STUDY OF MCDONALDS

SUBMITTED TO:
Ms. PHD
SUBMITTED BY:
SAIRA
Group members
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PURPOSE OF STUDY
The main purpose of all this study is to find out how management works in huge organizations
such as McDonalds. While working on this project we came along so many things that surprised
us and increased our interest in this study. The report focuses on Management techniques and
strategies used y McDonalds. The reason for selecting McDonalds for this project is ecause
we wanted to study an organization which has a long success history and is a enchmark in the
industry. McDonalds has strong rand name! image and reputation in "ast food industry. #t has
uilt up huge rand equity. #t is the no $ fast food company y sales! with more than %$!&&&
restaurants ser'ing urgers and fries in almost $($ countries. The image of McDonalds is
recognized e'erywhere. This rand is in top ten of the most powerful rand names in the world
with )oca*)ola! +okia or ,M. -long that it has.
* /arge market share compared to 0")! 123,43 0#+, and other competitors
* 5pecialized training programs and courses for Managers
* McDonalds 6lan to Win 7financially8
* #ntroduced so many new products and keeps introducing new ones
*#n'ested in so many Technology #nno'ations
* ,ood marketing strategies
Which makes it the right choice to e studied.
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ACKNOWLEDGEMENT
This report is the comination of sincere hard work and dedication. # would like to show my
gratitude towards my super'isor Ms 69D for his help for this project. Without his complete
guidance and support # would not ha'e een ale to complete this endea'or. # would also thank
Mr. -hsan for pro'iding guidance throughout the project. # would also like to thank my friends
and class fellows for pro'iding me support and help y pin pointing the prolems. # would also
like to show my gratitude towards the respondents for their time and pro'iding 'aluale
information without which this report would ha'e not een completed. This report contains all
the rele'ant material required as per instruction. # hope this report meets the e:pectations. #
appreciate any suggestions for impro'ements in this report and its contents from e'eryone.
especially from teachers as # elie'e there is always a room for impro'ement.
CONTENTS
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$. MCDONALDS WORLDWIDE
McDonald?s was founded in $D>> y 3ay 0roc. 3ooted in 3ay 0roc?s founding principles of
Guality! 5er'ice! )leanliness H Ialue 7G.5.).HI.8. MacDonald?s headquarters are situated in
<ak 1rook! #llinois! 25-. #t has more than %>&&& ranches all o'er the world. #t produces "ast
"ood. -ccording to the sur'ey of (&$& McDonald?s ha'e more than >! &&!&&& employee in its
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worldwide ranches. McDonald?s management has always elie'ed in eing a leader in issues
that affect their customers. This philosophy is e'ident in McDonald?s in'ol'ement in 'arious
community projects regarding education! health care! medical research! and rehailitation
facilities. These acti'ities help the corporation to e:tend their image eyond fun and
entertainment into social responsiility. 9owe'er! in the late $DB&s! McDonald?s egan to face
criticism for its en'ironmental policies! especially those surrounding polystyrene clamshell
containers. #n $DBE! McDonald?s replaced )")s! the lowing agent used in clamshell
production! with weaker 9)") *((?s after facing pulic criticism that )") usage was
contriuting to ozone depletion. 1ut this change was not enough for many grass*roots
en'ironmental groups that! led y the )itizens )learinghouse for 9azardous Waste 7))9W8!
united in estalishing a 3onald McTo:ic )ampaign consisting of restaurant picketers and an
organized effort to mail clamshells ack to <ak 1rook headquarters. When McDonald?s later
tested trash*to*energy on*site incinerators! ))9W quickly named the project Mc6uff. 1y
$DBD! school children! the ackone of McDonald?s customer ase! founded a group called
0ids against 6olystyrene. -lthough they were not the only fastfood restaurant facing criticism
for disposale packaging! McDonald?s could not afford to let this situation escalate. <ne of
their primary competitors is 1urger 0ing. McDonalds is the leading gloal foodser'ice retailer
with more than %&!&&& local restaurants ser'ing >C million people in more than $($ countries
each day. -ll McDonaldJs restaurants offer a standard menu! which comprise food items such as
hamurgers! cheeseurgers! chicken sandwiches! "rench fries! salads! milk shakes! desserts and
ice cream sundaes. 5ome McDonaldJs restaurants offer additional food items to suit local taste
and preferences. The company also operates restaurants under the rand name J1oston MarketJ.
