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McDonalds Franchise (Bangladesh)

BUSINESS PLAN ON
McDonalds Franchise (Bangladesh)

Prepared For:
Dr. Md.MahfuzAshraf
Lecturar, EMIS Department, Dhaka University
EMIS-501: Introduction to Business

Prepared By:
Abeda Sultana: 61119-12-024
Helal Uddin Khan: 61119-12-041
Mohibul Hasan: 61119-12-029
Nazia Akter: 61119-12-028
Nur-A-Sayed: 61119-12-008
Date of Submission: 12th April, 2011

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Executive Summery
The project business plan on McDonalds Franchise (Bangladesh) will mainly emphasize
on fast food culture and distribution of fast food in the local market as well as to the general
people. Our vision is to be the worlds best quick service restaurant experience. Being the
best means providing outstanding quality, service, cleanliness and value, so that we can make
every customer in every restaurant smile. Our mission is to be the best employer, deliver
operational excellence, achieving enduring profitable growth expanding the brand and
leveraging the strength of our system through innovation and technology. Our main
uniqueness of the service will be to provide breakfast category and others in our menu with
moderate price and high quality.
However, the project will be operated in small scale but all this units will be performing
satisfactorily as plannned. The prime promoters of McDonalds Franchise (Bangladesh) will
be Abeda Sultana, HelalUddin Khan, Mohibul Hasan, Nazia Akter and Nur-A-Sayedi, it will
be owned and managed by the partners of the firm. General and limited partnership policy
will be followed that is, all the partners of the firm will get limited liability that is, who are
liable for loss only upto the amount of their investment. Here we will follow DEED OF
PARTNER SHIP AGREEMENT. McDonalds Franchise (Bangladesh) will have a very
sound list of qualified and skilled work force in the related position. It will consist of
accounts manager, technical manger, marketing manager, finance manger, administrative
consultants and employees etc.
We have planned to take the financial assistance of two banks: Standard Chartered Bank and
HSBC Bank Bangladesh. We have targeted young generation as our main consumers thats
why we have selected Gulshan-1 as our restaurant location surrounded by several college and
universities. We will use some technology based equipment which will be imported from
foreign countries. We have already analyzed that, the business we are going to conduct are
not ecologically harmful. Our contribution towards economy will be employing number of
unemployed but efficient people that can make an effective contribution towards the action of
removing unemployment

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TABLE OF CONTENTS
Page No.
Executive Summary.....................................................................................................................
PART 1
06

INTRODUCTION..........................................................................................
..........................................................................................................................
1.1
About the Business Plan........................................................................
1.2
Objectives of the Business Plan.............................................................
1.3
Methodology Used................................................................................
1.4
Limitations............................................................................................
1.5
Scope.....................................................................................................

06-

PART 2
08

BUSINESS INTRODUCTIONS....................................................................

07-

2.1
2.2
2.3
2.4
2.5

PART 3
11

MANAGEMENT ASPECTS..........................................................................
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9

PART 4
16

General description of the Venture........................................................


Facts about the McDonald's Franchise System......................................
Financial Requirements.........................................................................
Other Requirements...............................................................................
Company Background...........................................................................
2.5.1
Company Vision......................................................................
2.5.2
Company Mission...................................................................
2.5.3
Goal of the Venture.................................................................
2.5.4
Uniqueness of the Service.......................................................

The Promoters.......................................................................................
Share Holding of the Owners................................................................
Summery of Qualification.....................................................................
Legal form of Business..........................................................................
Banks.....................................................................................................
Insurance Company...............................................................................
HR Management...................................................................................
Staffing Needs.......................................................................................
Staff Planning........................................................................................

TECHNICAL ASPECTS................................................................................
4.1
4.2

4.3
4.4
4.5
4.6
4.7
4.8
4.9

09-

12-

Manufacturing Process/Technology......................................................
Material Inputs & Utilities.....................................................................
4.2.1
Utilities...................................................................................
4.2.2
Raw materials.........................................................................
Product Mix...........................................................................................
Machineries & Equipment.....................................................................
Environment..........................................................................................
Plant Capacity.......................................................................................
Schedule of Project Implementation......................................................
Location & Site.....................................................................................
Project Chart & Layout.........................................................................

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PART 5
22

MARKETING ASPECTS..............................................................................
5.1
5.2

5.3
5.4

5.5

5.6
PART 6
29

PART 7

Current Scenario of Bangladesh............................................................


Situation Analysis..................................................................................
5.2.1
Market Summary....................................................................
5.2.2
SWOT Analysis......................................................................
5.2.3
Competitor Analysis................................................................
Market Mix Analysis.............................................................................
STP Analysis.........................................................................................
5.4.1
Market Segment......................................................................
5.4.3
Target Market..........................................................................
5.4.4
Positioning..............................................................................
Market and Demand Analysis................................................................
5.5.1
Sources of Secondary Information..........................................
5.5.2
Characterization of the Market................................................
5.5.3
Demand Forecasting...............................................................
Corporate Social Responsibility............................................................

FINANCIAL ASPECTS.................................................................................
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
6.12

17-

23-

Cost of the Project.................................................................................


Means of Financing...............................................................................
Working Capital Requirements..............................................................
Schedule for cost of production.............................................................
Profitability projection..........................................................................
Projected Income Statement..................................................................
A-Loan Amortization Schedule............................................................
Ratio Analysis.......................................................................................
Projected Balance Sheet........................................................................
Cash Flow Statement............................................................................
Net Present Value..................................................................................
Payback Period Analysis......................................................................

