McDonald’sMcDonald’s

Chase Mueller Ashley Hoptay Tanner Gilreath Anna Rendon Olivia Erwin Brandon Laviage Paige Stone

OverviewOverview

Analyzed McDonald’s and its three Analyzed McDonald’s and its three competitors, YUM! Brands, Burger King competitors, YUM! Brands, Burger King and Wendy’s, to assess the company’s and Wendy’s, to assess the company’s standing in the industry.standing in the industry.

Focused on the key company Focused on the key company characteristics, its financial situation, characteristics, its financial situation, each company’s organizational flexibility each company’s organizational flexibility and culture, strategies used, and their and culture, strategies used, and their ability to be able to compete in today’s ability to be able to compete in today’s market and economy.market and economy.

Corporate Social Corporate Social ResponsibilityResponsibility

Has become a way of doing business.Has become a way of doing business. Understand that they must deliver Understand that they must deliver

responsible food to its consumers.responsible food to its consumers. How it serves food.How it serves food. Where the food comes from.Where the food comes from. What people want from it.What people want from it. Therefore, the company works closely with Therefore, the company works closely with

its suppliers, franchisees and employees to its suppliers, franchisees and employees to ensure products are safely delivered to ensure products are safely delivered to consumers.consumers.

Corporate Social Corporate Social ResponsibilityResponsibility

McDonald’s goes green:McDonald’s goes green: Since 2000, the company has opened up Since 2000, the company has opened up

multiple “green” restaurants.multiple “green” restaurants. Rebuilding restaurants with a more Rebuilding restaurants with a more

innovative and efficient design that will innovative and efficient design that will reduce the use of water and energy.reduce the use of water and energy.

Enhancing its packaging – 82% of its Enhancing its packaging – 82% of its packaging is made from renewable packaging is made from renewable resourcesresources

““Closed Loop Hierarchy for Packaging and Closed Loop Hierarchy for Packaging and Waste”Waste”

Corporate Social Corporate Social ResponsibilityResponsibility McDonald’s is…healthy?McDonald’s is…healthy?

Three aspects involved: provide consumer-Three aspects involved: provide consumer-friendly nutrition information, bring consumers friendly nutrition information, bring consumers high-quality choices, and communicate high-quality choices, and communicate responsiblyresponsibly

Offer salads, wraps, smaller portions and Offer salads, wraps, smaller portions and healthier sides. Zero grams of Trans fat in fried healthier sides. Zero grams of Trans fat in fried foods. foods.

Can find all of the nutrition information on the Can find all of the nutrition information on the Web. Also implementing a new packaging design Web. Also implementing a new packaging design where the nutrition information will be placed on where the nutrition information will be placed on the wrapper.the wrapper.

Strengthening its Global Children’sStrengthening its Global Children’sMarketing GuidelinesMarketing Guidelines

Corporate Social Corporate Social ResponsibilityResponsibility

McDonald’s makes its presence McDonald’s makes its presence known:known: Gets involved with its communities in Gets involved with its communities in

four ways:four ways: Ronald McDonald HouseRonald McDonald House SponsorshipsSponsorships Owner/Operator InvolvementOwner/Operator Involvement Disaster ReliefDisaster Relief

Corporate Social Corporate Social ResponsibilityResponsibility

Quality every step of the way:Quality every step of the way: Takes great prudence to ensure that every Takes great prudence to ensure that every

aspect of the supply chain positively aspect of the supply chain positively contributes to the safety, quality and contributes to the safety, quality and availability of its products.availability of its products.

Uses a Social Accountability program to Uses a Social Accountability program to uphold its strict standards for its suppliers.uphold its strict standards for its suppliers.

Not afraid to leverage its size and influence Not afraid to leverage its size and influence to raise questions about the suppliers’ to raise questions about the suppliers’ methods and to encourage improvement in methods and to encourage improvement in their practices.their practices.

