1. McDonald’s Tanner Gilreath Anna Rendon Olivia Erwin Brandon Laviage
Chase Mueller Ashley Hoptay
Tanner Gilreath Anna Rendon
Olivia Erwin Brandon Laviage
Paige Stone

2. Overview
Analyzed McDonald’s and its three competitors, YUM! Brands, Burger King and Wendy’s, to assess the company’s standing in the industry.
Focused on the key company characteristics, its financial situation, each company’s organizational flexibility and culture, strategies used, and their ability to be able to compete in today’s market and economy.

3. Corporate Social Responsibility
Has become a way of doing business.
Understand that they must deliver responsible food to its consumers.
How it serves food.
Where the food comes from.
What people want from it.
Therefore, the company works closely with its suppliers, franchisees and employees to ensure products are safely delivered to consumers.

4. Corporate Social Responsibility
McDonald’s goes green:
Since 2000, the company has opened up multiple “green” restaurants.
Rebuilding restaurants with a more innovative and efficient design that will reduce the use of water and energy.
Enhancing its packaging – 82% of its packaging is made from renewable resources
“Closed Loop Hierarchy for Packaging and Waste”

5. Corporate Social Responsibility
McDonald’s is…healthy?
Three aspects involved: provide consumer-friendly nutrition information, bring consumers high-quality choices, and communicate responsibly
Offer salads, wraps, smaller portions and healthier sides. Zero grams of Trans fat in fried foods.
Can find all of the nutrition information on the Web. Also implementing a new packaging design where the nutrition information will be placed on the wrapper.
Strengthening its Global Children’s
Marketing Guidelines

6. Corporate Social Responsibility
McDonald’s makes its presence known:
Gets involved with its communities in four ways:
Ronald McDonald House
Sponsorships
Owner/Operator Involvement
Disaster Relief

7. Corporate Social Responsibility
Quality every step of the way:
Takes great prudence to ensure that every aspect of the supply chain positively contributes to the safety, quality and availability of its products.
Uses a Social Accountability program to uphold its strict standards for its suppliers.
Not afraid to leverage its size and influence to raise questions about the suppliers’ methods and to encourage improvement in their practices.

8. Forecasting and Speed of Response
McDonald’s plays a large part in its communities, and the company is constantly searching for new ways to get involved or help the environment. The company also tries to project future needs to lessen the impact that its business has on its communities.
McDonald’s is able to quickly respond to its communities’ needs and wants:
McDonald’s was the only quick service restaurant to make Health Magazine’s list of America’s Top 10 healthiest meals at limited-service restaurants”

9. Entrepreneurial Orientation
78% of McDonald’s restaurants are operated by franchisees.
Creates a strong entrepreneurial feel.
The only competitor with a larger mix of franchisees is Burger King – 90% of restaurants are operated by franchisees.
Very selective when granting franchises or licenses. Will not franchise to passive investors that do not appear capable of matching the goals and requirements that McDonald’s sets for all of its locations

10. Attraction and Retainment
Make that a McCareer please.
Supports development from the crew room to the board room.
Promotes from within.
Provides training for all levels.
Service level receive on the job training where they learn the technology as well as customer service techniques
Provide college level classes at Hamburger University for management training
McDonald’s Leadership Institute provides almost 200 employees from the McDonald’s system to partake in the accelerated programs and learn how to be a corporate leader in the company
Ranked as one of the Top 20 Global Companies for Leaders in 2007 by Fortune

11. Super Sizing Value Value menu: no value cost trade-off
Dollar Menu, Yen for Great Value in Japan
Maintain a supply of high quality ingredients
Ensured by the company’s size and strength over its suppliers
Variety and selection of menu items to satisfy all tastes
Research and Development is essential to growth
Have three food studios located in Munich, Hong Kong and Chicago where chefs test and create their new concoctions

12. Delivering Value
Convenience and accessibility are important aspects that bring consumers more value
Located in close proximity to each other
Found in areas with a high customer concentration
Expanding the number of 24 hour locations
Opening drive-thrus in areas such as Russia and China and adding double drive-thrus in the US
Kiosks in India and Indonesia
Delivery service in Singapore, Egypt and other Asian and Middle Eastern countries

13. Reimaging Value
Feel that its restaurants are the best way for the company to express its brand and create the ultimate customer experience
Renewed about 10,000 restaurants within the past five years
Design is contemporary and eco-friendly
Burger King is also re-investing in the design of its restaurants

14. Marketing and Promotions
Relevant marketing and promotions strengthen its connection with its customers and build brand awareness and loyalty
“I’m Lovin’ It” campaign
Promotions such as Monopoly and Uno evoke customer interaction and get them involved with the brand
Burger King is advertising more and is utilizing a more viral campaign

15. Financial and Accounting Analysis
Quantitative accounting disclosures are intended to effectively communicate the financial statements’ numbers
Certain legal manipulations and disclosures could give a company an unrealistic value as well as mislead its investors.
Tools
Financial Ratios

16. Ratio Analysis
It is used to show the resources a firm and its ability to cover their current assets with current liabilities.
The higher a firm’s current ratio is, the more able a firm is to pay off its liabilities.

