Republic of the Philippines

L aguna S tate P olytechnic U niversity

Province of Laguna

Operations Management of McDonald’s

Alfonso, Recelyn D.
Parducho, Barron Angelo N.
Ramido, Queenie Alexis N.
Onglengco, Karen Joy V.
Sotomayor, Dianne Faye U.

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TABLE OF CONTENTS

Title Page ………………………………………………………………………… 1

Table of Contents ………………………………………………………………. 2
I. Introduction …………………………………………………………………… 3
II. Reference ………………………………………………………………………6

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 I. INTRODUCTION
Background of the Company

History
In 1940, brothers Richard "Dick" and Maurice "Mac" McDonald opened a barbecue
restaurant called McDonald's Bar-B-Q in San Bernardino, California. After eight years,
they took a risk by streamlining their operations and establishing the Speeded Service
System, which featured 15-cent hamburgers. The first official franchised McDonald's
restaurant opened in Des Plaines, Illinois, on April 15, 1955, by Ray Kroc, a Multimixer
milkshake machine salesman. McDonald's continued to expand rapidly, with new
franchises opening across the United States and worldwide. McDonald's has had a
significant role in defining the global fast-food industry and has been an icon of
American fast-food culture throughout its history. It has also endured multiple
challenges and allegations, but it continues to be a famous and recognizable brand
globally.

Product Selling
McDonald's product offerings include fast food items such as burgers, fries, soft
drinks, milkshakes, and breakfast items. This includes some iconic menu items like Big
Mac, French Fries, Christmas-themed McFlurry, Chicken McNuggets, etc. A key to
McDonald's success is how it is consistent in terms of taste and quality, no matter which
location you visit worldwide.
McDonald's leads in the fast-food industry with its promotional techniques that
include offers and freebies to regularly attract customers. For example, McDonald's
offers a "Happy Meal," which consists of a main meal, side, and drink for a discounted
price. They have successfully fostered brand loyalty through their McDonald's Rewards
program which allows 26 million customers to earn redeemable points for free. Its
marketing plan primarily includes advertising, public relations, online ads, and direct

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marketing. They also utilize point-of-sale materials and sponsorships to promote their
brand.
McDonald’s marketing objectives include appealing to the price point of a target
market that is looking for fast food service at low costs. This consists of families with
children, middle-class income earners and anyone who needs less wait time for food.
Ray Kroc focused on adopting bundle price strategy, like the Big Mac Meal, that
becomes profitable when sold in bulk at low prices. This leads to an impressive 37%
profit margins, which is much higher than 6-9% average QSR margins.
Today, it also focuses on self-serve kiosks and meal-based menu items to further
reduce labor costs. Their pricing also follows purchase power parity to adapt to the
international market segment. For example, in India, McDonald's finally became
profitable after 22 years by focusing on local tastes and spending habits of their target
audience.

Location (Locally and Internationally)

On May 15, 1940, the McDonald's brothers launched their first eatery in San
Bernardino, California. Initially, guests were served via a car-hop drive-in system. The
brothers' first moniker for their company was "McDonald's Famous Barbecue," and the
initial menu offerings were all oriented upon barbecue.
In the Philippines, the iconic Golden Arches first appeared in 1981 when Dr.
George T. Yang opened the nation's first McDonald's restaurant, which still stands
today in Morayta, Manila. In 1992, McDonald's opened its first locations in Visayas and
Mindanao, bringing its renowned menu items like the Big Mac and Fries to more
Filipinos. McDonald's, a Filipino-owned business, became "Una Sa Pamilyang Pinoy" in
2005. With over 480 locations and 40,000 employees, it's now a top fast-food company
in the Philippines.

Competition
McDonald’s has its way of making a difference and competing with its
competitors. It uses five operation performance objectives to operate their businesses.
First, it creates high-quality products and services. McDonald’s uses product

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standardization to ensure that its products have a consistent level of quality and flavor
wherever they are sold. Additionally, standardization decreases the room for error in
food preparation so that it meets consumer expectations. Secondly, their business
focuses on achieving efficiency and speed. Since fast food means quick service,
McDonald's has streamlined its processes to guarantee that customers receive their
meals fast and employees place a high priority on speed and efficiency in its business
operations. Thirdly, McDonald’s stores are open 24/7, which means, you can avail their
product anytime the customer wants. In addition, they also expanded their delivery
service through the Mcdo App where there is no need to go to their store to order
different products, and with just one click, people can get the product they want.
Fourthly, they create innovation. McDonald's constantly innovates its menu and
business practices to stay current and satisfy shifting consumer preferences. Examples
are new menu items, healthier choices, and regional delicacies. And lastly, they practice
cost effectiveness. Since McDonald's uses product standardization, it helps the
business to reduce costs by allowing them to create a high-product variety with low
production expenditures. Additionally, it makes training easier, lowers mistakes, and
guarantees that product quality and flavor are consistent, all of which helps to save
costs.

With this, it helps McDonald’s to be the leading fast-food business internationally

and second lead fast-food business in the Philippines. Garnering almost 40,000 stores
internationally and 700 plus in the Philippines. It is slowly creating a loyal customer
while keeping up with the business’ number one competitor or the leading fast-food
business in the Philippines. It constantly innovates and adapts to gain market share,
and strategies to use for the growth of the business.

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 REFERENCES

McDonald’s History
https://corporate.mcdonalds.com/corpmcd/our-company/who-we-are/our-history.html

McDonald’s Product Selling

McDonald's Marketing Strategy: How McDonald's makes you love it! (buildd.co)

McDonald’s Location

https://en.wikipedia.org/wiki/History_of_McDonald%27s#:~:text=city%20of
%20Monrovia.-,1940s,was%20used%20to%20serve%20customers.

https://www.linkedin.com/company/golden-arches-development-corp/?
originalSubdomain=ph

McDonald’s Competition
https://mcdonalds.com.ph/our-story
https://profitworks.ca/small-business-sales-and-marketing-resources/blog/marketing-
strategy/541-how-mcdonalds-became-the-leader-fast-food-industry-marketing-
strategy.html
https://research-methodology.net/mcdonalds-business-strategy/
https://www.statista.com/statistics/1288386/philippines-leading-quick-service-
restaurants-by-sales/