Forecasting and Speed of Forecasting and Speed of ResponseResponse

McDonald’s plays a large part in its McDonald’s plays a large part in its communities, and the company is constantly communities, and the company is constantly searching for new ways to get involved or searching for new ways to get involved or help the environment. The company also tries help the environment. The company also tries to project future needs to lessen the impact to project future needs to lessen the impact that its business has on its communities.that its business has on its communities.

McDonald’s is able to quickly respond to its McDonald’s is able to quickly respond to its communities’ needs and wants:communities’ needs and wants: McDonald’s was the only quick service restaurant McDonald’s was the only quick service restaurant

to make to make Health MagazineHealth Magazine’s list of America’s Top ’s list of America’s Top 10 healthiest meals at limited-service restaurants”10 healthiest meals at limited-service restaurants”

Entrepreneurial Entrepreneurial OrientationOrientation 78% of McDonald’s restaurants are 78% of McDonald’s restaurants are

operated by franchisees.operated by franchisees. Creates a strong entrepreneurial feel.Creates a strong entrepreneurial feel. The only competitor with a larger mix of The only competitor with a larger mix of

franchisees is Burger King – 90% of franchisees is Burger King – 90% of restaurants are operated by franchisees.restaurants are operated by franchisees.

Very selective when granting franchises or Very selective when granting franchises or licenses. Will not franchise to passive licenses. Will not franchise to passive investors that do not appear capable of investors that do not appear capable of matching the goals and requirements that matching the goals and requirements that McDonald’s sets for all of its locationsMcDonald’s sets for all of its locations

Attraction and Attraction and RetainmentRetainment

Make that a McCareer please.Make that a McCareer please. Supports development from the crew room to the Supports development from the crew room to the

board room. board room. Promotes from within. Promotes from within. Provides training for all levels.Provides training for all levels.

Service level receive on the job training where they learn Service level receive on the job training where they learn the technology as well as customer service techniquesthe technology as well as customer service techniques

Provide college level classes at Hamburger University for Provide college level classes at Hamburger University for management trainingmanagement training

McDonald’s Leadership Institute provides almost 200 McDonald’s Leadership Institute provides almost 200 employees from the McDonald’s system to partake in the employees from the McDonald’s system to partake in the accelerated programs and learn how to be a corporate accelerated programs and learn how to be a corporate leader in the companyleader in the company

Ranked as one of the Top 20 Global Companies for Ranked as one of the Top 20 Global Companies for Leaders in 2007 by Leaders in 2007 by FortuneFortune

Super Sizing ValueSuper Sizing Value Value menu: no value cost trade-offValue menu: no value cost trade-off

Dollar Menu, Yen for Great Value in JapanDollar Menu, Yen for Great Value in Japan Maintain a supply of high quality Maintain a supply of high quality

ingredientsingredients Ensured by the company’s size and strength over Ensured by the company’s size and strength over

its suppliersits suppliers Variety and selection of menu items to Variety and selection of menu items to

satisfy all tastessatisfy all tastes Research and Development is essential to Research and Development is essential to

growthgrowth Have three food studios located in Munich, Hong Have three food studios located in Munich, Hong

Kong and Chicago where chefs test and create their Kong and Chicago where chefs test and create their new concoctionsnew concoctions

Delivering ValueDelivering Value Convenience and accessibility are important Convenience and accessibility are important

aspects that bring consumers more valueaspects that bring consumers more value Located in close proximity to each otherLocated in close proximity to each other Found in areas with a high customer Found in areas with a high customer

concentrationconcentration Expanding the number of 24 hour locationsExpanding the number of 24 hour locations Opening drive-thrus in areas such as Russia and Opening drive-thrus in areas such as Russia and

China and adding double drive-thrus in the USChina and adding double drive-thrus in the US Kiosks in India and IndonesiaKiosks in India and Indonesia Delivery service in Singapore, Egypt and other Delivery service in Singapore, Egypt and other

