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Mcdonalds Case Study Project Managment

Contents 1. Introduction 1. 1 History of McDonald’s 1.

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2Philosophy of the company 2. Task 1: SWOT Analysis 2. 1 Strengths 2. 2 Weakness 2. 3 Opportunities 2. 4 Threats 3. Task 2: McDonald’s Plan to Win Strategy 3. 1 Implementation of key elements new Strategies 3. 2 SWOT Analysis and Plan to Win 4. Task 3: McDonald’s 2003-2009 Strategy 4. 1 McDonald’s Dynamic Strategy 4. 2 Strategies Comparison 5. Task 4: McDonald’s Competitors 5. 1 Wendy’s 5. 2 Jack in the Box 5. 3 Sonic 6. References 7. Bibliography 1. Introduction 1. History of McDonald’s The first McDonald’s was inaugurated by the McDonald’s brothers in 1948, constituting itself as the first local in the history of the quick service of foods, in San Bernardino, California (U. S). They offered quick food, soon they reached a high level of sales and although the menu was limited the success that is to say previously prepared food and served to high speed. Without a doubt the base of its success was in substituting the conventional china that you/they used the rest of restaurants, for the paper bags.

It was then when the supplier of the shaking machine shake, Ray Kroc, surprised by the quantity of “Multi-mixers” requested, it proposed the opening of new restaurants. This way in 1955 the first local of the Corporation was inaugurated in charge of Ray Kroc. During the 50? s and the 60? s, Ray’s managerial team Kroc established the successful philosophy of the system of the company: Quality, Service, Cleaning and Value. At the moment this Franchise possesses more than 25. 00 establishments in 117 countries and five are the continents in which the Golden Arches run off with, number that was increased more with the recent opening of 3. 000 local during 1999. Although McDonald’s offers its clients a standard menu in its entire local, it is common that these menus combine with special products that are developed in each culture depending on the likes of the clients. {Love, 1995 #4} 1. 2 Philosophy of the company The company brought to this new market of the quick foods a concept of original quick service, where of the details is taken care to the maximum, to offer the consumer an excellent product.

The operative philosophy of the McDonald’s system is based on the Quality, Service, Cleaning and Value for 44 years. The company offers a standard menu, although it develops in each culture special products that are adjusted to the pleasure of the community. McDonald’s is successful because it has a system of corporate norms and individual opportunities, to all the Franchised they are integrated in the same philosophy of values and clear expectations. For McDonald’s the employees are the most important thing.

It is thanks to them for what the clients are taken an incredible experience in each visit and want to return. The principles of Quality, Service and Cleaning begin with their own employees, McDonald’s guides all the actions according to organizational values as working in team, to feel passion for the work always offering the best of themselves, to be committed with the partners and with the mission of the company, to be entire in each one of the actions, to be leaders. {Kroc, 1987 #5}

McDonald’s is a company that offers work eminently to young people over 16 years, it is for it, for what its schedules of work are enough flexible to be able to continue the studies, adding an unique labor experience, it can even become the first step of a great professional career in an international company. The competitors of McDonald’s is formed by all those companies that act in the sector of the quick foods that using a very similar technology tries to assist to the same type of clients. When McDonald’s begun to give its first steps restaurants of quick food they didn’t exist, so soon he became the leader of the sector.

It was starting from that Ray Kroc organized the company McDonald’s System, Inc. , March 2 1955 when other companies were already in the business and McDonald’s it was beginning to lose its advantage in front of other companies like Burger King, Kentucky Fried Chicken or Chicken Delight. Kroc was then in one of the most competitive markets, that of the hamburgers. {Kroc, 1987 #5} McDonald’s has always tried to differentiate its products of the rest of its competitors, and it doesn’t in fact try to differentiate them through the price, but through the good quality, the service, the originality and innovation.

If for something is McDonald’s characterized it is for the innovation, she has always tried to offer something different to its consumers, continually innovating with new products, and a clear example is in the Big Mac. In the market very similar hamburgers were already sold when McDonald’s decided to sell it, but she only knew how to give him the form and the in agreement size with its name. And as shown on Table 1 the market share between competitors throw the last 4 years. Table 1. Burger Restruant Market Share |Europe (2006) |Europe (2007) |Europe (2009) |USA | |McDonald’s |16. 54 |19. 47 |66. 74 |94. 06 | |Yum! Brands |3. 25 |3. 43 |42. 82 |58. 59 | |Burger King |2. 60 |2. 65 |21. 45 |29. 35 | |Subway |0. 74 |0. 1 |19. 79 |27. 07 | |Starbucks |0. 77 |0. 90 |17. 44 |23. 86 | www. macdailynews. com McDonald’s also knew that the strategy of growth was essential and when Burger King and Burger Chef were enlarged so much that they were about to reach him, McDonald’s decided to grow even more. In 1967 Burger King had settled down as expansion program reaching the 100 new positions a year, equaling the rhythm of expansion of McDonald’s for the first time.

But the threat of Burger Chef was even bigger, since at the beginning of 1968 its program of expansion had shortened the distances between her and McDonald’s reducing it to less than 100 position. [pic] Figure 1 Burger Fast food Market Share 1 . It is obvious that all the competitor companies have tried to sell products substitutes of the Big Mac, without a doubt, the good known one is the Big King of Burger King that tries to satisfy the same clients with the same ingredients.

While McDonald’s tries to differentiate the Big Mac of the Big King offering fresh products and a hamburger of more quality, Burger King tries to highlight its product offering a hamburger a little bigger and made to the grill and therefore, with different flavor. Figure 1 2. Task 1: SWOT Analysis [pic] 2. 1 Strengths All strengths have been taken from the McDonald’s 2006 Worldwide Corporate Responsibility Report {McDonald’s, 2008 #20} • Open door Company Company trust was declining because of public confidence in the safety of beef, poultry and bad intentioned internet rumors.

