Strategic Analysis for McDonald's Expansion

The provided assignment content discusses the factors that contribute to the successful growth of McDonald's as a multinational corporation. The cost drivers affecting the company include order size and location, advertising budget, reputation, number of dealers, and sales per dealer. Links between activities, such as high-quality food reducing advertising costs, are also highlighted. Opportunities for reducing costs, like creating regional designs and self-manufacturing raw materials, are discussed. The reasons for McDonald's success include quality and quantity assurance, HRM and sustainable development, and manager contributions towards growth and success.

OPERATIONS AND QUALITY MANAGEMENT
Quality management ensures that an organization, product or service is consistent.
It has four main components: quality planning, quality assurance, quality control
and quality improvement. Operations management is an area of management
concerned with designing and controlling the process of production and
redesigning business operations in the production of goods or services.
Therefore, choosing an organization which is an epitome of the same is a must. An
organization that have seeped in the roots all the measures, controls, procedures
relating to operations and quality management and most importantly is not a fluke
of the present but a craftsmanship of century and age old business model,
remodeling itself with the current of the modern scenarios and need of the market.
Diversification and expansion are two parameters by which companies’ trajectory
towards growth and market share can be mapped and therefore, an organization has
mastery in the same. A organizational model that have been exemplary in setting
standards for industrial leadership and style and have priceless faithful satisfied
customers all around the globe and the organization which satisfies all set marks is
Mc Donald’s –Mc Monarch.

Mc DONALD – Mc MONARCH
INTRODUCTION:
McDonald's (or simply as McD) is an American hamburger and fast food restaurant chain. It was
founded in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald. In 1948,
they reorganized their business as a hamburger stand, using production line principles. The first
McDonald's franchise using the arches logo opened in Phoenix, Arizona in 1953. Businessman
Ray Kroc joined the company as a franchise agent in 1955 and subsequently purchased the chain
from the McDonald brothers. Based in Oak Brook, Illinois, McDonald's confirmed plans to
move its global headquarters to Chicago by early 2018.
Today, McDonald's is one of the world's largest restaurant chains, serving approximately 68
million customers daily in 119 countries across approximately 36,615 outlets. McDonald's
primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft
drinks, milkshakes, and desserts. In response to changing consumer tastes, the company has
expanded its menu to include salads, fish, wraps, smoothies, and fruit. A McDonald's restaurant
is operated by a franchisee, an affiliate, or the corporation itself. The McDonald's Corporation
revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in
company-operated restaurants. According to a BBC report published in 2012, McDonald's is the
world's second largest private employer (behind Walmart with 1.9 million employees), 1.5
million of whom work for franchises.
MAIN PRODUCTS AND CUSTOMERS:
The McDonald brothers' original restaurant served only hot dogs, hamburgers, cheeseburgers,
milkshakes, and the original pre-1960s type of French fries. Today's McDonald's menu includes
numerous other items that have been added through the years. The products range at Mc
Donald’s can be divided into following categories:

Mc Donald’s also have various other products prone to their popularity in the region they are
produced and is considered a regional item, as they are specific specialty of that country or
region.
Customers:
Mc Donald’s have established their presence in 119 countries, which can be broadly classified
into following regions:
M c D o n a ld 's P r o d u c t s
BEEF
(Hamburger, Big Mac, Big N'
Tasty)
BREAKFAST
(Mc Muffin, Mc Griddles, hot
cakes)
CHICKEN
(Mc chicken, snack wrap,
sandwiches)
FISH
(Filet O fish, Fish Mc Bites)
PORK
(Mc Rib)

Analysis:
 Diversification is one of the most important indicators that reflect the progress the
company has achieved and is likely to achieve in the coming years, with the product and
customer range as diversified as above, it can be interpreted that Mc Donald’s have
mastered the art of expanding and diversifying all-round the globe.
 Flexibility, is one of the difficult maneuver in operation and quality management, but Mc
Donald’s have been successful in this aspect, as creating menus in opinion of the
localities depicts the urge of the organization to succeed under all conditions.
 Quality and Quantity, precision is the reason of success behind any international food
chain and Mc Donald’s have all hands on the art of technology and human resource that
secures and maintain the quality, which gets reflected in their geographical spread.
 Process, is needed for each and every executing decision of the company and without a
strong process and its awareness amongst the personnel is not adhered to, nothing can be
achieved.
Mc DONALD'S
AROUND THE WORLD
North
America Latin America Europe Middle East
&Africa Asia Pacific

