Value Chain and Supply Chain Analysis: McDonald's Case Study, MGT804

This case study examines McDonald's value chain management, a crucial aspect of its operations. The analysis begins with an executive summary highlighting the importance of value chain and supply chain management for operational efficiency and customer satisfaction. The introduction provides background information on McDonald's, including its founding, location, and product offerings. The main body delves into the value chain management, emphasizing the integration of resources, data, and logistics. It identifies McDonald's target customers, including children, young people, and families, and utilizes the STP model (Segmentation, Targeting, and Positioning) to explain their marketing strategy. Key suppliers, such as Tyson Foods and 100 Circle Farms, are identified, along with McDonald's franchise partners and competitors like KFC and Burger King. The supply chain is described, focusing on sustainability, ethics, economics, and cost efficiency. The conclusion recommends effective supply chain management strategies for McDonald's. The report references academic journals and online resources to support the analysis.

Value Chain
Management

EXECUTIVE SUMMARY
Value chain and supply chain management both are important for an organisation as they help
in providing resources through which company can conduct their operations in more effective manner.
Every company have to target customers for serving them in effective manner and fulfilling their
needs as well as wants. In relation of McDonalds they are targeting children as well as young age
people both. Along with this, there are several competitors of respective fast food company such as
Subway, KFC, Starbucks, Wendy’s, Taco Bell and many more. Moreover, McDonalds have their
proper supply chain with the assistance of this they will be able to serve customers in appropriate
manner.

INTRODUCTION....................................................................................................................................3
MAIN BODY...........................................................................................................................................3
CONCLUSION........................................................................................................................................5
REFERENCES.........................................................................................................................................6

INTRODUCTION
Value chain management (VCM) is combination of resources that start with the vendor’s
vendor (Eriksson and et al., 2017). VCM integrates materials, information, labour, logistics, facilities
and many more within time-responsive and capacity managed solution which help in maximisation of
financial resources as well as minimize waste. This report is based on McDonalds which is an
American fast food company founded in 1940 as well as its founder was Richard and Maurice
McDonald. It is located at Chicago, Illinious U.S. and they are serving at worldwide level. Respective
fast food company is offering several products such as Hamburgers, Chicken, French fries, soft drinks,
milkshakes, salads, desserts, coffee, breakfast, wraps and many more. This report will going to discuss
target customers, key suppliers, partners as well as competitors of McDonalds. Along with this supply
chain and value chain of respective fast food company will also elaborate.
MAIN BODY
Value chain management (VCM) is combination of resources which start with the vendor’s vendor.
Value Chain Management is integration of resources, data, labour, logistics, facilities and many more
within time-responsive and capacity managed solution which help in maximisation of financial
resources as well as minimize waste (Simatupang, Piboonrungroj and Williams, 2017). McDonald is
fast food industry organisation which was founded in 1940 and serving at worldwide level. They are
offering variety of products such as Hamburgers, Chicken, French fries, soft drinks, milkshakes,
salads, desserts, coffee, breakfast, wraps and several other.
Target customers – For an organisation target market or customers are that to whom
company want to sell their goods and services. Respective fast food company there primary target
customers are parents of young children, business customers, youngster as well as teenagers.
Moreover, most obvious marketing for respective fast food company is its marketing towards children
as well as parents also of young children. For better understanding of target customers STP model is
more suitable as well as segmentation, targeting and positioning is integral component for
McDonald’s marketing strategy (McDonalds Segmentation, Targeting and Positioning, 2016).
Explanation of these are as follows:-
Type of segmentation Segmentation criteria McDonald’s target segment
Geographic
Region Global and domestic
Density Rural and Urban
Age 8 to 45
Gender Females and males

Demographic Life-cycle stage Bachelor stage, newly married and full
Nest.
Income Both low and middle
Occupation Students, personnel’s and professionals
Behavioural
Users status Fast food eaters on regular basis
Personality Careless and easygoing
Degree of loyalty Switchers as well as Hard core loyal
Benefits sought Time efficiency, cost and so on
Psychographic Life style Company targets resigned, struggler as
well as mainstreamer individual as per
the cross cultural consumer
characterization which was designed
by Rubican and young
Social class
Key suppliers – McDonalds is operating more than 38000 restaurants which need several ingredients
and resources for conducting daily operations in effective manner. As respective fast food company
doesn’t make any product by their own as they contracted with several suppliers for fulfilling their
daily basis needs in effective manner (Koval and et al., 2019). Suppliers are major part of respective
company three legged stool. In this other two parts are operators as well as staff of McDonalds. There
are several suppliers of respective fast food company such as Tyson foods, 100 circle farms, Gavina
gourmet coffee, Lopez foods, Hildebrandt farms and several other. All these supply fish, meat,
poultry, dairy products, bakery and so on (Couto and et al., 2016). Furthermore, respective fast food
company server approx. 1% of global population from all over the world outlets.
Partners – McDonalds more than 80% of restaurants are franchises. It is categorised within 3
parts i.e., conventional franchise, development license and Affiliates. Explanation are as follows :-
 Conventional franchise – It needs generally 20 years initial payment as well as royalties.
Company owns infrastructure and land but for employees and equipments franchisees are
responsible (Maon and Sen, 2016).
 Development license – For whole business licensees provide capital which includes real estate
also. Within this company don’t invest anything.
 Affiliates – In this company has its equity invested within limited number of foreign affiliated
markets.