#n fiscal (&$&! the company operated %$!@@E fast food restaurants in o'er $($ countries in the
following geographic segmentsK 25. 4urope. -sia 6acific! Middle 4ast and -frica 7-6M4-8.
/atin -merica and )anada. McDonaldJs generates re'enues through company operated
restaurants and franchisee restaurants. <f the companyJs total restaurants! o'er B!&&& are
operated y the company and o'er $B!&&& are operated y franchisees. The remaining restaurants
are operated y affiliates. The companyJs re'enue comprises sales from company operated
restaurants and fees as well as rent from franchisees and affiliates. The company and its
franchisees as well as affiliates source purchase food! packaging! equipment and other goods
from appro'ed suppliers. The company maintains quality standards through assurance las
around the world. - quality assurance oard! including the companyJs technical! safety and
supply chain specialists! pro'ide guidance on all aspects of food quality and safety.
2. MCDONALDS PAKISTAN
Mcdonald?s the world?s est quick ser'ice restaurant was introduced in 6akistan in the
5eptemer $DDB at /ahore and there are now (E restaurants in B major cities of 6akistan. 7$$ in
0arachi! $ in 9yderaad! $& in /ahore and $ in "aisalaad! $ in 0ala 5hah 0aku! $ in 5ialkot! $
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in #slamaad H $ in 3awalpindi8 with a strong elief in the 3ay 0roch phrase when you are
green you are growing. #n 6akistan Mc Donald?s has an aggressi'e plan to e:pand its usiness
in all other cities of the 6akistan. -nd in 6akistan it is focusing to pro'ide friendly and quick
ser'ices restaurants .This launch was met with unprecedented enthusiasm form the citizens of
/ahore who are known for their li'eliness! 'igor and penchant for quality food. Today millions
of 6akistanis place their trust in McDonald?s to pro'ide them est quality food! quick ser'ice and
'alue for money. World famous "rench fries! 1ig Mac! Guarter 6ounder! )hicken Mc+uggets
and egg McMuffin are not only kidsJ fa'orites ut also lure in the customers of all ages.
McDonald?s is firmly committed to gi'e ack to the community where it operates. They are
happy to ecome in'ol'ed ecause they recognize that organizations ha'e a role to play in
helping communities to work successfully.
#n start! McDonaldJs had (*joint 'entures in 6akistan. "or these 'entures McDonaldJs has made
franchise*contract with L,house -karL and -min /akhani! who is now the )4< of
McDonalds 6akistan.
"irst for the territory including the pro'inces ofK
5indh
1aluchistan
5econd for the territory including pro'inces ofK
6unja
060
#n near future! McDonalds is e:pected to e:pand its ser'ices and open up new restaurants in
following cities of 6akistanK
,ujranwala
6eshawar
Multan.
McDonaldJs /ahore is a joint 'enture etween McDonaldJs )orporation 2.5.- and ,-M )orp
76't.8 /td. McDonaldJs made its deut in 6akistan on $Dth 5eptemer $DDB when it?s ,rand
)ountry <pening was held in the pro'incial metropolis of /ahore. This made 6akistan the $$%th
country on the gloe where the world renowned ,olden -rches were unfolded. -fter /ahore!
McDonaldJs made ,olden -rches glitter in other cities of 6akistan! "aisalaad is already open!
soon to e followed y other cities.
