Business Strategy of McDonald's | Assignment

TABLE OF CONTENTS
1.0 EXECUTIVE SUMMARY……………………………………………………………… 3
2.0 INTRODUCTION………………………………………………………..……………… 4
2.1 MCDONALD’S HISTORY…………………………...…………………………… 4
2.2 MCDONALD’S LOGO…………………………………………………...……….. 6
2.3 MCDONALD’S VISION & MISSION…………………………………………..... 7
2.4 MCDONALD’S MANAGEMENT…………………………………………...…… 8
2.5 MCDONALD’S PRODUCT………………………………………………...…….. 9
3.0 LITERATURE REVIEW………………………………………………………………... 10
4.0 STRATEGY PLANNING……………………………………………………………….. 14
5.0 RECOMMENDATION & IMPLEMENTATION STRATEGIES……………………… 15
6.0 CONCLUSIONS………………………………………………………………………… 15
7.0 REFERENCES…………………………………………………………………………... 16

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1.0 EXECUTIVE SUMMARY
McDonald’s has become the largest restaurant chain in the world with the majority of over 90% of
these stores run as franchises, with over 36,000 stores in over 100 countries. As they quote it: “The
power of our franchisees, suppliers, and employees working together toward a common goal are what
makes McDonald’s the world’s leading quick-service restaurant brand”. McDonald's founder, Ken
Croc defined its value proposition this way: “McDonalds stands for friendliness, cleanliness,
consistency, and convenience”. The company basically has two profit formulas, namely one for a
company-owned restaurant, where it gets all the revenue and bears all the costs, and one for a franchise
restaurant, where it gets a rental fee, and royalty fees that depend on a percentage of the franchise sales.
McDonald’s was essentially one of the first restaurants for the creation of fast food. This set up
McDonald for success because their system of producing foods was at a super-fast rate. Which
benefited their brand name tremendously, bringing in tons of customers. As their reputation grew for
quick food, they extended to grow their company, now being the most well-known fast-food restaurant
in the world. McDonald’s was essentially one of the first restaurants for the creation of fast food. This
set up McDonald’s to succeed because their food production system was at a very fast pace, which
greatly benefited their brand, bringing in many customers. As their reputation grew for fast food, they
expanded to grow their company, now the most famous fast food restaurant in the world. McDonald’s
best system for generating revenue is to own real estate, and since their company has grown so large,
they have opened up new locations around the world. They have a comfortable and friendly atmosphere
with great parking, playgrounds, restrooms, and sometimes even free newspapers, which ultimately
attracts many customers as well. With the ability to buy properties and buildings around the world and
also having several places in one area attracts a lot of attention from the public.
McDonald brothers San
Bernardino McDonald’s
restaurant 1948-1955.

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2.0 INTRODUCTION
2.1 MCDONALD’S HISTORY
The establishment of McDonald's first began in 1940 when brothers Maurice and Richard
McDonald opened their first restaurant in San Bernardino, California. McDonald brothers turned
their restaurant into a hamburger and milkshake restaurant located in San which was
originally selling products like burgers, fries and shakes for half the price and in half the time of
competing restaurants. Ray Kroc was the exclusive distributor of a milk shake maker called the
Multimixer and heard how well the McDonald brothers used their Multimixers to serve their
customers. He met with them and obtained the franchise rights from them to operate a
McDonald’s restaurant.
In 1955, Ray Kroc founded the McDonald's Corporation and opened the first restaurant
in Des Plaines, Illinois. By early 1960’s he had already opened 200 restaurants throughout USA
and also brought the McDonald hamburger share of the business for $3 million. By 1965 with
over 700 restaurants open, the company became McDonald’s Corporation with the company’s
first offering on the stock exchange (History of the Golden Arches 2010). It wasn’t long before
McDonald’s also captured the attention in several other countries. Throughout the company’s
growth, Kroc managed to maintain a balancing act, imposing system-wide standards while still
an entrepreneurial spirit that welcomed ideas from all levels.
Founder of McDonald: Richard McDonald, Maurice McDonald & Ray Kroc
And the rest, as they say, is history. McDonald's has grown into the largest restaurant
organization in the world. Ray Kroc was chairman of the McDonald’s corporation from 1968
until his death in 1984, but his legacy lives on. Its success story continues with the families of
employees, franchisees, and McDonald’s suppliers. His commitment, dedication, and
accomplishments live on in McDonald’s restaurants around the world.

