In The Name of ALLAH, The Most Merciful, The Most Beneficial.

Strategic Business Management

Presented To,
Miss Shumaila Mazhar
University of Sargodha

Presented By,
AAMIR RAZA

SADIA GULL
TAYYABA SAFEER

AROOJ NASIR

Group (A)
M.B.A. Regular “A”

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 To Almighty Allah
The Most merciful
The Most beneficent
Who enabled us the ability to
understand and comprehend things
around us.

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 We would like to thank our professor “MAM SHUMAILA
MAZHAR AWAN” who was always there to help and guide us when we
needed help. His perceptive criticism kept us working to make this project
more full proof. We are thankful to him for his encouraging and valuable
support. Working under him was an extremely knowledgeable and enriching
experience for us. We are very thankful to him for all the value addition and
enhancement done to us.

No words can adequately express my overriding debt of gratitude to

my parents whose support helps me in all the way. Above all I shall thank
my friends who constantly encouraged and blessed me so as to enable me to
do this work successfully.

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 First of all we would like to thank that great entity that helped us to
get through this report safely, the one who was always there when no one
was!

SHUKER- ALL- HUMDULILLAH!

Would that we have words to pay tribute to our loving parents and
teachers whose invaluable prays salutary admire and embodying
attitude kept our spirit alive to strive for knowledge and integrity which
enable us to reach milestone.

We would also like to express enormous gratitude to our respectable

teacher “MAM SHUMAILA MAZHAR AWAN” for providing the direction
for this project and for helping us in refining our effort and ideas.

We also acknowledge the help and pleasant gathering of all our class
fellows. We are also thankful to all of those people who helped us in
accomplishing our project.

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 TABLE OF CONTENTS

Topics Page
Summary 6

Introduction McDonald 7

History analysis 7

Vision & Mission 8

Stage 1: Input Stage

 External audit 9

 Internal audit 10

 External factor evaluation (EFE) matrix 11

 Internal factor evaluation (IFE) matrix 12

Stage 2: Matching Stage

 SWOT matrix 13

 Space matrix 15

 The Boston consulting group (BCG) matrix 16

 The internal-external (IE) matrix 17

 Grand strategy matrix 18

Stage 3: Decision Stage

The quantitative strategic planning matrix (QSPM) 19

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 Summary of case study …McDonald
McDonald’s performance in global market is significant. In spite of competition and
challenges posed by litigation in various markets around the world, the food service giant has
experienced steady growth in revenues, operating income and assets. McDonald operates in
the food service industry through co owned restaurants, franchises, and license worldwide,
competing with international, national, regional and local retailers of food products, including
restaurants, quick service eating establishments, pizza parlors, coffee shops, street vendors etc.
McDonald is operating in more than 100 countries and is organized into a geographical
structure.

In 2003,mcdonald draw a plan named, ”plan to win” and announced that in

April,2007,Mcdonald will sale its 1600 restaurants to Rest Co. Iberoamericana limited. MCD
continue to maintain its long term goals for achieving average annual company sales and growth
of revenue. The Latam sale generates about $700 million for Macdonald; the impact of this
conversion of restaurants to franchises is decline of Mac’s consolidated revenue s annually by
$1.5 billion.

Mac’s key competitors includes, Burger King, Yum Brands and Wendy’s who directly
compete with McDonald in the fast food restaurant business.

McDonald’s market leadership is its ability to successfully innovate and standardized

products and process technology. Its approach to serving customers efficiently and offering
customers a variety of menu choice consistent with changing preferences of consumer’s
worldwide. Convenience, value based pricing and extended hours are an integral part of
McDonald’s core strategy of creating value to its customers.

McDonald’s new plan “plan to win” seeks to offer exceptional customer experience
through five key drivers like people, products, place, price and promotion. In addition to
opening new restaurants, it continually upgrades its old restaurants through renovations and
investments in property, plant and equipment. It also has to face legal challenges from activities,
consumers, labor unions, medical and religious groups around the world.

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INTRODUCTION:
McDonald's Corporation is the world's largest chain of fast food restaurants,
serving nearly 47 million customers daily through more than 31,000 restaurants in
119 countries worldwide. McDonald’s sells various fast food items and soft drinks
including, burgers, chicken, salads, fries, and ice cream. Many McDonald’s
restaurants have included a playground for children and advertising geared toward
children, and some have been redesigned in a more 'natural' style, with a particular
emphasis on comfort: introducing lounge areas and fireplaces, and eliminating hard
plastic chairs and tables.