Asian and Middle Eastern countriesAsian and Middle Eastern countries

Reimaging ValueReimaging Value

Feel that its restaurants are the best Feel that its restaurants are the best way for the company to express its way for the company to express its brand and create the ultimate customer brand and create the ultimate customer experienceexperience

Renewed about 10,000 restaurants Renewed about 10,000 restaurants within the past five yearswithin the past five years

Design is contemporary and eco-friendlyDesign is contemporary and eco-friendly Burger King is also re-investing in the Burger King is also re-investing in the

design of its restaurantsdesign of its restaurants

Marketing and Marketing and PromotionsPromotions

Relevant marketing and promotions Relevant marketing and promotions strengthen its connection with its strengthen its connection with its customers and build brand awareness customers and build brand awareness and loyaltyand loyalty ““I’m Lovin’ It” campaignI’m Lovin’ It” campaign

Promotions such as Monopoly and Uno Promotions such as Monopoly and Uno evoke customer interaction and get them evoke customer interaction and get them involved with the brandinvolved with the brand

Burger King is advertising more and is Burger King is advertising more and is utilizing a more viral campaignutilizing a more viral campaign

Financial and Accounting Financial and Accounting AnalysisAnalysis

Quantitative accounting disclosures are Quantitative accounting disclosures are intended to effectively communicate intended to effectively communicate the financial statements’ numbersthe financial statements’ numbers

Certain legal manipulations and Certain legal manipulations and disclosures could give a company an disclosures could give a company an unrealistic value as well as mislead its unrealistic value as well as mislead its investors. investors.

ToolsTools Financial RatiosFinancial Ratios

Ratio AnalysisRatio Analysis

It is used to show the resources a firm It is used to show the resources a firm and its ability to cover their current and its ability to cover their current assets with current liabilities.assets with current liabilities.

The higher a firm’s current ratio is, the The higher a firm’s current ratio is, the more able a firm is to pay off its more able a firm is to pay off its liabilities.liabilities.

Ratio AnalysisRatio Analysis

The quick asset ratio, or acid-test, uses the The quick asset ratio, or acid-test, uses the firm’s most liquid assets than can quickly be firm’s most liquid assets than can quickly be turned into cash for their book value amounts turned into cash for their book value amounts to pay off current debts. to pay off current debts.

The assets included in this ratio are cash, The assets included in this ratio are cash, marketable securities, and accounts receivable. marketable securities, and accounts receivable.

Ratio AnalysisRatio Analysis

Working capital turnover is determined by Working capital turnover is determined by dividing a company’s sales by its working dividing a company’s sales by its working capital: current assets less current capital: current assets less current liabilities.liabilities.

It evaluates how efficient a company uses It evaluates how efficient a company uses its working capital balance to create sales. its working capital balance to create sales.

Ratio AnalysisRatio Analysis

It simply gives profit as a percentage of net sales.It simply gives profit as a percentage of net sales. It shows how much of each dollar of product sold It shows how much of each dollar of product sold

is profit. is profit. By having a small percentage it shows that the By having a small percentage it shows that the

company is not utilizing their resources well and company is not utilizing their resources well and their cost to produce the item are too high. their cost to produce the item are too high.

Ratio AnalysisRatio Analysis

The firm uses the previous year’s assets to better The firm uses the previous year’s assets to better reflect profitability for the current year. reflect profitability for the current year.

This is done because profits with the new assets will This is done because profits with the new assets will not be recognized until the next fiscal year and that is not be recognized until the next fiscal year and that is how it gives people a better understanding on how how it gives people a better understanding on how they either helped or hurt the company. they either helped or hurt the company.

Ratio AnalysisRatio Analysis

The purpose of the Z-score is to help us make The purpose of the Z-score is to help us make calculations that help us to understand where a calculations that help us to understand where a company stands with their credit risk. company stands with their credit risk.

A company is considered to be bankrupt when their Z-A company is considered to be bankrupt when their Z-score is below 1.81. When a firm’s score exceeds 2.67, score is below 1.81. When a firm’s score exceeds 2.67, the firm is considered to have low risks in the the firm is considered to have low risks in the bankruptcy and credit categories. bankruptcy and credit categories.

