strategic management presentation
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STRATEGIC MANAGEMENTPRESENTATION
FAST FOOD INDUSTRY
Market Size and Growth Rates• Earning trillion-dollar per year. • In the United States, it is sharing 10% of the GDP. Canada- 13%, 13% - Mexico, 11% -European Union, 12% - Latin America and 14%- Asia (2007).
Scope of rivalry Local to international
Stage in Industry Life Cycle
Curve is flatter- the stage of expansion.
Forces driving Industry Competition
IndustryCompetitors
Rivalry Among Existing Firms
PotentialEntrants
Buyers
Other Stakeholders
Suppliers
Substitutes
RelativePower of Unions,Governments,etc.
Threatof New Entrants
Bargaining Power of Buyers
Threatof Substitute Products or Services
Bargaining Power of Suppliers
Relatively weak
Very strong
Very strong
Moderate to strong
Weak
Supplier Power• Willingness of supplier• Supplier-seller collaboration• Supplies are mostly commodities• Customers- industry leaders
• Barriers to Entry• Economies of scale• Unattractive market growth • Competitors strong offensive moves• Competitors expertise in
marketing and efficiency
Threat of Substitutes• Readily available • Attractively priced • Satisfactory in terms of quality
Degree of Rivalry• Several competing companies. • Product and service differentiation inadequacy. • Aggressive in making fresh moves - Domestic demand is growing slowly- Competitors often rely on price cuts to boost volume- Low switching costs for consumers
Buyers power•A large number of small operators •High fixed costs, •Undifferentiated and replaced•Switching cost low•Consumer-price-sensitive, •Produce the product•Purchases in small volumes •Well-informed about sellers’ products,
prices, and costs
INDUSTRY ANALYSIS
Offensive strategies and defensive approach
Competitive pressure from substitute products, quick, convenient service Threat of new entrants and power of suppliers is not significant-
capital to invest in real estate
Driving force
McDonald’s Competitive analysis matrix
The competitive profile matrix defines the firm major competitor and their particular strengths and weakness & position
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Competitive profile matrix
Mc Donald’s Burger Kings Yum Brands Wendy’s
Critical Success Factor Weight Rating Weighted score
Rating Weighted score`
Rating Weighted score
Rating Weighted score
Price 0.15 4 0.60 3 0.45 3 0.45 3 0.45
Financial Position 0.08 4 0.32 3 0.32 3 0.24 2 0.16
Customer loyalty 0.10 4 0.40 3 0.40 3 0.30 2 0.20
Advertising 0.10 3 0.30 3 0.30 4 0.40 2 0.20
Product Quality 0.10 4 0.40 3 0.40 4 0.40 2 0.20
Innovation 0.15 3 0.45 3 0.45 3 0.45 2 0.30
Market share 0.10 4 0.40 2 0.20 3 0.30 2 0.20
Management 0.07 4 0.28 3 0.21 3 0.21 3 0.21
Global Expansion 0.15 4 0.60 2 0.30 3 0.45 1 0.15
Grand Total 1 3.75 3.03 3.20 2.07
MCDONALD’S CORPORATION
• Largest Chain of Restaurants serving nearly 47 Million customer daily with 31,000 outlet in 119 countries, employing 1.5million people.
• 15% owned and operated directly• Franchisee and JV - revenues come from the rent, royalties and fees
paid by the franchisees & sales in company-operated restaurants.• Profit Grew Over 30% over three years ending to $52.8 billion.• 9% Growth In Operating income to $5.9 billion. • Main characteristic- local deviation from the standard menu• Key success factors- Company Expansion Strategy
McDonald’s Vision, Mission and Value
MACDONALD OVERVIEW
1960’s: introducing Hamburger University., big idea- Big Mac
1970’s: introduced happy meal, thru drive.
1990’s: acquired stakes, web- McDonald’s.com- macdonalization
2003: revitalizing plan - Plan to Win strategy, with its strategic focus on ‘being better, not just bigger’.
Till 2008: 30496 outlets.ranked 5 most admired company in CRS .named as marketer of year by advertising age“ when and where you want it” & "Forever Young”For mobile population: offering more drive thrus- China and US
double drive thrus- in Canada and Russia delivery services – Singapore, Egypt, India
top 8 most powerful brand
2009: Plan to win strategy, focus on being one brand, one system and one plan.
