REPORT ON ANALYSIS OF

MCDONALDS CORPORATION

Submitted By:
Anikesh Kumar

Akif Naeem
Haider Raza
Gaffar Khan
Parveen Chand Joshi
Suraj Kumar
Sem-III
MBA Executive

CENTRE FOR
STUDIES

MANAGEMENT

JAMIA MILIA ISLAMIA

INDEX
1.

Introduction

2.

Mission & Vision

3.

Values

4.

McDonalds Franchise

5.

Hamburger University

6.

External Analysis

7.

SWOT Analysis

8.

Corporate Strategy

9.

Business Strategy

10.

PESTEL Analysis

11.

Leadership

12.

Corporate Governance

13.

Organisationsal Structure

14.

Ethical Issues

15.

Recommendations

1.

Introduction

The McDonald's Corporation is one of the world's largest and most

successful chain of hamburger fast-food restaurants, serving more than 47
million customers around the world daily. Its menu includes hamburgers,
cheeseburgers, chicken products, French fries, breakfast items, soft drinks,
shakes, and desserts. In response to criticism and changing consumer tastes,
the company has expanded its menu to include salads, wraps and fruit.
McDonald's restaurants have been found in 119 countries; it operates over
31,000 restaurants worldwide, employing more than 1.5 million people.
History
The business began in 1940, with a restaurant opened by brothers
Richard and Maurice McDonald in San Bernardino, California. Their
introduction of the "Speedee Service System" in 1948 furthered the principles
of the modern fast-food restaurant that the White Castle hamburger chain had
already put into practice more than two decades earlier. The original mascot
of McDonald's was a man with a chef's hat on top of a hamburger shaped
head whose name was "Speedee." Speedee was eventually replaced with
Ronald McDonald by 1967 when the company first filed a US trademark on a
clown shaped man having puffed out costume legs.
McDonald's first filed for a U.S. trademark on the
name McDonald's on May 4, 1961, with the description "Drive-In Restaurant
Services," which continues to be renewed through the end of December
2009. In the same year, on September 13, 1961, the company filed a logo
trademark on an overlapping, double arched "M" symbol. The overlapping
double arched "M" symbol logo was temporarily disfavored by September 6,
1962, when a trademark was filed for a single arch, shaped over many of the
early McDonald's restaurants in the early years. The famous double arched
"M" symbol in use today did not appear until November 18, 1968, when the
company filed a U.S. trademark.

2.

MISSION & VISION

MISSION:
McDonald's brand mission is to "be our customers' favorite place and way to
eat." Our worldwide operations have been aligned around a global strategy
called the Plan to Win centering on the five basics of an exceptional customer
experience People, Products, Place, Price and Promotion. We are
committed to improving our operations and enhancing our customers'
experience.
VISION:
McDonald's vision is to be the world's best quick service restaurant
experience. Being the best means providing outstanding quality, service,
cleanliness, & value, so that we make every customer in every restaurant
smile.

3.

VALUES

We place the customer experience at the core of all we do:

Our customers are the reason for our existence. We demonstrate

our appreciation by providing them with high quality food and superior
service, in a clean, welcoming environment, at a great value.
We are committed to our people:
We provide opportunity, nurture talent, develop leaders and
reward achievement. We believe that a team of well-trained individuals with
diverse backgrounds and experiences, working together in an environment
that fosters respect and drives high levels of engagement, is essential to our
continued success.

We believe in the McDonalds System:

McDonalds business model, depicted by the three-legged stool

of owner/operators, suppliers, and company employees, is our foundation,
and the balance of interests among the three groups is key.

We operate our business ethically:

Sound ethics is good business. At McDonalds, we hold ourselves

and conduct our business to high standards of fairness, honesty, and integrity.
We are individually accountable and collectively responsible.

We strive continually to improve:

We are a learning organisation that aims to anticipate and

respond to changing customer, employee and system needs through constant
evolution and innovation.

We grow our business profitably:

McDonalds is a publicly traded company. As such, we work to

provide sustained profitable growth for our shareholders. This requires a
continuing focus on our customers and the health of our system.

4.

MCDONALDS FRANCHISE
Most Owner/Operators enter the System by purchasing an existing
restaurant, either from McDonalds or from a McDonalds
Owner/Operator.
Financial Requirements/Down Payment:
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 non-borrowed personal resources,
which includes cash on hand, securities, bonds.
Generally require a minimum of $300,000 of non-borrowed personal
resources to consider you for a franchise.

