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Internal and External environment analysis for Mcdonalds

McDonalds has been a thriving business since 1955 and 20 of the top 50 corporate staff employees started as a restaurant level employee. In addition, 67,000 McDonalds restaurant managers and assistant managers were promoted from restaurant staff. Fortune Magazine 2005 listed McDonald's as the "Best Place to Work for Minorities." McDonalds invests more than $1 billion annually in training its staff, and every year more than 250,000 employees graduate from McDonald's training facility, Hamburger University.

The business is ranked number one in Fortune Magazine's 2008 list of most admired food service companies.

One of the world's most recognizable logos (the Golden Arches) and spokes character (Ronald McDonald the clown). According to the Packard Children's Hospital's Center for Healthy Weight children age 3 to 5 were given food in the McDonalds packaging and then given the same food without the packaging, and they preferred the food in the McDonald's packaging every single time.

McDonalds is a community oriented, socially responsible company. They run Ronald McDonald House facilities, which provide room and board, food and sibling support at a cost of only $10 a day for families with children needing extensive hospital care. Ronald McDonald Houses are located in more than 259 local communities worldwide, and Ronald McDonald Care Mobile programs offers cost effective medical, dental and education services to children. They also sponsor Olympic athletes.

They are a global company operating more than 23,500 restaurants in 109 countries. By being spread out in different regions, this gives them the ability to weather economic fluctuations which are localized by country. They can also operate effectively in an economic downturn due to the social need to seek out comfort foods.

They successfully and easily adapt their global restaurants to appeal to the cultural differences. For example, they serve lamb burgers in India and in the Middle East, they provide separate entrances for families and single women.

Approximately 85% of McDonald's restaurant businesses world-wide are owned and operated by franchisees. All franchisees are independent, full-time operators and McDonald's was named Entrepreneur's number-one franchise in 1997. They have global locations in all major airports, and cities, along the highways, tourist locations, theme parks and inside Wal-Mart.

They have an efficient, assembly line style of food preparation. In addition they have a systemization and duplication of all their food prep processes in every restaurant.

McDonald's uses only 100% pure USDA inspected beef, no fillers or additives. Additionally the produce is farm fresh. McDonald's serves 100% farm raised chicken no fillers or additives and only grade-A eggs. McDonald's foods are purchased from only certified and inspected suppliers. McDonalds works closely with ranchers, growers and suppliers to ensure food quality and freshness.

McDonalds only serves name brand processed items such as Dannon Yogurt, Kraft Cheese, Nestle Chocolate, Dasani Water, Newman's Own Salad Dressings, Heinz Ketchup, Minute Maid Juice.

McDonald's takes food safety very seriously. More than 2000 inspections checks are performed at every stage of the food process. McDonalds are required to run through 72 safety protocols every day to ensure the food is maintained in a clean contaminate free environment.

McDonald's was the first restaurant of its type to provide consumers with nutrition information. Nutrition information is printed on all packaging and more recently added to the McDonald's Internet site. McDonalds offers salads, fruit, roasted chicken, bottled water and other low fat and calorie conscious alternatives.

It has branded menu items e.g. Big Mac, Chicken McNuggets, which further promote McDonalds.

McDonalds Egypt:

Has the second largest market share in Egypt with branches exceeding 60.

Fastest delivery service provided in Egypt.

Nutrition information is printed on all packaging

Safety protocols and quality assurance to serve best quality food.

More than 92% of suppliers are Egyptian (Halal)

Efficient assembly line to serve food as fast as possible with maintaining high quality.

Charity works.

McDonalds is the first restaurant in Egypt to provide drive through in 7 branches.

Has a joint venture with shell petroleum.

Sponsors many events and football teams.

Cares about the environment by recycling the oil used in cooking for delivery motorcycles.

(SWOT)

McDonalds Worldwide:

High employee turnover in their restaurants leads to more money being spent on training.

Their test marketing for pizza failed to yield a substantial product. Leaving them much less able to compete with fast food pizza chains.

The company’s ability to increase revenue is small due to many competitors to keep prices down.

It uses advertising that mostly targets children.

Lack of innovative products.

McDonalds Egypt:

No innovation in products that could serve the culture taste due to consistency in their menu.

Prices

McDonalds Structure:

McDonalds has a functional structure which serve many product lines in the same industry.

Its chain of command is as follow: Chief Executive

Operations

Development

Finance

Marketing

Human Resources

McDonald's are structured along functional lines. Their Chief Executive oversees five major areas of activity:

Operations (equipment and franchising)

Development (property and construction)

Finance (supply chain and new product development)

Marketing (sales marketing)

Human Resources (customer services, personnel, hygiene and safety)

Culture:

McDonalds is all about corporate culture. From its Hamburger University (where managers and assistant managers are trained) to its vision statement of Quality, Service, Convenience, and Value (QSCV), McDonalds corporate culture is a shared value system that forms the basis of all company decisions.

