mcdonalds
TRANSCRIPT
Members:Hayat Omer MalikSana Habib Dar
INPUT STAGE
INDUSTRY STRUCTURE
Threat of new entrantsLOW due to established brand identities and performance advantage of established fast food service companies.
Bargaining power of buyersLOW because large numbers of buyers with relatively small purchases and are also not highly sensitive to price.
Threat of substitutesLOW because no real substitutes of fast food.
Bargaining Power of SuppliersLOW because standard product, inputs are commodities and therefore can easily switch between suppliers.
Rivalry Among CompetitionHIGH because the industry is growing in the US, competitors are diversified, there are significant product differences among rivals and established brand identities.
OVERALL, INDUSTRY IS ATTRACTIVE
COMPETITIVE PROFILE MATRIXMCDONALDS YUM BURKING WENDY’S
Critical success factors
Weight Rating Weighted score
Rating Weighted score
Rating Weighted score
Rating Weighted score
Market share
0.05 4 0.2 3 1.15 3 1.15 3 1.15
Financial position
0.2 4 0.8 3 0.6 3 0.6 2 0.6
Price 0.1 3 0.3 3 0.3 3 0.3 4 0.4
Location 0.2 3 0.6 4 0.8 2 0.4 2 0.4
Customer service
0.3 3 0.9 4 1.2 4 1.2 4 1.2
TOTAL 1 2.8 4.05 3.65 3.75
McDonalds should pursue horizontal integration by buying wendys facilities of low-priced menuMc Donalds should pursue market development in AMEA and Europe eg. China and India
IFE MATRIX
Strengths Weight
Rating
Weighted Score
Regional sales growth(Latam sale) 0.05 2 0.1
Very strong brand name 0.05 4 0.2
Customer service & value based pricing 0.06 3 0.18
Strong financial position 0.3 4 1.2
Innovation & standard product & process technologies
0.05 4 0.2
Decor for redesigning brand 0.1 3 0.3
Substantial Cash Flow 0.05 3 0.15
Increase in dividend to shareholders 0.05 2 0.1
Weaknesses Weight
Rating
Weighted Score
No significant diversification 0.15 3 0.45
US centric performance 0.1 2 0.2
Negative reputation of an unhealthy food provider
0.04 2 0.08
TOTAL 1 3.16
STRATEGIES
McDonalds should play on its financial strength and pursue horizontal diversification
McDonalds can do product development by providing less fat content products to health conscious consumers
Opportunities Weight
Rating Weighted Score
Growth in Chinese and Indian markets 0.19 4 0.76
Growth of the fast-food industry 0.12 3 0.36
Population growth and growing trend of a faster life
0.09 3 0.27
Less risky option of opening new franchises 0.07 3 0.21
New market for more health conscious customers
0.09 2 0.18
Threats Weight
Rating Weighted Score
Conversion to franchises can create differences in services
0.07 3 0.21
Swings in local currencies 0.12 2 0.24
Global recession 0.09 2 0.18
Litigation on health issues 0.16 1 0.16
TOTAL 1 2.57
EFE MATRIX
STRATEGIES
Increase number of stores in growing markets of India and China (market development)
Diversify into non-US markets to reduce impact of swings in local currencies
MATCHING STAGE
TOWS matrix
STRENGTHS1. Regional sales growth2. Very strong Brand name 3. Customer service & value based pricing4. Strong financial position5. Innovation & standard product & process
technologies6. Decor for redesigning brand7. Substantial Cash flow8. Increase in dividend to shareholders
WEAKNESSES1. No significant diversification2. US centric performance3. Negative reputation of an unhealthy
food provider
OPPORTUNITIES1. Growth in markets in
India and China2. Growth of Fast food
industry3. Population growth and
growing trend of a faster life
4. Less risky option of opening new franchises
5. New market for more health conscious customers
SO strategies• Increase number of stores in
growing markets of India and China (S4, O1)
• Increase stores in US and Europe (S4, O2, O3)
• Convert more stores in to franchises (S5, O4)
• Provide a newer and wider range of products in regional markets (S5, O2)
