[Type the company name]

McDonalds company analysis

Team Project

Prepared by: Students Name and Surname: Edita Ivanova,

Group: 3 11/8/2011

CONTENTS

INTRODUCTION 1. COMPANY ANALYSIS 1.1 Description of the firm (history, managers, mission, vision, values, main products and markets) 1.1.1. History 1.1.2. Managers 1.1.3. Mission. Vision. Values 1.1.4. Main Products and the markets 1.2 Financial analysis of McDonalds 1.3 Current strategy of McDonalds 1.4 Identification of strengths & weaknesses 1.5 Issues facing McDonalds 2. EXTERNAL ENVIRONMENT ANALYSIS 2.1 Analysis of McDonalds macro-environment 2.2 Analysis of industry (five forces framework) 2.3 Key strategic factors in the industry (strategic groups, market segments, critical success factors) 2.3.1 Strategic groups 2. 3.2. Market segments 2.4. Future scenarios 2.3.3 Critical success factors 2.5 Identification of opportunities and threats

3. DEVELOPMENT and RECOMMENDATIONS FOR IMPLEMENTATION OF STRATEGIC OPTIONS

CONCLUSIONS

INTRODUCTION

The goal of this paper work is to analyze McDonalds Incorporated company. During studies of International Marketing we have acquainted with the theoretical part of International Marketing what is the most important stage in the beginning every time confronting with the new subject. However, only accomplishing the practical tasks we can better understand the matter of discipline analyzing strategic audit of a concrete operating company. Our tasks of this paper work were to gather into equally divided groups of students and to work on a common goal in showing the degree to which we can collaborate together in analyzing the chosen company and building our general management competence. So, the broader tasks to reach the aim are:

to overview and analyze the literature concerning the subject of International Marketing; to describe the chosen company and the market it is operating in; to analyze principles of a selected company and existing strategies in it.

The object of our team project is McDonalds Incorporated recognized as a premier franchising business around the world, leading global food service retailer having over 32,000 local restaurants which serve its favourite foods World Famous Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin to more than 64 million people in 117 countries each day.

1. COMPANY ANALYSIS

1.1 Description of the firm (history, managers, mission, vision, values, main products and markets) 1.1.1. History

Everything has started when Patrick McDonald opened The Airdrome in 1937. This restaurant was located at the Monrovia Airport in Monrovia, California. At that time prices were much lower than it is today. Back to then the hamburgers were sold only for 10cents, and all-you-can-drink orange juice cost only 5cents. After 3years, in 1940 his two sons Mac and Dick (Maurice and Richard), relocate the whole building and open the restaurant with new name McDonalds Bar-B-Que Restaurant in San Bernardino, California. It was a typical drive-in featuring a large menu and car hop service. In 1948 McDonald brothers closed their restaurant temporarily. After 3months, in December the new, with a self-service drive-in, restaurant was opened. The menu was minimized and it consisted only from nine items (hamburger, cheeseburger, soft drinks, milk, coffee, potato chips and a slice of pie. After several years, in 1954, a multimixer salesman Ray Kroc enters into a McDonalds developing stage. He realized that taking an opportunity to become a franchising agent for a whole new concept of restaurant is an appropriate decision for his future. On April 15th 1955 the first McDonalds restaurant in Des Plaines, Illinois is opened. A one year later Fred Turner (future McDonalds Chairman) is hired as a counter man. After a while he became the head of McDonalds Operations which were responsible for the quality, service and cleanliness. The biggest event at that time in 1960 was the statement that McDonalds has sold 100 Million of hamburgers in more than 100 restaurants in America. A few years later in 1961 Hamburger University is opened. After this university students get a Bachelor degree of Hamburgerology.
1

The Business started to expand and in 1963 there were 5times more restaurant than in 1958. McDonalds reaches 500 restaurants. At the 10th Anniversary (1965) of McDonalds it issues the first public stock selling for $22.50 per share. In 1967 McDonalds starts the business internationally. Firstly, it goes to close neighbours, in Canada and Puerto Rico first restaurants are opened. Therefore, nowadays we can see McDonalds restaurants in 119 countries around the world. Another big change in McDonalds history was the first Drive-thru. It was opened in Sierra Vista, Arizona. As long as there were soldiers near Fort Huachuca who were not allowed to leave the car in

army fatigues, the McDonalds has solved this problem introducing a new service drive-thru. It became one of most successful implementation in services field. Later on McDonalds started to expand its business really quickly. The restaurants are opened in Japan then in Spain, Denmark, and Philippines. At the end of 1983, McDonalds has 7,778 restaurants located in 32 countries all around the world. At the year of 1996 the Internet site McDonalds is created. In 2009 the break event was that McCafe goes National and later on internationally. Nowadays McDonalds is considered to be the leading global food service retailer. It owns more than 32,000 local restaurants in 119 countries worldwide. The principle of this expansion is quite simple to serve high quality, standardized products to all customers. The restaurants are operating independent and they run by local businessman or businesswoman.

1.1.2. Managers
McDonalds name is well known for franchising which was the key to nowadays success in the worldwide food industry market. There are 119 countries where the McDonalds is operating and more than 75%of it is set by franchising. The managers of McDonalds are considered to be those people who are highly qualified business people joining their System as Owners/Operators. McDonalds are seeking businessman/businesswoman with a business experience. It is important that those people have some knowledge from owning or managing business/business units or having led multiple departments as their previous job. Another factor which is being considered is financial resources. In McDonalds case the top executive officers are working as managers who direct restaurants staff indirectly. They use several levels of supervisors who then direct the workers. There is a high need to be familiar with the work which now they are managing. So, there is no wonder why they all climbed the carrier from the bottom to the top. In such company as a McDonalds managers may only provide some recommendation to the next level of management whether to hire or to fire employees.

1.1.3. Mission. Vision. Values

McDonald's brand mission statement 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 cantering 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.
2

This mission includes becoming the best employer for people in each local community independently in location. To provide the excellent service to all customers and of course achieve growth with a profit through strengths such as McDonalds system innovation and technology. The vision of McDonalds is to be the best quick service restaurant in the whole world. It refers to outstanding quality, cleanliness, high quality service and high value food in order to make every customer smile. McDonalds company states that their values in practice are the corporate responsibility of the company. They show values in everyday activities, when they are achieving some goals and most importantly open lines of communication is the main value between customer and other stakeholders. They work together with suppliers and independent franchisees to achieve a sustainable future not only for the company but for the communities in which they operate as well. Their strong values helped them to become who they are, what they do and how they operate nowadays. The one of the McDonalds values is customer satisfaction. It is said that the reason for McDonalds existence are customers. They are trying to show the appreciation by serving a high quality food and superior service. They also strive to achieve a welcoming environment. Another value is to be committed to people who are working to them. They believe that working in a well-trained team with intercultural experiences and backgrounds are the core of success. The other value is that they believe in the McDonalds System. The business model which is contained of three-legged stool (suppliers, operator and employees) is the essential key for developing the business globally. The most important is to keep the balance between those stools legs. Ethic in business is also one of the values. They are trying to conduct their business with fairness, honesty and integrity. They state that: We are individually accountable and collectively responsible.
3

McDonalds obliged to grow business profitably as long as it is publicly traded company. This requires not only focus on gaining more money but also on customers and the health of the whole system. The changing environment, customer, employee and systems need lead to the McDonalds evolution and innovation as well.

1.1.4. Main Products and the markets

The products produces by McDonalds can be divided in several groups: Hamburgers, Chicken, fish and pork products, French fries, Soft drinks, healthy items such as salads and Desserts.

