mcdonaldsvaluechainanalysis_001 grp 9
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McDonald’s Value Chain McDonald’s Value Chain AnalysisAnalysis
Jeovani Zamarripa, Alicia Wylie, Jason Flores, Conor Mullarkeyy
Mission StatementMission Statement
“McDonald's brand mission is to "be McDonald s brand mission is to be our customers' favorite place and way
to eat." Our worldwide operations phave been aligned around a global
strategy called the Plan to Win t i th fi b i f centering on the five basics of an
exceptional customer experience –People Products Place Price and People, Products, Place, Price and Promotion. We are committed to
improving our operations and improving our operations and enhancing our customers' experience.”
Company HistoryCompany History
McDonald’s Bar-B-Que (1940)McDonald s Bar-B-Que (1940)• World’s 1st McDonald’s• Founded by Dick and Mac McDonald• Founded by Dick and Mac McDonald• San Bernadino, CA
D i i & h i• Drive-in & car hop serviceMcDonald’s (1948)
N F l• Name Formulates• Menu develops• 15 Cent hamburger
Company InfoCompany Info
• Corporate Headquarters:p q– McDonald’s Corporation
2111 McDonald's DrOak Brook, IL 60523
• Employees: – Approximately 400,000 McDonald’s employees globallyApproximately 400,000 McDonald s employees globally– 1.6 million people globally are employed through
McDonald’s restaurants and their franchises
• Restaurants: – 32,000 world-wide, 118 countries
2009 Revenue & kU.S. Stocks (US only)
• NYSE: MCDNYSE: MCD– Current Price: $64.74– Change: $0.26 +g
(As of 2/16/2010)
• 2009 Revenue (mil.)$22,744.701• Year Revenue Growth 3 3%• Year Revenue Growth -3.3%• 2009 Net Income (mil.)$4,551.001
Y N t I G th 5 5%• Year Net Income Growth 5.5%
LeadershipLeadership
James Skinner Vice Chairman, CEO
Left to Right: Jose Armario, Group President Canada & Latin America; Janice Fulds, US Chief Operations Officer; James Skinner, Vice Chairman and CEO; Donald Thompson, President U.S.A; Jeffrey Stratton,
Chief Restaurant Officer; Mary Dillion, Global Chief Marketing Officer; Timothy Fenton, President Asia/Pacific Middle East & Africa; Peter Bensen, Chief Financial Officer; Dennis Henequen. President
Europe; (at table) Gloria Santona, General Counsel & Corporate Secretary; Richard Floersch, Chief Human Resource Officer.
CultureCulture
• Forging new opportunitiesForging new opportunities– Innovation from within– Empowered “big thinking”p g g
• Social responsibility– Community FocusCommunity Focus– Responsible Purchasing– Protecting Our Environmentg
• Diversity– Employee ForceEmployee Force
McDonald’s Production SystemMcDonald s Production System
INPUT OUTPUTPROCESS
Employees
Customers
Cook and package foods
Satisfied customers
Customers’ favorite Customers
Restaurants
Food Prep/Assembly Line
Assemble meals to the customers order
Customers favorite place and way to eat
Provide a relaxed and fun environment to eatLine
Frozen foods (patties, fries, chicken nuggets, etc.)
ProduceProduce
Containers
Company image
Operational Strategic f i iPerformance Dimensions
COSTQUALITY
SPEEDFLEXIBILITY
COSTCOST
Make it cheap:Make it cheap:• Economies of scale
– Allows McD’s to pass the value to consumersAllows McD s to pass the value to consumers• McValue Dollar Menu• Party Pack
l• Cost controls
QUALITYQUALITY
Make it consistent:Make it consistent:• Universal taste• Core offerings globallyCore offerings globally
Order Qualifier: Make it good:Order Qualifier: Make it good:• Taste appeal to its target market• Healthy options• Healthy options
SPEEDSPEED
Make it fast:Make it fast:• 90 second service goal
Order Qualifier: Make it dependable:• Menu items available daily• Menu items available daily• Hot & Fresh
Order Qualifier: New Product Development:• R i l it• Regional menu items• Healthy menu options
FLEXIBILITYFLEXIBILITYOrder Qualifier: Product design:• S/M/L/Super size• S/M/L/Super size• Gender based kids meals• Happy meals vs. Mighty kids meals
P l k• Promotional packagingOrder Qualifier: Product Mix:• Sandwich varietiesSandwich varieties• Soft serve offerings (milkshakes, ice cream
cones, sundaes)• Salads• SaladsOrder Qualifier: Production Volume:• Staffing based on consumer traffic and meal
titime• 24 Hour restaurants and drive-thru
MD’s Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTUREFIRM INFRASTRUCTURE
HUMAN RESOURCES
TECHNOLOGY