 Remaining balance of purchase price must be paid off with in 7 years.

McDonalds does not offer financing but they work with many national
lending institutions.
McDonalds owns all buildings and properties.

5. EXTERNAL ANALYSIS
PORTERS FIVE FORCES
Threats of new entrants : The infant businesses which first enter into the
fast food industry may have to face some challenges regarding to economies
of scale, brand loyalty, capital required and government regulation.

Nevertheless, these challenges do not pose a large threat to the existing

companies. Thus, the threat of new entrants within this industry to the existing
companies is not high. In terms of economies of scales, because of the high
volume of production and the number of outlets, big business may easily
achieve economies of scale; whereas, those small business get difficulty in
gaining economies of scale due to the low volume of production.
Bargaining power of buyers : As there are lots of substitute products within
this industry, McDonalds will have to pay much attention to customers
demands to gain new customers while maintaining a base of loyal customers.
Customers pay much concern about their health and the rise of obesity in the
U.S, fast food companies like McDonalds will have to provide healthier food
such as salads and fruits and remove trans-fatty acids from the oils used to
make foods.
Bargaining power of suppliers : Supplier relations are very important to this
industry. The prices charged by suppliers are the major factors that affect net
income. Although the supplies are commodities and suppliers do not have the
ability to charge more than the market, operators do not have the chance to
bargain for cheaper products

or large quantity discounts. Good relationships are crucial to this particular

industry so that large quantities of supplies are available when needed.
Lastly, although there are many suppliers, location is extremely important. So
suppliers closer to the operators substantially influence transportation costs.
The fact that suppliers do not have the ability to increase prices but operators

do not have the ability to bargain makes supplier power moderate in the fast
food industry.

Threat of Competition : The competition in the fast food industry is high and
the trend is increasing. Operators compete on the basis of price, location,
food quality and consistency, style and presentation, and food range. New
products are constantly being introduced because variety greatly affects
consumer demand. Service is also expected to increase in quality.
Restaurants are constantly implementing strategies such as drive -thru.The
competition between franchises and locally operated fast food restaurants
adds to the competition. Even though the single-location fast foods account
for a small share of restaurants their share of industry revenue is larger. They
have successfully established their restaurants in high traffic locations and at
the same time in marketing their brands.

Threat of Substitutes : Fast foods are discretionary items that are easily
substituted by other types of meals . These might include meals prepared at
home, dine-in restaurants, deliveries, and meals supplied at convenient
stores. Since customers have become more aware of the health effects of fast
foods other substitutes are becoming more and more attractive. Vast amounts
of money have been spent on marketing and promoting healthier fast foods to
be able to compete with healthier options. Restaurants need to change the
image customers have and at the same time increase brand awareness.

7.

SWOT ANALYSIS

Strengths :
Strong Global Brand: McDonalds has one of the most recognizable brands
in the world. Most individuals in the United States, and much of the world,
instantly recognize the companys Golden Arches. The company provides
consistency in its food, so that you can get the same taste whether youre
eating a Big Mac in New York or Moscow. However, it also provides cultural
diversity in the foods it offers based on the location of the restaurant, thereby
adding to supplemental sales in each particular region. The companys
success has allowed it to become the worlds largest fast food restaurant
chain in the world.
Diversified Income: Since the company is so large, with so many locations
around the world, its total sales and earnings in different regions tend to offset
one another. It has locations in nearly 120 countries, so if domestic sales are
slumping, its possible that they could be strong in South America or Europe.
As a result, the company doesnt rely on one key source of income, unlike
many of its rivals. For example, Burger King relies almost exclusively, roughly
98%, on the United States for its earnings. This diversification allows
McDonalds to have relatively stable cash flows, and generate consistent
profitability.

Weaknesses :
Negative publicity: McDonalds has always maintained the perception that its
food is unhealthy, loaded with fat, carbs, salt, and sugar. Well, these
perceptions are generally on point, as most items on its standard menu are
relatively unhealthy. The chain has been widely criticized for promoting
unhealthy eating habits, leading many of its customers to put on pounds.

2004s documentary, Super Size Me, didnt help the company, as it

documented Morgan Spurlocks rapidly deteriorating health as he ate only
McDonalds for a 30-day period. As a result, many health conscious
consumers dont even consider having a meal at McDonalds, despite its
efforts to introduce healthier options.
High Employee Turnover: Most jobs at McDonalds are low skilled and low
paying. As a result, there is a significant amount of employee turnover. Many
employees dont take the job seriously, or only do it for short periods of time,
and this leads to lower performance. Since there is so much turnover, training
costs are high, pressuring the companys bottom line.

