Examples of Students Essays

Mcdonalds History Essay Example

Mcdonalds History Essay

In the history of business, countless companies have failed, some have luckily succeeded, but only one became the world’s largest and most profitable in the fast food industry – Mcdonalds History Essay introduction. That company is McDonalds. The question though however is how McDonalds separated itself from companies like Wendy’s and Burger King to become the world’s most successful fast food restaurant. How did McDonalds start as one restaurant in 1948 to become today’s largest fast food chain in the world? McDonalds surpassed its competition with innovative thinking in restaurant management and operations, through successful marketing, and simply being able to adapt with the times. In the beginning all businesses start off small, but only a select few of these small businesses thrive and multiply to become successful multinational conglomerates like McDonalds.

It is hard to imagine McDonalds starting off in 1948 as a small single burger snack in San Bernardino, California seeing how large it is today. What separated McDonalds from all other small businesses was their new and innovative idea, “an ‘assembly line’ whereby a reduced menu (consisting only of hamburgers, cheeseburgers, french fries and drinks) could be cooked cheaper and quicker, which would hopefully lead to a higher turnover of customers. ”3 This concept of food preparation is still the heart of the fast food industry. However McDonald’s founders, Richard and Maurice McDonald, did not start their restaurant with this innovative idea.

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In the 1940’s the McDonald brothers started off with a small drive in restaurant, where people were served to their cars, and had about a twenty five item barbeque menu. They were mildly successful, but the brothers felt they could improve, and on December of 1948 they reopened their business with an innovative way of food preparation that is still used today. It did not take long for business to start surging, in only five years their volume of burgers sold almost doubled, and during peak periods it would not be unusually to see a hundred and fifty customers outside waiting for a burger from this new up incoming business. It did not just attract customers though; it also enticed many business people which initially started the expansion of McDonalds. With word spreading of the success of McDonalds many business people wanted to mimic their success, which piloted the first franchise of McDonalds being sold to Neil Fox in Arizona for merely one thousand dollars. The thousand dollars would buy the right to use the name “McDonalds”, a brief description on how their “Speedee Service System” was done, and the services of their first cashier Art Bender for two weeks to help get them started.

However there was one businessman that would change McDonalds forever, his name was Ray Kroc. 5 Ray Kroc first came in contact with McDonalds in 1954 when he was trying to sell and supply them with multimixer’s, which were used to make shakes. When Ray Kroc saw firsthand how successful McDonalds was, it made him think about all the untapped potential in the rest of the country. From seeing this, it inspired Kroc to sign a ninety nine year contract with the McDonald brothers who gave Kroc exclusive rights to franchise out McDonald’s restaurants to the rest of the country under a company that Kroc would own and run. This incorporated company was called McDonalds System Inc, which was remained to be McDonalds Corporation in 1960. 7 The essence of the contact said that Kroc could open as many restaurants as he wanted seeing that no changes were made to the original style of McDonalds without written consent. 8 It was also said that Kroc could only charge $950 dollars for initial franchising fee’s, and take only 1. 9% of the franchises sales, giving 0. 5% back to the McDonalds.

Kroc’s first restaurant, the one felt to be first of McDonalds Corp. , opened in Des Plaines Illinois in April of 1955. It did not take long for more and more McDonalds to open up. By the end of 1956, fourteen McDonalds were opened reporting 1. 2 million in sales. Four years later there were 228 restaurants reporting sales of 37. 6 million. 10 To maintain this growth, Kroc found it in his best interest to simply buy out the McDonald brothers so he could have total control over the company. As a result in 1961, Kroc bought out the brothers for 2. 7 million giving him absolute power in all aspects of McDonalds. 11 With McDonalds now in control by Ray Kroc this guided the way to many new innovative ideas.

First in 1961, he created an ad campaign, called “Look for the Golden Arches”, which really helped boost sales at current locations. Another idea in 1962 was to replace their current symbol, a character called “Speedee”, with the now world famous Golden Arches. A year later, Kroc came up with the idea to have a red haired clown to appear in the restaurant called “Ronald McDonald” to try and appeal to kids, an idea no one could of imagine to work so good. 12 In a recent study it was proven that Ronald McDonald was the second most recognizable figure, topped only by Santa Claus. 3 This goes to show how McDonalds has been so successful in advertising which in the end helps the company grow. Since McDonald’s inception they have never struggled with marketing, rather they are world renowned for it.

Any company would love to have the success McDonald has had when it comes to advertising. But how have they been so successful? First they have had some of the cleverest ideas when it comes to advertising. Almost every single ad campaign or slogan for instance, “ba da ba ba baa I’m Lovin It,” has caught on immediately. Two of McDonald’s most successful ad campaigns were in the 1984 Olympic Games where when the “U. S. won, you won”14 and the other was when they gave away “Teenie Beanie Babys” with happy meals in 1997. 15 Another reason McDonalds was so successful in advertising is because they adapted with the times. For instance, look at the way the actual restaurant has change in design over the years. In the beginning, McDonalds had a very sleek and revolutionary look to it, with two arches going over the top of the building. However in 1967, there was a change in public interest and people preferred a more traditional style look, which resulted in a complete redesign of the building.

This resulted in a total makeover towards mansard style roofs with brown bricks and red shingles. With this revolution, also came the birth of a sit down area within McDonalds. 16The main look within was very simple, with very cheap plastic booths and tables in the restaurant. It was not until 1975 that McDonalds again changed the way it served its customers. With the automobile being even more in demand, McDonalds adapted and capitalized on this trend by creating the drive thru window. 17The traditional look had remained the same until recent years when McDonalds started to dramatically change the look of their locations again.

Instead of the traditional look, McDonalds went back to the sleeker look with the two arches going over it. The new McDonalds look very similar to the ones from pre 1968, however there is a drastically new interior. For instance, most “new restaurant’s [have] higher-tech features: wireless Internet service, digital ordering displays and plasma-screen television sets… [there are] muted earth tones instead of blazing reds and yellows, as well as walls marking off dining zones for singles, families and business meetings. This shows how McDonalds is adapting to the more technological society that is happening today and capitalizing on it. 18 With the actual restaurant changing over time, so did the menu. With Ray Kroc owning McDonalds, this allowed various new menu changes that have now become staples within McDonalds. The first addition to the McDonalds menu was the “Fillet o Fish” in 1963, then in 1968 the Big Mac was introduced. Other famous additions to McDonald’s menu include the McFlurry, the Quarter pounder, Chicken McNuggets, and the Happy Meal.

However, the biggest addition to McDonald’s menu was with the addition of breakfast items in 1973. 19 The reason for this is by restricting to the sales of only burgers alone, there was only a certain time period at which people were willing to eat them which is typically lunch or dinner. However by having a breakfast line, McDonalds was able to tap into a market they would not be able to do at the time. By simply adding breakfast, it increases the hours of operations which will increase revenue. McDonalds was not the only hamburger restaurant at the time, they had lots of competition from competitors like Wendy’s and Burger King.

In the late 1970’s and early 1980’s, competition between these rivals intensified. Experts at the time believed that the fast food industry had stop growing, meaning that the current companies needed to fight for more market share rather than expand more. As a result vigorous ad campaigns from Burger King’s, “Have it your way”, and Wendy’s, “Fresh Alternative”, began. However McDonalds sales and market share still continued to grow, showing that consumers reacted more to the all the advertising efforts of McDonalds further proving the power of effective marketing. 0 The best way to look at the success of McDonalds is to look at their rapid US growth. The biggest contributor to McDonald’s growth was when the company went public in 1965, selling shares for $22. 25 each. It only took a few weeks for its share price to more than double to $49 each.

To further see McDonald’s success, look at these numbers. By 1967 McDonalds had just opened their 1,000 restaurant, three years later they opened their 1600th restaurant occupying all 50 states raking in $587 million in sales a year. By 1990, McDonalds had opened 11,800 restaurants reporting $18. million in sales and selling a total of 80 billion burgers. With all of its success in American, it was inevitable for McDonalds to cross its U. S. borders and expand even further. 21 One of the main reasons for the huge success of McDonalds was their ability to expand all across the world. The first non U. S. McDonalds opened in Canada on 1968 in Richmond B. C. , and global expansion has not stopped since. 22 McDonalds can be found all across the world in 119 different countries. 23 McDonalds pioneered in opening restaurants were no other American company tried, and they succeed greatly.

A prime example of this is when McDonalds opened a restaurant in Soviet Russia in 1990, in Moscow. On the first day, more than thirty thousand people lined up to be the first people to eat at the new McDonalds in Moscow. Another example is in 1992 when McDonalds opened its first restaurant in Beijing, where it drew a crowd of forty thousand people its first day. Currently, there are thirty-one thousand restaurants worldwide. 24 However, McDonalds could only expand so much. By keeping this in mind, the mantra of “better, not just bigger,” kicked into play. 25 It is an increasing trend today to see twenty four hour McDonalds.

This was brought out by the idea of “Instead of building more restaurants, McDonald’s is increasing its financial results by squeezing more from the ones it. ”26 What this means is that instead of expanding, they need to make more money from existing McDonalds and one way of during that is increasing the hours of operation. This was the same methodology used when the breakfast line was added in, by having longer hours, it gives the opportunity to increase profits. The story of McDonalds however is not perfect; there are many black spots in the success of McDonalds.

