McDonald’s PH

STRATEGIC AUDIT & CORPORATE GOVERNANCE ANALYSIS

A Paper Presented as a Final Requirement in

BMC 05-18 -Strategic Management

Prepared by:

Yamamoto, Mikko B.
Samarita, Joalbet L.
Tecuico, Aira Denise C.
Secopito, Trisha Mae
Corong, Lynn Belle
Kanaoka, Kenta C.

Presented to:

DR. BERNIE E. BALMEO

Subject Professor
 TABLE OF CONTENTS
Page No.
I. Executive Summary ………………………………………………………………………………………………………….. 1

II. Introduction ……………………………………………………………………………………………………………………… 1

III. Company Overview ………………………………………………………………………………………………………… 2

A. Company Name and Logo, Head Office, Website ………………………………………………………. 2
B. Company Vision, Mission and Values …………………………………………………………………………. 2
C. Objectives ………………………………………………………………………………………………………………….. 2
D. Company Culture ……………………………………………………………………………………………………….. 3
E. Organizational Structure ……………………………………………………………………….……………………………………… 4
F. Corporate Governance ………………………………………………………………………………………………. 5
1. Board of Directors ……………………………………………………………………………………………….. 5
2. CEO ……………………………………………………………………………………………………………………… 6
3. Ownership and Control ……………………………………………………………………………………….. 6
G. Corporate Resources …………………………………………………………………………………………………. 6
1. Marketing…………………………………………………………………………………………………………….. 6
2. Finance ……………………………………………………………………………………………………………….. 8
3. Research and Development ………………………………………………………………………………… 8
4. Operations and Logistics …………………………………………………………………………………….. 9
5. Human Resources ………………………………………………………………………………………………. 9
6. Information Technology ……………………………………………………………………………………… 10

IV. Industry Analysis and Competition ……………………………………………………………………. 10

A. Market Share Analysis ……………………………………………………………………………………………. 11

B. Competitors’ Analysis …………………………………………………………………………………………….. 11

V. Company Situation ……………………………………………………………………………………………………….. 12

A. Financial Performance ………………………………………………………………………………………………. 12

B. Comparative Analysis ……………………………………………………………………………………………….. 12
C. PESTEL Analysis ………………………………………………………………………………………………………… 13
D. SWOT Analysis ………………………………………………………………………………………………………….. 14
E. Boston Consulting Group (BCG) Matrix or Portfolio Analysis …………………………………….. 14

VI. Critical Issues …………………………………………………………………………………………………… 15

VII. Corporate Strategies ………………………………………………………………………………………. 16

A. Growth Strategy ………………………………………………………………………………………………… 16

B. Consolidation Strategy ………………………………………………………………………………………. 16
C. Retrenchment Strategy …………………………………………………………………………………….. 17
VIII. Functional Strategies ……………………………………………………………………………………. 17
1. Marketing …………………………………………………………………………………………………………. 17
2. Finance ……………………………………………………………………………………………………………… 17
3. Research and Development ………………………………………………………………………………. 17
4. Operations and Logistics ……………………………………………………………………………………. 17
5. Human Resources ……………………………………………………………………………………………… 17
6. Information Technology …………………………………………………………………………………….. 18

IX. Recommended Strategy...………………………………………………………………………………… 18

X. Implementation ………………………………………………………………………………………………………….. 19

Appendices

References
 STRATEGIC AUDIT & CORPORATE GOVERNANCE ANALYSIS

I. Executive Summary

McDonald’s Corporation is a “Centralized, International company”, which is the largest chain of

fast food restaurants with more than 30,450 fast-food restaurants in 121 countries worldwide. Fifty
eight percent of these stores are operated by franchisees, twenty eight by the company, and fourteen
percent by affiliates. McDonald’s expand its market into foreign countries through three primary
methods, franchising, company owned restaurants, and joint ventures which will help McDonald’s
easily to be accepted into unfamiliar markets and franchising continues to contribute heavily to
McDonald’s international success. Although its expansion rapidly, McDonald's still manage a tight
grasp on operations, cost and quality by using a centralized, international structure. However,
McDonald needs to face the risk of its change in operation strategy.

II. Introduction

The world-famous Golden Arches arrived in the Philippines in 1981 when Dr. George T. Yang
opened the first-ever McDonald’s restaurant in the country. The historic restaurant still stands on its
original location in Morayta, Manila.

In 1992, McDonald’s brought its world-famous menu items like Big Mac and Fries closer to
more Filipinos with the opening of its first stores in Visayas and Mindanao.

35 years since it first arrived in Philippine shores, McDonald's became a 100% Filipino-owned
company in 2005—fulfilling its vision to become ‘Una Sa Pamilyang Pinoy’.

Today, McDonald’s has grown to become one of the country’s leading fast food chains with
more than 480 restaurants nationwide. With President and Chief Executive Officer Kenneth S. Yang at
the helm, McDonald’s is now a multibillion-Peso company, with over 40,000 employees serving
Filipinos all over the Philippines.