Opportunities :
Upgraded Menu: New CEO Steve Easterbrook has big plans to turn the
company around. Part of the plan is to offer premium products at some of its
locations. The restaurant recently introduced artisan chicken and sirloin
burgers to its menu in parts of the U.S. The company is also trying to
strengthen its position in the high-margined caffeinated beverages industry,
dominated by Starbucks (SBUX). McCafe has had some success by keeping
prices competitive, and the company has been able to harness its vast store
network, marketing muscle, and highly efficient supply chain. The McCafe
menu also now includes fruit smoothies, an appeal to more health conscious
consumers.
Expansion Plans: McDonalds is always on the lookout to expand its market
share. While the markets in North America and Europe are fairly saturated,
there are opportunities in more underdeveloped nations. The company also
recently announced that it was going to refranchise 3,500 restaurants by the
end of 2018, accelerating the pace of refranchising and increasing the global
franchised percentage from the current 81% to 90%. This should allow for a
more streamlined, lower cost, and more stable organization.

Threats :

Competition: McDonalds faces significant competition from national,

international, regional, and local retailers of food products. It competes on the

basis of price, convenience, service, menu variety, and product quality. While
it does a good job on most of these metrics, product quality is something that
management is working on, given consumers increasing preference for
quality and natural products. In the hamburger fast food category, McDonalds
primarily competes with Burger King and Wendys (WEN). However, it still
has the highest market share in the overall fast food market, with a 22%
share, ahead of competitors Yum! Brands (YUM) and Subway.
More Health-Conscious Customers: Many consumers, both in the U.S. and
abroad, are trying to eat a healthier diet. The rise in popularity of organic
products, fresh fruit and vegetables, and goods with all-natural ingredients is
somewhat of a concern for McDonalds. While the company has very strict
quality controls for its food, customers arent exactly going to McDonalds for
free-range chicken and organic vegetables. The company is also facing
concerns that younger, more health-conscious consumers, will hurt results in
the long run unless a shift in strategy is made.

8. CORPORATE STRATEGY
Corporate level strategy is a strategy which is aimed at the long term position
of a business. A company for instance, may consider where it will be in 10
years time and should decide in what ways it should reach the aim by
pursuing certain strategies and directions. A corporate or business can use
variety of methods to develop a corporate level strategy but, there are four
main strategies that almost all businesses use which are:

Concentrate on a single business, which means that the business stays on

the same industry or activity in order to create a strong competitive position
within the industry.

Diversification; which is to move to a new business to provide a new good or

service. There are two kinds of diversification, related diversification which is
to compete in similar area/industry of activities to build a synergy and
unrelated diversification which is to enter a new industry to compete and build
a portfolio strategy.
International Expansion. This is to compete in more than one market to
serve the needs of the other markets/countries.
Vertical Integration. This is a way to cut costs by providing your own ways of
inputs, backward vertical integration and your own channels of distribution
and selling outputs by forward integration.

9. BUSINESS STRATEGY

Value for Money :

McDonalds aims to lure price sensitive customers with its value for money
meals

such

as

the

Buffalo

Ranch

McChicken

and

the

Jalapeo

McDouble(Lutz, 2014). The company initially targeted high-priced value items

in its menu but has recently shifted its focus towards lower-priced products

Customer Service :
McDonalds has always focused on its service excellence to provide
customers with high-quality food served quickly and in clean surroundings.
However, with increasing demand and a complex food menu, the restaurant
has been experiencing service delays due to the longer preparation time
required for menu items (Lutz, 2014). Speed of service is one of the most
crucial aspects of fast food. During peak traffic times (lunch and dinner rush
times), customers expect to receive their orders within about one minute after
placing them. During slower times, customers are willing to wait two or three
minutes for their orders before they start to form negative opinions about the
company. McDonald's has realized that a return to its former reputation for
serving quality fast food quickly means elimination of certain menu items and
greater focus on its more traditional menu items, such as Big Macs, Quarter
Pounders, Fish, Chicken, and French Fries

Brand Marketing :
McDonalds has been adversely affected by the growing health concerns of
consumers all over the world. The products of McDonalds have been labeled
as junk food and declared unfit for daily consumption. McDonalds now aims
to increase the trust of its customers in the food quality and brand of
McDonalds products as healthy food options (Lutz, 2014). To do this, it has
started offering salads, iced tea, sugar free drink options, fruit juices, and
other options that are either low in calories and/or low in carbohydrates and
opening of coffee shop by name of McCafe

Menu Standardization :
McDonalds has implemented menu customization for various countries of
operations that has actually complicated the menu items and increased the

preparation time and thus wait time for customers (Lutz, 2014). McDonalds
needs to standardize and simplify its menu items to include food items that
can be prepared quickly and served in the shortest possible time. Again,
McDonald's is focusing on its traditional menu of Big Macs, Quarter
Pounders, McFish, McChicken, French Fries, sugar-free drink options, juices,
and breakfasts.