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Internal Audit
Strength
• Strong Brand name, image & reputation• Large market share• Strong global presence• Specialized training for managers known
as hamburger university• Plan to win focuses on 4 p’s• Strong financial performance& position• Proven production methods & countless
new innovation ( breakfast, café etc)• Customer focus• The company has favorable access to
distribution networks • Strong MCD performance in the global
market place
Weakness
• Unhealthy food image• High staff turnover including top
management• Customer losses due to fierce
competition• Legal actions related to health issues :
use of trans fat & beef oil• Uses HCFC – 22 to make polystyrene
that is contributing to ozone depletion• lack of product offerings to meet varied
customer tastes and preferences • Many restaurants are outdated
SWOT ANALYSIS
External Audit
Opportunities• Growing health trends among the
customer• Falling global trade barriers in
attractive markets • Globalization , expansion in other
countries• Diversification & Acquisition of other
quick- service restaurants• Growth of fast food industry• Worldwide deregulation• Low Cost menu that will attract the
customers.• Expansion of menu to meet healthier
consumer preferences • Freebies & discounts
Threats• Health professional& Consumer activist
accuse MCD of contributing of high cholesterol, heart attacks, diabetes & obesity
• Relationship B/W MCD Corporate & Its franchisee
• Anti- American Sentiments• Global recession & Fluctuating foreign
currencies• Industry to struggle to meet the customers
towards health & environmental issues.• Rivals copy McDonald’s innovations fairly
quickly, eliminating first-mover advantages
• The company has the propensity to induce shifts in consumer tastes away from the firm's products
PEST ANALYSIS
Political and legal•Highly influenced by the individual state policies•Recurrent bellowing in opposition to the fast food industry.
Economic•Exchange rate fluctuations•The rate at which the economy grows ; hit by inflation
Social•With definite types of personalities. •Below the age bracket of thirty-five•Working within many social groups
Technological •Inventory system and the management of the value chain•Quality standards
Environment •Accusations of environmental damage.
Mc Donald’s USA Mc Donald’s USA
THE BCG MATRIXTHE BCG MATRIX
Mc Donald’s EUROPE Mc Donald’s EUROPE
Mc Donald’s ASIA Mc Donald’s ASIA Mc Donald’s AMERICAS Mc Donald’s AMERICAS
ANSOFF MATRIXANSOFF MATRIX
Market penetration loyal consumer base and existing products
Product development new foods and new burgers in their menu
Market development established globally
McDonalds new cafe style shops
As it is something new McDonalds has introduced but still related to their food market : fast food company diversifying into selling coffee. can be a part of Related diversification strategy(McDonalds are already selling coffee so it could also be a product development strategy..??)
As it is something new McDonalds has introduced but still related to their food market : fast food company diversifying into selling coffee. can be a part of Related diversification strategy(McDonalds are already selling coffee so it could also be a product development strategy..??)
Supplier performance index
ImportBreath of supplyprocess control
equipment
No direct control over issues, positive influence by raising questions, bringing people to the table and encouraging improvement
The McDonald’s Supply Chain
PORTER VALUE CHAIN ANALYSIS OF MCDONALD’S
The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting
in a profit margin for McDonald's.
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•Organizing the supply of food and materials to restaurants through approved third party logistics operators.
•Production in huge plants denoted exclusive to McDonald’s control food distribution and packaging system
Inbound logistics
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Relatively Few Management Layers to Reduce Overhead
Effective Training Programs to Improve Worker Efficiency and Effectiveness
Timing of Asset Purchases
Efficient Plant Scale to Minimize Manufacturing Costs
Selection of Low Cost Transport Carriers
Delivery Schedule that Reduces Costs
Products Priced to Generate Sales Volume
Small, Highly Trained Sales Force
Investments in Technology in order to Reduce Costs Associated with Manufacturing Processes
Frequent Evaluation Processes to Monitor Suppliers’ Performances
Policy Choice of Plant Technology
Organizational Learning
Efficient Order SizesO
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•R&D in field research needs of end users.• quality development in collaboration with good suppliers
•Forward integration: through franchisees with control over store presentation, menu items etc. and enhance participation in process improvement
Operations
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Selection of Low Cost Transport Carriers
Delivery Schedule that Reduces Costs
National Scale Advertising
Products Priced to Generate Sales Volume
Small, Highly Trained Sales Force
Effective Product Installations to Reduce Frequency and Severity of Recalls
Frequent Evaluation Processes to Monitor Suppliers’ Performances
Efficient Order Sizes
Interrelationships with Sister Units
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•Is the concern of the franchisee.
•Outbound logistics are growing as a part of McDonald’s recycling system integrating in the logistics of distribution center
Outbound logistics
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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MARGIN
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•Long term marketing objectives are broken down into shorter term measurable targets, which McDonald uses as milestones.