We do also remember the BSE crisis in Europe at the begin of this millennium. On March 2001 MCDONALD’S decided to open its doors to everybody with desire to see how the company is being managed. This action was supported by open invitation through TV and printed advertisement. Consider the courage of MCDONALD’S’s board to open their company to everyone? Have they completely been sure of what is going on in their remotest MCDONALD’S restaurant? How can they risk to show one of their black sheep (and every 1000s of subsidiaries holding concern has some! to the public and could face the tremendous impact a cockroach would have being found in a double-cheese burger or found on their kitchen floors? Roaches are present in many locations we don’t want to have them: Certainly MCDONALD’S intended a growing mindset by its employees and management by implementing programs like this. Vice-president of corporate affairs Eric Gravier said: If any aspect of our business deserves an open look, it’s our efforts to conduct our business responsibility. • Ceres guidance and co-work

MCDONALD’S works together with a coalition of investors, environmental organizations and other public interest groups to strengthen their social and environmental programs. I would perceive it also as a form of public auditing. It can be valued as strength because this helps MCDONALD’S to focus on what they should do to maintain loyal to its corporate social responsibility targets without losing strength on their business priorities. CERES encourages MCDONALD’S to report their progress and future efforts through an open door spirit. Ceres helps MCDONALD’S to develop and live CSR.

The highly decentralized system –Considered as a great advantage in MCDONALD’S business – also has are disadvantages when it comes to achieve mutual global objectives. Ceres puts these weaknesses open on the table and MCDONALD’S’s top management evaluates these statements, research results. Ceres e. g. has advised management that MCDONALD’S should report more metrics and goals to demonstrate and foster progress. Ceres made 3 issues its top priority: 1. Obesity 2. MCDONALD’S’s purchasing power 3. Climate change To 1 – obesity Their approach to the health problem no. 1 in the US is the following: . Offering Menu Choice 2. Providing Nutrition Information 3. Promoting Physical Activity 4. Marketing and Communicating Responsibility To 2 – purchasing power How does MCDONALD’S influence their upstream purchasing power? What is profit oriented and what is really CSR oriented? • Careful supply chain strategy For MCDONALD’S there are several important strategic pillars, the first one is the commitment to social responsibility with food quality and safety, then the issue of sustainable food supply and animal welfare. MCDONALD’S food standards are world class. • Active community responsibility

Through MCDONALD’S House Charities and innumerable local and global community programs MCDONALD’S shows that the revenue is not all or part of the revenue belongs to the society and therefore will be given back. It shall demonstrate that MCDONALD’S recognized that through society they can do business and prosper. This consciousness also reflects itself in the attitude of employees and management in a way that they feel more responsible in what they are doing as it is as serving the public. • Rigorous food safety standards “It goes all the way from the farm right to the restaurant”.

MCDONALD’S works hard to make sure that rigorous food safety standards are upheld in each restaurant with training, food, safety and quality, the development of the food and menus. It all ties because many of the suppliers consider themselves extensions of the MCDONALD’S family and so they have the same rigorous approach to the programs. MCDONALD’S has a responsibility to provide a relevant variety of quality product choices that the costumer trust and that means working with partners that operate ethically and meet the social responsibility standards. • Accurate service standards

MCDONALD’S works hard to maintain a work environment where everybody feels valued and accepted by providing training and other opportunities for personal and professional growth and to promote job satisfaction. In their own words: “Our well-trained employees will proudly provide fast, friendly and accurate service with a smile to delight our costumers”. • Affordable prices to high quality products MCDONALD’S keeps its responsibility by keeping values and high standards as they provide food that is affordable to a wide range of costumers and that means being the most efficient provider and offer the best value to the most people. Responsible charity and community work “We believe in giving back to the communities in which we do business and to Supporting Ronald McDonald House Charities and other charities that promote the health and well being of children”. {Gould, 1996 #9} • Profitability MCDONALD’S is committed to growing their business on behalf of the shareholders who Provide the necessary capital for the company to grow, they should realize and Attractive return on their investments. No poor company can allow itself to offer charities or help when it itself is in need.

Being rentable makes MCDONALD’S able to help whenever necessary and maintain its corporate responsibility principles fresh. • Bigger menu choices / Product strategy MCDONALD’S works together with the Global advisory council whose members are very high profile scientists in the food industry, experts who are looking at obesity and nutrition. With their help MCDONALD’S has created new menu choices including salads and fruits, keeping their serving size standards and making menus more flexible and easier to mix or change.

In the last 5 years MCDONALD’S has included milk and water and a variety of ongoing product innovation will include expanded side and beverages choices in addition to new entrees which will give the costumer to feed himself healthier and proportionate. • Clear nutrition information on packaging I think one of the better strengths from MCDONALD’S is that they where one of the first fast food restaurant that started writing the nutritional info on their packaging advocating for balanced active lifestyles and healthier clear nutrition values.

MCDONALD’S has been a terrific leader on their work to explore new ways to deliver nutrition and balanced active lifestyle info to the costumers. • External and Internal leadership stances to encourage activity Internal: MCDONALD’S developed and distributed an own crew training video in seven languages on “It’s what I eat and what I do”, besides that the company makes a great effort distributing materials encouraging balanced, active lifestyles. MCDONALD’S has also introduced training for both crew and management. External: MCDONALD’S introduced “it’s what I eat and what I do” initiative.

Leveraged Olympic and global sponsorships including Olympic day run. In the USA more than 15 million step meters were distributed and passport to play was launched. • Decentralized but not disconnected system MCDONALD’S recognizes the need to maintain a system in which everyone adheres to the same core values, principles and standards. They balanced this with a program called “Freedom within the framework”. Local business-owner/operators and restaurant managers have the flexibility and responsibility to develop programs that respond to the diversity of the costumers and local market conditions. Innovative excellence program development MCDONALD’S has a very wide selection of programs on its account, everything with the only goal of growing to be better rather than bigger. MCDONALD’S has aligned around a global strategy program called Plan to Win that centers in the five basic P’s, people, products, place, price and promotion. Each P has its own vision, specific objectives and key performance measures. This reflects and approach to long-tern sustainable, profitable growth.