SOCIAL ASPECTS
7.1
Environmental impact of project...........................................................
7.2
Contribution towards the economy........................................................
7.3
Social cost benefit analysis....................................................................

APPENDIX
A. Formula Used.............................................................................................
B. References ................................................................................................

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PART-1
INTRODUCTION
1.1 About the Business Plan
This business plan is based on McDonalds Franchise (Bangladesh); we are assigned to do
this business plan by our respective instructions Dr. Md. Mahfuz Ashraf, Lecturer,
Department of Management Information System, University of Dhaka for the Introduction to
Business Course.
In this business plan we have focused on proposed McDonalds Franchise business in our
country. Its advantage, potentiality, barriers in this sector, further measures to make it more
effective in our country.
1.2 Objectives of this Business Plan
The main objective of the study is to present our gathered practical knowledge to start a
business which is McDonalds Franchise (Bangladesh). This practical orientation gives us a
chance to co-ordinate out theoretical knowledge with the practical knowledge. The following
are of objective for this practical orientation about McDonalds.
Knowing the aspect and potentiality of McDonalds into our country.
A short view on the important elements needed for starting the business.
The effective and efficient measures to provide healthy and hygienic food to the
people of Bangladesh.
1.3 Methodology used
To prepare this business plan, standard method of report writing has been used. Different
types of data were needed to complete, and analyzed. The required data collected by using
both primary and secondary sources. For collecting data from primary sources, interviews
and questionnaire method were used. The collecting data from secondary sources we used
prospectors, newspapers, internet etc. After completion of data, these were sort out into
different category. Through the report, these data were analyzed by using standard statistical
methods. Moreover, because of this analysis the finding of the report is made.
1.4 Limitations
In the full course for report writing, the researches have gone through several limitations.
They are:
Time for writing report was limited.
Lack of experience.
Time limitation.
1.5 Scope
The business plan covers The description of our business idea.
Introduction of our company and services.

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Management aspect of the company.


Technical aspect of the company.
Marketing aspect of the company.
Financial analysis of the company to determine feasibility of the project
PART-2

BUSINESS INTRODUCTION
2.1 General description of the Venture:
McDonalds Franchise (Bangladesh) is the shining light that will show the way to future of
hygienic fast food in Bangladesh as well as aimed to introduce a new era in this sector. To
curve the path for a better service we have taken the initiatives to establish a fast food
restaurant that will provide healthy food to the people of this country. It will be a partnership
firm with equal amount of share of the five owners according to the partnership act 1932.
We will launch as a new venture of organization. It will be well equipped with the latest
machineries and equipment from China. Raw materials such as coffee will be imported from
Germany and beef, chicken, vegetables will be collected from domestic market.
2.2 Facts about the McDonald's Franchise System
McDonald's has been a franchising company since 1955 and has relied on its franchisees to
play a major role in the system's success. McDonald's remains committed to franchising as a
predominant way of doing business. Today, the McDonald's franchise is the leading global
foodservice retailer with more than 30,000 restaurants, located in more than 100 countries.
If anyone considers of buying a McDonald's franchise will most likely have to buy an
existing franchise restaurant. Most franchisees enter the system by purchasing an existing
restaurant, either from McDonald's or from a McDonald's franchisee. A very small number of
new operators enter the system by purchasing a new restaurant.
2.3 Financial Requirements
An initial down payment is required when purchasing a new restaurant (40% of the total cost)
or an existing restaurant (25% of the total cost). The down payment must come from nonborrowed personal resources, which include cash on hand; securities, bonds, and debentures;
vested profit sharing (net of taxes); and business or real estate equity, exclusive of personal
residence.
Since the total cost varies from restaurant to restaurant, the minimum amount for a down
payment will vary. Generally, you need a minimum of $300,000 of non-borrowed personal
resources to be considered to open a McDonald's franchise. Individuals with additional funds
may be better prepared for additional or multi-restaurant opportunities which McDOnald's
encourages.
2.4 Other Requirements

Significant business experience - Individuals who have demonstrated successful


ownership or management of multiple business units or have managed multiple
departments.

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Rapid growth - Individuals who possess the capability to grow rapidly with McDonald's.

Business plan - The ability to develop and execute a business plan.

Manage finances well - Ability to manage finances including a thorough understanding


of business financial statements.

Good management skills - Commitment to personally manage the day-to-day operations


of the restaurant business.

Training - Willingness to complete a comprehensive world class training program and


become proficient in all aspects of operating a McDonald's restaurant business.

Exceptional customer experience - The capability to effectively manage an organization


that recruits, trains, and motivates restaurant employees who deliver an exceptional
customer experience.

Good credit history - An acceptable credit history

2.5 Company Back ground:


McDonalds Franchise (Bangladesh) is a fast food restaurant that will bring healthy and
hygienic food to its customer.
2.5.1 Company Vision:
"McDonald's vision is to be the world's best quick service restaurant experience. Being the
best means providing outstanding quality, service, cleanliness, and value, so that we make
every customer in every restaurant smile."
2.5.2 Company Mission:
Be the best employer for our people in each community around the world

Deliver operational excellence to our customers in each of our restaurants;

Achieve enduring profitable growth by expanding the brand and leveraging the strengths
of the McDonald's system through innovation and technology.

2.5.3 Goal of the Venture:


As a new company the first target of McDonald Franchise will be to creat a position in the
market and set a level that we provide better service to the customers, and set the profit ratio
what we need to learnt. The goal of our venture will be to take the fast food industry a step
ahead.
2.5.4 Uniqueness of the service:
Uniqueness of the service is given below:

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Moderate price with high quality.


Providing breakfast category in our menu.
Providing fastest home delivery in a short time in limited arena.
Serving the food to the customer within 20 minutes from their order time.

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PART-3
MANAGEMENT ASPECTS
3.1 The Promoters:
Our project will be the brainchild of five Promoters:
Abeda Sultana
HelalUddin Khan
MohibulHasan (Nayan)
NaziaAkter (Nazi)
Nur-A-Sayed
3.2 Share Holding of the Owners:
Our total capital is BDT. 27000,000.
Our owners are invested equally
Owners Name
Equity Amount in Taka

Abeda Sultana
HelalUddin Khan
Mohibul Hasan
NaziaAkter
Nur-A-Sayed
Total

20.0%
20.0%
20.0%
20.0%
20.0%
100%

54,00,000
54,00,000
54,00,000
54,00,000
54,00,000
270,00,000

3.3 Summery of Qualification:


Name
Abeda Sultana

Helal Uddin Khan


Mohibul Hasan

Nazia Akter

Nur-A-Sayed

Qualification
MBA in MIS
B.Sc in Electrical and
Electronic Engineering
MBA in MIS

Post in the firm


Human Resource
Department

MBA in MIS
BSc in ETE(Electronics &
Telecommunication
Engineering)
MBA in MIS;
B.Sc in Computer Science
and Engineering
MBA in MIS

Marketing Department

Management

Finance Department

MIS Department

Customer Relation Department

3.4 Legal form of Business:


McDonalds Franchise (Bangladesh) will be owned and managed by the partners of the firm
and will have limited liability, that is, who are liable for the loss only up to the amount of

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their. The partner of firm will based on the written contract and is duly signed by all the
partners of the. So by law the firm will be operated and managed by the Article of Partnership
of the Partnership Act- 1932.
3.6 Banks:
The partners of the firm are solvent and they have got property and liquid cash. After that
they will need financial support from the financial institutions. The management of the firm
selected two banks for submitting the proposal of business and feasibility study. Our banks
are:
Standard Chartered Bank
52/7 Dilkusha road, Motijhil.
Dhaka, Bangladesh.
HSBC Bank Bangladesh
Dhanmondi, House no. 352 (old),
Road no. 27 (old). Dhaka, Bangladesh.
3.7 Insurance Company:
For the purpose of business inside the country McDonalds needs insurance for its property
and business. For this purpose we have planned to take an insurance policy from
United Insurance company
22 KaziNuzrul Islam Avenue
Dhaka 1000, Bangladesh.
Phone- 8619336-8.
3.8 HR Management:
HR management is an important part of a business report in management sector. In our
business we will employ several employees for different purpose. Stuff will be maintained
and operated properly for the betterment of the business. HM management includes some
stuffing need, stuffing planning and budget of the stuffs.
3.8.1 Staffing Need:
Stuffing need will affect a lot to continue our business. We can show our stuffing need in two
different ways. There will be a stuffing need in establishing the business primary steps, and
then we will need stuffs to continue our restaurant. So it can be shown in two different ways:
Current stuffs.
Future stuffs.
Sl. No
Designation
Current Staff
Required Staff
1.
Manager
5
5
2.
Floor Manager
0
1
3.
Crew Member
0
17
Note: Crew Member includes 10 waiter, 5 delivery boy & 2 staff.

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3.8.3 Staff Planning:


Health and Hygiene:
According to section 12-21, of the Factory Act 1965, workers health and hygiene
rules are maintained. By matching up the law and our capacity, we tried to provide
maximum clean and healthy environment to our worker.
Safety:
According to section 22,36,37,41, safeties are strictly maintained along with other
provisions.
Working hour:
Working hour of a worker is maintained with the rules of working hour, i.e., 3 hour
hour/per day per/per shift.
Leave and holidays:
Every worker is allowed to have leave and holidays according to sections 78-79 but
payment will not be made for any sick leave or casual leave but general employees
will have their benefits.
Employment of labor:
Employment of labor will certainly matched up with the rules of the employment of
labor act 1965 and any termination of worker will be made under section 16-19 of the
act.
Payment of wages:
Payment of wages will be made under the payment of wages act 1936.
Welfare of the worker:
According to sections 43, 44, 46 workers will be provided welfare facilities and
depending upon their working hour and performance they will be provided. With
incentive informs of cash. Again there will be two bonuses available in a year.

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PART-4
TECHNICAL ASPECT
4.1 Manufacturing Process/Technology:

4.2 Material Inputs & Utilities:


4.2.1 Utilities: In the location of the firm where the production of the plants & other activities
related to McDonalds Franchise will be done, need proper supply of
Electricity
Gas
Water
Computer related utilities etc.
4.2.2 Raw Materials: We know you expect good food and good value when you come to
McDonalds. And to make that happen, we work with the best food suppliers in the world
Raw Materials

Suppliers

Coffee

Gavia Gourmet Coffee

Beef

Sahin Beef Food

Chicken

Bengal Poultry Farm

Vegetables

ALO Vegetables Farm

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4.3 Product Mix:


