Assignment MGT 162
Assignment MGT 162
McDonald’s is one of the leading restaurant chains in the world, touching the lives of people
everyday. The long journey of the burger brand started in 1940, when two brothers, Dick and
Mac McDonald opened the first McDonald’s restaurant in San Bernardino, California.
Initially, they owned a hotdog stand, but after establishing the restaurant they served around
25 items, which were mostly barbequed. It became a popular and profitable teen hangout. In
1948, the brothers closed and reopened the restaurant to sell only hamburgers, milkshakes
and French fries.
As per the information of the McDonald’s history, the major revenue came from hamburgers,
which were sold at a nominal price of 15 cents. The restaurant gradually became famous and
the McDonald brothers begin franchising their restaurant in the year 1953. The first franchise
was taken by Neil Fox and under it; the second Mc Donald’s restaurant was opened in
Fresno, California. It was the first to introduce the Golden Arch design. The third and fourth
restaurants were opened in Saginaw, Michigan and Downey, California, respectively.
The latter is the oldest Mc Donald’s restaurant still in operation. In 1954, an entrepreneur and
milkshake-mixer salesman, Ray Kroc, acquired the franchise of McDonald’s restaurant for
outside California and Arizona. In effect, Kroc opened his first and the overall ninth
restaurant in Illinois, Chicago, and gave birth to Mc Donald’s Corporation. In 1958, the
restaurant chain sold its 100 millionth hamburger. In 1960, Kroc renamed his company as
‘McDonald’s Corporation’. In 1961, Kroc convinced the McDonald brothers to sell the
business rights to him for a sum $2.7milion.
Later that year, the Hamburger University was opened, which gave away McDonald's
restaurant Bachelor of Hamburgology degrees to students. In 1963, the mascot Ronald
McDonald was born as a part of a marketing strategy in US. In 1967, the first restaurant
outside US was opened in Richmond, British Columbia. In 1974, the 3000th restaurant opened
in Woolwich, United Kingdom, which is the first of the country. Happy Meal was introduced
in US in 1979. In 1984, the company became the main sponsor of the Summer Olympics. The
year was also marked by the death of Ray Kroc.
In 1988, the first restaurant opened in a communist country in Belgrade, Yugoslavia,
followed by the first Soviet restaurant in Moscow (1990). In 1992, the largest McDonald’s
was opened in Beijing, China, having over 700 seats and was later demolished. In 1993, the
first sea-going restaurant was established, aboard the Finnish Cruise-ferry Silja Europa,
sailing between Helsinki and Stockholm. In 1994, McDonald’s bagged the Catalyst Award
for its program for ‘fostering leadership development in women’. In 1996, the first Indian
restaurant was opened.
In 2003, the company launched the ‘I’m lovin’ it’ campaign. In 2005, McDonald’s started its
McDelivery service in Singapore. In 2006, the chain announced that it will publish nutritional
information on its packaging of all its products, for the benefit of the customers. Considering
the huge success and brand McDonald’s has become, the food chain is spread across the
world in almost all the major cities of the globe. Being economic and user friendly, the
success rate of the company cannot be doubted.
Richard McDonald Maurice McDonald
Died July 14, 1998 (aged 89) Died December 11, 1971 (aged 69)
Bedford, New Hampshire, U.S. Riverside, California, U.S.
Resting Calvary Cemetery Resting Calvary Cemetery
place Manchester, New Hampshire, place Manchester, New Hampshire, U.S.
U.S.
Nationality American Nationality American
Other Dick McDonald Other Mac McDonald
names names
Occupation Entrepreneur Occupation Entrepreneur
MISSION AND VISION
The following core values guide our actions as we strive to achieve our mission:
MCDONALDS MANAGEMENT
McDonald Management, Inc. was formed in 1988 as an umbrella organization to research,
organize, operate and own a diversified portfolio of remarkable projects. Our long list of
ventures over the years include US State Department contracts in Africa, People to People
programs in the old Soviet Union, gravel pits & quarries in Washington State, cattle ranches
in Idaho, hard-cider production operations in three states, and Jazz & Blues Clubs up and
down the West Coast.
We look for interesting ideas not yet realized. We brainstorm those ideas making use of the
energy and excitement of youth tempered by the wisdom of experience. We produce
feasibility studies that carefully document and weigh the pros & cons of each idea. For the
rare project that passes our feasibility phase, we develop and implement the operations and
funding models. In the end, we always operate each project for several years to make sure our
efforts are not lost to a pre-mature exit strategy.
The purpose of this paper is to discuss external and internal factors affecting McDonald’s
management functions. This will be accomplished by explaining how McDonald’s deals with
each of the external and internal factors. There were three factors that were chosen to outline
the success of McDonald’s corporation. The first factor is globalization, which is define as
closer contact between different parts of the world, with increasing possibilities of personal
exchange, mutual understanding and friendship between "world citizens". Diversity, the
difference among people and cultures, is the second factor discussed in the paper. The final
factor is ethics, which can be defined as a set of principles of right conduct. This paper
explains how the McDonald Corporations uses the factors to conduct business around the
world.