Marketing and Marketing and ManagementManagement

McDonald’s once focused on children for their McDonald’s once focused on children for their advertising, but recent law suits and documentaries advertising, but recent law suits and documentaries resulted in the company’s innovation and major resulted in the company’s innovation and major changes to health related product ranges. Now more changes to health related product ranges. Now more teenagers and adults rule the McDonald’s ad world. teenagers and adults rule the McDonald’s ad world.

McDonald’s had begun concentrating so heavily on McDonald’s had begun concentrating so heavily on expansion and growing big that it missed out on key expansion and growing big that it missed out on key factors like quality maintenance and R&D.factors like quality maintenance and R&D.

McDonald’s strategic plan is influencing their McDonald’s strategic plan is influencing their marketing efforts by building better brand marketing efforts by building better brand transparency. They want their image to be transparency. They want their image to be recognized globally. They are enhancing the recognized globally. They are enhancing the customer’s experience.customer’s experience.

Marketing and ManagementMarketing and Management The change in the top managerial level has created The change in the top managerial level has created

a new wave in performance and major changes have a new wave in performance and major changes have been implemented to retain and sustain the brand been implemented to retain and sustain the brand quality and innovation. As the new CEO rightly quality and innovation. As the new CEO rightly quotes:quotes:

““The world has changed. Our customers The world has changed. Our customers have changed. We have to change too."have changed. We have to change too."

-James R. Cantaloupe, -James R. Cantaloupe, Chairman and CEO, McDonald’s Chairman and CEO, McDonald’s

Types of marketing mix that McDonald’s use to Types of marketing mix that McDonald’s use to achieve their marketing goals are longer operating achieve their marketing goals are longer operating hours, everyday value meals, and optimizing hours, everyday value meals, and optimizing efficiency in the drive-thru.efficiency in the drive-thru.

Business Life Cycle: Business Life Cycle: McDonalds McDonalds 1948: 1948: Richard and Maurice McDonald open the first Richard and Maurice McDonald open the first

McDonald's restaurant in San Bernardino, California.McDonald's restaurant in San Bernardino, California. 1954: 1954: Ray Kroc gains the rights to set up McDonald's Ray Kroc gains the rights to set up McDonald's

restaurants in most of the country.restaurants in most of the country. 1955: 1955: Kroc opens his first McDonald's restaurant in Des Kroc opens his first McDonald's restaurant in Des

Plaines, Illinois; he incorporates his company as Plaines, Illinois; he incorporates his company as McDonald's Corporation. McDonald's Corporation.

1961: 1961: Kroc buys out the McDonald brothers for $2.7 Kroc buys out the McDonald brothers for $2.7 million.million.

1963: 1963: McDonald's goes public. McDonald's goes public. 1967: 1967: The company opens its first foreign restaurant in The company opens its first foreign restaurant in

British Columbia, Canada. British Columbia, Canada. 1973: 1973: Breakfast items begin to appear on the menu, with Breakfast items begin to appear on the menu, with

the debut of the Egg McMuffin. the debut of the Egg McMuffin. 1974: 1974: The first Ronald McDonald House opens in The first Ronald McDonald House opens in

Philadelphia.Philadelphia.

Business Life Cycle: Business Life Cycle: McDonalds McDonalds

1975: 1975: The first McDonald's drive-thru window appears. The first McDonald's drive-thru window appears. 1985: 1985: McDonald's becomes one of the 30 companies McDonald's becomes one of the 30 companies

that make up the Dow Jones Industrial Average.that make up the Dow Jones Industrial Average. 1998: 1998: The company takes its first stake in another fast-The company takes its first stake in another fast-

food chain, buying a minority interest in Colorado-based food chain, buying a minority interest in Colorado-based Chipotle Mexican Grill. Chipotle Mexican Grill.