Digital Marketing :
McDonalds has shifted its focus on digital marketing strategy so as to engage
and target the young online audience through social media networks such as
Facebook and Twitter. The company hired its first digital marketing officer Atif
Rafiq in the year 2013 (Morrison, 2014). Digital marketing is paying off, as
results show that more young people are visiting McDonald's than before. The
drop-off in sales and market shares is among families; that is where
McDonald's Corporation's challenge lies.

Breakfast Menu Items :

McDonalds has recently launched new additions in its menu items and offers
an expanded breakfast menu with coffee, milkshakes and pastries for
customers(Moskowit, March 2014). The strategy is quite successful for the
brand and the demand for breakfast menu items have increased substantially
for the company. One possible solution that McDonald's might want to
consider is to follow the lead of one of its smaller regional competitors, Jackin-the-Box, which sells breakfast 24 hours per day. With the popularity of the
Golden Arches' breakfasts, it might be a successful way to snag some
additional market share and bolster sales and profits.
Delivering food to customers in places that demand it
Though not traditional in US, McDonalds delivers in many markets
around the world, and the company cites it as one of the reasons it have
been so successful in those markets.Delivery is common practice, even

for fancy restaurants, in many Asian and Middle Eastern cities,so

McDonalds is just meeting the cultural norms of its surroundings.
Making its stores more attractive to get customer in
McDonalds is improving its physical locations to make them more
appealing to customers, and it seem to be working.Over 95% of
McDonalds locations have extended theirs hours now, and it has
several thousand stores that are open 24/7.Free Wifi is now available in
McDonalds restaurants across the world and lately it has made a big
push to get a flat screen TVs in the stores. Its even starting up its own
TV channel with original programming called McTV.
Increasing its offering of snacks items
American love to snack on stuff, and McDonalds has recognized that
demand and answered with plethora of new products.Smaller items like
wraps, along with expansion into deserts have made their way onto the
menu and have done well.
Importing more of its successful niche products internationally
McDonalds has an incredible

variety of culture-specific food items

across the planet and most wouldnt stand a chance internationally.But

some are winners, and company have started to test them out in other
market. For example is Australias Chicken McBites, which are now
tested in Detroit,Michigan and some other products have been huge hit
in other market, just need a correct area to expand them to.
Customization
McDonald have always adopted a policy of customization of its menu
according to countrys culture and taste and preferences of people. One
such example is vegetarian menu of McDonald in India(McAloo tikki,
Mac Paneer).

10. PESTEL ANALYSIS :

PESTEL is an analysis of the external macro and micro environment in which
a business operates. PESTEL stands for political, economical,
social,technological, environmental and legal factors.

POLITICAL FACTORS :
The international operations of McDonalds are highly influenced by the
individual countrys policies enforced by each government. For instance, there
are certain groups in India, Europe and the United States that clamour for
state actions pertaining to the health implications of eating fast food. They
have indicated that harmful elements like cholesterol and adverse effects like
obesity are attributable to consuming fast food products.
On the other hand, the company is controlled by the individual policies and
regulations of operations. Specific markets focus on different areas of concern
such as that of health, worker protection, and environment. All these elements
are seen in the government control of the licensing of the restaurants in the
respective states of the country. For instance, there is an impending legal
dispute in the McDonalds franchise in India where certain infringement of
rights and violation of religious laws pertaining to the contents of the food.

The existence of meat in their menus in India is apparently offensive to the

Hindu religion in the said market. There are also other studies those points to
the infringement of McDonalds Stores with reference to the existing
employment laws in the target market. Like any business venture, these
McDonalds stores have to contend with the issues of employment
procedures as well as their tax obligations so as to succeed in the foreign
market like India.