McDonald’s strives to deliver quality service and a delightful customer experience. Our
employees enjoy a dynamic working environment, support, training and opportunities to help them
deliver the best possible results and advance their career.

Apart from the company's commitment to serving and delighting its customers and employees,
McDonald’s is also dedicated to making a difference in the lives of Filipino children and families
through its charity of choice, Ronald McDonald House Charities and its banner programs.
III. Company Overview
A. Company Name and Logo, Head Office, Website

McDonald’s PH
Head Office: 17th Floor Citibank Center Building
Makati, PH
Website: https://www.mcdonalds.com.ph/

B. Company Vision, Mission and Values

VISION
“UNA SA PAMILYA”
§ First to respond to the fast-changing needs of the Filipino Family.
§ First choice when it comes to food and dining experience.
§ First mention as the ideal employer and socially responsible company.
§ First to respond to the changing lifestyle of the Filipino family.
MISSION
“To serve the Filipino community by providing great-tasting food and the most relevant
customer delight experience.”
VALUES

§ Customer-Driven: Conscious and deliberate action to exceed the needs and requirements of
both internal and external customers.
§ Malasakit: Concern for the customers, employees, co-workers, business partners, community
and company.
§ Integrity: Being upright in character and action, upholding the standards of one’s profession
and position through honesty, responsibility, and trust.
§ Teamwork: Working as ONE towards achieving a common goal.
§ Excellence: Day to day drive to deliver THE BEST results.

C. Objectives

The main objective of the McDonald's corporation is to be the customer's favorite place
to eat. To achieve this, McDonald's created a global strategy called "Plan to Win," which
focuses on creating an extraordinary customer experience.

The Plan to Win consists of five factors: people, products, promotion, place and price.
McDonald's focuses on its customers as well as its own employees. Fostering a nurturing and
 motivating environment for its employees ensures continuation of the company's customer
service strategies. Balancing the needs of McDonald's franchise owners, food suppliers and
employees is essential to running the company smoothly. McDonald's also strives to uphold a
high standard of ethics in the workplace and give back to the community through the Ronald
McDonald house family of charities.
"For more than ten years, the Plan to Win along with our system alignment, financial
strength and distinct competitive advantages have served as the critical framework behind our
growth," said Don Thompson, McDonald's corporation president and chief executive officer.
"Today, the Plan to Win continues to guide the evolution and execution of our global growth
priorities as we strive to become even better and bigger."
Because McDonald's is also a publicly traded company, maintaining consistent profits
for its shareholders is also high on the list of objectives. The McDonald's Plan to Win
encompasses all these factors that are essential to the company's continued growth and
dominance in the market.

D. Company Culture

The culture of McDonald’s is focused on four key points. These are individual learning
organizational learning, employee focus, and diversity. McDonald’s ensure that employees are
provided sufficient opportunities to enhance their learnings and skills. When employees are skilled,
they contribute towards the high performance or organization. Individual learning also ensures
organizational learning. It pushes organization knowledge to a new level. It ensures that organizations
attain heights of success. Employee’s needs are focused at McDonald’s; they are prioritized because
when employees are happy customers are happy too. Diversity ensures people from different
backgrounds work together and use their diverse skills to attain organizational goals (THOMPSON,
2017).

Organizational culture and ethics can be managed perfectly by looking at the best practices
exercised by top notch companies. For instance, America Express values, integrity, fairness, team
work, organizational citizenship behavior and a win-win approach (Gerard, n.d.). Google ensures that a
home like an environment prevails at the organization where employees work in a stress-free
environment. At Google, employees can even bring their pets to work. There are gyms, salons, and
cafes inside the office space. Organizational culture and ethics can be well managed by looking at how
successful companies manage its culture and ethics (Patel, 2015).
Mc Donald’s had a climate where quality, cleanliness, services, and values and stressed. Food is
ensured to meet health and cleanliness standards. Free kitchen trips provide the opportunity to
customers to see a clean environment of mc Donald’s restaurants. The culture of this organization is
focused on centricity, diversity, employee and organizational learning. There are many areas that
organization is ignoring. To ensure that organization like mc Donald’s is not stuck in scandals like
stealing it needs to focus on following culture and ethical values:

• Integrity
• Fairness
• Equity
• Transparency
 • Employee citizenship behavior
• Loyalty

Integrity, fairness, equity, and transparency will ensure that employees exhibit behaviors that
do not harm the integrity of the company. Employee citizenship behavior will enable employees to do
much more for the benefit of the organization than just performing their job. When employees are
loyal, they do not indulge in any practice that would harm the repute of their company.

E. Organizational Structure

McDonald’s Corporation has a divisional organizational structure. Conceptually, in this

structure type, the business organization is divided into components that are given responsibilities
based on operational requirements. Each division handles a specific operational area or set of
strategic objectives. One of the aims of this corporate structure is to support autonomy and
organizational flexibility in satisfying business needs in different organizational aspects and markets.
McDonald’s organizational structure has the following characteristics, arranged according to
significance in affecting food service business operations:

 Global hierarchy

 Performance-based divisions

 Function-based groups

Global Hierarchy. McDonald’s Corporation has a global hierarchy to cover all its operations worldwide.
This feature of the organizational structure emphasizes corporate control in the context of managerial
control and direction. For example, McDonald’s CEO directs the activities of all business areas through
this structural characteristic. Mandates and directives are passed from the CEO down to middle
managers, and to the restaurant managers and personnel in company-owned operations and among
franchisees. This feature of McDonald’s corporate structure is typical of most global business
organizations.

