Download - SWOT Analysis of McDonald's
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Cheryl WilcoxDale BrockwayMarc CamerlinBelisa Anzalotti
McDonald’s
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Agenda
Company Background
SWOT Analysis
Strategies: Past and Future
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McHistory
• Ray Kroc opens the Des Plaines restaurant in 1955. First day’s revenues - $366.12
• In 1965, McDonald’s goes public with the company’s first offering on the stock exchange
• In 1967, Jim Delligatti invents the Big Mac
• “Makadonaldo” first opened in 1971 (Japan)
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McHistory
• Egg McMuffin is introduced in 1973; Developed by owner operator Herb Peterson
• In 1974 Fred Hill of the Philadelphia Eagles teams up with McDonald’s to create the Ronald McDonald House
• Happy Meals (1979)
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Fascinating McFacts
• Today, the company operates more than 23,500 restaurants in 109 countries
• Since its founding in 1955, McDonald’s has sold well over 100 billion hamburgers
• McDonald’s prepares more than 6.8 million pounds of French fries every day
• More than 50,000 students have graduated from “Hamburger University”
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Franchising McFacts
• Approximately 85% of McDonald’s restaurant businesses world-wide are owned and operated by franchisees
• All franchisees are independent, full-time operators
• McDonald’s was named Entrepreneur’s number-one franchise for 1997
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McDonald’sStrategic Issue
To Consistently Increase
Shareholder Value through the
Growth of Profits and Market
Share in the Fast Food Industry
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SWOT Analysis - Strengths
• Brand Equity…world-wide
• 42% of US fast-food hamburger business
• Consistency of food
• Successful items: Fries, Happy Meal, Big Mac, Egg McMuffin, Promotions
• Overseas market
• Balance sheet position
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SWOT Analysis - Weaknesses
• Declining market share
• Weak product development
• Disgruntled franchisees
• Quality and taste of products
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Whose food do Americans really like best?
Best-tasting food?
Wendy’s 36%*
Burger King 32%McDonald’s 21%
Best-tasting burgers?
Burger King 42%Wendy’s 32%McDonald’s 17%
* Percent of respondents
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SWOT Analysis - Weaknesses
• Declining market share
• Weak product development
• Disgruntled franchisees
• Quality and taste of products
• Slowed revenue and income growth
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Income TrendsReturns
6.7%
4.5%
14.7% 14.4%
9.1%
17.7%
12.3%
10.2%
16.6%
13.0% 14.6%
14.7%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1994 1995 1996 1997
Revenue Net Income Profit margin
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Stock Price
$48 $50$58
$48
$63
$84
$-
$20
$40
$60
$80
$100
1996 1997 1998
McDonald's Growth S&P Industry Growth
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• International expansion
• Only serving 1% of the world’s population
• Growing dining-out market
SWOT Analysis - Opportunities
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• Mature/overstored industry
• Strength of competition
• More health-conscious consumers
• Changing demographics
• Fluctuation of foreign exchange rates; Economies
SWOT Analysis - Threats
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1997 Competitor Financial Comparison
6.8%
4.0%
7.4%
4.4%
8.7%
16.3%
0%
5%
10%
15%
20%
Revenues Net I ncome
McDonald's Burger King Wendy's
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Past McStrategies
• Product Development– Successes: Fries, Happy Meal, Big
Mac, Egg McMuffin, Promotions
– Failures: McPizza, Fajita, Carrot Sticks, McLean, and the Arch Deluxe
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Past McStrategies• Market Development
– Success: International growth– Failure: Over-expansion in US
• Alternative locations
• Forward Integration– Distribution through franchisees with
control over store presentation, menu items
• Joint Venture: Franchisees
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New McStrategies
• Leverage Brand Equity
• Product Development: Focus on core business– Quality and taste issues
• Food delivery methods
• MBX (McDonald’s Big Extra)
– Family Value Meal
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New McStrategies• Joint Venture (Franchisee): Change
methods of dealing with franchisees
– To better motivate owners and foster team spirit
– Enhance owners’ participation in process improvements
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New McStrategies
• Market Penetration and Development– Continue International expansion
• Retrenchment– Home office cost reductions
– Splitting into five geographic divisions
• Horizontal Integration– Purchase competition with differing
target markets
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Cheryl WilcoxDale BrockwayMarc CamerlinBelisa Anzalotti
McDonald’s