•Country teams are given autonomy in marketing mix decision.
•Advertising & PR is outsourced (Mudra agency in India)
Marketing
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Services provided by the companies enrollment standards
Service
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Procurement
Sought partners with expertise on down trade distribution
Procurement
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Technological Development
Technology and development research in quality assurance, and packing readdressed at lower cost, faster delivery chain system and process control equipments, recycling system.
R & D
Technological Development
Human Resource Management
Firm Infrastructure
Procurement
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Human Resource Management
HRM specialists in R&D and expertise in food formulation, education to raise awareness of issues and raise demand. The addressing environmental issues and CRS.
HRM
Su
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Act
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Technological Development
Human Resource Management
Firm InfrastructureIn
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Firm Infrastructure
Strong real estate portfolio.International organization more than 50000 employees works in more than 50 countries,
Rapid market growth
Slow market growth
Strong competitive position
Week competitive position
Quadrant IQuadrant II
Quadrant IIIQuadrant IV
Grand Strategy Matrix
Excellent strategic positionConcentration on current markets & productsTake risk aggressively when necessary
Excellent strategic positionConcentration on current markets & productsTake risk aggressively when necessary
RECOMMENDATIONS
Stay-on-the-offensive strategy
Fortify-and-defend strategy
Recommended Strategy/possible strategies
Adaption strategy
Focus on CSR .The 2009.Global Best of Green highlights - local innovations that can be shared and applied in other markets across McDonald System.
Grand strategy matrix-alternative strategies
Market developmentMarket penetrationProduct developmentForward integration Backward integrationHorizontal integrationConcentric diversification
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SWOT MatrixStrength
1.Strong Brand name, image & reputation
2.Large market share
3.Strong global presence
4.Specialized training for managers known as hamburger university
5.Plan to win focuses on 4 p’s
6.Strong financial performance& position
7.Introduction of new product
8.Customer focus
9.Strong MCD performance in the global market place
Weakness1.Unhealthy food image
2.High staff turnover including top management
3.Customer losses due to fierce competition
4.Legal actions related to health issues : use of trans fat & beef oil
5.Uses HCFC – 22 to make polystyrene that is contributing to ozone depletion
6.Ignoring breakfast from the menu
S-O Strategies W-O Strategies
1. Opportunities2. Growing health trends among the customer
3. Globalization , expansion in other countries
4. Diversification & Acquisition of other quick- service restaurants
5. Growth of fast food industry
6. Worldwide deregulation
7. Low Cost menu that will attract the customers
8. Freebies & discounts
Focus on the plan to win to attract customers & expansion in other countries(S5, O2,O6)Expansion in the market share by more investments in Asia (S2,O2)
Minimize customers losses by providing low cost menu & discounts.(W3, O6,O7)
S-T Strategies W-T Strategies
Threats1.Health professional& Consumer activist accuse MCD of contributing of high cholesterol, heart attacks, diabetes & obesity
2.Relationship B/W MCD Corporate & Its franchisee
3.Anti- American Sentiments
4.Global recession & Fluctuating foreign currencies
5.Industry to struggle to meet the customers towards health & environmental issues
More control on franchise dealers to maintain MCD’s reputation & quality.(S1, T2)Provide new product & keep innovation. ( S7, T3)
Applying ) grams trans fat in all world wide MCD’s. ( W1, W4, O1)Transfer from HCFC-22 to HFC – free.( W5, T6)
•To deal directly with the proper authorities •Acquainted with the law•Carry out a well conducted market research.
PEST ANALYSIS
McDonald’s deemed as demigod in the fast food business in the international scene, what it preserves as revealed in its processes is the need for flexibility. Any business in spite of the
muscle of the brand name or the size of its reserves could not afford any failures in their individual markets.
•Obtain the relevant information from the target market. •Find out the shifts in areas•The cost-effectiveness, interactivity and real-time effects of the communications •Find out the environmental regime •Minimise the use of Styrofoam materials and plastic cups. •Hire local counsels
‘Think global, act local’
CONCEPTUAL STORMING Mr. Akshat JainCONCEPTUAL STORMING Mr. Akshat Jain
PRESENTATION &Spade Work By Preeti Chaudhary
PRESENTATION &Spade Work By Preeti Chaudhary
IDEAS FLOOD
ANNUAL REPORT 2007,2008http:/ivy thesis. typepad.comwww.ccfplus.comwww.about mcdonalds.comwww.crmcdonalds.comMcDonald's Environmental ReportCrafting and Executing Strategy by
Thompson, Strickland, Gamble
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