Performance-Based Divisions. Performance-based divisions are the most distinct feature of

McDonald’s corporate structure. Prior to its reorganization on July 1, 2015, McDonald’s had the
following geographic divisions in its organizational structure: (a) U.S., (b) Europe, (c) Asia/Pacific, (d)
Middle East and Africa, and (e) Other Countries & Corporate (OCC) including Canada, Latin America
and Corporate. After the reorganization, the company used performance as basis for the new divisions
in its organizational structure: (a) U.S., (b) International Lead Markets, (c) High Growth Markets, and
(d) Foundational Markets and Corporate. The United States division provides the biggest regional sales
revenues to McDonald’s. The combination of international lead markets also represents a major chunk
of the company’s revenues. The high-growth markets account for a small minority of McDonald’s
revenues, even though these markets present considerable potential for business growth based on
rapid economic development.

Function-Based Groups. McDonald’s maintains function-based groups in its corporate structure. For
example, in corporate operations, the company has a People group for human resource management,
and a Supply Chain and Sustainability group for supply chain management and sustainability
endeavors. Each group is under the leadership of a corporate executive or senior manager. This
organizational structure characteristic enables McDonald’s Corporation to address the basic functions
in its business. Groups may be added or changed as the company grows and its target markets change.

F. Corporate Governance
1. Board of Directors
McDonald's Board of Directors is entrusted with and responsible for the oversight of
McDonald's Corporation in an honest, fair, diligent and ethical manner. The Board has long believed
that good corporate governance is critical to fulfilling the Company's obligation to shareholders. We
have and will continue to strive to be a leader in this area. This section of McDonald's website contains
detailed information about McDonald's governance practices.
McDonald's Board believes that good governance is a journey, not a destination. Accordingly,
we are committed to reviewing our governance principles at least annually with a view to continuous
improvement. One thing that will not change, however, is our commitment to ensuring the integrity of
the McDonald's System in all its dealings with stakeholders.

Name/Age Title
1. Christopher Kempczinski, 50 President, Chief Executive Officer & Director
Gender
2. Andrew J. McKenna, 89 Chairman-Emeritus
3. Enrique Hernandez, 62 Independent Chairman
Male
4. Catherine M. Engelbert, 56 Independent Director
Female
5. Robert A.23.08%
Eckert, 65 Independent Director
6. John Washington Rogers, 61 Independent Director
7. Miles D. White, 64 76.92% Independent Director
8. Richard H. Lenny, 67 Independent Director
9. Mary Margaret Hastings Georgiadis, Independent Director
56
10. Lloyd H. Dean, 69 Independent Director
11. John J. Mulligan, 53 Independent Director
12. Sheila A. Penrose, 73 Independent Director
13. Paul Steven Walsh, 63 Independent Non-Executive Director

Gender

Male – 10
Female – 3
 Age Age

50 - 60
50-60 = 4
15.38% 61-70 = 7
30.77% 61 - 70
71 - 80 71-80 = 2

53.85%

2. CEO

Kenneth Yang is the President and CEO of Golden Arches Development Corporation or
McDonald's Philippines. His father is Mr. George Yang, the founder of McDonald’s PH. His Twitter
profile identifies him as “Ronald McDonald’s boss.” And rightly so for this father of three has already
taken over the helm of the hamburger franchise from his father as president and CEO of the Philippine
McDonald’s franchise. A hard worker, he still finds the time to play golf and enjoy his vintage cars.

3. Ownership and Control

Golden Arches Development Corporation (“GADC”) is a domestic corporation engaged in the

operations and franchising of quick service restaurant business under the McDonald’s brand in the
Philippines and in accordance with the master franchise agreement with McDonald’s Corporation
(“MCD”), a company incorporated in Delaware and with principal offices in Illinois, USA. GADC was
incorporated on July 16, 1980. McDonald’s is one of the best-known global brands. All McDonald’s
restaurants in the Philippines are operated either by GADC or by independent entrepreneurs under a
sub-franchise agreement or by affiliates under joint venture agreements with GADC. The McDonald’s
System in the USA is adopted and used in the domestic restaurant operations, with prescribed
standards of quality, service and cleanliness. Compliance with these standards is intended to maintain
the value and goodwill of the McDonald’s brand worldwide.

G. Corporate Resources

1. Marketing

McDonald’s global brand is well known. Marketing, promotional and public relations activities
are designed to promote McDonald’s brand and differentiate the Company from competitors.
Marketing and promotional efforts focus on value, quality, food taste, menu choice, nutrition,
convenience and the customer experience.
Marketing Strategy: 5P’S

After analyzing the market condition, finding the main factor, target segment as well as
understanding the demand of the market, every company requires coming up with an offer or such
kind of plan which speed up the development of the business.

