BULACAN STATE UNIVERSITY-SARMIENTO CAMPUS

Case Study

In partial Fulfillment
of the Requirements for the Degree
Bachelor of science in Hospitality management

submitted to: Mr. Melvin Sarosa

Submitted by:
Michael Gabriel Magno
Jeffrey Pariña
Joy Monponbanua

Date: October 18, 2019

BACKGROUND

McDonald’s, in full McDonald’s Corporation, American fast-food chain that is one of the largest
in the world, known for its hamburgers. Its headquarters are in Oak Brook, Illinois.
The first McDonald’s restaurant was started in 1948 by brothers Maurice (“Mac”) and Richard
McDonald in San Bernardino, California. They bought appliances for their
small hamburger restaurant from salesman Ray Kroc, who was intrigued by their need for eight
malt and shake mixers. When Kroc visited the brothers in 1954 to see how a small shop could
sell so many milk shakes, he discovered a simple, efficient format that permitted the brothers to
produce huge quantities of food at low prices. A basic hamburger cost 15 cents, about half the
price charged by competing restaurants. The self-service counter eliminated the need for waiters
and waitresses; customers received their food quickly because hamburgers were cooked ahead of
time, wrapped, and warmed under heat lamps.
Seeing great promise in their restaurant concept, Kroc offered to begin a franchise program for
the McDonald brothers. On April 15, 1955, he opened the first McDonald’s franchise in Des
Plaines, Illinois, and in the same year launched the McDonald’s Corporation, eventually buying
out the McDonald brothers in 1961. The number of McDonald’s outlets would top 1,000 before
the end of the decade. Boosted by steady growth, the company’s stock began trading publicly in
1965.

The public face of McDonald’s was created in 1963 with the introduction of a clown named
Ronald McDonald, while the double-arch “m” symbol became McDonald’s most enduring logo
in 1962, lasting far longer than the tall yellow arches that had once dominated the earlier
restaurant rooftops. Other products and symbols would define the McDonald’s brand, including
the Big Mac (1968), the Egg McMuffin (1973), Happy Meals (1979), and Chicken McNuggets
(1983).

The chain continued to expand domestically and internationally, extending to Canada in 1967,
reaching a total of 10,000 restaurants by 1988, and operating more than 35,000 outlets in more
than 100 countries in the early 21st century. Growth was so swift in the 1990s that it was said a
new McDonald’s opened somewhere in the world every five hours. It effectively became the
most popular family restaurant, emphasizing affordable food, fun, and flavours that appealed to
children and adults alike.

The success of McDonald’s brought increased criticism, much of which concerned its perceived
association with a global increase in obesity. McDonald’s responded by adding healthy items to
its menu, and in 2017 it began testing a vegan hamburger. During this time it also eliminated
supersized portions, and its U.S. and Canadian restaurants stopped using trans-fat oil in a number
of items. Such measures, however, did little to stem health concerns. In addition, as one of the
world’s largest private employers, McDonald’s faced numerous calls to increase wages. The
term McJob was added to the Merriam-Webster dictionary to mean “low-paying job.” In the late
20th century, McDonald’s moved beyond the hamburger business by acquiring Chipotle
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Mexican Grill (1998), Donatos Pizza (1999), and Boston Market (2000) in the United States, and
in the United Kingdom McDonald’s purchased Aroma Cafe (1999) and an interest in Pret A
Manger (2001), a sandwich restaurant chain. However, by late 2008 McDonald’s no longer
owned or had a stake in any of those companies, instead concentrating on its own brand.
McDonald’s was active in charitable work. In 1974 it joined Philadelphia Eagles football player
Fred Hill, whose daughter had been diagnosed with leukemia, in founding the Ronald McDonald
House in Philadelphia. The residence allowed families to live near the hospital where their
children were receiving treatment. By the early 21st century, more than 360 such houses existed
around the world. The Ronald McDonald House Charities (established 1987) also supports
various other efforts.

The Analysis Report

The Problem

An app called "Ice Check" allows customers to see which McDonald's currently have
functioning ice cream machines. Broken ice cream machines are a top McDonald's customer
complaint. McDonald's is supposed to replace its ice cream machines with a new model that
fixes problems.

Employees Customers

low wages Hospitality

Mcdonanlds service
slow service inadequate
Poor quality Management of emplyees

Service Management
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The Objective

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.

Areas of Consideration

McDonald’s needs to adapt to different cultures and conditions when it sets up business in
different parts of the world.
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Courses of Action

Donald’s hedges their interest rate and foreign exchange exposures, which are made up
offoreign income and assets and their domestic and foreign debt portfolio, by using the
followingapproaches: Qualitative Analysis – uses the underlying economic fundamentals
for each country, and thecurrency is analyzed to determine when it is necessary to hedge.Do
not change anything with the current operation standards of McDonald’s since, it has provento
be effective through the years.Maintain McDonald’s current operation in fast -food
business but diversify its products andservices. The following SWOT analyses of the
technological innovations of McDonald’s showrecommended actions for the company.

Recommendation

The second alternative course of action is recommended. It is highly suggested that

Plan of Action

McDonald's Investigation - Action Plan The purpose of this report is to show my understanding
of why McDonald's adopted franchising. In the report I am going to explain franchise and
explain its legal framework. Also the amount of control McDonalds actually has over the
McDonald's outlets and where the outlets should be located. I will also evaluate if original
decision to franchise was the correct one. My report will include: v where my information comes
from and why; v an introduction that will give a brief history of McDonalds and some of the
characteristics of the company i.e. aims and objectives; v I will explain what a franchise is and
their advantages and disadvantages as well as how they operate; v the agreement of franchise and
what problems the franchiser might have with the franchisee with things like freedom and
control, and v a conclusion of if I think McDonalds choice was successful and if I think it could
be improved. Research and Sources of Information. When gathering my information for this
report I will research in different areas. I will by looking in books, on the Internet at the
McDonald's site, asking my teacher and from their student handbook. I will need to go to the
McDonalds web page because I need to find out about their history, their aims and objectives,
how they control and manage their franchises and general information about the running and
franchising of McDonalds Restaurants.
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Potential Problem

McDonald’s is considered as the most successful and largest restaurant chain in the world. In
1990 McDonald’s opened its first store in Shenzhen China. In 1992, McDonald’s Beijing outlet
was opened. There are more than 800 McDonald’s outlets in China today.

In so far as the legal aspect was concerned, there were no franchise laws that existed in China.
This posed a problem about how franchises should exist or operate.

Chinese people were “loyal to Chinese cuisine and felt that the fast food chains did not offer
much variety to suit their palate. The Chinese preferred the traditional culture of food and drink
complete with colour, fragrance, flavour, and variety.”

To make matters worse, they also “faced intense competition by its biggest rival Yum Brands i.e.
KFC.” Not only did McDonald’s have the difficult task of adapting their business to the Chinese
culture and way of life; they also had to fend off their competitors. This meant finding other
ways to compete against them and attract customers by changing their product range, style and
advertising.

Contingent Plan of Action

They try to reflect the tastes and customs of the local markets by offering different kind of
menus.

Exhibits

The Chicken McNuggets in China come with the traditional BBQ, Sweet & Sour, and Honey
Mustard sauces, but there’s also a Chilli Garlic Sauce, which is very popular in China.
(Answers.com, 2007) In 2001 McDonald’s Vegetable and Seafood Soup and Corn Soup were
introduced. I think that these menu items were introduced because it was in line with their
culture and love for foods with exotic taste. Clearly this proved to be a successful marketing
strategy as it targeted the palatial needs of the Chinese people because of their ancient history
and experimentation with different varieties of food.