The main problems have been through the various trials against McDonalds, and the link between the food McDonalds sells and obesity and other health issues. The main trial that completely defamed McDonalds was the famous “McLibel” case that ended in 1997. This trial was about McDonalds suing two environmentalists for distributing a leaflet containing various disturbing claims against McDonalds. In the end McDonalds won the case, but they lost more than they won, a pyrrhic victory. In the end of the trial, the judge found McDonalds guilty of “mistreating animals, paying low wages and exploiting children through its ads. 27 This was the first major bash to McDonald’s reputation. The next blow to McDonald’s reputation came from a documentary called “Supersize Me” created by Morgan Spurlock.

For years people have been bashing McDonalds for all of its unhealthily food, but after “Supersize Me” things changed the most. After the movie, McDonalds did many various things in retaliation of the movie. First it removed the supersize option on fries and soda, they started offering bottled water and yogurt instead of fries and soda, they can out with a salad line, and they also started to print all the nutritional facts of their products on the wrappers. 8 It is safe to say that McDonalds is a great example of a company that succeed. It was able to expand from a single burger shack to a multinational conglomerate with over thirty one thousand restaurants worldwide. It goes to show how one innovative idea of an assembly line style restaurant could become worth billions in the future. McDonalds proves how creative marketing will help a company expand. Finally, McDonalds shows how a single person, Ray Kroc, could build upon a single idea and create a business that is known all around the world.

Examples of Students Essays

McDonald’s Corporation in the New Millennium Essay Example

McDonald’s Corporation in the New Millennium Essay

McDonald’s Corporation in the New Millennium

Case 2

The Problem

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McDonald’s Corporation’s slow adaptation of customer’s preferences and tastes.

Objectives

To help McDonald adapt customer’s preferences and tastes quickly – McDonald’s Corporation in the New Millennium Essay introduction. To help the McDonald’s Corporation improve their earnings and sales growth in the market. To recommend several actions that may help them in solving the problem that arises.

Situational Analysis

Jack Greenberg was the C.E.O of McDonald’s Corporation. “Big Mac Attack” was the advertising slogan of this corporation referring to a craving for a McDonald’s Big Mac burger. However, “Big Mac Attack” now referred to corporation’s earning declined in the late 1990s and 2000s. But McDonald’s Corporation leads the fast-food industry for its dynamic market expansion, new products, and special promotional strategies. In United States, sales growth became slow to the industry average in recent years. The CEO decided to find appropriate strategies to reverse the declines and stay ahead of competition.

Jack Greenberg recognized the difficult task the company faced in trying for sales to grow as the market shares and profit as well. He also recognized that the strengths of the competitors are by taking advantage quickly in customer preferences and tastes.

SWOT Analysis

Strengths

The advertising slogan “Big Mac Attack” referring to the craving for the corporation’s product McDonald’s Big Mac Burger. Dynamic Market Expansion

Special Promotional Strategies

Weaknesses

Slow adaption of customer’s preferences and tastes.

Opportunities

McDonald’s Corporation could take advantage to the fast-food industry because of the corporation’s positive image for its advertisements and because it leads the fast-food industry for its dynamic market expansion, new products, and special promotional strategies. Corporation’s positive image

Threats

Major competitors such as Burger King Corp, Hardee’s, Wendy’s International, Pizza Hut, KFC, and taco Bell External factors like economic, political or legal, climate, cultural forces etc.

Conclusion

Therefore, I conclude that McDonald’s Corporation is experiencing declination of earnings as well as slow movement of sales growth in the market because of the competitors which are quick in terms of adapting the customer’s preferences and tastes. I think this corporation needs to find a more appropriate and effective strategies in order to solve the corporation’s problem.

Alternative Courses of Action

The McDonald’s Corporation should maintain the corporation’s positive image by those advertisements and other promotional activities. This Corporation should make products that would fit to the needs of those customers like those health conscious customers. This Corporation should think in advance and create new products which will be customers preferred. This Corporation should also create or improve strategies in order to maintain as leading in the fast-food industry and to increase the earnings as well as the sales growth in the market.

Recommendations

As a case analyst, I recommend that McDonald’s Corporation should apply the Alternative Courses of Action which can be a big help for the corporation’s improvement and success. It could make the corporation reverse the declined earnings and to make the slow movement of sales growth to be fast and achieve the sales growth that the McDonald’s Corporation is striving for.

Examples of Students Essays

Internationalization of Businesses Like Mcdonald's Essay Example

Internationalization of Businesses Like Mcdonald’s Essay

McDonald’s Corporation is the world’s largest chain of hamburger fast food resrestaurant – Internationalization of Businesses Like Mcdonald’s Essay introduction. Its headquartered in the United States. McDonald’s primarily sells hamburgers, cheeseburgers, chicken, french fries, breakfast items, soft drinks, shakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, wraps, smoothies and fruit. So this eaasy try to analyse and idetify McDonald’s internationalization. For McDonald’s resources and capabilities, McDonald’s itself has the brand and the enterprise image, but add-valuing resources can lead to competitive advantage.

So through the advantage of opening dessert station, focusing on staffs training and franchise are to have the competitive advantage so as to reduce the cost and increase enterprise profits. McDonald’s is not rarely. Because there are KFC,Dicos similar with McDonald’s, but it is not imitable. The unique historical conditions and patent restrictions are hardly to imitate. Production of foods is a secret. Above these because there is a good organization which have organization structure and management system. McDonald’s have various entry mode.

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To begin with, McDonald’s choose the model of franchise. Franchisors sells the rights to intellectual property to the franchisees for a royalty fee lead to the international market of rapid expansion and rapid development. In addition, the McDonald’s Corporation in the fund does not need to input foreign branch. Although will have to personnel, sales and distribution, management or control in the hands of authorized dealer. Authorized to McDonald’s company for technical and sales guidance on the products and services to the global standardization.

Standardized product of McDonald’s is Western-style fast-food in the world, as well as the service form and management strategy. its meals include hamburgers, French fries, cola, coffee, soup and so on. The McDonald’s current consumer loyalty is very high. McDonald’s for the localization of products in order to standardize services at the same time to adapt to different needs of various regions. Like in china, we will provide Chinese breakfast.

McDonald’s pricing basic unity and Relative low. In the United States, McDonald’s is as work meal appears, its aims are to facilitate the ork of tension in the rhythm of ordinary workers, so in the United States of America McDonald’s, have no customers waiting in the queue for dining scene; but in China, McDonald’s has become a leisure and entertainment place. We can often be seen riding wait for others to finish and then dish dining scene, it would be a very long time the local mode of operation and did not affect the McDonald’s Corporation standardization production management mode. In addition, in china McDonald’s build up the dessert station because of much population. It increases the distribution channels. Comparing with starbucks, McDonald’s adapt to ordinary people.

Starbucks adapt to people who have high consumption and high salary. China runs leisure coffee area McDonald’s restaurants. Coffee is named after Mccafe in the McDonald’s. Mccafe is about half of the average price of Starbucks A shareholder of McDonald’s is performance of CSR. Environmental groups provide comfortable and safe environment. Employees need a specific skill and high quantified to service customers of consumptions. Suppliers provide raw material. So to my mind, I suggest that McDonald’s need diversity because of restriction of brand image, develop quality of foods and confirm the salary of employee.

Examples of Students Essays

McDonald's vs Burger King Essay Example

McDonald’s vs Burger King Essay – Part 2

McDonald’s and Burger King are both fast food restaurants in a demanding world – McDonald’s vs Burger King Essay introduction. They are both franchises which mean each is owned by an individual and operated under the name and guidelines of the franchise. They are known for their hamburgers and french fries. McDonald’s and Burger King compete who serves the better nutritional hamburger, who provides the best service and who has the better atmosphere. Both McDonald’s and Burger King have been in service for over 50 years. McDonald’s and Burger King both say they serve the better nutritional hamburgers.

Lets take a look at some of the facts. McDonald’s serve the outrageous Big Mac whereas Burger King serves the almighty whopper. The average burger at Burger King is slightly heavier than McDonald’s. It weighs in at 121 grams, contains nine grams of total fat, 30 grams of carbohydrates, 12 grams of protein and 490 mg of sodium (bk. com). McDonald’s average burger weighs in at 100 grams and has nine grams of fat, 31 grams of carbohydrates, 12 grams of protein and 480 mg of sodium (McDonalds. com). They both claim to use 100% beef.

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Burger King broils their burgers to get the great outdoor taste of cooking on the grill. McDonald’s fries their burgers over a flat grill so it tastes like home cooking. McDonald burger comes with ketchup, mustard, pickle, onion or however it is ordered. Burger King burgers come with ketchup, mustard and pickle or “have it your way” made. McDonald’s hamburgers are cheaper than Burger Kings and have better value. McDonald’s servings are a little smaller and with this being said you are consuming fewer harmful ingredients such as sodium. That is for a regular burger.

Now for the big mac vs. the whopper it is a different story. The big mac has 1170 sodium, 770 calories, 44g protein, 40 g of fat, 59 g of carbs and 2 g of Trans fat (McDonalds. com). The whopper comes in at 980 sodium, 630 calories, 25 g of protein, 35 g of fat, 57 g of carbs and 1 g of Tran’s fat (bk. com). So here you see that Burger King out does McDonald’s nutritionally for these sandwiches. A normal sandwich has approximately 255 mg of sodium. The more sodium the higher the risk of high cholesterol and high blood pressure which can cause a stroke or a heart attack.

