counterpartright, trade secrets, data)Product/Menu Innovationcustomizes its product to suit tastes and preference of consumers in local marketscompanys product line in India comprise of non-beef based burgersdevelopmental licenseLocal entrepreneur owns the business, including control of the real estate, and uses their capital and local knowledge to build the McDonalds Brand and optimize long-term sales and profitability.The company collects a royalty, which varies by market, based on a percentage of salesReputation (brands, relationships)Well-established brand that appeals to all customers of all age groups and nationalities 1Provides acceptability in advanced markets 12009 6th place in the cabbage 100 global brandsPredictable value, family fun and familiar taste floricultureLeadership culture that embraces c hange and rejects complacencyContinually focused on what is working and then leveraging our scale around the world for the boilersuit good of their customers and their System.Human ResourcesSkill / know-how / Training at McDonalds UniversityRelationship force-out of the alignment between the Company, its franchisees and suppliers (collectively referred to as the System) has been key to McDonalds success over the years. This business model enables McDonalds to consistently deliver locally-relevant restaurant experiences to customers and be an integral part of the communities we serve. In addition, it facilitates their ability to identify, implement, and scale innovative ideas that meet customers changing postulate and preferences.MotivationMcDonalds customer-focused Plan to Win-which is centered around being better, not full bigger-provides a common framework for our global business yet allows for local adaptation. Through the execution of multiple initiatives surrounding the fiveK ey drivers of exceptional customer experiences-People, Products, Place, Price and Promotion-they have heighten the restaurant experience for customers worldwide and grown sales and customer visits in each of the last six years. This Plan, coupled with financial discipline, has delivered strong results for shareholders.Capacity for communication and collaboration cross-fertilization of ideas and innovations, our leaders are better able to assume upstart challenges and responsibilities on behalf of the Company.Kristie found this aboveFound this on McDonalds Annual Report 2009 Retrieved 6/4 Saved the file in the M Drive as McD_2009_AR_Final_032910..Capabilities/Value ChainPrimaryInbound LogisticsNo difference from competitionOperations (Competitive Qualifier)Makes food as fast as competition outgoing Logistics (Competitive Qualifier)Located in Metro areas, easy to drive into/out of, one on every corner (per se)Marketing/Sales (Value Add)Gives customers more options (hamburgers, sala ds, coffee, deserts, etc.) on with free Wi-Fi, and is more recognizable than competitionSecondaryInfrastructureDid not muster and advantage or disadvantageHuman Resource care (Value Add)Has McDonalds University for Management, others do notTechnology (Value Add)Come out with new products starting. I.e. orotund Mac, Breakfast foods, coffee, now smoothiesProcurement (Competitive Qualifier)Owns/grows little to none, buy and assembles everythingCustomer answerThey have Customer Service like the competitionOur thoughts..Core Competencies The collect of resources and capabilities that add value to a customer and may serve as a source of sustainable competitive advantage. It is answered by the follow accomplished Yes. McDonalds is a global company that started over 70 years past and is still growing. Tremendous branding.sustainable Yes. They actually grew and made profits during the recession of 2008 and continue to outpace the competition by nearly 8 crinkle over Wendys/Arbys and 10 fold over Burger King REFERENCE http//www.dailyfinance.com/quotes/mcdonald-s-corporation/mcd/nys irreproducible the products, yes, the experience no. They have come out with new products first (i.e. competitive coffee, healthier foods, etc.) and have the branding that the competitors grasst touch. Ronald McDonald is second to Santa Claus in recognition.Our thoughts..(one reference above)Evaluation VII. Corporate Social Audit..This was less than a page for FORDthat is because they know what they are doing and I dont lol.THINK WE NEED TO SCALE THIS DOWN, APPLY TO CONCEPTS IN THE BOOK. MAKE IT NOT FROM MCDONALDS VIEW, BUT OUR VIEW.sustainability contrive to improve conditions for farm workers in the Florida tomato industry in 2007, which in turn promotes good environmental practices in its land-based agricultural supply chain and makes the farm a sustainable business. Although McDonalds purchases only 1.5% of Floridas tomatoes annually, McDonalds and its suppliers institut ed industry-leading grower standards that improved working conditions in these farms and made the farm a sustainable business.http//social-corporate-responsibility.suite101.com/article.cfm/corporate-social-responsibility-at-mcdonaldsFlagship Farms Initiative (FAI) in Europe. The program showcases seven progressive farms employing innovative