In today’s society, corporations and enterprises are expanding their businesses in the global
markets. Globalization is necessary for success and survival in the worldwide market;
however, global competition is not easy (Bateman & Scott, 2004). By the end of the twentieth
century, the list of Fortune 500 companies was no longer only United States corporations due
to an increase in international companies joining the list (Global Capitalism, 2005). As a
leading food service retailer, McDonald’s joins those corporations with restaurants in 119
countries (McDonald’s, 2004). Important strategic decisions are a key factor to their success
with consideration for both internal and external factors. When considering the foreign
market, companies need to consider there are risks. There must be local marketing to appeal
to the local consumers and also to build relationships and trust (Bateman & Scott, 2004).
Therefore, the strategic planning for marketing has to be effective. McDonald’s caters its
menu in other countries to the cultures of the regions. For example, in India, the non-
vegetarian menu includes chicken and fish items only.
MARKETING MANAGEMENT
MANAGING MARKET
1. INTRODUCTION
In the year 1937, two brothers named Richaard and Murice in California started the operation of
McDonald’s as a drive in retaurant (Scribd, 2009). At present, McDonlads is serving fifty four million
people each day among one hundred and twenty countries trhough its thiry thousands local
restaurants. According to The Times 100 (2009), during the year 2008 McDonalds operated 31,667
restaurants over 120 countries which can be divided into sex segments. Those are: United States,
United Kingdom, Asia Pacific, Africa, Canada, Middle East and Latin America. At Present, McDonalds
is the number eight famous brand around the world (Datamonitor, 2009).
Resturant and franchisee resturants operated under the direct and indircet supervision of
McDonalds company are the main source of McDonalds’ revenue.
Around eight thousands resturants of McDonalds are monitored by the company itself, franchisees
operate around eighteen resturants of McDonalds (Abdullah, 2009). Apart from that, all other
McDonalds resturants are being operated just by using McDonalds affiliation. The revenue of
McDonalds are generated from mainly two sources: 1) from the sale of McDonalds directly
controlled restaurants and 2) rent and fees from affiliates and franchisees of McDonalds.
2.MACRO ENVIRONMENT
According to Business Dictionary (2009), Organization’s decision making and performance and
strategies are sometimes affected by some external.
McDonald's places emphasis on the training and development of its employees. They aim to
provide career opportunities for people to achieve their potential. The firm offers both full
and part-time career opportunities, which helps staff to combine work with family or
educational commitments.
Job progression is used to encourage employees who got their first job in the company to
progress to management positions. These promotions are based on the performance of the
staff member. Over 40% of McDonald's managers started as hourly-paid staff members in the
restaurants. Over half of the company's middle and senior managers have moved up from
restaurant-based positions.
MCDONALD MANAGEMENT STRATEGIC
COMPANY PROFILE
A company without vision and mission is like a human body without bones to support and
strengthen its values. That is exactly why the McDonald’s is building this two big statements, which
is to keep realizing what they want to do, why they do it, how to do it, and what they do really want
to be in the right corridors of business. Not just to gain profits, but also to survive in the global
market.
McVision
“to be the world's best quick service restaurant experience. Being the best means providing
outstanding quality, service, cleanliness, and value, so that we make every customer in every
restaurant smile.”
McMission
Be the best employer for our people in each community around the world
Deliver operational excellence to our customers in each of our restaurants; and
Achieve enduring profitable growth by expanding the brand and leveraging the strengths of the
McDonald's system through innovation and technology.
McFinancial Information-Global (Year 2008)
There are two ways to become a McDonald's franchisee - start a new restaurant from scratch or buy an existing McDonald's
restaurant.
Either way, you need to fulfill certain financial requirements to be a McDonald's franchisee.
Initial Costs
Legal fees are paid by the franchisee to cover the preparation of the franchise documentation
Royalty Fee
A Royalty Fee, which is a system fee, is based on a percentage of the restaurant's gross sales, which is currently at 5%.
Rental
Depending on store type, location and performance – may vary between 13% to 20%
Marketing Contribution
Currently at 5% of the restaurant's gross sales.
2) EXISTING RESTAURANTS
If you choose to buy an existing McDonald’s restaurant business instead, you will usually buy it over based on the
restaurant's market value. In addition, the franchise fee and security deposit aforementioned will also be payable.
Note: All matters mentioned in relation to an individual making an application and qualifying for a McDonald's franchise
also apply to the situation where it is proposed that an existing restaurant business is purchased.
FURTHER NOTES:
1. The costs stated above are only estimates and may change without prior notice.
2. As a general guide, no less than 30% of the initial costs must be funded from non-borrowed personal
resources.
3. Term of Franchise: 20 years or length of lease of premises.
Statement of Financial Position, Assets
The statement of financial position provides creditors, investors, and analysts with
information on company's resources (assets) and its sources of capital (its equity and
liabilities). It normally also provides information about the future earnings capacity of a
company's assets as well as an indication of cash flows that may come from receivables and
inventories.
Assets are resources controlled by the company as a result of past events and from which
future economic benefits are expected to flow to the entity.
