Company Analysis McDonald`s

CompanyAnalysis: McDonald’s

Tableof Contents

Part 1: who the company is 3

Introduction- About the company 3

Supply Chain Management and Competitive Strategy 3

Environmental Scanning: SWOT Analysis 4

Strengths 4

Weaknesses 5

Opportunities 5

Threats 6

Part 2: company’s supply chain as it is currently 6

Supply Chain Management 6

Location strategy 7

Layout Strategy 8

Area Analysis 8

Part 3: How the company wants supply chain to be 11

Area Planning 11

Part1: who the company is Introduction-About the company

McDonald’sis a big brand name in the food and beverages industry given itsconsistent performance and strategies that outsmart its competitorsin the highly competitive industry. The company was set up in 1940with the main purpose of offering restaurant services andparticularly the barbeque. The two brothers, Dick and Mac McDonaldwere the chief architects of the famous company and they marshalledall available resources they had to establish the company inCalifornia. Raymond Kroc oversaw the growth of the company from atiny restaurant to what it is in the global market today. The founderwas just a simple milkshake machine salesperson who used to serve theresidents with petty foods before meeting the two great brothers todraft the idea of putting up a restaurant 1954. Late 1950s was thebreakthrough years for the company because it managed to sell closeone-hundred hamburgers consequently making substantial profits thatdrove its operations in the country.

SupplyChain Management and Competitive Strategy

Theorganization has a simply, but effective system when it comes tovalue chain. Under this strategy, food is supplied to variousbranches through the third party logistics operators, which means itdoes not get involved in handling products while in transit. Thisstrategy is the best in handling perishable and high-risk products,as logistical companies are known to be effective when it comes todelivering the required product. This form of supply chain isreferred to as inbound logistics. The production activities takeplace in the company’s huge plants without much control ofdistribution of the finished product. Packaging is also contracted toother small companies and this strategy is known to increaseefficiency. Whenever the production process is ongoing, specificmeasures and guidelines are undertaken to ensure safety of employees,as well as quality preservation. While products are being taken tovarious destinations, the company carries out monitoring through thecomputerized systems, something that facilitates consistency in theway goods are produced and delivered to various destinations.

Thecompany also applies outbound logistics where growth is consideredpart of the recycling processes and it has to be integrated in thelogistics of the centres utilized in distribution. The peopleemployed at various points are mandated with the role of storing theproducts and distribute them to the designated customers. As far asmarketing is concerned, the long-term objectives of the company arebroken down into manageable short-term objectives and the main reasonfor doing this is to ensure such objectives are measurable. Eachfranchise is given full powers to operate independently whereby itcan incorporate any strategy into its operations as long as it doesnot amount to ineffectiveness.

EnvironmentalScanning: SWOT Analysis

Inthe financial year ending 2014, the company had mixed fortunesregistering the least sales after a very long time. This trend isattributable to the lessening of the US dollar in the global market,extreme competition, and inefficiencies in particular marketglobally, especially those in Europe. The chief executive, DonThompson, was sacked following this poor performance and the new manat the helm is Steve Easterbrook who took over early this year. Thenew changes in management has given investors some hope and the newboss recently unveiled a global development plan that focuses onimproving operations, winning back customer confidence and trust, andunlocking the financial potential of the company.


AsLove (1987) observes, one of the strengths that have maintained thedominance of the company is its strong global brand. The brand isrecognized everywhere, especially the Golden Arches. The standardsapplied in producing the product in the United States are similar tothose utilized in Moscow Russia meaning consistency in production iswhat has been keeping the company above others globally. Based on thecultural settings and the regional demands, the company adjusts itssystems to suit the demands of the locals and authorities. Anadditional strength is diversified income, which is facilitated bythe size. The company has locations across the globe, something thatallows it to make adequate profits through sales. It operates in overone-hundred and twenty countries and whenever the performance at homeis dismal, its international branches help it to boost income. BurgerKing is a brand recognized in the United States and it depends onthis market, but other brands are also performing very well in otherparts of the world. Diversification is a strategy that has helped thecompany a great deal in maintaining the cash flows consequentlygenerating profits.