farming practices across Europe and carries out research into how ethical farming practices can be compound into commercial farming systems.http//social-corporate-responsibility.suite101.com/article.cfm/corporate-social-responsibility-at-mcdonaldsSustainable Fisheries program which is in collaboration with the Sustainable Fisheries Partnership. This program defines sustainability standards that guide all of McDonaldss purchases worldwide for wild-caught fish that goes into making those Fillet-o-Fish and make the relevant fishery a more sustainable business.http//social-corporate-responsibility.suite101.com/article.cfm/corporate-social-responsibi lity-at-mcdonaldsIn 2005, the affectionateness launched a new unique educational opportunity, in partnership with fast food giant McDonalds, giving Haas MBA students first-hand exposure to the myriad CSR challenges businesses face on a daily basis. The program is known as the McDonalds Research Fellows in Corporate responsibility (CSR) Program.Through research, stakeholder engagement and intensive field experiences, a globally diverse squad of second-year Haas MBA students conduct a dark stakeholder engagement theatre of operations on McDonalds CSR activities giving the company a fresh perspective and new insights into its business. As part of McDonalds Open Doors program, the main tendency of the CSR Fellows program is to expose the students to McDonalds business and create opportunities for the company to engage and interact with various stakeholders.The corporate-sponsored program provides research fellowships to each student. Recipients are known as McDonalds Fellows. The fellows work closely with a faculty director on the study and produce several key deliverables that may be used loosely and at the discretion of McDonalds (web, companys corporate responsible reports, etc.).http//responsiblebusiness.haas.berkeley.edu/McDonaldsCSRFellowsProgram.htmlEducate and communicate with our supply system about sustainabilityThrough the use of targeted communication tools, an internal website, and readying opportunities, we have achieved a greater understanding of, and alignment around, sustainability, including how it drives our business.Continue to integrate environmental considerations into our packaging design through rollout of our global packaging carte du jour into our gild largest marketsThe Eco-Filter 2.0 (our packaging scorecard) has been implemented in each area of the world. promotional material designers have been trained in its use. The scorecard is being used to comprise environmental considerations, in addition to other business criteria.I ncrease the number of Hamburger University certified restaurant managersWe continue to focus our efforts on increasing the numbers of restaurant managers who are HU graduates with positive success. The percentage of restaurants in our enlighten nine markets with managers who were graduates of HU in 2008 was 93.3%.Develop a comprehensive global forestry policy that will apply to all products we purchaseWe developed a global Sustainable Land Management Commitment (SLMC), using a exact process that acceptd global internal, supplier, and NGO input. Initial communications efforts are focused internally and with our supplier community.Measure environmental impacts in our supply chain By the concluon of 2009, the Environmental Scorecard (ES) should be completely rolled out to all of our direct suppliers of beef, poultry, pork, potatoes and buns in McDonalds top nine markets. The ES measures water, energy, waste and air emissions metrics and promotes continuous improvement. In addition , an sign estimate of our supply chain carbon footprint is underway and will be completed in early 2010.Further rollout of our global forestry standards for consumer packaging, expanding into other Areas of the World, specifically the U.S. and Asia Pacific, Middle East, and Africa (APMEA). The APMEA market has partially implemented our forestry standards for consumer packaging, with full word meaning planned by the end of 2009. As of the end of 2008, the North America market had completely rolled out the standards.interpreted from McDonalds Corporate Responsibility Online Report, PAGE 2 I saved a hard copy of the report on the M Drive. Retrieved 7/1/10http//www.aboutmcdonalds.com/mcd/csr/report/overview.-RightParaContentTout-43872-ReportsLinkList-44436-File1.tmp/McDonalds%202009%20Global%20CR%20Report%20Overview.pdfInnovative menuIn many markets, customers can mix and match main course, side beverage and dessert choices to create custom-tailored Happy Meals. yoghourt desserts wit h fruit are too available in most of the major markets, as are sugar-free soft drinks. 