For that, McDonalds 5P’s marketing strategy that follows product, place, price, promotion and
lastly people.

a) Product
Product consists of how the company must design, manufactures the products which improve
the experience of every customer. Product refers to physical product and services provided by the
business to its patron.

McDonalds includes specific aspects of its service and products like packaging, looks and
desirability. This includes non-tangible and tangible features of the services and product.

McDonalds has intentionally kept its product depth and width limited. McDonalds had studied
the manners of the Indian clients and totally provided various menus as compare to its menu
presented in world market. The company eliminates beef, mutton and pork burger from their menu.
India is just country wherein McDonalds offer vegetarian menu. As well as the cheese and sauce use
are pure vegetarian.

The company constantly improves its product and service in accordance to the fast-changing
desires and tastes of its consumers. One of the good examples is the launching of Chicken Maharaja
Mac and the Chicken McNuggets.

b) Place
The place for the most part includes distribution outlet and channel of the business. It is very
essential because the service or the product should be accessible to the consumers at the right time,
right place and right quantity.

In United States almost 50% of McDonald’s outlets are located three minutes away from each
other. There are specific level of happiness and fun which McDonalds offers to its consumers. It offers
value position that based on the requirement of the consumer.

c) Price
Pricing strategy is one of the most significant aspects when it comes to marketing. This
includes price breakdown, when any discount service or payment available.

Business should also consider the possible reactions from its rivalry when it comes to pricing.
Pricing strategy was developed in order to attract middle- and lower-class individual and the result can
clearly be seen the customer base which McDonalds has at present.
 McDonald’s restaurant has specific value pricing as well as bundling strategy like combo meal,
happy meal, family meal and happy price menu in order to improve total sales of the service and
product.

d) Promotion
The endorsement activities implement by the Company aids communicate effectively with the
potential consumers. Ad targeted to catch the interest of the people it reaches to massive number of
customers at a time. Ad plays an important role for product promotion such TV advertisement,
billboard and posters which also used by some ground breaking business including Apple Company.

e) People
McDonalds understands the significance of both consumers and employees. It understands the
truth that happy workers can serve properly and led in happy customers.

McDonalds restaurant constantly does Internal Marketing as this strategy becomes effective it
will lead automatically to the success of external marketing.

2. Finance.

McDonald's has two sources of profit: Sales made by company-owned restaurants, Rental and
royalty income from franchised restaurants. McDonald's retains all of the profit earned by company-
owned restaurants.

3. Research and Development.

Expansion Strategy
McDonald’s has adopted a Market Development strategy for expanding into growing economies, especially
those of Asian countries. The Golden Arches have set their sights on penetrating Asian markets, as those
markets have high income potential. McDonald's already enjoys unqualified success in Tokyo, Seoul, Beijing,
India, and the United Arab Emirates, to name a few Asian markets. There are many other markets throughout
the Asian region that offer the promise of high sales, market share and profit for the creative fast food company
that is fast enough on its feet to set up operations there.

Franchising
To carry on the expansion strategy the company used the franchising strategy worldwide. It has successfully
replicated its business model, not in the US but also in the global locations. Today more than 80% of the
restaurants of the company are operated through the franchisees. The contribution of the franchisee business
is as follows:
Adaptation strategy
The strategy can be compared to localization. With this strategy, McDonald’s adapts to the
needs of the consumers as required by the cultures of specific countries.

Adaptation works very well for McDonald’s. The strategy enables the fast food chain to have a
wider reach worldwide. The strategy does require higher communication and production costs.

Aside from the winning strategies, the company’s marketing mix is likewise flexible, in order to
tailor it to the local market requirements in terms of location of distribution, promotions plans and
pricing.

4. Operations and Logistics.

A. Operations
McDonald’s Corporation’s operations management (OM) supports the company’s position as
the largest fast food restaurant chain in the world. McDonald’s global business entails a wide
variety of strategic needs for its operations management, such as strategic HRM and supply
chain development. To do so, McDonald’s must apply suitable policies and strategies in all the
10 decision areas of operations management.

1. Design of Goods and Services.

2. Quality Management.
3. Process and Capacity Design.
4. Location Strategy.
5. Layout Design and Strategy.
6. Job Design and Human Resources.
7. Supply Chain Management.
8. Inventory Management.
9. Scheduling.
10. Maintenance.

B. Logistics

The logistics system begins with producers of the raw materials. For McDonald's, this includes
food producers, producers of paper products, and producers of technological devices and software.
From the producers, materials are ordered via a central ordering system, and are shipped directly to
each restaurant.

5. Human Resources.

McDonalds is a very responsible and is a very reputed organization and the human resource
practices provide equal opportunities for their work and for better performance. The HR department
also commits a great diverse environment and friendly environment. They provide best training to
bring the unique skills and high qualities to the team members.
 6. Information Technology

McDonald’s had installed different kinds of information system like a point of sale system,
office information system, transaction processing system, customer relationship management,
business intelligence, etc.

