5 Cs Of McDonalds:Company:

McDonald's Corporation is in 119 countries around the world. 33,000 locations serve over 68
million customers each day (Data Monitor, 2011). When it comes down to the McDonalds as a
brand and fast food industry, the sales are high, but the brand perception is not keeping up with
the pace. Rated the worlds number 6 brand by Interbrand, McDonalds brand is negatively
perceived by the public (Morrison, 2011). A few factors that influence the negative effect on
McDonalds brand perception include the issue of obesity, the involvement of animal cruelty,
social media commentary, and targeting an innocent audience with manipulation. McDonalds
aims are to maximize the profit by increasing the sales, keeping cost low and more outlets
nationwide. McDonalds main aim is to lead the Quick Service restaurant market by a
programmer of site development and profitable restaurant opening. The mission statement of
business McDonalds mission is to be the worlds best quick service restaurant experience.
Being the best means providing outstanding quality, service, cleanliness, and value, so that we
make every customer in every restaurant smile."

Collaborators:
Supplier is an organization that provides resources for other organizations. In McDonalds three
legged stool philosophy the third leg is supplier partners. McDonald's has practiced a backward
vertical integration, by replacing most of its suppliers. It has done so for two reasons,

To reduce costs, and

To ensure that its products are of top quality.

These supplies include beef and milk to be used in its products, which it gets from its farms.
Other suppliers include local grocery stores that supply McDonald's with fresh vegetables. Soft
drinks are supplied exclusively by Coca-Cola, which is also its ally. McDonald's supplies also
include raw material such as flour, sugar, yeast, etc.

Customers:
This refers to buyer force. The buyer has a great deal of selecting power due to the fact that if
they are dissatisfied with the food or service they can easily switch or purchase from an alternate
product. But it is undeniable that any organization cannot satisfy the needs of all the consumers.
Therefore organization divides the market into segments which display similar characteristics or
behavior is necessary. McDonald's market segmentation is based on demographic variables Age
and Lifestyle. The primary target markets are seniors, adults and teenagers, but the most heavily
targeted segment is children.

The market segmentation of McDonalds can be visualized as follows:

Market Segments

Seniors
Adults
Teenagers
Children

Customers are those who pay money to acquire an organization's goods or services. For many
years McDonald's mostly targeted the young people, however this has changed in this decade;
McDonald's has turned towards a more general market. By doing this McDonald's concentrates
on the family, targeting a diverse market. Customers used to get to know about the products
through advertising. Now a days they are focusing on billboards and give ads on social media
site.

Competitors:
It was said that Food industry is highly competitive" ("Data Warehousing Case Study: Fast
Food", n. d.). McDonald's major Competitors include that Burger King, Taco Bell, Subway, and
Panera Bread. Especially, KFC, which offers chicken nuggets and fries on its menu, operates
over an 11000 restaurants in more than 80 countries.
Fast food, especially fries, hamburger and so on, are thought as garbage-food because of highcalorie. There are high possibilities of healthy substitutes posing a threat to these companies. Of
course, McDonalds is concentrating on the health side by introduction of healthy food items in
the menu.
The following are the findings of the competitive position of McDonalds based on the Porter's
five forces:
Rivalry:
This involves how the company differentiates itself from its competitors. In case of McDonalds,
as discussed above the major rivals are Burger King, KFC and Wendy's. Though McDonalds is
the Market Leader currently, with the capacity of the rivals growing the competition seems
intense. The rivals are trying to increase their sales by concentrating on the health factors.
New Entrants:
With so many popular fast food companies in the industry new entrants are not much if a threat
when seen globally. McDonalds has an edge over its competitors as it is globally spread.

Buyers:
With reasonable prices and quick service provided by McDonalds, there is less scope for
customers to move to competitors for the products. With the introduction of the wireless facility
in the some of the outlets has added to the attraction.
Suppliers:
Except for the cold drink from Coca Cola, the company does not have a single supplier at a
global level. For meat it has its own farm and other raw materials are from local store
Substitutes:
There are high possibilities of healthy substitutes posing a threat to the company. Though
McDonalds is concentrating on the health side by introduction of healthy food items in the menu,
it might still be posed with the challenge of substitutes.