McDonald?s has set the all rolling in 6akistan with two modern! state*of*the*art restaurants! one
in /ahore and 0arachi each. The McDonaldJs /ahore 3estaurant is located on ,ulerg?s Main
1oule'ard while the one in 0arachi is situated on the Main +orth +azimaad 3oad. The /ahore
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McDonaldJs has scored another first in 6akistan with its Dri'e*Thru M a modern customer ser'ice
concept in quick ser'ice restaurants that has een introduced for the first time in 6akistan. The
customer simply dri'es into McDonaldJs! places the order and pays at one window and collects
the food within a minute at the ne:t all without lea'ing the car.
2.1 Vision
McDonaldJs 'ision is to e the worldJs est quick ser'ice restaurant e:perience. 1eing the est
means pro'iding outstanding quality! ser'ice! cleanliness and 'alue! so that they make e'ery
customer in e'ery restaurant smile. To achie'e their 'ision! they are focused on three worldwide
strategiesK
1. Be !e Bes E"#$o%e&'
1e the est employer for their people in each community around the world.
2. De$i(e& O#e&)ion)$ E*+e$$en+e'
Deli'er operational e:cellence to their customers in each of their restaurants.
,. A+!ie(e En-.&in/ P&o0i)1$e G&o2!'
-chie'e enduring profitale growth y e:panding the rand and le'eraging the strengths
of the McDonaldJs system through inno'ation and technology.
2.2 Mission S)e"en
Mc DonaldJs is the largest and est known gloal food ser'ice retailer entertaining $.@million
customer?s e'eryday in $($ countries. McDonalds is the market leader with outstanding rand
recognition! e:perience management! high quality food! site de'elopment e:pertise! ad'anced
operational systems and unique gloal infrastructure which ensures a position that enales us to
capitalize on gloal opportunities. We plan to help in the de'elopment of the social infrastructure
of the country where we work in. We want to e the est employer for our people in each
community around the world. We plan to e:pand our leadership position through great testing
food! superior ser'ices! e'eryday 'alue and con'enience.
,. DEPARTMENTALI3ATION
McDonalds follows di'isional departmentalization ecause there are a lot of di'ersity its
products! ser'ices and its geographical location. 4ach department has its own responsiility and
its own 'alues. The o'erall performance is e'aluated y the headquarters working in the country!
like in 0arachi in 6akistan case.
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McDonald?s has a lot of products ranging from urgers to shakes to reakfast. They ensure high
quality in their products! keeping in mind the demand of the customers. Their main efforts are in
a direction of maintenance of their unique firm power! and creation of the additional added cost
through e:perience to keep and de'elop their product quality.
3HD conducts sur'eys to gather the data aout the choices of the customers like what kind of
change they want in their product line. Then the entire concerned department work closely
together to ensure the customer?s choices are met.
4. COORDINATION IN MCDONALDs
McDonalds follows oth 'ertical and horizontal coordination. Iertical coordination is used in
hierarchal system from top to the lower management a horizontal coordination is used among
peers to communicate their ideas etc.
4.1 Ve&i+)$ +oo&-in)ion
Iertical coordination is done in McDonalds when the management con'eys their ideas and
sol'es their amiguities in any case the coordination of the lower management is always
in'ol'ed! suppose McDonalds is aout id to launch their new product like urger! reakfast etc!
then the top management i.e. is the e:ecuti'es recei'e feedack from lower management aout
what does the consumer wants. Then the top management considers this fact and e'aluates the
effecti'eness of the launch of that product and transfers their final judgment to the lower
authority. Thus a new product is launched y the coordination of senior e:ecuti'e sand the lower
management. Iertical coordination is also 'ery helpful in the case when the lower employees
need to seek assistance thus the e:ecuti'es those employees the needed assistance.
4.2 5o&i6on)$ +oo&-in)ion
#n horizontal coordination the same le'el employees coordinate with each other to sol'e the
management or company?s conflicts. "or e:ample a situation arises in which sales promotion of
the new product is in'ol'es then all the managers cooperate with each other to ensure the
promotion?s effecti'eness and its good results.
5imilarly if they want to sol'e an issue regarding company?s inner management! then they
coordinate with each other to sol'e the issue without concerning the higher authorities. o'erall
demographics of that area.
7. MCDONALDS STRATEGIES
7.1 INTENSIVE STRATEGIES
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M)&8e Pene&)ionK
McDonalds is planning to e:pand further in 6akistani markets so as to capture more market
share in the 6akistani market.
P&o-.+ De(e$o#"enK
o McDonalds is planning to intensify its marketing efforts as well as product
de'elopment to reinforce McDonalds rand in the minds of people.
o McDonalds is also trying to introduce new products which include the latest N1ig
Mac? and the NMc -raia?.
7.2 DIVERSIFICATION STRATEGIES
Con+en&i+ -i(e&si0i+)ion'
McDonalds is introducing new deals which would attract more price sensiti'e customers to
them too.
5o&i6on)$ -i(e&si0i+)ion'
McDonalds has introduced the new NMc -raia? and the new N-raian rice? for its present
customers.
7., DEFENSIVE STRATEGIES
Re&en+!"enK
McDonalds has a strategy of closing down all the non*profitale ranches in 6akistan which
they think are not up to the mark in terms of quality! ojecti'es and sales.
9. ORGANI3ATIONAL STRUCTURE
#n 6akistan! the company is headed y Mr. -min Muhammad /akhani as )4<. 1elow them are
the directors and the general managers. 4'ery department has its own director like director
finance! marketing! management etc. 4'ery outlet has its own has its own operation managers.
They use se'eral le'els of super'isors who then direct the workers. There is a high need to e
familiar with the work which now they are managing
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"inance department is headed y ,M finance. all the financial acti'ities of each and e'ery outlet
are under his command. The import and e:ports of ingredients and other necessity ojects of the
company are also made under the command of ,M finance.
Marketing department is headed y ,M marketing and de'elopment. Marketing managers work
under him and under them are associates and marketing e:ecuti'es. ,M is directly related with
the managers who then forward his instructions to the e:ecuti'es. The marketing e:ecuti'es and
associates are directly answerale to the managers.
The person responsile for )ustomer 5er'ices and Training is the 9ead of 9uman 3esources ut
it is the responsiility of all employees! particularly managers and area management! to
challenge questionale eha'ior and practices. The 9uman 3esources Department monitors the
effecti'eness of the policy at regular inter'als and takes correcti'e action as necessary to ensure
that it is eing complied with the policies of the company.
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CEO
Director
Operations
GM
Finance
GM
Development
& Marketing
Purchase
Manger
Marketing
Manager
Finance
Manager
Operations
Lahore
Admin
Office
Manager
Operations
Karachi
Assistant
Accountants
Marketing
Executive
Manager
Import &
Export
Senior
Executive
marketing
Asst mang
real estate
ountr!
"#
Manager
ountr!
$raining
onsultants
"#
oordinator
Lahore
"#
oordinator
Karachi
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:. SWOT ANALYSIS
<n the asis of en'ironmental analysis of McDonaldJs! the structural analysis of fast food
industry! and the assessment of internal resources of the company! following strengths!
weaknesses! opportunities and threats are there for McDonaldJsK
:.1 STRENGT5S
McDonald?s in 6akistan is inherited y a lot of strengths which includesK
- strong image well reputes organization.
+o compromise on quality of products.
5elf*ser'ice criteria sa'e a lot of cost.
Different incenti'es and packages for children.
Guality raw material 7ingredients8 in all the products.
McDonaldJs strong financial position! growing cash flow! solid international presence
makes McDonaldJs one of the consumer products with a high growth rate.
Working en'ironment in McDonaldJs is 'ery friendly and all the employees of the
company are treated as memers of McDonaldJs family.