HUMAN RESOURCES
TECHNOLOGY
PROCUREMENTPROCUREMENT
INBOUND LOGISTICS
MARKETING & SERVICES
OUTBOUND LOGISTICSOPERATIONS SERVICEINBOUND
LOGISTICSMARKETING & SERVICES
OUTBOUND LOGISTICSOPERATIONS SERVICE
Firm InfrastructureFirm InfrastructureStrengths:• Brand recognition• Brand recognition• #1 in retail fast food industry• LeadershipLeadership• Financial Strength• Company image• Intellectual property• Franchising
Weaknesses:• LawsuitsLawsuits• Company image• Culture insensitivities
MD’s Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTURE
Brand recognition #1 in retail fast food industry Leadership Financial Strength Financial Strength Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities
HUMAN RESOURCES
TECHNOLOGY
PROCUREMENT
STRENGTH
WEAKNESSINBOUND LOGISTICS
MARKETING & SERVICES
OUTBOUND LOGISTICSOPERATIONS SERVICE
WEAKNESS
Inbound LogisticsInbound LogisticsStrengths:• Economies of scale
– Pass value to customer (i.e. $1 menu)• Just-in-time order & deliveryJust t e o de & de ve y• Sustainable packaging• Renewable resources
P k i i i (82% bl )– Packaging composition (82% renewable resources)– Oil recycling (diesel oil)
• Supply chain controly• Quality control
– Freight truck inspections– Random auditsRandom audits
Weaknesses:• Media backlash
MD’s Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTURE
Brand recognition #1 in retail fast food industry Leadership Financial Strength Financial Strength Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities
HUMAN RESOURCES
TECHNOLOGY
PROCUREMENTEconomies of
l
Just-in-time order & delivery
PROCUREMENT
STRENGTH
scaleSustainable packagingRenewable resourcesSupply chain Supply chain control
Quality controlMedia/PR
INBOUND LOGISTICS
MARKETING & SERVICES
OUTBOUND LOGISTICSOPERATIONS SERVICEWEAKNESS
OperationsOperationsStrengths:
O li & it ki k j b li ti • On-line & on-site kiosk job application systems
• 2nd largest employer in the U.S.2 largest employer in the U.S.• Reinforced information systems • Wireless headsets• Wi-Fi offered in all locations• R&D in target consumer demands and
trendstrends• Corporate guidelines imposed on
franchisees• Franchisees must purchase supplies from
McD’s
OperationsOperationsWeaknesses:
Hi h t ( th 100%)• High turn-over (more then 100%)• 90 second drive-thru rule (unsuccessful)• Impersonal drive-thru greeters • Impersonal drive-thru greeters
(telemarketer like, person is not in store)
MD’s Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTURE
Brand recognition #1 in retail fast food industry Leadership Financial Strength Financial Strength Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities
HUMAN RESOURCES
Just in time order
Job appliation systems2nd largest U.S. employerHigh turn-overReinforced IT systems
TECHNOLOGY
PROCUREMENTEconomies of scaleSustainable
Just-in-time order & delivery
Reinforced IT systemsWireless headsetsWi-FiDrive-thru voiceFranchsor purchase agreement
STRENGTH
Sustainable packagingRenewable resourcesSupply chain control
R&D based on consumer demandsCorp guidelines for Franchisees90 second drive-thru rule
INBOUND LOGISTICS
MARKETING & SERVICES
OUTBOUND LOGISTICS
OPERATIONS SERVICEWEAKNESS
Quality controlMedia/PR
Outbound LogisticsOutbound Logistics
• Distributor agreementsg• Quality control
– Freight truck inspectionsrandom audits– random audits
• Refrigerated trucks• Reinforced Information Systemse o ced o at o Syste s
– Cashier– Assembly Line
Order fulfillment– Order fulfillment• Just in time order and delivery
– Ensuring freshnessg• Packaging quality reinforces freshness
– Hot/Warm food
MD’s Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTURE
Brand recognition #1 in retail fast food industry Leadership Financial Strength Financial Strength Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities
HUMAN RESOURCES
Just in time order
Job appliation systems2nd largest U.S. employerHigh turn-overReinforced IT systems Refridgerated trucks
TECHNOLOGY
PROCUREMENTEconomies of scaleSustainable
Just-in-time order & delivery
Reinforced IT systemsWireless headsetsWi-FiDrive-thru voiceFranchsor purchase agreement
Refridgerated trucksReinforced ITJust-in-time order & delivery
Distributor agreementsQC
STRENGTH
Sustainable packagingRenewable resourcesSupply chain control
R&D based on consumer demandsCorp guidelines for Franchisees90 second drive-thru rule
QCPackaging