Other excellence programs are the well known ROIP (Restaurant Operations Improvement Process). It helps improve restaurant performance and accountability as related to quality, service and cleanliness (QSC) and people practice standards. Those standards have been broken down into specific procedures and are organized into 12 systems that deliver the experience the costumers expect. An excellent program is the Mystery shopper program where unannounced and anonymous inspectors visit as costumers and rate the restaurant according to the QSC.

Many restaurants around the world include a measurement program based on customer comment that can provide its feedback via toll-number and they also take input from their own staff by an annual employee satisfaction survey. • Ethical Conduct promotion MCDONALD’S Board of directors and top management work to ensure the company’s integrity in all its dealings with shareholders. Their commitment is codified in policies, standards and codes including the Corporate Governance principles, Code of Conduct for the board of directors and code of Ethics for the CEO and Senior Financial Officers because Corporate Responsibility begins at the top.

The principles include provisions designed to ensure independent oversight of the company’s assets and business affairs. This strengths could be as well be left out – as today all public concerns do need to have these policies – and if all are having them they cannot be considered as strength anymore but simply as going concern and standard. For MCDONALD’S employees worldwide the overall framework for ethical business practices is the Standards of Business Conduct which applies to all salaried employees worldwide including restaurant managers.

It provides rules for handling every ethical issue that might arise or incorporate all laws and policies that apply to the worldwide business. The standards establish a foundation on their core values, provide an orientation to ethical business conduct, offer guidance in a wide range of issue areas and identify resources for questions and concerns. 2. 2 Weaknesses • MCDONALD’S inflexibility Can MCDONALD’S ever excel or are they caught to always offer economic fast food? MCDONALD’S is weak in reacting fast to markets changes. If more and more customers go onto eating BIO or ECO-food e. g. eat – MCDONALD’S could not follow this trend without losing a lot of profit because such a shift in suppliers a) from the point of offer/demand ratio and b) from logistics could not be made in reasonable time. It would impose a threat of a deep profit recession until MCDONALD’S would have adapted their product portfolio. • Not employee-friendly MCDONALD’S is not a worker-friendly environment in the sense that it offers medium to long term working relationships. In the article3 “Company before Nation” McDonald claims that it has the hostility of workers’ rights union under control. Well – if e. . in Germany you have a workers rotation on average below 6 months – a company never runs into danger of facing workers protection laws. Every worker in Germany for the first 6 months is under “trial-conditions” employed and can be discharged at any time without any obligations and cost. In an article4 of the Billings Gazette it has been recognized that MCDONALD’S has a hard time in finding and retaining good workers. Gylette, Wyoming reports a weired case that a MCDONALD’S manager needs to outsource the drive-through order taking process via a call center in Santa Monica, California. McDonalds = too much shareholder value driven {Nachrichten, #26} Shareholder value is often not the same as Corporate Social Responsibility i. e. if profits go down and down, stocks go down – often more than they actually should and drastic corporate measures have to fix the problem. The levers are not too many and are well known: Where can we save costs? Where can we get cheaper meat? Where can we get cheaper bread? Where can we release workers and run a MCDONALD’S restaurant with less people? As anyone can imagine – some of these actions cannot be socially or environmentally responsible – that is not what money is all about! MCDONALD’S continues to promote unhealthy food Despite diversification of their product portfolio towards more healthy choices MCDONALD’S still continues a saturated fat filled 850 kcal Burger and other unhealthy but tasty food. That could continue to harm their reputation as unhealthy fast food supplier. • Errors on promoted CSR MCDONALD’S claimed that they have not imported meat from rain forest countries but in court it appeared that MCDONALD’S very well had imported meat from Costa Rica and Brazil where rain forests are eliminated to get more green-fields for cows. {Weekly, 1994 #27} 2. 3 Opportunities Attractive and flexible work environment MCDONALD’S offers many job opportunities. External recognition about how MCDONALD’S is a great place to work has become something that dispels myths that are out there. Programs like MC flexibility make their 1. 5 million employees around the world to love and respect their work place. MCDONALD’S takes very serious its responsibility to promote fair, safe and healthful working conditions, effective management policies, diversity and inclusiveness in all restaurants. MCDONALD’S is pride to say that 42% of their world top management started with MCDONALD’S careers serving customers.

However – the attractive and flexible working environment has been not rated as strength as personal observation and press reports make it more of an opportunity. An opportunity for society that there is an employer who always hires people which can be helpful for intermediate jobs – i. e. amongst other advantages keeping jobless-rates lower. • Strong environmental work Also this CSR issue has been characterized within the 2006 Worldwide Corporate Social Responsibility Report more as a strength as an opportunity. The web however has contradictory essays and reports and therefore it is rated here as an opportunity.

MCDONALD’S restaurants are committed to manage their business by integrating environmental considerations into daily operations and by constantly seeking ways to add value to the community. For example maintaining the restaurants and drive thrum’s clean. MCDONALD’S continues the refinement and implementation of the environmental guidelines on fish sourcing and trough this guidelines at least 18,000 metric tons of whitefish have been shifted from unsustainable sources. • High Supplier profile Setting the highest quality standards possible makes suppliers to jump the hurdle. They have to be able to deliver what we ask for.

We look at taste and quality first not efficiency not cost. Frank Muschetto (Senior Vice-president) clears: the profile of the suppliers that we select is consistent with several attributes that we identified years ago that we felt support what MCDONALD’S is about. One of them is their commitment to corporate responsibility if they don’t have it, forget it. We try to pull together with many other companies and in several cases with the whole industry to be proactive against issues that can affects us all like avian influenza. We use our leadership as a tool to participate with the United Nations on the common goal of stopping the sickness.

