Презентація "McDonald’s Corporation"

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Слайд #1
McDonald’s Corporation
A Strategic Management Case Study
www.mcdonalds.com/
Matthew O’Malley
Spenser Ouellette
Kristi Plourde
Robert Roy


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Overview
Company Overview
A Brief history of McDonald’s
Existing Mission and Vision
Existing Objectives and Strategies
Current Issues
New Mission and Vision
External Assessment
Industry analysis
Opportunities and threats
EFE Matrix
CPM Matrix
Internal Assessment
Strengths and weaknesses
Financial Condition
IFE Matrix
Strategy Formulation
SWOT Matrix
Space Matrix
IE Matrix
Grand Strategy Matrix
Matrix Analysis
QSPM Matrix
Strategic Plan for the Future
Objectives
Strategies
Implementation Issues
EPS/EBIT
Evaluation
McDonald’s 2008 Update
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Who We Are
Headquartered in Oak Brook, Illinois.
World’s largest foodservice retailing chain.
Known for its burgers and fries.
Offers a standard menu at all locations, though some locations may have some variation based on geographic variations in taste preference.
Operates over 31,370 fast food restaurants in over 118 countries, employing 390,000 people.
A majority of the restaurants are operated by franchisees.
McDonald’s owns the land used for each of the franchises, then builds and secures a long-term lease for the restaurant site.
Franchisees then provide a portion of capital by investing in the equipment, signs, seating and décor of their restaurant business.
The company also operates restaurants under the brand name 'The Boston Market‘, acquired in May of 2000.
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What We Sell
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Where We Are


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History
Dec 1948: The first McDonald’s restaurant is opened in San Bernardino, California by brothers Richard and Maurice McDonald. Offers burgers, fries, milk shakes, soft drinks, and apple pie.
1954: Ray Kroc, a milkshake machine salesman, suggests nationwide franchising and acts as a franchising agent for the brothers.
1955: The first restaurant run by Ray Kroc opens in Des Plaines, Illinois. Several problems arise in adapting the system used by Richard and Maurice to the new restaurant. First logo, Speedee, is introduced.
1956: Kroc has to repurchase the franchise rights for the Cook County restaurant. They had been previously sold to the Frejlack Ice Cream Co. Fred Turner is hired to oversee operations.
1957: Year-end sales for close to 40 restaurants- almost $4.5 million.
1958: The 100 millionth hamburger is sold. Sales top $11 million. There are 34 restaurants in existence.


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History (cont.)
1959: Kroc opens 67 new restaurants, bringing the total to 100 franchises. They begin advertising on billboards.
1960: Look for the Golden Arches becomes the new slogan. Fifth anniversary of the company is celebrated, and the 200th restaurant is opened. Sales reach $38 million.
1961: Kroc buys out the McDonald brothers for $2.7 million and opens his first Hamburger University, for the training of franchisees
1962: The Speedee logo is replaced by the Golden Arches as the company logo. Advertises nationally, for the first time, in Life magazine.
1963: The 500th McDonald’s is opened. The fish filet sandwich is added to the menu. Ronald McDonald is introduced.


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History (cont.)
1965: Stock goes public in celebration of the 10th anniversary of the company. Ads start showing on network television.
1966: The first public shareholders meeting is held. Sales hit $200 million.
1967: The first restaurants outside the US open in Canada and Puerto Rico.
1968: The Big Mac is added to the menu. The 1,000th store is opened in Des Plaines.
1969: International division of the company is formed. McDonald’s is listed on the Midwest and Pacific stock exchanges.


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History (cont.)
1970: The 1,500th restaurant is opened in New Hampshire. New advertising slogan becomes, You deserve a break today, so get up and get away to McDonald’s.
1971: Company headquarters are moved from Chicago to Oak Brook, Illinois. Restaurants are opened for the first time in Australia, Germany, Guam, Holland, and Japan.
1972: McDonald’s is a $1 billion corporation. Surpasses the Army as the nation’s biggest dispenser of meals.
1973: The Egg McMuffin is added to the menu as a breakfast item.
1974: The first Ronald McDonald House is opened. Sales approach $2 billion. Fred Turner is named President and CEO.


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History (cont.)
1976: Sales exceed $3 billion, and the 4,000th store is opened. Directors declare the first cash dividend.
1977: A variety of breakfast foods are added to the menu.
1979: Happy Meals are added to the menu. Half of all stores have a drive-thru window.
1980: The 6,000th restaurant is opened. 25th anniversary is celebrated. Mike Quinlan becomes president and CEO of McDonald’s USA, which is a new position.
1981: The first restaurants are opened in Denmark, the Philippines, and Spain.
1982: Dividends per share rise by 32%. Mike Quinlan becomes president and COO as well as keeping his position with McDonald’s USA.


