McDonald’s Against Anti-McDonalism 200314190 Young-ho Lee 200510402 Sang-sup Woo 200510421 Sang-uk Ju 200710522 Jung-hyun Back

Contents Introducing 1 Analysis 2 3 How!? 4 Problems 5 Alternative strategies

1.Introducing (1) History

1.Introducing (1) History

1.Introducing (1) History

and serve 58 million customers each day. 1.Introducing (2) Overview McDonald's restaurants are found in 119 countries and territories around the world and serve 58 million customers each day. McDonald's operates over 31,000 restaurants worldwide, employing more than 1.5 million people.

1.Introducing Total assets US$29.2 billion (2) Overview Products fast food Revenue US$22.6 billion Operating US$6.51 billion Income Net income US$4.31 billion Total assets US$29.2 billion Total equity US$13.2 billion

1.Introducing (2) Overview Beef Big mac · Big N' Tasty · Kiwiburger · Lean Beef Burger · Quarter Pounder · SuperBeef · Deluxe line · Arch Deluxe Chicken Chicken McNuggets · McChicken Other Happy Meal · McRib · Filet-O-Fish · McMuffin · McGriddles · Premium line

Mc business model 1.Introducing an investor in properties (2) Overview an investor in properties Mc business model a franchiser of restaurants an operator of restaurants

2.Analysis 1. Rivalry within industry: (1) Competitive forces(Michel Porter) 1. Rivalry within industry: Burger King, Wendy’s, In & Out etc. Brands - Big Mac, Filet o’ Fish, Ronald McDonald House Innovation - McGriddle, celebrity endorsements, monopoly Online presence - company info, links to charity works 2. Threat of new entrants: McDonald’s has market dominance (over 30,000 restaurants world-wide) constant growth -Franchising 3. Threat of substitutes: Any other food industry – high-class restaurants to hot dog stands Healthier alternatives (Newman’s Own), unique products

2.Analysis 4. Bargaining power of buyers: (1) Competitive forces(Michel Porter) 4. Bargaining power of buyers: Pay attention to customer demands and trends Offer specialty products for certain segments First mover- removal of super size option, salads, cooking oil 5. Bargaining power of suppliers: McDonald’s relies on strong supplier and distributor relationships Help suppliers lower costs Develop new supplier base to reflect customer diversity Suppliers include: Coca-Cola, Heinz, Newman’s Own

Differentiation strategy Cost Leadership Strategy 2.Analysis (2) Mc’s Competitive Strategy 1 Differentiation strategy Gold Standard 2 Signature Favorites Big Mac and McNuggets 3 Cost Leadership Strategy Items are very competitively priced

McDonald’s or Burger King for lunch today, which one would you pick? 3.How Mc is number one? If you could eat at McDonald’s or Burger King for lunch today, which one would you pick? 94% responded “MCDONALDS” with thunderous cheers 6% responded “Burger King” without much enthusiasm.

3.How Mc is number one? McD Forecasting Being their own boss Benefit from national marketing Selling a well established, high quality product Dynamic innovation Intensive initial training & Continuous support

3.How Mc is number one? Business model Franchising Licensing (1) Being their own boss Business model Franchising Licensing

3.How Mc is number one? Strategy Economies Standardization of scale (2) Selling a well established, high quality product Strategy Economies of scale Standardization

3.How Mc is number one? Training Franchisee training Human resource (3) Intensive initial training & support Training Franchisee training Human resource management

3.How Mc is number one? (4) Benefit from national marketing

Many creative items on menu 3.How Mc is number one? (5) Forecasting & Innovation Many creative items on menu

Globalization negotiating input prices. Bigmac Index-Purchasing Power Parity Introduced in The Economist in September 1986 by Pam Woodall -Predicting exchange rate movements is that the rate between two currencies. -McDonald's franchisees at least in theory have significant responsibility for negotiating input prices.

Globalization Bigmac Index-Purchasing Power Parity QUESTION !!! The price of a Big Mac was $3.57 in the United States (Varies by store) The price of a Big Mac was £2.29 in the United Kingdom (Britain)(Varies by region) The implied purchasing power parity was $1.56 to £1, that is $3.57/£2.29 = 1.56 This compares with an actual exchange rate of $2.00 to £1 at the time [(2.00-1.56)/1.56]*100= ?% The pound was thus overvalued against the dollar by ?% But the Big Mac (and virtually all sandwiches) vary from country to country with differing nutritional values, weights and even nominal size differences.

4.Problems Cultural antagonism Regulations Health issue Anti- Americanism Health issue Cultural antagonism Regulations

4.Problems (1)Cultural antagonism

4.Problems (2)Anti-Americanism

4.Problems (3)Health issue

4.Problems (4)Regulations

5.Alternative strategies Global Integration Local Responsiveness

5.Alternative strategies (1) Localization Thailand

5.Alternative strategies (1) Localization China

5.Alternative strategies (1) Localization Peru

5.Alternative strategies (2) Diversity on menu

5.Alternative strategies (3) Hamburger University 32

5.Alternative strategies (3) Hamburger University In 1961, Fred Turner, McDonald’s former senior chairman and Ray Kroc’s first grillman, founded Hamburger University in the basement of a McDonald’s restaurant in Elk Grove Village, Illinois February 24, 1961, Hamburger University's first class of 14 students graduated.  Today, more than 5,000 students attend Hamburger University each year.  The first restaurant company to develop a global training center.

5.Alternative strategies (3) Hamburger University quality service Company’s Global center procedures operations

5.Alternative strategies (3) Hamburger University Standardization Discussion R & D Diversification

Thank You !