At this point let us look at the differences of McDonald’s french fries and Burger King french fries. McDonald’s have smaller shoestring sixe french fry. Burger King has the larger fry which means more spud in the french fry. McDonald’s puts out 2. 27 milligrams of sodium per gram of french fry. Burger King puts out 3. 73 milligrams of sodium per gram of french fry. A large french fry at McDonald’s averages around $1. 99 with 154 grams and 350 milligrams. Burger Kings large french fry averages around $1. 89 with 190 grams and 170 milligrams.

Burger King french fries are larger than McDonald’s. The larger the french fry means the more potato inside. You get larger portions at Burger King. Customer service at Burger King is very important. In 2008 improper cooking techniques and broiler problems resulted in Burger King selling undercooked hamburgers. The hamburgers were cooked at 131 degrees when they should have been cooked at 155 degrees. If they are not cooked at 155 degrees they are not safe to eat. Burger King took this matter very seriously as they were failing their service to their customers.

Undercooked hamburger can contain dangerous germs and bacteria. This could result in their customers getting food poisoning and falling disease. Burger King did not want this for they want to provide the best service ever. As early as 2005 some Burger King locations began offering free high speed Internet, better known as Wi-Fi. Other places were offering internet, but they were selling a card for success. Burger King offered it free to show their customers how much they appreciated every one of them.

The free service could also be accessed using PDA’s, hand held devices that combine computing telephone/fax, internet and networking features. On the other hand when customers have a complaint McDonald’s listen. July 1992 McDonald’s became the first chain to launch a formal policy guaranteeing free meals to every unhappy customer. McDonald’s guarantee ensures customers that “if you’re not satisfied we will make it right-or you’re next meal is on us”. You can receive a free meal if you don’t receive a hot meal, if you don’t receive quick delivery, if you don’t eceive friendly service or an accurate drive thru order. The program was designed to help promote consumer confidence and encourage employees to work hard to satisfy all customers. McDonald’s strives to deliver value and 100 percent customers’ satisfaction. With a few of the facts given it just goes to show how McDonald’s and Burger King strive to give their customers the service they deserve. If it were not for their loyal customers they would not have establishments to worry about. So they are dedicated to keeping their customers happy.

McDonald’s has a play place for kids to enjoy their meals. McDonald’s is family oriented. They have a jungle play gym where the kids can play when they are done eating while the rest of the family continues to finish their meal. Some of the McDonald’s also have a recreational area with blocks to build and other items for the kids also to enjoy while dining at the restaurant. If the parents finish their meal and the children are playing there is newspapers there for the parents to enjoy reading while they play.

They also offer Wi-Fi for your convience. Besides those facts McDonald’s represents the Ronald McDonald House. The first Ronald McDonald House was opened in Philadelphia in 1974. The Ronald McDonald Housing facilities are all located near hospitals. The facility provides temporary treatment for children that are usually suffering from cancer. The facility provides temporary housing for as little as $15 a day or as low as nothing for some families who often come from far away to be with their children at their time of suffering.

The Ronald McDonald house provides an atmosphere of mutual support and shared concerns among everyone involved. This program was brought forth because Fred Hill a member of the Philadelphia Eagles football team, (at the time) his daughter contracted leukemia. Jim Murray (a friend of Fred Hill) asked McDonald’s to help raise money for a facility near a hospital where parents could stay. The facility was just a regular house. The franchises promised to donate all the money raised from a special promotion, if and only if, the facility could be called the “Ronald McDonald House”.

With McDonald’s providing this house it goes to show the atmosphere they want their customers to experience. They not only try to have a great atmosphere inside their restaurant but they want to extend it beyond that, showing that they care in and out of the establishment. Burger King also came up with a good atmosphere for families. In 1997 Burger Kings across the nation from 4 p. m. to 8 p. m. , you would be able to order your hamburger and french fries and then be seated, wait at your table for your order to be delivered to you.

While waiting adults would get popcorn to snack on while the kids got crayons to color on a paper placemat. You got this to occupy you’re time while you wait for your food. Customers had commented that they wanted an ambience atmosphere and a relaxed meal at dinner time. Burger King responded by giving their customers what they asked for. McDonald’s advertises making things easy on the parent as in “You deserve a break today”. Burger King advertises choices such as “Have it your way”. Both restaurants are striving to please their customers. Customer satisfaction is their number one priority.

I guess the question would be “who serves the better nutritional burger, who has the better service and who has the better atmosphere”? It all depends on the person. They need to make that decision. Both family restaurants has their pros and cons. So the answer would be in the eyes of the beholder. My personal reference would be McDonald’s. I like their service much better. I love the idea of how they support the Ronald McDonald atmosphere. They have proven themselves once again that they deserve the worthiness award. The big yellow arch wins hands down!

REFERENCES

aht.seriouseats.com/…/fast-food-french-fries-taste-test-mcdonalds-bur…Cached You +1’d this publicly. Undo Feb 27, 2012

– www.Bk.com

www.McDonald’s.com

Examples of Students Essays

McDonalds in India Essay Example

McDonalds in India Essay – Part 2

1.      Company Background

McDonalds, one of the world’s largest and best known fast-food chains, had very humble origins as a drive-in restaurant in San Bernardino in California in 1948 – McDonalds in India Essay introduction. McDonalds was formally incorporated as McDonald’s Corporation in the year 1955 by Ray Kroc in 1955, who opened the first restaurant under the corporation in Des Plaines, Illinois, near Chicago, on April 15, 1955. Throughout the years McDonalds Corporation has grown phenomenally, and has now more than 30,000 restaurants in about 120 countries around the world, with about 50 million customers served per day (McDonald’s Corporation 2004)

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Due to the liberalization policies introduced in 1991 the foreign companies for the first time had a decent chance of opening their ventures in India. Following these policy changes a number of U.S.-based fast food chains like KFC and Pizza Hut rushed to the Indian market in the early 1990s policies, McDonald’s did not enter the Indian market until 1996. Instead, it spent about six years in planning, extensively researching Indian consumer tastes, product development, and supply chain arrangement before opening its first outlet in 1996 (Dash 2005)

Thus, the McDonalds Indian operation was started in the year 1996, with the first outlet opened in the month of October in New Delhi. McDonalds in India is actually a fifty-fifty joint venture partnership run by Indians. The two companies are Hardcastle Restaurants Pvt. Ltd owned by Amit Jatla, who operates the McDonalds outlets in Western India; and Connaught Plaza Restaurants Pvt. Ltd. owned by Vikram Bakshi , who operates the outlets in northern India. Currently there are about 56 restaurants throughout India employing over 2000 Indians.  The outlets serve about half a million customers per day on an average. McDonalds India does not have a franchise option. The two restaurants mentioned above, either buy or take premises on a long-term arrangement (McDonalds India 2005)

 

2.      Products and Services

As a result of its research McDonalds found out a lot about the testes and preferences of Indian customers and designed a corresponding Menu specifically catering to the tastes of Indian people. For its success McDonalds had to face two huge challenges. The first was to get past hurting the religious sentiments of Indian people, and the second was not to give a chance to the politicians to label the corporation as a unfriendly foreign company. Working the first front McDonalds removed the possibility of beef and pork in their products, as the former was a strict no-no for the Hindus, while the later was not preferred by Muslims. There were many product innovations done for this purpose, the first of them was replacing beef and pork based products by the unobtrusive mutton. Another innovation was the McAloo Tikki Burger, to make the products have a purely vegetarian feel for people. In fact approximately 75% of the menu available in McDonald’s in India is Indianized and specifically designed to woo Indian customers. This additionally shows that the corporation respects the Indian culture. The Indianised food concept is not just limited to product innovations; the spices used are also predominantly Indian. In addition vegetarian and non-vegetarian based products are separated during procurement, cooking and serving of the dishes. McDonalds also wishes to tune its image of being only a fast-food restaurant. It plans on adding health food options to its product lists in terms of offering more baked or toasted options as opposed to fried patties. McCurry Pan, introduced in 2003, was the first baked dish option (Dash 2005)

Following is a sample exhibit of the products served by McDonalds in India.