A relatively enduring, interdependent symbolic system of values, beliefs, and assumptions evolving from and imperfectly shared by interacting organizational members that allows them to ascribe common meanings to stimuli encountered in the organizational context; these functions are accomplished through the mediation of implicitly and explicitly rules that act as cultural warrants.

McDonald’s vision statement creates the values by which are made all managerial and corporate decisions. These guiding values are exhibited in all aspects of business, from social responsibility and diversity to training and policies. McDonalds operates four Hamburger Universities in four countries.

McDonalds has and provides the best employees-business relationship via providing an equal opportunity employer. As an equal opportunity employer McDonald’s ensures that employees and job applicants are selected, trained, and promoted without discrimination to race, gender, sexual orientation, age or disability.

The company promotes their employees based on their relevant skill, talents, and performance. In support of this McDonald's promotes and sustains a working environment, which is free from unlawful discrimination, harassment and bullying.

Employees are regarded as members of a team where everyone's opinion is valued and respected. The Human Resources department monitors the effectiveness of the discrimination policies at regular intervals and takes corrective action as necessary to ensure that they being complied with Employees who feel that they have been treated unfairly are encouraged to use the remedies outlined in the Company's handbooks.

The Ronald McDonald House charity offers thousands of sick children in approximately 48 countries hope and it inspires courage. They say laughter is the best medicine and nothing makes people smile more than a Happy Meal.ourworld-policy-hero

At McDonald’s we recognize our responsibilities to protect and preserve the environment for future generations to come...

Our goal is simple, is achieving a continuous environmental improvement across all areas of our business.

ourworld-prp

btn-show-your-support

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Litter

McDonald’s provides trash cans outside every store all around the world.

food-fries

Waste

Used cooking oil represents 10% of the restaurant total waste, and is recycled into biodiesel, which our delivery bikes runs on.

food-saladsplus

Packaging

For the salads containers McDonald’s replaced them with a paper card base; saving nearly 69 tones of plastic purchased by the firm.

Energy

All our restaurants uses low energy lampsrestaurants-whatson

Resources

Suppliers:

Meat: from Brazil in bulks and then processed in Egypt.

Potato: Farm frites

Vegetable: Egyptian farms

Dairy: Egyptian farms

Bread: Egyptian suppliers

Assets:

60 restaurants

Delivery Motorcycles

Office equipment

Manufacturing plants

Restaurant equipments

Skills & Knowledge:

Employees are trained on the same values and are given the required skills to achieve company’s success. (Hamburger University)

External environment:

(SWOT)

Worldwide:

In today's health conscious societies the introduction of a healthy hamburger is a great opportunity. They would be the first QSR (Quick Service Restaurant) to have FDA approval on marketing a low fat low calorie hamburger with low calorie combo alternatives. Currently McDonald's and its competition health choice items do not include hamburgers.

Provide optional allergen free food items, such as gluten free and peanut free.

In 2008 the business directed efforts at the breakfast, chicken, beverage and convenience categories. For example, hot specialist coffees not only secure sales, but also mean that restaurants get increasing numbers of customer visits. In 2009 McDonald's saw the full benefits of a venture into beverages.

It can adapt to the needs of the societies and undergo an innovative product line.

It can adapt to the needs of the societies and undergo an innovative product line.

It can research ways to use ‘green’ energy and packaging which will work as a part of their promotional effort as well as fulfill their social responsibility.

It can create new product offerings, use mobile text messaging to offer services that appeal to consumers.

It can upscale some of its restaurant settings at luxurious locations to attract more customers.

It can provide optional items that are regarded to be the basis of allergy for some.

It can slow down the level of expansion in order to increase the profitability of the organization.

McDonalds Egypt:

Introduce new products that satisfy the culture needs

Reduce expansion to generate more revenue

Use new home ordering techniques

Care more about green environment

(SWOT)

Worldwide:

The recession negatively impacts the holding position of the firm regarding its revenue streams, even though they are quite diversified.

Foreign currency fluctuations are regarded to be a major problem as it uses standard pricing for its food items.

More restaurants that are increasing their food offering and declining the price.

Health issues regarding the fast food chain.

Heavy investments on promotional campaigns which decrease the gaining of market share.

Some parents criticize the firm’s ‘cradle to grave’ marketing strategy that focuses on kids, who later on take it as a trend to their adulthood.

Sued various times for unhealthy food, usually with addictive additives.

Emergence of major fast food competitors: Burger King, Starbucks, Wendy’s, Taco Bell, KFC.