MCDONALD’S participates in a program called Kaleidoscope to test ways to sustain compliance based on dynamic, internal management systems and ongoing worker input. Annual audits are done globally for meat (beef, pork and poultry) processing plants looking forward to maintain animal welfare farms all over the world and not only in the USA and Europe. • Own corporate responsibility Comity MCDONALD’S takes serious responsibility on what comes from being a major player in the global food industry and that’s why the Board of Directors has a standing Corporate Responsibility Committee.

It acts in an advisory capacity to the board and to management on policies and strategies. At the global management level, several groups provide leadership on particular types of corporate responsibility issues, for example: Worldwide Corporate relations council who aligns all communications and external affairs for MCDONALD’S globally: oversees and advises on the corporate responsibility efforts. • Truthful brand image MCDONALD’S ensures to maintain and build the trust with all stakeholders and customers with appropriate and truthful marketing and communications. These topics must also be relevant to costumers and consistent with the brand.

Being real makes the people believe in our corporation and give support in our many community and global charity programs. MCDONALD’S continuously works to assess and evolve their marketing and advertising standards; they have newly introduced additional training and accountability for those whose work involves brand related communications and or use of MCDONALD’S trademarks. 2. 4 Threats • Scepticism In recent years we have seen e-mails and information on the web that MCDONALD’S is using monster-chicken • Not healthy enough for children For children the product choice still is not healthy enough. What else besides beef and chicken or fish?

What about a soy burger, vegetable burger or fibre containing Deserts or simple deep frozen, quick steamed vegetable bowl (containing at least 80% of the vitamins and enzymes). What about offering small gifts or special packages as a premium for a healthy product or a premium system for kids who eat healthy? A threat if the competition comes up with such a system. • Beef/Poultry/Fish Health Problems Serious initiatives in the US against growth hormone and or antibiotic stuffed cows, bird flu epidemics in the US and Europe, high contents of heavy metals in fish could cause sales slumps and cause profits and stocks to fall.

MCDONALD’S as a giant in the fast food business could act to slow to avoid large corporate damage. • Made in China syndrome Labour exploitation in China for the production of McDonalds “happy meal” toys. • Profit pressure The pressure to deliver shareholder value will force MCDONALD’S to not follow up the one or other CSR issue. No MCDONALD’S CEO will risk his post at the cost for the implementation of a CSR if it would not at the same time create immediate value for shareholders. • MCDONALD’S a major contributor in global warming MCDONALD’S is considered to be the largest consumer of beef.

Examples that MCDONALD’S cattle are being fed on former rain-forest territory, the excessive amount of cattle which produce huge quantities of methane, heavy use of chemicals, fertilizers and pesticides just to keep cattle breeding and MCDONALD’S burgers profitable could develop a future threat of conscious consumer choices to visit a MCDONALD’S restaurant or not. • Local fast food restaurants Local fast food restaurants that are don’t have such purchasing power and are less environmental threatening as giants such as McDonalds enjoy better quality reputation, because they buy from local butcheries, or use products e. . made in Austria i. e. free running chickens, approved Austrian grown cows. • MCDONALD’S has the power to create demand Rather than reacting to the free play of market forces MCDONALD’S with its marketing budget of 1bn USD is able to create demand {Phil Lyon, 2007 #28}. That can be a threat for a society and its culture. 3. Task 2: McDonald’s Plan to Win Strategy 3. 1 Implementation of key elements new Strategies McDonald’s overall strategic plan is called Plan to Win. Their focus is not so much on being the biggest fast-food restaurant chain, rather it is more focused on being the best fast-food restaurant chain.

McDonald’s “strategic alignment behind this plan has created better McDonald’s experiences through the execution of multiple initiatives surrounding the five factors of exceptional customer experiences – people, products, place, price and promotion”. {McDonald’s, 2008 #20} McDonald’s also incorporates geographical strategic plans. In the U. S. , McDonald’s strategic plan continues to focus on breakfast, chicken, beverages and convenience. These are the core areas in the United States. McDonald’s has launched the Southern Style Chicken Biscuit for breakfast and the Southern Style Chicken Sandwich for lunch and dinner.

In the beverage business, McDonald’s starting introducing new hot specialty coffee offerings on a market-by-market basis. In Europe, McDonald’s uses a tiered menu approach. This menu features premium selections, classic menu, and everyday affordable offerings. They also “complement these with new products and limited-time food promotions” {McDonald’s, 2008 #20} In the Asia-Pacific, Middle East, and Africa markets, McDonald’s strategic plan is focused around convenience, breakfast, core menu extensions and value.

With McDonald’s overall strategic plan and its geographical strategic plan, the company should start to see more positive financial results. McDonald’s incorporates several organizational strategies. Some of the organizational strategies consist of better restaurant operations, placing the customer first, menu variety and beverage choice, convenience and day part expansion, and ongoing restaurant reinvestment.

McDonald’s plans to “continue to drive success in 2008 and beyond by leveraging key consumer insights and our global experience, while relying on our strengths in developing, testing and implementing initiatives surrounding our global business drivers of convenience, branded affordability, day part expansion and menu variety” {McDonald’s, 2008 #20}. One of the ways McDonald’s can obtain a positive net income is to maximize efficiency in its restaurant operations while at the same time placing the customer first.

With strategic focus on menu variety and beverage choice, McDonald’s is hoping for increased sales and guest counts. With their convenience and day part expansion initiative, McDonald’s is hoping to increase efficiency in its drive-thru pick up window, and the company is staying open later for those late-nighters who want a quick bite to eat. McDonald’s also has locally owned and operated restaurants which “are at the core of their competitive advantage and makes them not just a global brand but a locally relevant one” {McDonald’s, 2008 #20}. They are in the process of remodeling and upgrading its franchises.