(http://road.uww.edu/road/parbotek/250-777/Week%203%20-%20McDonald’s.pdf)

 

3.      Target Consumers

The primary target customers of McDonalds have always been children. This target customer segment was spotted by Ray Kroc, and has since been followed throughout all its franchises. The idea behind is that families will follow where children wish to go. In India this means an entire section comprising of the very old people to adults and teenagers. There has however been a growing trend for targeting many other segments like corporate people, the primary target in India however remains the family, as is very clear from its advertisements (Dash 2005)

4.      International Marketing Strategy

a.            Product – One of the main reasons for the brand popularity of McDonalds in India is the variety of products available. There is a lot of effort spent on the customization of product according to the tastes of people. India is in fact the largest market for vegetarian based products of McDonalds. This ensures the reach of the company among the various segments of people with a wide variety of eating habits. Even the regular products are customized by making them more Indianised by adding Indian spices. Some examples of products developed in India and rolled out in other countries are Pizza McPuff, McAloo Tikki burger and McCurry Pan (India-info)

b.            Price – The main reasons for the growth of McDonalds in India is attributed to its pricing strategy. While McDonald’s incurred high fixed costs in infrastructure and supplier creation in India. it has adopted a large volume, low realization model of business. The company has taken a long-term view and priced its products appropriately. There are products available in every price segment with the lowest-cost burger starting from Rs 20 (or 05 dollars approx). While McDonald’s has achieved success by tapping middle-class households worldwide, in India the majority buyers are the rich and upper-middleclass population. The middle class population still remains to be effectively tapped. (Dash 2005)

c.             Promotion – McDonalds focuses its advertisements on being a place where

families could go for any kind of outing. The USP of the advertisements is that

people can have fun at these places, which is targeted at almost all the

consumer segments. In addition the company also focuses on promotional

campaigns from time to time.  “An example was ‘Music Meal, launched in

April     2005 in association with Coca-Cola India and Universal Music India,

which  became  extremely popular with young men and women” (Dash 2005)

d.            Place – Initially McDonalds opened its outlets only in Delhi and Mumbai due to

affordability and brand recognition factors. The places were sufficiently

exposed to the western culture due to their metropolitan culture. Also these

places had the largest percentage of urban population in the rich and upper

middle class zones, who were willing to try new eateries. The next lines of

outlets were opened in satellite cities i.e. near to Deli and Mumbai like Noida

and Pune respectively. Expansion continued to cities with tourist appeals like

Shimla and cities with eat out culture like Ahemadabad and Bangalore.

Hyderabad is the latest addition into the city list of McDonalds expansion plans

(Dash 2005)

5.      Sales Forecast

McDonalds sees India as a market with a lot of expansion capability. The main reason for this is the fast growth in economy which has led to a higher purchasing power in the hands of people. It is planning to open about 15-20 outlets in India as a target per year. However, India is viewed as a tough market with limited scale. Currently, McDonald’s has 54 outlets in more than 10 cities in India. The company plans to add 15 outlets a year at an investment of US$ 8.7 million. In addition they also plan to double this investment  to US$ 174 million. Fresh investments will be for expansion of McDonald’s India’s supply chain, refurbishing its cold chain, and setting up more outlets (India – info)

McDonald’s is planning tie-ups with oil marketing companies for setting up McDonald’s outlets at gas stations. McDonald’s is also eager to set up more outlets at places like railway stations, and is working on new product offerings like a fruit drink and desserts. (India –info)

 

 

6.      Conclusion

While McDonalds may still remain as the choice for people in the rich an middle class segments, the growth of this section itself in the Indian economy, due to the rapid development, means that the future of McDonalds in India is good. However, the company needs to focus of continuous innovation of products, and also think about expanding to other cites, instead of just concentrating on strategic metros and suburbs (Dash 2005)

 

 

References

 

Dash K, “McDonalds in India”, The Garvin School of International Management,

2005, http://road.uww.edu/road/parbotek/250-777/Week%203%20-%20McDonald’s.pdf

 

India-info, McDonald’s Corporation, US Companies in India, http://www.india-now.org/download/McDonalds.pdf

 

McDonalds India, March 2005

http://www.mcdonaldsindia.com/aboutus/faqs-mcdonalds.html

 

McDonald’s Corporation, International Directory of Company Histories, Vol.63. St.

James Press, 2004. http://www.fundinguniverse.com/company-histories/McDonalds-Corporation-Company-History.html

 

Examples of Students Essays

Mcdonald in India Essay Example

Mcdonald in India Essay

Case Study Individual Report – International Management 15/02/2012 McDonald’s in India by Kishore Dash Until late 1980s, India was a very closed and protective country in terms of economic, political and social perspectives – Mcdonald in India Essay introduction. However, after this period dramatic changes happened in all of these areas. At the time, the political leaders pursued policies of economic nationalism but these policies were inefficient and by 1990, India was facing a severe economic crisis.

In response, the government introduced a series of liberalization policies designed to decrease the government control. The Indian social values also start changing in the late 1980s, there was an increasing acceptance of foreign culture. With this wide range of reforms in the 1990s combined with the large consumer market there were enough incentives for McDonald’s to enter in the Indian market. Before opening their first restaurant, McDonald’s spent many years planning and researching Indian market.

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The fast food company had a very well defined entering strategy, it wanted to get accepted and blend into local Indian cultural. To succeed in this objective, the restaurant developed a variety of strategies with especial focus on Indian consumers. McDonald’s was very concerned with Indian religious sensibilities, consumer’s food habits and with potential confrontations with the government and political activists. Most people do not eat beef and pork and prefer vegetarian foods, so McDonald’s created a menu that is specifically designed to Indian consumers introducing local products.

Although trying to appeal all ages, the company positioned itself as family restaurant, in order to meet the changing family system and Indian social values, since is a country in which children are the family priority. Regarding the Indian Government, as long as the company pursues the purpose of creating employment opportunities and meet the government’s standards for regulation on food, health and hygiene, the support would follow.

Concerning the possible confrontations with activists, McDonald’s has created many green and community programs in order to increase awareness of an active and healthy life and to promote and increase solidarity in India. McDonald’s set up a well-established supply chain in order to operationalize its practiced QSCV (quality, service, cleanliness and value), to enjoy flexibility in pricing since Indian consumers were very price sensitive and to launch a new product when necessary. McDonald’s and its international suppliers worked with local companies to develop products that meet the restaurant quality tandards and at the same time to help them to improve their ability to compete in international markets. In terms of Location, McDonald’s decided to set up two joint ventures in Mumbai and Delhi. Logistics plays a very important role on the location strategy and so McDonald’s decided to establish restaurant closed to their two distribution centers in India. Despites these efficient and good strategies, McDonald’s has to face many challenges such as high costs, constant pressure to introduce new products and the need of extensive investments to expand the business.

One of the possible solutions could be to arrange a partnership with the Indian Government in order to get the funds necessary to expand since the restaurant is giving so much to the country and contributing the development of Indian economy. McDonald’s could also try to utilize existing facilities instead of create everything from “scratch” as a way to reduce costs in the expansion for other Indian cities. Ana Filipa Conduto, n? 10175

Examples of Students Essays

The Wendy's Company Strategy Essay Example

The Wendy’s Company Strategy Essay

The Wendy’s Company Dave Thomas opened our first Wendy’s restaurant in 1969 in Columbus, Ohio – The Wendy’s Company Strategy Essay introduction. He opened the door to a new gold standard in quality food. When other restaurants were using frozen beef and mass-producing food, Dave developed an innovative method to prepare fresh, made-to-order hamburgers. Every day, we honor his legacy and continue to live through his values by using select, premium ingredients and serving food that’s made fresh with every order. Corporate Profile The Wendy’s Company (NASDAQ: WEN) is the world’s third largest quick-service hamburger company.

The Wendy’s system includes more than 6,500 franchise and Company restaurants in the U. S. and 27 other countries and U. S. territories worldwide. Wendy’s Vision Statement When everyday people sort through all the ‘spin’ there is one quick-service restaurant that is ‘A Cut Above’… that’s Wendy’s … we stand for honest food … higher quality, fresh, wholesome food … prepared when you order it … prepared by Wendy’s kind of people … people that believe this is My Wendy’s … we do it Dave’s Way … we don’t cut corners. Wendy’s Mission Statement:

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Wendy’s provides its employees with “What We Believe” guidelines, which serve as both an internal mission statement and an external customer service goal. For those that put on the Wendy’s nametag, this is “What We Believe”: * QUALITY IS OUR RECIPE – We don’t cut corners on our products, service, or employees! * TREAT EVERYONE WITH RESPECT – Be genuine and kind and lend each other a helping hand! * DOES THE RIGHT THING – Honesty and integrity are rules we live by! * PROFIT MEANS GROWTH – Teamwork is the key to our success! GIVE BACK – Make your community better every day! Wendy’s Strategy The case objective was to analyze Wendy’s previous and current strategy. Wendy’s success is based on the combination of product differentiation, market segmentation, quality food, quick service, and reasonable prices. We will talk about each on the following: Product differentiation: The most important product of Wendy’s is the “old fashioned” hamburger. This is a hamburger made from fresh beef and is squared in a unique shape so as to differentiate from the others’.

Wendy’s made the concept of “limited menu” that just includes four main products so as to be convenient for customers to choose the food. Market segmentation/development: Young adults and adults are the main target customers of Wendy’s when it is found. The target group is sufficient in size to merit disproportionate attention and it is growing over time. Its potential profitability is considerably greater than its size. Quality food: “Quality is our recipe” is the permanent part of Wendy’s logo.

In Wendy’s, Quality not only just means the food they served but also includes the way they treated customers and employees. Wendy’s quality services range from “old fashioned” hamburger which is made from fresh beef that was cooked to order and served directly from the grill to customers, to the layout of their restaurant and franchises that is specially designed. Quick service: Dave’s initial goal is to build the first restaurant in Columbus that can get a really good hamburger without waiting 30 minutes.