Negativepublicity is one of the challenges that the company has been forcedto deal with over years since it is assumed that its food isunhealthy, with some haters claiming that the food is loaded withunnecessary fats, carbs, salts, and sugar. Health experts accuse thecompany of promoting unhealthy eating habits among Americans andother people globally. In 2004, a documentary titled ‘super sizeme’ played a critical role in destabilizing the sales of thecompany. In the documentary, Morgan Spurlock’s health is said tohave deteriorated tremendously after eating food from MacDonald’sfor thirty days. Many consumers avoided food from the restaurantthinking that their health would be put under jeopardy as well. Thecompany has to contend with the issue of employee turnover becausethe nature of the jobs demands low skills and they are poorly paying.As Neville(2008) puts it, employees are unlikely to take their jobs seriouslybecause they are not motivated to offer quality services.


Withthe coming of the new CEO, the company has a realistic chance ofturning its fortunes and in fact, plans are underway to upgrade themenu. The new leader announced that premium offers would beintroduced to loyal customers. The plans include venturing into thehot drinks industry where Starbucks is dominant. Again, the expansionstrategy, which targets the developing countries, is meant tostrengthen the company in the market.


Thegenuine threat that the company is struggling with is competitionfrom regional, national, and international companies. Competition isbased on prices, expediency, services, menu variety, and the qualityof products. The second threat is on the consciousness of consumerson health issues, which is being propagated by various professionalorganizations.

Part2: company’s supply chain as it is currently SupplyChain Management

Managementof supply chain is about efficient and planned harmonization ofconventional business tasks and strategies across these businessoccupations within a particular organization. It entails inventing,scheduling, implementation, management, observing supply chainactivities to create net worth, building competitive systems,leveraging global logistics, and linking supply to demand. McDonald’sis one of the global organizations that understands the importance ofsupply chain management and has gone ahead to integrate it into itsoperations. The organization operates in a complex global economythat is highly reliant on technology hence supply chain management isneeded to manage competition. Since the organization operates invarious countries with different taxation systems, it has been forcedto employ tax efficient supply chain management model that focuses onthe impacts of taxes on the business operations. In countries thatthe taxation system favours the company, it tends to increase itsoperations. One of the aspects of supply chain management thatMcDonald’s focuses on is customer service, which is aimed atstrengthening its relationship with clients (Chase, Jacobs, &ampAquilano, 2007). Outsourcing and formation of partnerships is anadditional principle that is often utilized at McDonald’s whereservices are outsourced from different partners and suppliers. Forinstance, the organization has contracted a private communicationcompany to be in charge of handling issues that customers raise viaonline forums.


Itentails coming up with a comprehensive plan to obtain an optimallocation for an organization through identification of needs andobjectives. The location has to be consistent with the generalcorporate strategy. Several factors influence the choice of locatinga company. One of the factors to consider is facilities, which entaildetermination of the type of space that the company needs to achieveboth short and long-term goals. Feasibility involves reviewingvarious operational expenses as regards the site. Other factors totake into consideration are logistics, labor, the communal factors,political factors, regulations, and incentives. Before a companydecides to take up a premise to set up its operations, it alsoassesses itself by looking at the size, the financial capability,infrastructure, and available labor. McDonald’s takes an extra stepin determining the best location to set up its business by dividingthe evaluation process into macro and micro levels. Under the macroexamination, it reviews various sites and population while microlevel valuation includes assessment of certain sites only. In macroanalysis, the management at McDonald’s carries out factor ratingand linear programming. Factor analysis calls for the establishmentof the costs for setting up the business in a particular site,including identification of the ethical values. The organizationoperates in an environment dominated by Islamic values andconsideration of these factors is critical before setting up theoperations. In case the costs exceed the benefits, the site isconsidered unfavourable and a new strategy of finding a new place isset up. Linear programming reinforces the factor rating method byevaluating the costs of prospective locations.