INBOUND LOGISTICS
MARKETING & SALES
OUTBOUND LOGISTICS
OPERATIONS SERVICEWEAKNESS
Quality controlMedia/PR
Marketing & SalesMarketing & Sales
Strengths:Strengths:• Product
– Health and wellness campaign & product p g pofferings
– Consumer and market researchP i• Price– McValue Dollar Menu
Party pack– Party pack• Promotion
– Disney and Nickelodeon license agreementsy g– Coca-Cola endorsement– “Feeding the athletes” Olympic sponsorship
Marketing & Sales (cont’d)Marketing & Sales (cont d)
Strengths:Strengths:• Place
– New upscale MD’sp– MD’s goes “green”– McCafe– Wi-Fi– McDonald’s Play Place
• Ronald McDonald• Community outreachCommunity outreach
Marketing & Sales (cont’d)Marketing & Sales (cont d)
Weakness:Weakness:• “Supersize Me” movie• Media/PR• Adaptation to global culture and customs• Product failures
MD’s Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTURE
Brand recognition #1 in retail fast food industry Leadership Financial Strength C i
HUMAN
Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities
Job appliation systemsHUMAN
RESOURCES
TECHNOLOGY
E i f
y2nd largest U.S. employerHigh turn-over
Just-in-time order & delivery
Reinforced IT systemsWireless headsetsWi-FiDrive-thru voice
Refridgerated trucksReinforced ITJust-in-time order & delivery
Consumer ResearchMcValue Dollar MenuParty Packs
PROCUREMENT
Economies of scaleSustainable packagingRenewable resourcesSupply chain control
Quality controlMedia/PR
Franchsor purchase agreement
R&D b d
Distributor agreementsQCPackaging
Party PacksCartoon AffiliationsCokeOlympic SponsorUpscale MD'sGoing GreenM C f
STRENGTH
R&D based on consumer demandsCorp guidelines for Franchisees90 second drive-thru
l
McCafeWi-FiMD's Play PlaceRonald McDonald"Supersize Me"Media/PR
INBOUND LOGISTICS
MARKETING & SALES
OUTBOUND LOGISTICS
OPERATIONS SERVICEWEAKNESS
rule Global expansion issuesProduct failures
ServiceServiceStrengths:• Fast food service• Order accuracyy• Clean environment• Friendly customer servicey
Weaknesses:Weaknesses:• Lack of customer service• Employee apathyEmployee apathy• Dissatisfied customers
MD’s Value Chain AnalysisMD s Value Chain AnalysisFIRM INFRASTRUCTURE
Brand recognition #1 in retail fast food industry Leadership Financial Strength C i
HUMAN
Company image Intellectual property Franchising Lawsuits Company image Culture insensitivities
Job appliation systemsHUMAN
RESOURCES
TECHNOLOGY
E i f
y2nd largest U.S. employerHigh turn-over
Just-in-time order & delivery
Reinforced IT systemsWireless headsetsWi-FiDrive-thru voice
Refridgerated trucksReinforced ITJust-in-time order & delivery
Consumer ResearchMcValue Dollar MenuParty Packs
PROCUREMENT
Economies of scaleSustainable packagingRenewable resourcesSupply chain control
Quality controlMedia/PR
Franchsor purchase agreement
R&D based on
Distributor agreementsQCPackaging
Party PacksCartoon AffiliationsCokeOlympic SponsorUpscale MD'sGoing GreenM C f
Fast food service
STRENGTH
R&D based on consumer demandsCorp guidelines for Franchisees90 second drive-thru rule
McCafeWi-FiMD's Play PlaceRonald McDonald"Supersize Me"Media/PR
Order accuracyClean environmentFriendly customer serviceLack of customer service
INBOUND LOGISTICS
MARKETING & SALES
OUTBOUND LOGISTICSOPERATIONS SERVICE
WEAKNESSGlobal expansion issuesProduct failures
Employee apathyDissatisfied customers
Core CompetenceCore Competence
• McDonald’s strength lies in the operations and firm i f infrastructure.
• McDonald’s core competency is the production and d li d f ff d bl f d t l b f delivery speed of affordable food to a large number of customers to support a low cost, high speed, and consistent quality strategy
• McDonald’s strategy is supported by its strong financial resources, brand image, market leadership, buyer supplier relations, and product value. p
Competitive AdvantageCompetitive Advantage
• #1 Fast food restaurant in industryy• Customers• Value and affordable menu• Convenience• Franchisee base
Fun FactsFun Facts…
• Aprox.. 9 million pounds fries served p 9 pdaily
• 380 sesame seeds on a sesame bun• Approx. 82% of consumer packaging is
made from renewable materialsC t il i t bi di l f l• Convert oil into biodiesel fuel
• Logo differs between “green” locations and traditional locations (green and traditional locations (green background vs. red color)
• Beer served in Germany McDonald’sy