McDonaldJs has menu! which has more readth and depth than any other fast food
franchisee in 6akistan.
Well documented fair and strict criteria for recruitment of employees.
2pdated training programs of employees.
"le:ile workforce! which can work on more than one jo at a time.
5kied and moti'ated workforce.
5ufficient funds to in'est in marketing efforts.
4:cellent relations etween management employees.
5ecured jos.
,ood working conditions.
)areer opportunities for employees.
)are for the thoughts and moods of customers.
)elerations of main e'ents e.g. independence day etc
:.2 WEAKNESSES
-long with a lot of strengths there are some weaknesses also y which McDonald?s suffersK
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Management of McDonald?s does not consider other fast*food chains or outlets in /ahore
as its competitor e.g. 0") 6izza 9ut H local urger market which are their competitors
in real sense.
With the passage of time the e:penses of McDonald?s are increasing. The reason is the
ig part of fi:ed costs e.g. fi:ed o'erheads H fi:ed salaries of all the employees! which
increases directly with the decrease in production.
Dominant class in 6akistan is middle* income class for which it is difficult to afford the
menu M items of McDonald?s or at least middle*class cannot enjoy McDonald?s product
more frequently.
McDonaldJs has product portfolio 7menu8 of greater width and depth. this road array of
products allows attacks from niche players.
5ome of the products of the company are not competiti'ely priced.
-ll the raw materials are imported from different countries. this increases their cost of
production.
:., OPPORTUNITIES
The mar'elous growth in numer of stores outlets all o'er the world in the result of great
opportunities granted to McDonalds.
McDonald?s is the single international quality* urger chain operating in 6akistan! so it
has more profit potential in 6akistan uptil now.
1y #ncreasing consciousness aout low fatty foods which are eing pro'ided McDonaldJs
7using 'egetale oil8.
#ncreasing disposale income in upper and upper*middle social classes of uran areas!
which are target market of McDonaldJs.
1y strengthening the marketing efforts! company can ha'e more sales as compared to
e:isting sales.
:.4 T5REATS
McDonald?s people say that there is no threat for them and it can also e a ig threat for
them.
Threat of new entrants is also working there ecause industry is growing at a rapid speed
and a lot of attraction is there for new* comers. 4ntry arriers are also low in 6akistan so
this threat really works for McDonald?s.
Doule digit inflation pre'ailing in the country! which in turn increases the cost of
production.
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)ontinuous de'aluation of rupee that has increased the import ill of raw materials.
#mposition of hea'y ta:es on fast food industry including 5ales Ta: and 4ntertainment
Ta:.
)omple: rules and regulations imposed y go'ernment.
;. SOCIAL RESPONSIBILITIES
5ocial 3esponsiility is not a program that egins and ends. -cting responsily has always een
a part of who we are and will continue to e the way McDonald?s does usiness. #t?s an ongoing
commitment! said McDonald?s )4< <i" C)n)$.#o. # am proud of what our company has
accomplished! and we continue to do more. McDonald?s founder R)% K&o+ uilt the company
on the principle of gi'ing ack to the communities in which they do usiness. That same asic
philosophy still holds true at McDonald?s today. - McDonald?s franchisee and hisOher team can
e found supporting 'arious local schools! youth athletic teams! senior citizens? groups! safety
awareness campaigns! literacy programs! en'ironmental projects and other local fundraising
initiati'es in their communities. McDonald?s national! registered charity! Ron)$- M+Don)$-
C!i$-&ens C!)&iies 73M))8! was estalished in $DB(. #t has one simple ojecti'eK to help
children in need. 3onald McDonald )hildren?s )harities supports 3onald McDonald 9ouses H
other registered charities that help impro'e the physical and emotional quality of life for children
with life *threatening illnesses or disailities and their families. McDonald?s has also in'ested in
education sector and is currently running 9amurger 2ni'ersity. #n 6akistan! it is in'esting is
similar charities and project such as C!)")n Mone% and C!)")n S+!oo$ s%se" etc. thus to
gi'e ack to the community.