ECONOMICAL FACTORS :
Organisations in the fast food industry are not excused from any disputes and
troubles. Specifically, they do have their individual concerns involving
economic factors. Branches and franchises of McDonalds have the tendency
to experience hardship in instances where the economy of the respective
countries are hit by inflation and changes in the exchange rates, India is not
an exception to it. The customers consequently are faced with a stalemate of
going over their individual budgets whether or not they should use up more on
these foreign fast food chains like McDonalds. Hence, these chains may have
to put up with the issues of the effects of the economic environment.
Particularly, their problem depends on the response of the consumers on
these fundamentals and how it could influence their general sales. In
regarding the operations of the company, McDonalds tend to import much of
their raw materials into a specific countrys territories if there is a dearth of
supply. Exchange rate fluctuations will also play a significant role in the
operations of the company.
As stated in the paragraph above, McDonald stores have to take a great deal
of consideration with reference to their microenvironment. The companys
international supply as well as the existing exchange rates is merely a part of
the overall components needed to guarantee success for the foreign
operations of McDonalds. Moreover, it is imperative that the company be
cognizant of the existing tax requirements needed by the individual
governments on which they operate. This basically ensures the smooth
operations of the McDonalds franchises. In the same regard, the company
will also have to consider the economic standing of the country on which they
operate on. The rate at which the economy of that particular country grows
determines the purchasing power of the consumers in that country. Hence, if

a franchise operates in a particularly economically weak country, their

products shall cost higher than the other existing products in the market, then
these franchises must take on certain adjustments to maintain the economies
of scale. However in case of India the company has been able to maintain a
constant level of prices for their products.

SOCIO-CULTURAL FACTORS :
Articles on the international strategies of McDonalds seem to function on
several fields to guarantee lucrative returns for the organisation. To illustrate,
the organisation improves on establishing a positive mind-set from their core
consumers. McDonalds indulge a particular variety of consumers with
definite types of personalities. It has also been noted that the company have
given the markets such as the United Kingdom and India, an option with
regards to their dining needs. McDonalds has launched a sensibly valued set
of food that tenders a reliable level of quality for the respective market where
it operates. Additionally, those who are aged just below the bracket of thirtyfive are said to be the most frequent consumers of McDonalds franchises.
The multifaceted character of business nowadays is reflected in the harsh
significance of the information on the subject of the existing market. This
procedure is essentially identified in the field as market research. Information
with regards to the appeal and potential fields of the market would double as
obstructions to the success of the company if this area of the operations is
neglected. In the case of McDonalds they establish a good system in
determining the needs of the market. The company uses concepts of
consumer behaviour product personality and purchasing decisions to its
advantage which is clearly evident in case of India as the company was quick
in removing their Pork and Mutton products from Indias menu. It is said to
have a major influence on the understanding of the prospective performance
of the organisation in a particular market.

TECHNOLOGICAL FACTORS :
McDonalds generates a demand for its own
tool for marketing is by means of Online
Collaboration with websites like Snapdeal and
India, television advertisements, banners and

products. The companys key

Facebook and Google ads,
Timesdeal to promote sales in
hoardings. There are similarly

some claims that McDonalds are inclined to interest the younger populations
more. The existence of play spots as well as toys in meals offered by the
company shows this actuality. Other demonstration of such a marketing
strategy is apparent in the commercials they use. They employ animated
depictions of their characters like Grimace, Ronald and Ham burglar. Other
advertising operations employ popular celebrities to promote their products.
The like has become endorsers for McDonalds worldwide Im loving it
campaign. Moreover, the operations of McDonalds have significantly been
infused with new technology. Elements like the inventory system and the
management of the value chain of the company allows for easy payments for
their suppliers and other vendors which the individual stores in respective
markets deal with. The integration of technology in the operations of
McDonalds tends to add value to their products. Basically, this is manifested
in the improvements on its value chain. The improvement of the inventory
system as well as its supply chain allows the company to operate in an
international context.

ENVIRONMENTAL FACTORS :
The social responsibilities of McDonalds on the country are influential to the
operations of the company. These involve accusations of environmental
damage. Among the reasons why
they are charged with such claims is the employ of non-biodegradable
substances for their drinks glasses and Styrofoam coffers for the meals.
Several civic groups in India have made actions to make the McDonalds
franchises in India aware of the rather abundant use of Styrofoam containers
and the resultant abuse of the environment.