Each McDonald's restaurant is operated by a franchisee, an affiliate, or the

corporation itself. The corporations' revenues come from the rent, royalties and fees paid
by the franchisees, as well as sales in company-operated restaurants. McDonald's
revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth
in operating income to $3.9 billion.

McDonald's brand formed in 1954, Is the leading global food-service

retailer with more than 30,000 local restaurants serving nearly 50 million people in
more than 120 countries each day.

The rich history began with the founder, Ray Kroc's strong foundation he
built which continues today with McDonald's vision and commitment of our
talented executives to keep the shine on McDonald's arches for years to come.

HISTORY ANALYSIS:

The business began in 1940, with a restaurant opened by brothers Dick And Mac
McDonald in San Bernardino, California. With the expansion of McDonald's into many
international markets, the company has become a symbol of globalization and the spread
of the American way of life. Its prominence has also made it a frequent topic of public
debates about obesity, corporate ethics and consumer responsibility

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MCDONALD'S IN PAKISTAN:

Aiming to be the world's best quick service restaurant experience, McDonald's started its
operations in Pakistan in 1998 and is a leading fast food service retailer for its valued
customers.

With a strong believe in the phrase "when it's green it's growing", McDonald's
Pakistan is growing with the focus to provide friendly and quick service experience to our
customers. McDonald's Pakistan is a part of Lakson Group of Companies, operating with
a network of restaurants in various cities with a vision leading us to reach our customers
for providing friendly services in all regions of the country. We are operating, presently
in 6 cities of Pakistan Karachi, Hyderabad, Lahore, Faisalabad, Rawalpindi and
Islamabad In Future, very soon planning to expand in many cities in Pakistan to realize
the McDonald's service vision, we believe in strengthening our team and ensure to
deliver the right skills and knowledge to the right person for getting the right job done.
Our strength for making our strong team players to shine under the Golden Arches lies in
the People Promises,

McDonald's focus to deliver;

1. Resources & Recognition

2. Values & Leadership Behavior
3. Competitive Pay & Benefits
4. Learning Development & Personal Growth
5. Resources to get the Job Done

Vision
To be the best and leading fast food provider around the globe

Mission
McDonald's brand mission is to be our customers' favorite place and way to eat,
and improve our operations to provide the most delicious fast food that meet our
customers' expectations.

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 SWOT ANALYSIS OF MCDONALD
External Audit:

OPPORTUNITIES THREATS
Growing health trends among Health professionals and consumer
consumers activists accuse
Globalization, expansion in other McDonald's of contributing to the t
countries (especially in China & country’s health issue of high s
India). cholesterol, heart attacks, diabetes, .
Diversification and acquisition of and obesity.
other quick-service restaurants. The relationship between corporate
Growth of the fast- food industry. level McDonald's and its franchise
Worldwide deregulation dealers. L
Low cost menu that will attract the McDonald’s competitors threatened e
customers. market share of the company both g
internationally and domestically. a
Freebies and discounts.
l
Anti-American sentiments
:
Global recession and fluctuating
foreign currencies.
Fast-food chain industry is
expected to struggle to meet the L
expectations of the customers e
towards health and environmental g
issues. i
s
l
a
t
i
o
9 n

f
o
Internal Audit:

STRENGTH WEAKNESS
Unhealthy food image.
High Staff Turnover including Top
Strong brand name, image and
management
reputation.
Customer losses due to fierce
Large market share
competition.
Strong global presence
Legal actions related to health
Specialized training for managers
issues; use of Trans fat & beef oil.
known as the Hamburger
Uses HCFC-22 to make
University.
polystyrene that is contributing to
McDonalds Plan to win focuses on
ozone depletion.
people, products, place, price and
Ignoring breakfast from the menu.
promotion.
Strong financial performance and
position.
Introduction of new products.
Customer focus (centric)
Strong MCD's performance in the
global Marketplace.

