McDonald's is a global fast food chain that began in the 1940s as a drive-in restaurant. It is now the world's largest chain of hamburger fast food restaurants serving over 68 million customers daily in 119 countries. McDonald's follows a producer-driven distribution channel using a franchise model where it owns 20% of outlets and franchisees own 80%. Key channel members include franchisees and suppliers. The document provides an overview of McDonald's history, business model, strategy, strengths, and recommendations.
McDonald's is a global fast food chain that began in the 1940s as a drive-in restaurant. It is now the world's largest chain of hamburger fast food restaurants serving over 68 million customers daily in 119 countries. McDonald's follows a producer-driven distribution channel using a franchise model where it owns 20% of outlets and franchisees own 80%. Key channel members include franchisees and suppliers. The document provides an overview of McDonald's history, business model, strategy, strengths, and recommendations.
McDonald's is a global fast food chain that began in the 1940s as a drive-in restaurant. It is now the world's largest chain of hamburger fast food restaurants serving over 68 million customers daily in 119 countries. McDonald's follows a producer-driven distribution channel using a franchise model where it owns 20% of outlets and franchisees own 80%. Key channel members include franchisees and suppliers. The document provides an overview of McDonald's history, business model, strategy, strengths, and recommendations.
McDonald's is a global fast food chain that began in the 1940s as a drive-in restaurant. It is now the world's largest chain of hamburger fast food restaurants serving over 68 million customers daily in 119 countries. McDonald's follows a producer-driven distribution channel using a franchise model where it owns 20% of outlets and franchisees own 80%. Key channel members include franchisees and suppliers. The document provides an overview of McDonald's history, business model, strategy, strengths, and recommendations.
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ByAMRITA GUPTA ROLL NO.
06 MBA-IB(1st semester)
Mcdonalds History U.S based company. Head quartered at Oak Brook, Illinois, U.S. It started as a drive in restaurant in the late 1940s. In 1966 was listed on New York stock exchange. Entered India in October 1996,in a joint venture.
Company profile Worlds largest chain of fast food hamburger
frenchfries,soft drinks,coffee,shakes and desserts.
Now serving more than 68 million customers in more
than 119 countries.
1.8 million system employees.
Objectives of the channel
To serve good food in a friendly and fun environment
to be a socially responsible company
To provide good returns to its shareholders To provide its customers with food of a high standard,
quick service and value for money
Strengths Strong brand recognition
Weakness Considered as junk food.
Strong international presence
Product innovation Strong distribution network Good relations with franchise
Health related issues
SWOT Opportunities Acquisition of other restaurants. Increasing number of working youth Affinity of Indians towards junk food. Expanding in tier 2 and tier 3 cities.
Threats Competitive pricing Threat of labor strikes
How does it operate?
McDonalds
McDonalds
(company owned outlets)
Franchisee
Customers
Customers
Distribution channel defined-:
Distribution channels are sets of interdependent Organizations involved in the process of making a product or service available for use or consumption. -STERN & ANSARY
Companys strategy McDonalds follows a zero level distribution
channel. It practices pull strategy for its enhancement of sales. Follows Hybrid channel marketing.
Channel format (is decided by who drives the channel system.) Producer driven
(effort of manufacturer to reach the product to his consumers.)
Seller driven
(use of existing channels to reach the largest number of end users)
Service driven
(people who provide or facilitate distribution)
McDonalds System McDonald's follows a producer driven channel
format. (Franchise system 80%) (self owned outlets 20 %)
World market leader in (Quick Service Restaurants)
area. Corporate strategy :-
* QSC & V -: Quality, service, cleanliness & value * Plan to win -: Successful business revitalization
McDonalds in India: McDonalds does not offer direct franchise.
Talking about India, it has been into a joint venture ship with
two entrepreneurs :
Amit Jatia, Vice Chairman, Hardcastle Restaurants Pvt. Ltd.
(awarded a development licensee status for west and south India)
Vikram Bakshi's Connaught Plaza Restaurants Private Limited . (awarded a development licensee status for north and east India)
McDonalds suppliers Trikaya Agriculture
Supplier of Iceberg Lettuce
Vista Processed Foods Pvt. Ltd.
Supplier of Chicken and Vegetable
Dynamix Diary
Supplier of Cheese. Amrit Food
Supplier of long life UHT Milk and Milk Products for Frozen desserts.
Channel member Channel members are the people through which goods
and services go through before they reach the consumer.
The members include franchisees, joint ventures and
licensees, wholesalers and industrial distributors.
Others include brokers and agents, insurance
companies and transport industries.
Channel members in McDonalds
FRANCHISOR
The franchisor owns the brand and the operating system that they license to their franchisees. FRANCHISEE
The franchisee invests in the right to use the franchisor's expertise, brand name, operating methods, and initial and ongoing support.
Channel Member Responsibilities of Channel Members
The producer and intermediaries must agree on price policies, discounts, territories, and services to be performed by each party. E.g. McDonalds provides franchisees with promotional support, training, management assistance, in turn, franchisees must meet company standards for physical facilities, buy specific food products... etc.
STPD Analysis Segmentation based on lifestyle and habits of urban
families. Targeting kids, office goers,youth. Positioning with statements such as I am loving it,
aap ke zamaane me baap ke zamaane ke daam .
Differentiation - taste and packaging.
Brand building process
Identify your customer
Clarify what is important to them
Narrow to the highest four or highest three priority of outcomes to your customers.
Evaluation of corporate strategy
McDonalds Focusing on drive in strategy. McDonalds initial franchisee fees is $45,000. Be the best quick service restaurants by providing quality service,cleanliness and value that makes every customer in every restaurant smile.
Dominos Focusing on take away strategy. Dominos initial franchisee fees is $25,000. Exceptional people on a mission to be the best pizza delivery company in the world.
Evaluation of Channel Format
McDonalds follows a producer driven format system. i.e. a franchisee system, but along with that also it
carries its self owned outlets..so it remains to an advantageous position.
Unlike Dominos (a company working on the very
similar structure) In which it runs wholesole on the basis of franchisee system only.
Evaluation of Channel Performance
McDonalds Since it follows zero level distribution channelit ensures more fresh and safe ingredients. Practices hybrid channel marketing and thus has a back up of its own outlets. It is more cost effective as no third party is involved in it. The chain goes likeDominos Since it follows one level distribution channel it lags a bit behind in ensuring ultimate fresh ingredients. Practices single channel marketing i.e. through its franchisees only. Comparatively less cost effective as prominent retailers are also involved. The chain goes like-
COMPANY FRANCHISEE CUSTOMERS
COMPANY RETAILERS FRANCHISEE CUSTOMERS
Channel Member Performance
McDonalds Dominos McDonald's do not pay overtime Dominos in contrast to this pays rates even when employees work very incentives to the employee on long hours. accomplishment of certain fixed goals Pressure to keep profits high and wage costs low results in understaffing, so staff have to work harder and faster. As a consequence, accidents (particularly burns) are common. Not surprisingly staff turnover at McDonald's is high, making it virtually impossible for employees to carry on for a longer duration. Its strength lies in retaining its employees. Also it practices reward power tool.
This results in low employee turnover and an assurance of success.
Suggestions-: Increasing seating capacity. Aggressive expansion plans throughout the country. More drive in.