The expansion has made the firm vulnerable to the slow economies of the other countries.

Swine Flu

McDonalds Egypt:

Rumors such as an Americanized brand that supports Israel.

Egyptians are starting to care more about diet and health

Economy recession

Swine Flu

McDonalds vs. KFC vs. Momen

The SWOT analysis of KFC showed that it has the largest market share of the fast food industry and 24 stores more than McDonald’s. Its weaknesses turned out to be lack of consistence of standards and moderate rates of dissatisfaction by the customers. For the threats and opportunities of KFC, they are no different from those of McDonald’s or any other fast food restaurant in the industry.

Similarly, the SWOT analysis of Momen showed that its main strengths are in their diversified menus and reasonably more competitive and affordable prices. Its weaknesses are much more lack of consistency than that of KFC and customers perceive their taste to be less than both McDonald’s and KFC as well as any other fast food restaurant in the market. Its opportunities are the incorrect believe of customers that Momen is Egyptian and halal while McDonald’s and KFC are not. However, the threats of Momen are that they are only spread over the main areas of the Egyptian market so they do not serve all the customers unlike what McDonald’s and KFC do.

Natural environment:

McDonalds doesn’t supply its franchises from the headquarters in fact it treats every franchise as its own operating business that will order it’s supplies from the suppliers they want taking into consideration the quality assurance this could be based on the country itself or from imported goods.

For McDonalds Egypt they order nearly 92% of their supplies from Egyptian producers whom produce the supplies in Egyptian land because Egypt is considered to be a good agriculture region for its good climate and having the Nile River.

Potato: Farm frites

Vegetable: Egyptian farms

Dairy: Egyptian farms

Bread: Egyptian suppliers

Societal:

Political:

Taxes before 2005 were 40%, after 2005 and until now it is reduced to 20% this encouraged McDonalds to expand into what it is now 60 Branches and rising.

Economical:

Inflation has a very huge impact on McDonalds Egypt as prices are increasing and people have low income this leads them to spend money on cheap products, McDonalds has to increase its prices because it’s supplies are becoming more expensive.

The economic crises has also affected McDonalds because people are saving more and spending less and as McDonalds is not considered as a need and people have many other cheap substitutes such as Amo Hosney and Momen, McDonalds sales are reduced.

As McDonalds has a high unemployment rate it is not hard to find employees because McDonalds has a training center that trains them and candidates don’t need to have special skills or certificates to work at McDonalds.

Socio-culture:

As McDonalds operate in many different countries it has to take into consideration their beliefs and traditions.

It introduces new products besides the standard menu that suits every culture for e.g. in the Middle East MC Arabia and in India Mc Panton.

McDonalds also cares about the factors that could offend each culture for e.g. a state in USA considers the red color in McDonalds logo as evil therefore McDonalds has introduced the BLUE color in the logo.

Technological:

McDonalds uses new technology in cooking and preparing the food to reduce the fats and cholesterol in nutrition.

It has also introduced new technology to reduce costs (waste) and increase production ‘efficiency’.

Task: (Porter 5 Forces)

Threat of new entrants:

McDonald’s was not frightened a single bit when it first noticed that Burger King is going to start up in the Egyptian market for several reasons. First, they were well aware of their position in the market and how customers perceive them. Second, Burger King is not well positioned yet and the customers do not really know anything about it as well as not many customers in Egypt like it. Third, in order for Burger King to catch quickly with McDonald’s it needs to open 10 stores every 2 months which is impossible and even if it was possible Burger King would still need a year for it to catch up.

McDonald’s main concern is for new small entrants such as Amo Hosney who offers low price products with more quantity but the difference comes in quality and not quantity.

Rivalry among existing firms:

McDonald’s does not really see Hardees or consider it a main competitor. Kentucky Fried Chicken and Momen are the main competitors of McDonald’s in the fast foods industry or business. KFC has the largest market share of the fast food industry with 84 stores (24 stores more than McDonald’s) and Momen has the third largest share of the industry. McDonald’s is counting on coming up with creative and appealing ideas to beat the competition which is the main strategy that McDonald’s is adopting against competition.

Threat of substitutes:

Instead of buying McDonalds people can prepare food at home and it will be more healthy and will cost less therefore it is considered to be a threat to McDonalds because people will buy less causing loss in revenue.

Power of buyer:

McDonalds consumers can influence its prices because there are many competitors and substitutes that consumers can switch to such as Momen and KFC therefore the consumers have the power in purchasing the product of not and can influence it.

Power of supplier:

McDonalds has the power over suppliers because there are many suppliers available whom wish to work with McDonalds because it is a well recognized organization worldwide. The only problem is that McDonalds needs to follow some quality measurements in providing the food which might not be easily taught to new suppliers.

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