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1983: Chicken McNuggets are introduced on the menu.
1984: Ray Kroc, founder and senior chairman of the board of directors, dies.
1984: Year end sales pass $10 billion. Ed Rensi becomes president of McDonald’s USA. Open restaurants in Andorra, Finland, Taiwan and Wales, and the 8,000th restaurant is opened.
1985: The McDLT is introduced, a hamburger sold with lettuce and tomato in a separate compartment to keep them cool.
1986: McDonald’s offers comprehensive listings of ingredients in all its foods to the public. Mike Quinlan is elected CEO, and restaurants open in Argentina, Cuba, and Turkey.
History (cont.)


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History (cont.)
1987:Tossed salads are added to the menu, to satisfy the public’s desire for lighter, more nutritious fast-foods.
1988: An agreement is signed to build the first McDonald’s in Moscow. Sales exceed $16 billion. Restaurants are opened in Hungary, Korea, and Yugoslavia.
1990: The world’s biggest McDonald’s, with seating for 700, is opened in Moscow.
1991: The McLean Deluxe sandwich is introduced and added to the menu after years of research. The company diversifies for the first time, introducing indoor playgrounds, with the first in Chicago.
1994: Stella Liebeck from Albuquerque, New Mexico sues McDonald’s for almost $2.9 million for burns from spilling a hot McDonald’s coffee on her lap. She receives $640,000 from the suit.
1996: The first airborne McDonald’s, the McPlane, takes off from Switzerland.
1996:The Arch Deluxe hamburger is introduced.


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History (cont.)
1996: Net profits over the last five years have grown at a compound annual rate of 12%. Cut cost of opening a new franchise by 30% through standardization and reliance on drive-thrus.
1997: Develop plans to lower prices in order to protect market share from further encroachment, mostly by Burger King. New promotion, the Teenie Beanie Babies, is the most effective marketing plan in McDonald’s history.
1998: The company diversifies outside of hamburger sales with its purchase of a minority stake in a Denver based chain of casual Mexican restaurants, Chipotle Mexican Grill.
1999: Continues diversification with the purchase of Donatos Pizza Inc. This was later bought back by the original owner in 2003.
2000: In its largest acquisition ever, McDonald’s purchases Boston Market, Inc. for $173.5 million. Restaurant is opened in French Guiana.


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History (cont.)
2001: Faced with a class-action lawsuit for advertising its fries and hash browns as vegetarian, even though they include beef flavoring.
2001: About 50 new stores are opened in Mexico. McDonald’s announces its intent to invest $67 million in the Philippines by 2005.
2002: McDonald’s apologizes for not listing beef flavoring as an ingredient in its hash browns and fries and offers to donate $10 million to vegetarian groups.
2003: Post their first quarterly loss in over 40 years. Slash spending by 33%, and new store openings are reduced from 1,000 the previous year to 360.


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History (cont.)
2004: Introduces the “Go Active! Happy Meal,” consisting of a salad, water, stepometer, and an exercise booklet.
2005: Net income increases 14% to $2.6 billion, with record annual sales of $20.46 billion.
2005: Chipotle Mexican Grill Inc., in which McDonald’s has a 92 percent ownership stake, files an initial public offering with the Securities and Exchange Commission.
2006: Plans are established to open 125 restaurants per year in China, bringing the total locations there to 1,000 by 2008.


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Mission Statement
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.


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Vision Statement
We aspire to end hunger one meal at a time by providing low cost- high quality nutritional food globally.
Corporate Responsibility Statement
McDonald's 2008 Corporate Responsibility Report
It all comes down to the food. That’s what McDonald’s is all about. The food we serve…how and where we serve it…the welfare of our employees and our suppliers’ employees…where the food comes from…and so much more. Running restaurants is a multi-faceted endeavor, but ultimately, it all comes back to the food.


