cDonald’s Case StudyWhy Is Everyone Lovin’ It

History

Flow Of PresentationThe Company Today

Competitors & Revenues

Reasons For Success

Risks Faced

Tackling Risks

Case Study Questions

Summary

How It All BeganStarted by Richard and Maurice McDonald in 1940 with hotdogs. Yes, that’s right! Not burgers.

Nationally franchised by businessman Ray Croc in 1955 who eventually bought the chain from the McDonald brothersThe world famous golden

arches were incorporated in the company logo in 1962 and the mascot Ronald McDonald was introduced in 1967.

Timeline

So How Big Really Is The Company Today?

The Company TodayOperates more than 35,000 outlets in more than 119 countries. More than 1.9 million employees

worldwideFeeds more than 68 million people worldwide everyday. (In case you are wondering, that’s more than the population of UK!)Generated $25.4 billion in

revenues in the year 2015. Also owns assets worth $38 billion worldwide.

Competition

Miles Ahead Of Competition

McDonalds Burger King Starbucks Dominos Subway KFC0

5

10

15

20

25

30

35

40Sy

stem

Wid

e Sa

les(

billio

n $)

Where Do These Revenues Come From?

US Europe APMEA Others

39.7% 33.7% 21% 5.5%

Reasons For Success

Consistency: Same quality throughout the world both in terms of products and services

Innovation: Introduction of innovative products and services to enhance customer experience

Strong emphasis on cleanliness, quality and customer service.

Strong focus on building of brand equity through:

Smart choice of brand elements

&Holistic marketing activities

Affordability of products. Attracts masses and youngsters.

Localized product offerings satisfies local tastes

Brand revitalization through brand extension

Innovative and targeted advertising campaigns and products

Ads and promotions targeted at kids and teens

Promotes the idea of sharing with friends

Emphasis on cheapness and affordability

Risks Faced By The CompanyAssociated with obesity all over the world. Health conscious customers shifting to healthier alternatives. Food safety issues also exist.Rivals are offering more

customization options to lure in customers.

Expanding too fast Dip in quality

Tackling RisksIntroducing healthier items in the menu

Slimming the menu down & focusing on customization

Controlled expansion will keep focus on core brand values and undiluted quality of products and services.

What are McDonald’s core brand values? Have these changed over the years?

• The core values of the brand have included quality, cleanliness, service and value.

• Their core values are reflected in their outlets, the pricing of their products and their employees.

• Although the company lost focus during expansion in the 80s, the company has learnt from its mistakes.

• Even after so many years, the company does try its best to stick to their core values which is the center of their business model.

McDonald’s did very well during the recession in the late 2000s. With the economy turning around for the better,

should McDonald’s change its strategy? Why or why not?

• The company did exceptionally well in the recession especially when compared to its peers.

• The reason it did well was because of its cheap offerings which attracted customers in times of financial troubles.

• The company should definitely stick with their strategy even now because if it has done well in financially trying times, it is favored to do well when the situation eases.

• Certain changes can be made to the existing strategy after in-depth study of the current markets.

What risks do you feel McDonald’s will face going forward?

• Health conscious consumers might move to brands offering healthier options.

• Changing tastes and lifestyles pose a big threat. The company will need to adapt to changes to be able to tackle such problems effectively

• Competition from local fast food chains as they have to focus only on a small area .

• Training employees rapidly and effectively during expansion drives.

Summary• Started in 1955(franchise), the company has grown to

be the world’s largest fast food chain with assets worth around $38 billion and 1.9 million employees.

• Miles ahead of its competition in terms of sales.• Has managed to build a very strong brand. The 6th most

recognizable brand in the world.• Continues to expand and grow at am alarming rate.• Innovative marketing campaign along with good quality

and affordability of both services and products and localization fueling growth.

• Often associated with increased obesity which might lead to customers migrating to healthier alternatives.

• Plagued with food safety issues in many countries.• Needs to introduce healthier options and control its

expansion to maintain lead in the fast food industry.

DISCLAIMERCreated by Anchit Basu, Fr. Conceicao Rodrigues College of Engineering, Bandra, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow