The purpose of this research is to conduct a clear analysis of the effects of purchasing power to consumer behavior of Mcdonald’s customers.

CONSUMER CHARACTERISTIC AND MARKETING TECHNIQUES OF MCDONALD’S COMPANY LIMITED
A Dissertation of Applied Business Project Proposal
Presented to
Seoul National University
Graduate School of Business

In Partial Fulfillment
of the Requirements for the Master Degree
Business Administration
GMBA Program
2017
Keywords: MacDonald Company, Marketing Strategies, Consumer behavior, Purchasing power and Marketing

ABSTRACT
The purpose of this research is to conduct a clear analysis of the effects of purchasing power to consumer behavior of Mcdonald’s customers. Apparently, the ability of customers to purchase specific delicacies depends on a number of parameters with finance as a major point of consideration. Consumer behavior is a psychological issue that depends on customer motivation. Thus if a customer has money he or she is motivated to purchase certain kinds of foods. This study will evaluate if by analyzing the purchasing power of its customers, McDonalds intends to ascertain the kinds of dishes that should be prepared at particular outlets. In an endeavor to come up with a detailed and well-researched paper, various methods will be utilized.
Alternative solutions to the prevailing customer conditions shall be garnered using models such as PASTEL & SWOT analysis as well as the 4Ps. PASTEL & SWOT analysis will be able to identify the underlying weaknesses, threats, opportunities and the strengths of the company. This analysis will then lead to decision-making processes on how to best improve customer loyalty and trust by providing them with affordable products. The information about SWOT analysis and financial situation of the customers will be collected using interview schedules, visits to the market segments and by reviewing documents that reveal the statistics of the company. Further, this paper shall explore the marketing strategies of McDonald’s in the Korean market to shed off the bad image created by the hamburger disease. In a sense, McDonald’s strategic action was taken after this ‘burger panic’ so we need to figure out how the company handle those issues and risky factors caused by the customer’s purchasing power.

PREFACE
This dissertation is an applied business project proposal founded on the survey and analysis of the purchasing power of customers at McDonald’s corporation as well as the factors influencing the same. This research has been conducted as a partial fulfillment of the award of a Master Degree in Business Administration. I would sincerely take this opportunity to thank my supervisors for their unending support during the entire process.

My hope is that you enjoy reading this paper.
Seunghoon Lee

Table of Contents
Introduction 1
Company Overview 2
McDonald’s Marketing Mix (4Ps) Analysis 3
Product Mix 4
Place 5
Price 6
Promotion 7
McDonald’s SWOT Analysis 8
Strengths 8
Weakness: 8
Opportunities: 8
Threats: 8
Financial Analysis 9
Factors that Influences Customer Buying Behavior for McDonald’s 9
The Purchasing Power of Customers at McDonald’s 9
1. Personal preferences. 9
How McDonald’s responded to the Personal preference aspect of its customers 14
McDonald’s in France 15
McDonald’s in China 15
McDonald’s Reputation and Marketing in Korea 16
Concentration on Children 17
2. Consumer financial stability 18
Analysis of McDonalds Risk Control……………………………………………………………………………………..19
Recommendations 14
Conclusion 15
References 16
Appendices 17
A. New McDonalds’s Strategy 17
B. Financial Data 18

Introduction

McDonald’s is among fast food companies in the world for so many years. Although it is not the first in the franchise business, its business model has been replicated by other companies. In recent years ,the company has experienced a lot of troubles with sales falling, employee protests and scandals in some of its operation around the world. Despite these issues, the company still remains to be the top fast food chain in the US and around the world. Currently, the company has more than 35,000 in over 100 countries and the company still experiences growth in some countries.

In this paper, we will be discussing the consumer behavior of the customers of McDonald’s and how these behaviors affect the marketing strategies being implemented by the company. We will be using different analytical tools to determine some of the strategies of the company. The first part of the paper will discuss an overview of the company and this will be followed by an analysis of the operation of the company using two analytical models, namely the SWOT Analysis and the 4Ps model. This will be followed by a Financial Analysis of the company and how its financial performance affected the strategies being used by the company. Third, there will be discussion of the personal preferences of McDonald’s customers specifically among customers in China, South Korea and France. We will also look at how McDonald’s placed importance on marketing its products to attract children, which comprise a significant portion of its customers. Lastly, all the points discussed will be synthesized and come up with some feasible recommendation that the company can implement to address the issues that we have identified in our analysis.