1999: 1999: Donatos Pizza Inc. is acquired. Donatos Pizza Inc. is acquired. 2000: 2000: McDonald's buys the bankrupt Boston Market McDonald's buys the bankrupt Boston Market

chain. chain. 2002: 2002: Restructuring charges of $853 million result in Restructuring charges of $853 million result in

the firm's first quarterly loss since going public.the firm's first quarterly loss since going public. 2003: 2003: McDonald's sells Donatos in order to refocus on McDonald's sells Donatos in order to refocus on

its core hamburger business. its core hamburger business.

Business Life Cycle: Business Life Cycle: Wendy’s Wendy’s

19691969: Dave Thomas opens the first Wendy's restaurant in : Dave Thomas opens the first Wendy's restaurant in downtown Columbus, Ohio. downtown Columbus, Ohio.

19721972: Wendy's franchising begins. : Wendy's franchising begins. 19751975: First international restaurant opens in Canada. : First international restaurant opens in Canada. 19761976: Wendy's International, Inc. goes public. : Wendy's International, Inc. goes public. 19771977: Company begins national television advertising. : Company begins national television advertising. 19781978: The 1,000th Wendy's opens in Springfield, Tennessee. : The 1,000th Wendy's opens in Springfield, Tennessee. 19811981: Thomas makes his first appearance as Wendy's : Thomas makes his first appearance as Wendy's

advertising spokesperson. advertising spokesperson. 19841984: Famous and award-winning "Where's the Beef?" ad : Famous and award-winning "Where's the Beef?" ad

campaign is run.campaign is run. 19861986: James W. Near becomes president and COO and : James W. Near becomes president and COO and

launches a major reorganization. launches a major reorganization. 19951995: Wendy's International acquires Tim Hortons, a : Wendy's International acquires Tim Hortons, a

Canadian coffee and baked goods chain. Canadian coffee and baked goods chain. 19971997: The 5,000th Wendy's restaurant opens in Columbus, : The 5,000th Wendy's restaurant opens in Columbus,

Ohio. Ohio. 20022002: Dave Thomas dies; Wendy's International acquires a 45 : Dave Thomas dies; Wendy's International acquires a 45

percent stake in Café Express. percent stake in Café Express.

Business Life Cycle: Business Life Cycle: Burger KingBurger King

1954:1954: James McLamore and David Edgerton establish Burger James McLamore and David Edgerton establish Burger King Corporation. King Corporation.

1959:1959: The company begins to expand through franchising. The company begins to expand through franchising.

1967:1967: Burger King is sold to Pillsbury. Burger King is sold to Pillsbury.

1977:1977: Donald Smith is hired to restructure the firm's Donald Smith is hired to restructure the firm's franchise system. franchise system.

1989:1989: Grand Metropolitan plc acquires Pillsbury. Grand Metropolitan plc acquires Pillsbury.

1997:1997: Grand Metropolitan merges with Guinness to form Grand Metropolitan merges with Guinness to form Diageo plc. Diageo plc.

2002:2002: A group of investors led by Texas Pacific Group acquire A group of investors led by Texas Pacific Group acquire Burger King. Burger King.

Business Life Cycle: KFC Business Life Cycle: KFC 1952: 1952: The Colonel begins actively franchising his The Colonel begins actively franchising his

chickenbusiness by traveling from town to town and cooking chickenbusiness by traveling from town to town and cooking batches of chicken for restaurant owners and employees. batches of chicken for restaurant owners and employees. The Colonel awards Pete Harman of Salt Lake City with the The Colonel awards Pete Harman of Salt Lake City with the first KFC franchise. A handshake agreement stipulates a first KFC franchise. A handshake agreement stipulates a payment of a nickel to Sanders for each chicken sold. payment of a nickel to Sanders for each chicken sold.

1960: 1960: The Colonel's hard work on the road begins to pay off The Colonel's hard work on the road begins to pay off and there are 190 KFC franchisees and 400 franchise units and there are 190 KFC franchisees and 400 franchise units in the U.S. and Canada. in the U.S. and Canada.

