McDonalds Case study

2569 WordsMay 16, 200911 Pages
Introduction to case McDonalds’ total revenue (Income Statement Row 5) rose 11 percent in 2006 (according to numbers, it was only 8.84%) and net profits (Income Statement Row 23) climbed 36 percent. These increases were a result of a turnaround strategy initiated by the late CEO, James R. Cantalupo, in order to address McDonald’s general poor performance and first quarterly loss ever in the first quarter of 2003. “The decline in McDonald’s once-vaunted service and quality can be traced to its expansion of the 1990s, when headquarters stopped grading franchises for cleanliness, speed, and service.” Current CEO, Jim Skinner, intends to continue Cantalupo’s turnaround strategy and to bring the McDonald’s company up-to-date in the 21 century. This includes remodeling existing stores, evaluating store performance, and reinventing the McDonald’s menu. Analysis of the general environment • Demographic o The country is quickly changing pace. It used to be that Americans wanted larger portions and cheaper food. As health issues begin to arise, Americans are now looking for healthy options, smaller portions and better quality. Organic has become the new buzz word. • Sociocultural o “McDonald’s is facing a rapidly fragmenting market, where changes in the tastes of consumers have made once exotic foods like sushi and burritos everyday options.” These new taste buds have branched out in gourmet coffees and the increase in ethnic style food eating establishments. • Political/Legal o The movie Super Size Me showed the world the effects of only eating fast food. This caused uproar in the community demanding smaller portions and healthy options. • Technological o The average consumer no longer carries cash. This means that either companies like McDonald’s must adapt and accept credit payments, or accept loss in revenue. • Economic o The media and government

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