McDonald's Individual Assignment

Analyzing the Strategy of
McDonalds
By / Eng. Mohamed Ahmed Abdelatey
GR: 26
McDonald's is the world's largest restaurant chain by revenue, serving
over 69 million customers daily in over 100 countries across 37,855
outlets as of 2018. Although McDonald's is best known for its
hamburgers, cheeseburgers and French fries, they also feature chicken
products, breakfast items, soft drinks, milkshakes, wraps, and desserts.
In response to changing consumer tastes and a negative backlash
because of the unhealthiness of their food, the company has added to
its menu salads, fish, smoothies, and fruit. The McDonald's Corporation
revenues come from the rent, royalties, and fees paid by the
franchisees, as well as sales in company-operated restaurants. According
to two reports published in 2018, McDonald's is the world's second-
largest private employer with 1.7 million employees
(behind Walmart with 2.3 million employees).
The functional-level strategies which McDonald's pursued to

boost its customer responsiveness:
 Infrastructure (leadership)
McDonald’s is one of the largest restaurant brands in the world and it is the
world leader in the retail food service industry, with almost 37,000 stores in 120
countries. McDonald’s emphasis on adding new restaurants for near 5 years, more
than 50% of increase in new restaurants opened. The McDonald’s Corporation is one
of the most successful global restaurant chains around the world. They have used
effective management and global expansion strategies to enter new markets and gain a
share of the foreign fast food market.
McDonald’s leadership team is headed by the President and CEO, who is aided by nine
senior managers, each overseeing a specific aspect of the business. The previous
President and CEO Mr. Steve Easterbrook took the helm in 2015 and he was widely
considered as an effective leader until he was fired for having consent sexual
relationships with subordinate employees. During his leadership tenure Mr. Easterbrook
was credited with turning around the company and reviving its falling stock price. Most
prominent changes introduced by Easterbrook include reducing costs, introducing touch-
screen ordering and establishing all-day breakfast.
 Production
Each McDonald’s store has a unified purchase channels, but because of the
main fast food are hamburger and fries, so each store just mostly purchases the semi-
finished products, when they are going to sale, just need one further processing. So
that can ensure the uniformity of products, it can strictly make the quality indicators
for each food, its quality assurance. McDonald’s also developed close ties with
whole-sellers and food producers, managing its supply chain to reduce costs. As it
became larger, buying power enabled McDonald’s to realize economies of scale in
purchasing and pass on cost savings to customers in the form of low-priced meals,
which drove increase in demand.
Permanent Product Strategy

McDonald's offering regular hamburgers, Big Macs and
quarter pounders is an example of a type of marketing
known as permanent product strategy. Several products on
their menu are permanent and do not change, which
appeals to loyal customers who frequent the restaurant
chain. After the initial development, these items remain on
the menu for extended periods of time without undergoing
significant changes. This strategy ensures that there is
always something familiar and predictable for consumers on
the menu.
Temporary Product Strategy
In addition to its permanent product offerings, McDonald's
regularly develops temporary products. The McRib, for
example, is a product that is offered only seasonally. The Big
Ocean burger is an example of a burger that was developed
as a temporary product, offered only for a few months in
2007. The purpose of this product development strategy is
to give customers something new to experience on each
visit and to experiment with new items that may become
permanent, according to Panmore Institute.
Local Product Development Strategy

As McDonald's has expanded internationally, it has created
several products to meet consumer demand in the local
markets, as described on the Eat This, Not That! Website. In
the Netherlands, for example, they have developed the
McKroket, a burger featuring a typically Dutch kroket, a
deep-fried, ragout-filled patty. In the Canadian province of
Quebec, McDonald's offers poutine, a traditional dish of
French fries, gravy and curd cheese. Several unique items
can be found on the menu in Honk Kong: Coke float, iced
milk tea, ham and egg pasta and the chicken and egg
burger. This strategy ensures that local customers have
foods to fit their tastes.
In my Opinion Local Adaptation Strategy is very important