Chicken
From our ever-popular Chicken McNuggets to our fabulously fresh salads, chicken from
McDonalds is a delicious choice.
Chicken McNuggets
Chicken Selects Premium Breast Strips
Premium Grilled Chicken Classic Sandwich
Premium Crispy Chicken Club Sandwich
Chipotle BBQ Snack Wrap (Crispy)
Chipotle BBQ Snack Wrap (Grilled)
Premium Bacon Ranch Salad with Crispy Chicken
Premium Caesar Salad with Grilled Chicken
Premium Crispy Chicken Classic Sandwich
Sandwiches
Delicious, freshly made, and oh-so-satisfying. From the Big Mac to our Premium Grilled
Chicken Club to our classic Cheeseburger, McDonalds sandwiches make the meal.
Premium Crispy Chicken Classic Sandwich
Premium Grilled Chicken Classic Sandwich
Big N Tasty
Southern Style Crispy Chicken Sandwich
Angus Bacon & Cheese Snack Wrap
Angus Deluxe Snack Wrap
Honey Mustard Snack Wrap (Crispy)
Angus Mushroom & Swiss
Premium Grilled Chicken Club Sandwich
McRib
Breakfast
Get your wakeup call with irresistible eggs, savory sausage, flaky biscuits and so much more.
Sausage Biscuitwith Egg
Sausage Biscuitwith Egg
Sausage McGriddles
Big Breakfastwith Hotcakes
Bacon, Egg &Cheese Biscuit

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Sausage McMuffinwith Egg


Hotcakes with Sausage
Sausage Burrito
Beverages
No meal is complete without a drink! From Diet Coke to low-fat milk to fresh-brewed, hot
coffee, weve got the perfect companion for your favorite menu items.
Chocolate Triple Thick Shake
Premium Roast Iced Coffee
Sweet Tea
1% Low Fat Chocolate Milk Jug
Minute Maid Orange Juice
MUM Water
Diet Coke
Sprite and Coke
4.4 Machineries & Equipment:
Dough Press
Proofer (Roll-In)
Fryer w/ Heat/Hold Station
Pressure Fryer
Cook & Hold Oven
Conveyor Ovens
Convection Oven
4.5 Environmental Aspects: After production wastage/disposal will not affect environmental
system because of good wastage management system.
4.6 Plant Capacity:
4.6.1Technological Requirement:
Sl. No.
List of Technology
1
Electric Stove
2
Microwave Oven
3
Refrigerator

Quantity
10
5
3

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4
5

Air-condition
Television

3
2

Input Constraints: As in our country, there is much more load-shedding in summer


season, so there may arise problems in raw materials reservation.
Market Condition: As we have huge amount of young generation as customer & our
brand goodwill also reflects a strong/certain market condition thats why we will use
large capacity.
4.7 Schedule of Project Implementation:
A set of activities are required in implementing project is mentioned below:
a. Receiving permission for franchising at 22nd December 2010.
b. Renting restaurant space and purchasing required machinery and equipment within
26th of December 2010.
c. Decoration of restaurant with lighting, furniture, ACs and arranging machinery in
kitchen within 15th of January 2011.
d. Collecting raw material & ingredients and storing within 18th January 2011.
e. Turing the raw material into ready to serve state, within 20th of January 2011.
f. McDonalds franchise will be inaugurated in Bangladesh in 21st of January 2011.
4.8 Location & Site: Based on price, considering the economic condition of that particular
areas people, availability of employees, raw materials & our target customer (students), we
chose Gulshan area as our business site & the location are shown below:

4.4 Machineries & Equipment:


Dough Press
Proofer (Roll-In)
Fryer w/ Heat/Hold Station
Pressure Fryer
Cook & Hold Oven
Conveyor Ovens
Convection Oven

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Chocolate Triple Thick Shake

Premium Roast Iced Coffee

Sweet Tea

1% Low Fat Chocolate Milk Jug

Minute Maid Orange Juice

MUM Water

Diet Coke

Sprite

Coke

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4.9 Project Charts & Layout:


4.9.1 Process Layout

McDonalds Hamburger Assembly Line:

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4.9.2

Restaurant layout:

PART - 5
MARKETING ASPECT

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5.1 Current Scenario of Bangladesh:


Currently in Bangladesh, the national economy and marketplace are undergoing rapid
changes and transformation. A large number of reasons could be attributed to these changes.
One of the reasons in these changes in the Bangladeshs market scenario is globalization and
another is technical change.
Young generation of Bangladesh now-a-days is very much fond of fast food and currently
KFC, Pizza Hut, BFC, HELVETIA are serving their customer according to their demand, we
are commencing are business into the market in order to serve our customer comparatively
better than these competitors. Since, McDonalds is a worldwide brand in the fast food
industry, we hope we will get warm welcome by the people of Bangladesh.
5.2 Situation Analysis:
5.2.1 Market Summary:
Only 15% of the total numbers of restaurant are owned by the Company. The remaining 85%
is operated by franchises. The company follows a comprehensive framework of training and
monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and
Value propositions offered by the company to its customers.
By developing a sophisticated supplier networked operation and distribution system, the
company has been able to achieve consistent product taste and quality across geographies.
McDonalds focuses not only on delivering sales for the immediate present, but also
protecting its long term brand reputation.
Customer perception is a key factor affecting a products success. Many potentially
revolutionary products have failed simply because of their inability to build a healthy
perception about themselves in the customers minds. McDonalds being an internationally
renowned brand brings with it certain expectations for the customers.
Target Market
A family with children
Urban customer on the move
Teenager

What is McDonalds For me?


A treat to children, a fun place to be for the children.
Great taste, quick service without affecting the work schedule
Hangout with friends, but keep it affordable.

Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects
their values. The customers expect the brand to enhance their self-image. Customer
responses obtained at the Vile Parle, Mumbai outlet confirmed the fact that they connect
strongly with the brand. However, fulfilling some of the customer expectations like a broader
product variety provide McDonalds a great scope for improvement.