There is no doubt that McDonalds main products are hamburgers. There is a high variety of this type of food. To begin with, the simplest one and the most common is Cheeseburger (in some countries they are involved in 1Eur/1$menus), then Double Cheeseburger (which has two ground beef patties and two slices of cheese), McDouble, Big NTasty, McNifica, etc. The names and consistent varies according to the countries. Chicken, fish and pork products such as McChicken, Premium chicken sandwiches, Snack wrap, Chicken McNuggets, etc. are another products in McDonalds restaurants. French fries are considered to be one of the most sellable items. The main reason for this is that no matter what other product the consumer is willing to buy, but in every set French fries are included automatically. Other products such as salads are relatively new in this restaurant. The first salads were added to its menu in 1985. Nowadays more and more people are concerned about their health so, McDonalds puts its all efforts to achieve more and not lose any of the potential customers. The biggest soft drink supplier is the Coca-Cola Company. Hot and iced tea is delivered by S&D Coffee in the US), hot chocolate, various juice and other regional beverages such as milkshakes are available in various markets all around the globe. Desserts are considered to be the last big group of products in McDonalds restaurants. It includes such items as ice-cream (McFlurry), McDonaldland cookies, Freshly Baked cookies, Pies, Cinnamon melts, the fruit and yougurt parfait, smoothies and other items which depending on the region and country.

Markets The recovery of McDonalds after the global crises seems to be surprisingly fast and the sales growth rate continues to increase. The one of the biggest fast food restaurant in the world declared that it is still gaining market shares its rivals. The high rate of unemployment does not influence the convincing people to spend money and eat at McDonalds. It has suggested improved breakfast menu with the new frappe drinks. It was the key success factor in recovering after the huge losses. McDonalds surprised everyone when it reported growth of 6.0%worldwide while the same store sales growth was approximately 3.8%. The company is forecasting the further growth of 5-6% worldwide. The chart below shows the slowdown experience in 2008.

Chart 1 The McDonalds slowdown experience in 2008

In different companys regions there are different trends. For example, the Europes growth rate is 4.1%, the Asia Pacific, Middle East and Africa region growth rate is 8.1%. The European region holds about 40% if total sales, so this region is most important to McDonalds. The Asia Pacific region includes China where number of consumers is growing rapidly. McDonalds is planning to reach 2,000restaurants till the 2013. In this market the biggest competitor is Yum Brands which has 3,700 restaurants. In the US, the introducing new menus for the breakfast and new frappe were very successfully in gaining more customers. The following chart emphasizes the McDonalds market share growth in comparison with selected competitors:

Chart 2 U.S. Fast food market share

The rising of commodity prices influenced the food industry as well. This impact is the best seen in the coffee sector. One of the McDonalds competitors is Starbucks. It was not able (for Starbucks) to resist the price increase for 9% which led that McDonalds prices particularly for the coffee was bellow than Starbucks. This is also the reason for the future market share gains. If McDonalds wants to recover faster and if it wants to be a leader in all fast food sectors it has to improve customer metrics by which it can follow and decide what are the changes in the customers needs and wants, how they can satisfy these issues. The most important thing is to think globally but act locally. McDonalds has to take into account different cultures, tastes, incomes, etc. and they have to serve slightly different food but the high service should remain the same.

1.2 Financial analysis of McDonalds

Available financial data is used to evaluate the performance of the organization. In this case, McDonalds restaurants chain will be analyzed. The most useful tools are those which show the causeand-effect relationships. One of the most important documents is the companys annual reports while it is required by law to be filled with some financial data. This part of paperwork will include the McDonalds 3-years data summary which is analyzed and converted into ratios and percentages. Those ratios will be compared to show the relationships and trends with standards of performance.

Table 2 Balance sheet

Period Ending Dec 31, 2010 Dec 31, 2009 Dec 31, 2008 Assets Current Assets Cash And Cash Equivalents 2,387,000 1,796,000 2,063,400 Short Term Investments - - Net Receivables 1,179,100 1,060,400 931,200 Inventory 109,900 106,200 111,500 Other Current Assets 692,500 453,700 411,500 Total Current Assets 4,368,500 3,416,300 3,517,600 Long Term Investments 1,335,300 1,212,700 1,222,300 Property Plant and Equipment 22,060,600 21,531,500 20,254,500 Goodwill 2,586,100 2,425,200 2,237,400 Intangible Assets - - Accumulated Amortization - - Other Assets 1,624,700 1,639,200 1,229,700 Deferred Long Term Asset Charges - - Total Assets 31,975,200 30,224,900 28,461,500 Liabilities

Current Liabilities Accounts Payable 2,916,400 2,970,600 2,506,100 Short/Current Long Term Debt 8,300 18,100 31,800 Other Current Liabilities - - Total Current Liabilities 2,924,700 2,988,700 2,537,900 Long Term Debt 11,497,000 10,560,300 10,186,000 Other Liabilities 1,586,900 1,363,100 1,410,100 Deferred Long Term Liability Charges 1,332,400 1,278,900 944,900 Minority Interest - - Negative Goodwill - - Total Liabilities 17,341,000 16,191,000 15,078,900 Stockholders' Equity Misc Stocks Options Warrants - - Redeemable Preferred Stock - - Preferred Stock - - Common Stock 16,600 16,600 16,600 Retained Earnings 33,811,700 31,270,800 28,953,900 Treasury Stock (25,143,400) (22,854,800) (20,289,400) Capital Surplus 5,196,400 4,853,900 4,600,200 Other Stockholder Equity 752,900 747,400 101,300 Total Stockholder Equity 14,634,200 14,033,900 13,382,600

Net Tangible Assets 12,048,100 11,608,700 11,145,200 Currency in USD

1.3 Current strategy of McDonalds

In McDonalds there is a strategy named Plan to Win since 2003. This plan to win in the industry exist till now and it forced McDonalds to have 32 months of global comparative positive sales which is the longest strip for the last 25 years. To say more, company has had a growth which in general lies above the industry average growth.
7

To get better understanding about the current strategy of the company, let take a look what is the Plan to Win? It is nothing else except 5Ps that are behind the Plan to Win, it includes: People, Place, Product, Price, and Promotion. The 5Ps are trying to perceive every thinkable angle of the company, and have ways to improve everything, from refurbishing old shops, to maintenance wi-fi for customers, setting the right mood with music and creating deli menus to cope with the bad publicity.
8

Promotion - Im loving it worldwide campaign - Billboards, internet, TV, all advertising in general Price - High quality food at a reasonable price - Value menus - Premium selections salad Place - Refurbishing stores - New music - Wi-fi

Products - Broaden the selections - McDonalds Food Studios - Superior supplier practices - High product standards - McCafe - Examples: Rice burger, fruit and walnut People - Developed training and hospitality programs to teach our people the skills they need to deliver great service - Computer based training

- Flatscreens

-Restaurant Operations Improvement Process (ROIP)

Their main efforts are in a direction of maintenance of their unique firm power, and creation of the additional added cost through experience to keep and develop their shares in the American market. Companys newest leading addition of industrial line is the McCafe. The McCafe have a target audience of those who would like something else than regular soft drinks, or probably only wants some coffee.
9

Using this new strategy and an industrial line McDonalds tries to seize shares of the market in the industry of coffee industry, which mainly operates Starbucks. It is courageous strategy, where they have an experience minimum, but however it is strategy which is supported by a considerable quantity of their forces. They already have global network of suppliers and one of the most influential brands in the world. Their marketing has focused on two separate things: first, coping with the effects of the obesity through marketing and a new healthier product category and second, increasing brand awareness to maintain and develop market shares.
10

While supervising the result (outcome) of McDonalds has carried out strategy the last years, then the financial data speaks in own language. Development of the incomes which are above development of the market means that they increase the shares in the market. When supervising of their edges of total profit, then since performance of Plan to Win has increased edge more than forty percent. It shows that McDonalds till now have correct forces and strategy to outmanoeuvre any problems of fatness. McDonalds should study their basic products in the future. As changing requirements and instructions from clients and the governments appear, then at McDonald's there would be a big advantage of being preventive on these questions. Now they were some of the slowest in the industry to get rid of their trans-fat to make French fries which sends a bad signal on not caring about their clients. On all questions of public health services they, apparently, have very jet manner, still precisely knowing what to make with a problem. If they have to change and expand the research of these areas, the pure size and resources could give easily to them the big push up in CSR competencies and the general image in comparison with their competitors. But as it now, their research - some kind of weakness as they concentrate more on research in decorating than in full healthy meal. It isn't intended these that they should change the basic products as a cheeseburger, big Mac and French fries, but rather placing some resources in creation of the basic of more healthy products. Thus, they also would deal with some of their weaknesses and would construct protection against future threats.
11

1.4 Identification of strengths & weaknesses

The resource strength, behavior, weakness, synergy and distinctive competences are major components of the internal environment of an organization. It is all about how the company manages to use its resources and into what outcome it brings: does the use of the resources is optimal and brings to an
12

advantage or it is not well managed and brings into disadvantage? There come also companies strengths or weaknesses.