LEGAL FACTORS :
There has been the recurrent bellowing in opposition to the fast food industry.
This has similarly made McDonalds apply a more careful consideration on
their corporate social responsibilities. On the whole, this addressed the need

of the company to form its corporate reputation to a more positive one and a
more socially responsible company. The reputation of McDonalds is
apparently a huge matter. Seen on the website of the company, it seems that
they have acquired strides to take in hand the key social censures that they
have been berating them in the past decades. The company has provided
their customers the relevant data that they need with reference to the
nutritional substances of their products. This is to attend to the arguments of
obesity charged against the products of the company. In the same way, the
consumers provided freedom in choosing whether or not they want to
purchase their meals.
This is tied up with the socio-cultural attributes of the market on which they
operate. For instance, operations in predominantly Muslim countries require
their meat to conform to the Halal requirements of the law. In the same
regard, those that operate in countries in the European Union should conform
to the existing laws banning the use of genetically modified meat products in
their food. This was prime reason which forced McDonalds to eliminate beef,
pork and Mutton out of Indias product menu. Other legal concepts like tax
obligations, employment standards, and quality requirements are only a few
of important elements on which the company has to take into consideration.
Otherwise, smooth operations shall be hard to achieve.

11. LEADERSHIP
The rich history began with Mcdonalds founder, Ray Kroc. Today, the talented
executives continue to build on his legacy, ensuring the Golden Arches will
shine for years to come.

About Steve Easterbrook :

President and Chief Executive Officer
With the goal of revitalizing McDonalds as a modern, progressive burger
company, delivering a contemporary customer experience, Steve Easterbrook
became President and CEO of the worlds largest foodservice company in
early 2015. Hes passionate about running great restaurants and building
on that foundation to create financial value, drive operating growth and
generate
excitement
for
the
brand.
Easterbrook believes in the entrepreneurial spirit of McDonalds system of
franchisees, suppliers and employees and the power of the companys
geographically diversified restaurant portfolio. Since joining McDonalds in
1993 as a Financial Reporting Manager in London, Easterbrook has held
numerous leadership roles, including CEO of McDonalds UK, President of
McDonalds Europe and most recently, Global Chief Brand Officer.
With 36,000 restaurants in more than 100 countries in the McDonalds
portfolio, Easterbrook and his leadership team create global frameworks that
are adapted by local markets, powering a brand that is relevant both locally
and
globally.
In addition to his more than 20 years with McDonalds, Easterbrooks time
leading two UK-based restaurant chains PizzaExpress and Wagamama

equips him with an outside perspective. Plus, his experience spans beyond
the restaurant industry. Easterbrook is a certified accountant and a visiting
fellow of the Oxford University Centre for Corporate Reputation.
According to Kay Croc, The two most important requirements for major
success are: first, being in the right place at the right time, and second, doing
something about it.

Kay Crocs Leadership Style (The company lives by):

12. CORPORATE GOVERNANCE :

"The basis for our entire business is that we are ethical, truthful and
dependable. It takes time to build a reputation. We are not promoters.
We are business people with a solid, permanent, constructive ethical
program that will be in style years from now even more than it is today." Ray Kroc, 1958
McDonalds success is built on a foundation of personal and professional
integrity. Hundreds of millions of people around the world trust McDonalds.
We earn that trust everyday by serving safe food, respecting our customers
and employees and delivering outstanding Quality, Service, Cleanliness and
Value (QSC&V). We build on this trust by being ethical, truthful and
dependable. In short, what Ray Kroc, founder of McDonalds Corporation said
more than 50 years ago was right.
McDonalds Board of Directors is entrusted with and responsible for the
oversight of McDonalds Corporation in an honest, fair, diligent and ethical
manner. The Board has long believed that good corporate governance is
critical to fulfilling the Companys obligation to shareholders. We have and will
continue to strive to be a leader in this area. This section of McDonalds

website contains detailed information about McDonalds governance

practices.
McDonalds Board believes that good governance is a journey, not a
destination. Accordingly, we are committed to reviewing our governance
principles at least annually with a view to continuous improvement. One thing
that will not change, however, is our commitment to ensuring the integrity of
the McDonalds System in all its dealings with stakeholders.

