Mcdonalds 2012-2013 Essay
Dick and Mac Mcdonald were two brothers who started the McDonald’s brand in California after moving their hotdog stand to San Bernadino from Monrovia Airport. After realizing that hamburgers were their most popular product, the brothers reinvented their restaurant using their Speedee Service System in 1948. It was a concept that created a production line of hamburgers that were made before being ordered. This concept pioneered the fast food industry and was in complete contrast to most restaurants that only prepared food after the customer had placed their order.
A history was created by McDonald’s system that helped them to undercut competitors by as much as 50%. The growing volumes helped them to reduce more costs from the economies of scale. This was an advantage that is a success for McDonald’s till now. The entry of Ray Kroc into the business was a significant development in the history of McDonald’s. He brought the rights that helped McDonald’s to expand their concept outside California and Arizona. A restaurant chain was quickly built and more than 100 restaurants were in operation by 1959. Ray Kroc bought the McDonald brothers in 1961. However the negotiations did not went well and McDonald brothers lost all the royalties and rights to the brand they had started.
The separation ways between Kroc and the McDonald brothers was not very pleasant. This resulted in Kroc building and then managing the opening of a new outlet of McDonald’s near the last remaining store of McDonald brothers. The historians and biographers had perceived this move as incredibly insignificant. They compared it with kicking a man when he is already down. Any malicious behavior on the part of Kroc was denied by the McDonald’s Corporation. They preferred to strike out McDonald brothers from the corporate history.
Family members of McDonald have written about the deal between the brothers and Kroc. They appeared on talk shows for promoting their side of story. McDonald’s Corporation pioneers the training of its franchise owners in 1961 with the opening of Hamburger University. This move was aimed to maintain manager and franchisee loyalty in spite of a highly competitive market. The introduction of Ronald McDonald as a brand face and the release of the Big Mac burger were seen in the 1960s. The launch of Big Mac burger has grown turning out to become the most popular burger of McDonald’s.
http://www.slideshare.net/pridhavale/mcdonalds-marketing-strategies Mission & Values
McDonald’s brand mission is to be our customers’ favorite place and way to eat. Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers’ experience.
We place the customer experience at the core of all we do. Our customers are the reason for our existence. We demonstrate our appreciation by providing them with high quality food and superior service in a clean, welcoming environment, at a great value. Our goal is quality, service, cleanliness and value (QSC&V) for each and every customer, each and every time. We are committed to our people. We provide opportunity, nurture talent, develop leaders and reward achievement. We believe that a team of well-trained individuals with diverse backgrounds and experiences, working together in an environment that fosters respect and drives high levels of engagement, is essential to our continued success. We believe in the McDonald’s System.
McDonald’s business model, depicted by our “three-legged stool” of owner/operators, suppliers, and company employees, is our foundation, and balancing the interests of all three groups is key. We operate our business ethically. Sound ethics is good business. At McDonald’s, we hold ourselves and conduct our business to high standards of fairness, honesty, and integrity. We are individually accountable and collectively responsible. We give back to our communities. We take seriously the responsibilities that come with being a leader.
We help our customers build better communities, support Ronald McDonald House Charities, and leverage our size, scope and resources to help make the world a better place. We grow our business profitably. McDonald’s is a publicly traded company. As such, we work to provide sustained profitable growth for our shareholders. This requires a continuous focus on our customers and the health of our system. We strive continually to improve. We are a learning organization that aims to anticipate and respond to changing customer, employee and system needs through constant evolution and innovation.
McDonald’s is Global – and in Your Hometown
McDonald’s is the leading global foodservice retailer with more than 34,000 local restaurants serving approximately 69 million people in 119 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local men and women. Our goal is becoming customers favorite way and place to eat and drink by serving core favorites such as the world famous French Fries, Big Mac, Quarter Pounder and Chicken Mc Nuggets.
Our Strategic Direction
The strength of the alignment among the Company, its franchisees and suppliers (collectively referred to as the System) has been key to McDonald’s success. This business model enables McDonald’s to deliver consistent, locally-relevant restaurant experiences to customers and be an integral part of the communities we serve. In addition, it facilitates our ability to identify, implement and scale innovative ideas that meet customers’ changing needs and preferences.
McDonald’s customer-focused Plan to Win provides a common framework for our global business yet allows for local adaptation. Through the execution of initiatives surrounding the five elements of our Plan to Win – People, Products, Place, Price and Promotion – we have enhanced the restaurant experience for customers worldwide and grown comparable sales and customer visits in each of the last eight years. This Plan, combined with financial discipline, has delivered strong results for our shareholders.