IV. Industry Analysis and Competition

Background & Purpose

•Founded by 2 brothers
•Franchising “McDonald’s
•Phoenix, Arizona
•Neil Fox- National Perspective
•Ray Croc- Agent for growth
•120 Countries, 31,000 Restaurants
•Growing Franchises- 60% of Sales

Problems, Challenges, Issues

•Growing Revenues
•Dropping Profit Margins
•GRAPH

Issues in Customer Service

•100-point scale
•Increasing Rating, but still behind average
•11 points below avg.
•2008- Rated 69 out of 100
•High Turnover Rates

A. Market Share Analysis

 B. Competitors’ Analysis

V. Company Situation

A. Financial Performance

2018 2019 2020

Total Sales 1,018,703,300 1,021,074,113 930,552,347
Total Revenue 1,018,703,300 1,021,074,113 930,552,347
Total Expenses 591,110,288 581,615,319 575,720,423
Net Income 286,993,923 291,886,966 229,179,029
Current Assets 196,335,363 172,358,162 302,426,083
Total Assets 1,589,370,747 2,301,441,394 2,549,725,188
Current Liabilities 144,087,307 175,463,033 299,513,120
Total Liabilities 1,893,151,028 2,701,629,185 2,930,780
Total Number of Common &
19,534,422 17,013,851 8,434,969
Preferred Stock
Stockholders’ Equity 303,416,534 397,986,569 8,434,804
 Reported Earnings Per Share 308,791,413 381,996,077 379,329,861
Current Ratio 65,917,929 47,499,684 48,953,756
Return on Equity -100.30% -79.88% -53.99%
Year-End Stock Price 8,196,295 9,341,441 10,397,999
Market Cap 136,210,000,00 147,470,000,00 159,880,000,00
0 0 0

B. Comparative Analysis

MCDONALD’S BUGER KING WENDY’S

Total Sales 930,552,347 708,412,380 452,240,000
Total Revenue 930,552,347 708,412,380 452,240,000
Total Expenses 575,720,423 398,528,030 320,481,000
Net Income 229,179,029 104,765,700 110,395,500
Current Assets 302,426,083 300,799,220 554,050,000
Total Assets 2,549,725,188 1,911,977,070 5,440,000,000
Current Liabilities 299,513,120 281,574,020 294,920,000
Total Liabilities 2,930,780 9,222,810 4,920,000
Total Number of Common &
8,434,969 2,777,420 5,163,599
Preferred Stock
Stockholders’ Equity 8,434,804 2,754,200 5,163,600
Reported Earnings Per Share 379,329,861 343,425,120 218,572,500
Current Ratio 48,953,756 33,390,00 41,420,000
Return on Equity 53.99% 25.66% 69.71%
Year-End Stock Price 10,397,999 11,300,000 12,059,000
Market Cap 159,880,000,00 55,321,000,00 45,810,000,00
0 0 0

C. PESTEL Analysis

P E S T E L
Political Economic Social Technological Environmental Legal

McDonald’s Economic Evolving While technology Today more than Regulation is

operates in factors are of lifestyles can may seem to play ever, people care always the
over 100 paramount have an effect a very limited about protecting biggest
countries, so its importance on sales role in the fast the environment. concern to a
political to performance. food industry, They care about company. As a
exposure is all McDonald’s, People nothing could be problems such as company in the
over the board. especially increasingly further from the air and water fast food
Generally, considering are seeking truth. In fact, pollution, and the industry,
McDonald’s, that it more high technology effects waste McDonald’s
like any other operates in sophisticated helps packing are having must adhere to
restaurant, has over 100 fare when organizations on the many legal
to comply with countries. they eat out. improve their environment. A requirements,
government The decision Hamburgers management and few years ago, such as the
regulations whether to and fried productivity, McDonald’s found labor and
pertaining to import raw potatoes are while reducing itself in the employment
health and materials or not as special wasted time and crosshairs of law, corporate
hygiene. Some buy them as they once resources. It can environmentalist law and tax
governments locally is one were. help with wrath over the requirements,
have been important Moreover, scheduling, polystyrene to name a few.
pressuring the factor; while people ordering, packaging it was
fast food another is tax in western forecasting sales using for its
industry, rates. countries such and foot traffic, sandwiches. With
because fast as the United and easy over 60 million
food has States may customer people buying
increasingly enjoy payment for food from
been seen as hamburgers food. Technology McDonald’s daily,
junk food, and French can also be used that was a great
leading to fries, people in for easy, deal of
obesity, Asian inexpensive polystyrene waste
cardiovascular countries, for advertising on packaging finding
difficulties and example, the Internet, its way into
high prefer rice. A providing Wi-Fi landfills.
cholesterol. few years and even McDonald’s
Moreover, the back, computing responded to
current tumult McDonald’s devices to satisfy criticism by
in relations promoted a customer needs. phasing out
between the rice burger in polystyrene in
United States China; it is favor of paper-
and Russia may now based packaging,
threaten promoting rice which breaks
McDonald’s for dinner in down into organic
ability to that nation. ingredients much
function and more quickly in
turn a profit in the environment.
the Russian
Federation.

