Rough Draft

Introduction

McDonald’s corporation was originally designed as a quick-serve restaurant with a mission to provide high-quality, quick food products to customers. In McDonald’s history, this mission has been met and continues to expand. They currently operate 12,611 quick service restaurants worldwide and serve over 20 million customers a day in the United States alone. Growing competition and environmental factors that are beyond their control as well as changing customer preferences are beginning to challenge the continued use of their current operating system. From 1965 through 1991 the chain had an average annual return on equity of 25.2% and average annual growth of 24.1%. However, sales per unit have slowed and they are at a period of stagnation and are looking for ways to continue their growth in this market.

Facts

McDonald’s has achieved its astounding success through a combination of consistent operations and innovation. By forging relationships with suppliers they ensured consistency throughout their franchises. Rigorous testing of supplier product and constant inspection of franchisees ensured consistency and allowed them to squeeze profit from everywhere. Innovation from the supply side and internally has been a major strength. From creating new methods to store French fries to creating new methods to prepare hamburgers, innovation has been key to staying ahead of the competition. New product development has also impacted sales. The McNugget and the entire breakfast lineup totally changed their revenue. The introduction of the McNugget positioned McDonalds’s to become the second largest chicken retailer. The breakfast lineup accounted for 15% percent of sales by the mid 1980s.

Strengths and Weaknesses

Branding could be seen as a strength and a weakness. Strength in that they are known for quick, cheap food at a low price. A weakness in that if they try to shift into the dinner market, which presently accounts for 20% of revenue, it...