CODE OF CONDUCT :
Director Code of Conduct

 Supplier Code of Conduct

Standards of Business Conduct
Code of Conduct for the Board of Directors:
The members of the Board of Directors of McDonalds Corporation
acknowledge and accept the scope and extent of our duties as Directors. We
have a responsibility to carry out our oversight responsibility in the interests of
all McDonalds shareholders, within the scope of our authority and consistent
with our fiduciary duties and our governance documents. The Board of
Directors has adopted the following Code of Conduct and our Directors are
expected to adhere to the standards of loyalty, good faith, and the avoidance
of conflicts of interest that follow:
Board Members will:
Act in the best interests of, and fulfill their fiduciary obligations to, all
McDonalds shareholders;
Act honestly, fairly, ethically and with integrity;
Conduct themselves in a professional, courteous and respectful manner;
Comply with all applicable laws, rules and regulations, and McDonald s
policies, including, but not limited to, the applicable provisions of the
Companys Related Person Policy;
Act in good faith, responsibly, with due care, competence and diligence,
without allowing their independent judgment to be subordinated;
Act in a manner to enhance and maintain the reputation of McDonald s.
Code of Conduct for the Suppliers:

Human Rights
UN Declaration of Human Rights: We expect our suppliers to conduct their
activities in a manner that respects human rights as set out in The United
Nations Universal Declaration of Human Rights.
Freedom of Association: Suppliers shall respect the rights of workers to
associate or not to associate with any group, as permitted by and in
accordance with all applicable laws and regulations.
Employment Status: Suppliers shall employ workers who are legally
authorized to work in their location and facility and are responsible for
validating employees eligibility to work status through appropriate
documentation.
Employment Practices: Suppliers shall not use any form of slave, forced,
bonded, indentured, or involuntary prison labor. They shall not engage in
human trafficking or exploitation, or import goods tainted by slavery or human
trafficking. They shall not retain employees government-issued identification,
passports or work permits as a condition of employment.
Anti-Discrimination and Fair Treatment: Suppliers shall promote and maintain
a workplace free from discrimination and treat their employees with fairness,
dignity and respect. No form of physical, sexual, psychological or verbal
harassment or abuse shall be tolerated.
Working Hours and Rest Days: Employees shall be allowed at least one day
off every seven days, and any overtime worked shall be voluntary. If local law
allows, employees may voluntarily work overtime on rest days, provided that
they
are allowed at least one day off within the next seven days. Continuous
working days are never to exceed 21 days without a rest day.
Underage Labor: Suppliers shall ensure that no underage labor has been
used in the production or distribution of their goods or services. A child is any

person under the minimum employment age according to the laws of the
facilitys country, or, in the absence of law, under the minimum age for
completing required education. Suppliers shall not employ anyone younger
than 14, regardless of the countrys minimum working age.
Wages and Benefits: Suppliers shall ensure that their workers are paid lawful
wages, including overtime, premium pay, and equal pay for equal work
without discrimination. There shall be no disciplinary deductions from pay.

Environmental Management :
Suppliers are responsible for managing, measuring and minimizing the
environmental impact of their facilities. Specific focus areas include air
emissions, waste reduction, recovery and management, water use and
disposal, and greenhouse gas emissions.
Business Integrity :
Compliance with Law: Suppliers business activities shall comply with
applicable laws and regulations in the countries and jurisdictions in which they
operate. This Code applies to activities in the locations where suppliers
goods are produced, where any related services are performed, and where
the goods enter the supply chain.
Anti-Bribery: Suppliers shall not engage in any form of bribery, kickbacks,
corruption, extortion or embezzlement. Suppliers shall not take any action that
would violate, or cause McDonalds to violate, any applicable anti-bribery law
or regulation, including the U.S. Foreign Corrupt Practices Act.
Audits and Assessments: McDonalds reserves the right to audit compliance
with this Code. Audits are facility inspections that include employee interviews
and a review of supplier records and business practices. Such audits are
conducted by McDonalds or its approved monitoring firm. If an audit identifies

a violation of this Code, suppliers shall act promptly to correct the situation to
McDonalds satisfaction.
Books and Records: Suppliers shall maintain accurate and transparent books,
records and accounts to demonstrate compliance with applicable laws and
regulations and this Code.
Confidentiality: Suppliers shall safeguard McDonalds information by keeping
it secure, limiting access, and avoiding discussing or revealing such
information in public places. These requirements extend even after the
conclusion of a suppliers business relationship with McDonalds.
Grievance Mechanism: Suppliers shall create internal programs for handling
reports of workplace grievances, including anonymous reports.

13. ORGANISATIONAL STRUCTURE :

The McDonald's executive organisational department areas are as follows: at
the top are the chairman and chief executive officer, and the chief operating
officer. Below that, the departments are broken down into: corporate affairs,
marketing, human resources, national operations, regional managers,
finance, information, and strategic planning.