In addition to developing new products for local markets,
McDonald's will also use an adaptation strategy whereby
they take a product and modify it to fit local tastes.
Adaptation strategy may also be used to align cultural
norms or regulations, according to Welp Magazine. In
India, for instance, the Big Mac has been modified into the
Maharaja Mac which contains no beef, in keeping with local
diets. In Greece, the Big Mac has been adapted to use a pita
bread instead of a bun. Even the McLobster has been
adapted to the McCrab in some U.S. markets where crab is a
common food or lobster prices are too high.
 Marketing
McDonald’s sells a wide range of products: hamburgers, chicken meals,
French fries, milkshakes, soft drinks and even introduced more healthy products:
salads, fruits and carrot sticks. Unfortunately, even those products that are normally
supposed to be healthy are not fresh and contain a number of E-s to conserve them
and procure an unusual good taste. Taking into consideration the differences between
cultures, the company differentiate its market approach by launching personalized
products in different countries. Therefore, they introduced wine in France, super-big
hamburgers in the U.S.A., rice in China, hamburgers without beef in India, Beer in
Germany, Filipino-style spicy burger in Manila etc. They also “introduced” Ronald, a
well-known clown whose purpose is to attract and entertain children. For kids they
have the Happy Meal menu (in close association with well-known brands such as
Walt Disney and CocaCola), offering an attractive toy in each Happy Meal.
McDonald’s Marketing Mix
Product
McDonald’s offers a variety of fast-food options including
classic American staples (burgers & fries), an extensive
selection of sweets and drinks (McCafe), McDonald’s-specific
favorites (Big Mac, Quarter Pounder).
Price
McDonald’s uses a value-based pricing strategy and strives to
provide value to its customers across the menu, and also offers
a $1-3 menu. In essence, their goal is to keep prices as low as
possible.
Place
Under McDonald’s franchising model, you’re able to find a

restaurant near you almost anywhere you are.
Source
Additionally, the company is investing in delivery options with
Uber Eats, Door dash, and other delivery services.
Promotion
McDonald’s has invested unbelievable amounts of money into
advertising efforts that span from traditional TV and radio to
social media, guerilla marketing, and everything in between.
These promotions center around McDonald’s as a great
restaurant option for the whole family.
Powerful Marketing Strategies: I’m Lovin`It

Now that you know the marketing strategies that made
McDonald’s successful, go out and make them work for your
brand.
Find your values, locate your core products, and invest time
and money into improving and promoting them.
 Material Management
McDonald’s standardized the process of order taking, making food, and
providing services. Standardized processes raised employee productivity while
ensuring that customers had the same process in all branches of the restaurant.
 R&D
McDonald’s scrapped its supersize menu and added healthier options such
as salads and apple slices in response to the feedback that McDonald’s was
contributing to obesity, due to its low-priced, high-fat foods were dangerous, claimed
critics. So, McDonald’s added grilled chicken sandwiches, chicken wraps, Southern-
style chicken sandwiches, and more recently, chicken to their breakfast menu.
McDonald’s also shifted its emphasis on beverages in response to the rapid growth of
Starbucks. In 2006, McDonald’s decided to offer better coffee, including lattes and
for many people a latte from the McDonald’s drive-through window is comparable.
 Information Systems
McDonald’s emphasized a few “velocity growth accelerators” and one of
those is mobile ordering and payments. According to Margaret, M-payment is a point-
of-sale (PoS) transaction which received with a mobile device. Customers can use a
smart phone with the app of payment to pay the bill. There is no doubt that almost
everyone owns a smart phone, and it makes payment become very easy that without
pay the cash and give change. And the cashier of McDonald’s can scan the barcode
displayed on the mobile screen of customers to give them a discount. What is more, it
is not only can decrease the situations of give a wrong change, but also can increase
the work efficient of the McDonald’s staff.
 Human Resources
McDonald’s Hong Kong offers employees free continuing education courses
in business. McDonald’s Argentina provides scholarships for employees to study in a
degree-granting program that was developed in partnership with a national university.
McDonald’s UK offers approximately $1,800 to each employee to invest in their
education, training, or ongoing involvement in sports or the fine arts (VSA Partners,
2004). As can be seen, the McDonald’s Corporation invests significant resources in
training and retaining employees of diverse backgrounds. Every day, around the
world, restaurant crewmembers receive structured on-the-job training and coaching in
workplace skills and values.
What does product quality mean for McDonald’s? What functional-level