The company is also opening up McCafe’s “with the expectation that the gourmet coffee shop would move it closer to its goal of doubling sales at existing U. S. restaurants over the next decade” {Peter, 2007 #19} A couple other organizational strategies are branded affordability, and the development of their employees starting with recruitment and training and leading all the up to leadership and management. 3. 2 SWOT Analysis and Plan to Win McDonald’s strategic plan is influencing their marketing efforts by building better brand transparency.

They want their image to be recognized globally. They are enhancing the customer’s experience. “Across their markets, they are making is easier for customers to enjoy a great McDonald’s experience. They are introducing drive-thrus to the increasingly mobile populations in China and Russia, while in the U. S. and Canada, greater drive-thru efficiency and double drive-thru lanes enable them to serve even more customers quickly” (McDonald’s, 2008, 13). In Germany, McDonald’s has a reimaging program that includes adding about 100 McCafes.

They are also installing new kitchen operating systems so that they can continue to deliver high food quality. McDonald’s has already renovated about 10,000 restaurants world wide. They want their restaurants to be an expression of their brand. The company is also delivering greater value to the customer with new menu selections. “By serving a locally relevant balance of new products, premium salads and sandwiches, classic menu favorites and everyday affordable offerings around the world, they create value for customers and satisfy their demand for choice and variety” {McDonald’s, 2008 #20}.

Types of marketing mix that McDonald’s use to achieve their marketing goals are longer operating hours, everyday value meals, and optimizing efficiency in the drive-thru. McDonald’s also uses marketing campaigns. In 2007, McDonald’s used the Shrek movie to give children a choice between milk, fruit, or vegetables as part of their Happy Meal. In addition to their commitment with children, McDonald’s is building their brand image “with innovated marketing transporting ideas across borders and using I’m lovin’ it to deepen their connection with customers who love their food and the unique McDonald’s experience” (McDonald’s, 2008, 17).

In the 2008 Olympics held in Beijing, McDonalds offered the Beijing Burger, Carmel and Banana Sundae, and Rice Sticks. They featured nine Olympic and Paralympic athletes on their packaging. In Australia, McDonald’s held a marketing campaign where the people could decide what name to give its new hamburger. The name that won was Backyard Burger. With marketing campaigns like these, McDonald’s is trying to create a better brand image. Other organizational and marketing strategies are “creating stronger bonds of trust by being accessible and maintaining an open dialogue with customers and key stakeholders” {McDonald’s, 2008 #20}.

The company is reinvesting approximately $1. 9 billion into their restaurants primarily to reimage existing restaurants and build new ones. McDonald’s is also moving towards a more heavily franchised, less capital-intensive business model. Although in some countries, such as China, this is not permissible due to governmental laws. With McDonald’s growing global brand image and its emphasis on the five factors of exceptional customer service, this should help them increase sales and net income.

With the initiative of remodeling and upgrading existing franchises, this will give the customer a more pleasant and friendly place to dine out at. With McDonald’s marketing campaign for the 2008 Olympics, they were an integral part of the games and this only enhanced McDonald’s brand image in a positive way. With the recruitment and training initiatives for current employees or future prospects, this will allow McDonald’s to achieve less of an already high turnover ratio. 4. Task 3: McDonald’s 2003-2009 Strategy 4. McDonald’s Dynamic Strategy With an established brand, visible leadership and solid financial performance in its own sector, McDonalds has the foundations and options for future expansions. As stated previously, the group sees expanding markets/culture/economies as their future growth areas. One possible strategy for expansion would be to increase the local branding of menus within these markets. There is an opportunity to not only increase the numbers of cities, but to make the McDonalds name more recognizable as a restaurateur abroad.

This would require the company to manage more outlets, rather than encouraging franchisee, which requires a committed financial expansion. Increasing its market share or at least visibility would heighten the brand awareness, {Kotler, 2005 #18}. The costs associated with a strategy to increase partnerships would be far less than if they attempted to expand to more developing countries and cities on their own. McDonalds is currently aligned with a limited number of government partnerships- China, Vietnam, {Thomm, 1996 #21}.

The risks are much lower but there is a risk to brand dilution with regard to consistency of the services provided and perfected by the McDonald’s familiarization, management processes and manufacturing and production specifications. McDonald uses existing marketing communication methods such as TV, press, magazines, outdoor posters and taxi sides, all featuring the distinctive logo. Advertising is used to encourage people to try the food items, {Kotler, 2008 #17} and to raise awareness of new product developments and new openings.

Nonetheless the marketing department could try increasing and adapting new marketing tactics. Also 18 percent of turnover is spent on advertising; for comparison, the industry standard is five to seven percent. {Kotler, 2008 #17}. The budget must be focused. To further capture the developing markets through local promotions, local endorsements and local menu planning would lead to significant decreases in advertising costs but an increase in the appropriateness of the message to the consumers in the target markets.

Using Ronald McDonalds as a marketing tool has certain problems with the younger generation. The traditional iconic figure has less in common with the youth culture, {Schlosser, 2002 #22} and the more reference based figure is more suitable, such as Justin Timberlake. Consumers have a personal affinity with him, {Kotler, 2005 #18}. This must be exploited further. This loyalty could be captured to increase the market share of the Brand. The perception of American quality is paramount to many multinational businesses and exploited the world over.

This can be seen in education, engineering and law. McDonald could emphasize the quality and superiority of service provided by the Americans through it’s advertising in other countries. Nonetheless, {Schlosser, 2002 #22} states that the traditional American style that once gave them its unique status is now its disadvantage. International markets no longer lust for the novelty of eating out in an American ‘dinner’, so McDonald’s need to change this and meet the needs of specific markets rather than using a uniform approach.