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Brand Strategy
2003-2008 “I’m Lovin’ it” is an international branding campaign by McDonald’s Corp. It was created by Heye & Partner, a longtime McDonald's agency based in Unterhaching, Germany. It was the company's first global advertising campaign.
Target Market is Children/ Elderly People
Happy Meals and Coffee.
http://www.youtube.com/watch?v=5fbrnj2Ki4s


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Menu
http://www.mcdonalds.com/usa/eat/mcdonalds_menu.html
Nutrition Information
http://nutrition.mcdonalds.com/nutritionexchange/nutritionexchange.do


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Nutrition Information
1st restaurant to place its information in an easy-to-read graphic format on their packaging


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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 McDonald’s System
McDonald’s 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 McDonald’s, we hold ourselves and conduct our business to high standards of fairness, honesty, and integrity. We are individually accountable and collectively responsible.
http://www.crmcdonalds.com/publish/csr/home/about/values.html


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Values Continued
We strive continually to improve
We are a learning organization that aims to anticipate and respond to changing customer, employee and system needs through constant evolution and innovation.
We grow our business profitably
McDonald’s 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.
We give back to our communities
We take seriously the responsibilities that come with being a leader. We help our customers build better communities, support Ronald McDonald House Charities, and leverage our size, scope and resources to help make the world a better place.
http://www.crmcdonalds.com/publish/csr/home/about/values.html


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McCafé
1993: First McCafé launched in Melbourne, Australia. These reflect a consumer trend towards espresso coffees.
Turned out to generate 15% more revenue than regular McDonald’s.
Largest coffee shop brand in Australia and New Zealand by 2003.
First US location was in Chicago, opened in 2001, after 300 locations had opened worldwide.
By 2002, had spread to 13 countries.


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McCafe
Features a relaxed adult atmosphere. Offers customers a variety of specialty coffee drinks along with muffins, pastries and sandwiches.


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McDonald’s Franchise
Most Owner/Operators enter the System by purchasing an existing restaurant, either from McDonald’s or from a McDonald’s 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. McDonald’s does not offer financing but they work with many national lending institutions.
McDonald’s owns all buildings and properties.


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Ray Kroc Formula for Success:
Quality
Service
Cleanliness
Value


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Ray Kroc- Business Model
Ray Kroc- Developed a business model known as “The Three Legged Stool.” Owner/Operator, Suppliers and Employees
Just as all three legs of a stool need to be equal to support the weight, all three elements of the McDonald’s system are equally important partners in McDonald’s success.


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Hamburger University Facility
In 1993, McDonald’s invested $40 million in Hamburger University, a 130,000- square foot facility on an 80-acre campus located at McDonald’s Corporate in Oak Brook, IL.
13 teaching room
300 seat auditorium
12 interactive education team rooms
3 kitchen labs
State of the art service training labs


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Hamburger University
Hamburger University has become the company’s global center of excellence for McDonald’s operations training and leadership development.
McDonald’s training mission is to be the best talent developer of people with the most committed individuals to Quality, Service, Cleanliness and Value in the world.
First company to develop a global training center


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Hamburger University cont.
Hamburger University students can earn credit toward a college degree through their course work.
Ray Kroc once said, “If we are going to go anywhere, we’ve got to have talent. And, I’m going to put my money in talent.”
McDonald’s spends $1 Billion on training and development every year.


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Ronald McDonald House Charities
The mission of Ronald McDonald Charities is to create, find and support programs that directly improve the health and well being of children.
Ronald McDonald Houses are located all around the world and provide families a way to stick together in times of need when their children are ill.
Service Provided:
Home-cooked meals
Private bedrooms
Playrooms for children
Special suites for children with suppressed immune systems
Accredited education programs
Recreational activities
Non-clinical support services
Sibling support services


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World Children Day
McDonalds restaurants around the world celebrate world children’s day with fundraising activities. In 2006, McDonalds raised more than $25 million worldwide to benefit Ronald McDonald House Charities and other local children’s charities.


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Mom Knows Best
“Loved by kids, approved by mom” is one of McDonalds important goals. McDonalds created a global moms advisory panel of 10 mothers from 7 countries to provide input and guidance on a broad range of topics, including their food to help better serve the needs of moms and families around the world.


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Responsible Suppliers
“Only purchase from suppliers who meet our stringent food safety standards, but who also share our commitment to social responsibility and sustainability.”
-animal welfare
-rain forest and antibiotics policies
-supplier social accountability program


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Going Green
McDonald’s has taken the initiative to incorporate used cooking oil into their operations.
In several countries across the McDonald’s System, restaurants are recycling their used cooking oil to sell to companies that specialize in refining the product into clean burning diesel for consumer use.
In 2006, McDonalds in the U.S has began developing green restaurants.
Floor Tiles with a high recycled content
Efficient Lighting Products, Skylights and Daylight controls
High efficient rooftops
Water conserving toilets


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Popular Promotions
Toys with Happy Meals
Cars
Pirates of the Caribbean
Games- Monopoly/ Uno –Win various prizes and trips
Collectibles- Coca Cola Glasses, Beanie Babies
Olympic Games- Global partner of the Olympic games- reflects our commitment of the importance of sports and physical activities.
World Champions- 1,400 children from 51 countries had the opportunity to meet the world’s best soccer players at the 2006 FIFA World Cup.