• Offer new products with less fat content for health conscious customers (S5, O5)
WO strategies:• Increase number of stores in
growing markets of India and China (W2, O1)
• Offer new products with less fat content for health conscious customers (W3, O5)
THREATS1. Conversion to franchises
can create differences in services
2. Swings in local currencies
3. Global recession4. Litigation on health
issues
ST strategies:• Spread the risk by opening more
stores outside US to ward off recessionary threats (S3, T3)
• More control on franchise dealers to maintain McDonald's reputation and quality (S2 T1)
WT strategies:• Diversify into non-US
markets• Apply 0 grams Trans fat in
all worldwide McDonald's products (W3, T4)
T O W S
SPACE matrix
Financial Strength Rating Environmental Stability Rating
Return on investment 4 Rate of inflation -3
Leverage 4 Demand Changes -3
Cash Flow 6 Price Elasticity of demand
-1
EPS 5 Competitive pressure -5
P/E ratio 3 Barriers to entry into markets
-3
Risk involved in business -3
Average 4.4 Average -3 Y-axis 1.4
Competitive Advantage
Rating Industry Strength Rating
Market share -1 Growth potential 5
Product Quality -2 Financial stability 5
Customer Loyalty -2 Ease of entry new markets
4
Control over other parties
-2 Resources utilization 4
Technological know how
-1 Profit potential 5
Demand variability 3
Average -1.6 Average 4.33 X-axis 2.73
SPACE MATRIX+6
+1
+5+4+3
+2
-6
-5
-4
-3
-2
-1-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6
FS
CAIS
ES
-7
+7
Aggressive
(+2.73, +1.4)
STRATEGIES
• Increase number of stores in growing markets of India and China
• Increase stores in US and Europe
• More control on franchise dealers to maintain McDonald's reputation and quality
• Offer new products with less fat content for health conscious customers
IE matrix
3
2
1
4 3 2 1IFE total weighted score
EFE total weighted score
2.57, 3.16
STRATEGIES
• Increase number of stores in growing markets of India and China and also in US
• Offer new products with less fat content for health conscious customers
• Introduce new products based on regional preferences
BCG matrix
BCG MATRIX
?YUM
Burger King
Wendy’s
Ind
ustr
y S
ale
s G
row
th R
ate
Relative Market Share PositionHigh Medium
LowHigh
Medium
Low
CASH COW DOG
DECISION STAGE
Strategy 1
Expand further in Asia by adding 500 restaurants
Strategy 2
Applying 0 grams Trans fat in all worldwide McDonald's restaurants
Key Internal Factors Weight AS TAS AS TAS
Strengths Regional sales growth(Latam sale) 0.05 3 0.15 2 0.1
Very strong brand name 0.05 4 0.2 4 0.2
Customer service & value based pricing 0.06 3 0.18 4 0.24
Strong financial position 0.3 4 1.2 4 1.2
Innovation & standard product & process technologies
0.05 3 0.15 4 0.2
Decor for redesigning brand 0.1 2 0.2 2 0.2
Substantial Cash Flow 0.05 3 0.15 3 0.15
Increase in dividend to shareholders 0.05 2 0.1 2 0.1
Weaknesses
No significant diversification 0.15 2 0.3 2 0.3US centric performance 0.1 2 0.2 2 0.2Negative reputation of an unhealthy food provider
0.04 2 0.08 3 0.12
SUBTOTAL 1.00 2.91 3.01
Strategy 1
Expand further in Asia by adding 500 restaurants
Strategy 2
Applying 0 grams Trans fat in all worldwide McDonald's restaurants
Key External Factors Weight AS TAS AS TAS
OpportunitiesGrowth in Chinese and Indian markets 0.19 4 0.76 2 0.38
Growth of the fast-food industry 0.12 3 0.36 3 0.36
Population growth and growing trend of a faster life 0.09 3 0.27 3 0.27
Less risky option of opening new franchises 0.07 2 0.14 2 0.14
New market for more health conscious customers 0.09 3 0.27 4 0.36
Threats
Conversion to franchises can create differences in services
0.07 2 0.14 2 0.14
Swings in local currencies 0.12 4 0.48 3 0.36
Global recession 0.09 2 0.18 2 0.18Litigation on health issues 0.16 2 0.32 3 0.48
SUBTOTAL 1.00 2.92 2.67SUM TOTAL ATTRACTIVENESS SCORE 5.83 5.68
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