INTRODUCTION

Although the realm of accounting and finance has often been viewed as dull bean

counting, in todays modern and competitive business environment, the finance department should

be at the heart of any company, encompassing a variety of functions that go beyond its traditional

financial reporting role. While it is still a priority for accountants to ensure a companys financial

statutory accounts meet legal requirements, dynamic companies such as McDonalds have shifted

the focus of their accounting and finance function to additionally include the evaluation of past

performance and appraisal of future opportunities, helping to ensure the

Company maximises its strategic capabilities.

McDonalds Restaurants UK Limited, a wholly owned subsidiary of the U.S. parent

company, opened its first UK restaurant in Woolwich in 1974. There are now 1,200 restaurants

operating in the UK which, despite representing only 4% of the total number of McDonalds

restaurants worldwide, contribute 7% of global profits, making the UK a very important financial

market for McDonalds shareholders.

McDonalds understands the value of an integrated accounting and finance function,

extending from the restaurant floor up to the board of directors. Each individual McDonalds

restaurant is structured as an independent business, with restaurant management responsible for its

financial performance, supported by the centralised Accounting & Finance department.

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 DEPARTMENT STRUCTURE & FUNCTION

McDonalds Finance Department has two key areas of responsibility: financial reporting and

management accounting. Although each of these functions has different priorities, working

together ensures the best financial position for the company now and for the future.

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HOW DOES MCDONALDS MAKE A PROFIT?

McDonalds has two sources of profit:

Sales made by company-owned restaurants

Rental and royalty income from franchised restaurants.

RESTAURANT SALES

McDonalds retains all of the profit earned by company-owned restaurants. An example Profit &

Loss Statement for a restaurant is shown left and highlights how food and labour constitute a

restaurants largest costs. In addition to variable costs, which increase or decrease depending on the

level of sales, McDonalds also incurs costs that are largely fixed, for example utilities and

advertising, which need to be paid for even before the restaurant makes any sales. Increasing sales

and controlling costs are fundamental to ensuring the profit of each restaurant is either maintained

or increased.

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 COMPANY PROFILE

McDonalds is a leader in convenient foods and beverages, with revenues of about $23

billion and over i.6 million employees serving the customers world wide. The company consists

of the snack business of Beverages and Foods. PepsiCo brands are available in nearly 115

countries having more than 24,500 restaurants in the world providing 24 hour service. Having

about 1 billon customers to be served all over the world.

McDonaldss success is the result of superior products, high standards of performance,

distinctive competitive strategies and the high integrity of our people. McDonalds is continuing to

expand and introduce new alternative beverages in the market. Approximately 85% of McDonalds

restaurant businesses world-wide are owned and operated by franchisees .All franchisees are

independent, full-time operators. McDonalds was named Entrepreneurs Number-one franchise

for 1997

Our mission is to be the world's premier consumer Products Company focused on

convenient foods and beverages. We seek to produce healthy financial rewards to investors as we

provide opportunities for growth and enrichment to our employees, our business partners and the

communities in which

we operate. And in everything we do, we strive for honesty, fairness and integrity you could now

join our team. Greater variety and quality choices surprise and delight customers with the food and

beverage they desire.

McDonalds corp. is currently one of the most successful consumer products company in

the world with annual revenues exceeding $23 million and has more than 1.6 million employees.

McDonalds products are recognized and are most respected all around the globe. Currently, its

divisions operate in all over the world in beverages, snack foods, and restaurants. The corporations
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increasing success has been based on high standards of performance, marketing strategies,

competitiveness, determination, commitment, and the personal and professional integrity of their

people, products and business practices.

McDonalds believes their success depends upon the quality and value of their products by

providing a safe, whole some, economically efficient and a healthy environment for their

customers; and by providing a fair return to their investors while maintaining the highest standards

of integrity.

HISTORY OF McDONALDS.

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The McDonald's History - 1954 to 1955

Raymond Albert Kroc 1902-1984, A Salesman

Ray Kroc mortgaged his home and invested his entire life savings to

become the exclusive distributor of a five-spindled milk shake

maker called the Multimixer. Hearing about the McDonald's

hamburger stand in California running eight Multimixers at a time,

he packed up his car and headed West. It was 1954. He was 52

years old.

Dick and Mac McDonald's Restaurant, San Bernardino, California

Ray Kroc had never seen so many people served so quickly when

he pulled up to take a look. Seizing the day, he pitched the idea of

opening up several restaurants to the brothers Dick and Mac

McDonald, convinced that he could sell eight of his Multimixers to

each and every one. "Who could we get to open them for us?" Dick

McDonald said.

"Well," Kroc answered, "what about me?"

Where it all began, Des Plaines, Illinois

Ray Kroc opened the Des Plaines restaurant in 1955. First day's

revenues-$366.12! No longer a functioning restaurant, the Des

Plaines building is now a museum containing McDonald's

memorabilia and artifacts, including the Multimixer!

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The McDonald's History - 1956 to 1963

Ray Kroc At Work

"If you've got time to lean, you've got time to clean," Ray Kroc

preached to his troops. Heeding his own words, here the Chairman of

the Board cleans the parking lot of the first McDonald's franchise in

Des Plaines, Illinois.

Ronald McDonald, In Any Language He Means "Fun!"

"The smile known around the world," In his first TV appearance in

1963 the happy clown was portrayed by none other than Willard Scott.

Fred Turner And Ray Kroc, Architects Of A Dream

Here Ray Kroc (right) and Fred Turner study the design which would

replace the red and white tile buildings that had become landmarks

throughout the U.S. Called Kroc's first "grill man extraordinaire,"

Turner is today Senior Chairman of the Board.

The McDonald's History - 1965 to 1973

McDonald's Comes To Wall Street

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 In 1965 McDonald's went public with the company's first offering on

the stock exchange. A hundred shares of stock costing $2,250 dollars

that day would have multiplied into 74,360 shares today, worth

approximately $3.3 million on December 31, 2006. In 1985

McDonald's was added to the 30-company Dow Jones Industrial

Average.

A Big Idea Called "Big Mac"

"Introduced systemwide in 1968, the Big Mac was the brainchild of

Jim Delligatti, one of Ray Kroc's earliest franchisees, who by the late

1960s operated a dozen stores in Pittsburgh."

The Egg McMuffin

Introduced in 1973, the Egg McMuffin was developed by owner

operator Herb Peterson.

The First Ronald McDonald House in Philadelphia, PA

In 1974 Fred Hill of the Philadelphia Eagles teamed up with

McDonald's to create Ronald McDonald House. Here the families of

critically ill children have a place to call home while they're away from

home as the young patients undergo treatment for their conditions.

The Happy Meal

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 Since 1979 the Happy Meal has been making kids visits that much

more special. Clubs the world over collect Happy Meals toys and

boxes.

The Future Begins Now

McDonald's Express for a world that can't slow down!.

McDonald's is popping up in more non-traditional locations like

Amoco and Chevron stations, with full menu offerings and dining

room seating, just like you'll find in a traditional McDonald's.

FACTS & FIGURES

1.6million

Restaurant employees System wide dedicated to serving our customers

540million

Snack Wraps were sold in 2007

24,500

Restaurants around the world offer extended or 24-hour service

1billion

More customers were served in 2007 than in 2006

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 115

Countries participated in one of McDonalds most successful promotions ever

Our tie-in with DreamWorks Shriek the Third

Levels of strategic Management

The products and services mentioned above reflect three types of major

strategies employed by the organization at various levels. Namely they are:

Corporate strategy

Corporate level strategy fundamentally is concerned with the selection of

businesses in which the company should compete and with the development and

coordination of that portfolio of businesses.

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 McDonald's is engaged in. Mc Donalds only deals in the restaurant

business, so its corporate strategy is a single business unit strategy, likely of

growth. To make this clearer, GE's corporate strategy is of interrelating business

units. Consumer electrics, submarines, locomotives, light bulbs etc share some

synergies and each is a separate business unit.

Corporate level strategy is concerned with:

Reach - defining the issues that are corporate responsibilities; these might

include identifying the overall goals of the corporation, the types of

businesses in which the corporation should be involved, and the way in

which businesses will be integrated and managed.

Competitive Contact - defining where in the corporation competition is to

be localized. Take the case of insurance: In the mid-1990's, Aetna as a

corporation was clearly identified with its commercial and property

casualty insurance products. The conglomerate Textron was not. For

Textron, competition in the insurance markets took place specifically at the

business unit level, through its subsidiary, Paul Revere. (Textron divested

itself of The Paul Revere Corporation in 1997.)

Managing Activities and Business Interrelationships - Corporate

strategy seeks to develop synergies by sharing and coordinating staff and

other resources across business units, investing financial resources across

business units, and using business units to complement other corporate

business activities. Igor Ansoff introduced the concept of synergy to

corporate strategy.

Management Practices - Corporations decide how business units are to

be governed: through direct corporate intervention (centralization) or

through more or less autonomous government (decentralization) that relies

on persuasion and rewards.

Corporations are responsible for creating value through their businesses.

They do so by managing their portfolio of businesses, ensuring that the

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businesses are successful over the long-term, developing business units, and

sometimes ensuring that each business is compatible with others in the

portfolio.

Business strategy:

A strategic business unit may be a division, product line, or other profit

center that can be planned independently from the other business units of the

firm.

At the business unit level, the strategic issues are less about the

coordination of operating units and more about developing and sustaining a

competitive advantage for the goods and services that are produced.

This might be low-cost strategy, differentiation, or focus strategies.

McDonalds has pursued two strategies since 2003. To keep up with rapidly

changing consumer preferences, demographics, and spending patterns,

McDonald's has introduced new items (Premium Chicken sandwiches and the

Angus Beef Burger) and campaigns to create more healthy foods (Premium

Salads). The strategy reflects the philosophy that novelty, as opposed to loyalty to

traditional products, is the key determinant of sales in the fast food industry.

McDonalds has also focused on increasing sales at existing restaurants

instead of opening new ones. To do so, McDonald's has remodelled many

restaurants, kept stores open longer, and increased menu options. Nevertheless,

new McDonalds restaurants are still opening around the world at a rapid rate -

the company plans to open about 1,000 units in 2008, and continues to grow its

restaurant base by 1-2% each year.