The company should increase advertising in its new target markets, and stress the quality and affordability of service in all promotions. Also, consider alternative marketing strategies such as a credit card rewards program, corporate sponsorship of events, and well-publicized donations to charity. The optimal solution for McDonalds is to expand their service by offering to more cities, offering services in the expanding markets and increasing their promotion. During traditionally low seasons, tactical promotions and price advertising could also used to maximise restaurant capacity, commonly known s yield management, {Kotler, 2005 #18}. McDonalds has the capability to sustain itself as one of the leaders in the worldwide food retail industry, {Thomm, 1996 #21}. With careful planning and effective marketing, they can achieve this. In addition to communication to consumers, they must utilise their community database, partnerships, retailers and community sponsors, who are the primary influences of the target market and who can familiarise all consumers with the products, benefits, and associated benefits, the core and peripheral attributes of the McDonald brand and the products/services. 4. Strategies Comparison McDonald’s has many competitors to compete with in the fast food industry for example Burger King, Wendy’s, and Arbys see Chart 1. Burger King is McDonald’s biggest competitor with their hamburgers being fire grilled rather than fried; both have the kid’s meals with the little toys to attract the younger children and combo meals for the young adults. McDonald’s and Burger King both have prepaid cards whereas Wendy’s and Arbys do not have these cards. Wendy’s offer not only hamburgers, but they have taken it to their loaded bake potato, chili, and the frost, and compete with the children’s meals.

Arby’s also has a nice menu besides the average hamburgers, they also have chicken salad sandwiches, roast beef sandwiches, and a kids meal that includes a healthy meal such as fruit mix, turkey and ham sandwiches without the crust, with no toys included. Burger King, Wendy’s, Arby’s are just a few of McDonald’s competitors that McDonald’s would have to compete with depending were you are located. There may be more or less competitors but at this time McDonald’s, Burger King, Wendy’s, and Arby’s all offer the hamburger’s, fries, chicken sandwiches and the kid’s meal, they also have sweepstakes that you can enter to win prizes.

McDonald’s competitive landscape for our product, the McDonald’s Reward Card, that we have presented would attract McDonald’s target consumers between the ages of 18 and 25, will surely bring a higher profit for the McDonald’s corporation. The McDonald’s Reward Card will offer the opportunity for our customers to earn points which they will be able to purchase not only food, but to purchase the entertainment that they enjoy, there is no contest that they have to enter and wait for a drawing to win a prize.

When they purchase at McDonald’s they earn points, it is a win situation, McDonald’s rewards their customers for selecting McDonald’s to feed them with the variety of great fast food. {Kotler, 2009 #23} Chart 1 McDonald’s Competitors [pic] 5. Task 4: McDonald’s Competitors Performing a competitor analysis will enable McDonald’s to understand the industries and market in which it operates. The use of Porter’s Five Forces will help them to analyses the dynamics of the market and understand the critical success factors in order to understand its position. Four types of competition {Kotler, 2005 #18} Brand competition |Industry competition |Form competition |Generic competition | |Burger King |Restaurants |Supermarkets |Trends: clothing, music, | |Domino’s Pizza, Inc. |Non-fast food outlets |Food market stalls |fashion | |Independent fast food outlets e. g. |Cafes |Eating at home |Consumer durables | |fish and chips, kebab places |Coffee shops | |Similar priced products | |Papa John’s International, Inc. | | | |Subway | | | | |Wendy’s International, Inc. | | | | |Yum! Brands: KFC, Pizza Hut | | | | 5. 1 Wendy’s The first Wendy’s restaurant opened in Columbus, Ohio on November 15, 1969 at 257 East Broad Street by Dave Thomas (Wendy’s. om). In 1972, the first franchise outside of Ohio was opened in Indianapolis, Indiana. Wendy’s is known as the home of the old fashioned hamburger, and is the Number 3 hamburger chain by sales. Its sales trail only McDonald’s and Burger King. There are almost 6,700 Wendy’s restaurants worldwide; about 78% of them are franchised” (Hoover’s fact sheet). Wendy’s offers high quality in customer service and allows customers to have their hamburger made the way they want it done. Wendy’s is on the New York Stock Exchange under the symbol of WEN.

Dave Thomas when he started Wendy’s new the secret to success was to offer quality to customers and to the Franchisees that would own Wendy’s restaurants. Wendy’s in the early 90’s developed a four part strategy that world guide the company to refocus on what they do best, and grow the business into the next millennium. The first strategy is operating restaurants that exceed customer expectations on each visit. This is vital in today’s competitive fast food business, due to the vast amount of choices consumers have, and one bad experience can lose a customer for life.

This concept is easily done on paper, but with shrinking margins and lack of ability to attract highly skilled employees this strategy is difficult to implement. Although, Wendy’s seems to have instilled these beliefs into management and has seen considerable success practicing these beliefs. This strategy is the most important compared to the other three, because if you don’t have any customers it does not matter how good your food is, you won’t stay in business. Many companies forget that customer service is vital in staying in business and to growing the market.

Fast food restaurants are one area that customer service is vital for survival. The second strategy is accelerating new store openings and strengthening the quality of other Wendy’s locations. This is vital for Wendy’s to keep its competitive advantage is the ability to keep stores clean and modern. This strategy is being implemented and seems to be quite successful in helping older Wendy’s become profitable again. Wendy’s philosophy is not to be the cheapest, but to be the best. With this philosophy Wendy’s has to offer newly designed restaurants with modern design to attract the cliental that will pay extra for fast food.

Wendy’s seems to be doing an excellent job in creating an atmosphere that is conducive to customers spending a little more to get a lot more. Wendy’s has introduced salad bars, buffets, and has made the atmosphere friendlier to patrons. The third strategy is to aggressively increase penetration by adding new units or so called “special sites”?. This an excellent way to grow Wendy’s market, these small restaurants are cost effective and promote the Wendy’s products to more families and truck drivers. Wendy’s is aggressively targeting the traveler in this area, which seems to be a good move to make Wendy’s the fast food of choice for travelers.

