McDonald’s

1. McDonald’s Isabel Soboszek Meghan Dilawari Matt Salisbury Farhan Latif Tammy Huynh

2. Company Background • The first McDonald’s was built in 1940. • Ray Kroc was the first franchisee appointed by the original McDonald brothers, Dick and Mac. • He opened his first restaurant in Des Plaines, Illinois. • The company motto became “Quality, Service, Cleanliness and Value” (Q.S.C.& V)

3. History of the company • infancy stage • growth stage • maturity stage

4. Significant challenges faced in the company’s history • $250,000 donation from McDonald’s becamesubject for investigation during Watergate scandal • Law suits faced

5. Current status of McDonald’s • Sales and revenues; share of market • Current company locations • Number of employees • Customers • Competitors • Company’s use of IT and IS

6. Current Status Of Company • McDonald's is the world's #1 fast-food company by sales • Serving burgers and fries, it operates more than 30,000 flagship restaurants • It serves in more than 119 countries on six continents • On a day-to-day basis, more than 47 million customers world-wide are served • Employs more than 1.5 million people • The Boston Market and Chipotle Mexican Grill fast-casual chains are also owned by McDonald's • The most recent promotion was the Monopoly Best Chance Game 2004 which lasted from October 12 to November 15

7. Competitors • A competitor for McDonald’s can be anywhere from an upscale restaurant to a measly hot dog stand at a football game. • McDonald’s major competitors: • Burger King ,Subway, Yum, Wendy’s,In & Out, Taco Bell, Sonic • Jack in the Box, Carl’s Jr, Togo’s, Quiznos, KFC, Popeye’s, Pizza Hut, Round Table Pizza, Domino’s, Wenerschnitzel • Of those, Burger King, Subway, and Yum are listed as the top three competitors [McDonalds Corporation Fact sheet]

8. Suppliers • McDonald’s believes the only way to serve a wide, diverse group of customers is through a wide, diverse group of suppliers. Therefore, McDonald’s greatly relies on its suppliers. • “McDonald's suppliers in the U.S. operate over 40 distribution centers, strategically located to be accessible to more than 12,000 restaurants in the country. They provide a diverse range of products and services for our restaurants. It is crucial that the suppliers reflect the diversity of our customers around the world.”

9. Company’s Financial/ Profitability Past Performance McDonald's Corporation (NYSE: MCD) • McDonald's Plaza, Oak Brook, IL 60523 (Map) • Phone: 630-623-3000 Fax: 630-623-5004 Key Numbers: • Company Type: Public • Fiscal Year-End: December • 2003 Sales: $17,140.5M • 1-Year Sales Growth: 11.3% • 2003 Net Income: $1,471.4M • 1-Year Net Income Growth: 64.7% • 2003 Employees: 418,000 Executives: • Chairman: Andrew J. McKenna, Sr.  • President, CEO, & Director : Charles H. (Charlie) Bell  • SEVP & CFO: Matthew H. (Matt) Paul

10. Porter’s Five Competitive Forces(1) • Rivalry within industry: • Burger King, Wendy’s, In & Out etc. • Brands - Big Mac, Filet o’ Fish, Ronald McDonald House • Innovation - McGriddle, celebrity endorsements, monopoly • Online presence - company info, links to charity works • Threat of new entrants: • McDonald’s has market dominance (over 30,000 restaurants world-wide) • constant growth -Franchising • Threat of substitutes: • Any other food industry – high-class restaurants to hot dog stands • Healthier alternatives (Newman’s Own), unique products

11. Porter’s Five Competitive Forces(2) • Bargaining power of buyers: • Pay attention to customer demands and trends • Offer specialty products for certain segments • First mover- removal of super size option, salads, cooking oil • Bargaining power of suppliers: • McDonald’s relies on strong supplier and distributor relationships • Help suppliers lower costs • Develop new supplier base to reflect customer diversity • Suppliers include: Coca-Cola, Heinz, Newman’s Own

12. Company’s Competitive Strategy • Differentiation strategy - Gold Standard • Signature Favorites - Big Mac and McNuggets • Cost Leadership Strategy - Items are very competitively priced

13. Strengths & Weaknesses • Strengths: • Company can offer a meal with low prices • Ronald McDonald Charity Program • Weaknesses: • Low Market Share in Chicken Products

14. Challenges/Opportunities • Challenges From Competitors:The company has to compete with other restaurant and food industry since there are so many selections and choices to choose from. • Union:The company regard union as third parties and they refuse the legitimacy of a union as an expression of the interests of the employees that they’re dealing with.

15. IT/IS Systems • The company uses IT and IS in a number of ways. In fact, without the technology, McDonald’s would not be able to operate as it does today. • From taking orders to completing the orders, everything involves a computer. A network system is used to take an order which is then sent to the back through the system in order for the food to be cooked. • The following are a few systems used by McDonald’s: • POS (Point of sale) – allows orders to be placed, check the amount of inventory on hand, see the number of transactions that have occurred in the last few days or even years, see the labor percentage, total cost of waste, check the drive thru time [TTL]. • KVS (Kitchen valiance system) – allows the orders taken up front and in the drive thru to be displayed and transferred to the monitors in the grill area.

16. Conclusion • Thank you for your time. • Does anyone have any questions?