Choose Mc'donal in Singapore. Perform an environment analysis this company. Around 2000 words

Business environment analysis of McDonald’s
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03-Sep-2017
Introduction
McDonald’s is the one of the largest fast food chain in the world and the business
model works in mode of franchisee. As per estimates McDonald’s serve food to around 3.5
million customers every day. The company is known for the high profile brand image, quality
control and highly satisfied customer base. The company has achieved a strong brand value
in the market and has been expanding bases in different regions of the world.
The company began its operation as early as 1948 and started expanding to different
regions in the year 1967. The company operates in some 120 countries and has more than
34000 branches across the globe.
McDonald's Corporation, the world's biggest fast food operator, opened its first store
in 1948 in San Bernardino, CA, and signed its first franchise agreement in April 1954. By
1957, McDonald's had 14 stores and opened its first international store in Canada just 10
years later. The company entered a high-growth phase during the 1970s, opening about 500
new stores each year. During the 1980s, however, growth slowed as competition from other
quick-service operators increased. Competition intensified to an even greater extent during
the 1990s. At that time, McDonald's diversified within the quick-service industry by
purchasing other operators and increasing its international investments. McDonald's currently
employs more than 420,000 staff and earned $24.6 billion globally in 2016.
Sectoral View
McDonald is operating in the business of fast food chains along with catering
services. They compete with restaurants and different kind of fast food chains in the world.
The focus in this line of business should be on high service standards along with strong
measures for quality control. Despite the slowing economic growth worldwide, multinational
companies (McDonald store’s) continue to expand their operations in Asia/Pacific, an
important region for manufacturing as well as a significant market for products and services.
A midsize MNC would typically have presence in seven to eight markets, while a large MNC
would have presence across the region, stretching from Japan, Australia and India.
McDonald's business model is primarily focused on the franchising of restaurants. Of
the company's 36,000 restaurants in more than 119 countries at the end of 2015, more than
82.4% were operated by franchisees (with the remainder being company-operated stores). By
2018, the company plans to have 90.0% of their restaurants operated by franchisees as part of
a larger restructuring that the company states will give restaurants more opportunities to
experiment and better integrate themselves within their core market. Franchises contribute to
the company's revenue through the payment of rent and royalties, usually based upon a
percentage of sales. Franchises also pay an initial fee to the McDonald's to establish a
restaurant. Over the past five years, McDonald's has undertaken a significant effort to
modernize the format of its stores, many of which have not received a makeover in more than
two decades. At the end of 2013, the company reported that 45.0% of its restaurant interiors
and exteriors reflect its contemporary restaurant design.
A growing number of McDonald store’s also have extensive presence in China and
India. In China, their operations could be bigger than the rest of the region combined. As for
India, it continues to be a major software development and McDonalds support center, as
well as a growing market for products and services. More McDonald stores are putting
emphasis on these markets.
McDonalds Menu
McDonald's menu has traditionally consisted of a range of burgers, fries, desserts and
beverages. Over the past decade, however, the company has introduced a range of healthier
options, such as salads, to cater to changing consumer preferences. More recently, in
response to lower sales, McDonalds has moved to test new menu offerings in an attempt to
phase out its ―Dollar Menu & More,‖ which offered items ranging from $1.00 to $5.00. The
company recently debuted its ―McPick 2‖ offering, in which consumers can pick two items
off a preset menu for $2.00. These value menu items are designed to be sold as ―loss-
leaders,‖ enticing customers into the store with the hope that they will pay for higher-margin
products while there. The chain is also making a bigger push into the breakfast segment,
where it is a market leader, by emphasizing the high quality of its McCafe coffee and offering
all-day breakfast. The breakfast segment has become a battleground in the Fast Food industry
over the past five years, as it is the only time segment that is currently growing. In response,
the company has introduced all-day breakfast offerings, and plan to slowly expand its all-day
breakfast menu moving forward.
Competition
McDonald stores with extensive experience operating in Asia/Pacific have been
hosting their McDonalds infrastructure in one or two regional business hubs, typically
Singapore and Hong Kong, to support their operations across the region successfully. They
are also beginning to host their McDonalds infrastructure in China and India to improve
performance for local end users.
However, there are many McDonald competitors like Pizza Hut and Burger King,
typically midsize companies or late entrants to the marketplace, that still host their
infrastructure in multiple or disparate locations — including their premises — across the
region. A significant number of U.S. and European McDonald store’s also host their
McDonalds infrastructure in their home markets to support their business in Asia.
Consequently, their use of McDonalds infrastructure may not be well-optimized, resulting in
inefficiency and higher costs. Application performance may also be impacted by excessive
latency due to the wide geographic distance between the data center and branch offices,
resulting in inconsistent or poor experience for end users in the region.
To solve these issues, McDonald store’s should host their McDonalds infrastructure in the
region, consolidate their hosting in one or two regional locations, and support local hosting in
China and India — particularly if they have a large presence there. There will be some
exceptions that require local hosting in specific markets, like regulatory requirements for data
residency in the banking sector or an ERP application that supports a local supply chain. Yet
by and large, the bulk of McDonalds systems can be centralized in a regional location.
This research will advise infrastructure managers in McDonald store’s on how to select
regional sites for colocation in the Asia/Pacific region, based on industry best practices.
Financial performance
Over the five years to 2017, McDonald's global revenue is expected to decline at an
annualized rate 2.5% to $24.3 billion. As McDonald's does not receive revenue from its
franchised stores, the company's performance in the fast food industry is best measured by
system-wide sales, which includes revenue earned by company-owned stores and franchised
stores. Based on this measure, McDonalds' market share is estimated to be 13.9% in 2017.
Total system-wide sales are expected to decline at an annualized rate of 1.0% to $84.0 billion
over the five years to 2017.
Though all-day breakfast has offered more options to consumers and increased sales and
earnings over the short term, these moves could...