At the business level, the strategy formulation phase deals with:

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 positioning the business against rivals

anticipating changes in demand and technologies and adjusting the

strategy to accommodate them

Influencing the nature of competition through strategic actions such as

vertical integration and through political actions such as lobbying.

Michael Porter identified three generic strategies (cost leadership, differentiation,

and focus) that can be implemented at the business unit level to create a

competitive advantage and defend against the adverse effects of the five forces.

Functional Level Strategy

The functional level of the organization is the level of the operating

divisions and departments. The strategic issues at the functional level are related

to business processes and the value chain. Functional level strategies in

marketing, finance, operations, human resources, and R&D involve the

Vision
development and coordination of resources through which business unit level

strategies can be executed efficiently and effectively.

Mission

Functional units of an organization are involved in higher level strategies

by providing input into the business unit level and corporate level strategy, such
Objectives
as providing information on resources and capabilities on which the higher level

strategies can be based. Once the higher-level strategy is developed, the

Goals action-plans that each department or
functional units translate it into discrete

division must accomplish for the strategy to succeed.

Value

KEY STEPS TOWARDS STRATEGIC PLANNING

Strategies
The preparation of a strategic plan is a multi step process covering Vision,

Mission, Objectives, Values, Goals, Strategies and Programmes.

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Programmes
Vision Statement

"McDonald's vision is to be the world's best quick service restaurant experience.

Being the best means providing outstanding quality, service, cleanliness, &

value, so that we make every customer in every restaurant smile."

Mision statement

Be the best employer for our people in each community around the world

Deliver operational excellence to our customers in each of our restaurants;

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 Achieve enduring profitable growth by expanding the brand and leveraging

the strengths of the McDonald's system through innovation and

technology.

Objectives

In a business when a number of brains are working together, there are

always different views on a certain aspect, therefore aims and objectives are used

to help them focus on one view on the aspect which either seems right or is

right.

Aims & Objectives help an organization grow; it is used as a guideline, a

plan & goal. What the organization is heading for & how it is heading there &

where it is heading? All the answers for these questions are answered by Aims &

Objectives.

The Main Objectives of a Business are:

Sales Sales revenue is the total amount of money a company has earned by

providing their service or selling their stock.

Growth An increase in the Business capacity to produce more stock or provide

better or greater service.

Profit Residual value gained from business operations after cutting out

expenses such as stock cost etc.

Customer Satisfaction Providing service to customers to their satisfaction

level such as hygienically clean place or high quality food.

SMART
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Before a business can set objectives it is important that they follow the SMART

criteria.

Specific Detailed and Exact

Measurable Targets should be measurable

Achievable Something that can be achieved

Realistic Targets must be realistic, so that they can be met

Time Specific That can be achieved by a deadline

Aims & Objectives of McDonalds its what I eat and what I doIm

lovin it

McDonalds objectives are to reverse the decline of sales, to continue

staying ahead of the competition in the fast food industry and to find new

strategies that would help the restaurant successfully compete in the a fiercely

competitive market.

Goal

McDonalds goal in laid our in their second Worldwide Corporate

Responsibility Report is to communicate our progress and direction related to

the most relevant and material corporate responsibility - related aspects of their

business. To that end, the report is structured according to key elements of our

business strategy - the Plan to Win.

The Plan is a global alignment around five drivers of exceptional customer

experience, all beginning with the letter P. They have focused on three of the five

Ps: Products, People and Place. (The remaining two are Price and Promotion.)

Values

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 We place the customer experience at the core of all we do:

Our customers are the reason for our existence. We demonstrate

our appreciation by providing them with high quality food and superior

service, in a clean, welcoming environment, at a great value. Our goal is

QSC&V for each & every customer, each & every time.

We are committed to our people

We provide opportunity, nurture talent, develop leaders and reward

achievement. We believe that a team of well-trained individuals with

diverse backgrounds and experiences, working together in an environment

that fosters respect and drives high levels of engagement, is essential to

our continued success.

We believe in the McDonalds System

McDonalds business model, depicted by the three-legged stool of

owner/operators, suppliers, and company employees, is our foundation, and

the balance of interests among the three groups is key.

We operate our business ethically

Sound ethics is good business. At McDonalds, we hold ourselves

and conduct our business to high standards of fairness, honesty, and

integrity. We are individually accountable and collectively responsible.

We give back to our communities

We take seriously the responsibilities that come with being a leader.

We help our customers build better communities, support Ronald

McDonald House Charities, and leverage our size, scope and resources to

help make the world a better place.

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 We grow our business profitably

McDonalds is a publicly traded company. As such, we work to

provide sustained profitable growth for our shareholders. This requires a

continuing focus on our customers and the health of our system.

We strive continually to improve

We are a learning organization that aims to anticipate and respond

to changing customer, employee and system needs through constant

evolution and innovation.

Strategy

"McDonalds possesses a highly visible and popular brand image

around the world. The firm has grown to become one of the most popular food

brand names in the world, with continuous increases in exposure in new

markets, such as Asia and Europe, amongst others.

Although McDonalds has been in existence in North America for

many decades, the increasing popularity in new markets has positioned the firm

for continued growth in market share and customer buying power. The

McDonalds strategy map encompasses four key perspectives:

1) Financial;

2) Customer;

3) Internal Process;

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4) Learning.

These perspectives have evolved over time into a well-defined vision

for the corporation, which is to become the most positive dining experience in

the world ("McDonalds")."

Key steps towards business strategies

A scan of the internal and external environments forms an important part of

the strategic planning process. Environmental factors internally affecting the

firm can be classified as Strengths or Weaknesses and those externally affecting

to the firm can be classified as Opportunities and Threats. This is referred to as

SWOT Analysis.

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Strengths

Global brand

McDonalds has a well-established global brand that appeals to all

age groups and customer segments. In 2005, McDonalds placed ninth in

the top 100 global brands ranking of Business Week magazine and

Interbrand, a branding consultancy.

Strong operational capabilities

McDonalds has strong operational capabilities which allow it to

provide high quality products and customer service across its restaurants.

The company has a world-class supply-chain and standardized processes

to deliver products of uniform quality across restaurants, regardless of

their location or nature of operation (company-owned or franchisee-

operated). The company and its partners purchase food and related items

from an approved group of suppliers.

Successful items

Some of its products such as Big Mac, and Chicken McNuggets and

have become brands in their own right. Strong brand draws customers to

the companys restaurants and provides it with a recognized brand

currency in new markets.

Quality Products

McDonalds is the symbol of quality with respect to its offering.

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Weakness

Weak revenue growth

Low revenue growth suggests that the company has not been able to

expand customer traffic at existing restaurants thanks mainly to the

maturation and saturation of its key markets.

Weak product development

McDonalds faces a strong competition and its weak product

development creates problem.

Opportunities

Expansion

McDonalds is serving only in few cities of Pakistan. There is a large

market for McDonalds still to serve. Furthermore it has few outlets within
cities in which it is currently serving, so McDonalds also has opportunity

to expand within cities.

Franchisee-operated restaurants

McDonalds intends to sell about company-operated restaurants in

the Pakistan to franchisees. The operating margin of franchisee-operated

restaurants is higher than that of company-operated restaurants.

The sale of company-operated restaurants to franchisees is likely to

increase the overall profitability of McDonalds Pakistans business.

Growing dining-out market

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 As the lifestyle trends of consumers are changing, the dining out

market is growing, that would serve as an opportunity for the McDonalds

Threats

Intense competition

McDonalds restaurants face intense competition from international,

national, regional and local retailers of food products. The company

competes on the basis of price, convenience, service and quality of food

products.

The companys competition includes restaurants, quick service

eating establishments, pizza parlors, coffee shops, street vendors,

convenience food stores, delicatessens and supermarkets.

Growing health consciousness

As the education level in Pakistan has increased in last few years,

health consciousness has also increased .A growing consciousness of

health matters could reduce McDonalds revenues

Increased Sales Tax

Sales tax has increased which results in the increased customer

prices and reduced sales level.

Strategic Management Process

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 The strategic management process of McDonalds is made up of four
elements: situation analysis, strategy formulation, strategy implementation, and
strategy evaluation. These elements are steps that are performed, in order, when
developing a new strategic management plan. Existing businesses that have
already developed a strategic management plan will revisit these steps as the
need arises, in order to make necessary changes and improvements

Situation Analysis

Internal
Situation analysis is the first step in the strategic management process.
Assessment
The situation analysis provides the information necessary to create a company

mission statement. Situation analysis involves "scanning and evaluating the

organizational context, the external environment, and the organizational

environment". This analysis can be performed using several techniques.

Observation and communication are two very effective methods.

Strategy Strategy Strategy

Formulation Implementation Control

To begin this process, organizations should observe the internal company

environment. This includes employee interaction with other employees, employee

interaction with management, manager interaction with other managers, and

management interaction with shareholders. In addition, discussions, interviews,

and surveys can be used to analyze the internal environment.

Environmental
Analysis
Organizations also need to analyze the external environment. This would

include customers, suppliers, creditors, and competitors. Several questions can

be asked which may help analyze the external environment. What is the

relationship between the company and its customers? What is the relationship

between the company and its suppliers? Does the company have a good rapport

with its creditors? Is the company actively trying to increase the value of the

business for its shareholders? Who is the competition? What advantages do

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competitors have over the company?

Strategy Formulation

Strategy formulation involves designing and developing the company

strategies. Determining company strengths aids in the formulation of strategies.

Strategy formulation is generally broken down into three organizational levels:

operational, competitive, and corporate.

Operational strategies are short-term and are associated with the various

operational departments of the company, such as human resources, finance,

marketing, and production. These strategies are department specific. For

example, human resource strategies would be concerned with the act of hiring

and training employees with the goal of increasing human capital.

Competitive strategies are those associated with methods of competing in a

certain business or industry. Knowledge of competitors is required in order to

formulate a competitive strategy. The company must learn who its competitors

are and how they operate, as well as identify the strengths and weaknesses of

the competition. With this information, the company can develop a strategy to

gain a competitive advantage over these competitors.

Corporate strategies are long-term and are associated with "deciding the

optimal mix of businesses and the overall direction of the organization" (Coulter,

2005, p. 216). Operating as a sole business or operating as a business with

several divisions are both part of the corporate strategy.