Context:McDonald is the largest fast food company in the world. There are more than 30,000 restaurants
in over 120 countries worldwide. In reality, there is nearly 49 million customers daily buy food
from McDonald. The reasons of success for McDonalds are not only about delicious fast food,
but also the theory, strategy that it used. In this post, I will mainly focus on the analysis of macro
environment for McDonalds, which is using the tool called PESTEL analysis
Political Factors
Generally, McDonalds are affected by government policy on the regulations of Fast Food
Company such as health and hygiene policy. Government realized health problem have been a
big concern for everyone, people are having diseases such as cardiovascular and cholesterol
because they are eating too much fast food. Furthermore, hygiene policy also is a big concern for
a fast food company. Good relationship with government will bring McDonald on a better
position to service in this industry
Economic Factors
McDonalds have to consider the effect of economic. Organisational performance is usually
affected economic factors such as tax rate, exchange rate and unemployment rate. Running a
Business in local market, a company must be facing government regulation on tax or profit.
Especially McDonald is an international company, and its business is successfully running over
the world. Every country also has its own regulation on tax or other else that affect the business.
Moreover, McDonald needs to import food and drink in local market, which mean the exchange
rate and people living standard also affect the cost of running a business and productivity.

Socio-Cultural Factors
The changing lifestyle will affect the sales performance of McDonalds. Nowadays, people are
willing to eat more expensively. They want to have quality services and food more than fast
food. Moreover, different country has different eating behaviour. In western country such as
USA, people are willing to eat potato and hamburger. But in China, people prefer rice more than
hamburger and potato. Few years ago, McDonald promoted rice burger, and now is promoting
rice for dinner. For my point of view, it is really strange and hardly to say it is delicious.
Socio-Cultural Factors
The changing lifestyle will affect the sales performance of McDonalds. Nowadays, people are
willing to eat more expensively. They want to have quality services and food more than fast
food. Moreover, different country has different eating behaviour. In western country such as
USA, people are willing to eat potato and hamburger. But in China, people prefer rice more than
hamburger and potato. Few years ago, McDonald promoted rice burger, and now is promoting
rice for dinner. For my point of view, it is really strange and hardly to say it is delicious.
Environment Factor
Recently, people start concern environmental problems such as air pollution and too much waste
of row material. Take McDonald as example, it faced a lot of criticize of the waste production.
Before the pager packaging was produced, McDonalds were using polystyrene for packaging for
foods. As I mentioned at the beginning, there are around 49 million customers daily buy the food
from McDonald. Can you imagine how much food waste and the waste of polystyrene
Legal Factors
Regulation always is the biggest concern to a company. As a company in fast industry, there are
many legal requirements that McDonald should achieve in different countries, such as the labour
and employment law, company law and tax requirement.
In conclusion, McDonald is still facing different threat from the macro environment. McDonald
will be affected by each of the factors.

Key success factors:Uncompromising Standards:

One of the most influential factors that made the initial set of McDonald's possible would have to
be credited to the restaurant's extreme commitment to their aimed standards of consistency and
their motto of "Quality, Service, Cleanliness and Value." In which both were created by Kroc
himself. Even customers knew that no matter where they travelled, they could rely on those
qualities at every McDonald's they visited