Strengths of McDonalds Taking into consideration that McDonalds is a global company, working its capital in many countries worldwide and known for almost all people in the world, we can point out such strengths of this franchise:

McDonalds is a strong competitor for all sit-down restaurants because of its size, worldwide extent and famousness. McDonalds is the market leader in both the domestic and international markets
13

The size of McDonalds, as it was mentioned before, is enormous and it has an advantage of economies of scale, which is crucial for every business. Diversifying business worldwide in various countries let to reduce or at least to verify the risk of business and find best advantages of different countries economies. McDonalds also takes an advantage of a long-term economic growth as an international company. It is also known that McDonalds has a strong real estate portfolio, which is also considered as strength of a company. The companys outlets are located in areas that are highly known for visibility, traffic volume and ease of access.
14

The brand of McDonalds is easy recognised among competitors and is very strong. Through aggressive market planning, MacDonalds has been able to recapture its youth market once again.
15

Viewing the strengths of McDonalds form consumer eyes, the strengths can be more focused on brand, famousness, quick supply of a food, good taste of food, which more often lead even to an addiction of McDonalds foods, also mostly well perceived personnel as a polite and performing their job well.

Weaknesses of McDonalds Even though McDonalds has a huge extent in the world, has a strong strategy, well known brand and feels comfortable in a market, however, as all business it faces some difficulties or some threats and as all business has some internal weaknesses, which actually cannot be always visual for individual eyes, but can be identified only by professional economists. The summary of McDonalds weaknesses might be:

Looming market saturation , which can lead to difficulties in advertising new products.
16

Fast growing and competitive market. That makes company to face income problems. Income problems and huge competition do not let the range of production rise into value ones but makes to diversify a range of cheap and quickly made ones. McDonalds is also a low innovative company.

In more simple view the McDonalds might have weaknesses because of huge competition in fast food industry. Nevertheless, fast food industry is not a respected industry in most of nowadays point of view because of rising number of various diseases caused by fast, unhealthy food. Moreover, McDonalds food might seem more unhealthy and fatty food, rather then delicious. And there the price seemed as low doesnt help in case of quality of food.

1.5 Issues facing McDonalds

17

There are a lot of issues, which McDonalds is facing. Here you can find some of it:

ADVERTISING McDonald's spend over two billion dollars each year on advertising: the Golden Arches are now more recognized than the Christian Cross. Using collectable toys, television adverts, promotional schemes in schools and figures such as Ronald McDonald the company bombards their main target group: children. Many parents object strongly to the influence this has over their own children. McDonald's argue that their advertising is no worse than anyone else's and that they adhere to all the advertising codes

in each country. But others argue it still amounts to cynical exploitation of children - some consumer organizations are calling for a ban on advertising to children.

ANIMALS Vegetarians and animal welfare campaigners aren't too keen on McDonald's - for obvious reasons. As the world's largest user of beef they are responsible for the slaughter of hundreds of thousands of cows per year. In Europe alone they use half a million chickens every week, all from windowless factory farms. All such animals suffer great cruelty during their unnatural, painful and short lives, many being kept inside with no access to fresh air and sunshine, and no freedom of movement. Again, McDonald's argue that they stick to the letter of the law and if there are any problems it is a matter for government. They also claim to be concerned with animal welfare.

CAPITALISM Nobody is arguing that the huge and growing global environmental and social crisis is entirely the fault of one high-profile burger chain, or even just the whole food industry. McDonald's are of course simply a particularly arrogant, shiny and self-important example of a system which values profits at the expense of anything else. Even if McDonald's were to close down tomorrow someone else would simply slip straight into their position. There is a much more fundamental problem than Big Macs and French Fries: capitalism.

EMPLOYMENT The Corporation has pioneered a global, highly standardized and fast production-line system, geared to maximum turnover of products and profits. McDonald's now employ more than a million mostly young people around the world: some say a million people who might otherwise be out of work, others however consider that they are in fact a net destroyer of jobs by using low wages and the huge size of their business to undercut local food outlets and thereby force them out of business. Is McDonald's a great job opportunity or are they taking advantage of high unemployment to exploit the most vulnerable people in society, working them very hard for very little money? Complaints from employees range from discrimination and lack of rights, to understaffing, few breaks and illegal hours, to poor safety conditions and kitchens flooded with sewage, and the sale of food that has been dropped on the floor. This type of low-paid work has even been termed 'McJobs'.

ENVIRONMENT Conservationists have often focused on McDonald's as an industry leader promoting business practices detrimental to the environment. And yet the company spends a fortune promoting itself as environmentally friendly. One of the most well-known and sensitive questions about McDonald's is if they are responsible for the destruction of tropical forests to make way for cattle ranching. McDonald's say no. Many people say yes. So McDonald's sue them. Not so many people say yes anymore, but does this mean McDonald's aren't responsible? They annually produce over a million tons of packaging, used for just a few minutes before being discarded. What environmental effect does the production and disposal of all this have?

EXPANSION In 1996 McDonald's opened in India for the first time: a country where the majority of the population is vegetarian and the cow is sacred. Can people challenge the undermining of long-lived and stable cultures, and regional diversity? Self-sufficient and sustainable farming is replaced by cash crops and agribusiness under control of multinationals - but how are people fighting back?

FREE SPEECH So, it seems as though lots of people are opposed to the way McDonald's go about their business. So there is a big global debate going on about them right? Wrong. McDonald's know full well how important their public image is and how damaging it would be to them if any of the allegations started becoming well-known amongst their customers. So they use their financial clout to influence the media, and legal powers to intimidate people into not speaking out, directly threatening free speech. The list of media organizations who have been sued in the past is daunting, and the number of publications suppressed or pulped is frightening.

NUTRITION

Nutritionists, for example, argue that the type of high fat, low fiber diet promoted by McDonald's is linked to serious diseases such as cancer, heart disease, obesity and diabetes. The sort of diseases that is now responsible for nearly three-quarters of premature deaths in the western world. McDonald's responds that the scientific evidence is not conclusive and that their food can be a valuable part of a balanced diet. Some people say McDonald's are entitled to sell junk food in exactly the same way that chocolate or cream cake manufacturers do: if people want to buy it that's their decision.

2. EXTERNAL ENVIRONMENT ANALYSIS 2.1 Analysis of McDonalds macro-environment Political factors

The international operations of McDonalds are extreme under influence of a policy of the separate state put into practice by each government. For example, there are certain groups in Europe and the United States which demand the acts of governmental power concerning medical values of meal of fast food. They have specified that harmful elements as cholesterol and negative influences as fatness are concerning consumption of products of fast food. On the other hand, the company operates the separate policy and instructions of operations. The certain markets concentrate on various areas of anxiety, such as various area of health, protection of the worker, and environment. All these elements are noticed in the state control of licensing of restaurants in the corresponding states. For example, there is a hung legal dispute in privilege McDonalds in India where certain infringement of rights and infringement of the religious laws concerning the maintenance of meal. Meat existence in their menu in India is obviously offensive to Indian religions in the mentioned market. There are also other researches which specifies in infringement of McDonald's Stores concerning existing laws on employment in the target market. As any business enterprise, these McDonald's stores should argue with problems of procedures of employment just as their tax obligations to succeed in the foreign market.
18

Economic factors The organizations in the fast food industry aren't excused from any disputes and problems. Definitely, they really have the separate problems involving business factors. Branches and privileges of networks of the enterprises of fast service as McDonalds has a tendency to experience difficulty in cases where the economy of the corresponding states is amazed by inflation and changes in exchange rates.