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Newspaper advertisement announcing the
opening of Ray Kroc’s first McDonald’s.
McDonald’s franchise was first brought to Malaysia in the early 1980s by Tan
Sri Dato’ Vincent Tan of the Berjaya Corporation Group in a joint venture under the name Golden
Arches Restaurants Sdn Bhd. The first McDonald’s restaurant was opened in Jalan Bukit Bintang,
Kuala Lumpur in 1982, and the chain was managed by Mohamad Shah bin Tan Sri Abdul Kadir.
After more than 20 years, the franchise returned to McDonald's Corporation which directly
operated the Malaysian operation until the transfer of rights to Lionhorn. While McDonald’s
Corporation manages its operations in Malaysia, the franchise is open to Malaysians to operate
McDonald’s restaurants in selected areas, but that option does not appear to be available right
now.
The first McDonald in Malaysia

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2.2 MCDONALD’S LOGO
The world’s largest chain of fast-food restaurants, McDonald’s is better known for its logo than
its appetizing food. A significant part of the success of McDonald's is associated with its striking
logo design. Well known as the Golden Arches, the McDonald’s emblem has a great story that
should inspire every graphic designer. The journey of McDonald's logo begins with the rapid
growth of its business.
Logo 1940 Speede Logo Service: 1948
Logo 1948 – 1953 Logo 1953
– 1960
Logo 1960 – 1968 Logo 1968 – 2003,
2010 until present
Logo 2003 – 2010

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2.3 MCDONALD’S VISION & MISSION
“McDonald's mission is to be our customers' favourite place and way to eat – with inspired people
who delight each customer with unmatched quality, service, cleanliness and value every time.”
McDonald’s mission is to make delicious feel-good moments easy for everyone. This is how they
uniquely feed and foster communities. In this mission statement, McDonald’s Company
emphasizes becoming the favourite of target customers. Based on this aspect, the major
determinants of the business is customer’s preferences For instance, McDonald’s has develop its
menu and recipes in order to satisfy the consumers’ preferences. This is to achieve the company’s
mission which is to become the customer’s favourite place to eat. The components of this mission
statement focus on two points which are becoming the favourite place and becoming the favourite
way. As a fast food service business, the company optimize productivity and customer experience
by developing restaurant designs and layouts. The menu development, helps in making the
company’s restaurants and franchised locations the favourite place to eat and drink.
Meanwhile, the “favourite way” component of the mission statement shows that the
company aims to influence people on how to eat and drink.
McDonald's vision statement is “to move with velocity to drive profitable growth and
become an even better McDonald's serving more customers delicious food each day around the
world.” The statement reveals the growth potential and development trajectory of the company. The
main components of this vision statement are moving with velocity to drive profitable growth,
become an even better McDonald’s, and also serve more customers delicious food each day around
the world. This vision statement clearly shows that the business aims to grow and expand its
operations. This can be done by opening more business locations and improving operational
efficiency to improve profit margins. Then the vision statement also focuses on improving the
business such as product development, marketing, franchising, and human resource
development. In conclusion of this vision statement, the company expects growth and an overall
enhancement of the various areas of the fast food restaurant chain business.

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2.4 MCDONALD’S MANAGEMENT
The backbone is the Brand, and always has been, a commitment to a set of core values that define
who they are and the way they run their business and restaurants. Those values have been
practiced on a daily basis and used to make decisions whether big or small; McDonald’s has been
defined as a brand that can be trusted by the people. The value is the filter through which all
business decisions are made because actions are greater than words. The revitalized strategy is
supported by a focus on running great restaurants and empowering the public.
Meeting the basic needs of customers is at the core of what they do, and they do it by
leveraging their execution strengths. They will improve public practices to ensure people feel
welcome, valued, and part of the McDonald’s community, which they live with their values every
day and are committed to fostering a safe, respectful and inclusive workplace, providing quality
employment, and creating opportunities for all.

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2.5 MCDONALD’S PRODUCTS
McDonald’s mostly sells hamburgers, a variety of chicken, chicken sandwiches, fries, soft drinks,
breakfast dishes, and desserts. In most markets, McDonald’s offers salads and vegetarian items,
wraps, and other local foods. On a seasonal basis, McDonald's offers the McRib sandwich.
Products are offered either as “dine-in” (where customers choose to eat at a restaurant)
or “take-out” (where customers choose to pick up food from the premises). "Dine-in" meals are
provided on a plastic tray with a paper insert on the floor of the tray. "Take-out" meals are usually
delivered with the contents enclosed in a distinctive McDonald's-branded brown paper bag. In
both cases, individual items are packaged or boxed as appropriate.
McDonald’s products

