McDonalds

McDonalds

This is an exciting and interesting essay to write for a number of

reasons. For one it's an honour to make a research on one of the most

profitable societies of the world, for second because the kindness of

McDonald's employees and the precision of McDonald's Web site, are

perfect sources for all kind of information that can help analyse

through Porter's value chain, all the aspects of its value creation.

In the late 1940s, Dick and Mac McDonalds were searching for a way to

improve their little drive-in restaurant in San Bernardino, California,

U.S.A.; they invented an entirely new concept based upon speed service,

low prices, and big volumes. Word of its success spread quickly, in

1952 they had more than 300 franchising inquires a month from all over

the country. McDonald's is now the largest and best-known foodservice

retailer and one of the two best-known and powerful brands in the

market. With more than 24,500 restaurants in 115 countries, some of

those operated by the company, some by franchisees or by affiliates

operating under joint-venture agreements. The global market potential

is still huge: yet on any day, even as the market leader, McDonald's

serves less than one percent of the world's population. The restaurant

chain plans to expand their leadership position through convenience,

superior value and excellent operations. The effort to increase market

share, profita! bility and customer satisfaction has produced high

returns to shareholders: a compound annual total earning of 21% over

the past 10 years. McDonald's vision is to dominate the world-wide

foodservice industry. Universal dominance means setting the

performance standard for customer satisfaction and increasing market

share and profitability through successful fulfilling McDonald's

convenience, value and execution strategies. A precise way of

considering McDonald's' role of operations is through Porter's value

chain analysis. The Value chain breaks down the firm into its

strategically relevant activities, in order to understand the behaviour

of costs and the existing or potential sources of differentiation. A

firm gains competitive advantage by performing these strategically

important activities more cheaply or better than its rivals. For a

company which feeds some 38 millions clients every day, finding a

reliable quality supplies is a major factor for success. McDonald's has

solved the problem by making food supplies part of their success.

McDonald's distributors are strategically to be accessible to the each

restaurant and carry practically everything, from meat and potatoes to

lightbulbs. Coca-Cola, the right well-known drink, has been with

McDonald's from the beginning supplying beverages. McDonald's is

increasingly using its leverage to capitalise upon global purchasing

practices. New restaurants throughout Europe feature tabletops from

Belgium; chairs, floors and tiles from Italy; doors from Austria etc.