mcdonalds value chain analysis

McDonalds Value Chain McDonalds Value Chain AnalysisAnalysis

Jeovani Zamarripa, Alicia Wylie, Jason Flores, Conor Mullarkeyy

Mission StatementMission Statement

McDonald's brand mission is to "be McDonald s brand mission is to be our customers' favorite place and way

to eat." Our worldwide operations phave been aligned around a global

strategy called the Plan to Win t i th fi b i f centering on the five basics of an

exceptional customer experience People Products Place Price and People, Products, Place, Price and Promotion. We are committed to

improving our operations and improving our operations and enhancing our customers' experience.

Company HistoryCompany History

McDonalds Bar-B-Que (1940)McDonald s Bar-B-Que (1940) Worlds 1st McDonalds Founded by Dick and Mac McDonald Founded by Dick and Mac McDonald San Bernadino, CA

D i i & h i Drive-in & car hop serviceMcDonalds (1948)

N F l Name Formulates Menu develops 15 Cent hamburger

Company InfoCompany Info

Corporate Headquarters:p q McDonalds Corporation

2111 McDonald's DrOak Brook, IL 60523

Employees: Approximately 400,000 McDonalds employees globallyApproximately 400,000 McDonald s employees globally 1.6 million people globally are employed through

McDonalds restaurants and their franchises

Restaurants: 32,000 world-wide, 118 countries

2009 Revenue & kU.S. Stocks (US only)

NYSE: MCDNYSE: MCD Current Price: $64.74 Change: $0.26 +g

(As of 2/16/2010)

2009 Revenue (mil.)$22,744.701 Year Revenue Growth 3 3% Year Revenue Growth -3.3% 2009 Net Income (mil.)$4,551.001

Y N t I G th 5 5% Year Net Income Growth 5.5%

LeadershipLeadership

James Skinner Vice Chairman, CEO

Left to Right: Jose Armario, Group President Canada & Latin America; Janice Fulds, US Chief Operations Officer; James Skinner, Vice Chairman and CEO; Donald Thompson, President U.S.A; Jeffrey Stratton,

Chief Restaurant Officer; Mary Dillion, Global Chief Marketing Officer; Timothy Fenton, President Asia/Pacific Middle East & Africa; Peter Bensen, Chief Financial Officer; Dennis Henequen. President

Europe; (at table) Gloria Santona, General Counsel & Corporate Secretary; Richard Floersch, Chief Human Resource Officer.

CultureCulture

Forging new opportunitiesForging new opportunities Innovation from within Empowered big thinkingp g g

Social responsibility Community FocusCommunity Focus Responsible Purchasing Protecting Our Environmentg

Diversity Employee ForceEmployee Force

McDonalds Production SystemMcDonald s Production System

INPUT OUTPUTPROCESS

Employees

Customers

Cook and package foods

Satisfied customers

Customers favorite Customers

Restaurants

Food Prep/Assembly Line

Assemble meals to the customers order

Customers favorite place and way to eat

Provide a relaxed and fun environment to eatLine

Frozen foods (patties, fries, chicken nuggets, etc.)

ProduceProduce

Containers

Company image

Operational Strategic f i iPerformance Dimensions

COSTQUALITY

SPEEDFLEXIBILITY

COSTCOST

Make it cheap:Make it cheap: Economies of scale

Allows McDs to pass the value to consumersAllows McD s to pass the value to consumers McValue Dollar Menu Party Pack

l Cost controls

QUALITYQUALITY

Make it consistent:Make it consistent: Universal taste Core offerings globallyCore offerings globally

Order Qualifier: Make it good:Order Qualifier: Make it good: Taste appeal to its target market Healthy options Healthy options

SPEEDSPEED

Make it fast:Make it fast: 90 second service goal

Order Qualifier: Make it dependable: Menu items available daily Menu items available daily Hot & Fresh

Order Qualifier: New Product Development: R i l it Regional menu items Healthy menu options

FLEXIBILITYFLEXIBILITYOrder Qualifier: Product design: S/M/L/Super size S/M/L/Super size Gender based kids meals Happy meals vs. Mighty kids meals

