By:

Aarzoo chopra
Mc Donald's Beginning….
 Late 1930s
Richard and Maurice Mc Donald
drive in, in California
 1937
hot dog stand Airdrome California
 1940
Mc Donald barbeque restaurant
 1948
 decided to streamline the
business
 Need of hour quick service and
mass production
 80% of sales by hamburgers
1948
 reopened the store with new
strategies
 quick service at a low price
 An assembly line kind of approach to prepare
food “Speedee System”

15 cents as compared to 30 cents

First mascot Speedee

Franchising
 1953 ,franchising in order to expand
 For 1000 dollars
 Mc Donalds name
 a basic description of their service system
 services of Art Bender

• In 1954. Ray Kroc, distributor for milkshake

machines. finalized a deal with the McDonald
brothers
• He established a franchising company, the
McDonald System Inc. and appointed franchisees
• In 1961, he bought out the McDonald brothers'
share for $2.7 million and changed the name of
the company to McDonald's Corporation
• In 1965, McDonald's went public...
Over the years..
Business divided into four segments:
US , Europe, Asia Pacific middle east and
Africa(APMEA) and other countries
2003
quarterly loss for first time
As of now 2008
Headquartered in Oak Brook
Illinios,USA
Chairman and CEO: James A Skinner
Key Milestones..
 1954 Ray Croc, franchising agent
 1960 renamed the co as Mc Donald’s corporation
 1961 Co logo from “Speede” to letter “M”
 1961 Croc buys out Mc Donald’s for US $2.7million
 1963 Ronald Mc Donald
 1979 Happy Meal
 1988 Fortune magazine 100 products America
makes the best
 1996 20 ,00 restaurant mark
 2000 low calorie menu items, healthy cooking ways
 2003 advertisement campaign, tag line”Im lovin it”
Recession Effect…

 McDonalds reported net income of US$ 1.19

billion in second quarter of the year 2008.
A rise in 4% in revenue backed by 6.1%
growth in same store at the global level while
the comparable sales in the US grew by 3.4%.
Mconalds industrial average has shed only
3.4% that,s better than its fast food rivals like
burger king, down 24.6% and yum!
Brands,28.6% .
 Contd…
Cut down on fine dining restaurants

Adding local items to its menu

Adjusted prices according to the prevailing

economic conditions.
GLOBAL EXPANSION
• First international restaurant in Canada on June 1,
1967.

• July 1971, started operating in Tokyo.

• Started its operations in Europe (Netherlands) in the

same year.

• Also opened restaurants in Munich, Germany and

Australia.

• In early 1970s it also entered France and England.

• On January 31, 1990 it entered Russia setting
up a restaurant in Moscow.

• In 1990 a restaurant was opened in China.

• In 1992, two outlets were opened in Poland.

• In 1993 it entered the Middle East Market.

• In 1996 McDonald’s entered India through a

franchisee, opening a restaurant in New Delhi.
GROWTH STRATEGIES
1. Think Global Act Local

• McDonalds tried to expand into global arena with

standardized operations, modified a little to fit in with
the local culture, tradition, social practices and laws.

• It invested a lot in researching the market and then

develop its products to suit local tastes.

• They tried to localize the products and ingredients

keeping in mind the sentiments and religious practices
in different countries.
• Starting their in venture in Indian market they learnt
that Hindus consider cows as sacred, so beef product
was not offered in the restaurants.

• Also to cater to the large vegetarian population they

introduced vegetarian burgers called McVeggie, McAloo
Tikki, Pizza McPuff etc.

• Considering the muslim population don’t eat pork, non-

vegetarian products included only chicken and lamb.
In Jerusalem, McDonald’s are closed on
Saturdays, the Jewish Sabbath Day.

In all islamic countries it offered a “Halal” menu

and prepared food according to Islamic laws.

However the basic structure of McDonald’s Menu

remained same comprising of burger or
sandwich, fries and coca cola.
2. Adjusting Price

• It adjusted its price according to the value of currency of the

target country.