Layoutstrategies aim at achieving maximum utilization of space, equipment,and human resources. The company has to ensure the space it occupiesis not wasted and this is realized through designing. Throughplanning of effective layout strategies, chances are high that theflow of information would be smooth, something that boasts the moralof workers given the fact they will be working under favourableconditions. Employees working in squeezed offices are unable to offerquality services, as this interferes with communication seriously.Therefore, proper planning of office space improves customer/clientinteraction hence facilitating flexibility. Various types of layoutsexist, including office, retail, warehouse, fixed-position,process-oriented, and work-cell layout. However, only a few apply toMcDonald’s, such as office, work-cell, fixed position, andprocess-oriented. Regarding office layout, the objectives includelocating workers based on their roles, core duties, andresponsibilities in the organization. For workers in need of frequentcontact, they are placed next to each other to facilitate easiercommunication and flow of information. An excellent layout planconsiders the requirements related to capacity and space,environment, ease of information access, and the costs associatedwith movement. At McDonald’s, workers and workstations are groupedto offer comfort, safety, and facilitate easier movement of peopleand information. However, flow of information is given priority andthis informs the layout strategy. Whenever a new technology isintroduced, changes are introduced in the office


SWOTanalysis refers to a structural planning technique employed inassessing the strengths, weaknesses, opportunities, and threats(Chermack,T &amp Bernadette, 2007).The management uses the technique to determine the performance of aproduct, industry, organization, or the individual. The analysisentails a process in which objectives of the organization arespecified as well as classifying internal and external factors, whichmight be either beneficial or inauspicious. Establishment of thestrengths helps in understanding the special features of theorganization that are likely to give it an advantage over othermarket players. Looking at the organizational weaknesses is vital inthe sense that it plays a role in understanding the existingshortfalls in comparison to opponents. Opportunities are elementsthat the organization is likely to utilize to achieve competitiveadvantage. Threats are the factors that possibly cause problems.Conducting a SWOT analysis is imperative in strategic planning giventhe fact it helps in designing appropriate steps towards success.Stakeholder analysis differs from SWOT analysis because themanagement uses it to identify people and groups that have thecapacity of interfering with the performance of the organization,especially the actions proposed. It entails classifying importantpeople and sorting them out based on their importance. The managementhas to ensure it weighs and balances the demands of variousstakeholders to prevent conflict escalation (Fletcher, 2003). Inother words, stakeholder analysis ensures the interests of a certaingroup in the organization do not override those of others. Astakeholder is any person or company that is directly involved in theaffairs of the organization. While SWOT analysis diagnoses themarket, stakeholder analysis evaluates the potential effect of groupsand people associated with the organization.

Issueidentification differs from SWOT and stakeholder analyses because itis related to problem solving. Whenever an organization faces aserious problem that affects its performance, issue identification isthe first step towards solving it. Many organizations tend to suggestproblem solving techniques and procedures, but they end up failingbecause of insufficient identification problems. For instance, anorganization might be facing a challenge of retaining employees,which signifies an effect and not a cause. Under such a scenario,finding out the reasons why many employees could be handing in theirresignation letters is critical. Therefore, the organization has tocome up with an effective tool that will always capture the feelingsof workers and the problems they encounter at the place of work.Additionally, the management has to adopt the strategies that workwell in averting the situation by establishing effective strategies.

Thebest approach towards solving people’s problems is setting up anissue desk that will be charged with the role of collecting theirsuggestions, identifying the real problems, and acting upon theinformation collected(Pont, 2012).Based on this, it is important to conduct stakeholder analysis toensure the organization continues to receive funding as well asrealizing its desired goals and objectives. Development of acommunication plan needs completion of an interest matrix by notingdown the concerns of each group. Not all stakeholders are the same interms of influence hence mapping their concerns is very important.The shareholders are the key participants meaning they have to beinvolved in the governance structure, as they to play a role indecision-making. Additionally, the management has to consult andengage the stakeholders regularly to facilitate continuous flow offunds. Informing the less important groups of the decisions should bethrough general communications, newsletters, company websites, andmail shots. The management has to show consideration for the minorstakeholders with an aim of increasing their participation in theorganizational matters.