17. Ratio Analysis
The quick asset ratio, or acid-test, uses the firm’s most liquid assets than can quickly be turned into cash for their book value amounts to pay off current debts.
The assets included in this ratio are cash, marketable securities, and accounts receivable.

18. Ratio Analysis
Working capital turnover is determined by dividing a company’s sales by its working capital: current assets less current liabilities.
It evaluates how efficient a company uses its working capital balance to create sales.

19. Ratio Analysis It simply gives profit as a percentage of net sales.
It shows how much of each dollar of product sold is profit.
By having a small percentage it shows that the company is not utilizing their resources well and their cost to produce the item are too high.

20. Ratio Analysis
The firm uses the previous year’s assets to better reflect profitability for the current year.
This is done because profits with the new assets will not be recognized until the next fiscal year and that is how it gives people a better understanding on how they either helped or hurt the company.

21. Ratio Analysis
The purpose of the Z-score is to help us make calculations that help us to understand where a company stands with their credit risk.
A company is considered to be bankrupt when their Z-score is below When a firm’s score exceeds 2.67, the firm is considered to have low risks in the bankruptcy and credit categories.

22. Marketing and Management
McDonald’s once focused on children for their advertising, but recent law suits and documentaries resulted in the company’s innovation and major changes to health related product ranges. Now more teenagers and adults rule the McDonald’s ad world.
McDonald’s had begun concentrating so heavily on expansion and growing big that it missed out on key factors like quality maintenance and R&D.
McDonald’s strategic plan is influencing their marketing efforts by building better brand transparency. They want their image to be recognized globally. They are enhancing the customer’s experience.

23. Marketing and Management
The change in the top managerial level has created a new wave in performance and major changes have been implemented to retain and sustain the brand quality and innovation. As the new CEO rightly quotes:
“The world has changed. Our customers have changed. We have to change too."
-James R. Cantaloupe,
Chairman and CEO, McDonald’s
Types of marketing mix that McDonald’s use to achieve their marketing goals are longer operating hours, everyday value meals, and optimizing efficiency in the drive-thru.

24. Business Life Cycle: McDonalds
1948: Richard and Maurice McDonald open the first McDonald's restaurant in San Bernardino, California.
1954: Ray Kroc gains the rights to set up McDonald's restaurants in most of the country.
1955: Kroc opens his first McDonald's restaurant in Des Plaines, Illinois; he incorporates his company as McDonald's Corporation.
1961: Kroc buys out the McDonald brothers for $2.7 million.
1963: McDonald's goes public.
1967: The company opens its first foreign restaurant in British Columbia, Canada.
1973: Breakfast items begin to appear on the menu, with the debut of the Egg McMuffin.
1974: The first Ronald McDonald House opens in Philadelphia.

25. Business Life Cycle: McDonalds
1975: The first McDonald's drive-thru window appears.
1985: McDonald's becomes one of the 30 companies that make up the Dow Jones Industrial Average.
1998: The company takes its first stake in another fast-food chain, buying a minority interest in Colorado-based Chipotle Mexican Grill.
1999: Donatos Pizza Inc. is acquired.
2000: McDonald's buys the bankrupt Boston Market chain.
2002: Restructuring charges of $853 million result in the firm's first quarterly loss since going public.
2003: McDonald's sells Donatos in order to refocus on its core hamburger business.

26. Business Life Cycle: Wendy’s
1969: Dave Thomas opens the first Wendy's restaurant in downtown Columbus, Ohio.
1972: Wendy's franchising begins.
1975: First international restaurant opens in Canada.
1976: Wendy's International, Inc. goes public.
1977: Company begins national television advertising.
1978: The 1,000th Wendy's opens in Springfield, Tennessee.
1981: Thomas makes his first appearance as Wendy's advertising spokesperson.
1984: Famous and award-winning "Where's the Beef?" ad campaign is run.
1986: James W. Near becomes president and COO and launches a major reorganization.
1995: Wendy's International acquires Tim Hortons, a Canadian coffee and baked goods chain.
1997: The 5,000th Wendy's restaurant opens in Columbus, Ohio.
2002: Dave Thomas dies; Wendy's International acquires a 45 percent stake in Café Express.

