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Business model of Mcdonalds

1. Workforce

McDonald’s always select their workforce very carefully. Many people have had their first job working at a McDonald’s restaurant. Cooking equipment and procedures are evolving and it takes a person who can multitask and think more analytically. McDonalds has incorporated exams during the interview process to find people with the right mindset and skills for the job. McDonalds started a campaign launch to help recruit qualified employees to keep their high standards going in the restaurants. The labor conditions for McDonalds is you must be at least 14 years of age to be considered for employment and can only work 12 hours a week if under 16 years of age.

2. Diversity

Along with being one of the leading employers in the fast food industry, diversity plays a very important role in the operations of McDonalds. Diversity is one of the most important ways of doing business. Diversity is part of McDonald’s business plan is part of the business planning process. Diversity is the corporations most valued initiative and is always tied into the daily way of life at McDonalds. McDonalds has diversity business planning guidelines that are rolled out to all levels of leadership in the corporation. It is also tied into the strategic planning process.

3. Benchmarking Data and Similar Processes

McDonald’s always keep freshness in their stores. The concept is called “Made for you” by the corporation, but marketed to the public as “just for you”. It is a benchmarking process where the food is no longer prepared to put into stock that is used to meet demand. This method is to prepare food that is driven by customer demand. This approach eliminates the sitting time of the product, which is non-value added and increases customer satisfaction across the board.

4. Factors of Production

McDonald’s uses JIT manufacturing in their stores. JIT stands for “Just in Time”. This is a manufacturing system where the product is “pulled” on by the customer, rather than “driven” by the company. In a traditional system, the company may sit by and say that they plan to sell 100 units of food during the day. They would trend this data around demand times and produce accordingly. What happens is that some of the food will either not get sold, or will be in storage for some period of time. The benefits to this method are that the company pays less money in inventory and storage, and pays less money for inventory on hand. On the same hand, there can be outages by single source suppliers, causing temporary inventory outages. 5. Sources of Raw Materials

For raw materials McDonalds basically has specific companies from which they take their materials. And McDonalds is taking materials from those companies for long years. For example, their coffee is produced by “Gavina gormet” coffee company. This company has been producing coffee for McDonalds for the last 25 years. Overall, the company supplies McDonalds with over 400 million cups of coffee per year. This is no small bill for any supplier, so they have learned to respond to McDonald’s demand. This company gets its coffee beans from Central America, South America, and Southern California.

6. Key Products & Services Provided

McDonald’s is primarily known for its burgers and fries. McDonald’s operates in over 100 countries and offers a standardized menu with some geographic variations. Their key products include hamburgers and cheeseburgers, chicken sandwiches, French fries, wraps, chicken nuggets, salads, desserts, sundaes, soft serve cones, pies and cookies. They also offer beverages such as milk shakes, soft drinks, coffee and flavored tea. In many markets, McDonald’s also offers a variety of breakfast items such as hot cakes, muffins, biscuits, and bagel sandwiches. Some of McDonald’s key brand names for their products include Big Mac, Big N’ Tasty, Filet-O-Fish, McNuggets, McFlurry, McMuffin, and McGriddles.

7. Organizational Structure

McDonald’s operates its stores in two ways: company owned stores and franchised stores. According to McDonald’s Data monitor, McDonald’s has 32,478 restaurants. 6,200 are company owned restaurants where McDonald’s gets revenue from restaurant sales. The remaining restaurants are franchises where McDonald’s gets revenue from either rent and/or royalties based on a percentage of sales.

8. Locations for Production/Distribution

McDonald’s operates in over 100 countries with its primary markets in Europe, Asia Pacific and Northern America. The company headquarters is located in Oak Brook, Illinois and employees 385,000 people. McDonald’s has stand alone restaurants as well as locations inside airports, toll stops, colleges and malls. 9. Policies & Strategies on Pricing

One of McDonald’s main pricing strategies is its dollar menu. The dollar menu made its debut in the U.S and was so successful it now appears in restaurants across the world. The dollar menu is very successful at appealing to college students or low income families.

10. Consumer Perceptions

McDonald’s Data monitor lists one of its strengths as “strong brand value draws customers to McDonald’s restaurants”. This well established brand name is one of their key positive consumer perceptions. McDonald’s has a strong brand which can lead to consumers to choosing them over a competitor. This strong brand also makes it easier for McDonald’s to enter new regions and markets. Since they have such an established brand name, it makes consumers in new markets more likely to try their restaurant once it is opened. 11. Consistency

“Quality, Service, Cleanliness and Value” is the main formula of McDonalds. It doesn’t matter if you’re visiting a McDonald’s in California or Connecticut, America or Australia – you’re going to have a similar experience wherever you are. This highlights Ray Kroc’s vision for McDonald’s from the beginning. 12. Innovation

Innovation is really important for a company’s growth. And McDonald’s adopted it very well. At first, the characteristics of consistency and innovation seem to contradict one another. But in fact, they work together to allow for McDonald’s continued growth. Innovation stemming from responsiveness to customers and franchisees has played a big role in McDonald’s fending off stagnation over the years. In addition, McDonald’s product offerings have evolved over the years alongside the tastes of their customers thanks in part to some observant and innovative franchisees. A few examples of products that were introduced after being developed by McDonald’s franchisees or owner/operators are: Filet-O-Fish, Big Mac, hot Apple Pie, Egg McMuffin and McFlurry. 13. Franchisee selection

For franchisee McDonald’s basically choose a person of high professional and business integrity. And it should have strong business background, with special emphasis on interpersonal skills, team leadership and financial management, or compatible experience. The franchisee should have a willingness to personally devote full time and best efforts to the day-to-day operation of the restaurant as an on-premises franchisee (owner/operator). The franchisee must have an entrepreneurial spirit and a strong desire to succeed and the ability to successfully complete a training and evaluation program for a minimum of nine months, full time. The franchise should have the flexibility to relocate within a large geographic area for a restaurant opportunity and the ability to meet the financial requirements.

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