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External Factor Evaluation (EFE) Matrix:

Weighted
Key External Factors Weight Rating
Score
Opportunities
Growing health trends among consumers 0.08 3 0.24

Globalization, expansion in other countries 0.12 4 0.48

(especially in China & India).
Diversification and acquisition of other quick- .04 3 0.12
service restaurants.
Growth of the fast-food industry. .10 3 0.30

Worldwide deregulation .04 2 0.08

Low cost menu that will attract the customers. .08 2 0.16

Freebies and discounts .08 1 0.08

Threats
Health professionals and consumer activists
accuse McDonald's of contributing to the 0.10 3 0.30
country’s health issue of high cholesterol, heart
attacks, diabetes, and obesity.
The relationship between corporate level 0.09 3 0.27
McDonald's and its franchise dealers.
McDonald’s competitors threatened market
share of the company both internationally and 0.12 4 0.48
domestically.
Anti-American sentiments. .07 2 .14

Global recession and fluctuating foreign .04 3 .12

currencies.
Fast-food chain industry is expected to struggle
to meet the expectations of the customers .04 2 .08
towards health and environmental issues.
Total 1.00 2.85

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Internal Factor Evaluation (IFE) Matrix:

Weighted
Key Internal Factors Weight Rating
Score
Strengths

Strong brand name, image and reputation. 0.12 4 0.48

Large market share 0.10 4 0.40

Strong global presence 0.04 3 0.12

Specialized training for managers known as the 0.04 3 0.12

Hamburger University.
McDonalds Plan to Win focuses on people, 0.12 4 0.48
products, place, price and pro mot ion

Strong financial performance and position. 0.08 4 0.32

Introduction of new products . 0.06 4 0.24

Customer focus (centric). 0.06 4 0.24

Strong performance in the global marketplace. 0.08 4 0.32

Weaknesses
Unhealthy food image. 0.08 1 0.08

High Staff Tu rnover including Top management 0.04 1 0.10

Customer losses due to fierce co mpetit ion. 0.04 1 0.04

Legal actions related to health issues; use of trans 0.04 2 0.08

fat & beef o il.
McDonald's uses HCFC-22 to make polystyrene 0.04 2 0.08
that is contributing to ozone depletion.

Ignoring breakfast fro m the menu. 0.06 1 0.06

Total 1.00 3.16

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 SWOT MATRIX
STRENGTH WEAKNESS
Strong brand name, image and Unhealthy food image.
reputation. High Staff Turnover including
Large market share Top management
Strong global presence Customer losses due to fierce
Specialized training for competition.
managers known as the Legal actions related to health
Hamburger University. issues; use of Trans fat & beef
M cDonalds Plan to win focuses oil. t
on people, products, place, price Uses HCFC-22 to make s
and promotion. polystyrene that is .
Strong financial performance contributing to ozone
and position. depletion.
Introduction of new products. Ignoring breakfast from the
Customer focus (centric) menu.
Strong M CD's performance in
L
the global M arketplace.
e
OPPORTUNITIES S-O Strategies W-O Strategies g
a
Growing health trends  Focus on Plan to win  Minimize
among consumers to attract customers customers losses l
Globalization, expansion in :
and expansion in by provide low
other countries (especially in other countries (S5, cost menu and
China & India).
O2, O6) discounts (W3, O6,
Diversification and
 Expansion in market O7)
acquisition of other quick-
share by more
service restaurants.
investments in Asia L
Growth of the fast-food e
(S2, O2)
industry.
g
Worldwide deregulation
i
Low cost menu that will
attract the customers. s
Freebies and discounts. l
a
t
i
o
13 n

f
o
THREATS S-T Strategies W-T Strategies
Health professionals and  More control on  Applying 0 grams
consumer activists accuse franchise dealers to Trans fat in all
M cDonald's of contributing maintain worldwide
to the country’s health issue
McDonald's McDonald's (W1,
of high cholesterol, heart
reputation and W4, O1).
attacks, diabetes, and obesity.
quality (S1, T2).  Transfer from
The relationship between
 Provide new product HCFC-22 to HFC
corporate level M cDonald's
and keep innovation (hydro
and its franchise dealers.
(S7, T3). fluorocarbon)-free
M cDonald’s competitors
(W5, T6)
threatened market share of
the company both
internationally and
domestically.
Anti-American sentiments
Global recession and
fluctuating foreign
currencies.

Fast-food chain industry is

expected to struggle to meet
the expectations of the
customers towards health and
environmental issues.