Clients hence face a survey stalemate through their separate budgets, whether they should spend more on these foreign networks of the enterprises of fast food. Hence, to these chains, possibly, it is necessary to take out problems of effects of economic environment. Especially, their problem depends on the answer of consumers to these main principles and how it could influence their general sales. In an estimation of operations of the company, food chains as McDonalds tend to import the biggest part of the raw materials to certain territory if there is a delivery lack. Exchange rate fluctuations will also play an essential role in companys operations. As it is declared in the paragraph above, stores of McDonald should take a big reason concerning 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. It is besides obligatory, that the company has been informed on the existing tax requirements needed by the separate governments on which they operate. It basically guarantees smooth operations of McDonalds privileges. In the same relation the company should consider also a state economic situation on which they influence on. Level at which the economy of special state grows, defines purchasing capacity of consumers in that country. Hence, if the privilege works in the especially economically weak state, then their products should cost above than other existing products in the market, these privileges should take certain regulators to support economy at the expense of manufacture growth.

19

Socio-Cultural factors Articles about the international strategy of McDonalds, apparently, function on several areas to guarantee profitable returns for the organization. To illustrate, the organization changes to the best an establishment of positive thinking from their basic consumers. McDonalds indulges a special variety of consumers with certain types of persons. Also it has been noticed that the company has given the markets, such as the United Kingdom, a choice concerning their lunch requirements. Specified that McDonalds beginnings considerably valued set of meal which offers a reliable degree of quality for the corresponding market where it works. In addition, those who are elderly only below a bracket of thirty five as said are the most frequent consumers of McDonalds privileges. Many-sided character of business is reflected now in sharp value of the information about the existing market. This procedure is essentially identified in area as market research. Information concerning the reference and potential areas of the market would double as a barrier to success of the company if this area of operations neglected. In case of McDonalds they establish good system in determining of requirements of the market. The company uses concept of consumer individuality of a product of behaviour and decisions on purchase to its advantage. It is said, to have the main influence on understanding of prospective result of the organization in the particular market.
20

Technological factors McDonalds makes a demand for their own products. The key tool of the company for marketing is by means of TV advertisings. There are some requirements that McDonalds is inclined to interest the younger population more. Existence of game stains also toys in the meal offered by the company shows this validity. Other demonstration of such marketing strategy is obvious in advertising they use. They use recovered descriptions of the characters as Grimace and Hamburglar. Other advertising operations employ popular celebrities to promote their products. Similar became endorsees for McDonalds all over the world loving it campaign. Besides, operations of McDonalds have considerably been infused with new technology. Elements as the system of stock and management of the value chain of companys creation consider easy payments for the suppliers and other sellers with which the person supplies in the corresponding agreement on the markets. Technology integration into operations of McDonalds tends to increase cost of their products. Basically it is shown in improvements on its chain of creation of value. Improvement of stock system just as its systems of deliveries allows the company to work in the international context.
21

Legal factors There was a current roar against the fast food industry. It has forced McDonalds to apply more close examination on their corporate social responsibility. As a whole it has addressed to requirement of the company to generate its corporate reputation to more positive and the more socially responsible company. The reputation of McDonalds is obviously a huge question. Noticed on companys web site, seems, that they have got steps to take in hand the key social condemnation that they abused them in the last decades. The company gave to their clients the corresponding data in which they need the relation of food essence of their products. This is to attend to the arguments of obesity charged against the products of the company. In the same way consumers have provided freedom in a choice, whether they want to buy the meal. It is connected with socio-cultural market signs which they influence. For example, operations in predominantly Muslim countries demand, that their meat corresponded to Halal requirements of the law. In the same regard, those that operate in countries in the European Union should correspond to the existing laws forbidding usage of genetically modified meat products in their meal. Other legal concepts as tax obligations, employment standards, and requirements to a degree of quality are only a few of important elements on which the company should consider. Otherwise, smooth operations should be difficult to reach.
22

Environmental factor Social responsibility of McDonalds on the state influences to company operations. They involve charges of harm to environment. Among the reasons why they are accused of such requirements, is that the work of substances is not decomposed by microorganisms for their drinks glasses and treasury of expanded polystyrene for meal. Some civil groups in Hong Kong have made actions to make McDonalds privileges in Hong Kong aware of the rather copious use of containers of expanded polystyrene and resulting abusing by environment. Further, has specified that in 1995, McDonalds Hong Kong ran through the expanded polystyrene used by both Australia and the incorporated United States.
23

2.2 Analysis of industry (five forces framework)

A business has to understand the dynamics of its industries and markets in order to compete effectively and intensively in the marketplace. The forces which derive competition and attractiveness of a market, contending that the competitive environment is created by the interaction of these five different forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into the market, there are also the forces of supplier power, the power of buyers, and the threat of substitute products or services (The Figure1 Porters Five Forces Framework). Michael E. Porter suggested that the intensity of competition is determined by the relative strengths of these forces. Figure 1 Porters Five Forces Framework Source: Splash map on the five competitive forces

The Five Forces directly are interconnected with the effect on the companys ability to serve its customers and to make a profit. A change in any of these forces generally requires a company to re-assess its competitive strategies.

Competitive rivalry

According to Porters Five Forces Model, if entry into a market is easy then rivalry is likely to be high. Considering McDonalds competitive rivalry, there is intense competition in fast food industry that many small fast food businesses fight with each other to improve their customer base. This makes a competition the major focus between businesses. Although, McDonalds, with more than 32,000 local restaurants serving more than 60 million people in 117 countries each day, has a number of fast food outlet competitors across the countries such as Burger King, Taco Bell, KFC, Wendys, it is currently the leader of the industry in market capitalization with a cap of $39.31 billion.

The Threat of new entrants The threat of new entrants in the fast food industry is high because there are no legal barriers which would keep them from entering the industry. The economies of scale and the access of the distribution are the major barriers that firms face in the industry. Firms must spend a large amount of capital on advertising and marketing in order to enjoy successful existence and long life of a fast food outlet. Large established companies with strong brand names such as McDonalds make it more difficult to enter the market because new entrants are faced with price competition from existing chain restaurants. Thus, it takes a pretty much time for a new business to establish in the fast food industry.

Supplier bargaining power The bargaining power of suppliers of McDonalds is high because McDonalds restaurants use the same products from the same suppliers and it doesnt matter if you are in Rochester, MN or Beijing, China you can get the same Big Mac everywhere. This is a feature McDonalds want to keep going on by encouraging consistency among its restaurants. Supplying these products to McDonalds across the globe is the whole business for the suppliers and, however, if McDonalds would lose even one supplier it would have to change one or more of its product lines and perhaps the whole menu what the McDonalds customers were used to. This gives the suppliers of McDonalds a high bargaining power.

Buyer bargaining power Buyers, in the fast food industry, are those who is ordering fast food at the local restaurant, over the telephone, or internet or just paying or consuming the products . Bargaining power of customers of McDonalds is low because of low customer switching costs which are nearly zero; however, for example, one-fifth of the USA population eats in a fast food restaurant every day. Thus, fast food industry
24

does not worry about customers loyalty. Fast food products industry is differentiated which are usually or almost always promoted by advertising that is because of a vast competition between fast food firms. Product differentiation is very important in fast food industry to make your product stand out against the crowded fast food industry products. Furthermore, quality of the product or service in the fast food industry is very important as customers have full information of the products they buy and consume. Furthermore, if the fast food industry does not match the demands of the buyers and the general consumer trends, then the buyers can choose not to buy their product and convince others to do the same. A good example of this is the movie Super Size Me. It is a movie showing an ordinary consumer trying to live of McDonalds fast food, and the purpose of the movie was to see what the traditional fast food from McDonalds could do to your health if you were to eat their products for every meal. This movie shows what the buyers possible reactions could be if not satisfied or not being pleased. The reactions from the whole market were a large change in consumer preferences and brand preferences.