1964: 1964: Kentucky Fried Chicken has more than 600 Kentucky Fried Chicken has more than 600 franchised outlets in the United States, Canada and the first franchised outlets in the United States, Canada and the first overseas outlet, in England. overseas outlet, in England.

1966: 1966: The Kentucky Fried Chicken Corporation goes public. The Kentucky Fried Chicken Corporation goes public. 1969: 1969: The Kentucky Fried Chicken Corporation is listed on The Kentucky Fried Chicken Corporation is listed on

the New York Stock Exchange. the New York Stock Exchange. 1971: 1971: More than 3,500 franchised and company-owned More than 3,500 franchised and company-owned

restaurants are in worldwide operation when Heublein Inc. restaurants are in worldwide operation when Heublein Inc. acquires KFC Corporationacquires KFC Corporation

Business Life Cycle: KFC Business Life Cycle: KFC 1979: 1979: KFC cooks up 2.7 billion pieces of chicken. There are KFC cooks up 2.7 billion pieces of chicken. There are

approximately 6,000 KFC restaurants worldwide with sales of approximately 6,000 KFC restaurants worldwide with sales of more than $2 billion. more than $2 billion.

1982: 1982: Kentucky Fried Chicken becomes a subsidiary of R.J. Kentucky Fried Chicken becomes a subsidiary of R.J. Reynolds Industries, Inc. (now RJR Nabisco, Inc.) when Reynolds Industries, Inc. (now RJR Nabisco, Inc.) when Heublein, Inc. is acquired by Reynolds. Heublein, Inc. is acquired by Reynolds.

1986: 1986: PepsiCo, Inc. acquires KFC from RJR Nabisco, Inc. PepsiCo, Inc. acquires KFC from RJR Nabisco, Inc. 1997: 1997: PepsiCo, Inc. announces the spin-off of its quick service PepsiCo, Inc. announces the spin-off of its quick service

restaurants - KFC, Taco Bell and Pizza Hut - into Tricon restaurants - KFC, Taco Bell and Pizza Hut - into Tricon Global Restaurants, Inc. Global Restaurants, Inc.

2002: 2002: Tricon Global Restaurants, Inc., the world's largest Tricon Global Restaurants, Inc., the world's largest restaurant company, changes its corporate name to YUM! restaurant company, changes its corporate name to YUM! Brands, Inc. In addition to KFC, the company owns A&W® Brands, Inc. In addition to KFC, the company owns A&W® All-American Food® Restaurants, Long John Silvers®, Pizza All-American Food® Restaurants, Long John Silvers®, Pizza Hut® and Taco Bell® restaurantsHut® and Taco Bell® restaurants

McDonalds Corporate McDonalds Corporate StructureStructure

Management gurus often cite McDonald’s corporate Management gurus often cite McDonald’s corporate structure model. structure model.

The company's highly decentralized management The company's highly decentralized management runs its franchises.runs its franchises.

McDonald’s uses a functional structure, with the McDonald’s uses a functional structure, with the

Chief Executive overseeing five major areas of Chief Executive overseeing five major areas of activitiesactivities. .

Franchise candidates must sign an agreement with Franchise candidates must sign an agreement with the firm, which gives them the right to operate a the firm, which gives them the right to operate a specific McDonald’s location for a period of 20 years. specific McDonald’s location for a period of 20 years.

  

McDonald’s Corporate McDonald’s Corporate Structure ChartStructure Chart

McDonalds Corporate McDonalds Corporate CultureCulture

McDonalds vision statement is quality, service, convenience, McDonalds vision statement is quality, service, convenience, and value (QSCV)..and value (QSCV)..

No one portrays McDonalds culture more than Hamburger No one portrays McDonalds culture more than Hamburger University, it is a place where Organizational culture is University, it is a place where Organizational culture is franchisees, managers, and assistant managers are franchisees, managers, and assistant managers are indoctrinated into the culture that is McDonald's. indoctrinated into the culture that is McDonald's.