Furthermore, these small restaurants are cheaper to develop and share the costs with gas stations they are affiliated with. The last of the domestic strategies is its marketing strategy to promote its perception of promotional items at the upper end of the price spectrum. This has been successful with the spicy chicken sandwich and pita sandwiches, which both have had considerable success. In the fast food business Wendy’s has differentiated itself from McDonalds and other fast food restaurants by offering high quality food items consumers are willing to pay for. In this area Wendy’s has dominated the market and has seen considerable success.

Wendy’s needs to keep utilizing this strength by introducing new products, and try not to go head to head with McDonalds. http://www. nzherald. co. nz/property/news/article. cfm? c_id=8&objectid=10537499 http://www. nbr. co. nz/article/wendys-plans-nz-expansion-36423 5. 2 Jack in the Box Although Jack in the Box remained strong with widely varied menu items and unique marketing strategies through the E. coli disaster of 1993, the current economic slump in the fast food industry highlights serious controversy over the company’s new growth strategy and accounting practices (Bauder).

In this article, analysts are challenging the accounting practices of a San Diego-based company, Jack in the Box. In their 10-k report, Jack in the Box is listing franchise sales as “other revenues”, which on paper triples their operation income to $9. 1 million. David N. Allen of investment banking firm Caris & Co. , questions this practice as the, “Selling of company assets to franchisees is not the same as selling a food product”. He goes further saying that the company should separate operating earnings from non-operating income. Reporting gains from asset sales to franchisees is inappropriate.

Jack in the Box countered this claim by stating that other fast food chains use the same accounting practices, which is consistent with GAAP (Generally Accepted Accounting Principles). In defense of Jack in the Box, Bud Leedom, senior analyst at Wells Fargo Securities believes that Jack’s accounting technique is specifically disclosed to Wall Street and as such is not troubled by their practices. Yet, on the other hand, David Geraty of RBC Capital Markets points out that by employing this practice the company is simply compensating softer sales with gains for other revenues. Platinum Inc. s responsible for the preparation, integrity, and fair presentation of its published financial statements. For my organization, The Platinum Company, the corporation maintains a system of internal control over financial reporting which is designed to provide reasonable assurance to management and the Board of Directors regarding the preparation of reliable published financial statements. The financial statements must follow the GAAP guidelines in preparing reports and recording transactions. To insure proper accounting Platinum utilizes their own internal audits and employs a well-known public accounting firm Deloitte & Touche, LLP.

Like Jack in the Box, Platinum’s Annual Report 2002, under other (loss) income, reports losses due to financial bankruptcy in one of their investment companies and reports financial gains because of investments in unconsolidated affiliates. To make recommendations in improving the companies financial reporting would be difficult at best. Platinum extremely strict and assertive in their internal audits to ensure proper procedures are followed. The companies internal accountants work together with Deloitte & Touche’s accountants to preserve proper ethical conduct and moral principals are monitored.

Business ethics are proper ethical conduct that implies that you not only consider what is in your best interest, but also what is in the best interest of others. Moral principles are what guide the conduct of individuals. For example, regarding financial reporting, WorldCom used a liberal interpretation of accounting rules when preparing financial statements. In an effort to make it appear that profits were increasing, WorldCom would write down in one quarter millions of dollars in assets it acquired while, at the same time, it included in this charge against earnings the cost of company expenses expected in the future.

The result was bigger losses in the current quarter but smaller ones in future quarters, so that its profit picture would seem to be improving. Additionally, the unethical financial reporting decision that WorldCom made cost the company’s reputation and most importantly the business. In my opinion, if Platinum continues to follow GAAP guidelines in their reporting practices, they should be exempt from the public analysis, Jack in the Box could not avoid. Unless there is a public build of support in order to challenge GAAP guidelines regarding listing franchise sales as other revenue, this accounting practice is just and fair.

An organization must put business ethics in front of profits to ensure that they do not become another WorldCom tribulation http://www. marlerblog. com/2006/07/articles/legal-cases/thirteen-years-since-jack-in-the-box/ 5. 3 Sonic In 1953 Sonic Corporation was founded by Tony Smith in Shawnee, Oklahoma under a different name of the Top Hat. Tony Smith started the company as a drive-in restaurant featuring hot dogs, hamburgers, and french-fried onion rings. In the mid-50s Smith was asked by Charles Pappe for assistance in establishing a similar restaurant in a rural town also located in Oklahoma.

This was the beginning of a partnership between the two men. In 1991 Sonic Corporation was the fifth largest chain in the fast-food industry, servicing in the hamburger segment, behind McDonald’s, Burger King, Hardee’s, and Wendy’s. Sonic has and is still carrying the tradition of being a high-quality franchise-based organization in the Sunbelt states. The following case will be broke down into five different stages beginning with early strategies, problems, new strategies, a ratio analysis, and a recommendation.

Tony Smith introduced the Top Hat as a drive-in restaurant that reduced start up cost by not having eat-in space. This new restaurant featured drive-in stalls for automobiles that were equipped with a two-way intercom enabling customers to order as soon as they drove in, opposed to conventional practices of waiting for a carhop to take an order. Delivery of the fresh fast-quality products was doing to the unique design of the kitchen, and the use of carhops. Sonic Corporation preferred to do things as easy as possible and avoid sophistication. Another strategy Smith implemented was a collection of franchise royalties.

This was done in a way such that Sonic franchise holders were required to purchase printed bags at an additional fee that Smith arranged through a paper-goods supplier. Pyramid-type selling arrangements were formed by franchisees in money making efforts by starting other franchises through friends. This lead to original store managers having a percentage of their own store earnings and a portion of the new operation of the recruited friend manager. This idea further developed to multi-ownership of almost all Sonic operations as store managers were also part owners. This concept of pyramid-type selling carried Sonic forward with rapid growth.