Wendy’s set a dining room that is designed to seat 92 customers, and a pick-up window to serve drive-thru customers in every restaurant and expand the scale continuously. ” Now we will try to find out constantly strategy based on time, incident of Wendy’s International on another page. Please see it …… Now we will try to find out constantly strategy based on time, incident of Wendy’s International. Strategies are as follows: Time| Incident| Strategy| 1985| Opening more than 3500 restaurant at Ohio. Market Development| 1970| It was the first in the industry to introduce the convenience of a “drive-through-windows”. | Related Diversification & Market Development| 1980| Wendy’s climbed to fame with its commercials, like “where’s the beef? And the soviet Fashion show. ”| Market Penetration| 2006| Wendy’s was also the first to demonstrate its commitment to providing healthy food choices. And announced that they are using healthy oils in the preparation of most of oils food item. Differentiation Strategy &Product Development| | “Open 26 company owned restaurant in North America”| Market Development| | “Open 96 franchises restaurant in North America”| Market Development| | It operates in United State and 20 foreign countries| Market Development| | Company spent $134 million in marketing and advertising. | Market Penetration| 2007| Wendy’s plant to focus expansion of its core operations in North American location by opening 80 to 110 new company restaurant and franchises. | Market Development| $$$$$$$$$$ END OF CASE STUDY $$$$$$$$$$

Examples of Students Essays

McDonald's: The coffee spill Essay Example

McDonald’s: The coffee spill Essay – Part 2

1 – McDonald’s: The coffee spill Essay introduction. What are the major issues in the Liebeck case and in the following incidents? Was the lawsuit “frivolous” as some people thought, or serious business? The major issues in this case include how hot the coffee should be, when to draw the line on making a case outrageous and how corporations are supposed to please customers without worrying about being sued. I believe that the lawsuit was frivolous because of the amount of money that was being asked for. It is common sense that when you order coffee or any other hot beverage that contents will be hot.

I feel that it was the fault of Liebeck and although this is the case, McDonald’s should have paid the medical bills and settled out of court before it was blown out of proportion. 2. What are McDonald’s social (economic, legal, and ethical) responsibilities toward consumers in the Liebeck case and the other cases? What are consumers’ responsibilities when they buy a product such as hot coffee or hot hamburgers? How does a company give consumers what they want and yet protect them at the same time?

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McDonald’s responsibilities are to be honest and fair economically, legally and ethically. Any business should keep the safety of their customers in mind and if an incident does occur, take responsibility. Consumers are responsible for situational awareness. They should pay more attention to what they are doing and if something does occur, consumers should act within reason and not try to get every cent from the company they can. It is impossible to keep everyone happy. 3. What are the arguments supporting McDonald’s position in the Liebeck case?

What are the arguments supporting Liebeck’s position? McDonald’s stated that Liebeck had only herself to blame for placing the cup between her legs. It was also stated that Liebeck failed to leap out of the seat allowing the coffee to penetrate her clothing and burning her. A burn expert for Liebeck stated that 170 degree coffee is capable of causing second degree burns within 3. 5 seconds. It was also argued that 700 complaints, equal to one in every 24 million cups sold, is trivial.

This statement was supposed to help McDonald’s but in turn helped Liebeck. 4. If you had been a juror in the Liebeck case, which position would you most likely have supported? Why? What if you had been a juror in the pickle burn case? If I were a juror in this case or the pickle burn case, I would have most likely supported McDonald’s. I feel that people should show a little more common sense when they order food. Most people want to get their food while it is still hot so why don’t people sue when food is too cold?

On the other hand, McDonald’s should make the warning on the cup larger and warn consumers as they order. 5. What are the similarities and differences between the coffee burn case and the pickle burn case? Does one represent a more serious threat to consumer harm? What should McDonald’s, and other fast food restaurants, do about hot food, such as hamburgers, when consumers are injured? Both the coffee case and the pickle burn case have one big thing in common. Both cases are against McDonald’s.

Both cases are based on the same complaint, too hot, but the burns resulted from different sources. As I stated above, fast food restaurants should make labels larger as well as give a verbal warning. Maybe they should make the entire wrapper or cup a warning. I cannot however agree to lower the temperature. I feel that if a customer wishes to have a cooler beverage, ask the server to pour a little cool water in it to cool it off. As far as food is concerned, consumers should have the common sense to wait. 6. What is your assessment of the “Stella Awards?

Is this making light of a serious problem? I think that the Stella awards are funny. They show us what people are willing to sue over and how outrageous the cases can be. The serious problem that I see is people are losing more and more common sense and businesses are paying for it. 7. What are the implications of these cases for future product-related lawsuits? Do we now live in a society where businesses are responsible for customers’ accidents or carelessness in using products? We live in a society that is growing older.

Does this fact place a special responsibility on merchants who sell products to senior citizens? I feel that we are living in a world where businesses are responsible for consumer carelessness and accidents. Senior citizens should be warned over and over if a product is hot but should not place a special responsibility on merchants that sell to senior citizens. As far as implications, for the court systems to remain fair, damages should and need to be given to all but it does not have to be millions and millions of dollars.

Examples of Students Essays

Pestel Analysis of Mcdonalds Essay Example

Pestel Analysis of Mcdonalds Essay

PESTEL Analysis of MaCdonalds 1 – Pestel Analysis of Mcdonalds Essay introduction. OVERVIEW McDonald’s Corporation  is the world’s largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald; in 1948 they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth.

A McDonald’s restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation’s 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 percent over the three years ending in 2007 to $22. 8 billion, and 9 percent growth in operating income to $3. 9 billion Currently, its divisions operate in all over the world in beverages, snack foods, and restaurants.

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The corporations increasing success has been based on high standards of performance, marketing strategies, competitiveness, determination, commitment, and the personal and professional integrity of their people, products and business practices. McDonald’s believes their success depends upon the quality and value of their products by providing a safe, whole some, economically efficient and a healthy environment for their customers; and by providing a fair return to their investors while maintaining the highest standards of integrity. 2.

PESTEL Analysis of MacDonald’s India * Political McDonald’s entered India in the year 1996 when the fast food retail market in India was at a nascent stage. Encountered with several challenges in the beginning in terms of adapting to the tastes, preferences and culture of the local customers, changing the perception of Indian consumers towards American food habits, obstruction from political parties, issues with distribution, designing a proper supply chain to training the employees on McDonald’s standards. McDonald’s has it different policies rules and egulations, and because of that it has its own license of restaurants which is controlled by the government for health, workers protection, and environment. Even then there was some quarrel in the McDonald’s franchise in India. There where some violation of religious laws pertaining to the contents of food. According to them the meat used by them in their foods was completely hateful to the Hindu religion in the said market. And also same situation were faced in for using ham and pork in there foods because using this content are not accepted by the peoples as it is in opposition to Muslim religion.

So, this is also one type of political factor faced by McDonald’s. There are also other studies those points to the infringement of McDonald’s Stores with reference to the existing employment laws in the target market. Like any business venture, these McDonald’s stores have to contend with the issues of employment procedures as well as their tax obligations * Economical Organisations in the fast food industry are not excused from any disputes and troubles. Specifically, they do have their individual concerns involving economic factors.

Branches and franchises of fast food chain like McDonald’s has to face many problems due to economic factors such as inflation, exchange rates, recessions, income and interest rates. The customers consequently are faced with a stalemate of going over their individual budgets whether or not they should use up more on these foreign fast food chains like McDonalds. Hence, these chains may have to put up with the issues of the effects of the economic environment. McDonald’s import much of their raw materials into a specific country’s territories if there is a dearth of supply.

Exchange rate fluctuations will also play a significant role in the operations of the company. The company will also have to consider the economic standing of the country on which they operate on. The rate at which the economy of that particular country grows determines the purchasing power of the consumers in that country. Hence, if a franchise operates in a particularly economically weak country, their products shall cost higher than the other existing products in the market, then these franchises must take on certain adjustments to maintain the economies of scale.

However in case of India the company has been able to maintain a constant level of prices for their products. * Socio-Cultural Factors McDonald’s indulge a particular variety of consumers with definite types of personalities. It has also been noted that the company have given the market like India, an option with regards to their dining needs. McDonald’s has launched a sensibly valued set of food that tenders a reliable level of quality for the respective market where it operates customers. the peoples who were below 35 age were the most frequent customer as a food was like by them, and as there was a free gifts for the children’s so they were the next high customers. McDonald’s is becoming a multi-faced character of business. They establish a good system in determining the needs of the market. The company uses concepts of consumer behaviour product personality and purchasing decisions to its advantage which is clearly evident in case of India as the company was quick in removing their Pork and Mutton products from India’s menu.

It is said to have a major influence on the understanding of the prospective performance of the organisation in a particular market. The main intention of the company it’s to earn profit and it is possible through the more numbers of customer’s. It does not only serve the peoples but also bring changes in people’s way of living, faction and tradition. * Technological Factors McDonald’s uses very low technology but uses its idea to generate demand for their products. McDonald’s are inclined to interest the younger populations more.

The company’s key tool for marketing is by means of Online Facebook and Google ads, Collaboration with websites like Snapdeal and Timesdeal to promote sales in India, television advertisements, banners and hoardings. The existence of ‘play spots’ as well as ‘toys in meals’ offered by the company shows this actuality. They employ animated depictions of their characters like Grimace, Ronald and Ham burglar. Other advertising operations employ popular celebrities to promote their products. The ‘like’ has become endorsers for McDonald’s worldwide “I’m loving it” campaign.