Consistency:
In 1955, Kroc incorporated his company as McDonald's corporation and opened his first very
own restaurant in Illinois.
Placing his concern over the consistency and uniformity from store to store, he decided to
establish strong restaurants first before franchising them out. Wants McDonald's to be a multi
local and not a multinational corporation.
QSCV:
For example, cleanliness is one feature of the McDonald's corporate system that needs no
explanation; clean toilets are universally appreciated. McDonald's is widely credited with starting
a revolution of rising expectations among East Asian consumers who had never experienced high
standards of public hygiene in the catering trade. In Taipei, Beijing, Seoul, and Hong Kong, local
restaurateurs had to match this new standard or watch their customers go elsewhere. Young
people began to draw an equation between the condition of a restaurant's toilet and the state of its
kitchen.
Willingness to Adapt:
McDonald's success is dependent on adapting to its consumers needs and demands McDonald's
franchise business has not only survived but thrived through boom times and recessions and has
successfully reacted to consumer trends. It was one of the first franchise restaurants to post
nutritional information about its menu, and now offers salads and other healthy options in recent
years.
Also, the key to McDonald's worldwide success is that people everywhere know what to expect
when they pass through the golden arches. This does not, however, mean that the corporation has
resisted change or refused to adapt when local customs require flexibility.
McDonald's continually seeks for innovation and they need to adapt to new market conditions
according the fast paced globalize world. For example, in 1963, McDonald's introduced the
"Filet-of-Fish" sandwich in the Cincinnati area for Catholics who were restricted not to consume
meat on Fridays. This new offering was later on implemented to the standard menu, then to the
national menu and lastly world wide.
In 2005, another adaptation to the times and consumer demand was the provision of WiFi with
Nintendo in select locations; and delivery service in Singapore, where customers can phone in
their order and have it delivered 24 hours a day, seven days a week. The company has also
departed from its standard free-standing units, and installed quick service kiosks in busy places,
like malls and airports.

Valuing People Approach:

The real secret to successful operation system is not found in its regimen but in the way it
enforces uniform procedures without stifling the entrepreneurship of franchises. For example, in
Japan, without the freedom of franchisees and suppliers to exercise their entrepreneurial
instincts, to test their own ideas . . . it would lose touch with the market place."
Everybody from below to top. Also, McDonald's views people, including the maintenance
people, partners, corporate managers, hostess in the restaurant, suppliers etc. what to see our
associates grow. If one example of a family succeeds, we all succeed.
Franchisees/ Associates/ Partners:
His idea was to start the franchisee without paying the franchisee charges. This was the start of
Mc Donald's success. First, make your partners rich. Though Kroc focused more closely on the
burger than others, his real innovation was to turn the business of franchising on its head.
Typically, franchising deals were struck by firms that wanted to get rich quick by being paid up
front for licensing their brand name and menu and supplying products. They were not confident
in their long term survival, so they wanted to pocket money now Kroc burst with confidence in
McDonald's future and that's why he was willing to get rich at a slower pace, if it meant that his
franchisees would prosper. Kroc felt that his competitors cared only about jamming profitable
stuff down the throats of their partners, rather than long term growth. He noticed how casually
and negligently the companies supervised their stores. Kroc felt passionately that his job was to
make his franchisees rich by cutting their costs and improving their products. (Buchholz, 2007)
Kroc's business model required an extra helping of patience. Kroc trusted a bunch of novice
franchisees. Kroc may have been confiden. He slowly distributed the stores, testing and training
the franchisees and requiring them to meet his excruciating standards for QSCV. Because other
companies were eager to collect big bucks fast, they sold off vast statewide territories to rich
speculators. Kroc sold just one at a time and refused to sell a second franchise to an operator
unless his performance was stellar.
Wanted the corporation to have control over its franchisees, the local business people who paid
the corporation to run its restaurants. Other chains let franchisees buy the right to open as many
stores in a region as they could. Kroc sold his franchisees just one store, so he could make sure
they knew how to run a McDonald's the way he wanted it run. He made sure his franchisees did
well, their success served his interests, since the corporation earned money on their restaurants'
sales.
Also, from his background knowledge of being a successful salesman, he understood that he
would not be a supplier to his franchisees, for it would jeopardize the relationships between the