The business is managed as distinct geographic segments that include:
* Asia/Pacific, Middle East and Africa (APMEA)
* Other Countries & Corporate(OCC) including Canada, Latin America and Corporate Restaurant Ownership
We view ourselves primarily as a franchisor and believe franchising is important to delivering great customer experiences and driving profitability. At year end 2010, 80% of McDonald’s restaurants were franchised. Of the total McDonald’s restaurants worldwide:
* Nearly 59% are conventional franchisees
* 21% are licensed to foreign affiliates or developmental licensees
* Nearly 20% are Company-operated
The McDonald’s Franchise
McDonald’s is the best of the best when evaluating the franchise industry. The McDonald’s Franchise has over the past sixty years developed an entire market, defined American Culture, written the book on franchise growth and set the standards for branding. Not bad for a company founded by a guy who sold Dixie Cups for a living. The McDonald’s franchise has played a key part in virtually every family and child’s life in America since the mid-1950’s . The Brand, with Ronald McDonald’s help, became synonymous with a child’s favorite place to eat. With the advent of the highway system’s growth throughout the United States, the McDonald’s Franchise System grew at unparalleled speeds.
Today, the McDonald’s franchise system boasts over 30,000 operating restaurants worldwide. How did a burger chain grow to be a world dominating brand and franchise so quickly? 1. A Great Operating Model. McDonald’s has one of the most sound and operationally solid business platforms in the world regardless of industry. As a franchise system, the McDonald’s operating unit could be leveraged through owner operators at a speed that could not be matched by company owned growth. 2. Collaborative Relationships with Franchisees. McDonald’s has one of the most synergistic working relationships with their franchisees in the franchise industry. Through this mutually beneficial relationship, the McDonald’s franchise system has thrived.
The Breakfast Menu, the Fish Sandwich and most of the successful menu items have come from franchise owner’s suggestions. 3. Brand Development. McDonald’s spends over one billion dollars per year on brand development and advertising. This brand development is what has fueled the growth of not only the franchise system, but each of the operating units themselves. McDonald’s brand is rated as one of the top five brands in the world, this has an enormous impact on the success of the restaurants. 4. Financial Management. McDonald’s owes a great deal of their success to a business strategy developed early in the company’s life.
By owning the real estate that the franchisee’s operate on, the McDonald’s system became one of the largest land owners in the world in a very short time period. It was this ingenuity that provided the organization with a substantial amount of assets, equity and investment weight which powered the company forward. 5. Vendor Relationships. Ray Kroc was famous for saying that the McDonald’s franchise was built on a “three legged stool”. One being the corporation, two the franchisees and the third being the great vendor relationships. Coca-Cola was the most prominent of the vendors, but each of the supplier partner’s played a critical role in the successful expansion of the McDonald’s Franchise.
McDonald’s Winning Strategy, At Home And Abroad
Of all established companies that have managed to endure the many challenges time brings to their way, one stands out: McDonald’s (NYSE:MCD). On Friday morning, the company reported another blockbuster quarter both on the bottom and top lines, with sales rising across all geographic regions. How does the company do it? Two ways: First, with a franchise business model that allows its franchisee-members, management and shareholders to share the risks and rewards from the discovery and exploitation of new business opportunities—McDonald’s model has become the norm for other franchise organizations. Second, by adaptation and innovation, coming up with fresh products and services to address the needs of a diverse consumer market—as shaped by demographic, economic and local factors around the world.
McDonald’s rode the baby-boomer trend in the 1960s, the swelling ranks of teenagers and the rising female labor force participation, supplying a fast and inexpensive menu. In the 1970s and the 1980s, the company rode the globalization trend by transferring the American way of life to many countries around the world. At the same time, it adapted to the social context of each county by franchising to local entrepreneurs. In the 1990s and early 2000s, McDonald’s made successful efforts to restore its corporate image by launching the “Fast and Convenient” campaign that involved the radical adjustment of the company’s product portfolio to emerging food industry trends—the re-furbish of McDonald’s restaurants to achieve a banded, updated, and more natural dining environment.