The improvement of the inventory system as well as its supply chain allows the company to operate in an international context. * ENVIRONMENTAL FACTORS Market never remain stable because it’s always goes on changing depend on the type of product produced in the business. The social responsibilities of McDonald’s on the country are influential to the operations of the company. These involve accusations of environmental damage. Among the reasons why they are charged with such claims is the employ of non-biodegradable substances for their drinks glasses and Styrofoam coffers for the meals.

Several civic groups in India have made actions to make the McDonald’s franchises in India aware of the rather abundant use of Styrofoam containers and the resultant abuse of the environment. * LEGAL FACTORS There has been the recurrent bellowing in opposition to the fast food industry. This has similarly made McDonald’s apply a more careful consideration on their corporate social responsibilities. On the whole, this addressed the need of the company to form its corporate reputation to a more positive one and a more socially responsible company. The reputation of McDonald’s is apparently a huge matter.

Seen on the website of the company, it seems that they have acquired strides to take in hand the key social censures that they have been berating them in the past decades. The company has provided their customers the relevant data that they need with reference to the nutritional substances of their products. This is to attend to the arguments of obesity charged against the products of the company. In the same way, the consumers provided freedom in choosing whether or not they want to purchase their meals. This is tied up with the socio-cultural attributes of the market on which they operate.

For instance, operations in predominantly Muslim countries require their meat to conform to the Halal requirements of the law. In the same regard, those that operate in countries in the European Union should conform to the existing laws banning the use of genetically modified meat products in their food. This was prime reason which forced McDonalds to eliminate beef, pork and Mutton out of India’s product menu. Other legal concepts like tax obligations, employment standards, and quality requirements are only a few of important elements on which the company has to take into consideration. Otherwise, smooth operations shall be hard to achieve.

Examples of Students Essays

Burger King: a Whopping Strategy En Route to Recovery Essay Example

Burger King: a Whopping Strategy En Route to Recovery Essay

Burger King: A Whopping Strategy En Route to Recovery Siohong Tih At the end of 2002, Burger King, the second largest fast food hamburger chain in the world, was in financial trouble – Burger King: a Whopping Strategy En Route to Recovery Essay introduction. Sales were dropping and its franchisees were confronted with heavy debts. One after another, its franchisees including its largest independent franchisee, AmeriKing, filed for bankruptcy protection. Burger King US’ sales in 2003 dropped to US$7. 9 billion from US$8. 3 billion the previous year. Burger King’s introduction of salad and chicken baguette sandwiches in its menu as a response to fight obesity made no significant impact on sales.

The CEO of Burger King, Brad Blum was then assigned to find ways to restore Burger King’s market position and image. The key concerns were the financial situation, the marketing strategies associated with the menu, and the promotion of best practices in management. COMPANY BACKGROUND In 1954, James McLamore and David Edgerton founded Burger King Corporation (BKC) in Miami. It started with a simple meal concept where families were served reasonably-priced broiled burgers. A drive-in facility made the eating-out experience highly convenient. Burger King also introduced dining rooms.

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Back then, it was the first, fast food outlet that offered such luxury. Three years later, Burger King introduced the “Whopper” burger in This case was written entirely from published sources and was prepared as a basis for class discussion. It is not in any way intended to illustrate either effective or ineffective handling of a managerial situation. The author would like to thank New Fong Yen, a UKM MBA student, for her assistance in preparing this case and Encik Ahmad Ikram Abdullah (a Fellow at Institute of Strategic and International Studies Malaysia) for editing this case. 95 Proceedings of …Seminar 2009: Case Studies in Malaysia ts menu. As the name implies, Whopper is a big-sized burger with sauce, cheese, lettuce, pickles and tomatoes specially prepared for those with a huge appetite. The introduction of Whopper was very successful and it soon became Burger King’s flagship product. BURGER KING’S FRANCHISE CONCEPT To speed up expansion, Burger King actively pursued the franchise business model. However, there was a difference. Its franchisees both owned and managed their outlets independently. The two founders of Burger King took their initial payments and left their franchisees pretty much on their own.

In addition, Burger King sold exclusive territorial rights to investors and large business operators. These large business operators bought the territorial rights, build as many stores as they could possibly wish and even sold part of the territorial rights to other investors. These other investors in turn, diversified the business offerings in their restaurants. It was apparent that with this approach, McLamore and Edgerton had either very little or totally no control over the franchisees’ business operations. Nevertheless, the system was showing good results and business expanded rapidly [2, 5, 6].

With this unique franchise method, Burger King was heavily dependent on its franchisees. In fact, franchisees represented more than 10,000 of Burger King’s almost 11,000 restaurants worldwide and contributed a substantial portion towards the chain’s performance. Burger King’s franchisees owned the stores instead of Burger King [3]. Also, with this highly independent structure, it is almost impossible to maintain consistent quality and service standards [8]. BURGER KING MANAGEMENT Burger King began with five restaurants in Florida. It was not long before he number increased with more restaurants being opened nationwide. In 1967 however, James McLamore and David Edgerton decided to sell the Burger King Company to Pillsbury, a home baking food giant. At that time Burger King was fast growing into becoming the third largest fast-food chain in the US. McDonald’s lead as the industry leader was getting thin. Burger King: A Whopping Strategy En Route to Recovery 96 The deal included sale of 274 stores and was worth US$18 million [5, 6]. It marked the beginning of more changes in Burger King’s history as the company saw itself bought and sold to many different owners.

In 1989, Grand Metropolitan PLC bought Pillsbury for US$66 a share or approximately US$5. 7 billion. As a result, Pillsbury became part of Grand Metropolitan’s worldwide system of food and retailing business. In 1997, Grand Met merged with Guinness to create Diageo PLC [10]. Diageo allowed some Burger King operators to manage more than 200 restaurants [9]. In November 2002, Burger King fast food chain under Diageo was purchased by a management buy-out team composed of Texas Pacific Group (TPG), Bain Capital Partners and Goldman Sachs Capital Partners for US$ 2. 6 billion (GBP1. 45 billion), resulting in another major management change within the corporate structure. However, Burger King continued to be managed by its existing Chairman and Chief Executive John Dasburg with some major changes made in its marketing division [8, 10]. Nevertheless, this frequent and long history of management change resulted in a tense and fragile relationship between management and the chain’s operators. It also caused extreme difficulty in making strategic adjustments in response to changes in the highly competitive fast-food industry.

There was a great tendency for Burger King to lose track of its strategic direction [11]. BANKRUPTCY ISSUES Burger King’s operating profit dropped US$27 million in a financial year ending June 2002. The situation deteriorated when AmeriKing, one of Burger King’s largest franchisee filed for bankruptcy in the same year [12]. Later in December 2002, AmeriKing, which operated 329 restaurants, was declared bankrupt [1, 13]. AmeriKing had about US$223 million in assets against US$291 million in debt [9]. One plausible explanation, according to Forbes, as to why these franchisees failed can be traced back to the late 1990s.

Many of these franchisees took too much debt to capitalize on the low interest rates. However, when sales target failed to be met and as a result of declining national and local sales, 28 Burger King outlets in Kansas and Nebraska filed for bankruptcy. [13} 97 Proceedings of …Seminar 2009: Case Studies in Malaysia The declaration of bankruptcy was taken in order to reorganize the US$30 million worth of debts and to secure assets worth up to US$15 million. As a result of bankruptcy filing, the Kansas and Nebraska Burger King outlets stopped making payments in February 2003. This caused further decline in sales.

Later, eight Burger King’s restaurants in Seattle faced possible closure for the same reasons. Between 2001 and 2002, Burger King’s financial condition and the failure of its franchisees in several states contributed a negative impact towards all other Burger King’s franchise owners. The number of Burger King’s restaurants fell from 8,306 in 2001 to 8,146 in 2002 [10]. Burger King had to craft new strategies to check the declining trend. MENU, STORE IMAGE AND PROMOTION In terms of menu initiative, Burger King launched a low-fat line of chicken baguette sandwiches in 2002 which cost the company millions of dollars.

Unfortunately, this new product line failed to stimulate sales [11]. Whopper was then introduced and studies later showed that Whopper, which competed head to head with McDonald’s Big Mac, was better preferred by customers. However, the quality of Whopper was inconsistent across different markets and franchisees [14]. This was illustrated in a statement by Alan Vituli, Chairman and Chief Executive of New York-based Canon: “2003 was a year of great opportunity in the quick-service hamburger restaurant industry. Many of our competitors were successful in esponding to these opportunities; unfortunately, the performance of our Burger King restaurants suffered during 2003 from the ineffectiveness of a number of unsuccessful systems-wide marketing and product initiatives. ” [11]. Company issues continued to pose a threat to business performance. They included dirty stores, poor service and menu missteps. Top company executives admitted that it was in fact a tougher job than expected to fix a dull menu, dirty stores, and debt-laden franchisees at Burger King’s 11,300 restaurants. Richard W.