The threat of substitutes Several factors determine if there is a threat of substitute products in an industry. First, if the consumers switching costs are low, which means that there is little of anything stopping the consumer from purchasing the substitute instead of the industrys product, then the threat of substitute products is high. Second, if the substitute product is cheaper than the industrys product there is a high risk of threat of substitutes. Third, if the substitute product is having equal or superior quality, functions, attributes, or performance compared to the industrys product, the threat of substitutes as well is high. With so many firms in the fast food industry with low switching costs, vide variety of similar products that people can chose, and healthier alternatives, the threat of substitutes is very high. As there is intense competition between rival sellers in the fast food industry, the competition between firms selling substitute products is intense as well. One very important issue is that the customer always tends to find another product comparable or better in terms of the quality of fast food products. Another thing is that fast food industry is unhealthy to its customers health. The majority of the public think that fast food restaurants primarily serve high in fat content foods which are unhealthy and as a consequence they tend to look elsewhere for healthier alternatives. While fast food products are not always associated with health and quality, fast food restaurants keeps a major advantage over other firms selling substitute products through the lower prices of their products and a quick, convenient service.

2.3 Key strategic factors in the industry (strategic groups, market segments, critical success factors) 2.3.1 Strategic groups
McDonalds company is one of the leading companies in the fast food industry with over 32000 of restaurants in 117 countries around the globe. McDonalds is also worlds first fast food company by sales, which gives for them advantage over their competitors in terms of profit. The main competitors of McDonalds in the global market are:

YUM! Brands; Burger King Holdings; Dominos Pizza; Triarc Companies.

All of these companies serve fast food around the world and are focused on providing a product that is based on low price convenience. Their strategic group is associated with many geographic locations and low price and quality. Even though these companies could be considered the biggest players in the global market, they face in each country local fast food restaurants, but bigger influence on them these local competitors are not able to do. The Figure 2 below represents the strategic group mapping of the fast food industry. The graph represents fast food companies, which were divided into different groups according to their price level and product line variety. As was stated before and we can see in the graph, all of the main and biggest fast food companies have limited menu with low prices for their products. This way all of them can compete on the same basis, according to these specifications. There are always competitive pressures and driving forces which adversely affect the firms in strategic groups. Therefore, some firms may try to shift to a more favorably situated group. This shifting is however difficult if the entry barriers of the target strategic group are high.

Figure 2 Fast food industry strategic group mapping.

2. 3.2. Market segments

Demographic segmentation - divides the market into groups based on demographic variables including age, gender, family size and life cycle.
25

Life cycle. McDonalds has targeted children, youth singles and the young urban families. It is attracting the young urban families wanting to spend some quality time while their children have fun at the outlet. Age. Mostly youngsters and kids are target, so to attract children McDonalds has Happy Meal with which toys ranging from hot wheels to various Walt Disney characters are given. Sometimes it also provides special facilities like Play Place where children can play arcade games, air hockey, etc. Mostly target is under age 5-6, 12-15, 15-20 and over. Gender. McDonalds have segmented its services to males as well as females. Occupation. McDonalds has mostly segmented its market to the school and college going students. Income. McDonalds has targeted mostly middle class and upper class urban families who can afford its luxury meal.

Psychographic segmentation. - sometimes also referred to as behavioural segmentation. This type of segmentation divides the market into groups according to customers lifestyles. It considers a number of potential influences on buying behaviour, including the attitudes, expectations and activities of consumers. If these are known, then products and marketing campaigns can be customized so that they appeal more specifically to customer motivations.
26

Needs-motivation. The luxury services of McDonalds fulfil the needs of self-worth. Personality. McDonalds mostly segments is market to extrovert people who usually hang out with friends and family in restaurants and other enjoyment places. Motivation slogans. McDonalds provides motivate slogans to attract its customers and make a good image in the minds of the customers like IM LOVING IT, EVERY TIME A GOOD TIME, PUT A SMILE ON, ENJOY MORE, MY MCDONALDS WHAT YOU WANT IS WHAT YOU GET and others.

These are one of the famous slogans of McDonalds through these slogans McDonalds is attracting its customers and making a good image in the minds of the customers. Company has segmented on basis of making relationship with the customers and making them believe that they are on the right place.

Region. Worldwide McDonalds is giving its services to almost more than 110 countries. This means they must much into each tradition of different cultures, religions and views, thats why in every country McDonalds has updated their menus according to local customers, but still saves their main products.

Use-related segmentation - popular and effective form of segmentation that categorizes consumers in terms of product, service, or brand usage characteristics, such as usage rate, awareness status, and degree of brand loyalty.
27

Use rate: medium users Awareness status: mostly people are aware of McDonalds and are interested to have services of McDonalds. Brand Loyalty: McDonalds have strong loyal customers.

Use-situation segmentation - involves segmenting consumers on the basis of time, objective, location, and person.
28

Time: leisure Objective: fun Person: self, family members, friends, peer

2.3.3 Critical success factors

Critical success factors are limited number (usually between 3 to 8) of characteristics, conditions, or variables that have a direct and serious impact on the effectiveness, efficiency, and viability of

anorganization, program, or project. Activities associated with CSF must be performed at the highest possible level of excellence to achieve the intended overall objectives.
29

The research about McDonalds company has led to the following success factors:

Standardization Environment oriented Willingness to innovate One dollar menu Following healthy food trends

Standardization In order to maintain the highest quality of their products McDonalds standardized the production methods and processes. The company just adjusts to different culinary differences in different countries, for example McDonalds offered vegetarian burgers to practicing Buddhists or Asian countries preferring spicy taste saw the introduction of spicy burgers, chicken and seasoning. This gives for people possibility to try either original US or their local taste. McDonalds achieves balance by maintaining standardization in products but adjusting to the local taste.

Environment oriented One of the main companys orientations now is the development of a strong company-wide environmental policy declaring that McDonalds is committed to protecting the environment for future generations, and that it believes that business leaders must also be environmental leaders. The policy takes a total lifecycle approach to reducing and managing solid waste: a sizable challenge, considering that each of McDonalds 8,600 U.S. restaurants 3 238 pounds of waste per day and each of its 34 U.S. regional distribution centres disposes of another 900 pounds of waste per day.

One dollar menu

With its one dollar menu McDonalds reaches very wide range of customers. One dollar menu was a response to competitors one dollar menus and it gave very good effect for the company, since the customers could find their loved fast food in just one dollar price.

Willingness to innovate McDonalds is all the time trying to be on time with new trends, demand or technology, even while striving to achieve consistency in the operation of its many outlets. The breakfast menu, salads, Chicken McNuggets, and the McLean Deluxe sandwich were all examples of how the company tried to appeal to a wider range of consumers.

Following healthy food trends In response to obesity trends in Western nations and in the face of criticism over the healthiness of its products, the company has modified its menu to include healthier alternatives such as salads, wraps and fruit.

2.4. Future scenarios

McDonald's developed its future scenarios around three strategies customer convenience, customer value, and optimal operations. More than ever, McDonalds is focused on and committed to doing the right thing for the local communities in which the company operates and for the customers it serves. This philosophy of doing good and giving back has always been at the heart and soul of the McDonald's business -like fries and hamburgers - and started with founder, Ray Kroc. Before there was even a name for "social responsibility," McDonald's was setting the standard, and theyve been the leader ever since. As we deal with challenging economic and political climates around the world, McDonalds role as an employer and local business becomes even more important. The company remains steadfastly committed to addressing various social responsibility issues, policies, and practices within the McDonald's system that affect local communities and customers.

McDonalds has made significant progress toward becoming a more socially responsible organization, but there is always work to be done. Through its 30,000 restaurants, its owner/operators and suppliers, the company continues to drive so.