27. Business Life Cycle: Burger King
1954: James McLamore and David Edgerton establish Burger King Corporation.
1959: The company begins to expand through franchising.
1967: Burger King is sold to Pillsbury.
1977: Donald Smith is hired to restructure the firm's franchise system.
1989: Grand Metropolitan plc acquires Pillsbury.
1997: Grand Metropolitan merges with Guinness to form Diageo plc.
2002: A group of investors led by Texas Pacific Group acquire Burger King.

28. Business Life Cycle: KFC
1952: The Colonel begins actively franchising his chickenbusiness by traveling from town to town and cooking batches of chicken for restaurant owners and employees. The Colonel awards Pete Harman of Salt Lake City with the first KFC franchise. A handshake agreement stipulates a payment of a nickel to Sanders for each chicken sold.
1960: The Colonel's hard work on the road begins to pay off and there are 190 KFC franchisees and 400 franchise units in the U.S. and Canada.
1964: Kentucky Fried Chicken has more than 600 franchised outlets in the United States, Canada and the first overseas outlet, in England.
1966: The Kentucky Fried Chicken Corporation goes public.
1969: The Kentucky Fried Chicken Corporation is listed on the New York Stock Exchange.
1971: More than 3,500 franchised and company-owned restaurants are in worldwide operation when Heublein Inc. acquires KFC Corporation

29. Business Life Cycle: KFC
1979: KFC cooks up 2.7 billion pieces of chicken. There are approximately 6,000 KFC restaurants worldwide with sales of more than $2 billion.
1982: Kentucky Fried Chicken becomes a subsidiary of R.J. Reynolds Industries, Inc. (now RJR Nabisco, Inc.) when Heublein, Inc. is acquired by Reynolds.
1986: PepsiCo, Inc. acquires KFC from RJR Nabisco, Inc.
1997: PepsiCo, Inc. announces the spin-off of its quick service restaurants - KFC, Taco Bell and Pizza Hut - into Tricon Global Restaurants, Inc.
2002: Tricon Global Restaurants, Inc., the world's largest restaurant company, changes its corporate name to YUM! Brands, Inc. In addition to KFC, the company owns A&W® All-American Food® Restaurants, Long John Silvers®, Pizza Hut® and Taco Bell® restaurants

30. McDonalds Corporate Structure
Management gurus often cite McDonald’s corporate structure model.
The company's highly decentralized management runs its franchises.
McDonald’s uses a functional structure, with the Chief Executive overseeing five major areas of activities.
Franchise candidates must sign an agreement with the firm, which gives them the right to operate a specific McDonald’s location for a period of 20 years.

31. McDonald’s Corporate Structure Chart
CEO/Divisional Vice Chairman/Director
VP/Other Executive Officer
Chairman of the Board/Director
Geographical President
President/COO
President, West Division
Director
Senior Executive VP/Other Corporate Officer
President, Eastern Division
Executive VP/ Other Executive Officer
Senior VP/Comtroller
CFO/Senior Executive VP

32. McDonalds Corporate Culture
McDonalds vision statement is quality, service, convenience, and value (QSCV)..
No one portrays McDonalds culture more than Hamburger University, it is a place where Organizational culture is franchisees, managers, and assistant managers are indoctrinated into the culture that is McDonald's.
This structure allows McDonalds to export successfully not only its management system but a very distinct culture as well.
Inspectors continually reinforce McDonald’s culture and by contests to determine whom best reaches the standards McDonald's sets for all its franchises.
McDonald's manuals emphasize the organization's motto, QSCV, and they define every task an employee needs to know.
These manuals ensure that efficiency, predictability, and control are involved in production and customer service.

33. Yum! Brands Corporate Structure
Originally an accumulation of restaurant chain accounts put together for not only the addition of Pepsi fountain accounts, but for profit from food sales.
Chains were acquired and managed virtually independently, essentially skipping the usual corporate practice of bringing them in line with the rest of the business units. 
Now, the company operates its business through three geographical reporting segments: the US, the International segment and China segment.  
The US segment operates multi-brand restaurants, where two or more of the concepts, such as KFC, Pizza Hut, Taco Bell, Long John Silver's and A&W, are operated in a single unit.  
Outside the US the company and its franchisees use decentralized sourcing and distribution systems involving many different global, regional, and local suppliers and distributors.