The “fast” and “convenient” elements of the McDonald’s concept were augmented by the “healthy” and “more natural” element, by adding salads, fruits, and carrot sticks to the menu. In recent years, McDonald’s has continued to broaden its product portfolio by offering high quality coffee and healthy drinks (either through its traditional restaurants or the Cafés), competing head to head with Starbucks (NASDAQ:SBUX) and local cafeterias—benefiting by local trends like austerity in Europe, and robust growth in China.
When people think about the franchising concept, McDonalds usually comes up first as a prime example. And though McDonalds was not the first franchise business – Isaac Singer, the inventor of the sewing machine gets credit for originating the franchise idea — the hamburger chain certainly exemplifies franchising success. The first “McDonalds” restaurant was opened by brothers Dick and Mac McDonald in 1940 on Route 66 in San Bernadino, California. The menu had about 25 offerings, and “carhops” brought the food out to patrons (usually teenagers) waiting in their cars. Today, McDonalds franchise network is the world’s leading food service retailer, with more than 30,000 franchise restaurants serving 52 million people in more than 100 countries. Of those stores, more than 70 percent are owned by independent operator franchisees.
How did the chain grow from a single store to the most popular fast food restaurant and successful franchise operation in the world? Raymond Kroc gets the credit as the driving force behind McDonald’s successful franchise growth. He did not start out as a restaurant owner, but as an equipment supplier to restaurants after mortgaging his home and investing all his savings in an exclusive distributorship for a milk shake maker called “Multimixer.” In 1954, the McDonalds restaurant caught Kroc’s attention because it was using eightMultimixers. Kroc went to visit the restaurant and was amazed at the speedy business operation that served so many people at once.
The McDonald brothers had already begun tofranchise their restaurant concept and had four locations going by the time of Kroc’s visit. Kroc recognized the opportunity to sell lots of Multimixers and made a proposal to the brothers to let him franchise restaurants outside of their home base in California. (Ray Kroc was not the only one impressed by the McDonalds restaurant, which was also visited by James McLamore, founder of Burger King, and Glen Bell, founder of Taco Bell.) In 1955, Kroc launched “McDonalds Systems, Inc.” as a legal structure to run his franchises, and by 1958 McDonalds had sold 100 million hamburgers. In 1961, the McDonald brothers agreed to sell all the business rights to Kroc for $2.7 million.
The company went public in 1965, and 100 shares purchased then for about $2,250 would have grown to 74,360 shares now worth over $3 million. The first McDonalds franchise opened outside the US in British Columbia, Canada in 1967. Since then, McDonalds has spread all over the world, with its largest franchise store featuring more than 700 seats opening in Beijing, China in 1992. One essential factor that contributes to franchise success is a consistent commitment to standards.
McDonalds franchise restaurants became well-known for the inspired and defining vision created by Kroc for his restaurant business. “Quality, Service, Cleanliness and Value” was the company’s motto, and customers knew that no matter where they travelled, they could rely on those qualities at every McDonalds they visited. Kroc’s brilliant marketing insights produced many winning strategies. He launched “Hamburger University” in 1961 in Elk Grove, Illinois, to train all franchisees in every aspect of McDonald’s management. Kroc also targeted families as his best market share. This resulted in the debut of the “Ronald McDonald” clown character on television in 1963, first played by Willard Scott.
McDonald’s success thrives on adapting to consumer demands…
But the franchise chain’s success also rests on another key component, which at first glance might seem contrary to franchising principles – continual innovation and adaptation to market conditions. First started as a simple hamburger, french fries and milkshake restaurant, McDonalds franchise operation experimented and expanded its menu to cater to changing tastes and consumer demand. In 1963, McDonalds introduced the “Filet-of-Fish” sandwich in the Cincinnati area for Catholics who did not eat meat on Friday. This was the first new offering added to the standard menu and went national the following year. It is interesting to note that many of the new products added to McDonald’s menu over the decades were developed by franchisees.
For instance, the “Big Mac” introduced in 1968 was the brainchild of Jim Delligatti, one of the earliest McDonalds Systems franchisees. The “Egg McMuffin” was developed in 1973 by McDonald’s franchisee Herb Peterson. A Canadian franchisee invented The McFlurry in 1997. 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.
McDonalds 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. If you would like to get your bite of the profitable franchise restaurant industry why not find out more about well-known and some up-and-coming fast food franchises, which have been influences by the world’s most successful franchise business – McDonald’s. http://www.franchisedirect.com/foodfranchises/themarketinggeniusbehindmcdonaldsfranchisesuccess/14/25
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 27 November 2016
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