ORGANIZATIONAL MODEL STRATEGY:
The strength of the alignment among the Company, its franchisees and suppliers (collectively
referred to as the "System") has been key to McDonald's long-term success. By leveraging our
System, we have been able to identify, implement and scale ideas that meet customers' changing
needs and preferences. In addition, our business model enables McDonald's to consistently
deliver locally-relevant restaurant experiences to customers and be an integral part of the
communities we serve.
McDonald's Corporation earns revenue as an investor in properties, a franchiser of restaurants,
and an operator of restaurants. Approximately 15 percent of McDonald's restaurants are owned
and operated by McDonald's Corporation directly. The remainders are operated by others
through a variety of franchise agreements and joint ventures.
The McDonald's Corporation's business model is slightly different from that of most other fast-
food chains. In addition to ordinary franchise fees and marketing fees, which are calculated as a
percentage of sales, McDonald's may also collect rent, which may also be calculated on the basis
of sales. As a condition of many franchise agreements, which vary by contract, age, country, and
location, the Corporation may own or lease the properties on which McDonald's franchises are
located. In most, if not all cases, the franchisee does not own the location of its restaurants.
Segments of Mc Donald’s business model:
US MARKET
INTERNATIONAL LEAD MARKETS
HIGH GROWTH MARKETS
FOUNDATION MARKETS

ORGANIZATIONAL TECHNICAL KNOW HOW
McDonald's Corp. has helped revolutionize the way restaurants use technology, dating back to
founder Ray Kroc's fascination with serving burgers and fries in a matter of minutes. Throughout
the years, their fascination with advancing their company technology wise has become a great
obsession for the IT department. In the 1970's, due to their outstanding lead and large burger
chains which lead the industry they were able to move from cash registers and completely install
computerized points-of-sale (POS). This particular sector of their technology has greatly
advanced to even the present times when there POS are all touch screen, in some restaurants, are
also self-serving devices.
Mc Donald’s uses a 100% biodiesel Technology. Doing this has helped reduce carbon emissions
with the truck making the deliveries. To make this processes a reality, Keystone Foods who
supply McDonald’s with their meat worked very carefully with a fuel manufacturer in the UK,
which they came up with the idea of using biodiesel to reduce their CO2 emissions per year. The
B100 (the biodiesel fuel used) has been adapted to make this possible.
The technology used throughout the corporation is the ACS system. ACS provides a full range of
services to McDonald's, including mainframe and midrange server support, networking
operations and engineering and data center facilities management. ACS also provides service
desk functions, user access, executive and security administration, desktop support and
messaging services, as well as end-to-end application performance monitoring service that
improves diagnosis of performance issues across core technology stacks and will support
development, testing and quality assurance processes.
Analysis:
 Definite Design: The reason behind the massive success of Mc Donald’s is the exact teste
process applied into each and every function of the management, the employees and the
organizational runner are well aware of their roles and responsibilities which gets
reflected into the wok they execute and hence, they achieve the desired results.
 State of Art Technology: The Company indulges itself into new and improved version of
technology all the time and at every nook and corner possible. Being technology

conscious, makes the result competitive and long lasting in the market, and takes the
product a step ahead than the competition.
 Quality Management: A global restaurant can earn success only when the quality of the
food and services have the approval of the customers in masses, and the current global
position of Mc Donald’s only showcase their best quality and process management
services that is appreciated by the masses around the globe.
 Human Resource Management: Mc Donald’s dominance around the globe is testimony of
their apt and suitable personnel policies that is satisfactory to both employer and the
employee.
 Sustainable Development: In the hoard of making profits , there are very few
organization that make sincere efforts and thoughts towards the detreating environment,
and Mc Donald’s is amongst the few world leaders that heads to the needs of the
environment and make efforts to safe guard the same, which in turn sets well with the
customers of the organization.

