McDonald Report

1.0 Company Summary

1.1 The overview of the company

McDonalds was founded by two brothers, Richard and Maurice McDonald in 1937 in California. This largest global fast food chained arrived in Malaysia 43 years later in December 1980. In December 1980, Golden Arches Restaurants Sdn. Bhd. (GARSB) won the licence to operate McDonald's in Malaysia. The first McDonald's restaurant subsequently opened its doors at Jalan Bukit Bintang on 29 April 1982. After twenty six years they now have 185 franchise outlets nationwide. McDonald's Malaysia operates under the umbrella arm of the APMEA group. As of December 2009, McDonald's Malaysia has 194 restaurants located nationwide, serving 10 million customers a month and expanding at a rate of 15-20 restaurants annually. McDonald's Malaysia is fully owned by McDonald's Corporation, and the restaurants throughout Malaysia are either operated by GARSB or franchisees. McDonald's Malaysia and our franchisees employ more than 8,000 locals with 150 support staff at the headquarters managing the day-to-day operations of the business. Their vision is "to be our customers' favorite place and way to eat".

1.2 Mission and Vision

1.2.1 Mission Statement

McDonald aims to be the leader in the Quick Service Restaurant (QSR) industry by maximizing Profits and through our Principles of QSC & V (Quality, Service, Cleanliness & Value) consistent with the needs of our Customer, Employees and Community.

1.2.2 Vision

To be out customers' favourite place and way to eat.

1.2.3 Values

McDonald's mission is to be our customers' favourite place and way to eat with inspired people who delight each customer with unmatched quality, service, cleanliness and value every time.

1.3 Opportunity

The fast food trend in Malaysia has benefited McDonalds as they are able to capture more market shares and customers. Malaysian would like to eat outside with the increasing of number of women workers. They would like to look at convenience place to eat as McDonalds provide it for them. The technology advance has improved McDonald's services efficiency as their customer able to order through phone and online. The growing internet users in Malaysia supported for this kind of service. 24 hours service will open a revenue window for McDonalds as customers look for quick meal at late night.

1.4 Threat

The increase of competitions from KFC, Subway, Burger King, and others has made the competition for market share in Malaysia tighter. Customers have more range of fast food being offered and they would have no brand loyalty with one brand. McDonalds need to fight back with their promotion and advertisement to gain the customers feeling. They need to spend a large amount of money on it. The health concern has become a main treat for McDonalds as most customers concern on healthy foods. Fast food is considered unhealthy because of too oily. This will reduce the number of customers to purchase McDonalds foods.

2.0 External Environmental Analysis.

2.1 Economic Environment.

The economic condition in Malaysia currently slowing as household incomes and business activity decelerates due to the effects of current world economic down-turn. However, Malaysia is still not in a recession period as compared to Singapore or United States. Even with the depreciation of Ringgit, real GDP growth is forecast an increase from 5.0% 2008 to 5.2% 2009.

Source- Euro-monitor International 2009 based on the World Bank.

Even with current economic condition, McDonalds remain optimistic. According to Business Times (2009) "McDonalds Malaysia expects its delivery service business to jump 40 per cent this year as its new call centre can handle more orders". They invested over two million ringgit for setting up the new call center. In addition, the Managing Director Azmir Jafaar, said the company "plans to invest 80 million ringgit this year to open between 15 and 20 new restaurants" (2009).

2.2 Natural Environment.

Malaysia natural environment is considered good. Based on the report by Department of National Environment Energy and Resources, the Air Pollution Index is in the status of good in many areas in the country.

Moreover, McDonalds around the world has always been a company which practice to protect the natural and community resources that support and are affected by their activities. McDonalds promotes recycling and energy conservation. "Since 1990, they had recycled 2 billion corrugated cardboard, purchased more than $3 billion in products made from recycled materials and eliminated several million pounds of packaging"(McDonalds).

2.3 Legal and Political Environment.

Malaysia is officially an Islamic nation which majority of its population is Muslim. In order to capture the market, McDonalds believe that in working with local businesses, government, authorities and suppliers throughout their worldwide operations.

In Malaysia, they are bound with the Syariat law which states all food served must be Halal. McDonald's is one of the many fast food chain restaurant in Malaysia gained Muslim consumers confident. McDonald's in Malaysia underwent thorough inspections by Muslim clerics to ensure ritual cleanliness the chain was rewarded with a halal ("clean and acceptable") certificate, indicating the total absence of pork products.

2.4 Technological Environment

McDonalds has been adapting to the use of technology in delivering its fast food to their consumers. The use of telecommunication technology is a good strategy to begin an online service diverse from its brick and mortar concept. McDonalds had expanded their call centre capability which "now can handle up to 70,000 calls compared to 20,000 previously" (McDonalds). In addition, McDonald's Malaysia is also "working on allowing customers to order and pay online". Thus, the investment made by McDonald's Malaysia is justifiable and relevant in terms of current trend.

3.0 Industry Analysis

To analyze the industry for McDonald's, the Michael Porter's five forces are used. The Porter 5 forces analysis is a framework for industry analysis and business strategy development developed by Michael E. Porter in 1979.