This structure allows McDonalds to export successfully not This structure allows McDonalds to export successfully not only its management system but a very distinct culture as well. only its management system but a very distinct culture as well.

Inspectors continually reinforce McDonald’s culture and by Inspectors continually reinforce McDonald’s culture and by contests to determine whom best reaches the standards contests to determine whom best reaches the standards McDonald's sets for all its franchises. McDonald's sets for all its franchises.

McDonald's manuals emphasize the organization's motto, McDonald's manuals emphasize the organization's motto, QSCV, and they define every task an employee needs to know. QSCV, and they define every task an employee needs to know.

These manuals ensure that efficiency, predictability, and These manuals ensure that efficiency, predictability, and control are involved in production and customer service. control are involved in production and customer service.

Yum! Brands Corporate Yum! Brands Corporate StructureStructure

Originally an accumulation of restaurant chain accounts Originally an accumulation of restaurant chain accounts put together for not only the addition of Pepsi fountain put together for not only the addition of Pepsi fountain accounts, but for profit from food sales. accounts, but for profit from food sales.

Chains were acquired and managed virtually Chains were acquired and managed virtually independently, essentially skipping the usual corporate independently, essentially skipping the usual corporate practice of bringing them in line with the rest of the practice of bringing them in line with the rest of the business units. business units. 

Now, the company operates its business through three Now, the company operates its business through three geographical reporting segments: the US, the geographical reporting segments: the US, the International segment and China segment.  International segment and China segment.   The US segment operates multi-brand restaurants, where two The US segment operates multi-brand restaurants, where two

or more of the concepts, such as KFC, Pizza Hut, Taco Bell, or more of the concepts, such as KFC, Pizza Hut, Taco Bell, Long John Silver's and A&W, are operated in a single unit.  Long John Silver's and A&W, are operated in a single unit.  

Outside the US the company and its franchisees use Outside the US the company and its franchisees use decentralized sourcing and distribution systems involving decentralized sourcing and distribution systems involving many different global, regional, and local suppliers and many different global, regional, and local suppliers and distributors. distributors.

Yum! Brands Corporate Yum! Brands Corporate Structure ChartStructure Chart

Yum! Brands Corporate Yum! Brands Corporate CultureCulture

Over the past 12 years, Yum! Brands success has been Over the past 12 years, Yum! Brands success has been driven by their focus on building leading brands in China in driven by their focus on building leading brands in China in every significant category. every significant category.

They strive to drive aggressive, international expansion and They strive to drive aggressive, international expansion and build strong brands everywhere. build strong brands everywhere.

They try to dramatically improve U.S. brand positions, They try to dramatically improve U.S. brand positions, consistency and returns, driving industry-leading, long-consistency and returns, driving industry-leading, long-term shareholder and franchisee value, and build a unique, term shareholder and franchisee value, and build a unique, fun culture led by people who love the restaurant business.fun culture led by people who love the restaurant business.

  They created the Yum! Dynasty Growth Model.They created the Yum! Dynasty Growth Model.

How We Win Together Principles are their corporate values How We Win Together Principles are their corporate values and are built around a "People Capability First" philosophy.and are built around a "People Capability First" philosophy.

StrengthsStrengths FranchisesFranchises

McDonald’s operates 31,377 restaurants with McDonald’s operates 31,377 restaurants with 20,505 of those restaurants being operated by 20,505 of those restaurants being operated by private ownersprivate owners

Brand RecognitionBrand Recognition Branding allows customers to recognize icons, Branding allows customers to recognize icons,

thus becoming more brand loyalthus becoming more brand loyal Product UniformityProduct Uniformity

Offering the same consistent product creates Offering the same consistent product creates customer loyaltycustomer loyalty