VALUE CHAIN ANALYSIS
STEP1: FIRM’S PRIMARY ACTIVITIES
Company
Operated
Restaurants
Franchised
Restaurants
Sales and
Marketing
Distribution and Support
STEP2: TOTAL COST AND IMPORTANCE
$5555M
Very Important
$2000M
Very Important
$2500M
Important
$230M
Less Important
STEP 3: COST DRIVERS
Order size and
location of the
restaurants
Order size and
location of the
restaurants
Size of advertising
budget, strength of
existing reputation
Number of dealers, sales per dealer
STEP 4: LINKS BETWEEN ACTIVITIES
 High quality food will reduce the cost for advertising.
 Success of franchised restaurants will help in expanding in other localities.
 Improved and innovative marketing will reduce dealer’s cost.
STEP 5: OPPORTUNITIES FOR REDUCING COST
 Create one model design for different regions in a country.
 Self- manufacturing of raw materials will help in decreasing the cost.
REASONS FOR SUCCESSFUL GROWTH OF THE COMPANY
 Quality and Quantity Assurance: The reason of success behind any multinational

corporation is that the organization is able to maintain standard quality and quantity
across the nations and seas, they settle nothing but for the best and follow the
international standards set for the same, Mc Donald’s is a culmination of all these
factors and because of that have proven its metal all around the globe.
 HRM and Sustainable Development: A company can cross territorial barriers via
expansion, when they policies in place that can accommodate personnel with all kinds
of needs and backgrounds and train as well as adapt with them. Mc Donald’s over the
years have encased various programmes that cater to the same. Also, goodwill
amongst the customer and general society we live in can only be created, if the
organization gives back to them, and sustainable development is the keyword for that,
which is seeped into the roots of the Mc Donald’s corporation.
MANAGERS CONTRIBUTION TOWARDS GROWTH AND SUCCESS
 Innovational Idea: Innovation is the backbone on which the success of the
organization is balanced upon and it’s the manager’s contribution to constant give in
to the new ideas, to push the envelope and further broaden the horizon for the
company.
 Quality and Quantity Control: Expansion of an organization is circumspect to its
ability to maintain international standards and consistency throughout out the globe.
Mangers needs to be in acknowledge of the standards and requirement lay down by
the international quality control boards and make sure that the organization adheres to.
 Economic Environment: The most unstable situation for an international organization
is the prevailing economic environment in different countries; managers have the
ability to adapt these challenging situations and maintain a sense of decorum in the
executive functioning of the organization, so that they are apt to different situations.
 Training Modules: Managers are the successful leaders that directs the organization
towards success, growth and expansion, and all this can be achieved only when the
personnel employed is as per the requirement of the organization, and are a class of
professionals who know their subjects well. Even then, constant motivation , art of job
satisfaction needs to be developed and enthralled upon the personnel, so that their job
input is extraordinary, which in turn would help build momentum in the organization,

which will thrust it to move forward, earning more profits and greater market share.
 Corporate Governance: Corporate governance is the buzz word in the modern day
corporate world, and it’s the managers who shoulders the responsibility for its total
compliance, Managers ensures that company doesn’t fall behind in any statutory
compliance that the organization needs to fill in all the different departments of the
company, and recognizes the need and power of disclosures to all the stakeholders of
the organization , so that a sense of trust is developed between the organization and
the stakeholders. The other important aspect of corporate governance is the need to
give back to the societies and the customers, so that the goodwill and humanity co
exists in the modern day world.
 Decision Making: The most crucial and tough job of a manager is the ability to take
right decisions at the right time, the ability to be proactive is the one that contributes
the most in the success of an organization. Managers have the aptitude and attitude to
sense an opportunity and act accordingly that will help in brightening the future of the
organization.
 Urge to Succeed: Organization can achieve it’s set goals and objectives, only when it’s
in the company of the managers that have the drive and urge to succeed and achieve
heights that no has ever dreamt of. Self- Motivated managers are the one that can
tackle any situation and help the company to constantly move forward.
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