Strategy Implementation

Strategy implementation involves putting the strategy into practice. This

includes developing steps, methods, and procedures to execute the strategy. It

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also includes determining which strategies should be implemented first. The

strategies should be prioritized based on the seriousness of underlying issues.

The company should first focus on the worst problems, then move onto the

other problems once those have been addressed.

"The approaches to implementing the various strategies should be

considered as the strategies are formulated. The company should consider how

the strategies will be put into effect at the same time that they are being

created. For example, while developing the human resources strategy involving

employee training, things that must be considered include how the training will

be delivered, when the training will take place, and how the cost of training will

be covered.

Strategy Evaluation

Strategy evaluation involves "examining how the strategy has been

implemented as well as the outcomes of the strategy. This includes determining

whether deadlines have been met, whether the implementation steps and

processes are working correctly, and whether the expected results have been

achieved.

If it is determined that deadlines are not being met, processes are not

working, or results are not in line with the actual goal, then the strategy can

and should be modified or reformulated.

Both management and employees are involved in strategy evaluation,

because each is able to view the implemented strategy from different

perspectives. An employee may recognize a problem in a specific implementation

step that management would not be able to identify.

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 The strategy evaluation should include challenging metrics and timetables

that are achievable. If it is impossible to achieve the metrics and timetables,

then the expectations are unrealistic and the strategy is certain to fail.

Conclusion

The strategic management process is a continuous process. "As

performance results or outcomes are realized - at any level of the organization -

organizational members assess the implications and adjust the strategies as

needed". In addition, as the company grows and changes, so will the various

strategies. Existing strategies will change and new strategies will be developed.

This is all part of the continuous process of improving the business in an effort

to succeed and reach company goals.

BCG Matrix

The need for strategy in order to expand its existing product in very

promising markets for McDonalds is very essential. McDonalds along with KFC

and other major fast food chains have dominated the American continent as well

as elsewhere. BCG Matrix:

The market growth rate measures industry attractiveness. The underlying

theory for examining market growth rate is the industry life cycle. The BCG

assumes that growth rates, life cycle stages affect a firms finances.

27
Placing products in the BCG matrix results in 4 categories in a portfolio of a

McDonalds:

1. Stars (=high growth, high market share)

o Frequently roughly in balance on net cash flow. However if needed any

attempt should be made to hold share, because the rewards will be a cash

cow if market share is kept. So, McDonalds USA is under Star position.

2. Cash Cows (=low growth, high market share)

o Profits and cash generation should be high, and because of the low

growth, investments needed should be low. Keep profits high.

28
3. Dogs (=low growth, low market share)

o Avoid and minimize the number of dogs in a company.

o Beware of expensive turn around plans.

4. Question Marks (= high growth, low market share)

o Have the worst cash characteristics of all, because high demands and low

returns due to low market share

GE Matrix

Growth matrix The GE Matrix is a model to perform business portfolio analysis

on the Strategic Business Units of a corporation. The General Electronics of USA

with the support of consulting firm Mckinsey and Co. developed a more

complicated matrix as a technique of portfolio analysis. The GE business screen

can be shown with the help of the following diagram:

29
McDonald dont have GE matrix

7s MCKINSEYs MATRIX

Mckinsey developed a new framework to better represent the challenges of

Services Marketing and for analysis and improving organizations effectiveness

i.e. the 7S model which can be shown with the help of the following diagram:

Most of us grew up learning about 'the 4Ps' of the marketing mix: product,

price, place, promotion. And this model still works when the focus is on product

marketing. However most developed economies have moved on, with an ever-

increasing focus on service businesses, and therefore service marketing.

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 To better represent the challenges of service marketing, McKinsey

developed a new framework for analyzing and improving organizational

effectiveness, the 7S model:

The 3Ss across the top of the model are described as 'Hard Ss':

Strategy: The direction and scope of the company over the long term.

Structure: The basic organization of the company, its departments, reporting

lines, areas of expertise, and responsibility (and how they inter-relate).

Systems: Formal & informal procedures that govern everyday activity, covering

everything from management information systems, through to the systems at the

point of contact with the customer (retail systems, call centre systems, online

systems, etc).

The 4Ss across the bottom of the model are less tangible, more cultural in

nature, and were termed 'Soft Ss' by McKinsey:

Skills: The capabilities & competencies that exist within the company. What it

does best.

Shared values: The values and beliefs of the company. Ultimately they guide

employees towards 'valued' behaviour.

Staff: the Companys people resources and how they are developed, trained,

and motivated.

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 Style: The leadership approach of top management and the company's overall

operating approach.

In combination they provide another effective framework for analyzing the

organization & its activities. In a marketing-led company they can be used to

explore the extent to which the company is working coherently towards a

distinctive & motivating place in the mind of consumer.

Organizational Chart

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33
 Supply Chain
Our growth plan for the next three years is more a function of getting our
logistics and cold chain right rather than going to far off places.
- Amit Jetia, managing director, McDonald's India, Mumbai Joint Venture,

Supply
chain

Overview Cold Local Supplier

chain Sourcing s
Supply Chain

Suppliers Manufacturing Distributors Retailers Customers

Strategies of McDonalds

Following are the strategies adopted by McDonalds

International Growth

McDonalds has expanded to international markets in the face of

increasing regulations in the United States and domestic market

saturation. They initially entered international markets by leveraging

standardized product offerings, clean and bright environments, and

American brand equity.

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 However, recent years have seen McDonalds adapt to local regions by

remodeling its retail space while changing the product line to appeal to

local tastes. While the strategy has paid off well in the short term and

McDonalds has realized that they must adapt to each country they enter,

their tactics of both catering to local tastes and changing the restaurants

design and appeal is diluting brand equity. This will have disastrous

consequences in the long term.

US Market Saturation Slow Expansion

Focus on Same Store-Sales Growth and Improving Delivery Outlets

Forward Integration

A business strategy that involves a form of vertical integration whereby

activities are expanded to include control of the direct distribution of its

products.

Distribution through Franchisees

Backward Integration

Acquiring ownership of one's supply chain, usually in the hope of reducing

supplier power and thus reducing input costs.

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 Local Sourcing, Cold Chain, Suppliers

Market penetration & Development

Market penetration occurs when a company enters/penetrates a

market with current products. The best way to achieve this is by

gaining competitors' customers (part of their market share).

Other ways include attracting non-users of your product or

convincing current clients to use more of your product/service (by

advertising etc). Ansoff developed the Product-Market Growth Matrix to

help firms recognise if there was any advantage of entering a market.

McDelivery

New Product Development

Product development is the process of designing, creating, and

marketing an idea or product. The product can either be one that is

new to the marketplace or one that is new to your particular company,

or, an existing product that has been improved.

In many instances a product will be labeled new and improved

when substantial changes have been made.

Aloo Tikki, Salad

36
 Review of the literature:-

Concept for this survey have been developed after studying previous surveys on
consumer satisfaction at different sectors such as Banking sector,online share
trading.
Following websites can be referred:

Research conducted by Bain & Company found that an increase of 5% in customer

retention can increase profits by 25% to 95%. The same study found that it costs six
to seven times more to gain a new customer than to keep an existing one.

Additional researches has shown that:-

"US companies lose 50% of their customers every 5 years."

Source: Bain & Company

"Happy customers tell 4 to 5 others of their positive experience. Dissatisfied

customers tell 9 to 12 how bad it was."
Source Mark Stevens, Author

"Companies that make customer service a high priority see twelve times the return
on sales than those companies with a low emphasis on service."
Source: International Customer Service Association
37
"Only 1 out of 25 dissatisfied customers will express dissatisfaction."
"68% of customers stop doing business with a company because of poor service. Yet
95% of dissatisfied customers would continue to do business with a company if their
problem was solved quickly and satisfactorily."
Source - Mark Stevens, Author
Two-thirds (or 66%) of customers do not feel valued by those serving them.
Source - Mark Stevens, Author International Customer Service Association

Customer Satisfaction in the Indian Banking Sector conducted at IIM Bangalore:-

This study, conducted among five Indian banks, aimed at identifying customer
satisfaction variables which lead to relationship building, and developing a conceptual
framework of relationship marketing practices in Indian banks by capturing the
perspectives of customers with respect to their satisfaction with various services. It
also sought to identify whether demographics have a role to play in customer
satisfaction. A questionnaire designed from a literature review and in-depth interviews
were utilised to arrive at the 16 variables which determined the satisfaction of 555
customers of the five banks..

Conclusion
Reporting on the different satisfaction levels of the customers, the findings
suggest that while private banks have been able to attract the younger customers with
higher educational levels, who are comfortable with multi channel banking, the
customers of the national bank are older and more satisfied with the traditional
facilities. The results from this study could provide managerial lessons on assessment
of strengths and improvement of services and in evolving a research strategy that will
benefit the management of banks.

38
The study revealed that levels of customer satisfaction were on average 20 per cent
higher in restaurants that employ staff aged 60 and over. Widely recognised as one
the largest providers of first time jobs in the UK, McDonald's also has a strong core
of older workers, with around two-fifths of restaurants employing staff aged 60 and
over.

A study on customer satisfaction towards online share trading with special reference
to Coimbatore city.

The study has revealed the nature of the share investors, share broking firms and
investment atmosphere in Coimbatore.Its good to note that the younger generation is
more involved in on-line share trading.* Men are more into this investment mode.*
Post graduate investors are found to be more in this study.* People in the beginning
of their earning life seem to be more involved in on-line share trading.* Married
men and women have found on-line share trading as a source for extra
income.* Friends have been the major inducing factor towards on-line share trading.
Most of the respondents access the internet at the stock brokers office and they
access it on all business days.

Only less than 1/3rd of the investors are professionals Coimbatoreans show equal
consideration towards the trading sites. The investors of the Manchester of South
India are interested in getting more information about the stock prices etc.50% of the
on-line share trading respondents here rate the infrastructure facility in this town as
average. Majority of the respondents grade the bank associated activities of their on-
line trading site as Good

39
American customer satisfaction index shows drop in customer satisfaction at
Mcdonalds,a study conducted in 2010

According to the latest ACSI, which was founded at the University of Michigans
Ross School of Business and is produced by ACSI LLC, McDonalds satisfaction
score fell from 70 out of 100 in 2009, to 67 in 2010.
Despite posting industry-beating same-store sales for years, McDonald's saw a 4.3-
percent drop in its customer satisfaction score in 2010, as measured by the American
Customer Satisfaction Index.