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3.0 LITERATURE REVIEW
Like other Company’s, McDonald’s is experiencing draw backs thanks to the novel coronavirus,
however, the quick service franchise are surviving through various strategies consisting of innovation
and adaptation. The main subsiding strategies include standardization and adaptivity. By offering
identical food products throughout the globe such as their famous chicken nuggets, McFlurry’s,
McChicken’s, Filet-O-Fish’s and happy meals, they display a strong company image, while helping
build economies of scale. Whereas their adaptivity methods refers to localization, where they recognize
local cultures and traditions in order to cater for their specific requirements and needs. As a result, this
enables the company to have a wider reach world-wide.
In the role of a global brand, McDonald’s also presents innovation throughout many different
countries where there procedures and products vary. For example, it is a known fact that Germans love
to have a beer with their meal. In response to this, McDonald outlets in Germany offer beer within their
restaurants. This highlights how the McDonalds brand adapts to global customs and traditions,
ultimately maximizing profits and supporting the consumer’s traditions. On the other hand, McDonalds
offers curly fires along with a ‘Grilled Chicken Burger’ and a Chinese horoscope with the 12 animals
signs on Chinese New year. This emphasizes acknowledgement of country traditions and/or cultures.
In spite of corona virus, McDonalds maintains this same mindset. Australia, for example, are
having difficulty supplying general household items such as a bread and milk on their shelves; thus,
McDonalds in Australia are offering these items to consumers via their drive through. This underlines
convenience and innovation, which the McDonald’s brand displays globally. Exchange rates don’t
majorly impact franchises such as McDonalds due to the fact most of their supplies around the globe
are sourced within that country and not imported or exported globally, therefore exchange rates won’t
affect the company on that front. For example, when other franchises pay a license fee from another
country, (Let’s say Japan) they have a different currency (Yen). This would impact the company
because if the yen were to weaken against the USD, McDonalds would receive a smaller amount in
USD, for the same earnings of the franchise. This is due to the fact the dollar has weakened/decreased
compared to all the other countries in the world, implying that they’re earning more than their other
overseas operations than they were when the dollar was higher. Currently, the AUD exchange rates are
dropping with the AUD normally being at $0.77 but currently sitting on $0.65. Dropping exchange
rates can result in a possible recession where exports become cheaper and imports more expensive.
However, as stated previously, McDonalds sources most of their products from local suppliers so this
won’t affect McDonalds in this aspect. McDonald’s also protects their intellectual property globally
including trademarks, service marks and all graphical elements such as the feel and look of company.

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McDonald’s utilize many different resources on a day to day basis in order to keep operations
operating and at peak. The main different sources that McDonald’s require in order to run its restaurants
include natural, capital and labor resources. Each of these factors are vital to running a successful
business and need to be inspected regularly to determine any necessary tweaks in business planning in
attempt respond to any unprecedented situations or events in relation to corona virus. Nonetheless,
McDonald’s 3 resources can be further broken down into 3 different sections; packaging, distribution
and production. Distribution is recognized as a way in which something is shared among a group or
spread over an area. Natural resources such as metal are used to create cash registers and other cooking
equipment within the restaurant. Additionally, milk and fire are also essential natural resources as it
allows dairy products such as ice cream to be sold and grills to be used. Grills, ice-cream machines and
cashier registers are all examples of McDonald’s capital resources as they are pieces of machinery that
produce goods and perform services for the business. It also maximizes the efficiency of labor
resources. Labor resources are often the employees and managers of the business that provide their
skills, effort and knowledge to the business.
Thus, natural resources are used to create and run capital resources which are further managed
by labor resources. All these capital resources aide in the distribution of food to McDonald’s consumers.
Dairy Australia has responded on their website to Covid-19 questions and concerns where they
announced that there is no evidence that “Covid-19 can spread via live stock or food product” and that
“they have well established work arrangements to mount a suitable response to Covid-19”. This
indicates that McDonald’s have no issues in terms of sourcing dairy products and do not need to find
new suppliers.
Packaging is the practice of packaging goods and services to distribute to customers and
consumers. Some land resources that go into McDonald’s packaging include paper from trees, color
dyes and plastic which are all used to make straws and bags. Labor is needed for factory production
workers to manufacture the good, as well as delivery drivers to deliver the packaging materials and the
finalized product. Finally, McDonald’s servers are an important labor resource as they put the food into
the bag and hand it to the customers. Capital resources demonstrated in the packaging process include
factory machines, cardboard to hold the heavier and hotter burgers within the package and ensure
reliable storing. Markers are also another tool that is likely to be used to mark different sandwiches and
items. Covid-19 has impacted McDonald’s majorly on the packaging front due to the fact self-isolation
laws have resulted in shorter supply of paper and plastic packaging to businesses. In addition, paper
and plastic industries are having difficulty obtaining supplies thanks to factories in China closing and
import and export being cancelled. As a result, prices have inflated resulting in more expensive