Pricing StrategyPricing Strategy Value MenuValue Menu

WeaknessesWeaknesses

SaturationSaturation pricing wars against competitors has pricing wars against competitors has

caused a decrease in revenuecaused a decrease in revenue

Public PerceptionPublic Perception unhealthy product offerings has lead to unhealthy product offerings has lead to

numerous lawsuitsnumerous lawsuits

OpportunitiesOpportunities Market shareMarket share

countries such as Latin America and the countries such as Latin America and the Caribbean’s, Europe, The Middle East and Caribbean’s, Europe, The Middle East and North America, Sub- Sahara Africa, and North America, Sub- Sahara Africa, and Oceana have very few McDonald’s chains, Oceana have very few McDonald’s chains, creating a huge untapped marketcreating a huge untapped market

Younger Generation Younger Generation tend to be on the go, and look for meals tend to be on the go, and look for meals

that are quick, cheap, and convenient, thus that are quick, cheap, and convenient, thus giving a huge opportunity to serve an adult giving a huge opportunity to serve an adult crowdcrowd

Opportunities…Opportunities…

InnovativenessInnovativeness Continuously using technological Continuously using technological

factors, perhaps text message ordering factors, perhaps text message ordering can influence revenue or joining the can influence revenue or joining the going green movementgoing green movement

Product OfferingProduct Offering Constantly seeking new product Constantly seeking new product

offerings allows new opportunities for offerings allows new opportunities for growth and expansion of their brand growth and expansion of their brand recognitionrecognition

ThreatsThreats Economic SlowdownEconomic Slowdown

Recessionary period and global economic Recessionary period and global economic slowdown has led to currency losses, slowdown has led to currency losses, inflation or deflationinflation or deflation

Casual Dining RestaurantsCasual Dining Restaurants have decreased menu priceshave decreased menu prices Cheddar’s burger: $4.99Cheddar’s burger: $4.99

ImitationImitation new formats and new menu items are being new formats and new menu items are being

imitatedimitated

Company Assessment Company Assessment SummarySummary

Competitive ScopeCompetitive Scope

Global ScaleGlobal Scale Local, regional, national, and Local, regional, national, and

international competitorsinternational competitors

Makes up 2.4% of 575,000 total Makes up 2.4% of 575,000 total restaurants in U.S.restaurants in U.S.

Strategic IntentStrategic Intent

Leader in QSR industryLeader in QSR industry

Uses advertising, marketing, and Uses advertising, marketing, and public relations to promote brand public relations to promote brand image and focus on value, food taste, image and focus on value, food taste, menu choice and customer menu choice and customer experienceexperience

Market Share ObjectiveMarket Share Objective

Focus on internal growth through Focus on internal growth through expanding the number of restaurants as expanding the number of restaurants as well as capturing new market share well as capturing new market share from other industries.from other industries. Ex: coffee sectorEx: coffee sector

““Plan to Win”Plan to Win” Designed to bring more value to Designed to bring more value to

shareholdersshareholders Ex: flat screen TVs, internetEx: flat screen TVs, internet

Competitive Competitive Position/SituationPosition/Situation

Well-entrenched Well-entrenched

Global leaderGlobal leader

Keep position through expanding the Keep position through expanding the number of stores, internal number of stores, internal operations to new ventures, and operations to new ventures, and customer experience. customer experience.

Strategic PostureStrategic Posture

Defensive Strategies - reactions to Defensive Strategies - reactions to competition and to defend market sharecompetition and to defend market share Dollar menuDollar menu Value meals Value meals

Offensive Strategies - proactive Offensive Strategies - proactive approach to keep and secure its approach to keep and secure its position as market leaderposition as market leader New market venturesNew market ventures Customer loyaltyCustomer loyalty

Competitive StrategyCompetitive Strategy DifferentiationDifferentiation

Advertising and marketingAdvertising and marketing Recognizable name and logoRecognizable name and logo

Social responsibility and commitment to Social responsibility and commitment to communitycommunity

Green movementGreen movement Safe and high quality meatSafe and high quality meat

TechnologyTechnology Speedee Service SystemSpeedee Service System