5.2.2 SWOT Analysis:

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S tro n g B ra n d
L o w d e p th a n d w id th o f p ro d u c t

ES xt rp ea nn dg it nh t o T i e r 2 a n d t i e r 3
C h a lle n g in g c u s to m e r life c y c le
WcaP inr t odi eed tsuaa csktt ie on n e I sn sn o v a t i o n
OISC n uu c pps r tpeopla mi soe ere rdrI tnIcunt oe tngmi mri aptatlyiceoyt ni t i o n f r o m
El o n c t a r ly f ia n s t t o f ob or ed a ok uf at ls et t cs a l ti ek ge o r y
ju m b o k in g

T h re a t
5.2.3 Competitor Analysis:
McDonalds has been a leading fast-foods outlet in Vile Parle. But the outlet understudy has
other competitors eating away into its market share. In addition to its traditional rivalsKFC,
Dominos, Pizza Hutthe firm encounters new challenges. Jumbo King competes using a
back-to-basics approach of quickly serving up burgers for time-pressed consumers. On the
higher end, the KFC has become potent competitor in the quick service field, taking away
customers from McDonalds. Perhaps in the new environment, fast, convenient service is no
longer enough to distinguish the firm. At this time, a new critical success factor may be
emerging: the need to create a rich, satisfying experience for consumers.
5.3 MARKETING MIX ANALYSIS:
After segmenting the market, finding the target segment and positioning itself, each company
needs to come up with an offer. The 5Ps used by McDonalds are:
1. Product
2. Place
3. Price
4. Promotion
5. People
Product:

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Marketing

Engineering

Scalable
Possible & Feasible
& Distributable
Product Success

Useful & Durable

Design

Product is the physical product or service offered to the consumer. Product includes certain
aspects such as packaging, guarantee, looks etc. This includes both the tangible and the nontangible aspects of the product and service.
Place & distribution channels:
The place mainly consists of the distribution channels. It is important so that the product is
available to the customer at the right place, at the right time and in the right quantity. Nearly
50% of U.S.A is within a 3 minute drive from a McDonalds outlet.
Pricing strategy
Quality
Low
Price

Low

High

Economy

Penetration

Skimming

Premium

High

Pricing Strategy Matrix


Pricing includes the list price, the discount functions available, the financing options
available etc. It should also take into the consideration the probable reaction from the
competitor to the pricing strategy. This is the most important part of the marketing mix as this
is the only part which generates revenue. All the other three are expenses incurred. The price
must take into consideration the appropriate demand-supply equation.

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McDonalds has certain value pricing and bundling strategies such as happy meal, com bo
meal, family meal etc to increase overall sales volumes.
Promotion Strategy:

Advertizing

Personal
Selling

Marketing and Communication

Sales
Promotion

Public Relation
Direct Marketing

The various promotion channels being used by McDonalds to effectively communicate the
product information are given above. A clear understanding of the customer value helps
decide whether the cost of promotion is worth spending. There are three main objectives of
advertising for McDonalds are to make people aware of an item, feel positive about it and
remember it.
People and Motivation
McDonalds understands the value of both its employees and its customers. It understands the
fact that a happy employee can serve well and result in a happy customer.
McDonald continuously does Internal Marketing. This is important as it must precede
external marketing. This includes hiring, training and motivating able employees. This way
they serve customers well and the final result is a happy customer. The level of importance
has changed to be in the following order:
1. Customers
2. Front line employees
3. Middle level managers
4. Front line managers
The punch line Im loving it is an attempt to show that the employees are loving their work
at McDonalds and will love to serve the customers.

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5.4 STP ANALYSIS:


5.4.1 Market Segment:
McDonald is a worldwide brand fast food Provider Company. It offers a high quality of
fast food, delicious in reason able price. This price is reasonable in the sense of high
quality, status, test and for brand but it is too high for the general people of Bangladesh.
Therefore in finding the segment for McDonalds customer we have to select the
HIGHER MIDDLE and RICH people and the layout will be selected accordingly.
5.4.2 Target Market:
In case of selecting the target customer, McDonald in Bangladesh must emphasize on the
TEENAGERs and YOUTHs. Because all people dont like fast food, but almost every
teenagers and youths love fast food.
5.4.3 Positioning:
Positioning consists of the following considerations:
Product line:
Price: The price for McDonald food items will be defined according to the economic
condition of people. A permission will be taken from the franchisor to modify the
price, as McDonald modified its price in India. The price determination will also
consider the competitors (like KFC, Aristrocate, Pizza-hut etc) price.
Distribution: McDonald prefers a direct distribution system. That means all the
ingredients are stored in branches and order are supplied directly from outlets.
Sales promotion: McDonald will offer sales promotion on its quantity sales. Like a
pizza will be charged according to its Manu, but it will charge less for 5 pizzas
ordered at a time.
Such as: 1 Berger = 190 tk.
5 Berger = 800 tk.
Advertising: McDonald mainly advertises on print media like TV, radio, newspaper.
Sometimes it may use handbills to some specific people and places. Like, to the
school students or people coming in fair etc.
5.5 MARKET & DEMAND ANALYSIS:
5.5.1 Sources of Secondary Information:
Secondary information of McDonalds can be collected from
Internal Sources:
Sales Data
Financial Data
Transport Data
Storage Data
External Sources:
Government Statistics
Trade Associations
Commercial Services