ANALIYSIS ON MCDONALDS AS A SMALL SCALE

McDonalds is one of the leading restaurant chains in the world, touching the lives of people

everyday. The long journey of the burger brand started in 1940, when two brothers, Dick and Mac

McDonald opened the first McDonalds restaurant in San Bernardino, California. Initially, they

owned a hotdog stand, but after establishing the restaurant they served around 25 items, which

were mostly barbequed. It became a popular and profitable teen hangout. In 1948, the brothers

closed and reopened the restaurant to sell only hamburgers, milkshakes and French fries.

As per the information of the McDonalds history, the major revenue came from

hamburgers, which were sold at a nominal price of 15 cents. The restaurant gradually became

famous and the McDonald brothers begin franchising their restaurant in the year 1953. The first

franchise was taken by Neil Fox and under it; the second Mc Donalds restaurant was opened in

Fresno, California. It was the first to introduce the Golden Arch design. The third and fourth

restaurants were opened in Saginaw, Michigan and Downey, California, respectively.

40
 The business began in 1940, with a restaurant opened by siblings Dick and Mac

McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in

1948 established the principles of the modern fast-food restaurant. The original mascot of

McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was

"Speedee." Speedee was eventually replaced with Ronald McDonald in 1963.

The present corporation dates its founding to the opening of a franchised restaurant by Ray

Kroc, in Des Plaines, Illinois on April 15, 1955 , the ninth McDonald's restaurant overall. Kroc

later purchased the McDonald brothers' equity in the company and led its worldwide expansion

and the company became listed on the public stock markets in 1965. Kroc was also noted for

aggressive business practices, compelling the McDonald's brothers to leave the fast food industry.

The McDonald's brothers and Kroc feuded over control of the business, as documented in both

Kroc's autobiography and in the McDonald brothers autobiography. The site of the McDonald

brothers' original restaurant is now a monument.

With the expansion of McDonald's into many international markets, the company has become a

symbol of globalization and the spread of the American way of life. Its prominence has also made

it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility.

MCDONALD'S India Pvt Ltd (MIPL), the wholly-owned subsidiary of the US-based fast-food

giant, McDonald's Corporation, is likely to put on hold its earlier declared expansion plan of

opening 80 restaurants in India by 2003.

McDonalds has 132 restaurants in India of which 79 are in North & East India and 53 in West &

South India.

79 restaurants in North & East India: with

33 in Delhi

41
 22 in Uttar Pradesh Noida (5),

Ghaziabad (4), Mathura (1) (Highway and Drive Thru), Kanpur (2), Meerut (2),

DEHRADUN (4), Agra (1), Allahabad (1), Varanasi (2)

11 in Haryana - Faridabad (3), Manesar (1) (Highway and Drive - Thru), Gurgaon (5),

Karnal (1) (Highway and Drive - Thru), Panipat (1)

7 in Punjab - Chandigarh (2), Ludhiana (2), Doraha (1) (Highway and Drive - Thru),

Jalandhar (1), Patarsi (1) (Highway and Drive - Thru)

3 in Rajasthan - Jaipur (3)

1 in Uttaranchal - Dehradun (1)

1 in West Bengal Kolkata (1)

1 in Himachal Pradesh- Jabli (1).

53 Restaurants in West & South India:

32 in Maharashtra Mumbai (23), Pune (8), Nasik (1)

7 in Gujarat Ahmedabad (4), Vadodara (2), Surat (1)

7 in Karnataka Bangalore(7)

4 in Andhra Pradesh Hyderabad (4), 3 in Madhya Pradesh Indore (3)

1996 The first McDonald's restaurant opened on Oct. 13, at Basant Lok, Vasant Vihar, New

Delhi. It was also the first McDonald's restaurant in the world not serving beef on its

menu
1997 The first Drive - Thru restaurant at Noida (UP)

The first disabled friendly store at Noida (UP)

1999 The first Mall location restaurant at Ansal Plaza (New Delhi)
2000 The first highway restaurant at Mathura (UP)
2001 The first thematic restaurant at Connaught Place (New Delhi)

42
2002 The first restaurant in a food court at 3C's, Lajpat Nagar (New Delhi)

The first restaurant at the Delhi Metro Station at Inter State Bus Terminus

The first annual fundraiser in association with ORBIS and Dr. Shroff's Charity Eye

Hospital.(Delhi)
2003 The first Dessert Kiosk - Faridabad (Haryana)
2003-04 Indigenous products like McAloo Tikki, McVeggie and Pizza McPuff exported to Middle

East countries
2004 McDonald's Delivery Service (McDeliveryTM ) introduced in New Delhi
2006 McDelivery on Bicycles flagged off at Chandni Chowk (Delhi)- another first initiative

by McDonald's India

100th McDonald's Restaurant in India

10 Year Anniversary
2007 The first Restaurant opened in the Eastern Region at Park Street, Kolkata (West

Bengal)

The first Restaurant opened at Airport.(Domestic Airport, New Delhi)

Customer Segmentation and Market Analysis

CUSTOMER SEGMENTATION

There is no single way to segment a market. Different segmentation variables

have to be tried, to find the variables that most accurately reflect the markets
structure (who will/will not buy).

43
The segmentation of McDonald outlets and its products is base on
demographic segmentation, geographic segmentation, and psychographic.

Demographic Segmentation:

It is based on age, sex, family size, marital status,

Income, occupation, education, religion, race,
Nationality.
The marketers have done segmentation on demographic basis. Most of the
deals offer in McDonald are according to normal family size of four or five, it is
economically reasonable for upper middle class and also for upper class
families. Besides these deals it also offers different meals fit for youngsters,
students, for small parties and celebrations

Geographic segmentation

State or regional, population density (rural-suburban-

Urban), community size (under 5k, 5-10k, 10-
20k....per sq
Km), climate, distance from a point.
There are at least 31,000 McDonald can be found in 120 countries and
territories around the world serving nearly 54 million customers each day. In
Pakistan, on geographic bases marketers have targeted big cities. As in
Lahore, Karachi, Islamabad, Pindi, Multan etc. The taste and quality is
according to the people of region in which it is offered. They have more then
one outlet in single city, like in Lahore. People of different areas in a city can
get the same quality and price from different sales outlets.

Psychographic segmentation

Segmentation on the basis of the markets

Knowledge of, attitude to, or opinion of a product.

44
The offerings are according to the lifestyle and social classes of people. Like in
Lahore, there is trend of eating out, so it is best
match for their style.
There is wide band of their loyal customers.

MARKET ANALYSIS

Ask an experienced marketer what will determine the success or failure

of a promotion and theyll often quote an age old industry rule: 70%
audience, 20 % offer, 10% creativity. Or, to express it another way, by
correctly analysing, and segmenting your customer database to ensure
that the right offer reaches the right people, you have a 90% chance of
success before you even start work on the creative.
Since 2003 McDonald is practicing two types of strategies to maintain with
rapid change comes in consumer preference as well as coping with changes in
demographic and spending styles. In United States they expand their business
introducing product variety and renovation in the already opened restaurant
instead of opening new restaurant. Whereas in Asia they expand their
business by exploring new markets. They offer the host countrys culture
rather imposing their home countrys culture there, this is the main business
strategy that makes it one of the most successful international fast food
chains.
Their market in Asia as well as in Pakistan is growing rapidly. In Pakistan they
are opening their outlets in more cities, due to increase in demands.

Competitor Analysis

The emergence of food chain has pressured industry participants to

continually add features and cut prices. Although McDonalds is a market

45
leader in its food and beverages industry but it is now facing tough
competition from the new entrants. It has to continuously update the business
strategies to compete with young new comers.

Following are the major McDonalds hamburgers Competitors,

KFC

In the late 1960s, KFC was stabilized in the US and the owners turned their
focus to international markets. By 1971, KFC had established 2,450 franchises
and 600 company-owned restaurants in48 countries.
PepsiCo acquired KFC in 1986 along with Pizza Hut and Taco Bell shortly after.
Today KFC is severing about 8 million customers globally. They have more
than 11,000 restaurants in more than 80 countries around the world. KFC is
biggest competitor of McDonald in chain of fast food.

Pizza Hut

PepsiCo decided to spin off two restaurants into an independent, publicly held
company called Tricon Global Restaurants, Inc. Then in 2002 Tricon acquired
Long John Silver and A&W All-American Food Restaurants where they, shortly
after, changed their Tricon name to Yum! Brands, Inc. Although as compared
to McDonalds it has more number of franchised restaurants but revenues are
low due to McDonalds big size.

46
 YUM!brands

YUM!brands Includes KFC, Taco Bell, Pizza Hut, and Long John Silvers
American Food Restaurants. China market is dominated by YUM! brands. It
serves as a biggest competitor while entering into the china market. While
McDonalds run its business under one flag. YUM! Has splits its resources into
variety of brands generating high revenue.

SWOT Analysis

SWOT analysis is the main ingredient of management as well as marketing

functional analysis. It is process of overall evaluation of companys strengths
(S), weakness (S) and prevailing opportunities (O) and threats (T) in the
companys competitive environment. Now we will conduct McDonalds SWOT
analysis in Pakistan.

Strengths

By strength we mean internal potential of company. While evaluating

strengths of McDonalds we will deal with companys micro environment.
McDonalds micro environment is consisting of the following elements.

1- Image
2- Full filling Customers Expectation
3- Innovation
4- Human Resource Satisfaction

Image

McDonalds is the fastest growing food chain of the world. It is a number brand
of the half of the world. It has created a positive strong image in its
customer minds. Customers are amused by their cleanings, high
speed service delivery and customer friendly attitude.

Full filling Customers Expectation

Another greatest strength of McDonalds is its product value. To fulfill

customers expectation when they walk in their franchise becomes their
strongest marketing element in Pakistan.
47
Innovation

McDonalds keeps on bringing innovation with quality in its products. People

get used to of experiencing new taste and variety

Human Resource Satisfaction

They give importance to the employees satisfaction. They believe that to

build strong employee-customer relationship they have to keep their
employee satisfied and happy with different incentives other than pay roll.