Boyce who was a Texas Pacific Partner and Chairman of Miami-based Burger King [9] said, “When you acquire something in a downward trajectory, it doesn’t bounce immediately. ” Alvaro M. Cabrera, the Chairman of Burger King: A Whopping Strategy En Route to Recovery 98 Miami-based Heartland Corp. , who had been operating Burger King’s franchise for 18 years, echoed the sentiment by identifying debt and poor store location as restricting factors [9]. During the past decade, Burger King engaged many advertising agencies but never got the right match between its products and advertising message.

For example, in targeting obesity-concerned and health-conscious consumers, Burger King offered salad and chicken baguette sandwiches. The impact on sales was minimal. On the other hand, competitors such as McDonald’s and Wendy’s offered hamburgers and fried chicken, and their sales increased [15]. Another advertising issue was the lack of branding initiatives. Although Burger King spend more on promotional giveaways such as toys and free drinks, the branding component seemed to be absent from Burger King’s advertising campaign [8]. SALES PERFORMANCE

Despite favourable across the board industry performance, Burger King US sales in 2003 dropped to US$7. 9 billion from US$8. 3 billion in 2002. Industry leader, McDonald’s, recorded increased sales to US$22. 1 billion in 2003 from US$20. 3 billion in 2002 while sales by Wendy’s rose to US$7. 4 billion from US$6. 8 billion during the same period [15]. McDonald’s and Wendy’s have continued to grow. Industry analysts believed that Wendy’s remarkable growth could even outpace Burger King’s and might even edge Burger King from the number two position in the US.

Wendy’s had 6,128 outlets in the US at the end of 2003 and each store average annual sales was US$1. 294 million, 30% more than Burger King’s [4]. THE ROAD TO RECOVERY Something needed to be done to check against the decline. Burger King’s latest owners, Texas Pacific Group (TPG), Bain Capital Partners and Goldman Sachs Capital Partners invested more than US$100 million in an effort to turn around the company. This included redesigning store image, restructuring the finances, segmentation and management of the menu offerings as well as a more effective marketing and communications campaign. 9 Proceedings of …Seminar 2009: Case Studies in Malaysia STORE IMAGE REDESIGN Blum, the CEO of Burger King had dirty or poorly managed stores temporarily closed. New customer-service standards were introduced. A Dallas store was the first to cease operations in February 2004 followed by a Michigan store in March 2004. Burger King needed to close 1,000 of the chain’s 7,727 outlets in the U. S. over the next 18 months [9]. A makeover of its 11,000 stores was put in place. A total of 600 stores got new signage and 200 stores were built with a completely new store design. Using new-age rchitecture, the stores were punctuated with bright colours. In addition, customized video games and indoor play areas were also placed in these stores. As for drive-through design, the stores were equipped with digital sound and outdoor screen to show customers their order. Clear bags were used in packaging to make it more attractive and to allow customers to see the items they purchased. However, the re-branding exercise through enhanced store image caused significant financial implication. According to estimates, a complete store redesign costs USD 250,000 to USD 750,000 per store.

With the store redesign effort, company strategists expected However, the recorded figures showed an average sales increase in sales of up to 30%. increase of between 12% and 17% only. Some stores recorded a 35% sales increase but they were few in number. From Burger King’s view, the new look would stand out amongst its competitors. Consumers would be inclined to ignore Burger King’s competitors and would be attracted to patronize its stores [3]. Another business strategy to further boost sales was the decision on May 2008 to extend business hours beyond 2 a. m. , Thursdays through Saturdays.

This strategy is a direct attack on McDonald’s stores which had already extended their business hours to late nights, resulting in improved sales of 9% to USD22. 79 billion in 2007 for McDonald’s[16]. FINANCIAL RESTRUCTURING In response to the debt problem faced by its franchisees, Burger King set up the Franchise Financial Restructuring Program. In August 2003, this program was widely accepted and about 2,540 restaurants participated. The company wrote off about US$106 million in debts of its US operations from December 2002 to June 2005. This amount consists of uncollectible Burger King: A Whopping Strategy En Route to Recovery 00 royalties, advertising and rent. Blum hired Trinity Capital, a Los Angeles-based franchiseturnaround specialist to assist its ailing franchise operators and negotiated with their lenders and restructured its debt [13, 9]. SEGMENTATION AND MENU MANAGEMENT More new and strategic initiatives were introduced taking into consideration findings based on market research. From past experiences, Burger King realized that consumers would not look at fastfood chains for health food [15]. The company discovered that fast-food eaters made up of only 18% of the population, which accounted for almost half of the company’s profits.

Through its market research findings, it was found that the best customer group to target were men aged 18 to 34. Based on the findings also, the company further segmentized the market by creating another customer sub-group profile called “superfan”. These were people who patronized Burger King five times a month and ate fast food 16 times a month. The company then planned the introduction of more menu offerings such as extra spicy chicken burgers and coffee with 40% more caffeine that targeted these segments. [17, 18]. An ad featuring a creepy, cool and hype character known as “The King”, was developed. The King” was portrayed together with large sandwiches like Burger King’s Enormous Omelette. This campaign managed to boost sales by 9% in the second half of 2004 and the first quarter of 2005 [19]. In terms of product pricing, Burger King’s strategy was more back to basics. focused on its flagship product – the Whopper. It In 2004, Blum introduced several new premium products – tender-crisp chicken sandwich, fire-grilled chicken salad and hefty Angus steak burger. These new products were aimed at families and Burger King fans, especially blacks and Hispanics [9, 11].

In 2005, while McDonald’s offered salad for diet and health buffs, Burger King did the opposite – it introduced the “Enormous Omelette Sandwich” which was what people love in a breakfast sandwich. It had twice the size and twice the satisfaction. This was consistent and ran well with its promotional slogan “Have it your way”. Consequently, breakfast sales increased by 20% as Burger King cater to the hardcore fast-food addicts [17]. Furthermore, in response to McDonald’s Dollar Menu and Wendy’s International Super Value Menu, 101 Proceedings of …Seminar 2009: Case Studies in Malaysia

Burger King introduced its own Value Menu in 2006 [20]. These steps of improved menu offerings provided hope for recovery. MARKETING COMMUNICATIONS Advertising expenditure was part of a companies’ effort in marketing. Realizing the weakness of its promotional campaign, Blum designed a new strategic marketing plan in 2003 that emphasized quality in place of discounts or other sales promotion. This strategy included a long-term branding campaign that included a 30 and 60-second radio and TV commercial as well as an increase in the usage of network TV as a media of communications [12].

In 2004, a new campaign re-introducing Burger King’s “Have it Your Way” slogan that was initiated in the 1970s, was said to have contributed to store sales growth of 4. 4%. It also introduced the “made-to-order challenge”, where half of all sandwiches ordered were customized [9, 15]. In addition to extending the operation hours, Burger King increased its breakfast offerings and kids’ meal promotion. “The King” too was not spared. It had a page on MySpace. com, the popular social networking web site. This marked the company’s shift to online advertising aiming at a younger audience [21].

Burger King’s value menu and the Microsoft Xbox 360 video game promotion spurred sales in the United States. The strategy to co-brand Burger King with Microsoft was very successful. Blum said that more than 3. 2 million Burger King-branded Xbox 360 games were sold at USD3. 99 each [20]. IMPROVED PERFORMANCE In 2004, Burger King started to show a modest turnaround. Burger King recorded a notable upturn in sales. Store sales from February to March 2004 increased more than 4%, compared to the same period a year ago [11]. In the last half of 2005, Burger King’s total revenue increased 5% to USD1. 2 billion, income from operations increased 29% to USD142 million and net income increased 9% to USD49 million [22]. The company managed to achieve total sales of US$1. 94 billion and a profit of US$47 million in fiscal year ended June 30, 2005 [19]. Average sales per restaurant were up 11% for eight consecutive quarters. According to the recorded nine months ending March 2006, Burger King reported a net income of Burger King: A Whopping Strategy En Route to Recovery 102 USD37 million on sales of USD1. 5 billion. Even though sales in 2006 increased compared to 2005 sales of USD1. billion, the net income was slightly lower compared to the same period in 2005 which was USD45 million. In terms of cost management, the company was also building smaller restaurants to reduce construction costs by about 25% [13]. Burger King Corporation was listed on the New York Stock Exchange under the symbol “BKC” on May 18, 2006 [2]. According to Wall Street analysts, on average, it was expected that this newly public company will earn 26 cents a share [20]. In November 2006, Burger King’s stock traded around USD17 per share. A year later, the stock traded close to USD28 per share [23].

J. P. Morgan analyst contended that Burger King’s favourable earnings record was also derived from a lower tax rate and a drop in food and paper costs [20]. MOVING FORWARD Burger King, the world’s No. 2 hamburger chain planned to introduce several new menu offerings that include two specialty Whoppers, a Wrap, Smoothies and even macaroni and cheese for children. The company also planned to open more new restaurants (300 more restaurant in 2008 and redesign existing ones). Cooking facilities will be improved, employing a new broiler that cooks better burgers.

It would continue running the advertisements with pop culture, promotional campaigns with movies, video games and sports. This followed the huge success the company had with advertising blitzes that featured The Simpsons, Transformers, Spider-Man 3 and the Xbox game system. These co-branding strategies were aimed at boosting Burger King as a fresh and happening brand in the minds of fast food consumers [18]. The company showed strong commitment as it confidently marches along to meet its financial and development objectives for the year.