P l k Promotional packagingOrder Qualifier: Product Mix: Sandwich varietiesSandwich varieties Soft serve offerings (milkshakes, ice cream

cones, sundaes) Salads SaladsOrder Qualifier: Production Volume: Staffing based on consumer traffic and meal

titime 24 Hour restaurants and drive-thru

MDs Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTUREFIRM INFRASTRUCTURE

HUMAN RESOURCES

TECHNOLOGY

HUMAN RESOURCES

TECHNOLOGY

PROCUREMENTPROCUREMENT

INBOUND LOGISTICS

MARKETING & SERVICES

OUTBOUND LOGISTICSOPERATIONS

SERVICEINBOUND LOGISTICS



SERVICE

Firm InfrastructureFirm InfrastructureStrengths: Brand recognition Brand recognition #1 in retail fast food industry LeadershipLeadership Financial Strength Company image Intellectual property Franchising

Weaknesses: LawsuitsLawsuits Company image Culture insensitivities

MDs Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTURE

Brand recognition #1 in retail fast food industry Leadership Financial Strength Financial Strength Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities

HUMAN RESOURCES

TECHNOLOGY

PROCUREMENT

STRENGTH

WEAKNESSINBOUND LOGISTICS



SERVICEWEAKNESS

Inbound LogisticsInbound LogisticsStrengths: Economies of scale

Pass value to customer (i.e. $1 menu) Just-in-time order & deliveryJust t e o de & de ve y Sustainable packaging Renewable resources

P k i i i (82% bl ) Packaging composition (82% renewable resources) Oil recycling (diesel oil)

Supply chain controly Quality control

Freight truck inspections Random auditsRandom audits

Weaknesses: Media backlash



HUMAN RESOURCES

TECHNOLOGY

PROCUREMENTEconomies of

l

Just-in-time order & delivery

PROCUREMENT

STRENGTH

scaleSustainable packagingRenewable resourcesSupply chain Supply chain control

Quality controlMedia/PR

INBOUND LOGISTICS



SERVICEWEAKNESS

OperationsOperationsStrengths:

O li & it ki k j b li ti On-line & on-site kiosk job application systems

2nd largest employer in the U.S.2 largest employer in the U.S. Reinforced information systems Wireless headsets Wi-Fi offered in all locations R&D in target consumer demands and

trendstrends Corporate guidelines imposed on

franchisees Franchisees must purchase supplies from

McDs

OperationsOperationsWeaknesses:

Hi h t ( th 100%) High turn-over (more then 100%) 90 second drive-thru rule (unsuccessful) Impersonal drive-thru greeters Impersonal drive-thru greeters

(telemarketer like, person is not in store)



HUMAN RESOURCES

Just in time order

Job appliation systems2nd largest U.S. employerHigh turn-overReinforced IT systems

TECHNOLOGY

PROCUREMENTEconomies of scaleSustainable


Reinforced IT systemsWireless headsetsWi-FiDrive-thru voiceFranchsor purchase agreement

STRENGTH

Sustainable packagingRenewable resourcesSupply chain control

R&D based on consumer demandsCorp guidelines for Franchisees90 second drive-thru rule

INBOUND LOGISTICS


OUTBOUND LOGISTICS

OPERATIONS SERVICEWEAKNESS


Outbound LogisticsOutbound Logistics

Distributor agreementsg Quality control

Freight truck inspectionsrandom audits random audits

Refrigerated trucks Reinforced Information Systemse o ced o at o Syste s

Cashier Assembly Line

Order fulfillment Order fulfillment Just in time order and delivery

Ensuring freshnessg Packaging quality reinforces freshness

Hot/Warm food



HUMAN RESOURCES

Just in time order

Job appliation systems2nd largest U.S. employerHigh turn-overReinforced IT systems Refridgerated trucks

TECHNOLOGY

PROCUREMENTEconomies of scaleSustainable


Reinforced IT systemsWireless headsetsWi-FiDrive-thru voiceFranchsor purchase agreement