• While fixing prices it considered various factors like location

and income distribution in the region.

• The price was fixed keeping in mind the target group of

middle and upper class people.

• In some markets company gave discounts on certain food

items from time to time , to promote a particular item or to
boost up its sales during lean periods.
Promotional Strategy
 Television Advertisements
 Significant use of Billboards and
Signage
 Sponsoring Sports Events
 Drive-Through Service
 Use of different punch lines in
different countries

1–18
Promotional Strategy
 Perceptual map for India
Promotional Strategy
In India it popularised with the
punch line
“Aap ke zamane mein ,baap ke
zamane ke daam”
“Mc Donald’s mein hai kuch baat”

•Communications through paper mats

and trays when faced with
controversy in India
•Re-engineering the menu
• McDonald’s a fun place to eat.
•Facilities like Wi-Fi in the outlets like
the one at Vile Parle in Mumbai.
1–20
Promotional Strategy
 In Russia, Ads focused on the quality of food.
 In France the company replaced Ronald Mc.
Donald in 2002 with Asterix
 Happy meal - Toys according to the marketing
theme of the country
 In 2008, McDonald’s U.K. ran a promotion of
“Buy one get one free” for Big Mac by way of
press vouchers
 McDonald’s Japan opened a new concept
restaurant called Quarter Pounder in Tokyo

1–22
Involvement in Local
Communities
 Employment Opportunities
 80% of restaurants franchised to local people
 McDonald’s in several countries hired local
people for top positions
 Sourced Raw materials from local supplies
 In 2002 it became a part of fundraising
campaign for SOS Children Villages
 In 2008, McDonald’s China donated RMB 1
million for the victims of the earthquake
 Awarded in Australia by EOWA in recognition for
boosting employment for women in the year
2008
 Trained suppliers besides training employees
1–23
New McStrategies
Leverage Brand Equity
Product Development: Focus on
core business
Quality and taste issues
 Food delivery methods
 MBX (McDonald’s Big Extra)
Family Value Meal
New McStrategies
Joint Venture (Franchisee): Change
methods of dealing with franchisees
To better motivate owners and foster team
spirit
Enhance owners’ participation in process
improvements
New McStrategies
Market Penetration and Development
Continue International expansion

Retrenchment
Home office cost reductions

Splitting into five geographic divisions

Horizontal Integration
Purchase competition with differing target
markets
Hurdles in Way…
Opposition from:

Anti-WTO,

Anti-America,

Anti-Globalization activists & Organizations

Agitated Acts…
In 1994, activists of “london greenpeace”
distributed leaflets titled “what’s wrong with mc
donald’s”. The trial ran for 313 days.

French farmers dismantled mc donald’s franchise

in millau as a protest against unchecked
globalisation.

In 2002, there were attempts to bomb two outlets

of mc donalds in saudi arabia, which turned out to
be unsuccessful.
In Mc Donald’s Favour
Allegations of it being a “greedy”
multinational was not true as it held very low
margins.

Products were moderately priced to serve

even the lower strata of the economy.

Provided employment to the local people and

took material from local suppliers.
Competitors
KFC
PIZZA HUT
TACO BELL
LONG JOHN SILVER’S
STARBUCKS CORPORATION
OTHER LOCAL CHAINS….

THESE BRANDS HAD

 More Variety
 Deeper Penetration
 Larger Customer Base
Impressive Results in Tough
Time
In October
 11 % increase in Net Income
Growth
 Domestic Market Increased by 9%
 European Operations Saw 23% growth

 Asian Middle east witnessed 28% growth

Growth margin Improved

 25.8 to 29.1
Slump a boon
 Contd…
December 2008
 7.7%increase in Global Comparable Sales
 4.5% accounted for US

 Europe Accounted for 7.8%

 Asia stood at 13.2%

Good performance countered economic

slowdown in US
Change in customer trend
Re-emphasizing McDonald’s Basic Strategy
Took CSR initiatives
Questions/Answers
Thank You