2.5 Identification of opportunities and threats

McDonalds is a huge industry of franchise companies all over the world. It is diversified almost in all countries of the world and has a huge power in the market because of its responsiveness to customers and substantial quality of a product. As it is the only one brand in this company, it serves actually many segments of the customers. The product diversity is quite high and serves the widest segments of a society. The product diversifies not only for different groups of customers with different tastes and needs but also for different groups of customers in different countries. This makes segmentation more complex, as a matrix and contributes to business huge successes. The example of a segmentation of McDonalds would be different kind of meet served in burgers in different countries. There are some Muslim countries, where pork is not accepted and there are other European countries where such kind of meat is really desirable. The new segment of a customer has been found recently, when the boom of healthy food came into society, people became more aware of unhealthy fast food, which McDonalds is serving. So its production of McFeast of whole bread burgers attracted more people with different tastes and lifestyle, not as fast food eaters. Over the years of operation this company has achieved its recognition and name and is a strong outstanding company from its competitors. The business is ranked number one in Fortune Magazine's 2008 list of most admired food service companies.
30

Marketing efforts in McDonalds Corporation is huge. From advertisements, which includes television, audiovisual, posters and other, also includes sponsorships of famous events, such as Olympic. McDonalds is a community oriented, socially responsible company. They run Ronald McDonald House facilities, which provide room and board, food and sibling support at a cost of only $10 a day for families with children needing extensive hospital care. This shows that McDonalds tries to achieve every spot of attention, what makes this business more successful.
31

However, even this company has a strong experience and recognition; there are some threats that occur in all the markets, especially when food market is one of the widest markets in the world. Taking McDonalds business it doesnt mean being oligopoly or monopoly, it means being in a market where perfect competition takes place. So, it is useful to consider what opportunities and threats may arise for such a company as McDonalds.

As we identified some characteristics of this successful company, we can draw out the opportunities that this company can achieve in the nearest future:

The first opportunity that can be realized in this company is new segments identification. Of course there are no limits in business to expand and there is no business that could survive without any growth or promotion. It is a very good opportunity to define some new needs or tastes of customers, despite all those diet cokes or healthy bread burgers that McDonalds already

included, there are so many other different needs that people have. The other more specific opportunity for McDonalds would be new technology adoption. Not talking about those new high technology cash-registers that are based on computer programs, McDonalds could include new technological ways in product making, that could make the process itself more fast or special products more tasty and with higher quality (like for example ice-cream or fresh juice machines). The internal strategy improvement has never gone to bad. As McDonalds already has a good strategy and employees training and promotion, it can make it more efficient and more productive by applying some new ways of motivation or work organization. As the food is made in lines, it can be somehow more diversified to achieve the more efficient operation. Provide optional allergen free food items, such as gluten free and peanut free. That would be a
32

great success of concentration to people, who have serious health problems and have to avoid fast food. Also McDonalds could consider new brands development. As it is a franchise, it doesnt mean that it hasnt opportunity of brands extent. It could make another niche where it would sell some other kind of products, like chocolate bars or other kind of sweats.

As there are many opportunities that can be fulfilled in the future, however McDonalds has also some weaknesses and threats. Talking about weaknesses McDonalds had some bad luck or unsuccessful projects in the past that manifested some weaknesses and also there are some disadvantages of fast food industry:

Their test marketing for pizza failed to yield a substantial product. Leaving them much less able to compete with fast food pizza chains. High employee turnover in their restaurants leads to more money being spent on training. They have yet to capitalize on the trend towards organic foods. McDonald's have problems with fluctuations in operating and net profits which ultimately impact investor relations. Operating profit was $3,984 million (2005) $4,433 million (2006) and $3,879 million (2007). Net profits were $2,602 million (2005), $3,544 million (2006) and $2,395 million (2007).
33

The threats, that exist in all the markets, that have some features as perfect competition and of course in the franchising companies, are such: The industry of fast food restaurants is huge and so do the competition in it. Some companies get old and boring in time and so can happen to McDonalds if it wont get adapt to new changes in trends and lifestyles. Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's, KFC

and any mid-range sit-down restaurants. Another huge threat is the threat of human health deterioration. The industry of fat food is huge in
34

the world and especially in most developed countries. People become more aware of unhealthy additives and processed foods that are included in McDonalds food production. Also the extreme rate of fat people in some countries can raise some disciplines in fast food making or prevent it at all. Another threat of going into franchising is reputation. It is essential to maintain a good reputation of your name; otherwise no one will buy your franchise.

3. DEVELOPMENT and RECOMMENDATIONS FOR IMPLEMENTATION OF STRATEGIC OPTIONS

Strategic options:

Reduction of employee training spending (lowering employee turnover); Taking advantage of organic food industry popularity (develop new products for new segments); Advantage of human health problems (improvement of products).

1. Reduction of employee training spending (lowering employee turnover). In order to reduce of employee training spending and to lower turnover, we would like to suggest:

To give the job just for highly motivated people. It means, that they are going to be loyal and not to leave job so fast; To train new employees using Big Brother principle. New employees would be trained by employees, who are working longer. In this way, company reduces training spending, new employees are trained by the people, who are working inside the company and do the same things every day.

To motivate employees and always take care about their expectations. It can be money premiums for good working in the end of the month (or year), some employees parties, Employee of the week (month) competition and etc.; also employer should take a look of what employee is expected from employer and try to solve that, ex. Maybe employee is not expected to get premium every month, but for good and loyal working he would like that the company would pay his child studies fee after 5 years.

2. Taking advantage of organic food industry popularity (develop new products for new segments); McDonalds is not that company, who suggest the most organic food, so they can try:

To make a line of organic food in their menu and take a look what is more popular and healthy for their customers. If it is going more popular than usual menu food, it is more worth to make all food in organic way, even it is more expensive. First of all, people like what is natural, and then they are interested in the price. To be in a partnership with scientists and doctors in order to take care of their customers heath. Everybody knows that organic food makes people feel better and healthier; also it affects nature in a good way. McDonalds declares that everything is for customer, so it must take an advantage of organic food popularity and make their customers to live healthier and in more natural way. To make big advertisement companies declaring organic food pluses and make it more popular in such way. Many people loves McDonalds food, so it has an authority and can show good example of necessity of organic food in people life and compare how organic and usual McDonalds food effect customers health and all the nature about them.

3. Advantage of human health problems (improvement of products) McDonalds is big food supplying company, and all of us know, how food affects our health. It is one of the main factors, what built our body and strength our brains. Knowing that, McDonalds should:

Suggest just high quality, improved products, which is full of vitamins and minerals. So, it means that the company must improve their products, all the food must be certificated and fit for all healthy food standards.

Be in a contact with suppliers, who supply products for McDonalds food and always check if the products is natural, high standard and healthy for all of age customers. Contact with doctors, scientist and improve their products to fit for all of age customers, even they have some problems with their stomach. It means to make measures and find what is the best for all possible customers.

CONCLUSIONS

Our team project is based on the literature of International Marketing and Management subject and the additional information which we have found as a reference to the proposed theme for this paper work. So, what we had to do was to refer to the whole plan of this paper work and to cope with the tasks which were concluded. The whole paper work consists of three main parts which are: company analysis, external environment analysis and development and recommendations for implementation of at least three strategic options. In the first part, concerning companys analysis, there was McDonalds as our chosen company described (its history, managers, mission, values, main products and markets), as well McDonalds resources and capabilities, financial analysis, its current strategy and identification of strengths and weaknesses, issues facing McDonalds were proposed. So, describing the company it is very important that nowadays McDonalds, producing Hamburgers, Chicken, fish and pork products, French fries, Soft drinks, healthy items e.g. salads and Desserts, is considered to be the leading global food service retailer owning more than 32,000 local restaurants in 119 countries worldwide and more than 75% of McDonalds is set by franchising. The principle of this expansion is to serve high quality, standardized products to all customers. The restaurants are operating independent and they run by local businessman or businesswoman. There are round 1.7 million employees in corporate and restaurant positions. McDonald's brand mission statement is to "be our customers' favorite place and way to eat." The vision of McDonalds is to be the best quick service