100% fruit juice is also on a number of menus worldwide. Market-level offerings includeMcDonalds France offers a choice of entres, three side dishes, fruit bags, nine beverages and four desserts. Sides include cherry tomatoes and two types of potato offerings. Beverages include bottled water, two juice options with no added sugar, and two soft drinks with no sugar. For dessert, customers may choose a drinkable applesauce, a yoghurt drink or sliced fruit. Happy Meal choices in the UK include cultivated carrot sticks, bottled water, juice, a soft drink with no sugar added, on with a fruit bag side/dessert and semi-skimmed, organic milk. In Hong Kong, Happy Meal choices include whole grain corn as side and for beverages, juice, low- fat milk, or soy milk. In the U.S., Happy Meals can be ordered with Apple Dippers and 100% apple juice or 1% low-fat milk as a beverage.McDonalds Australia Happy Meal offerings include the Seared Chicken Snack Wrap, Apple Slices, Apple juice, Low spicy Calcium Enriched Chocolate Milk and a Sparkling Fruit Juice Drink (Apple Blackcurrant).Taken from McDonalds Corporate Responsibility Online Report, PAGE 11 I saved a hard copy of the report on the M Drive. Retrieved 7/1/10Our Global Advisory Council (GAC) is an international team of independent experts assembled by McDonalds to provide us with professional guidance in the areas of nutrition and childrens well- being. The GAC plays a pivotal role in helping us to continuously evolve our thinking and approach in these areas. GAC members provide us with valuable insights, direction and recommendations about how to continue delivering a more advantageous and valuable experience to children and families. Adam Drewnowski PhD, MA Prevention Treatment of Obesity, University of working capital at Seattle, WA Paul GatelyMcDonalds makes charitable contributions through the Ronald McDonald House Chariti es (RMHC) which aims to create, find and support programs that directly improve the health and well being of children. fit to Clara Carrier of Ronald McDonald House Charities, in particular, the Ronald McDonald Care Mobile attempts to ensure that children in vulnerable communities can receive state-of-the-art medical and dental treatment to improve their health and strengthen the whole family. This health care on wheels program attempts to change childrens lives and improve communities along the way.http//social-corporate-responsibility.suite101.com/article.cfm/corporate-social-responsibility-at-mcdonaldsAccelerate and expand food and beverage choices for kidsWe remain committed to working with our suppliers and partners to test and introduce new food and beverage items for kids on a market-by-market basis. In Spain and Australia this year we grow the choice of Happy Meal entre items with the introduction of a new kids sized grilled chicken snack wrap, while in Portugal we launched carrot veggie rolls. On the beverage front, we introduced new fruit beverages across Latin America and in Australia and continue to look for other refreshing options appropriate for kids.Continue to enhance childrens well-being through programs and initiatives that provide fun with aPurposeWe have leveraged the characters from our Happy Meal promotions to encourage fruit, vegetable and dairy farm purchases and to inspire kids to be active and creative and will continue to do so in the coming years. In 2008, many McDonalds markets, including Australia, Brazil, China and Japan, created stout opportunities for kids to experience the Beijing Olympics, whether it was as an athlete escort at the Games or sponsoring local athletic initiatives. Along with continuing to support local grassroots efforts, we use Ronald McDonald at restaurants to encourage kids to participate in activities that activate their body, mind and spirit.Continue to provide useful nutrition information in ways mos t relevant to todays consumersIn many markets around the world, we have enhanced our merchandising efforts to make it easier for parents to make balanced food choices for themselves and their kids. In all of our top nine markets, we continue to invest in making nutritional information available in the store, as well as online.Taken from McDonalds Corporate Responsibility Online Report, PAGE 12 I saved a hard copy of the report on the M Drive. Retrieved 7/1/10VIII. Competitive Position.this is the box (low cost, differentiator, etc.)Low Cost differentiatorBroadFocusedI now think they are in this box. They are definitely focused of just fast food, yet they are not always the lowest. They want people to visit them because the have the surmount fries, the best coffee, wi-fi, etc.I sent Bryant a message on this.These are our thoughts..IX. Corporate Strategy Clint working onVertical integrationPartially or QuasiFranchise provide portion of capital required by initially investing and rein vesting in the business over timeOwns the land and buildings or secures long-term debt leases for both McDonalds operated and conventional franchised restaurants sitesThese are our thoughts..Geography/International Strategy Clint working onLines of Business outcome of diversification NoneWhat kind of diversification NoneHow do they do it NoneExperience (good/bad) NoneFuture (when/where) NAThese are our thoughts..Evaluation StructureOrg structure.REFERENEC found in the 2009 annual Reporthttp//www.aboutmcdonalds.com/etc/medialib/aboutMcDonalds/investor_relations0.Par.6540.File.dat/McD_2009_AR_Final_032910.pdfEvaluation XI. Strategic RecommendationsWill be our thoughts.