34. Yum! Brands Corporate Structure Chart
Chairman
CEO and President Yum! Brands, Inc.
President, Yum! Restaurants International
Sr. VP, Chief Public Affairs Office, Yum! Brands, Inc.
CFO, Yum! Brands, Inc.
SVP, Gen Counse, Secretary, Chief Finance Policy Officer
Cheif People Officer
VP Public Relations
Direct Public Affairs
VP Worldwide Knowledge Transfer
Sr. Vice President Finance and Corporate Controller
COO and Cheif Development Officer
President of U.S. Brand Building
Managing Director of Europe, Yum! Brands
Chief Marketing Officer, Indian Subcontinent
Cheif Marketing Officer, Australia
Managing Director of Mexico
President and Chief Concept Officer, KFC
Chief Operating Officer, KFC, USA
President, Pizza Hut
Chief Operating Officer, Pizza Hut, USA
President, Taco Bell
Cheif Operating Officer, Taco Bell
Sr. Vice President, Investor Relations and Treasurer
Corporate Strategy and Treasurer

35. Yum! Brands Corporate Culture
Over the past 12 years, Yum! Brands success has been driven by their focus on building leading brands in China in every significant category.
They strive to drive aggressive, international expansion and build strong brands everywhere.
They try to dramatically improve U.S. brand positions, consistency and returns, driving industry-leading, long-term shareholder and franchisee value, and build a unique, fun culture led by people who love the restaurant business.
 They created the Yum! Dynasty Growth Model.
How We Win Together Principles are their corporate values and are built around a "People Capability First" philosophy.

36. Analysis
SWOT
Strengths
Weaknesses
Opportunities
Threats

37. Strengths Franchises Brand Recognition Product Uniformity
McDonald’s operates 31,377 restaurants with 20,505 of those restaurants being operated by private owners
Brand Recognition
Branding allows customers to recognize icons, thus becoming more brand loyal
Product Uniformity
Offering the same consistent product creates customer loyalty
Pricing Strategy
Value Menu

38. Weaknesses Saturation Public Perception
pricing wars against competitors has caused a decrease in revenue
Public Perception
unhealthy product offerings has lead to numerous lawsuits

39. Opportunities Market share Younger Generation
countries such as Latin America and the Caribbean’s, Europe, The Middle East and North America, Sub- Sahara Africa, and Oceana have very few McDonald’s chains, creating a huge untapped market
Younger Generation
tend to be on the go, and look for meals that are quick, cheap, and convenient, thus giving a huge opportunity to serve an adult crowd

40. Opportunities… Innovativeness Product Offering
Continuously using technological factors, perhaps text message ordering can influence revenue or joining the going green movement
Product Offering
Constantly seeking new product offerings allows new opportunities for growth and expansion of their brand recognition

41. Threats Economic Slowdown Casual Dining Restaurants Imitation
Recessionary period and global economic slowdown has led to currency losses, inflation or deflation
Casual Dining Restaurants
have decreased menu prices
Cheddar’s burger: $4.99
Imitation
new formats and new menu items are being imitated

42. Company Assessment Summary
Strategic Posture
Renovation of Exiting Restaurants
Marketing/Advertising
Technology, Locations
Product Offerings
Focus
High Marketing/ Advertising Cost
Investment of Location property
Implement Just-in-Time (JIT)
Increased Technology cost
Overall Cost Leadership
Modern facilities
Premium coffees
Added lounges
Differentiation
No marketshare of own company
Only focus on themselves
Defensive

43. Competitive Scope Global Scale
Local, regional, national, and international competitors
Makes up 2.4% of 575,000 total restaurants in U.S.

44. Strategic Intent Leader in QSR industry
Uses advertising, marketing, and public relations to promote brand image and focus on value, food taste, menu choice and customer experience

45. Market Share Objective
Focus on internal growth through expanding the number of restaurants as well as capturing new market share from other industries.
Ex: coffee sector
“Plan to Win”
Designed to bring more value to shareholders
Ex: flat screen TVs, internet

46. Competitive Position/Situation
Well-entrenched
Global leader
Keep position through expanding the number of stores, internal operations to new ventures, and customer experience.

47. Strategic Posture
Defensive Strategies - reactions to competition and to defend market share
Dollar menu
Value meals
Offensive Strategies - proactive approach to keep and secure its position as market leader
New market ventures
Customer loyalty

48. Competitive Strategy Differentiation Advertising and marketing
Recognizable name and logo
Social responsibility and commitment to community
Green movement
Safe and high quality meat
Technology
Speedee Service System