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Supersize Me Scandal
It all started with a lawsuit against the burger giant by a group of obese teenagers, the case alleged that McDonald’s had created a national epidemic of obese children by misleading people into thinking their food was nutritious. 2004
Morgan Spurlock used this lawsuit as his inspiration for his hit film Supersize Me which proved to be scandalous for McDonalds. It was a 30 day documentary that focused on the increase in obesity in America due to McDonalds fast food.
http://www.youtube.com/watch?v=I1Lkyb6SU5U


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Other Important Facts
53% Household income is spent outside of the home
2006 National Restaurant Association Quick Service Restaurant Sales increased 5%
The Global “Informal Eating Out” market is expected to Grow $50 Billion in 2007 and over
200 Billion the next 4 years
Breakfast Food Industry $77.6 Billion
End of 2006- McDonalds had 31,000 locations word-wide and opened 744 restaurants.


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2006 Objectives
Grow Market Share
Create long-terms profitable growth for share holders.
Maintain current debt-to capital levels to 35-40%
Reduce the percentage of company owned units.
Decrease selling, general and administration expenses.


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External Assessment


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Global Industry Growth


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U.S Industry Growth


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Global Segmentation by Type


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U.S Segmentation by Type


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Competitors
Trademarks are property of respective brands


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External Audit- Opportunities
New Products & Services
Beverage Market
Growth of Franchise Restaurants
Demand for Organic Products
International Expansion
Conservation (going green)


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External Audit-Threats
Change in Commodity Prices
Food Safety and Food Borne Illness Concerns
Economic Slowdown
Growing Health Consciousness
Intense Competition (dine-in restaurants, Burger King)
Legal Challenges (McDonald’s faces many lawsuits)


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McDonalds
Burger King
Wendy's
Critical Success factors
Weights
Rating
Weighted Score
Rating
Weighted Score
Rating
Weighted Score
 
0.0 to 1.0
1 to 4
 
1 to 4
 
1 to 4
 
Market Share
0.18
4
0.72
3
0.54
2
0.36
Financial Position
0.12
4
0.48
3
0.36
3
0.36
Global Expansion
0.09
4
0.36
3
0.27
2
0.18
Customer Service
0.09
2
0.18
2
0.18
2
0.18
Advertising
0.07
4
0.28
3
0.21
2
0.14
Price Competitiveness
0.07
4
0.28
3
0.21
2
0.14
Product Innovation
0.11
2
0.22
3
0.33
3
0.33
Product Quality
0.1
1
0.1
2
0.2
4
0.4
Customer Satisfaction
0.08
3
0.24
3
0.24
4
0.32
Management
0.09
4
0.36
3
0.27
3
0.27
Totals
1
 
3.22
 
2.81
 
2.68
McDonalds Competitive Profile Matrix


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Key External Factors
Weights
Rating
Weighted Score
 
0.0 to 1.0
1 to 4
 
Opportunities
 
 
 
New Products & Services
0.1
3
0.3
Beverage Market (frosties)
0.08
2
0.16
Growth of Franchise Restaurants
0.09
3
0.27
Demand for Organic Products
0.06
1
0.06
International Expansion
0.1
4
0.4
Conservation (going green)
0.07
1
0.07
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
Threats
 
 
0
Change in Commodity Prices
0.07
3
0.21
Food Safety and Food Borne Illness Concerns
0.07
4
0.28
Economic Slowdown
0.1
4
0.4
Growing Health Consciousness
0.08
2
0.16
Intense Competition (din-in restaurants, Wendy's)
0.09
4
0.36
Legal Challenges (McDonalds faces many lawsuits)
0.09
3
0.27
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
Totals
1
 
2.94
External Factor Evaluation Matrix
McDonalds


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Internal Assessment


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McDonald's Performance Chart 2006
http://moneycentral.msn.com/investor/charts/chartdl.aspx?iax=1&Symbol=MCD


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Financial Highlights
Earnings per share from continuing operations have increased 13% in 2006.
Cash from operations has averaged more than $4 billion per year for the last three years.
McDonald’s is focusing on the Brand McDonalds. They disposed of Chipotle Mexican Grill in 2006, received $300 million in cash and 18 million shares of McDonald’s stock.


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Financial Highlights (Cont.)
Revenue Grew 9% to a record 21.6 Billion
2006 21.6B
2005 19.8B
2004 18.6B
Three Year Compound Annual Return to Shareholders
MCD 24%
S&P 10%
DJIA 8%

McDonalds more than doubled its annual return to shareholders than the S&P 500 and the Dow Jones Industrial Average.