Weakness

By weakness we mean prevailing internal system weakness of the company

and negative factors in environment that affect badly the companys core
business.

a. Over exposure
b. Customer trends
c. External Environment

Over Exposure

People of Pakistan always want something new or that is different from others.
But in McDonalds scenario, you can find its outlets everywhere in in big cities
of Pakistan. This over exposure may become boring for certain class of people
in Pakistan. This over exposure induce customer to move on to something new
which is not as crowdie as McDonalds. McDonalds has lost the element of
uniqueness by opening so much franchise.

Customer trends

Customer trends changes rapidly. when customer sees no further

advancement or innovation in companys product they move on to some other
brand.
48
External Environment

Threats and opportunities prevail in any companys external environment.

Following diagram shows that companys external environment

Technology; technology works as a benchmark for organization

success.
Politics: politics plays vital role in effecting organization repute.
Law: every organization need to work under state regulation, no
one can work beyond the legal boundaries of business limited
by state legal authority

Threats

With so much franchise dealers a threat of bond collapse exist. Another threat
would be lack of growth opportunities available. As the market is very
saturated so it is hard to grow more with the same product line. Another
concern can be a treat which is of health conscious people who thinks
McDonalds products make them fatty.

Opportunities:

There are a lot of unexplored market niche available in Pakistan. All they need
to do proper marketing of their product. Earlier they used kids as their brand
ambassadors. They should expand their target market by targeting health
conscious adults, men and women.

Marketing objectives
Some of the marketing objectives are as follows:

To make reasonable profit.

McDonalds main objective is to provide quality-oriented food and high

customer satisfaction.

To make at least 20% profit every year and keep on improving the sales
and percentage of profit in preceding0 years.

McDonalds has a wide distribution network retailer and Franchise system

through out many countries.

49
GENERAL MARKETING STRATEGY

TARGET MARKET

Demographic Factor:

Age from 18-50 Years

Social Class Middle, Upper middle & Upper Class.

Income Rs. 10,000/- and above

Gender Male and Female

Geographic factor:

Country Pakistan

City Karachi, Lahore, Islamabad etc.

Population Over 170 million

Psychological factor:

Occupation Executives, Students, Social workers.

Profession--- Cooks, Hotel Managers, Delivery Services.

MARKETING STRATEGY
50
The marketing mix is the combination of price, product, promotion and place
that successfully markets a product to focus of McDonalds.

1. Product:
Price must match the customers' idea of what the product is worth. The
important thing to remember when offering menu items to potential
customers is that there is a huge amount of choice available to those potential
customers with regard to how and where they spend their money. Therefore
McDonalds places considerable emphasis on developing a menu which
customers want.

McDonalds has introduced new products and phased out old ones over time,
and will continue to do so. Care is taken not to adversely affect the sales of an
existing option by introducing a new option which will cannibalize its sales.
Some of McDonalds options are growing in popularity while arguably the Big
Mac is at the maturity stage.

2. Price:
Customers draw their own mental picture of what a product is worth. A
product is more than a physical item; it also has psychological connotations for
the customer. The danger of using low price as a marketing tool is that the
customer may feel that a low price is indicative of compromised quality. This
means also the profit margin has been reduced without increasing the
sales.But the Price of McDonalds is high enough that a person feels free to
purchase the quality by paying extra as goodwill.
3. Promotions:
The promotions aspect of the marketing mix covers all types of marketing
communications. One of the methods employed by McDonalds is advertising
accompanied by the sales promotion and also by delivering the brochures to
the consumers who came for purchase.

51
PROMOTIONAL OBJECTIVES

To use push strategy.

To enhance the brand name and proceeds sales.

To develop a positive image of company.

To design a promotional campaign in such effective manner so that

consumer can switch over to use our brand from their present
brand.

PROMOTIONAL STRATEGY:

Promotional Device: Websites.

Magazines: The Dawn, The News & Sunday Magazines.
Out Door Media: Scotch print, point of purchase and banners for
introductory phase, Bill boards etc.

PROMOTIONAL INCENTIVES:

Consumer Deals of minimum costs

Distributor More sales commission will be given to franchise.

DOOR-TO-DOOR SELLING:
It is compulsory for all the franchises of McDonalds that they must give the
free home delivery of their product with minimum time.

52
 Thats Why McDonald and his some competitors have now large competition
among services along with the primary objective of fast food selling.

Product Strategy

Analyzing Current Business Product Portfolio

BCG Matrix:

Growth share matrix which is a planning method used for portfolio and
companys strategic business evaluation. Strategic business units are
classified as stars, cash cows, question marks or dogs.
McDonalds as a single business unit was a star that has high growth rate
along with high market share, but now it has turned into cash cows. Cash cows
is that strategic business unit in which has low growth rate and but it is
enjoying high business share or product. McDonalds Zinger Burger is an
established fast food unit that now needs less investment to garb its market
share as compared to other emerging business units.

Relative Share

High Low

?
Growth of market

High
Low

53
 Cash Cow Dog

McDonalds Zinger Burger

Product Concept and History

Zinger burger was first introduced in 16th century in Latin America. Later on it
established as a common food in USA. And now as every country has its
unique food like Pakistan has Roti, pulse, Rice etc. same as USA has zinger
burger as their common food and McDonalds introduced it in 1960s and now
cashing it in different parts of world.
Features, Functions, & Benefits
The immense growth of McDonalds makes it loose the quality of R&D and
quality maintenance department. Now they should develop a product quality
research and development to grab more market share.
Some benefits of this burger are that

It has perfect calories that a normal person should get in a day. I.e. 1600 calories.

It is enough large to fulfill the need of a person in hunger with vegetables n chicken.

The McDonalds core competencies which make it stand ahead among its competitors in industry:-
McDonalds Play Area:
McDonalds introduced the fun play area for kids, till now no competitor
operate a play area up to its standards
Product Variety:
McDonalds keeps on changing a bringing innovation in to burger, salads,
desserts, drinks and sandwiches variety.
54
Fastest Delivery:
McDonalds run the fastest delivery system worldwide

Happy Meals for Children:

A toy with every happy meal is their unique features and attracts the children
the most.
Target Market(s):

McDonald's target market is every segment of the demography. The segments

of the demography are; family life-cycles, gender, age, Nationality, Income,
Generation, Race etc.

McDonald's has based its segmentation on demographic variables (this is why

demographic forces are so important to monitor). Most of the segments
McDonald's targets are broken-down into age and lifestyle stage; this is
probably because they are easily identifiable and consumer needs and wants
vary closely with demographic variables. McDonald's primary target markets
are seniors, adults and teenagers, but the most heavily targeted segment is
children.
Some of the sub-groups they market to are:

Children

Parents of Small Children

Teens

Business People (Free WiFi in some restaurants)

Estimated annual Sales:

Estimated profitability:
Market Growth Rate:
McDonald's Corporation reported a 23% increase in profit for the fourth
quarter, on strong global comparable sales growth driven by higher demand.
McDonald's net income for the quarter was $1.22 billion, up 23% from $0.99
billion in the same quarter last year.
55
 Competition
Although McDonald's is the clear leader of the fast food industry in terms of
revenues generated and restaurants established, it faces competition from
other fast food chains, which are introducing new products themselves.
Major direct competitors in the (hamburger-based) fast food industry include:
Burger King Holdings is the second largest hamburger fast food chain.
Although more of Burger Kings restaurants are franchised than McDonalds
restaurants, Burger King Franchise revenues trail behind that of its competitor,
mainly due to the McDonalds size advantage.
Wendy's is the third largest hamburger fast food chain. It has a lower
operating margin that McDonalds, so it is likely to be more negatively
impacted during a recession.
Yum! Brands run Kentucky Fried Chicken, Taco Bell, Pizza Hut, Long John
Silvers, and A&W All-American Food Restaurants. Currently, Yum! Brands are
dominating the China market, posing a challenge to McDonald's attempts to
enter the market. While McDonalds Corporation focuses on its flagship brand,
Yum! splits its resources among a wide variety of restaurants.

56
Geographical Scope
With over 32,000 locations in over 110 countries, McDonalds (NYSE: MCD) is
the world's largest fast food restaurant chain. McDonald's operates its own
restaurants and franchises its brand to local businesspeople (about 70% of the
world's McDonald's restaurants are franchised. The company experienced a
dramatic turnaround in 2003, driven by a two-pronged strategy. In the U.S.,
McDonald's focused on increasing sales at existing locations by renovating
stores, expanding menu options and extending store hours. Internationally,
McDonald's expanded aggressively, opting to franchise rather than operate its
new locations, providing new income with little overhead.
Both strategies have paid dividends - despite its size, sales have grown by a
third since 2003. Domestically, McDonald's continues to perform well despite a
pullback in consumer spending and is even benefiting as consumers trade
down from more expensive eating options. At the same time, international
operations are driving profit growth. A growing global middle class, particularly
in emerging markets like China, India, and Latin America, represents a
massive opportunity for McDonald's. McDonald's aggressive efforts to expand
its global presence - most notably at the 2008 Beijing Summer Olympics -
have produced strong comparable sales and profit growth.

McDonald's International Revenues

Geographic Region Percent of Total Revenues

US 35%[8]

France, Germany, UK 21%[9]

Rest of Europe 14%[10]

Australia, China, Japan 8%[11]

Rest of Asia, the Middle East, Africa 8%[12

Consumer buying process:

57
McDonalds creates a frame work in peoples mind that McDonalds is a place
to get speedy and quality food to suffice the instant hunger.
They scanned through their preferences and select McDonalds as a medium
to suffice their need
They have three options to get the desired product

Go in the nearby restaurant and order your meal eat there!

Take away your meal home by drive through option

Call and get your meal home delivered, with the fastest delivery system
ever offered.

Competitive Products

There are many products as a competitor of McDonalds zinger burger, just like
KFC also a well established brand providing a healthy burger with a
competitive price.

Direct Competitors

Direct competitors of McDonalds are KFC, burger king, yum burgers etc.

Objective of the Study

To study the problems faced by the customers in variety in product.

To analyze the self service.

To study the expectation of consumer in McDonalds
To measure quantities offered in the product

To obtain suggestions for improvements in the product.