24 | P a g e

National & International Institution


5.5.2 Characterization of the Market:
McDonald's target market is every segment of the demography. The segments of the
demography are; family life-cycles, gender, age, Nationality, Income, Generation,
Race etc.
Serving billions of hamburgers has put a shine on these arches. McDonald's is the
world's #1 fast-food company by sales, with more than 32,400 restaurants serving
burgers and fries in more than 100 countries.
Key
numbers
for
fiscal
year
ending
December,
2009:
Sales: $22,744.7M One year growth: (3.3%) Net income: $4,551.0M Income
growth: 5.5%.
McDonald's is the world's leading food service organization. We generate more than
$40 billion in System wide sales. We operate over 30,000 restaurants in more than
100 countries on six continents.
5.5.3 DEMAND FORECASTING:
After gathering information about various aspects of the market & demand from primary &
secondary sources, an attempt may be made to estimate future demand. McDonalds follow
Jury of executive method under Qualitative method which is very popular in practice,
involves soliciting the opinions of a group of managers on expected future sales & combining
them into a sales estimate.
5.6 CORPORATE SOCIAL RESPONSIBILITY:
McDonald's Corporation and McDonald's restaurants, offer scholarships to students
from communities who face limited access to educational and career opportunities.
These scholarships are part of the RMHC and McDonalds ongoing commitment to
education.
McDonalds takes its responsibility to the environment seriously. In 1990, we
established our Global Environmental Commitment, and since then, weve been
focused on incremental improvements designed to continuously improve our
environmental performance, both in our supply chain and in our restaurants.

25 | P a g e

PART-6
FINANCIAL ASPECTS
6.1 Cost of the project:
McDonalds Corporation (Franchise-Bangladesh)
Cost of the project
Cost of the project
Land and land development:
Land purchasing cost (20 decimal @ 2, 45000)
Land development
Building and civil works:
Building (5 in number, total 40,000 sq. ft. @ 130)
Civil works and constructing (5 in number, total 40,000 sq. ft. @ 45)
Plans and machineries:
Plant heat exchanger
STP plant
CIP plant
In line dosing
Heating plant
Tank farm
Small volume mixing system
Valve matrix for mixing
Other costs:
Official equipment and furniture
Preoperative expanses
Working capital
Total

Tk.
4,900,000
350,000
5,200,000
1,800,000
500,000
550,000
430,000
200,000
620,000
500,000
250,000
575,000
500,000
500,000
3,76,90,000
5,45,65,000

6.2 Means of financing:


McDonalds Corporation (Franchise-Bangladesh)
Equity supplied by the owner
Owners name
Equity amount in tk.
SakhawatHossain
9,000,000
Nor-A-Jahid
9,000,000
Dickens CorneliousMcBean
9,000,000
Total
27,000,000
McDonalds Corporation (Franchise-Bangladesh)
Means of Finance
Means of Finance
Long term loans
Equity supplied by the owner
Debt equity ratio
Short-term loan which will be only taken for meeting up the working capital
need or only meet up production cost per
Interest on loans:
Long-term

Tk.
33,000,000
27,000,000
55:45
_
16%

26 | P a g e

Short-term
Loan period:
Long-term
Short-term
Installment paid (long term)

15%
5 years
1 month
Annually

6.3 Working capital requirement and its Financing:


McDonalds Corporation (Franchise-Bangladesh)
Working capital requirement
Particulars
2011
2012
2013
2014
Raw materials 3,75,25,000 2,80,75,000 2,95,63,000 3,05,10,000
Labor cost
50,000
65,000
70,000
75,000
Supervision
20,000
20,000
20,000
20,000
salary
Maintenance
25,000
25,000
25,000
25,000
Utilities
60,000
60,000
65,000
65,000
Others
10,000
10,000
10,000
10,000
Total
3,76,90,000 2,82,55,000 2,97,53,000 3,07,05,000

2015
3,25,75,000
80,000
20,000
25,000
70,000
10,000
3,27,80,000

Working capital will be financed 60% by short-term loan for each month @ 15%, 3
times in year.
6.4 Schedule for cost of production:

Particulars
Capital
utilized
Production
(per/ year)
Per kg. raw
material
price(tk.)
Raw
materials
(tk.)
Add. Labor
cost (tk.)
Factory
over-head
Depreciation
Maintenance
Supervisor
salary
Utilities
Total

McDonalds Corporation (Franchise-Bangladesh)


Schedule for cost of production
2011
2012
2013
2014
50%
55%
60%
65%

2015
70%

40,000 kg.

50,000 kg.

60,000 kg.

70,000 kg.

80,000 kg.

85,000

85,000

85,000

85,000

85,000

3,75,25,000

2,80,75,000

2,95,63,00
0

3,05,10,000 3,25,75,00
0

50,000

65,000

70,000

75,000

80,000

15,87,500
25,000
20,000

15,87,500
25,000
20,000

15,87,500
25,000
20,000

15,87,500
25,000
20,000

15,87,500
25,000
20,000

60,000

60,000

65,000

65,000

70,000

27 | P a g e

production
cost (tk.)

29,26,75,00
0

29,26,75,00
0

31,32,55,0
0

322,77,500

343,47,500

An increase rate of capital utilization indicates an expansion of business.


Total production is decreasing at a very low rate due to inflation, technological
upgrade etc except in 2015.
6.5 Profitability projection:

Particulars
Selling
cost
per/kg. (tk.)
Cost per/kg. (tk.)
Profit per/kg (tk.)
% of profit

McDonalds Corporation (Franchise-Bangladesh)


Profitability projection
2011
2012
2013
2014

2015

1,52,000
75,000
77,000
50.65%

1,85,000
85,000
100,000
54.05%

160,000
75,000
85,000
53.13%

170,000
79,000
91,000
53.53%

180,000
82,000
98,000
54.44%

6.6 Projected Income Statement:

Particulars
Yearly
production
Selling price
per/kg (tk.)
Sells revenue
(-) cost of
production
Gross profit
(-)
operating
expanses
Administrative
Selling exp EBIT
(-)
nonoperating exp:
Interest on long
term loanInterest
on
short loanPreliminary
exp. Write offEBT
(-) Tax @ 40%

McDonalds Corporation (Franchise-Bangladesh)


Projected Income Statement
2011
2012
2013
2014

2015

40,000 kg.