D. SWOT Analysis
 E. Boston Consulting Group (BCG) Matrix or Portfolio Analysis

In the above BCG Matrix, the star category includes burgers which are the highest selling
products since years and so they fit in here. The cash cow category includes French fries, side starters
and Mc drinks which act as a complimentary product to the star products. The question mark category
includes the products which do not generate much revenue and is less popular also. Dog category
includes the extinct products which include onion rings and other types of burgers which did not do
well in the market.

VI. Critical Issues

Company problems and their need for solutions that relate to the safety of the visitor at the
resource site or relate to resource protection and management issues that the public needs to be
aware of.
1. Bad food image
 To defend the image of its food, McDonald’s launched a social media campaign inviting
customers to ask questions about the ingredients it uses. Showing just how bad perceptions can be,
among the first questions McDonald’s addressed were “Why doesn’t your food rot?” and “Do you use
real chicken in your Chicken McNuggets?”
The company has run similar programs in Canada and Australia, where it says the program has built
trust with customers.

2. Lack of flexibility
Consistency has long been one of McDonald’s attractions — people like knowing exactly what
they’ll get when they order a Big Mac. But now people are gravitating toward places like Chipotle that
let people tailor their orders. To offer greater customization down the line, McDonald’s recently rolled
out prep tables in its kitchens that can hold more toppings and sauces.
The company is also testing a “Build-Your-Own-Burger” offering that lets people pick the bun, patty
and toppings they want. McDonald’s has already said it plans to roll out the format nationwide.

3. Slow, inaccurate service

McDonald’s executives have said they introduced too many items too quickly last year, such as
McWraps and the option to substitute egg whites for its breakfast sandwiches. That slowed down
service and led to inaccurate orders. On Tuesday, McDonald’s said it would focus on a simplified menu
that highlights its most popular items but did not give specifics.

4. Price sensitivity
Raising prices without driving away customers has been tricky for McDonald’s. At one time, for
instance, the popular Dollar Menu included a Big N’ Tasty, which was made with a quarter-pound of
beef. But over the years, McDonald’s has had to swap out items as costs for beef and cheese have
climbed.

5. Increased competition
In addition to newer players like Chipotle, longtime rivals Burger King and Jollibee have been
intensifying competition, too.

VII. Corporate Strategies

A. Growth Strategy
1) Market Penetration. McDonald’s uses market penetration as its primary intensive strategy for
growth. In applying this intensive strategy, McDonald’s grows by reaching more customers in
markets where it already has operations. For example, McDonald’s opens new restaurants in
North America and Europe by franchising, joint ventures or corporate ownership. A strategic
objective connected to this intensive growth strategy is global expansion through new
locations. McDonald’s generic strategy supports this intensive growth strategy because low
costs and low prices empower the firm to easily penetrate markets.
 2) Market Development. In its early years, McDonald’s used market development as its primary
intensive strategy for growth. However, market development is now a secondary intensive
growth strategy because McDonald’s already has restaurants in most regions around the
world, except Mongolia, some parts of the Middle East and west Asia, and the majority of
African countries. A strategic objective for this intensive growth strategy is to establish new
locations in new markets, such as new McDonald’s restaurants in African or Middle Eastern
countries where the company currently has no operations. Based on its generic strategy of cost
leadership, McDonald’s supports this intensive growth strategy by using low prices to compete
in new markets.

3) Product Development. McDonald’s uses product development as its tertiary or supporting

intensive strategy for growth. In applying this intensive growth strategy, McDonald’s develops
new products over time, such as new McCafé products. These new products may be variations
of existing products, or entirely new products. The strategic objective for this intensive growth
strategy is to capture more consumers by attracting them to new products. This intensive
growth strategy agrees with McDonald’s broad differentiation generic strategy in terms of new
products that make the company distinct.

B. Consolidation Strategy
1) Merger- McDonald’s has conceded that it can no longer ketchup with the enormous
business success of Jollibee. In a surprise announcement during a press conference
held at the Mall of Asia in Manila, Tony Tan Caktiong, the man behind Jollibee Foods,
said that McDonald’s has agreed to merge with Jollibee. Effective immediately, all
McDonald’s restaurants in the Philippines will become Jollibee. Customers will not find
any of the McMenus since Jollibee has decided to sell only its own champ burgers, in
addition to its Chicken Joy, spaghetti, rice meals and sweet desserts.

2) Acquisitions- A stronger domestic market presence was essential in propelling the fast
food leader to the international scene. Acquisitions were among the effective strategies
that would ensure quick expansion of McDonald’s Corporation.

C. Retrenchment Strategy
 McDonald also uses the retrenchment strategy for growth in corporate level. For
example, in its retrenchment, McDonald’s reduced complexity in its operation, in part
by simplifying the menu. Any new item had to meet the company's stringent test
kitchen demands for being simple to prepare consistently. It repositioned it's brand,
refined its pricing strategy and pulled the market segmentation lever, making sure it
was targeting young adults and moms with kids.