To study the marketing strategy adopted by Mc Donald

58
 RESEARCH METHODOLOGY:-

1.Research design
Research Design is a systematic planning, organizing & executing a research
project within
specified time limit & resource allocation.
After deciding the basic aspects of research project, example- formulating
research problem,objectives of research, data requirement, sample design & before
the commencement of work of
research project, the researcher has to prepare research design. The
research work will be
conducted as per the research design prepared. It is logical &
systematic outline of research
project prepared for directing, guiding & controlling a research work.
59
 This research is EXPLORATORY in nature as it deals in exploring
customer satisfaction.

2. Data collection method:-

Data is collected mainly through two methods. They are as follows:-

i. Primary Data
ii. Secondary Data

a) Primary data:-
Primary data constitute first hand information which is collected for the
first time in order
to solve research problem.
It is the data collected from primary sources which are original sources.
It is fresh data collected for the first time directly from the respondents.
Primary data is important as it gives reliable, factual first hand
information for
information purpose.
Researcher collects primary data as per the need of his research project
and from the source
or the source collected from internet

It is a created data.
It is also time consuming and costly data.
Primary different methods such as mail survey, personal interviews,
observation or
experimentation
Data collection instruments are to be designed according to the needs
of investigation.
Primary data is the original data collected by the researcher from
respondents through

Primary data are collected for detailed information on certain aspects of

research project.

Data collection was done through customer survey.

b) Secondary data:-
60
 Secondary data are next to primary data.
This data is already collected and complied for someone other than the
researcher
himself.
It is readily available in complied form.
Such data may be in the form of statistical statements or tables or
reports and so on.
Such data is available in published or unpublished form.
A researcher may use secondary data as the sole source of information
for his research
study.
Secondary data are available easily, quickly and economically.

3. Sampling technique:-
The technique used for sampling is the random or probability sampling
Probability sampling is a process of sample selection in which elements are chosen
by chance methods such as flipping coins, drawing number of balls from an urn
or through tables of random numbers.

4. Place of research:-
The universe taken for the research is DEHRADUN-

5. Analysis tool :-

The statistical tools for analysis used in this report are bar graphs,pie
charts etc.

The tools used for conducting consumers survey Questionnaire survey.

The whole report has been prepared by using Microsoft office 2007

6. Sample size:-

61
We have taken the sample size as 100

Brand Strategy
Brand:
A name, term, sign, symbol, or design, or a combination of these, intended to
identify the goods or services of one seller or group of sellers and to
differentiate them from those competitors.
What is brand?
Its who you are...and what you stand for.
Importance:
A strong brand is a heart and soul of an organization. we have a very strong
example here: If we take two dishes of McDonalds and give it to a same
person to eat. And one is in McDonalds packing and other is simple packing.
After eating both dishes he will feel that McDonalds dish was better than the
other in taste. It is just due to brand name.

62
Logo of McDonalds:

It creates a clear identity in the consumer mind. It also determines a

set of associations and feelings.

Brand name selection:

McDonalds brand name is short and simple, easy to spell, no negative imagery
which is important for making good impact.

Branding Strategy:
McDonalds use the line extension and brand extension strategies. As we have
example of line extension, when McDonalds introduces a new dish or deal for
their customers. And example of brand extension, when McDonalds
introduces something new, such as ice-cream.

Pricing
Price is the only one elements in marketing mix that produce
revenue, all other elements represent cost. According to expert 1%
price improvements generates a 12.5% profit improvements.
McDonald concentrates factors, when setting price:
McDonald concentrate on value based pricing, they set the prices of their
deals with buyer perceptions, they create beat image of their brand then set
prices. they also using the value adding prices, by attaching a differentiate
features and services.
There are two main types of setting price.
1-skimming
2-Penetration

63
McDonalds use the skimming strategy, because it produces the good quality
that support high prices.
Integrated Marketing Communication plan

1-Advertising Activity:
McDonalds advertises through print media in Pakistan and also use mass
media in some other countries and also pay high cost for mass media
advertising. McDonald's spend over two billion d McDonald's argue that their
advertising is no worse than anyone else's and that they hold to all the
advertising codes in each country.
2-Sales promotion activity:
McDonalds use sales promotion activity by giving some toys for children along
their special package deals. And sometimes they also offer, buy one get one
free. Which is very attractive for consumer and it is a tool for them by which
they enhance their sales ratio.
3-Events activity:
Time to time McDonalds helds events activity in which they have stalls of
their dishes. Events activities like consorts, basant festivals.

Distribution strategy
The aim is to discuss McDonald's distribution channel and the way in which
this fast-food restaurant chain gets its products to the market. In the theory of
the Marketing Mix, place (distribution) determines where the product will be
sold and how it will get there. In fact, as noted on www.mcdonalds.com,
McDonald's is the leading global foodservice retailer, with more than 30,000
local restaurants serving nearly 46 million people each day in 121 different
countries. Approximately 80 percent of all McDonald's restaurants worldwide
are owned and operated by independent franchisers.

ANALIYSIS ON MCDONALDS CORPORATION AT INTERNATIONAL LEVEL.

64
 McDonald's International through its wholly owned subsidiary McDonald's India entered

into two JVs, one with Connaught Plaza Restaurants Pvt. Ltd. in the Northern & Eastern region

and another with Hard Castle Restaurants Pvt. Ltd. in the Western & Southern region

McDonald's restaurants are found in 119 countries and territories around the world and

serve nearly 47 million customers each day. McDonald's operates over 31,000 restaurants

worldwide, employing more than 1.5 million people. The company also operates other restaurant

brands, such as Piles Caf, and has a minority stake in Pret a Manger. The company owned a

majority stake in Chipotle Mexican Grill until completing its divestment in October 2006. Until

December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonald's sold Boston

Market to Sun Capital Partners.

Most standalone McDonald's restaurants offer both counter service and drive-through

service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or

McDrive as it is known in many countries, often has separate stations for placing, paying for, and

picking up orders, though the latter two steps are frequently combined; it was first introduced in

Arizona in 1975, following the lead of other fast-food chains. In some countries "McDrive"

locations near highways offer no counter service or seating. In contrast, locations in high-density

city neighborhoods often omit drive-through service. There are also a few locations, located mostly

in downtown districts, that offer Walk-Thru service in place of Drive-Thru. Especially themed

restaurants also exist, such as the "Solid Gold McDonald's," a 1950s rock-and-roll themed

restaurant. In Victoria, British Columbia, there is also a McDonald's with a 24 carat (100%) gold

chandelier and similar light fixtures.

Each McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation

itself. The corporations' revenues come from the rent, royalties and fees paid by the franchisees, as

65
well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three

years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.

Full year 2008 highlights included:

Global comparable sales increase of 6.9%, including U.S. 4.0%, Europe 8.5%, and

Asia/Pacific, Middle East and Africa 9.0%

Growth in McDonalds combined operating margin of 320 basis points to 27.4%, after

adjusting for the impact of the 2007 Latin America transaction

Operating income increases in the U.S. 8%, Europe 23% (17% in constant currencies) and

Asia/Pacific, Middle East and Africa 33% (28% in constant currencies)

Earnings per share from continuing operations of $3.76, an increase of 16% (14% in

constant currencies), after adjusting for the impact of the 2007 Latin America transaction

Return of $5.8 billion to shareholders through shares repurchased and dividends paid, including a

33% increase in the quarterly cash dividend to $0.50 per share for the fourth quarter bringing our

current annual dividend rate to $2.00 per share

Individual franchise arrangements generally include a lease and a license and provide for

payment of initial fees, as well as continuing rent and royalties to the Company based upon a

percent of sales with minimum rent payments that parallel the Companys underlying leases and

escalations (on properties that are leased). McDonalds franchisees are granted the right to operate

a restaurant using the McDonalds System and, in most cases, the use of a restaurant facility,

generally for a period of 20 years. Franchisees pay related occupancy costs including property

taxes, insurance and maintenance. In addition, in certain markets outside the U.S., franchisees pay

a refundable, non interest-bearing security deposit. Foreign

affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales,

as well as initial fees. The results of operations of restaurant businesses purchased and sold in

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transactions with franchisees, affiliates and others were not material to the consolidated financial

statements for periods prior to purchase and sale.

McDonald's India Culturally Sensitive

McDonald's worldwide is well known for the high degree of respect for the local customs and

culture. McDonalds has developed a menu especially for India with vegetarian selections to suit

Indian tastes and preferences. Keeping in line with this, McDonald's does not offer any beef or

pork items in India. In the last decade it has introduced some vegetarian and non-vegetarian

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products with local flavours that have appealed to the Indian palate. There have been continuous

efforts to enhance variety in the menu by developing more such products.

McDonald's has also re-engineered its operations repeatedly in its 11 years in India to address the

special requirements of a vegetarian menu. Vegetable products are 100% vegetarian, i.e.

They are prepared separately, using dedicated equipment and utensils.

Only pure vegetarian oil is used as a cooking medium.

Cheese and sauces are completely vegetarian and egg less.

Separation of vegetarian and non-vegetarian food products is maintained throughout the

various stages of procurement, cooking and serving.

CHAPTER:-4

ANALIYSIS ON MCDONALDS ON PRODUTIVITY & QUALITY.

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 The site of the first McDonald's to be franchised by Ray Kroc is now a museum in Des

Plaines, Illinois. The building is a reproduction of the original, which was the ninth McDonald's

restaurant.

To accommodate the current trend for high quality coffee and the popularity of coffee

shops in general, McDonald's introduced McCafs. The McCaf concept is a caf-style

accompaniment to McDonald's restaurants. McCaf is a concept of McDonald's Australia, starting

with Melbourne in 1993. Today, most McDonald's in Australia have McCafs located within the

existing McDonald's restaurant. In Tasmania there are McCafs in every store, with the rest of the

69
states quickly following suit. After upgrading to the new McCaf look and feel, some Australian

stores have noticed up to a 60% increase in sales. As of the end of 2003 there were over 600

McCafs worldwide.

Some locations are connected to gas stations/convenience stores, while others called

McDonald's Express have limited seating and/or menu or may be located in a shopping mall. Other

McDonald's are located in Wal-Mart stores. McStop is a location targeted at truckers and travelers

which may have services found at truck stops. McDonald's announced on May 22, 2008 that, in the

U.S. and Canada, it will be introducing cooking oil for its French fries that contain no trans fats.

The company will use canola-based oil with corn and soy oils by year's end for its baked items,

pies and cookies.