Other functional departments within McDonald's are legal, customer services,

franchising, security, hygiene and safety, property and construction, supply
chain and restaurant services.
Multilevel Organisational Structure : Headed by CEO & Board of Directors

Organisational Structure : Store Level

14. ETHICAL ISSUES :

Protecting Company Assets :
All McDonalds employees must safeguard Company assets, including our
most valuable asset: our brand. One of the ways we protect our brand is to
prevent the improper use of the McDonalds name, trademarks or other
intellectual property.
Conflict of Interests :
Each of us must avoid any situation in which our personal or financial
interests might cause our loyalties to be divided. We must avoid even the
appearance of a conflict of interest that might cause others to doubt our
fairness or integrity.
Electronic Communication Usage :
Everything related to McDonalds e-mail and other electronic communications
systems, including all communications and information created, received,
saved or sent on McDonalds systems, is the property of the Company.
Business records & Communications :
Shareholders count on McDonalds to provide honest and accurate
information and to make responsible business decisions based on reliable
records. All financial books, records and accounts must accurately reflect
transactions and events.
Anti-Bribery :
For more than three decades, the u.S. Foreign Corrupt practices Act (FCpA)
has applied to McDonalds business operations globally.
International Business :

McDonalds complies with all applicable laws and regulations wherever we do

business. Almost every country in the world prohibits making payments or
offers of anything of value to government officials, political parties or
candidates in order to obtain or retain business.

15. RECOMMENDATIONS
More menu simplification
McDonald's menu has grown 42.4% in the past seven years, from 85 items in
2007 to 121 items today.
The bloated menu is causing problems in McDonald's kitchens and slowing
down customer service.
The chain's average drive-thru wait is now 3 minutes, 9.5 seconds, which is
the longest average wait time in at least 15 years,
McDonald's has cut some menu items in recent months, but franchisees say
much more needs to be done.
"They say they are going to simplify the menu and then add the Sirloin
Burger and new ingredients," "They are continually forcing new products on
the owners to try and drive sales, but the new products continue to slow
service and frustrate managers and crew in the restaurants."
Quicker customer service
The company needs to find ways to speed up customer service, outside of
just slimming down the menu.
Easterbrook acknowledged this issue in a call with analysts last week, but he
didn't go into too much detail.
"We've still got to make the entire McDonald's experience just a little easier
for our customers and a little easier for our crew," "And it's not simply the

menu simplification, it's what else can we take off the workload of our teams
in the restaurants to enable them to focus on what really matters, which is
taking care of customers.

Improve food quality

McDonald's has made some inroads in this area with its recent
announcement that it would be removing hard-to-pronounce ingredients from
its chicken. But more needs to be done.
"It's time to scale back GMOs and other things a person can't even
pronounce.

Reduce promotions
In an attempt to drive up traffic, McDonald's recently expanded its dollar menu
and ran several promotions offering free coffee during morning hours.
Franchisees have complained that the promotions are hurting profits.
"The system is broken, "There is no leadership, no plan, no respect for
operators or their investment or bottom line."

Upgrade aging stores

As former McDonald's CEO Don Thompson noted last year, customers today
"want to enjoy eating in a contemporary, inviting atmosphere."
But many McDonald's restaurants don't live up to that description.
"Aging McDonald's stores give the restaurants an old fashioned image.
McDonald's can't afford to further strain its relationship with franchisees by
making them pay the full cost of the upgrades, however, so"McDonald's

should negotiate franchise fee reductions or freezes in return for the

refurbishment of stores,

Get new products to the market quicker

"Believe it or not, McDonald's has a strong product pipeline - it just takes
forever to get them to market.
The company also needs to find a way to add new products without slowing
down customer service.

Raise wages for all employees without putting the full cost burden on
franchisees
McDonald's recently announced that it would be raising wages for employees
of company-owned restaurants - which account for one-tenth of the roughly
14,000 McDonald's restaurants in the US.
The decision has backfired against the company. Labor activists say the pay
raise should have applied to all employees, and franchisees - who own 90%
of McDonald's US restaurants - resent the pressure it put on them to increase
pay for their workers.
Franchisees say they can't afford more payroll costs because sales are
plunging and McDonald's corporate is bankrupting them with fees, aggressive
promotions, and costly restaurant upgrades.

Offer breakfast around the clock

McDonald's is testing an all-day breakfast in San Diego. Expanding that test

nationwide could help boost sales, given the popularity of the burger chain's
breakfast items.
Some of the most "craveable" items on the McDonald's menu are the
McMuffins and McGriddles.
McDonald's currently stops serving breakfast at 10:30 a.m. in most markets.