two because of profits. "You cannot be a partner and a supplier at the same time" says Kroc.
Because it creates beaucracy. Do it another way and it builds trust. Kroc was adamant in helping
out his franchisees as much as possible, as he knew that McDonald's growth was highly
dependent on their success.
Suppliers:
Kroc wanted to tame his suppliers by making them rich. He wanted better prices and better
quality. . Ray Kroc's plan to do business with outside suppliers was giving many small but new
companies a chance to make a profit on high volume orders. Kroc negotiated better deals with
small suppliers who were hungry for his emerging business. Kraft had the McDonald's cheese
account early on, but when Kroc requested a sharper- tasting cheddar for the burgers, Kraft was
too busy or too comfortable to develop a new recipe. When Kroc went looking for good-quality
beef, major players like Armour and Swift refused to extend credit. So Kroc made
multimillionaires of the quick and hungry suppliers. When Kraft failed him, Kroc turned to a
cheese head in Green Bay, Wisconsin, named L.D. Schreiber. Today the Schreiber Company is a
multibillionaire dollar firm. Kroc could not negotiate great deals with Wesson oil and Procter &
Gamble. Instead he turned an upstart named Harry Smargon into a very rich man.
Staff:
McDonald's saw the importance of doing an internal marketing plan. Explaining that "external
plans and programs will not be as successful if you put the outside world before your own
people. Employees come first" When "im loving it' was first globally launched, McDonald's
launched it internally first before a single consumer saw the advertising and experienced the
marketing. This demonstrated that the people were the most important elements for making the
revitalization of the McDonald's brand work. They wanted "i'm loving it" to become an internal
rallying cry, and not just an external slogan.
Charlie Bell recognized that proud employees provided greater service, which can make an
incredible impression that will have an impact on a customers loyalty.
Currently, approximately 1.6 billion people all over the world are employed or own a franchise at
McDonald's. Though much of the success could be contributed from the sharp eyes of Ray Kroc
and his management team, we cannot deny that one of the contributors to the success lies within
the employees inside the organization.
Since employees play such an essential role in the main activities of the company, there have
been surveys conducted concerning employees and staff of the growing popularity of this chain
of restaurants and employees' contribution to it. One of the most important points is that

employees are motivated in their work and duties. Company provides with a set of benefits for
their internal staff, such as:

Employees are allowed to eat for free;

Employees have a month of paid holidays;

Employees have an access for private health care;

Employees have discount card;

Employees are awarded for servicing for 3, 5, 10, 15 and more years;

Employees have an opportunity to get sponsorship program, etc.

Moreover, training sessions are provided for the internal new coming staff. These training
sessions are properly structured and highlight the main values and principles of the company Quality, Service, Cleanliness and Value (QSC&V). Newcomers and freshmen are trained how to
provide the better service to customers and clients. What is more important is that the training
sessions are constantly updated, to become more modern and realistic.
McDonald's has went further and established its own education center for learning and training
classes, called Hamburger University, in which is now opened in many parts of the world . In this
university there is a centralized system of education, which teaches new staff about the
importance of people in marketing management, the sense of employee training and so on. That
is why even every day new technologies appears, McDonalds remain the number one in the fast food providers.
The career ladder is very attainable for everyone who wishes it in McDonalds. Approximately
20% of the top management staff passed through the very beginning position in the kitchen. For
example, If the person really has a willing to be promoted further, he always can reach it.
Everything in the hiring and promotion people in McDonalds depends on ability and
hardworking skills of a particular person. For a new coming employee there is a set of stages
he/she should take in order to have a desired position within the company. People taking high
positions within the company and willing to know all internal processes need to pass through
them by themselves. They should clearly understand all the details their subordinates report to
them so that they do not only rely on their results, but can estimate what has been made
incorrectly or in improper way. McDonalds exactly gives such an opportunity for people to start
from the early steps and grow till the desired point of destination.