In a bid to tap into growing consumer interest in the provenance of food, the fast-food

chain recently switched its supplier of both coffee beans and milk. UK chief executive Steve

Easterbrook said: "British consumers are increasingly interested in the quality, sourcing and ethics

of the food and drink they buy". McDonald's coffee is now brewed from beans taken from stocks

that have been certified by the Rainforest Alliance, a conservation group. Similarly, milk supplies

used for its hot drinks and milkshakes have been switched to organic sources which could account

for 5% of the UK's organic milk output. The company has also expanded the McDonald's menu in

recent decades to include alternative meal options, such as salads and snack wraps, in order to

capitalize on growing consumer interest in health and wellness. McDonald's predominantly sells

hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast

items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and

other localized fare. This local deviation from the standard menu is a characteristic for which the

chain is particularly known, and one which is employed either to continue by regional food taboos

(such as the religious prohibition of beef consumption in India) or to make available foods with

which the regional market is more familiar (such as the sale of Mc Rice in Indonesia). There have

been continuous efforts to enhance variety in the menu by developing more such products.

70
 McDonald's has also re-engineered its operations repeatedly in its 11 years in India to

address the special requirements of a vegetarian menu. Vegetable products are 100% vegetarian,

They are prepared separately, using dedicated equipment and utensils. Only pure vegetarian oil is

used as a cooking medium. Cheese and sauces are completely vegetarian and egg less. Separation

of vegetarian and non-vegetarian food products is maintained throughout the various stages of

procurement, cooking and serving.

Most Respected Company' for four consecutive

years, 2003-2007 in the Food Services sector, by

Businessworld

Most Wanted Brand of the Year' Award 2003 &

2004 by Franchising Holdings India Ltd.

Retailer of the Year' Award for catering services,

2004-2006 at the Images Retail Awards.

The 'Most Preferred Fast Food Outlet' 2006 &

2007 by Awaaz Consumer Award, hosted by

CNBC.

Star Retailer - The Consumer Way, Food Services

Retailer' of the Year 2006 & 2007, by Franchise

India

71
 Amity Corporate Excellence Award'-in 2007 &

2008

McDonald's India - A decade of quality service

For its unparalleled benchmarks established in the QSR sector McDonalds India has been

bestowed with many prestigious awards. To name a few:

ANALIYSIS ON MCDONALDS ADVERTISEMENT

AND PUBILE RELATIONS.

72
Over the years, McDonald's has developed TV advertising campaigns that have become, like

McDonald's, a part of our lives and culture. McDonald's commercials have focused not only on

product, but rather on the overall McDonald's experience, portraying warmth and a real slice of

every day life. This "image" or "reputation" advertising has become a trademark of the company

and created many memorable television moments and themes, including:-

McDonald's is Your Kind of Place (1967)

You Deserve a Break Today (1971)

We Do it All for You (1975)

Twoallbeefpattiesspecialsaucelettucecheesepicklesonionsonasesameseedbun (1975)

You, You're The One (1976)

Nobody Can Do It Like McDonald's Can (1979)

Renewed: You Deserve a Break Today (1980 & 1981)

Nobody Makes Your Day Like McDonald's Can (1981)

McDonald's and You (1983)

It's a Good Time for the Great Taste of McDonald's (1984)

Good Time, Great Taste, That's Why This is My Place (1988)

73
Food, Folks and Fun (1990)

McDonald's Today (1991)

What You Want is What You Get (1992)

Have you Had your Break Today? (1995)

My McDonald's (1997)

Did Somebody Say McDonald's (1997)

We Love to See You Smile (2000)

There's a little McDonald's in Everyone (2001) - Canada Only

Im lovin' it (2003)

McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual

media (television, radio, and newspaper), the company makes significant use of

billboards(outdoors, on which large advertisements or notices are posted.) and signage, sponsors

sporting events from ranging from Little League to the Olympic Games, and makes coolers of

orange drink with their logo available for local events of all kinds. Nonetheless, television has

always played a central role in the company's advertising strategy.

EMPLOYEE BENEFIT PLANS

The Companys Profit Sharing and Savings Plan for U.S.-based employees includes a 401(k)

feature, a leveraged employee stock ownership (ESOP) feature, and a discretionary employer

profit sharing match. The 401(k) feature allows participants to make pre-tax contributions that are

partly matched from shares released under the ESOP. The Profit Sharing and Savings Plan also

provides for a discretionary employer profit sharing match at the end of the year for those eligible

participants who have contributed to the 401(k) feature. All contributions and related earnings can

be invested in several investment alternatives as well as McDonalds common stock in accordance

with each participants elections. Participants contributions to the 401(k) feature and the

74
discretionary employer match are limited to 20% investment in McDonalds common stock. The

Company also maintains certain supplemental benefit t plans that allow participants to (i) make

tax-deferred contributions

and (ii) receive Company-provided allocations that cannot be made under the Profit Sharing and

Savings Plan because of Internal Revenue Service limitations. The investment alternatives and

returns are based on certain market-rate investment alternatives under the Profit Sharing and

Savings Plan. Total liabilities were $415.3 million at December 31, 2007 and $378.6 million at

December 31, 2006 and were included in other long-term liabilities in the Consolidated balance

sheet. The Company has entered into derivative contracts to hedge market-driven changes in

certain of the liabilities. At December 31, 2007, derivatives with a fair value of $100.8 million

indexed to the Companys stock as well as an investment totalling $82.0 million indexed to certain

market indices were included in miscellaneous other assets in the Consolidated balance sheet. All

changes in liabilities for these nonqualified plans and in the fair value of the derivatives are

recorded in selling, general & administrative expenses. Changes in fair value of the derivatives

indexed to the Companys stock are recorded in the income statement because the contracts

provide the counterparty with a choice to settle in cash or shares.

Total U.S. costs for the Profit Sharing and Savings Plan,

including nonqualified benefits and related hedging activities, were (in millions): 2007$57.6;

2006$60.1; 2005$58.0. Certain subsidiaries outside the U.S. also offer profit sharing, stock

purchase or other similar benefit plans. Total plan costs outside the U.S. were (in millions): 2007

$62.7; 2006$69.8; 2005$54.1. The total combined liabilities for international retirement plans

were $129.4 million and $197.6 million at December 31, 2007 and 2006, respectively, primarily in

Canada and the U.K. Other postretirement benefits and post-employment benefits were immaterial.

75
 REASON TO WORK WITH MCDONALDS

Fast-track Career Progression

Young , Energetic & Flexible Environment

Excellent learning Potential

Dignity of Labour

World class Training Systems

Global Exposure

Good Benefits

76
. DATA ANALYSIS :-
GENDER:-
MALES 47
FEMALES 53
AGE GROUP:-
UNDER 16 1
16 25 18
25-35 72
ABOVE 35 9

1) HAVE YOU EVER VISITED McDONALDS?

4% - non visitors
96% -visitors

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 ANALYSIS :- majority of the sample segment visit McDonalds because it
is the only brand avialable in market

2) WHAT MAKES YOU PATRONIZE McDONALDS?

0% - print media advertisements

20% - electronic media
40% - word of mouth communication
60% - brand name
ANALYSIS :- majority of visitors follow brand name as
they feel that quality is mentained and it also serves as
status symbol

3) HOW OFTEN DO YOU VISIT McDONALDS?

78
 26% - once in a week
11% -few days a week
39% - once in a month
24% - few days a month

ANALYSIS :- data analysis shows that majority of visitors visit on monthly

basis. Major visitors are from middle class society and so it is difficult to sustain
more frequent visits

4) WHAT IS YOUR MAIN PURPOSE OF VISITING

McDONALDS?

79
 1% -doing some work
2% - waiting
19%- chatting
74% - eating

ANALYSIS :- the data shows that major purpose of visitors is eating

5) WHY DO YOU PREFER VISITING McDONALDS?

18% - good service

39% - good quality
23% - reasonale price
16% - good taste

ANALYSIS :- data shows people prefer McDonalds due to good quality. Since
consumers want maximum return for their money, quality is most promising
domain were maximum return can be reeped

6) YOU LIKE VISITING McDONALDS ALONGWITH-

80
 17%-GIRL /BOY FRIEND
54%-FRIENDS
22%- FAMILY
2%- ALONE

ANALYSIS :- MAJORITY PEOPLE VISIT WITH FRIENDS. In Indian

society, one has to mentain the decorum of social behaviour when with family
while among friends one is free of constrains, thus major people prefer
company of friends.

7) McDONALDS SHOULD IMPROVE ITS-

21% - FOOD
18% - SERVICE
21% - PRICE

81
 36% - LOCATION
ANALYSIS :- MAJORITY OF VISITORS THINK THAT
MCDONALDS SHOULD IMPROVE THEIR LOCATIONS. This
because in DEHRADUN, outlets are opened at central
points which may be far of from many places.

8) HOW MUCH SATISFIED ARE YOU WITH THE VAREITY OF

MEALS SERVED?

3% - VERY DISSATISFIED
6% - DISSATISFIED
30% - NEUTRAL
51%- SATISFIED
10 % - VERY SATISFIED

ANALYSIS :- major segment of people appear satisfied

with variety of meal served. This is because the
consumers feel that their money is effeciantly valued
in terms of services provided

9) HOW MUCH SATISFIED ARE YOU WITH THE PRICE OF

THE MEALS SERVED?

82
ANALYSIS MAJOR SEGMENT OF THE PEOPLE APPEAR TO BE
SATISFIED WITH THE PRICES OF THE MEALS SERVED. Items
like MAC ALLU TIKKI, MACPUFFS etc are quite economical
and good enough to satisfy hunger pangs

10) HOW MUCH SATISFIED ARE YOU WITH THE

SERVICE OF McDONALDS?

7%- VERY DISSATISFIED

5% - DISSATISFIED
27% - NEUTRAL
83
 48% - SATISFIED
13% - VERY SATISFIED
ANALYSIS: MAJOR SEGMENT APPEARED TO BE
SATISFIED WITH THE SERVICE.

11) HOW MUCH SATISFIED ARE YOU WITH THE

QUALITY OF THE MEALS SERVED?

5%- VERY DISSATISFIED

4% - DISSATISFIED
14% - NEUTRAL
51% - SATISFIED
22% - VERY SATISFIED

ANALYSIS: MAJOR SEGMENT APPEARS TO BE SATISFIED

WITH THE QUALITY OF THE MEALS SERVED.