VIII. Functional Strategies.

1. Marketing
 Efficiency – better business system better methods, systems and controls
 Quality – sourcing fresh ingredients to enhance the taste and flavors of their signature meals.
 Distribution – maintains an extensive advertising campaign.

2. Finance
 Efficiency- Lower its costs and sell its products cheaper to the public, which allowed it to grow
and be more profitable
 Quality- Revenue impact of its refranchising efforts.
 Distribution- Sales made by company-owned restaurants, rental and royalty income from
franchised restaurants.

3. Research and Development

 Efficiency- Effective management and global expansion strategies to enter new markets and
gain a share of the foreign fast food market
 Quality- Best practices in the global food industry, international growth trends and challenges,
and various lessons that have been learned from their expansion in foreign countries
 Distribution- International success, challenges and strategies.

4. Operations and Logistics

 Expansion – Expanding into growing economies that has a high potential income.
 Franchising – Carrying the expansion strategy of the company used in franchising worldwide.
 Adaptation – Maintaining the uniformity of quality and cost for its outlets.

5. Human Resources
 Quality - Employs the right people does the individual fit the two organization
 Efficiency - Employees show the correct behaviors and attitudes and have the opportunity to
develop the way that includes reward and training management.
 Distribution - There is a right decision in giving the right amount of compensation and benefits

6. Information Technology
 Efficiency- uses advancements in technology to offer personalization to customers through
self-service kiosks, where are they able to place orders and make payments without having to
queue up and can request for their food to be brought to their table by employees.
 Quality- Replace human servers with voice-based technology in its US drive-through.
 Distribution- McDonald's uses Windows XP embedded as their operating communications
software.

IX. Recommended Strategy

Recommended Strategy
It is essentially a logic tree with the main point at the highest level followed by supporting
points in the middle and the details at the lowest level. It starts at the top with the question or
problem your strategy is intended to address. The next level presents the strategic recommendation.
Here are some recommended strategies in McDonald’s Philippines.

1. Service Differentiation
McDonald’s needs to focus on service differentiation strategy in order to position the
restaurant as a superior service restaurant in the minds of the target consumers. The service
differentiation strategy implies that McDonald’s shall offer superior services at each step of the
customer touch points right from the placement of order through the delivery of the products.

2. Personnel Differentiation
The availability of well-trained staff is essential for delivery of high quality service to the
customers. McDonald’s should continue to invest in the training and development of its employees to
ensure high service quality. Well-structured training programs shall ensure the long term growth of
the organization.

3. Integrated Promotional Mix

McDonald’s can implement an integrated promotion mix that has a balance of both traditional
and modern digital media for brand promotions. McDonald’s must recognize the importance of digital
media in the promotional mix for organizations, and should devise digital marketing strategies to
engage with the online customer base.
4. Product Augmentation
McDonald’s can offer additional product and service features such as food on demand and
home delivery so as to provide convenience to customers. Product quality can be further enhanced
with fresh ingredients. McDonald’s should continue to invest in menu customization and menu
standardization strategies to attract and connect with target customers in diverse geographical
markets.

5. The Fast Food Concept

Fast food is a concept employed in restaurant operation that involves the mass production and
preparation of ready-to-eat food products to accommodate a large number of customers and thus,
increase sales volume, improve operational effectiveness and efficiency, and promote convenience by
reducing waiting time.

X. Implementation

Implementation is the important application, if plans, strategies are made properly, however,
there are no implementation, then there is no use effective strategic planning. In case of McDonald’s,
new strategies need to be implemented. If changes take place in the existing menu, and chef are
changed then plans should be follow accordingly, prices should be reasonable, staff and chef should
be given proper training that how to deal in kitchen and customers. McDonald’s should implement HR
strategies and strategies vary to finance deportment, staff need to manage by HR department,
example, and wages should be given properly, and there should be incentives and rewards after
proper appraisal system. The action or strategies need to implemented for the cleanliness staff, as
McDonald’s is famous for its clean open kitchen, so there should be in time, proper check by the
management team that all riles are implemented or not.

References
 https://www.google.com/url?
sa=t&source=web&rct=j&url=https://ivypanda.com/essays/mergers-acquisition-and-
international-strategies-in-mcdonald-and-carls-jr-
corporations/&ved=2ahUKEwj4lqLvhezuAhUDCqYKHdTfDrsQFjAFegQICRAC&usg=AOvVaw0Fcz
gnV4YfpLUsKtfJyvG1&cshid=1613398237287
 https://www.google.com/url?
sa=t&source=web&rct=j&url=https://adobochronicles.com/2013/07/03/mcdonalds-merges-
with-
jollibee/amp/&ved=2ahUKEwiqt_fihuzuAhXzxIsBHcFDBkYQFjACegQIExAB&usg=AOvVaw1W61
gfzkAvIIjusNilAyib&ampcf=1&cshid=1613398202396
 http://panmore.com/mcdonalds-generic-strategy-intensive-growth-strategies?
fbclid=IwAR00GyIaq5fcjHPtfskPBbGd86ZevC-xpg6GB8DgVQne9jA2ubuXaUzY1b8
 https://www.coursehero.com/file/10618695/McDonals/

 https://www.linkedin.com/company/golden-arches-development-corp

 http://panmore.com/mcdonalds-organizational-structure-analysis

 https://www.allianceglobalinc.com/subsidiaries/golden-arches-development-corporation

 https://www.mcdonalds.com/dam/AboutMcDonalds/Investors/9497_SBC_layout_McD_Eng-India