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Financial Highlights (Cont.)
Dividends have increased every year since McDonalds first paid in 1976, nearly doubled since 2004.
2006 $1.00
2005 $0.67
2004 $0.55
Cash returned to shareholders:
2006 4.9B
2005 2.1B
2004 1.3B
2003 0.9B
Totaled more than $9B between 2003-2006


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Income Statement


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Balance Statement
http://finance.yahoo.com/q/bs?s=MCD&annual


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Liquidity Ratios
Current Ratio
1.76
Quick Ratio
1.72
Leverage Ratios
Debt-to-Total Assets Ratio
0.29
Debt-to-equity Ratio
0.54
Long-term debt-to-equity Ratio
0.54
Times-Interest-earned Ratio
11.36
Activity Ratios
Inventory Turns
185.90
Fixed Assets Turnover
0.70
Total Assets Turnover
0.72
Accounts Receivable Turnover
25.90
Average Collection Period
14.10
Profitability Ratios
Gross Profit margins
0.33
Operating Profit Margin
0.22
Net Profit Margin
0.17
Return on Total Assets
0.12
Return on Stockholders equity
0.23
Earning per share
2.94
Price-earnings Ratio
15.06
Growth Rations (yearly)
Sales
9.30%
Net Income
36.20%
Earnings per share
16.75%
Dividends per share
50.00%
Ratios


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Growth Rates %
Industry
SP-500
Sales (Qtr vs. year ago qtr)
7.5
8.3
Net Income (YTD vs. YTD)
-9.1
16
Net Income (Qtr vs. year ago qtr)
42.5
6.6
Sales (5-Year Annual Avg.)
8.89
13.34
Net Income (5-Year Annual Avg.)
13.16
20.14
Dividends (5-Year Annual Avg.)
26.63
10
Price Ratios
 
 
Current P/E Ratio
24.8
21.9
P/E Ratio 5-Year High
30.4
25.9
P/E Ratio 5-Year Low
13
7.4
Price/Sales Ratio
2.1
2.38
Price/Book Value
3.02
3.39
Price/Cash Flow Ratio
5.4
10.6
Profit Margins
 
 
Gross Margin
31
33.8
Pre-Tax Margin
12.1
17.5
Net Profit Margin
8.1
12.4
5Yr Gross Margin (5-Year Avg.)
30.5
33.5
5Yr Pretax Margin (5-Year Avg.)
12.3
16.8
5Yr Net Profit Margin (5-Year Avg.)
8.5
11.7
Industry
Ratios


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Financial Condition
 
 
Debt/Equity Ratio
0.69
1.19
Current Ratio
0.4
0.9
Quick Ratio
0.4
0.7
Interest Coverage
13.9
43.3
Leverage Ratio
1.7
4
Book Value/Share
3.58
16.25
Investment Returns %
 
 
Return On Equity
15.1
20.8
Return On Assets
4
5.8
Return On Capital
5.4
7.7
Return On Equity (5-Year Avg.)
11.1
14.5
Return On Assets (5-Year Avg.)
3.1
5.1
Return On Capital (5-Year Avg.)
4.3
6.8
Management Efficiency
 
 
Income/Employee
3,150
37,696
Revenue/Employee
48,925
343,930
Receivable Turnover
29.9
9.5
Inventory Turnover
34.5
5.6
Asset Turnover
0.7
0.6
Industry
Ratios
(Cont.)


Слайд #60
O’Malley, Ouellette, Plourde, & Roy 2009
60
Net Worth Analysis
1. Stockholders' Equity + Good Will = 15458.30 + 2073.6 $3,531.90
2. Net Income X 5 = 3544.20 X 5 $17,721.00
3. Share Price = 44.33/EPS 2.44 = 18.16 X Net Income 3544.2 $64,362.67
4. Number of Shares Outstanding X Share Price = 1204 X 44.33 $53,373.32
Method Average $34,747.22


Слайд #61
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61
Internal Audit- Strengths
Strong Global Presence (located in over-
100 countries)
Strong Real Estate Portfolio
Brand Recognition
Revenue Growth 9% (Above Industry Average of 7.5%)
The Ronald McDonald House (Children Charity)
Systemization and Duplication (Consistency)


Слайд #62
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Internal Audit-Weaknesses
Public Perception (perceived as a contributor to societies obesity problem)
Product Innovation
Advertising (targets young children)
Customer Service
Market Saturation (more difficult to add new stores)
Labor Turnover


Слайд #63
O’Malley, Ouellette, Plourde, & Roy 2009
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Key Internal Factors
Weights
Rating
Weighted Score
 