Competitors - Fast food industry is wide and there are several organisations who are working
within this and all these are creating competition for each other (Jaradat and et al., 2017). There are
several competitors of McDonalds such as KFC, Burger King, Subway, Starbucks, Wendy’s, Taco
Bell and many more.
Supply Chain of McDonald’s – It is complicated web related to direct as well as indirect
suppliers which are head to clear standards related to quality as well as efficiency. McDonalds direct
suppliers which are coordinate purchasing as well as distributing to restaurants. On the other hand,
indirect suppliers are responsible for grain mills and abattoirs (Yamoah, 2019). Moreover, Farms and
ranches raise cattle or grow wheat, lettuce and many other important ingredients. For maintaining
proper working purchasing and distribution channel of restaurant coordinates with each other.
Products transported to company by utilisation of special vehicles along with temperature control
mechanisms. Respective fast food company states that they have sustainable supply chain which
focusing on 3 E’s i.e., ethics, environment and economic. Explanation are as follows ;-
McDonald’s Focus on sustainability ethics – Respective company work with their suppliers for
making sure that health and safety of customers and health as well as welfare of animal within their
supply chain (Scholtens, 2016). For instance, respective company endorses production practices
related to animal which result in reducing utilisation of antibiotics in food animals. Along with this,
aim of McDonalds is to decrease transportation timing of pre-slaughter within their supply chain.
Moreover, suppliers slaughterhouses are audited per annum for making sure compliance in best
practices of industry.
Economics in supply chain – It ensure long term livelihood of suppliers as well as farmers.
Respective company work with their suppliers for researching, share as well as scale best practices for
increasing productivity and efficiency (Jeyanthi and Chandrasekar, 2017). But at same time their aim
is to protect livestock, land and livelihood. Along with this, McDonalds working on sustainable
development which aims is to reduce hunger and generate employment.
Cost efficiency – Scale of McDonalds allow them to collaborate along with their suppliers to
gaining competitive advantages as well as predictable food as well as paper cost. Such practices
provide assistance of respective fast food organisation in achieving cost efficiency (Amentae and et
al., 2017).

CONCLUSION & RECOMMENDATION
From this discussion it has been recommended to McDonalds that they have to manage their
supply chain in more effective manner as with the assistance of this they will be able to gain raw
material for daily production in more effective prices.
After going through above discussion it has been summarised that, for an organisation value
chain management is important as it is integration of resources which start with the vendor’s vendor.
Value Chain Management integrates materials, information, labour, logistics, facilities and many more
within time-responsive and capacity managed solution which help in maximisation of financial
resources as well as minimize waste. Apart from this, target customers are important part a for an
business firm it is important to determine their target customers because it will help them in serving
within effective manner. Moreover, for conducting daily operations in better manner there is
requirement of supply chain management.

REFERENCES
Books and Journals
Amentae, T.K., Hamo, T.K., Gebresenbet, G. and Ljungberg, D., 2017. Exploring wheat value chain
focusing on market performance, post-harvest loss, and supply chain management in Ethiopia: the
case of Arsi to Finfinnee market chain. Journal of Agricultural Science, 9(8), pp.22-42.
Couto, J., Tiago, T., Gil, A., Tiago, F. and Faria, S., 2016. It’s hard to be green: Reverse green value
chain. Environmental research, 149, pp.302-313.
Eriksson, T., Nummela, N., Sainio, L.M. and Saarenketo, S., 2017. Value Chain Management
Capability in International SMEs. In Value Creation in International Business (pp. 171-193). Palgrave
Macmillan, Cham.
Jaradat, R., Adams, F., Abutabenjeh, S. and Keating, C., 2017. The complementary perspective of
system of systems in collaboration, integration, and logistics: a value-chain based paradigm of supply
chain management. Systems, 5(4), p.50.
Jeyanthi, P. and Chandrasekar, V., 2017. Value chain management in fisheries. ICAR-Central Institute
of Fisheries Technology.
Koval, V., Duginets, G., Plekhanova, O., Antonov, A. and Petrova, M., 2019. On the supranational
and national level of global value chain management. Entrepreneurship and sustainability issues, 6(4),
pp.1922-1937.
Maon, F. and Sen, S., 2016. Sustainable value chain management: A research anthology. Routledge.
Scholtens, B., 2016. Corporate social responsibility in the bank value chain. In Sustainable Value
Chain Management (pp. 481-500). Routledge.
Simatupang, T.M., Piboonrungroj, P. and Williams, S.J., 2017. The emergence of value chain
thinking. International Journal of value chain management, 8(1), pp.40-57.
Yamoah, F.A., 2019. Sustainability in supply and value chain management. In Incorporating
Sustainability in Management Education (pp. 167-193). Palgrave Macmillan, Cham.
Online
McDonalds Segmentation, Targeting and Positioning, 2016.[online].Available through<
https://research-methodology.net/mcdonalds-segmentation-targeting-and-positioning/>

APENDIX
Type of segmentation Segmentation criteria McDonald’s target segment
Geographic
Region International and domestic
Density Rural and Urban
Age 8 to 45
Demographic
Gender Females and males
Life-cycle stage Bachelor stage, newly married and full
Nest.
Income Both low and middle
Occupation Students, personnel’s and professionals
Behavioural
Users status Fast food eaters on regular basis
Personality Careless and easygoing
Degree of loyalty Switchers as well as Hard core loyal
Benefits sought Time efficiency, cost and so on
Psychographic Life style Company targets resigned, struggler as
well as mainstreamer individual as per
the cross cultural consumer
characterization which was designed
by Rubican and young
Social class