50,000 kg.

60,000 kg.

70,000 kg.

80,000 kg.

152,000

152,000

152,000

152,000

152,000

608,00,00,000
2,92,67,500

760,00,00,000
2,98,32,500

912,00,00,000
3,13,25,500

1064,00,00,000
3,22,77,500

1216,00,00,000
3,43,47,500

605,07,32,500

757,01,67,500

908,86,74,500

1060,77,22,500

1212,56,52,500

31,89,000
2,00,00,000

31,89,000
2,00,00,000

31,89,000
2,50,00,000

31,89,000
2,75,00,000

31,89,000
3,00,00,000

603,04,13,600

754,69,78,500

906,04,85,500

1057,70,33,500

1209,24,63,500

47,99,414

55,67,320

64,58,251

74,91,571

86,82,445

101,76,300

103,28,850

107,33,310

109,90,350

115,50,600

20,00,000

20,00,000

20,00,000

20,00,000

20,00,000

601,34,37,886
240,53,75,154

752,90,82,330
301,16,32,932

904,12,93,939
361,65,17,576

1055,65,51,579
422,26,20,632

1207,02,30,460
482,80,92,184

28 | P a g e

Net
income
360,80,62,732
after tax

451,74,49,398

542,47,76,363

633,39,30,947

724,21,38,276

An increase in yearly production (25%, 50%, 75%, 100% ) and sales revenue
(25%, 50%. 75%, 100% ) resulting an increase in gross profit as well as net
income after tax.
6.7 A-Loan Amortization Schedule:
Loan amount = A * PVIFA (n-5, r-16%)
PVIFA = 3.274 (form the table)

Yea
r
1
2
3
4
5

McDonalds Corporation (Franchise-Bangladesh)


Loan Amortization Schedule
Interes Beginning Interest
Interest
Principle
t rate amount (2) amount (3)
amount (4)
amount
(1)
(2-3=4)
16%
330,00,000 100,79,414 52,80,000
47,99,414
16%
282,00,587 100,79,414 45,12,094
55,67,320
16%
226,32,267 100,79,414 36,21,163
64,58,251
16%
161,74,016 100,79,414 25,67,843
74,91,571
16%
86,82,445
100,79,414 13,96,969
86,82,445

Remaining
balance
(1-4=5)
182,00,587
226,32,267
161,74,016
86,82,445
0

B-Description schedule details:

Assets
Land
Building
Equipment
plant
Total

McDonalds Corporation (Franchise-Bangladesh)


Description schedule details
Amount
Rate of depreciation Depreciation
52,50,000
10%
52,50,000
70,00,000
10%
70,00,000
and 36,25,000
10%
36,25,000
-

15,87,500

C- Administrative expenses:

Particulars
Salary
expenses
Office
supplies
Depreciation
Office utilities
Others
Total

McDonalds Corporation (Franchise-Bangladesh)


Administrative expenses
2011
2012
2013
2014
29,40,000
29,40,000
29,40,000
29,40,000

2015
29,40,000

24,000

24,000

24,000

24,000

24,000

45,000
120,000
60,000
31,89,000

45,000
120,000
60,000
31,89,000

45,000
120,000
60,000
31,89,000

45,000
120,000
60,000
31,89,000

45,000
120,000
60,000
31,89,000

29 | P a g e

6.8 Ratio analysis:


McDonalds Corporation (Franchise-Bangladesh)
Ratio analysis
Particulars
2011
2012
2013
2014
Debt analysis
55%
47%
37.72%
26.96%
Total assets turnover 7.44 times 7.91 times 8.71 times 8.32 times
Debt equity ratio
60.00%
56.18%
50.70%
42.37%
Return on equity
159.10%
161.20%
187.84%
141.86%
Gross margin ratio
28.29%
28.29%
28.40%
26.12%
Operating profit to
sells
27.47%
27.47%
27.67%
25.30%

2015
14.47%
6.93 times
28.30%
181.19%
27.19%
26.47%

6.9 Projected Balance Sheet:


McDonalds Corporation (Franchise-Bangladesh)
Projected Balance Sheet
Particulars
2011
Liability and owners equity:
Long-term loan 330,00,000
(-) repayment of 47,99,414
loan
Long-term loan 282,00,587
balance
270,00,000
Equity capital
605,07,32,500
Retain earning
Total
610,59,33,087
Liabilities
Assets:
Current assets:
Cash
Total
current
assets
Fixed assets:
Machinery
(-) Dep.
Land
(-) Dep.
Building
(-) Dep.
Preliminary
expenses
Preliminary
expenses