0.0 to 1.0
1, 2, 3 or 4
 
Internal Strengths
 
3 or 4
 
Strong Global Presence (located in over 100 countries)
0.09
4
0.36
Strong Real Estate Portfolio (franchises, land, buildings)
0.09
4
0.36
Brand Recognition (Ronald McDonald is as famous as Mickey Mouse)
0.11
4
0.44
Revenue Growth 9% (Above Industry Average of 7.5%)
0.11
4
0.44
The Ronald McDonald House (Children Charity)
0.06
4
0.24
Systemization and Duplication Process (consistency)
0.09
4
0.36
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
Internal Weaknesses
 
1 or 2
 
Public Perception (perceived as a contributor to societies obesity problem)
0.09
1
0.09
Product Innovation
0.08
2
0.16
Advertising- targets young children (many countries ban unhealthy advertisements)
0.07
2
0.14
Customer Service
0.08
2
0.16
Market Saturation (more difficult to add new stores)
0.07
2
0.14
Labor Turnover
0.06
1
0.06
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
 
 
 
0
Totals
1
 
2.95
Internal Factor Evaluation Matrix
McDonald's


Слайд #64
O’Malley, Ouellette, Plourde, & Roy 2009
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Strategic Formulation


Слайд #65
O’Malley, Ouellette, Plourde, & Roy 2009
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SWOT Matrix
SO Strategies
WO Strategies
ST Strategies
WT Strategies
1. Develop New Products & Services For Global Markets. (S1, O1)
1. Advertise Organic Products to Older Demographic. (W3, O4, O6)
1. Launch Marketing Campaign for Ronald McDonald House to increase Brand Recognition and Customer Loyalty. (S5, S3, T3, T5)
1. Research and Develop products that quell Growing Health Concerns. (W1, T2, T4)
2. Develop Green Packaging for all Stores. (S6, O6)
2. Spend more money on Research and Development to create new products and services. (W2, O1)
2. Develop alternatives to existing menu that can be easily implemented and don't rely on more expensive commodities. (S6, T1)
2. Increase spending on Customer Service efforts to decrease legal challenges. (W4, T6)
3. Integrate into new territories. (S1, S4, O5)
3. Create an organic menu. (W2, O1)
 
 


Слайд #66
O’Malley, Ouellette, Plourde, & Roy 2009
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McDonald’s SPACE Matrix
FS
+6
+1
+5
+4
+3
+2
-6
-5
-4
-3
-2
-1
-6
-5
-4
-3
-2
-1
+1
+2
+3
+4
+5
+6
ES
CA
IS
Conservative
Aggressive
Defensive
Competitive


Слайд #67
O’Malley, Ouellette, Plourde, & Roy 2009
67
Grand Strategy Matrix


Слайд #68
O’Malley, Ouellette, Plourde, & Roy 2009
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BCG Matrix
McDonalds stores compete in the same market whether they are corporate owned or franchised.
No Value in producing a BCG Matrix
McDonalds would be considered a Star.


Слайд #69
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IE Matrix
IFE Scores
Hold And Maintain
Strong
Average
Weak
3-4
2-2.99
1-1.99
High 3-4
I
II
III
EFE Scores
Medium 2-2.99
IV
V
VI
Low 1-1.99
VII
VIII
IX


Слайд #70
O’Malley, Ouellette, Plourde, & Roy 2009
70
Matrix Analysis
Alternative Strategies
IE
SPACE
GRAND
COUNT
Forward Integration
 
X
 
1
Backwards Integration
 
X
 
1
Horizontal Integration
 
X
 
1
Market Penetration
X
X
 
2
Market Development
 
X
 
1
Product Development
X
X
 
2
Concentric Diversification
 
X
X
2
Conglomerate Diversification
 
X
X
2
Horizontal Diversification
 
X
X
2
Joint Venture
 
 
X
2
Retrenchment
 
 
 
0
Divestiture
 
 
 
0
Liquidation
 
 
 
0


Слайд #71
O’Malley, Ouellette, Plourde, & Roy 2009
71
Possible Strategies
Create an Organic Menu.
A. Market Penetration
B. Product development & related diversification
Spend more money on research and development to create new products and services and increase the efficiency of operation.
A. Product development & related diversification


Слайд #72
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Option 1
Option2
 
 
 
 
 
Create an Organic
Spend more money on R&D to create new products
 
 
menu.
 
and services and increase the efficiency of operations
Key External Factors
 
Weight
AS
TAS
AS
TAS
Opportunities
 
 
 