12) HOW MUCH SATISFIED ARE YOU WITH THE

CLEANLINESS OF THE RESTRAUNT?

84
 5%- VERY DISSATISFIED
4% - DISSATISFIED
14% - NEUTRAL
51% - SATISFIED
22% - VERY SATISFIED

ANALYSIS : MAJOR SEGMENT APPEARS TO BE SATISFIED WITH

CLEANLINESS OF THE RESTRAUNT.

13) HOW MUCH SATISFIED ARE YOU WITH THE SELF

SERVICE AT THE RESTRAUNT?

85
 5%- VERY DISSATISFIED
4% - DISSATISFIED
14% - NEUTRAL
51% - SATISFIED
22% - VERY SATISFIED

ANALYSIS : MAJOR SEGMENT APPEARS TO BE SATISFIED

WITH THE SELF SERVICE AT THE RESTRAUNT.This is because
younger generation prefer more informal ambiance rather
than a sophisticated environment.

14) HOW MUCH SATISFIED ARE YOU WITH THE

AMBIENCE OF McDONALDS?

86
 1%- VERY DISSATISFIED
8% - DISSATISFIED
30% - NEUTRAL
47% - SATISFIEd
10% - VERY SATISFIED

ANALYSIS: MAJOR SEGMENT APPEARS TO BE SATISFIED WITH THE

AMBIENCE OF THE RESTRAUNT because it entertains the liveliness of
youth
15) HOW MUCH SATISFIED ARE YOU WITH THE
FREINDLINESS OF THE EMPLOYEES?

87
 2%- VERY DISSATISFIED
10% - DISSATISFIED
27% - NEUTRAL
47% - SATISFIED
14% - VERY SATISFIED

ANALYSIS- MAJOR SEGMENT APPEARS TO BE SATISFIED WITH

THE FREINDLINESS OF THE EMPLOYEES
16) ARE YOU SATISFIED WITH THE PRODUCTS SERVED AT
McDONALDS IN COMPARISON TO OTHER ?

88
 1%- VERY DISSATISFIED
9% - DISSATISFIED
19%- NEUTRAL
50% - SATISFIED
17% - VERY SATISFIED

ANALYSIS:- MAJOR SEGMENT APPEARS TO BE SATISFIED WITH

THE THE PRODUCTS SERVED AT MCDONALDS. This is because the
easely satisfy the need of snacks at economical prices

17) HOW MUCH SATISFIED ARE YOU WITH THE

OVERALL PERFORMANCE OF McDONALDS?

1%- VERY DISSATISFIED

6% - DISSATISFIED
13%- NEUTRAL
57% - SATISFIED
19% - VERY SATISFIED

ANALYSIS:- MAJOR SEGMENT OF THE PEOPLE APPERARS TO BE

SATISFIED WITH THE OVERALL PERFORMANCE OF McDONALDS.

89
 CHAPTER:-6

ANALIYSIS ON VALUATION OF TAX OF

MCDONALDS CORPORATION.

The Company records a valuation allowance to reduce its deferred tax assets if it is more

likely than not that some portion or all of the deferred assets will not be realized. While the

Company has considered future taxable income and ongoing prudent and feasible tax strategies,

including the sale of appreciated assets, in assessing the need for the valuation allowance, if these

estimates and assumptions change in the future, the Company may be required to adjust its

valuation

90
allowance. This could result in a charge to, or an increase in, income in the period such

determination is made. In addition, the Company operates within multiple taxing jurisdictions and

is subject to audit in these jurisdictions. The Company records accruals for the estimated outcomes

of these audits, and the accruals may change in the future due to new developments in each matter.

During 2007, the Company recorded a $316 million benefit as a result of the completion of an IRS

examination of the Companys 2003-2004 U.S. tax returns. During 2005, the Company recorded a

$179 million benefit due to the completion of an IRS examination of the Companys 2000-2002

U.S. tax returns. The Companys 2005-2006 U.S. tax returns are under audit and the completion is

expected in late

2008 or early 2009.

Deferred U.S. income taxes have not been recorded for temporary differences totalling

$6.7 billion related to investments in certain foreign subsidiaries and corporate joint ventures. The

temporary differences consist primarily of undistributed earnings that are considered permanently

invested in operations outside the U.S. If managements intentions change in the future, deferred

taxes may need to be provided.

BALANCE SHEET OF MCDONALDS 2014-15

PERIOD ENDING 30-Jun-12 31-Mar-13 31-Dec-14 30-Sep-15

Assets
Current Assets
Cash And Cash
2,142,100 2,438,400 2,136,400 4,282,700
Equivalents
Short Term - - - -

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Liabilities
Current Liabilities
Accounts
2,120,900 2,451,000 2,739,000 4,122,100
Investments
Payable
Net Receivables 784,600 848,000 904,200 812,500
Short/Current
Inventory 1,055,500 143,700 149,000 144,500
288,200 613,500 17,700 454,200
Other Current 379,200 449,300 435,700 596,000
Long Term Debt
Other Current
Assets
1,020,500 - 251,400 -
Total Current 4,361,400 3,879,400 3,625,300 5,835,700
Liabilities
Total Current
Assets
3,429,600 3,064,500 3,008,100 4,576,300
Long Term 1,060,100 1,064,400 1,036,200 1,032,300
Liabilities
Long Term Debt 7,885,500 8,199,900 8,416,500 8,569,400
Investments
Other Liabilities 1,652,500 1,471,000 1,074,900 1,154,300
Property Plant 20,106,600 20,975,200 20,845,700 20,526,200
Deferred Long

and Equipment
Term Liability 941,600 971,100 1,066,000 1,002,900
Goodwill 2,198,300 2,254,300 2,209,200 2,156,100
Intangible Assets - - - -
Charges
Accumulated - - - -
Minority Interest - - - -
Negative
Amortization
- - - -
Other Assets 1,268,500 1,300,200 1,307,400 1,278,900
Goodwill
Deferred Long - - - -
Total Liabilities 13,909,200 13,706,500 13,565,500 15,302,900

Term Asset
Stockholders' Equity
Misc Stocks
Charges
Total Assets 28,994,900 29,473,500 29,023,800 30,829,200
Options - - - -

Warrants
Redeemable
- - - -
Preferred Stock
Preferred Stock - - - -
Common Stock 16,600 16,600 16,600 16,600
Retained
25,881,200 26,592,500 25,845,600 24,585,700
Earnings
Treasury Stock (14,832,700) (14,371,900) (13,552,200) (11,858,500)
Capital Surplus 3,957,000 3,731,300 3,445,000 3,228,200
Other (201,500)

Stockholder 63,600 92 (296,700) (445,700)

Equity
 CHAPTER:-7

ANALIYSIS ON MCDONALDS IMPORT- EXPORT.

The business is managed as distinct geographic segments. Significant reportable segments

include the United States (U.S.), Europe, and Asia/Pacific, Middle East and Africa (APMEA). In

addition, throughout this report we present Other Countries & Corporate that includes operations

in Canada and Latin America, as well as Corporate activities and certain investments. The U.S.,

Europe and APMEA segments account for 35%, 39% and 16% of total revenues, respectively.

France, Germany and the United Kingdom (U.K.), collectively, account for approximately 60% of

Europes revenues; and Australia, China and Japan a 50%-owned affiliate accounted for under the

equity method), collectively, account for over 50% of APMEAs revenues. These six markets along

with the U.S. and Canada are referred to as major markets throughout this report and comprise

over 70% of total revenues. The Company continues to focus its management and financial

resources on the McDonalds restaurant business as we believe the opportunities for long-term

growth remain signifi cant. Accordingly, during the third quarter 2007, the Company sold its

investment in Boston Market. In 2006, the Company disposed of its investment in Chipotle

Mexican Grill (Chipotle) via public stock offerings and a tax-free exchange for McDonalds

common stock. As a result of the disposals during

93
2007 and 2006, both Boston Markets and Chipotles results of operations and transaction gains

have been reflected as discontinued operations for all periods presented. In analyzing business

trends, management considers a variety of performance and financial measures including

comparable sales growth, System wide sales growth, restaurant margins and returns.

Constant currency results exclude the effects of foreign currency translation and are calculated by

translating current year results at prior year average exchange rates. Management reviews and

analyzes business results in constant currencies and bases certain compensation plans on these

results because we believe they better represent the underlying business trends.

Comparable sales are a key performance indicator used within the retail industry and are

indicative of acceptance of the Companys initiatives as well as local economic and consumer

trends. Increases or decreases in comparable sales represent the percent change in constant

currency sales from the same period in the prior year for all restaurants in operation at least

thirteen months, including those temporarily closed. Some of the reasons restaurants may be

temporarily closed include road construction, reimaging or remodelling, rebuilding, and natural

disasters. McDonalds reports on a calendar basis and therefore the comparability of the same

month, quarter and year with the corresponding period of the prior year will be impacted by the

mix of days.

The number of weekdays, weekend days and timing of

holidays in a given timeframe can have a positive or negative impact on comparable sales. The

Company refers to this impact as the calendar shift/trading day adjustment. This impact varies

geographically due to consumer spending patterns and has the greatest impact on monthly

comparable sales. Typically, the annual impact is minimal, with the exception of leap years.

System wide sales include sales at all restaurants, whether operated by the Company, by

franchisees or by affiliates. While sales by franchisees and affiliates are not recorded as revenues

94
by the Company, management believes the information is important in understanding the

Companys financial performance because it is the basis on which the Company calculates and

records franchised and affiliated revenues and is indicative of the financial health of our franchisee

base.

RESEARCH METHDOLOGY

This project is prepared with the help of theoretical knowledge as well as

practical knowledge & a crumb of advises & suggestions from the concerned

professors.

The theoretical pert taken from the various books & magazines available on

this subject. And other recent happing in marketing is taken from magazines &

news paper.

As far as practical is concerned, all the information about the companies

information available on net.

Overall this mission has been completed with the combination of al those things &

it had been with the best of my facts & information.

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 BIBLOGRAPHY

BOOKS:-

BRAND PRACTICES.

MAZINES:-

BUSINESS WORLD.

100 TOP BRANDS.

THE VALUABLE BRANDS OF INDIA.

WEB SITES:-

www.mcdonaldsindia.com

www.mcdonalds.com

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