MCDONALD'S BUSINESS CASE STUDY

INTRODUCTION:

The first McDonald's was built in 1940 by the McDonald brothers Dick and Mac .
Started off as a hot dog stand in CA The McDonald brothers realized that
hamburgers were their most profitable menu item, and changed their business to
serve a limited menu. About McDonald • McDonald’s is a large corporation in the
fast food industry. • They have been around since 1955 when Ray Kroc started the
chain of McDonalds. They have been growing ever since. • The majority of the
restaurants are owned through franchises. About McDonald • They employ
447,000 people. • They have over 3,200 restaurants in over 119 countries. • The
majority of the McDonald’s franchises are owned by individual franchises. • Their
primary competitors are other fast food chains such as Burger King and Wendy’s.
The competition can get pretty intense to build customer loyalty to their food. •
The McDonalds Brand is one of the most well known Brands in the world.

STRATEGY:

McDonald’s Strategies • McDonald’s real goal as a corporation is to make money

for the stockholders. Their stated goal is Long term sustainable growth for all
stakeholders. • McDonalds has realized that they are reaching a big maturation
stage in the business cycle, based on its profits slowing down more and more every
year. It is going to be time to reinvent or re-image this corporation to try to start the
business cycle over again. McDonald’s Strategies.

SITUATION:

The first McDonald’s Drive-Thru opened in Sierra Vista, Arizona in 1975 Happy
Meals were added to McDonald’s menu in 1979 McDonald’s launched the new
worldwide Balanced Active Lifestyles public awareness campaign in 2005
McDonald’s celebrated its 50th Anniversary on April 15, 2005 Going International
•1971 McDonalds really starts going global Asian: Tokyo Ginza District, Japan
European: Netherlands, Munich, Germany •1967 - Canada & Puerto Rico •1971 -
Tokyo, Japan, Amsterdam, Netherlands & Sydney, Australia •1979 - Rio de
Janeiro, Brazil •1990 - Moscow, Russia & China.

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COST-ESTIMATION:

On August 5, 2013, The Guardian revealed that 90 percent of McDonald's UK

workforce are on zero hour contracts, making it possibly the largest such private
sector employer in the country. A study released by Fast Food Forward conducted
by Anzalone Liszt Grove Research showed that approximately 84 percent of all
fast food employees working in New York City in April 2013 had been paid less
than their legal wages by their employers.
From 2007 to 2011, fast food workers in the US drew an average of $7 billion
of public assistance annually resulting from receiving low wages. The McResource
website advised employees to break their food into smaller pieces to feel fuller,
seek refunds for unopened holiday purchases, sell possessions online for quick
cash, and to "quit complaining" as "stress hormone levels rise by 15 percent after
ten minutes of complaining." In December 2013, McDonald's shut down the
McResource website amidst negative publicity and criticism. McDonald's plans to
continue an internal telephone help line through which its employees can obtain
advice on work and life problems.
Liberal thinktank the Roosevelt Institute accuses some McDonald's restaurants of
actually paying less than the minimum wage to entry positions due to
'rampant' wage theft. In South Korea, McDonald's pays part-time employees $5.50
an hour and is accused of paying less with arbitrary schedules adjustments and pay
delays. In late 2015, Anonymous aggregated data collected by Glassdoor suggests
that McDonald's in the United States pays entry-level employees between $7.25 an
hour and $11 an hour, with an average of $8.69 an hour. Shift managers get paid an
average of $10.34 an hour. Assistant managers get paid an average of $11.57 an
hour. McDonald's CEO, Steve Easterbrook, currently earns an annual salary of
$1,100,000. His total compensation for 2017 was $21,761,052.

CHALLENGES:

Political Challenges •Health and Safety Guidelines The director of the obesity
program for the Children's Hospital Boston, David Ludwig, claims that "fast food
consumption has been shown to increase calorie intake, promote weight gain, and
elevate risk for diabetes" Center for Science in the Public Interest, a long-time fast
food critic over issues such as caloric content, trans fats and portion sizes Political
Challenges • Ecological/environmental issue – Fast food industry giants such as
Wendy's, Pizza Hut, and McDonalds are some of the largest consumers of paper
products in the US. "Every year millions of pounds of food packaging waste litter
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our roadways, clog our landfills and spoil our quality of life. • Home market
pressure-groups • International pressure-groups – Pushing for increased regulations
to make companies more responsible Political Challenges • Wars and conflicts
war between countries where the company operates. They have also become a
symbol of capitalism and Americanism meaning that they have now become the
target of terrorist group and attack. Economic Challenges • McDonald’s must
consider economic challenges when expanding internationally. Low set up costs =
rapid expansion One of the challenges for fast food industry is to keep the prices
low for the customer. Franchising facilitates set ups » McDonald’s corporation
provides financing assistance and training for new franchise owners to manage
cash flow and keep businesses profitable. Social Challenges The main reason is the
consumers’ worries had greatly increased with • health fears so customers now opt
for more healthier options like subway which offeres more of a variety for health
conscious customers.

ANALYSIS:

The siblings Richard and Maurice McDonald opened in 1940 the first McDonald's
at 1398 North E Street at West 14th Street in San Bernardino, California but it was
not the McDonald's recognizable today; Ray Kroc made changes to the brothers'
business to modernize it. The brothers introduced the "Speedee Service System" in
1948, putting into expanded use the principles of the modern fast-food restaurant
that their predecessor White Castle had put into practice more than two decades
earlier. The original mascot of McDonald's was a chef hat on top of a hamburger
who was referred to as "Speedee". In 1962 the Golden Arches replaced Speedee as
the universal mascot. The symbol, Ronald McDonald, was introduced in 1965. The
clown, Ronald McDonald, appeared in advertising to target their audience of
children.

On May 4, 1961, McDonald's first filed for a U.S. trademark on the name
"McDonald's" with the description "Drive-In Restaurant Services", which
continues to be renewed. By September 13, McDonald's, under the guidance of
Ray Kroc, filed for a trademark on a new logo—an overlapping, double-arched
"M" symbol. But before the double arches, McDonald's used the a single arch for
the architecture of their buildings. Although the "Golden Arches" logo appeared in
various forms, the present version was not used until November 18, 1968, when
the company was favored a U.S. trademark.

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GROWTH:

CONCLUSION:
Because McDonald's has taken much of the hard work out of stock management, Restaurant
Managers are able to spend more time focusing on delivering McDonald's high standards of
Quality, Service and Cleanliness. Customers are happy because they can be sure the item they
want is on the menu that day. Efficient stock management is essential to any business. It enables
the business to operate in a responsible way.The system also minimises waste. Efficient use of
materials means that society's resources are being used well with very few waste products. For
example, fewer materials end up as waste in landfill sites. This leads to a reduction in costs.
Due to lower costs, McDonald's can pass the benefits on to customers, providing better service
and lower prices. The reduction of waste provides a win/win/win situation for McDonald's, its
customers and wider society.

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