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packaging supplies for McDonald’s. McDonald’s main packaging procurement partner HAVI Global
Solutions, continue to “deliver promise(s) day in and day out with patience kindness”, while “adapting
inventories ad deliveries to changes in demand”. Therefore, McDonald’s aren’t making any changes to
their internal environment on this front as they continue to make connections across supply chains like
no other can.
Often, when people seek to purchase a McDonald’s franchise they need to possess a few
millions dollars due to the fact you are buying the business name, logo, reputation, model, suppliers
and marketing. However, not many people have millions of dollars just sitting around, so where do they
get it from? Well, some people collect it from their internal funds, which consists of personal
money/assets. On the contrary, other people seek to find external funds, which often include general
bank loaning. This is an attractive source of finance for many prospective Macca’s owners as they hold
a fantastic and reputable business name. Therefore, banks are confident in the businesses ability to pay
back the loan and its interests. This is especially great for McDonald’s during this time because banks
are hesitant in handing out money to new businesses as they’re not confident in their power to create a
successful business within the current climate. In contrast, McDonald’s are still managing to survive
and make money; hence, the banks self-assurance in financing Macca’s franchises. During this time,
McDonald’s are also sourcing finance through bank overdrafts. This is one of the most common types
of short-term borrowing as it assists businesses with short-term liquidity problems. This includes but is
not limited to, a seasonal decrease in sales which is both probable and likely in today’s conditions. This
is a great option for the business as it minimizes financial damage in the current pandemic.
Customers expect high quality products that are sold at great and competitive prices while being
served quickly and efficiently. When customers enter the store, they anticipate fantastic customer
service and to be greeted with a friendly smile. McDonalds understands these customer expectations
and acknowledges the importance of one of their major stakeholders, their customers. Thanks to this,
McDonald’s asses changes in consumer tastes and are constantly satisfying people’s needs and wants.
For example, in response to the veganism trend, McDonald’s have realized that more and more people
are wanting vegan based products therefore, McDonald’s have introduced the new ‘McVeggie burger’
and the ‘Grass-fed burger’. This highlights McDonald’s ability to understand the customer’s importance
in terms of contributing to the business and have taking this into account with their business planning.
In addition, customers have become increasingly health conscious and expect products to meet
particular dietary requirements for a variety of consumers. For instance, McCafe offers lactose free
milk for their drinks and healthy food substitutes such as toasties and salads. However, customers also
expect businesses such as McDonalds to be socially responsible and environmentally aware, which

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McDonalds exceeds expectations all the way from general recycling, to packaging, to management of
energy to even beef sustainability. Nonetheless, the corona virus has also influenced customers to
expect safe handling of food and appropriate hygienic measure such as wearing gloves, sanitizing
common contact surfaces and ensuring the basic procedures announced by the government, which
comprises of social distancing. McDonald’s have been managing these needs and expectations by
implementing all of these measures and maintaining consistent quality of products and customer
service. However, the corona virus has also swayed McDonald’s to offer local delivery. As a result, this
results in customers expecting appropriate driving techniques and measures to minimize damaged to
the atmosphere. Some actions they reapplying include alternative fuels with lower emissions, shorter
delivery distances and making product journey’s as efficient as possible. This emphasizes how
customers expect McDonald’s to maintain socially responsible behavior regardless of the world’s
current climate.
As stated previously, McDonald’s are helping supply their consumers with common household
elements such as eggs and milk, ultimately suggesting their commitment towards meeting customer
needs and sustaining high levels of customer service; thus, resulting in improved customer satisfaction
and progressive growth throughout the current pandemic and minimizing damage towards the quick
service franchise.