Part3: How the company wants supply chain to be


Communicationplanning entails adoption of a number of processes and strategies,but the most important is setting goals and objectives because itincreases effectiveness. A communication plan with clear goals andobjectives is likely to succeed because people are aware of what isexpected of them. Again, members of the public are informed of whatthe plan aims to achieve through the goals and objectives. Withoutgoals and objectives, chances are high that the concerned partieswill misuse resources meaning they play a critical role of preservingthe funds. Communication experts never believed that communicationplans could be measured hence they never expected media planning togo through performance and budget evaluation, as is always the casewith other projects set up in the organization (Latham,&amp Locke, 2002).Goals are defined as the ways through which results are articulated.They are often broad, intangible, and hard to measure. On the otherhand, objectives pertain to the subgroups of goals and are usuallyarticulated in scientific terms. In this regard, an objective isbased on fact and is observable as compared to a goal, which isabstract. When a communication plan achieves a number of objectives,it is said to have achieved the goal as well. At least three types ofgoals exist in communication planning, including the one aiming atimproving the reputation of the organization, relationship managementgoal, and task management goal. A communication plan to be generatedat McDonalds will be seeking to strengthen the relationship withstakeholders.


MacDonaldhas a number of options regarding dissemination of information toimportant stakeholders. The major sponsor, which is the government,is notified of any activity going on in the organization throughwritten documents because any message has to be signed to make itformal. In any bureaucratic environment, formal communication isvalued meaning written letters are sent to respective ministries,departments, agencies, and institutions notifying them of the plannedactions. The financial reports must be published in the popularnewspapers and magazines in the country, as this will allow membersof the public to comprehend the performance of the organization andscrutinize the accounts. Any organization funded through the publicfinances has to ensure it satisfies the populace to prevent conflictsthat might lead to the closure of the organization.Clientsare notified of the events and proceedings of the procurementprocesses of the organization through the radio and television, asthey are interested in listening and seeing what happens frequently.However, the use of social media should be considered in the futurebecause it attracts many youths who are the targeted group ofcustomers.

1.1.4Inventory Management

Managementof an inventory has never been an easy task, as it entailssupervision of the steady flow of units into and out of an existingrecord. In case the management fails to control the flow of theinventory, it would be too high resulting in difficulty in operation.A well-designed inventory should have the capacity to control thecosts, including minimization of tax burden and increasing the totalvalue. In this regard, the organization will have to pay closeattention to three major aspects and one of them is time. The time asupplier takes to generate an order and deliver the product iscritical and it has to be included in the inventory. When the exacttime the supplier takes to deliver a product is established,production is never interrupted. The second aspect is calculation ofthe buffer stock, which is an additional stock that is beyond theminimum number needed to sustain production levels. McDonald’skeeps accurate records of all financial transactions undertaken, aswell as the products ready to be delivered to the market.

1.2Customer Fulfilment

Thecompany has always operated in two major forms, one being serving asa franchisee meaning a member of another company, or acting as asales company in which it puts up a restaurant for customers toaccess various products. The company is guided by a strong vision andmission statement stating that, “to be the best and leading fastfood provider around the world.” The summary of the mission is QSCVmeaning quality, service, cleanliness, and value. In fact, this hasalways been its guiding principle in dealing with clients across theworld. With the value of the product the organization offers, eachclient is tempted to smile because its products are always of highquality. The company has a policy suggesting that it intends to bethe best destination for employees in each community globally. Interms of supplying products, it always seeks to deliver services andproducts with advanced operational systems that suit each customer ineach region or place that the company operates. Finally, the companyintends to progress in manner that will boost its brand in the globalmarket and innovation and technology are the two concepts dependedupon in improving operational systems.