Nowadays, more and more students come to interviews trying to get the job in McDonalds. It
becomes popular among the youth to have a part - time job and the companies like McDonalds
also benefits it as they offer a little bit higher the industry's average minimum salaries. Students
have several benefits working for McDonalds; they have free meal and have the opportunity to
earn their own pocket money. McDonalds, on the other hand, should have trained employees,
whom they need to teach immediately, and accurately introducing to the existing process and
paying them less. To reach the goal of fast training and not disturbing other employees from their
routine work, managers of McDonalds decided to implement the E-learning system for freshmen,
consisting of videos, role plays, newspapers and so on.
Employees are the most essential part in every organization. McDonalds wholly understands the
importance and contribution of every one person within the organization; that is why there is
well - known principle: "The result is done by a man". In order to fulfill the requirements of the
company - Quality, Service, Cleanliness and Value (QSC&V) - McDonalds considers each
employee as the vital part for success in achieving the above mentioned characteristics. In the
desire to fit the reputation of brand as number one fast-food restaurant, McDonalds tries to
follow four simple rules to help their employees to improve, such as:

The company has to maintain different kind of motivation to different departments within
the organization;

Every member of the staff has to have one goal, which will be reachable and clearly
viewed;

As a particular employee grow in his positions, his goals should also be changed, so that
every position up will spread his goals broader;

An increase in salary should be attractive for an employee. This will be a good

motivation technique. McDonalds uses different aspects of motivation tools, which
include financial, non - financial and social ones. Variety of motivation methods were
chosen for implementation because the research conducted internally in the company
showed that people need not only monetary refunds, but social recognition too. They
should not be separated, but rather combined for serving as the strong motivation
technique. The results of conducting the survey clearly underlines that although the
motivation tools were based on the theory of Maslow's hierarchy of needs, in the reality
employees need the mix of all aspects of motivation, not excluding some of them, in
order to improve the performance of people and as the result increase the productivity of
the whole activities of McDonalds. (NADIYA)

Giving Back to the Community:

Kroc became extremely wealthy following McDonald's enlisting in the stock market in 1965. .
Kroc believed in giving "something back to the community where you do your business This
extreme wealth did not stay with him alone, he decided that he would like to share his wealth
amongst others too. The Kroc foundation, which supports researches on diabetes, arthritis and
multiple sclerosis, is a testimonial of that. Other wealth sharing opportunities known was that he
gave 8 million USD to some of his top employees.
Over the years, the corporation also donated food and money to many charities, and the company
encouraged local franchisees to get involved in their communities. The best known charitable
effort is the Ronald McDonald house, which is located near hospitals where families can stay for
free while their children receive medical treatment. ". In 1974 McDonald's first opened the
Ronald McDonald's house in Philadelphia thus following Kroc's philosophy to provide the home
away from home for the families of children in nearby hospital followed by 100 similar
McDonald houses all over US after 12 yrs
Kroc makes it a mission to give back to the people, as it reflects on the consideration and serves
as a "thank you" to those who have always been supporting McDonald's.
Insights to Other Critical Success Factors:
Alongside it's philosophy, vision and mission statements, McDonald's has definitely managed to
beat the mediocre standards during the earlier stages, allowing it to take off and penetrate quicker
into the fast food market than its rivals.
This is mainly by it's

Attributes of speed: Initially, this was the main factor to McDonald's success. Even from
the earlier days, McDonald's has earned a reputation for serving meals efficiently fast. In
comparison to other similar fast food competitors, such as Hardee's and Rex Burger
joints, McDonald's was always developing its method behind the counters to speed up
their process of delivering the goods.

Types of products offered: A variety of goods catered to all types of people in every
region of the world. In India, for example, McVeggie has become a popular delight
among the locals, as the majority of the population is vegetarians.

Prices of products: Affordable to everybody. This was hugely contributed by the speedy
process of the food preparation time. Since it took less time to cook, "assemble" and
serve the burgers and fries, this only meant that McDonald's was able to sell more

products in a shorter time as well. Hence, the economy of scale, prices were able to fall
lower than its main competitors.

Level of service: Consistency of the services. Ray Kroc understood that the uniformity
and precision was key to a successful franchise. He made sure that there were rules set
and abided, by carefully creating a manual for all to follow and conform to. In that way,
everybody from different parts of the planet could enjoy McDonald's the way they
usually have it anywhere in the world just the same.