=. RECOMMENDATIONS
1. Re-.+ion o0 e"#$o%ee &)inin/ s#en-in/ >$o2e&in/ e"#$o%ee .&no(e&?
#n order to reduce of employee training spending and to lower turno'er! we would like to
suggestK
To gi'e the jo just for highly moti'ated people. #t means! that they are going to e
loyal and not to lea'e jo so fast.
+ew employees would e trained y employees! who are working longer. #n this
way! company reduces training spending! new employees are trained y the people!
who are working inside the company and do the same things e'ery day.
To moti'ate employees and always take care aout their e:pectations. #t can e
money premiums for good working in the end of the month 7or year8! some
employees parties! ??4mployee of the week 7month8?? competition.
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To make a line of organic food in their menu and take a look what is more popular
and healthy for their customers. #f it is going more popular than usual menu food! it is
more worth to make all food in organic way! e'en it is more e:pensi'e. "irst of all!
people like what is natural! and then they are interested in the price.
To make ig ad'ertisement companies declaring organic food pluses and make it
more popular in such way. Many people lo'es McDonald?s food! so it has an
authority and can show good e:ample of necessity of organic food in people life and
compare how organic and usual McDonald?s food effect customers? health and all the
nature aout them.
2. A-()n)/e o0 !.")n !e)$! #&o1$e"s >i"#&o(e"en o0 #&o-.+s?
McDonald?s is ig food supplying company! and all of us know! how food affects our
health. #t is one of the main factors! what uilt our ody and strengthen our rains.
0nowing that! McDonald?s shouldK
5uggest just high quality! impro'ed products! which is full of 'itamins and minerals.
5o! it means that the company must impro'e their products! all the food must e
certificated and fit for all healthy food standards.
1e in a contact with suppliers! who supply products for McDonald?s food and always
check if the products is natural! high standard and healthy for all of age customers.
)ontact with doctors! scientist and impro'e their products to fit for all of age
customers! e'en they ha'e some prolems with their stomach. #t means to make
measures and find what the est is for all possile customers.
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1@. CONCLUSION
McDonalds is operating in 6akistan as 'ery profitale organization. #n this project we struggled
to study the management eha'iour of McDonalds starting from its history to its 'ision and
mission statements in which e:plained the historical of McDonalds of how it entered 6akistan?s
market and the e:pansion of its usiness in 'arious cities. Moreo'er we also e:plained aout its
and ser'ices which are offered in 6akistan y McDonalds as their re'enue generating products
and ser'ices. #n addition to that we researched all their product line. We also e:plained the
organizational structure of McDonalds. #n that we e:plained the hierarchal structure of
McDonalds. -s a gigantic organization of the world need to uild their strong organizational
structure so does McDonalds. #t works on the asis of 'ertical and horizontal coordination. -ll
the e:ecuti'es from top to the lower management works together on making it a successful
organization.
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11. REFERENCES
$. httpKOOwww.aoutmcdonalds.comOcontentOdamO-outMcDonaldsO#n'estorsO#n'estors
P(&(&$(O(&$$P(&-nnualP(&3eportP(&"inal.pdf
(. httpKOOwww.mcdonalds.com.pkOpageOcorporate*information
%. httpKOOwww.nation.com.pkOusinessO(C*May*(&$%Omcdonald*s*pakistan*holds*rlp*course
C. httpKOOwww.pakre'iews.comOrestaurants*cafesOmcdonalds*pakistan
>. httpKOOen.wikipedia.orgOwikiOMcDonaldJs
@. httpsKOOnz.answers.yahoo.comOquestionOinde:QqidR(&$(&E&($C&(&>--q(,Cf
E. httpsKOOfinance.yahoo.comOqOcoQsRM)D
8. httpKOOwww.ask.comOquestionOwho*are*the*top*competitors*of*mcdonald*s