USD $ in thousands
Accounts and notes receivable, net 1,060,400 931,200 1,053,800 904,200 795,900
Property, plant and equipment, net 21,531,500 20,254,500 20,984,700 20,845,700 19,908,000
STEP 1
Submit your application by filling in the application form. This submission,
however, does not bind you or McDonald's in any way. It is simply the first
step to ensure that both parties will be happy to form a relationship through a
franchise agreement.
STEP 2
If we believe in your potential to be a franchisee after reviewing your
application carefully, we will arrange an interview with you. It will cover
your background, goals, financial status and interest in McDonald's.
STEP 3
If all is well, you will begin a formal training stint with McDonald's for
approximately 1 year. This comprehensive training programme will prepare
you in all aspects of operating a McDonald's restaurant and help us evaluate
your potential as a franchisee.
Let's take a walk down memory lane and remember the many achievements, successes and
milestones
of McDonald's Malaysia.
December 1980 McDonald's was first brought to Malaysia by YBhg Tan Sri Vincent Tan.
29 April 1982 The first McDonald's restaurant in Malaysia was opened at Jalan Bukit Bintang, Kuala
Lumpur.
29 October 1984 The first McDonald's restaurant opened outside of the Klang Valley was in Holiday
Plaza, Johor Bahru.
1987 McDonald's main supplier, MacFood Services
(M) Sdn Bhd commenced operations
7 March 1987 McEgg was first introduced in Malaysia.
2 November 1987 Ayam Goreng was first introduced in Malaysia. May 1988 Mohamed Shah bin Tan
Sri Abdul Kadir, former Managing Director and Joint Venture Partner of McDonald's Malaysia, joined
the McDonald's family. 19 December 1988 McDonald's Malaysia's first Drive-Thru restaurant was
opened at Jalan Pahang, Kuala Lumpur. 15 February 1990 Ronald McDonald Children's Charities
Fund of Malaysia (RMCC), McDonald's charity arm was established. 16 September 1992 McDonald's
Buns supplier, HaviFoods Sdn Bhd, started operations. 15 December 1992 The first McDonald's
restaurant in Brunei was opened. 1993 The Beef Prosperity Burger was developed in Malaysia and
first introduced. 20 January 1993 The first McDonald's restaurant on the Borneo Island was opened.
20 January 1993 McDonald's first franchised restaurant was opened in Sibu. 28 March 1994
McDonald's Delivery Service was first introduced. 1 July 1994 McDonald's Value Meal was brought
into the Malaysian market. 1995 The first McDonald's Hot Kiosk was opened in Kota Bharu. 1995
McDonald's received the Class A award from the Kuala Lumpur City Council. February 1995
McDonald's is the first Quick Service Restaurant to obtain Halal certification. 19 August 1995
McDonald's Malaysia opened its 50th restaurant at One Utama shopping complex. August 1996 The
highest McDonald's in the world opened at KL Tower. 22 March 1997 The RMCC scholarship
programme for underprivileged children called the "RMCC Tunas Wawasan" was launched. July 1997
McDonald's Malaysia opened its 100th restaurant at Sunway Pyramid shopping complex. 1998
McDonald's McSaver meals was introduced for the first time. 19 December 1998 McDonald's first
highway restaurant, Awan Besar was opened. 21 June 1999 RMCC opened its first Ronald McDonald
House in Malaysia. July 1999 A new brand promise, "We're out to make you smile" was put forward
in celebration of the new millennium. July 1999 McDonald's Customer Care Representative was
introduced. 29 April 2000 The first McDonald's Cold Kiosk was opened at Megamall Kuantan. 20
January 2001 McDonald's is the first Quick Service Restaurant to form an alliance with an oil
company when it opened at Mobil, Seremban Highway. 28 September 2003 Launch of the "i'm
lovin'it" campaign to revitalize the McDonald's brand. 2004 First McDonald's employee was sent to
the athlete's village in Athens, Greece in conjunction with the 2004 Olympic Games. July 2004 The
annual Olympic Day Run was introduced to mark McDonald's worldwide partnership with the
International Olympic Council. 20 November 2004 McDonald's introduced the "Give A Gift Of Smile"
campaign to assist Malaysian children born with Cleft Lip and Palate to undergo corrective surgery.
April 2006 Recognition by the Malaysia Book of Records for the Largest Participation for a Drive-Thru
Challenge. June 2006 Open Doors programme was introduced where customers were allowed to
witness first-hand the Food Quality and Safety practices at McDonald's . 2006 The first Malaysian
child, Kevin Khoo was chosen as a Player Escort at the 2006 FIFA World Cup Germany under the
McDonald's Player Escort Programme. January 2007 Winner of the BrandLaureate Award for Food &
Beverage, Quick Service Restaurant category. April 2007 McDonald's celebrates its 25th Anniversary
in Malaysia.
Our people are our ambassadors, representing the promise behind the brand.
We love our people and their dedication and loyalty is rewarded in more
ways than one. That's why we have people who have been with the company
through thick and thin for 15 to 25 years.
Find out why McDonald's® people are so committed to the company and to
one another.
• Company Activities
• Awards
• Training