Refridgerated trucksReinforced ITJust-in-time order & delivery

Distributor agreementsQC

STRENGTH

Sustainable packagingRenewable resourcesSupply chain control


QCPackaging

INBOUND LOGISTICS

MARKETING & SALES

OUTBOUND LOGISTICS



Marketing & SalesMarketing & Sales

Strengths:Strengths: Product

Health and wellness campaign & product p g pofferings

Consumer and market researchP i Price McValue Dollar Menu

Party pack Party pack Promotion

Disney and Nickelodeon license agreementsy g Coca-Cola endorsement Feeding the athletes Olympic sponsorship

Marketing & Sales (contd)Marketing & Sales (cont d)

Strengths:Strengths: Place

New upscale MDsp MDs goes green McCafe Wi-Fi McDonalds Play Place

Ronald McDonald Community outreachCommunity outreach

Marketing & Sales (contd)Marketing & Sales (cont d)

Weakness:Weakness: Supersize Me movie Media/PR Adaptation to global culture and customs Product failures


Brand recognition #1 in retail fast food industry Leadership Financial Strength C i

HUMAN

Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities

Job appliation systemsHUMAN

RESOURCES

TECHNOLOGY

E i f

y2nd largest U.S. employerHigh turn-over


Reinforced IT systemsWireless headsetsWi-FiDrive-thru voice


Consumer ResearchMcValue Dollar MenuParty Packs

PROCUREMENT

Economies of scaleSustainable packagingRenewable resourcesSupply chain control


Franchsor purchase agreement

R&D b d

Distributor agreementsQCPackaging

Party PacksCartoon AffiliationsCokeOlympic SponsorUpscale MD'sGoing GreenM C f

STRENGTH

R&D based on consumer demandsCorp guidelines for Franchisees90 second drive-thru

l

McCafeWi-FiMD's Play PlaceRonald McDonald"Supersize Me"Media/PR

INBOUND LOGISTICS

MARKETING & SALES

OUTBOUND LOGISTICS


rule Global expansion issuesProduct failures

ServiceServiceStrengths: Fast food service Order accuracyy Clean environment Friendly customer servicey

Weaknesses:Weaknesses: Lack of customer service Employee apathyEmployee apathy Dissatisfied customers


Brand recognition #1 in retail fast food industry Leadership Financial Strength C i

HUMAN

Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities

Job appliation systemsHUMAN

RESOURCES

TECHNOLOGY

E i f

y2nd largest U.S. employerHigh turn-over


Reinforced IT systemsWireless headsetsWi-FiDrive-thru voice


Consumer ResearchMcValue Dollar MenuParty Packs

PROCUREMENT

Economies of scaleSustainable packagingRenewable resourcesSupply chain control


Franchsor purchase agreement

R&D based on

Distributor agreementsQCPackaging

Party PacksCartoon AffiliationsCokeOlympic SponsorUpscale MD'sGoing GreenM C f

Fast food service

STRENGTH


McCafeWi-FiMD's Play PlaceRonald McDonald"Supersize Me"Media/PR

Order accuracyClean environmentFriendly customer serviceLack of customer service

INBOUND LOGISTICS

MARKETING & SALES

OUTBOUND LOGISTICSOPERATIONS SERVICE

WEAKNESSGlobal expansion issuesProduct failures

Employee apathyDissatisfied customers

Core CompetenceCore Competence

McDonalds strength lies in the operations and firm i f infrastructure.

McDonalds core competency is the production and d li d f ff d bl f d t l b f delivery speed of affordable food to a large number of customers to support a low cost, high speed, and consistent quality strategy

McDonalds strategy is supported by its strong financial resources, brand image, market leadership, buyer supplier relations, and product value. p

Competitive AdvantageCompetitive Advantage

#1 Fast food restaurant in industryy Customers Value and affordable menu Convenience Franchisee base

Fun FactsFun Facts

Aprox.. 9 million pounds fries served p 9 pdaily

380 sesame seeds on a sesame bun Approx. 82% of consumer packaging is

made from renewable materialsC t il i t bi di l f l Convert oil into biodiesel fuel

Logo differs between green locations and traditional locations (green and traditional locations (green background vs. red color)

Beer served in Germany McDonaldsy

mcdonalds value chain analysis

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