McDonalds offers four types of franchises:

1. Traditional restaurant: franchise offered is located in freestanding buildings, store

fronts, food courts, and other locations. The franchisee operates a full-menu restaurant, offering
the public a high standard of quality and uniformity in food and service. The term of a traditional
restaurant is generally 20 years.
2. Satellite locations: The franchisee is granted the right to operate the franchise in a
retail store, strip center, airport, universities, hospitals, and other diverse locations. These
restaurants serve a scaled-down menu of a traditional McDonalds Restaurant and in some cases
may also serve non-McDonalds trademarked products. The term of the franchise depends on the
location.
3. STO and STR locations: Small Town Oil locations are situated in fuel
stations/convenience stores, and operate a full-menu McDonalds restaurant within the shared
space. Small Town Retail locations that anchor a small retail center in rural communities.
4. BFL franchises:Business Facilities Lease franchises grant franchises with leases that
include the business facilities. Under a BFL, the franchisee has a conditional option to purchase
certain restaurant assets after the first year and extend the franchise for up to 20 years after the
beginning of the term.

Logistic
For McDonalds Keystone distribution works as a 3PL. (Waters; 2003; p.90)
However, responsibilities of 3PL is discussed in Appendix B under Supply chain
frameworks.

Keystone Distribution UK is a subsidiary of Keystone Foods LLC, which provides

food manufacturing and distribution services to quite a large amount of customers in
America, Asia, and Europe. Keystone distribution was formed in 1977 in partnership
with McDonalds for its UK baker of hamburger bun and since then company is
progressing along with McDonalds. Keystone distributor has been efficiently
supplying everything to its existing client need to run the business successfully.
Keystones manages a large part of McDonalds UK supply chain and replenishing its
1200 UK stores from mops and ketchup to the essential ambient , fresh , frozen
foods that makes up the McDonalds menu.
Structure of Supply Chain:
McDonalds deals with different suppliers for its different products and ultimately
which aims to provide customers great taste and on affordable price. McDonalds
has been working in partnership with household brand such as with Coca cola,
Tropicana and Buxton who act as second tier supplier because they supply its
products to keystone distribution who works for McDonalds as first tier supplier. Also
there are number of other suppliers such as Sun Valley and Moy Park who supply
McDonalds with Chicken product all these works as second tier supplier for
McDonalds.

All the different supplier deals with Keystone Distributor, who then sends material
directly to McDonalds to run the business smoothly by providing on affordable
prices, delivering products on time and helps in outward movement of orders and
receiving payments from customers. Overall, keystone is a important player in
structure of supply chain for making upward and downward activity successful. The
demerits of managing chain of supplier at McDonalds is to incur heavy investment of
time, money, and also it resources needed to implement and has to overlook the
supply chain as well and increase dependency.

Managing the supply chain

As the McDonalds UK distributor, it's the responsibility of Keystone to provide the
perfect service and product every time they need and also to coordinate the
requirement of hundreds of McDonalds around UK.

Keystone uses the latest technology and software to work closely with McDonalds
marketing and business plan. Keystones ensures managing peak and troughs as
they come along for keeping smooth supply chain and ensures there are no out of
stocks. On an average Keystone carries five days inventory in their store and
delivers three to four times per week inventory in each restaurant. To meet that
delivery they have 300 vehicles, tractors and trailers which help them to run these
logistic operations within UK and including the Isle of Man and channels Island by
delivering around one million cases each week.

Their biggest challenge is ensure those vehicles arrive at the restaurants on time
and containing everything being ordered and meeting 100 percent quality of product
including frozen, chilled or dry. However running those vehicle cause heavy amount
of pollution and damage to environment the challenge here is to make sure eco-
friendly tool to be used.

Political
As the biggest fast food restaurant chain in the world, McDonalds must keep
adapting its strategies based on the conditions of its industry environment.