In the later-70’s almost one new sonic store opened per day. The rapid expansion of Sonic was growing at an uncontrollable rate. With such rapid growth some stores failed. In these cases Sonic assumed control over failed franchise units, driving the number of company owned restaurants from 3 in 1974 to 149 in 1979. This rapid expansion of Sonic was a short lived frenzy which resulted in numerous failures do to lack of planning, market analysis, and requirements for unit managers. The company was forced to operate the failed franchise as company units in most cases, to protect the franchise name and reputation.

A loss was posted in 1980 as Sonic began closing some operations. Reason’s for the closings were that the board tighten its control which created an operation that left no services being provided to the franchise holders, including no advertising cooperation’s, no management training services, and no accounting services. In 1983 Smith decided to go outside the company’s parameters and appointed a professional manager that had no ties to Sonic Corporation in any shape, form, or know how. Stephen Lynn was introduced to Sonic Corporation as president and chief executive officer.

The new comer, Lynn, was granted the decision to form his own management team. This team was formed and implemented by mid 1984. By implementing his own management team Lynn could begin to take problems head on, after ridding the board members and franchise holders that had significant conflicting interests that clouded the better judgement of Sonic. In an attempt to turn the organization around, Lynn and his newly formed management team set forth on a strategy that had three key factors: a. attack problems concerning franchise attitude and Sonic’s image; b. improve purchasing c. Improve communications.

A co-op program along with advertising also helped improve communication and relations between franchise owners. The company’s strategies also reached out further as it offered annual conventions, provided training for managers, and training facilities with a test kitchen. The company went even further to offer help in areas of franchisees location sites and construction support to sales and profit improvement counseling. Another strategy was to upgrade the stores appearances and improve energy efficiency. Most franchise owners purchased a “retrofit” package that offered the mentioned upgrade features.

These new designs generated an average of 20 percent increase in unit sales in addition to the overhead savings. Sonic Corporation is an ever improving company that is striving for efficiency, freshness, and quality. Over the life of the company management has always been trying to increase profits and taking steps into the future. Sonic Corporation also learned that in maximizing profits one must incorporate all the ingredients from attitudes of the mangers and owners to the products they offer their customers. In looking at the ratio’s Sonic Corporation is looking stronger every year.

I would recommend keeping management minds striving to new and better innovations that could again revolutionize the company as it had under the leadership of Mr. Lynn. In doing so the company assures itself and ever lasting life in the fast-food drive-in industry. http://www. referenceforbusiness. com/history2/39/Sonic-Corp. html 6. References Gould, W. (1996). McDonald’s. London, Cherrytree Books. Kotler, P. (2005). Principles of marketing. Harlow, Financial Times Prentice Hall. Kotler, P. and G. Armstrong (2008). Principles of marketing. Upper Saddle River, NJ, Pearson/Prentice Hall.

Kotler, P. and K. L. Keller (2009). Marketing management. Upper Saddle River, NJ, Pearson/Prentice Hall. Kroc, R. and R. Anderson (1987). “Grinding it out : the making of McDonald’s. ” 218 p. , [24] pages of plates. Love, J. F. (1995). McDonald’s : behind the arches. New York, Bantam Books. McDonald’s (2008). “Annual Report. Retrieved September “. http://www. mcdonalds. com/corp/invest/pub/2008_annual_shareholders. html Nachrichten, F. http://www. finanznachrichten. de/nachrichten-2006-04/artikel-6317906. asp Peter, J. P. and J. H. Donnelly (2007). Marketing management : knowledge and skills.

Boston ; London, McGraw-Hill Irwin. Phil Lyon, S. T. a. S. S. (2007). “The Ritzer debate continued. ” http://www. mcspotlight. org/media/reports/silverstone. html Schlosser, E. (2002). Fast food nation : what the all-American meal is doing to the world. London, Penguin, 2007. Thomm, R. (1996). Business China : a practical insight into doing business in China. Chatswood, N. S. W. , Business & Professional Publishing. Weekly, B. (1994). “McLibel Support Campaign. ” summary and extracts of court proceedings in High Court case: McDonald’s versus Helen Steel and Dave Morris. . Biblography Gould, W. (1996). McDonald’s. London, Cherrytree Books. Kotler, P. (2005). Principles of marketing. Harlow, Financial Times Prentice Hall. Kotler, P. and G. Armstrong (2008). Principles of marketing. Upper Saddle River, NJ, Pearson/Prentice Hall. Kotler, P. and K. L. Keller (2009). Marketing management. Upper Saddle River, NJ, Pearson/Prentice Hall. Kroc, R. and R. Anderson (1987). “Grinding it out : the making of McDonald’s. ” 218 p. , [24] pages of plates. Love, J. F. (1995). McDonald’s : behind the arches. New York, Bantam Books. McDonald’s (2008). Annual Report. Retrieved September “. http://www. mcdonalds. com/corp/invest/pub/2008_annual_shareholders. html Nachrichten, F. http://www. finanznachrichten. de/nachrichten-2006-04/artikel-6317906. asp Peter, J. P. and J. H. Donnelly (2007). Marketing management : knowledge and skills. Boston ; London, McGraw-Hill Irwin. Phil Lyon, S. T. a. S. S. (2007). “The Ritzer debate continued. ” http://www. mcspotlight. org/media/reports/silverstone. html Schlosser, E. (2002). Fast food nation : what the all-American meal is doing to the world. London, Penguin, 2007. Thomm, R. (1996).

Business China : a practical insight into doing business in China. Chatswood, N. S. W. , Business & Professional Publishing. Weekly, B. (1994). “McLibel Support Campaign. ” summary and extracts of court proceedings in High Court case: McDonald’s versus Helen Steel and Dave Morris. http://www. referenceforbusiness. com/history2/39/Sonic-Corp. html http://www. marlerblog. com/2006/07/articles/legal-cases/thirteen-years-since-jack-in-the-box/ http://www. nzherald. co. nz/property/news/article. cfm? c_id=8&objectid=10537499 http://www. nbr. co. nz/article/wendys-plans-nz-expansion-36423