1 to 4
 
1 to 4
 
New Products and Services
 
0.1
4
0.4
4
0.4
Beverage Market (frosties)
 
0.08
3
0.24
2
0.16
Growth of Franchise Restaurants
 
0.09
 
0
 
0
Demand for Organic Products
 
0.06
4
0.24
2
0.12
International Expansion
 
0.1
 
0
 
0
Conservation (Going Green)
 
0.07
4
0.28
3
0.21
Threats
 
 
 
 
 
 
 
 
Change in Commodity Prices
 
0.07
2
0.14
2
0.14
Food Safety and Food Borne Illness Concerns
0.07
 
0
 
0
Economic Slowdown
 
0.1
2
0.2
3
0.3
Growing Health Consciousness
 
0.08
4
0.32
3
0.24
Intense Competition (Dine-In Restaurants, Wendy's)
0.09
4
0.36
3
0.27
Legal Challenges (8.8million lawsuits)
 
0.09
 
0
 
0
 
 
total should be 1.0
1
 
 
 
 
Quantitative Strategic Planning Matrix-QSPM


Слайд #73
O’Malley, Ouellette, Plourde, & Roy 2009
73
Key Internal Factors
 
 
  Organic
Menu
  Increase $ on
Research & Development
Strengths
 
 
 
1 to 4
 
1 to 4
 
Strong Global Presence (located in over 100 countries)
0.09
4
0.36
4
0.36
Strong Real Estate Portfolio (land, buildings)
0.09
 
0
 
0
Brand Recognition (Ronald McDonald is as famous as Mickey Mouse)
0.11
4
0.44
4
0.44
Revenue Growth 9% (Above industry average 7.5%
0.11
 
0
 
0
The Ronald McDonald House (Children Charity)
0.06
 
0
 
0
Systemization & Duplication Process (consistency)
0.09
 
0
 
0
Weaknesses
 
 
 
 
 
 
 
Public Perception (perceived as a contributor to societies obesity problem)
0.09
4
3
0.27
Product Innovation
 
0.08
4
0.32
4
0.32
Advertising (targets young children)
 
0.07
 
0
 
0
Customer Service
 
0.08
 
0
 
0
Market Saturation (more difficult to add new stores)
0.07
 
0
 
0
Labor Turnover
 
0.06
 
0
 
0
 
 
total should be 1.0
 
1
 
 
 
 
 
 
 
 
 
 
3.3
 
3.23
QSPM (Cont.)


Слайд #74
O’Malley, Ouellette, Plourde, & Roy 2009
74
Future Plans


Слайд #75
O’Malley, Ouellette, Plourde, & Roy 2009
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Objectives
Objectives for 2007 and the next three years are:


Better restaurant operations
Branded affordability
Menu variety and beverage choice
Grow market share
Maintain debt-to-capital levels to 35-40%
Create long-term profitable growth for shareholders


Слайд #76
O’Malley, Ouellette, Plourde, & Roy 2009
76
Recommendations
Create an organic menu to satisfy the growing hunger for healthier foods. This will increase McDonald’s sales and
be a positive effective on its public image. $15,000,000
Spend more money on Research & Development to create new products and services and increase the efficiency of operations.
$10,000,000
Advertise organic products to the older demographic. $10,000,000
Increase spending on customer service efforts to decrease legal challenges.
$5,000,000
Develop green packaging for all stores. This will decrease McDonald’s operations expenses and create a better atmosphere in the long run.
$25,000,000
Total Costs= $65,000,000


Слайд #77
O’Malley, Ouellette, Plourde, & Roy 2009
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Going Organic
Organic Food sales are anticipated to increase an average of 18 percent each year from 2007 to 2010.
Organic food represents approximately 2.8% of overall food and beverage sales in 2006. The organic sector grew 20.9% in 2006.
Total US organic sales, including food and non-food products, were $17.7 billion in 2006 up 21% from 2005.


Слайд #78
O’Malley, Ouellette, Plourde, & Roy 2009
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O'Naturals Organic Fast Food
McDonalds “competition” in the organic segment.
Privately owned company.
Locations: 2 in Maine, 1 in Massachusetts, 1 in Arizona, 1 in Kansas.
Serves only organic food and beverages.
Easy acquisition for McDonalds if they pursue the organic segment of the fast food industry.


Слайд #79
O’Malley, Ouellette, Plourde, & Roy 2009
79
Implementation


Слайд #80
O’Malley, Ouellette, Plourde, & Roy 2009
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EPS/EBIT Analysis
Amount of money needed: $65,000,000
Stock Price as of 12/31/06: $41.61
Tax Rate: 35%
Interest Rate: 7%
# Shares Outstanding: 1,204,000,000
# Shares needed: 1,562,124


Слайд #81
O’Malley, Ouellette, Plourde, & Roy 2009
81
EBS/EBIT Analysis (Cont.)
 