restaurant in the whole world. It refers to outstanding quality, cleanliness, high quality service and high value food in order to make every customer smile. The financial analysis of McDonalds says that the recovery of McDonalds after the global crises seems to be surprisingly fast and the sales growth rate continues to increase. It tries to improve customer metrics by which it can follow and decide what are the changes in the customers needs and wants, how they can satisfy these issues. The most important thing is to think globally but act locally. The later stage of the second part proposes companys current strategy. McDonalds has a specific Plan to win current strategy since 2003. These are 5Ps that are behind the Plan to Win, and it includes: People, Place, Product, Price, and Promotion. As changing requirements and instructions from clients and the government, McDonalds should study their basic products in the future. Furthermore, strengths and weaknesses as internal factors of a company are crucial not only in strategic decisions making but also in strategys implementation. Some weaknesses should be eliminated and strengths should be revealed and consolidated in order to follow organizations strategy in most efficient way. There are a lot of issues, which McDonalds is facing, as well. The most important of them are: advertising, animals, capitalism, employment, environment, expansion, free speech and nutrition. So, in the second part we have reviewed the information associated with external environment analysis where the analysis of macro-environment were done which says that McDonalds is under influence of the policy of the separate state by each government i.e. it has a tendency to experience difficulty where countries are amazed by inflation and changes in exchange rates. The Michael E. Porters analysis of industry (five forces framework) defined the forces which derive competition and attractiveness of a market. So, McDonalds competitive rivalry is intense because of many small fast food businesses always fighting with each other. Considering the force of the threat of entry, the economies of scale and the access of the distribution are the major barriers that firms face in the industry. High bargaining power of suppliers of McDonalds says that a company uses the same products from the same suppliers and is very dependent on them if something would go wrong or the supplier would stop supplying raw materials to McDonalds. The Bargaining power of customers of McDonalds is low because of low customer switching costs what means that customers can easily go from one fast food restaurant to another and do not feel big disadvantages. The competition between firms selling substitute products is intense because of the customer who always tends to find another product comparable or better in terms of the quality of fast food products or even healthier for his/her health. Talking about key strategic factors of McDonalds, a company representing one of the largest segments of the food industry and also being worlds first fast food company by sales this all gives

them advantage over their competitors in terms of profit, focusing on providing a product that is based on low price convenience, associating with many geographic locations and low price and quality. The research about McDonalds Company has led to the following key success factors: standardization, environment oriented, willingness to innovate, one dollar menu and following healthy food trends. The later stage of future scenarios explains us that McDonald's developed its future scenarios around three strategies customer convenience, customer value, and optimal operations. McDonalds through its 30,000 restaurants, its owner/operators and suppliers has made significant progress toward becoming a more socially responsible organization. And the last subpart of the first part of our paper work the opportunities and threats itself are identified through SWOT analysis of a company. SWOT analysis is a tool for auditing an organization and its environment. After identified characteristics of McDonalds, the opportunities that this company can achieve in the nearest future and threats of this company can be drawn out. It is very important for to know what threats exists and what opportunities are possible in a company. These can lead company into better or worse future. It depends on how managers are able to use the advantage of external environment. And, the third and the last part, associating with the development and recommendations of strategic options for McDonalds, proposes three strategic options and the recommendations for their implementation, as well the evaluation and control of these three strategic options. Strategic options are creative alternative action-oriented responses to the external situation of an organization. Our formed strategic options are: reduction of employee training spending (lowering employee turnover), taking advantage of organic food industry popularity (develop new products for new segments), advantage of human health problems (improvement of products).

REFERENCES

1. Analyzing resources and capabilities [online], [checked on 25, April, 2011]. Available from the Internet: <http://www.blackwellpublishing.com/grant/files/CSAC05.pdf>
2. Business dictionary. Critical success factors definition. [online], [checked on 25, April, 2011]. Available from the Internet: <http://www.businessdictionary.com/definition/critical-successfactors-CSF.html> 3. Business dictionary. Market segmentation definition. [online], [checked on 25, April, 2011]. Available from the Internet: <http://www.businessdictionary.com/definition/marketsegmentation.html> 4. BusinessiHub. Use-related segmentation. [online], [checked on 25, April, 2011]. Available from the Internet: < http://www.businessihub.com/use-related-segmentation/>

5. Buyer Bargaining Power (one of Porter's Five Forces) [online], [checked on 2, May, 2011]. Available from the Internet: <http://www.wikicfo.com/Wiki/Default.aspx?Page=Buyer%20Bargaining%20 Power%20%20one%20of%20Porters%20Five%20Forces&NS=&AspxAutoDetectCookie Support=1>
6. Buzzle.com. Geographic segmentation. [online], [checked on 25, April, 2011]. Available from the Internet: < http://www.buzzle.com/articles/geographic-segmentation.html> 7. Exams Tutor. Demographic Segmentation. [online], [checked on 25, April, 2011]. Available from the Internet:<http://www.examstutor.com/business/resources/studyroom/marketing/market_analysis/7 _demographic_segmentation.php>

8. Executive Bios [online], [checked on 12, May, 2011]. Available from the Internet: <http://www.aboutmcdonalds.com/mcd/our_company/bios/don_thompson.html >
9. IBS Center of Management Research. Consumer Behavior. [online], [checked on 25, April, 2011]. Available from the Internet: <http://www.icmrindia.org/courseware/Consumer%20Behavior/CBC02.htm>

10. Issues of McDonalds [online], [checked on 12, May, 2011]. Available from the Internet: <http://www.mcspotlight.org/issues/intro.html>

11. Key Ingredients of the McDonald's Experience [online], [checked on 8, May, 2011]. Available from the Internet: <http://www.meettheboss.tv/Article/11/Key-Ingredients-of-the-McDonald'sExperience/> 12. Our company [online], [checked on 12, May, 2011]. Available from the Internet: <http://www.aboutmcdonalds.com/mcd/our_company/bios.html> 13. PESTEL analysis of the macro-environment [online], [checked on 3, May, 2011]. Available from the Internet: <http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_1 2.htm> 14. PESTEL analysis of the macro-environment [online], [checked on 3, May, 2011]. Available from the Internet: <http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_1 2.htm> 15. PESTLE analysis to explain companys international strategy of McDonalds [online], [checked on 3, May, 2011]. Available from the Internet: <http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-ofmcdonalds.html> 16. Porter's Five Forces Analysis As A Tool For Business Strategy Development [online], [checked on 3, May, 2011]. Available from the Internet: <http://www.allfreeessays.com/essays/Porter-s-Five-Forces-AnalysisAs-A/30818.html> 17. Porter Five Forces [online], [checked on 3, May, 2011]. Available from the Internet: <http://www.allfreeessays.com/essays/Porter-5-Forces/5128.html> 18. Manager [online], [checked on 10, May, 2011]. Available from the Internet: <http://management.about.com/od/policiesandprocedures/g/manager1.htm>
19. McDonalds FAQ [online], [checked on 9, May, 2011]. Available from the Internet:

<http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html>

20. McDonalds (NYSE:MCD) report: Market share, margins on the rise [online], [checked on 11, May, 2011]. Available from the Internet: <http://www.stockmarketsreview.com/recommendations/mcdonalds_report_20 101115_59520/> 21. MC. DONALDS SWOT ANALYSIS [online], [checked on 9, May, 2011]. Available from the Internet: <http://www.scribd.com/doc/3972375/MCDONALDS-SWOT>

22. McDonalds website [online], [checked on 25, April, 2011]. Available from the Internet: <http://www.mcdonalds.com/us/en/home.html> 23. Notes of Strategic Management lectures 24. Resources and Capabilities of McDonald [online], [checked on 25, April, 2011]. Available from the Internet: <http://ivythesis.typepad.com/term_paper_topics/2010/02/resources-andcapabilities-of-mcdonald.html> 25. Resource of financial analysis [online], [checked on 10, May, 2011]. Available from the Internet: <http://uk.finance.yahoo.com/q/bs?s=MCD&annual> 26. Resource of financial analysis [online], [checked on 10, May, 2011]. Available from the Internet: <Leslie W.Rue, Phyllis G. Holland STRATEGIC MANAGEMENT Concepts and Experiences, 1986> 27. Resource of financial analysis [online], [checked on 10, May, 2011]. Available from the Internet: <http://www.stock-analysison.net/NYSE/Company/McDonalds Corp/Ratios/Profitability> 28. Resource of financial analysis [online], [checked on 10, May, 2011]. Available from the Internet: <http://www.investopedia.com/terms/c/cash-ratio.asp>
29. Resource of organizations history, managers, mission, vision, values, main products and markets [online], [checked on 9, May, 2011]. Available from the Internet: <http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html?DCSext.destination=htt p://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html> 30. Resource of organizations history, managers, mission, vision, values, main products and markets [online], [checked on 9, May, 2011]. Available from the Internet: <http://www.fundinguniverse.com/company-histories/McDonalds-Corporation-CompanyHistory.html> 31. Resource of organizations history, managers, mission, vision, values, main products and markets [online], [checked on 9, May, 2011]. Available from the Internet:<http://www.boj.com/articles/franchise/mcdonalds_king.htm> 32. Resource of organizations history, managers, mission, vision, values, main products and markets [online], [checked on 9, May, 2011]. Available from the Internet:<http://ivythesis.typepad.com/term_paper_topics/2009/07/human-resource-managementat-mcdonalds.html> 33. Resource of organizations history, managers, mission, vision, values, main products and markets [online], [checked on 9, May, 2011]. Available from the Internet: <http://www.papascott.de/archives/2007/05/25/karen-king-mcdonalds-ad/> 34. Resource of organizations history, managers, mission, vision, values, main products and markets [online], [checked on 9, May, 2011]. Available from the Internet:<http://management.about.com/od/policiesandprocedures/g/manager1.htm>

