The McDonalds Turnaround Story

Background

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Product Line

• Hamburger• Cheese Burger• Three soft Drink Flavors• Milk • Coffee• Potato chips• Pie• Salads

SWOT Analysis

STRENGTHS

WEAKNESSES

OPPORTUNITIES THREATS

STRENGTHS• World’s best brand name• Real estate operations allow

McDonald’s to open more stores• Large market share• Countless new innovations- Breakfast,

Big Mac, Happy Meal etc. • Specialized training for managers• Strongest international presence

among fast-food chains• Strong leader, Jim Cantalupo• McDonalds Plan to Win

WEAKNESSES•Customer service ranking is the lowest among fast-food chains•Many stores beginning to look out dated•Quality becoming inconsistent•Order accuracy is low compared to other chains

OPPORTUNITIES•Diversification and acquisition of other quick-service restaurants•Low-cost menu to attract different customers•Initial public offerings in other countries could raise revenues•Retail merchandise potentially used to raise revenues•Marketing opportunities rising.•New cooking styles

THREATS•Increased competition among rival sellers, including price wars, product innovation, and growth•Health conscious consumers demanding better quality, healthier menu items•Law suits•All fast-food chains expected to struggle to meet new consumer health expectations•Overall weaker economy

Problems to be handled Strategically

No longer the Great American Meal• Changing consumer eating habits• Health Conscious People• Preferred reheat able supermarket products• Competitors promotion and discount offers• Worst menu rating in 1998 survey• Increased service time and costs• Economic turmoil

STRATEGIC SOLUTION TO PROBLEMS

The Golden Arches Rise Again• Plan to win Strategy• Improvement of comparable sales through

improved quality of services and operations in existing restaurants.

Reduced inventory.New menu boards

• Healthy optionsEntrée-sized Salads

McGriddles Breakfast SandwichesFruit with Happy Meals

Adult Happy meal

• Innovation strategyNew York Reuben

Grilled VeggieLeaning Tower Italian

• Service Oriented strategy24-hour serviceCashless option

• Promotion strategyAppealing advertising campaigns

Jingles (tag lines)Olympic games(sponsorship)

• Diversification strategyDiversified burger, fries and breakfast items

Food Courts

• ResultsComparable store sales increase

Share price increased