Common Stock Financing
Debt Financing
 
 
Recession
Normal
Boom
Recession
Normal
Boom
 
 
EBIT
65,000,000
250,000,000
600,000,000
65,000,000
250,000,000
600,000,000
 
 
Interest
0
0
0
4,550,000
4,550,000
4,550,000
 
 
EBT
65,000,000
250,000,000
600,000,000
60,450,000
245,450,000
595,450,000
 
 
Taxes
22,750,000
87,500,000
210,000,000
21,157,500
85,907,500
208,407,500
 
 
EAT
42,250,000
162,500,000
390,000,000
39,292,500
159,542,500
387,042,500
 
 
#Shares
1,205,562,124
1,205,562,124
1,205,562,124
1,205,562,124
1,205,562,124
1,205,562,124
 
 
EPS
0.035045892
0.134791892
0.323500542
0.03259268
0.13233868
0.321047329
 
 
 
 
 
 
70 Percent Stock- 30 Percent Debt
70 Percent Debt- 30 Percent Stock
 
 
Recession
Normal
Boom
Recession
Normal
Boom
 
 
EBIT
65,000,000
250,000,000
600,000,000
65,000,000
250,000,000
600,000,000
 
 
Interest
4,550,000
4,550,000
4,550,000
3,185,000
3,185,000
3,185,000
 
 
EBT
60,450,000
245,450,000
595,450,000
61,815,000
246,815,000
596,815,000
 
 
Taxes
21,157,500
85,907,500
208,407,500
21,635,250
86,385,250
208,885,250
 
 
EAT
39,292,500
159,542,500
387,042,500
40,179,750
160,429,750
387,929,750
 
 
#Shares
1,205,093,487
1,205,093,487
1,205,093,487
1,204,468,637
1,204,468,637
1,204,468,637
 
 
EPS
0.032605354
0.132390144
0.321172178
 
0.033358901
0.133195457
0.322075427
 


Слайд #82
O’Malley, Ouellette, Plourde, & Roy 2009
82
Other Issues
Labor Turnover
Employee Retention
Cultural differences in international countries
Laws and regulations in international countries
Currency
Public Relation


Слайд #83
O’Malley, Ouellette, Plourde, & Roy 2009
83
Evaluation


Слайд #84
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Update-Current Strategy and Objectives 2007-2008
Our Plan to Win, with its strategic focus on "being better, not just bigger," has delivered even better restaurant experiences to customers and superior value to shareholders.
We have the world's best owner/operators, suppliers, and employees united in our commitment to customers.
We are leveraging greater consumer insight to deliver sustainable business results for the long-term benefit of our shareholders.


Слайд #85
O’Malley, Ouellette, Plourde, & Roy 2009
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McDonald’s Performance Chart 2006-2009
http://moneycentral.msn.com/investor/charts/chartdl.aspx?iax=1&Symbol=MCD


Слайд #86
O’Malley, Ouellette, Plourde, & Roy 2009
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McDonald’s Trivia
McDonald’s sell more than 1/3 of all the French fries sold in restaurants in the U.S.
McDonald’s restaurant will buy 54,000,000 pounds of fresh apples this year.
Nearly one in eight workers in the US has at some time been employed by McDonald’s.
More than 50,000 students from all over the world have graduated with “Bachelor of Hamburgerlogy” degrees from McDonald’s from Hamburger University.
Since its founding in 1955, McDonald’s has sold well over 100 billion hamburgers.
There is about 178 sesame seeds on a Big Mac bun.


Слайд #87
O’Malley, Ouellette, Plourde, & Roy 2009
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Слайд #88
O’Malley, Ouellette, Plourde, & Roy 2009
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Bibliography
McDonald’s Corporation-2007 Case Notes by Vijaya Narapareddy of University of Denver
McDonald’s Online www.mcdonalds.com/
2006 Annual Report
Graphics
Datamonitor
Global Fast Food Industry Profile 2008
US Fast Food Industry Profile 2008
Tony Gauvin
Wendy’s 2007- Strategic Management Case Study
Analyst Reports
Yahoofinance.com
moneycentral.msn.com
Organic Trade Association http://www.ota.com
O'Naturals
www.onaturals.com/
Business & Company Resource Center
McDonald’s Corp. Notable Corporate Chronologies. Online Edition. Thomson Gale, 2007. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.: Gale Group. 2009 http://galenet.galegroup.com/servlet/BCRC