35. Resource of organizations history, managers, mission, vision, values, main products and

markets [online], [checked on 9, May, 2011]. Available from the Internet: <http://recomparison.com/comparisons/100888/wendys-vs-mcdonalds-food-chain-facts/> 36. Resource of organizations history, managers, mission, vision, values, main products and markets [online], [checked on 9, May, 2011]. Available from the Internet: <http://seekingalpha.com/article/59134-mcdonald-s-global-exposure-perfect-for-an-economicslowdown> 37. Resource of strategic option definition [online], [checked on 12, May, 2011]. Available from the Internet: <http://www.toolkitsportdevelopment.org/html/resources/9E/9EB316CD-083E-4C09B7A5-E22DEA312F05/06%20Strategic%20Options.pdf> 38. SMO.DK-Sharing Knowledge. McDonalds current strategy [online], [checked on 12, May, 2011]. Available from the Internet: <http://www.smo.dk/mcd-assignment/current-strategy/>

39. Social Analysis In Macro Environment: 2009 [online], [checked on 3, May, 2011]. Available from the Internet:< http://www.koellay.com/2009/05/socialanalysis-in-macro-environment.html> 40. Splash map on five competitive forces [online], [checked on 4, May, 2011]. Available from the Internet: <http://braindancingsmorgasbord.blogspot.com/2009/10/splash-map-on-fivecompetitive-forces.html> 41. Strategic analysis of internal environment of a business organization [online], [checked on 12, May, 2011]. Available from the Internet: <http://bizcovering.com/business/strategic-analysis-of-internal-environment-ofa-business-organisation/> 42. Strategic Options [online], [checked on 12, May, 2011]. Available from the Internet: <http://www.toolkitsportdevelopment.org/html/resources/9E/9EB316CD083E-4C09-B7A5-E22DEA312F05/06%20Strategic%20Options.pdf> 43. Strategic Planning Template. Macro Environment Analysis [online], [checked on 3, May, 2011]. Available from the Internet: <http://www.whatmakesagoodleader.com/support-files/strategic-planningtemplate-macro.pdf> 44. SWOT Analysis [online], [checked on 5, May, 2011]. Available from the Internet: <http://en.wikipedia.org/wiki/SWOT_analysis> 45. SWOT Analysis McDonald's [online], [checked on 5, May, 2011]. Available from the Internet: <http://www.marketingteacher.com/swot/mcdonaldsswot.html> 46. Threat of Substitutes (one of Porter's Five Forces) [online], [checked on 25, April, 2011]. Available from the Internet:

<http://www.wikicfo.com/wiki/Threat%20of%20Substitutes%20%20one%20o f%20Porters%20Five%20Forces.ashx>
47. Tutor2u. Market segmentation - psychographic segmentation. [online], [checked on 25, April, 2011]. Available from the Internet: < http://tutor2u.net/business/marketing/segmentationpsychographic.html>

48. Values in Practice [online], [checked on 12, May, 2011]. Available from the Internet: <http://www.aboutmcdonalds.com/content/mcd/csr/about/values.html> 49. What is Benchmarking? [online], [checked on 26, April, 2011]. Available from the Internet: < http://www.benchnet.com/wib.htm> 50. Hoovers. YUM! Brands, Inc. [online], [checked on 25, April, 2011]. Available from the Internet: < http://www.hoovers.com/company/YUM!_Brands_Inc/hyssyi-1.html> 51. Hoovers. Burger King Holdings, Inc. [online], [checked on 25, April, 2011]. Available from the Internet: < http://www.hoovers.com/company/Burger_King_Holdings_Inc/hchyri1.html> 52. Hoovers. Domino's Pizza, Inc. [online], [checked on 25, April, 2011]. Available from the Internet: < http://www.hoovers.com/company/Dominos_Pizza_Inc/cfryri-1.html> 53. Hoovers. Wendy's/Arby's Group, Inc. [online], [checked on 25, April, 2011]. Available from the Internet: < http://www.hoovers.com/company/Wendys/Arbys_Group_Inc/rrxjyi-1.html>
54. Strategic Control Process. [online], [checked on 30, April, 2011]. Available from the Internet: < http://www.strategic-control.24xls.com/en144>

1 McDonalds History http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html?DCSext.destination=http://www.aboutmcdo nalds.com/mcd/our_company/mcd_history.html 2 McDonalds FAQ http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html

3 Values in Practice http://www.aboutmcdonalds.com/content/mcd/csr/about/values.html 4 McDonalds (NYSE:MCD) report: Market share, margins on the rise http://www.stockmarketsreview.com/recommendations/mcdonalds_report_20101115_59520/ 5 McDonalds (NYSE:MCD) report: Market share, margins on the rise http://www.stockmarketsreview.com/recommendations/mcdonalds_report_20101115_59520/ 6 Resource of financial analysis http://uk.finance.yahoo.com/q/bs?s=MCD&annual 7 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/current-strategy/ 8 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/current-strategy/ 9 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/current-strategy/ 10 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/currentstrategy/ 11 SMO.DK-Sharing Knowledge. McDonalds current strategy http://www.smo.dk/mcd-assignment/currentstrategy/ 12 Strategic analysis of internal environment of a business organization http://bizcovering.com/business/strategicanalysis-of-internal-environment-of-a-business-organisation/ 13 MC. DONALDS SWOT ANALYSIS http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT 14 MC. DONALDS SWOT ANALYSIS http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT 15 MC. DONALDS SWOT ANALYSIS http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT 16 MC. DONALDS SWOT ANALYSIS http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT 17 Issues of McDonalds http://www.mcspotlight.org/issues/intro.html 18 PESTLE analysis to explain companys international strategy of McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html 19 PESTLE analysis to explain companys international strategy of McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html 20 PESTLE analysis to explain companys international strategy of McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html 21 PESTLE analysis to explain companys international strategy of McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html 22 PESTLE analysis to explain companys international strategy of McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html

23 PESTLE analysis to explain companys international strategy of McDonalds http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html 24 Bargaining power of buyers http://www.smo.dk/mcd-assignment/porters-five-forces-analysis/ 25 Exams Tutor. Demographic Segmentation http://www.examstutor.com/business/resources/studyroom/marketing/market_analys

is/7_demographic_segmentation.php
26 Tutor2u. Market segmentation - psychographic segmentation http://tutor2u.net/business/marketing/segmentationpsychographic.html 27 BusinessiHub. Use-related segmentation http://www.businessihub.com/use-related-segmentation 28 IBS Center of Management Research. Consumer Behavior http://www.icmrindia.org/courseware/Consumer%20Behavior/CBC02.htm 29Business dictionary. Critical success factors definition http://www.businessdictionary.com/definition/critical-success-factors-CSF.html 30 SWOT Analysis McDonald's http://www.marketingteacher.com/swot/mcdonalds-swot.html 31 SWOT Analysis McDonald's http://www.marketingteacher.com/swot/mcdonalds-swot.html 32 SWOT Analysis McDonalds http://www.marketingteacher.com/swot/mcdonalds-swot.html 33 SWOT Analysis McDonalds http://www.marketingteacher.com/swot/mcdonalds-swot.html 34 SWOT Analysis McDonalds http://www.marketingteacher.com/swot/mcdonalds-swot.html