It planned to adopt proactive portfolio management, including the closure of under-performing enfranchising and acquisitions. In the fourth quarter of 2008, the company launched the Steakhouse Burger platform which offered customers a premium steak dinner. Other new offerings in addition to the Breakfast Value Menu include the Cheesy Bacon BK Wrapper (TM), the new nutritionally balanced BURGER KING (R) Kids Meal, featuring BK (TM) Fresh Apple Fries with low-fat caramel dipping sauce, KRAFT (R) Macaroni & Cheese and HERSHEY’s 1% Low Fat restaurants and strategic 103 Proceedings of …Seminar 2009: Case Studies in Malaysia

White Milk. These new meal for kids satisfy parent’s demands for nutrition and convenience as well as the children’s appetite for fun and great-tasting food [25]. In anticipating future trends, Burger King has identified the changing attitude of American consumers where the majority of them would prefer to order their burgers and fries via drive-ins. Burger King estimated that about 65% of total fast food consumer purchases will be done via drive-ins and only about 15% of consumers enter restaurants to take away. Thus, existing company outlets are too large to accommodate the remaining 1 n 5 customers [26]. How to respond to this new consumption trend would be a critical step in determining the company’s continued future success. Burger King: A Whopping Strategy En Route to Recovery 104 APPENDIX A. BKC Income Statement Burger King Holdings, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (Dollars and shares in millions, except for per share data) Increase / (Decrease) ————————-2007 $ % ——— —————$ 403 109 27 ——–539 346 115 15 $ 33 20 2 ——–55 32 11 14 8% 18% 7% 10% 9% 10% 17% NM

Three Months Ended March 31, Revenues: Company restaurant revenues Franchise revenues Property revenues Total revenues Company restaurant expenses Selling, general and Administrative expenses Property expenses Other operating (income) expense, Net Total operating costs and Expenses Income from operations Interest expense Interest income Interest expense, net Income before income taxes Income tax expense Net income Earnings per share – basic Earnings per share – diluted Weighted average shares – basic Weighted average shares – diluted (1) (1) 2008 ——-$ 436 129 29 ——-594 378 126 (6) ——– 2 (8) ——— ——— 13 477 ————–81 62 17 18 (0) (0) ————–16 17 ——— ——–65 45 24 11 ——— ——–$ 41 $ 34 ====== ===== $ 0. 30 $ 0. 30 135. 2 137. 5 $ 0. 25 $ 0. 25 134. 4 137. 2 36 8% ——–19 31% (1) (6)% 0% ——–(1) (6)% ———20 44% 13 118% ———$ 7 21% ====== $ 0. 05 $ 0. 05 20% 20% Source: The Company Published Third Quarter Fiscal 2008 report 105 Proceedings of …Seminar 2009: Case Studies in Malaysia APPENDIX B. America’s Top Companies in Food Industries Fortune 1000 rank 106 253 277 415 519 694 772 781 829 992 REVENUES $ millions 23,230. 70 10,416. 00 9,411. 50 5,925. 00 4,376. 90 2,876. 0 2,506. 10 2,469. 90 2,234. 00 1,654. 50 % change from 2006 7. 6 8. 9 20. 9 3. 6 2. 7 4 -5. 2 -32. 5 9. 1 4. 4 PROFITS $ millions 2,395. 10 909 672. 6 201. 4 230 126. 3 162. 1 87. 9 148 60. 5 % change from 2006 -32. 4 10. 3 19. 2 -40. 4 8. 3 16. 9 39. 4 -6. 8 448. 1 10. 5 EMPLOYEES Number 390,000 174,580 172,000 157,000 113,900 42,500 64,000 25,000 39,000 51,092 % change from 2006 -16. 1 4. 8 18 -0. 2 2. 8 -4. 1 -13. 5 -5. 7 5. 4 0. 6 Rank Company 1 2 3 4 5 6 7 8 9 10 McDonald’s Yum Brands Starbucks Darden Restaurants Brinker International Jack in the Box CBRL Group Wendy’s International Burger King Holdings Bob Evans Farms

Source: Fortune May 5, 2008 issue STUDY QUESTIONS The following questions can be included for discussion depending on specific course objectives: 1. 2. 3. 4. Prepare a SWOT analysis. What were the causes that led to a crisis in Burger King? How did Burger King overcome its problems and rebuild itself? What lessons can we learn from the Burger King (U. S. ) experience? Given the facts of the case, what strategies do you think would make Burger King number one in the U. S. fast food industry, and in so doing, take over McDonald’s leading position? REFERENCES [1] Company News: Big Burger King Franchise Chain Files for Bankruptcy (2002, Dec 5).

The New York Times. Retrieved from, http://query. nytimes. com/gst/fullpage. html? res=9A01E7D6153BF936A35751C1A96 49C8B63&n=Top/Reference/Times%20Topics/Subjects/F/Fast%20Food%20Industry [2] Domestic and Global Facts (2008). Retrieved Aug 7, 2008 from Burger King Corporation Website: http://www. bk. com/companyinfo/corporation/facts. aspx [3] Harrington, J. (2000, October 16). The Burger That Would Be King. Times Publishing Company Business; Cover Story, 10E. [4] Unhappy Meal: What’s wrong with Burger King? (2004, Jun 24). Slate. Retrieved July 27, 2008 from, http://www. slate. com/id/2102906 5] History of Burger King. Retrieved July 24, 2008 from The History of Branding Website: http://www. historyofbranding. com/burgerking. html [6] Burger King Corporation. Retrieved July 28, 2008 from Funding Universe Website: http://www. fundinguniverse. com/company-histories/Burger-King-CorporationCompany-History. html [7] Company History. (2005). Retrieved July 24, 2008 from Burger King Corporation Website: http://www. burgerking. ca/en/1122/index. php. [8] Thin times ahead for Burger King? (August 1, 2002). Marketing Week, 19. [9] Burger King’s Reign of Error. (2004, March 29).

Business Week-News Analysis. Retrieved July 31, 2008 from http://www. businessweek. com/bwdaily/dnflash/mar2004/nf20040329_5044_db016. htm [10] Bankruptcy News Room. (2006, July 28). Burger King Bankruptcy & Creditors. Retrieved on Aug 8, 2008 from BankruptcyLawFirms (part of ExpertHub Network) Website: http://www. bankruptcylawfirms. com/Burger-King-Dethroned. cfm [11] Garber, A. (2004, April 5). BK on the rise says new items are planned to keep up motion. Retrieved July 30, 2008 from http://www. findarticles. com/p/articles/mi_m3190/is_14_38/ai_115081025 [12] Burger King Reveals New Strategy. 2003, May 13). Promo Newsletters. Retrieved from http://www. promomagazine. com/news/marketing_burger_king_reveals/ [13] Reeves, S. (2006, May 12). No Red Meat at Burger King. Forbes. com. Retrieved from http://www. forbes. com/strategies/2006/05/11/ipo-outlook-burger-kingcx_sr_0512burger. html [14] Can the Whopper flip BK’s fortunes? (2001, May 3). Marketing Week, 21. [15] Can Burger King Rekindle the Sizzle? (2004, May 3). Retrieved July 27, 2008 from Harvard Business School Working Knowledge Website: http://hbswk. hbs. edu/archive/4105. html [16] Burger King attacks McDonald’s late-night flank. 2008, May 30). Chicago Business. com. Retrieved from http://www. chicagobusiness. com/cgibin/news. pl? id=29635 [17] Coultan, M. (2005, July 23). Catering to fast-food addicts reaps fat profits. The Age Online. Retrieved from http://www. theage. com. au/news/world/catering-to-fastfoodaddicts-reaps-fat-profits/2005/07/22/1121539147017. html [18] The Associated Press. (2008, Feb 27). Burger King discusses new items for 2008 growth strategies. Retrieved Aug 6, 2008 from International Herald Tribune Website: http://www. iht. com/articles/ap/2008/02/27/business/NA-FIN-COM-US-Burger-KingOutlook. hp [19] Arndt, M. (April 2006, April 7). Burger King’s Appetite for CEOs. Business Week. Retrieved from http://www. businessweek. com/investor/content/apr2006/pi20060407_969580. htm? ca mpaign_id=tbw%22 [20] Reuter. (2007, Jan 30). Xbox promotion, value menu lift Burger King Earnings. Retrieved Aug 6, 2008 from http://www. usatoday. com/money/companies/earnings/2007-01-30-burgerking_x. htm [21] Jargon, J. (2006, September 25). The King is Lurking: McDonald’s archrival Burger King is waking up, threatening the Golden Arches. Carin’s Chicago Business, 3. [22] Pressman, A. (2006, Februari 17).

Burger King, financially sounder but whopper sales lagging. Business Week. Retrieved from http://www. businessweek. com/investing/insights/blog/archieves/2006/02/burger_king _fin. html Burger King CEO John Chidsey on Innovation, Trust, and “The King” (2007, November 15). Retrieved July 27, 2008 from [email protected] Website: http://knowledge. emory. edu/article. cfm? articleid=1097# [23] Burger King: A Whopping Strategy En Route to Recovery 108 [24] News Release: Burger King Holdings Reports Strong Third Quarter Fiscal 2008 Results Led by Global Business Momentum, Raises Fiscal Year Guidance. (2008, May 1).

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