McDonalds considers the impacts of the political environment on its industry. In

McDonalds case, the most significant political external factors are as follows:

1. Increasing international trade agreements (opportunity)

2. Pending tax reform (opportunity)
3. Evolving public health policies (threat and opportunity)

McDonalds has the opportunity to expand its business based on improved

international trade, which can enhance global supply chains. McDonalds also
has the opportunity to reform its practices and strategies to lessen the impact of
taxation on the business without violating the law. However, public health policy
increasingly tends to discourage people from consuming fast foods from firms
like McDonalds. Nonetheless, the company has the opportunity to address this
external factor by improving the healthfulness of its products. In this aspect of
McDonalds, the political external factors present opportunities that outweigh
threats.

Economic Factors Important to McDonalds

Economic changes around the world influence McDonalds industry environment,
considering its global nature. In McDonalds case, the following are the most
notable economic external factors:

1. Slow but stable growth of the U.S. economy (opportunity)

2. Stable but risky European economies (threat)
3. Slowdown of the Chinese economy (threat)

Low meal prices are less of a concern for some consumers as a slow economy begins to rebound.
IBISWorld predicts fast food restaurants need to expand their menus when price isnt a top concern
for consumers. QSR magazine reports 2011 sales for McDonalds outpaced the companys 2009
sales by $1.5 billion after the chain included fruit smoothies and other new items on its menu.
Consumer demand for healthy meals is causing McDonalds and other fast food restaurants to add
fruits and vegetables to their menus, according to "QSR."

Economical factors always come as vital issue to business organisations. For

example, more or less all companies are affected by ongoing global economic
slowdown. Due to international business operation, McDonald's faces different scale
of tax and revenue measurement in different country. McDonald's also faces
difficulties because of international currency fluctuations especially in its global food
distribution. Local economical condition is also responsible for affecting McDonald's
operation. If the local economy is critical, people are usually discouraged to spend
more money for their food. As a result, company is affected.

Technological Factors in McDonalds Business

McDonalds success partly depends on technological applications. This aspect of
the PESTEL/PESTLE analysis pertains to the impact of technologies and related
trends on the remote or macro-environment of companies. McDonalds must
address the following technological external factors:

1. Moderate R&D activity in the industry (opportunity)

2. Increasing business automation (opportunity)
3. Increasing sales through mobile devices (opportunity)
McDonalds has the opportunity to increase its research and development
investments to improve business effectiveness and efficiency. Also, McDonalds
can apply more automation to maximize productivity, based on the external factor
of increasing business automation. Furthermore, McDonalds can improve its
mobile services to tap more consumers via its website or mobile app. In the
technological aspect of the PESTEL/PESTLE analysis, McDonalds has major
opportunities for growth.

Analysis of Competitive Forces on

McDonald's
Treats of new entrants
The new entrants in the market can make some considerable treats for existing
companies. If the new entrants really carry high brand value, the existing companies'
profit, market share and overall value will be affected. For example, if KFC opens a
new store in a certain area where McDonald's already exists, it will make some
barrier for McDonalds. On the other hand, it is also difficult to find a suitable location
to open a store in a new area.

Power of suppliers
Suppliers' power is another threat for business organisation. The company who is
going to produce the product, it needs some necessary raw materials. As raw
materials are normally delivered by suppliers, producing company depends on
suppliers in this case. So, the nature of the relationship between company and
suppliers affects the business. McDonald's realizes this truth and practices friendly
relationship with its suppliers.

Buyers' power
In restaurant business, customers are playing the role of buyers. In this case, buyers
are powerful because, they have thousands of ways to spend their money. They
choose the quality food with cheap price and standard service. McDonald's tries to
have the maximum numbers of customers from the same competitive market by
providing outstanding service.
Threats of substitutes
If the company's product is easy to substitute, it may affect the company. For
example- if other restaurant can produce the 'Big Mac' with same taste like
McDonald's, it will lose its customers. So, company needs to make something
effective and sustainable to ensure its speciality.

Threats of rivalries
The competitive position of a company is depends on its numbers of competitors
and the power of its competitors. It is needless to say that in present global market,
competitors are the main barrier of a company. McDonald's takes this challenge as
their mission to achieve its destination.