2012

2013

2014

2015

282,00,587
55,67,320

226,32,267
64,58,251

161,74,016
74,91,571

86,82,445
86,82,445

226,32,267

161,74,016

86,82,445

270,00,000
757,01,67,500

270,00,000
908,86,74,500

270,00,000
1060,77,22,500

270,00,000
1212,56,52,500

761,97,99,767

913,18,48,516

1064,34,04,945

1215,26,52,500

6089845587

7605299767

9118936016

10632079945

12142915000

608,98,45,587

760,52,99,767

911,89,36,016

1063,20,79,945

1214,29,15,000

36,25,000
362,500
52,50,000
525,000
70,00,000
700,000
20,00,000

36,25,000
725,000
52,50,000
10,50,000
70,00,000
14,00,000
20,00,000

36,25,000
10,87,500
52,50,000
15,75,000
70,00,000
21,00,000
20,00,000

36,25,000
14,50,000
52,50,000
21,00,000
70,00,000
28,00,000
20,00,000

36,25,000
18,12,500
52,50,000
26,25,000
70,00,000
35,00,000
20,00,000

200,000

200,000

200,000

200,000

200,000

30 | P a g e

written off
Treasury bond
Total
fixed 160,87,500
assets
610,59,33,087
Total assets

145,00,000

129,12,500

113,25,000

97,37,500

761,97,99,767

913,18,48,516

1064,34,04,945

1215,26,52,500

The balance sheet shows that management ensure an increase in retain earning
at a fixed rate of 25% compared with the base year.
6.10

Cash flow Statement:


McDonalds Corporation (Franchise-Bangladesh)
Cash flow Statement
Cash in 0 year
1 year
2 tear
3 year
4 year
and out

5 year

55%
Loan
45%
Equity
Sales
revenue

330,00,0
00
270,00,0
00
0

282,00,587

226,32,267

161,74,016

86,82,445

270,00,000

270,00,000

270,00,000

270,00,000

270,00,000

608,00,00,0
00

760,00,00,0
00

912,00,00,0
00

1064,00,00,0
00

1216,00,00,0
00

(A)Total
funds
Inflows
Funds
used:
COGS
Machine
ry
Admin.
exp.
Loan int.
Selling
exp.
(B)Total
funds
Outflow
s
(A-B)
net
Change

600,00,0
00

613,52,00,5
87

764,96,32,2
67

916,31,74,0
16

1067,56,82,4
45

1218,70,00,0
00

0
0

291,67,500
160,87,500

298,32,500
145,00,000

313,25,500
129,12,500

322,77,500
113,25,000

343,47,500
97,37,500

31,89,000

31,89,000

31,89,000

31,89,000

31,89,000

47,99,414

55,67,320

64,58,215

75,91,571

86,82,445

200,00,000

200,00,000

200,00,000

200,00,000

200,00,000

453,55,000

443,32,500

442,38,000

436,02,500

440,85,000

600,00,0
00

608,98,45,5
87

760,52,99,7
67

911,89,36,0
16

1063,20,79,9
45

1214,29,15,0
00

Cash flow increasing throughout the next 5 years at a fixed increasing rate
(25%, 50%. 75%, 100%).
6.11NPV (Net Present Value)
McDonalds Corporation (Franchise-Bangladesh)
NPV (Net Present Value) Analysis

31 | P a g e

Year

Discounted rate

Cash flow

(600,00,000)

360,80,62,732

451,74,49,398
15%

542,47,76,363

633,39,30,947

724,21,38,276

NPV=[{360,80,62,732/(1.15)}+{451,74,49,398/(1.15)^2}+{542,47,76,363/
(1.15)^3}+
{633,39,30,947/(1.15)^4}+{724,21,38,276/(1.15)^5}]600,00,000=
354,32,56,509
Positive NPV indicates that the project will be lucrative for the investor and
represent a worthy project.
6.12Payback period Analysis:
McDonalds Corporation (Franchise-Bangladesh)
Payback Period Analysis
Year
Cash Flow
Cumulative Cash flow
1
360,80,62,732
360,80,62,732
2
451,74,49,398
812,55,12,130
3
542,47,76,363
13,55,02,88,493
4
633,39,30,947
19,88,42,19,440
5
724,21,38,276
27,12,63,57,716
Payback

Period=

Year

before

Complete

Recovery

Unrecovered Investment
Cash Flow during the Recovery Year
Payback Period= 1+

3,60,80,62,732
4,51,74,49,398

= 1.79 or 2 years

32 | P a g e

PART-7
SOCIAL ASPECTS
7.1 Environmental impact of project:
McDonalds will ensure environment friendly raw-material and its food items production
process which will not be harmful anyhow. It will follow a well waste management which
ensure antipollution.
7.2 Contribution towards the economy:
It will contribute to the economy as follows:
Providing employment to the civilians.
Supporting local raw material suppliers.
7.3 Social cost benefit analysis:
In the society our project will bring many benefits:
Creating employment opportunities
It uses local raw materials.
It provides world class fast food items.
In the society our project can cause some costs:
It may drive young generation towards the fast food.

33 | P a g e

APPENDIX
Formula Used
Payback Period= Year before Complete Recovery +
(Unrecovered Investment )/(Cash Flow duringthe Recovery Year)
IRR= Lower rate ( Lower rate NPV )/(Lower rate NPV H igher rat e NPV ) + (Higher
rate-Lower rate)
t
NPV = Ct /(1+ R)

initial investment

Reference:
1. Chandra,P.(2006).Projects,Planning,Analysis,Selection,Financing,Implementation
and Review.NewDelhi:Tata McGraw-Hill Publishing Company Ltd.
2. Retrieved from http://www.mcdonalds.com/us/en/food.html
3. Retrieved
from
responsibility.html
4. Retrieved from
McDonalds

http://www.mcdonalds.com/us/en/contact_us/social_

http://www.scribd.com/doc/11520753/Marketing-Strategies-of-

5. Retrieved from http://www.freeessays.cc/db/37/pms258.shtml

34 | P a g e

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