strategies has it pursued to boost its product quality?
 Production strategy
Due to a number of negative concerns with regards to the nutritional content of the
products McDonald's is serving, the company opted to include healthier meals as an
alternative to its supersize menu. Also, they have enhanced the quality of their
beverages specifically McDonald's coffee by ensuring high quality beans are used in
the production, purchasing additional equipment, and filtering the water for the drink.
This upgrade has significantly contributed to its sales and increased its profit.
 Research and Development

With the use of the information gathered by the management where they were able to
find out that people are more into eating chicken than beef, from there they were able
to add new products such as meals that contain chicken meat to cater the needs of its
customers. Expanding the company’s products line based on facts about people’s
preferences can help boost the quality of products Mcdonald’s are offering. The
addition of chicken in their menu resulted to a positive impact to its sales because
people relied on Mcdonald’s that whenever customers crave for chicken, the fast food
chain can accommodate its demands.
 Human Resource Strategy

Due to the fact that there were complaints regarding the poor performance that
employees are giving to the customers due to the diversity of the menu and after
considering such, McDonald’s was able to design and develop strategies that would
help address the issues of the company and improve its services. This includes a
layout they have created called “Experience of the Future” which contains several
features such as ordering flexibility, customer experience, and more streamlined
menu. With this employees are more focused in doing the job or section assigned to
them delivering great customer experience and satisfaction Allowing mobile ordering
and payments, and delivery alternatives which are some of the attributes to achieve
superior quality are also done by McDonald’s that resulted to a more efficient and
effective flow in the operations thus improving the quality of service they are giving
to its customers.
VRIO Core Competencies (Long-Term Competitive Advantages) of

McDonald’s.
Two core competencies are identified in this VRIO analysis of

McDonald’s Corporation. The company’s brand is an organizational
resource for profitability through brand recall (when customers think of
where to have their meal) and through positive brand image of
products.
In the VRIO analysis context, McDonald’s brand has high value and is
rare in the industry. Competing restaurant businesses cannot imitate the
brand nor readily create an equally strong brand.
Moreover, McDonald’s value chain is organized around the maximum

strategic utilization of the brand as a core competency for sustainable
competitive advantage in the international food service industry. On the
other hand, the trademarks portfolio is an organizational resource and
core competency in McDonald’s fast food value chain operations. In the
VRIO analysis framework, this resource sustains the company’s strategic
ability to legally protect proprietary designs and information. For
example, McDonald’s trademarks, including food and beverage names,
are a strength that creates an image of uniqueness, even though
competitors’ products may be similar. In the resource-based view of this
core competency resource, the trademarks benefit the business through
fast food brand recall among consumers. This resource satisfies the VRIO
requirements for the long-term competitive advantage of McDonald’s
restaurant business.

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McDonald's Individual Assignment

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Analyzing the Strategy of

By / Eng. Mohamed Ahmed Abdelatey

The functional-level strategies which McDonald's pursued to

Permanent Product Strategy

Local Product Development Strategy

In my Opinion Local Adaptation Strategy is very important

McDonald’s Marketing Mix

Under McDonald’s franchising model, you’re able to find a

Powerful Marketing Strategies: I’m Lovin`It

What does product quality mean for McDonald’s? What functional-level

 Research and Development

 Human Resource Strategy

VRIO Core Competencies (Long-Term Competitive Advantages) of

Two core competencies are identified in this VRIO analysis of

Moreover, McDonald’s value chain is organized around the maximum

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