%20101909.pdf

 https://business.inquirer.net/259141/mcdonalds-philippines-goes-high-tech-high-touch

 https://mcdonalds600.weebly.com/pestel-analysis.html

BIO NOTES

BIONOTE OF AIRA DENISE C. TECUICO

Aira Denise C. Tecuico, 21 years old. Born on February 02, 2000 at

Novaliches Quezon City. She is the youngest daughter of Lucillen
Tecuico, a housewife and Alwin Tecuico, a Barangay employee. She is
currently taking up Bachelor of Science in Business Administration Major in Financial Management as
a 3rd year student at New Era University. She studied in Damong Maliit Elementary School during her
Elementary days from kinder to Grade. She took her Junior High School at Novaliches High School, also
she became the a treasurer officer and she was awarded as TOP 2 during her grade 7 and then
became a president officer in her class and also awarded as TOP 2 during her grade 8. She took Senior
High School at AMA College Fairview, in her senior high school she took the strand Accountancy and
Business Management (ABM) and she is the president of the class in Grade 11, year 2016. Entering
her 1st year college, she took up BSBA Major in Financial Management, her parents support her
studies and also her oldest sister in terms of her tuition fees. In her 1 st year college, she attended the
Junior Financial Summit year 2019, and she is now currently at her 3rd year in college.

BIONOTE OF JOALBET L. SAMARITA

Joalbet L. Samarita, 21 years old. She was born on July 23, 1999 in San
Juan Batangas Hospital. She is the eldest daughter of Josephin Samarita,
an OIC (Officer in Charge) and Bayani Samarita, a tricycle driver. She
currently taking Bachelor of Science in Business Administration Major in
Financial Management as a 3rd year student in New Era University. She
studied in San Juan Batangas when she in Kinder to Grade 4. She
continued her study in Candelaria Elementary School when she in grade
5 to Grade 6. She took her Junior High and Senior High School in Manuel
S. Enverga University Foundation Candelaria Inc. During her Junior High
she joined in the Enverga University Artist Center and receive a lot of
rewards. In her senior high she took the strand Humanities and Social Sciences and she is the
treasurer of the class from Grade 11 to 12, year 2016 to 2018. In her 1 st year college, she took BSBA
Major in Financial Management because her parents can’t support her college financially. Her auntie
volunteered to pay for her studies however her auntie wants her to take Accounting or Finance and
she decided to take Financial Management over Accounting. In her 1st year college also, she became as
a trainee in the organization named Junior Finance Executive Association and when she’s in 2 nd year
college she became officer of JFINEXA with the position of being treasurer. And now that she’s in 3 rd
year and still part of the said organization, the Junior Finance Executive Association as a Internal Vice
President in New Era University, year 2020-Present.

BIONOTE OF KENTA C. KANAOKA

Kenta C. Kanaoka 21 years old, was born on October 23, 1999 in

Sta. Maria Bulacan. He is the eldest son of Cerralyn
Cunanan. He is currently studying at the course of
Bachelor of Science in Business Administration Major in
Financial Management. He studied in Our Lady of
Lourdes Academy for Elementary and Junior High school and graduated at St. Augustine
College at Quezon City For Senior High school.

BIONOTE OF LYNN BELLE S. CORONG

Lynn Belle S. Corong, 20 years old, was born on April 02, 2000. She is
currently studying at the course of Bachelor of Science in Business
Administration Major in Human Resource Development Management as
3rd year student in New Era University. She studied at Rodriguez Heights
Elementary School. She took her Junior High School at Eastern Valley
School in grade 7 & 8 level and continued her studied at Tagumpay
National High School and graduated as top 1 in our class.

BIONOTE OF MIKKO B. YAMAMOTO

Mikko B. Yamamoto, 26 years old, was born in Pasacao, Camarines Sur.

She takes her elementary and high school in Pasacao, Camarines Sur in
Bicol. She was originally from Bicol and came here in Manila to work,
after 1 year staying here in Quezon City, she decided to go back
studying and enrolled in New Era University where she gets BS Financial
Management and now, she was in her 3rd year in college. Her plan after
she graduated is to take Civil Service and apply in BFP, PNP or Military
to serve and protect the people of our country. This has been her
dream since childhood and this is also her grandmother’s dream for
her.

BIONOTE OF TRISHA MARIE O. SECOPITO

Her name is April Trisha Marie O. Secopito, currently studying

Financial Management at New Era University. She lives in Quezon
City. She is also an online seller of beauty products. She plans to
work abroad after studying and pursue her career to help her parents
and achieve her dreams.