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 SPACE Matrix
Financial Strength Rating Environmental Stability Rating

Return on investment 4 Rate of inflation -3

Leverage 4 Demand Changes -3

Net Income 6 Price Elasticity of demand -1

EPS 5 Competitive pressure -3

ROE 5 Barriers to entry new markets -3

Cash Flow 4 Risk involved in business -2

Average 4.67 Average -2.5

Y-axis 2.17

Competitive Advantage Rating Industry Strength Rating

Market share -1.00 Growth potential 5

Product Quality -1.00 Financial stability 5

Customer Loyalty -1.00 Ease of entry new markets 4

Control over other parties -2.00 Resources utilization 4

Profit potential 5

Demand variability 3

Average -1.25 Average 4.33

X-axis 3.08

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 +ve

Conservative Aggressive

FS

Conserv
-ve +ve

Defensive Competitive
C

Defe -ve

Compet

The Boston Consulting Group (BCG) Matrixes

Relative Market Share Position

STARS
?
(Mcdonald)

CASH COWS DOGS

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The Internal-External (IE) Matrix:

The IFE Total Weighted Score

3.0-4.0 2.0-2.99 1.0-1.99

I II III

IV V VI

McDonald'
s

VII VIII IX

The IFE Total Weighted Score

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 Grand Strategy Matrix

Rapid Market Growth

ES
Quad 2 Quad 1
Rapid Market G
Quadrant II Quadr

Weak
Competitive Strong
Position Competitive
Position

Quad 3 Quad4
4
Quadran
Slow Market Growth

Slow Market G Quadra

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The Quantitative Strategic
Planning Matrix (QSPM):

Strategy 1 Strategy 2

Expand further in Applying 0 grams

Asia by adding 500 Trans fat in all
restaurants worldwide
McDonald's
restaurants

Key Internal Factors Weight AS TAS AS TAS

Strengths
Strong brand name, image and reputation 0.12 4 0.48 4 0.48

Large market share 0.10 4 0.40 2 0.20

Strong global presence 0.04 4 0.12 2 0.08

Specialized training for managers known as 0.04 - - - -

the
Hamburger University

McDonalds Plan to Win focuses on people, 0.12 4 0.48 4 0.48

products, place, price and pro motion

Strong financial performance and position 0.08 4 0.32 4 0.32

Introduction of new products 0.06 - - - -

Customer focus (centric) 0.06 1 0.06 4 0.24

Strong performance in the global marketplace 0.08 3 0.24 1 0.08

Weaknesses

Unhealthy food image 0.08 1 0.08 4 0.32

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High Staff Tu rnover including Top 0.10 - - - -
management

Customer losses due to fierce co mpetit ion 0.04 3 0.12 1 0.04

Legal actions related to health issues; use of 0.04 1 0.04 4 0.16

trans fat & beef oil

Uses HCFC-22 to make polystyrene that is 0.04 - - - -

contributing to ozone depletion

SUBTOTAL 1.00 2.34 2.40

Strategy 1 Strategy 2

Expand further Applying 0 grams

in Trans fat in all
Asia by adding worldwide
500 restaurants McDonald's
restaurants

Key External Factors Weight AS TAS AS TAS

Opportunities
Growing health trends among consumers 0.08 1 0.08 4 0.32

Globalization, expansion in other countries 0.12 4 0.48 1 0.12

(especially in China & India)

Diversificat ion and acquisition of other quick- 0.04 - - - -

service restaurants

Growth of the fast-food industry 0.10 4 0.40 4 0.40

Worldwide deregulat ion 0.04 4 0.16 1 0.04

Low cost menu that will attract the customers 0.08 - - - -

Freebies and discounts 0.08 - - - -

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Threats
Health professionals and consumer act ivists accuse 0.10 1 0.10 4 0.40
McDonald's of contributing to the country’s health
issue of high cholesterol, heart attacks, diabetes,
and obesity
The relationship between corporate level 0.09 4 0.36 1 0.09

McDonald's and its franchise dealers

McDonald’s competitors threatened market share

of the company both internationally and
0.12 4 0.48 4 0.48
domestically
Anti-American sentiments 0.07 - - - -

Global recession and fluctuating foreign currencies 0.04 - - - -

Fast-food chain industry is expected to struggle to

meet the expectations of the customers towards 0.04 1 0.04 4 0.16
health and environmental issues

SUBTOTAL 1.00 2.10 2.01

SUM TOTAL ATTRACTIVENESS

4.44 4.41
SCORE

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