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4.0 STRATEGY PLANNING
The strategic plan that is used by McDonald’s is called “plan to win”, which its concept is for
McDonald’s to not be the biggest fast food chain, except for it to be the best fast food restaurant chain.
McDonald’s tries achieving this by practising the 5P’s. The 5P’s are people, products, price, place, and
also promotion. Besides, McDonald’s combines organizational strategic plan which include better
restaurant operations, prioritizing the first customer, menu variety and also beverage choices.
From McDonald’s overall strategic direction and its geographical strategic plan, it leads the
business’s global brand to acquire a very high turnover rate and also more positive financial results as
yet. McDonald’s has introduce “McD Man” which attracted a lot of children which leads to increase of
sales figure from the previous year. Besides, they attract consumers by following the psychological
pricing strategy that makes the price looks economical to the customers. McDonald’s
utilizes mental estimating system in a way that it looks a lot simpler to be logical. McDonald’s often
observe the integrated pricing policy by the C3 formula which are cost customers and competitors.
McDonald’s uses this formula to set prices to target consumers and also keep teamwork and fairness
among diverse consumers within different franchises all around the world.
McDonald’s always chooses the most strategic location to open the business as it will get more
customers in any area with lots of people. They also make promotions of their brand such as
advertisement and promoting sales. McDonald’s sell the Prosperity Burger only once a year and the
strategy definitely works because most people are willing to queue for hours just to buy it. Most
customers also buy the burger in lot of quantity because it only come out once a year.
McDonald’s also set several specific skills that are needed for the workers to work. These skills
are separated into personal skills and professional skills. The personal skills are self-confident,
good communication skills, decision making, management skills, problem solving as well as creative
skills. Meanwhile for the professional skills, they are leadership skills, lading and mentoring skills,
counselling skills and also coaching and mentoring skills. All of these skills will definitely help the
business to achieve the objectives and goals of the business.

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5.0 RECOMMENDATIONS AND IMPLEMENTATION STRATEGIES
People do not want to have to drive far to eat when their hungry. McDonald’s has become super-
efficient for people and now has become a part of life for many. I think it would be nearly impossible
to see McDonald’s go away at this point because of the empire they have built.
The marketing function for McDonald’s would be the food aspect, in such the target market.
McDonald’s still uses a lot of its revenue from customers and because of this it relates to the
marketing aspect. For McDonald’s, their marketing related activities were the key for their success.
Yes, real estate is their biggest profit to their company. Though without having their reputation from
their fast food and marketing related activities, they would not been able to grow into such a
successful company without it.
In industry restricting, McDonald has redrawing the marketing map so that they can monitor
their marketing strategy though their 4P (Product, Price, Place & Promotion) effectively. They can
compare the price toward a line product so that customers can see that the products are affordable and
can be owned by them. It is the best way in order to get close to the client and customers at present and
in the future.
6.0 CONCLUSION
Covid-19 has drastically took the world by surprise and has impacted businesses and economies in an
unforeseeable way. Large cooperation’s such as McDonald’s need to carefully consider a wide variety
of factors in both the internal and external environments if they wish to continue business operations.
Covid-19 has majorly influenced business planning due to the fact McDonald’s are forced to adapt to
a new way of life and determine the appropriate responses to outbreaks and low consumer confidence
levels. They have needed to respond to their external environment and manage their operating
environment, while making changes to their internal atmosphere to ensure the safety and future of their
cooperation.
McDonald has already a successful franchise and well known in the world nowadays no matter
what happened. However, they still attain a good marketing strategy in order to maintain and care about
their customers. The development of technology has helped them a lot in achieving their successfulness
by the integration, interactivity, individualization, independence of location, intelligence, and industry
restructuring.

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7.0 REFERENCES
Kincheloe, J. L. (2011). McDonald’s, Power, and Children: Ronald McDonald (Aka Ray Kroc) Does
it All for You. In Key works in critical pedagogy (pp. 155-170). Brill Sense.
Klein, C. (2021, April 22). How McDonald’s Beat Its Early Competition and Became an Icon of Fast
Food. HISTORY. https://www.history.com/news/how-mcdonalds-became-fast-food-giant
Reed, E. (2021, October 4). History of McDonald’s: Timeline and Facts. TheStreet.
https://www.thestreet.com/markets/history-of-mcdonalds-15128096
W. (2017, April 12). The Founder of McDonald’s. Wordzz. https://www.wordzz.com/the-founder-of-
mcdonalds/
McDonald’s | History, Ray Kroc, & Facts. (n.d.-b). Encyclopedia Britannica.
https://www.britannica.com/topic/McDonalds
Crosse, G. (2014, August 18). McDonald’s strategy – More than it can chew? Reuters Events |
Sustainable Business. https://www.reutersevents.com/sustainability/business-strategy/mcdonalds-
strategy-more-it-can-chew
Rohr, C. (2021, June 8). Food and beverage industry during COVID-19: 4 survival strategies. The
Future of Customer Engagement and Experience. https://www.the-future-of-
commerce.com/2020/10/21/food-beverage-industry-during-covid-19/