Thecompany has an efficient management team that applies elements ofstrategic management in its operations where planning is undertakenin advance to give the company a competitive advantage. Thestrategies are customer-oriented meaning the desires and wishes ofcustomers take centre stage, as this is known to facilitatesustainability, as well as meeting growth and capitalization.Whenever the company is not performing as expected, the strategicteam commissions research to establish the reasons for behind thisunderperformance. Each branch has a vibrant customer care systemwhere customers can make direct calls through the hotlines provided.This enables clients to launch officials complains whenever theirneeds are not met and they can give suggestions on specific issues,as well as general performance of the company. The company’s tophierarchy supports technological development where any member ofstaff, irrespective of the position, has the right to suggest thebest technology to be applied in making and distributing products.Furthermore, the company does not shy away from collaboration as longas this will definitely improve the quality of the services offered.Another thing that is unique to the company is the idea of forwardintegration where franchisees are allowed to operate whilecontrolling the stores and the menus. Regarding the human resources,the company offers the best training to its staff upon recruitment tomatch the required skills internationally. Whenever a new product isintroduced in the market, training sessions must be organized for theaffected employees because this is believed to maintain quality(Goodman, 2005).On procurement, the company exercises flexibility meaning it choosesthe best suppliers available, especially the ones who are likely tohelp it enhance quality. Suppliers are allowed to offer productswithout relying on the benchmarks. The principle guiding the companyon this is experience on down trade distribution.


Qualitymanagement ensures the organization’s production and servicedelivery are sustainable in the turbulent market characterized bycutthroat competition. For the company to cope with quality issues ithas to plan well, establish controls, set up quality assurancemechanisms, and strategize on how to improve on continuous basis. Thecompany is aware of the impacts of quality management on the overallperformance and it has always facilitated quality improvement in allareas, including the means of attaining it. ISO 9001:2008 is thebasis through which the organization aligns its quality principles.First, the focus is on satisfying customers and the company hasalways generated strategies to cater for their current and futureneeds. The organization introduces workers to important customers,both internal and external, including their expectations that have tobe met within the specified time. The second principle is leadershipwhereby McDonald’s instructs its top managers to establish unity ofpurpose and ensure they offer direction. They have to facilitate anenabling environment that encourages people to achieve organizationalobjectives. In order to improve performance, the organization employsa process approach whereby it believes that resources and activitiesshould be managed effectively by applying a top-down approach.Enabling quality control entails discovering, understanding, andoverseeing related processes as a single system. To ensure continuousimprovement, the company established process performance measuresrecently whereby the efficiency of each department, section, andindividual employee is measured. The top management in the companyhas a clear data gathering and analysis process that informs itsdecision-making processes meaning it applies the factual approach.Finally, the company appreciates and values the presence of suppliersand has gone a step higher to form a special relationship tofacilitate value addition and boost the quality of products andservices offered.

Part4: The supply chain roadmap:

SupplyChain processes thinking and order fulfilment

Thethreats facing McDonald’s are many and the first one is completion,which has always forced the company to dig deeper to establish thebest strategies for survival. The fast foods industry is achallenging one because the products offered to clients are similarimplying the chances of making something different are minimal hencesurvival depends on how well the company handles its clients andother stakeholders. Competitors in the industry are advertisingproducts heavily, something that always gives McDonald a run for itsmoney. An additional threat is the closeness of various outlets ofthe company, which is unhealthy for competition because the company’sbranches find themselves competing to an extent of engaging inmalpractices that are likely to taint the image of the parentcompany. The entry of new players is not a big threat, as it is justmoderate even though it is easier to enter given the fact the startup costs are low. Other companies or individuals wishing to join theindustry are reluctant to do so because of the dominance ofMcDonald’s(Derdak, &amp Pederson, 2004).The company has an advantage that helps it in drafting policiestowards cost effectiveness and customer awareness programs. Thethreat of substitutes is also moderate even though the products aresubstitutable. However, the image of the company is irreplaceable,something that gives it an added advantage over others in the market.


Schedulingis concerned with management of time and efficient utilization ofresources to beat deadlines. For the organization to realize itsobjectives, it has to receive products in time, design them in time,and deliver them in time. Scheduling aims at realizing the short-termgoals and objectives and it has to be planned well to ensureachievement of long-term goals. An organization might choose toapproach the issue of scheduling in two broad ways, includingbackward and forward scheduling. However, McDonald’s makeseffective use of forward scheduling whereby the management selects aplanned action and determines the future date in which the product orprogram will be accomplished. A number of factors influence thescheduling choice and loading, which entails assigning jobs tovarious departments and available machines, is one of these factors.For instance, if a single machine has the capacity to deliver thedesired results, the organization will not face any difficultymeeting the deadlines. For McDonald’s, it has never faced anyserious challenge in meeting the needs of clients and customers intime because it has sophisticated machines and the best technology tohandle all the issues as per the scheduled time. Another factorconsidered is sequencing where the order in which jobs are processedis given special consideration. The organization is likely to face anumber of problems whenever the work centres are under pressure todeliver results. Time might be lost waiting for results hence theorganization is expected to employ the various sequence tactics. ForMcDonald’s, the technique applied is simple because it is based onthe first come first served principle. Whenever the company sets up aproject, Gantt charts are used to ensure deadlines are met (Heizer, &ampRender, 2014).


Anyorganization is faced with an uphill task of ensuring it remainscompetitive in the global market. For instance, a company has toensure all its departments are functional and will serve theorganization for several years. Establishment of a business is notdifficult to many people, but maintaining it is an issue that hasthreaten many executives. At McDonald’s, assessment of theperformance of various departments, processes, individuals, andstructures is often carried out to ensure they are functional withthe sole purpose of facilitating sustainability. The organizationcannot afford to lose any of its clients because they provide themuch-needed support to drive the company’s agenda. Capital flow hasto be maintained, human resources must be retained, and the companystructures, including machines should be maintained to facilitategrowth and sustainability. Therefore, continuous assessment andexamination of the organization is the strategy that McDonald’semploys in facilitating sustainability.

VRIOAnalysis and Generic Strategies

Withits recognized brand image globally, McDonald’s explores theavailable resources, something that has played a role in enabling thecompany grow successfully for quite a number of years. While thefranchises are given powers to operate independently, the companystill has a hand in procurement and supply chain, a conditionreferred to as rarity. Each branch has to follow strictly the companyrules(Stephen, 2004).Regarding the generic strategies, the company employs broaddifferentiation that entails drive through, lobbying, restroom,breakfast, and lunch menu. In places that different languages arespoken, the company has language specialists in every branch whoserole is to understand the demands of customers and ensure they aremet in the best ways possible. Additionally, the company providesextra services, such as internet connectivity through WiFi services.Through differentiated market segmentation, it has managed to capturemany family units, especially children who feel the message ‘happymeal’ is meant for them.

Processand Capacity Design

Capacitydesigning involves determination of the capabilities of the humanresources to meet the new requirements of a product. Design capacityis established through identification of the maximum time needed inthe organization to develop a high quality product. Due to issuessuch as quality problems, interruptions, and unavailability of rawmaterials, the organization has to establish whether it has effectivecapacity to generate a product. Therefore, any organization has tocome up with a working plan to enable early planning, as far ascapacity is concerned. Additionally, an organization has severalprocess and capacity designing strategies to choose from, includinglead strategy, lag, match, and adjustment strategy. Utilization ofthe various capacities in the organization to improve production ofgoods and services involves employing various techniques, equipments,and materials, hiring more workers, and bringing in new facilities.McDonalds made a decision to employ the lead strategy in enhancingcapacity because it has always anticipated for increased demand giventhe fact it has sufficient technology that plays a key role inattracting clients towards its services and products. The strategy isaggressive since it attracts customers through improvement of servicedelivery. The policy has helped the company achieve its desiredobjectives in a number of ways. For instance, it has played a majorfunction of ensuring the organization has a highly effectiveworkforce capable of meeting the demands of clients even in times ofrapid development. Recently, the company introduced an ambitiousprogram that allows customers to access its services online. Thestrategy helps in dealing with a high number of clients by ensuringthe needs of each are met. The strategy makes it difficult forcompetitors to take advantage of the staff shortage to take over asegment of the market.


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