Our discussion will be helpful because it will add literature on how big companies adjust their operation depending on the preference of their customers. It will also shed some light on why for the longest time, McDonald’s has been the number fast food chain company in the world despite facing so many problems. Our analysis will be confined to McDonald’s global operation using publicly available information about the company coming from the company’s Annual Report, company website and academic papers discussing the company.
Company Overview

It is evident from contemporary studies conducted by various researchers that McDonald’s Corporation is one of the leading food service retailer internationally with well over 34,000 business outlets in more than 119 countries. According to Rodrigo (2016), the organization approximates that it serves close to sixty-nine million (69 million) customers on a daily basis globally. This clearly indicates clear that McDonalds is a worldwide organization that offers locally prepared menu depending on the market segments within which the company conducts its transactions. The United States forms the largest market for McDonald’s in regards to the number of business outlets and the revenue generated from the business premises. The mission of McDonald’s is to offer authentic food choices that customers appreciate and acknowledge based on their cultural aspects. Since its inception, McDonald’s has completely transformed the hotel and hospitality sector by introducing fast foods and delivery of food directly to customers.
McDonald’s focalizes its business techniques or policies on its customers using the 4Ps of marketing mix. Further, the company employs a franchise business pattern in sustaining and developing or growing its operations. This enterprise patterns give an opportunity to McDonald’s to consistently serve its clients with locally apropos restaurant practices as well as a fundamental section of the societies it renders its service to. Further, the n make it possible for classification, execution as well as scaling of creative ideas that assist in satisfying consumers dynamic pre-requisites and priorities.
McDonald’s Marketing Mix (4Ps) Analysis

Product Mix

The company mainly offers food and beverages to its customers. Its product mix include,
hamburgers and sandwiches, chicken and fish, salads, beverages, breakfast as well McCafe.
McDonalds is a major brand of burgers, although it extends its product mix over time. This
aspect of the product mix shows that the company invents contemporary means to attract more
clients (Meyer 2017).
Place

The company’s restaurants are the major places where it distributes its products. It distributes its products through restaurants, kiosks, postmates websites, and McDonald’s App. Some of the
Restaurants further manage kiosks to distribute restricted chosen goods like desserts. Furthermore, clients may place orders via the postmates websites and mobile application.
Price

The company’s pricing technique comprises price bundling together with rational pricing. In terms of price, McDonald’s provides food and various goods in bundles that appears to be cheap compared to customer’s buying them individually. Rational pricing is applied by the company in prices that are seen to be substantially cheap like say $49 rather than $50.
Promotion

The company advertises its products to attract more clients. It utilizes advertisements, sales promotions, and public relations as well as express selling as its promotional mix. McDonald’s promotions are more superior than all other advertising techniques. It utilizes television, radio, print media, as well as online platforms for its promotions. Further, it uses sales promotions to attract more clients to its outlets (Meyer, 2017).
McDonald’s SWOT Analysis

According to Rodrigo (2012), the following is the Strengths, Weaknesses, Opportunities and Threats Analysis for McDonald’s company:
Strengths
• Creativity as well as variation in product scope
• Expansive geological as well as demographical existence.
• Administration and franchise structure’s aid as well as adoptability to the ever-changing market
• Lack of complacency as well as its philosophy on dubiety acceptance
• The company has long placed customer service at the forefront of its strategy (Appendix A)
Weakness:
• Consumer characteristics and anticipation largely differ amidst distinct cultures and countries.
Opportunities:
• Raise the number of people or companies applying for franchise. This benevolence of the company serves as a great asset or investment in the end.
• Rising in demand for the service accustomed industry alongside a rise in the number of the consuming category.
• McDonald’s endeavor to give health-premeditated diet has lured consumers worldwide.
• Creativity in their meal’s scope constantly increases the client base.
Threats:
• Judicial threats comprising lawsuits challenging the restaurant against their promotions, meals, obesity caused by their food, fries, employment etc.
• Campaigns tarnishing the company’s reputation by private organizations such as Mc Spotlight proving to be highly risky towards the company’s marketing technique.
• The company faces problems with inconsistent running and net returns that absolutely influence investor engagements. The table below presents a practical example.
• Resistance or hostility from parent cliques for enticing the children by giving them toys and presents and therefore luring them to the unhealthy fast food tradition at a very tender age.
• Stiff Competition from equally established food chains like Burger King, KFC and mid-range domestic restaurants that offer the same foodstuffs at an n even lower price than McDonald’s.
Financial Analysis
In the year 2013 the revenues of the corporation were found to be $28.11 billion. In the year 2014, the net sales or the revenues showed a significant decline to $27.44 billion. From the table below, it is imperative to ascertain that the total revenues of the company were found to be $25.41 billion. The decline in the revenues was also observed in the year 2016 where the revenues of the company were estimated to be $24.62 billion. From the analysis of the information presented in the table below, it is imperative to ascertain that Macdonald Company has been experiencing a decline in terms of revenues from the year 2013 to the year 2016.
Fiscal year is Jan – Dec. 2016 2015 2014 2013 2012
McDonalds Revenues or Net Sales 24.62B 25.41B 27.44B 28.11B 27.57B
Cost Of Goods Sold (COGS) 14.42B 15.62B 16.99B 17.2B 16.75B
McDonalds Gr6oss Profit 10.2B 9.79B 10.46B 10.9B 10.82B
Research & Development Expense – – – – –
Selling General & Admin Expense 2.46B 2.64B 2.51B 2.14B 2.21B
Income Before Depreciation Depletion Amortization 7.74B 7.15B 7.95B 8.76B 8.6B
Depreciation Depletion Amortization – – – – –
Non-Operating Income 6.3M 48.5M -6.7M -37.9M -9M
Interest Expense 884.8M 638.3M 570.5M 521.9M 516.6M
McDonalds Pretax Income 6.87B 6.56B 7.37B 8.2B 8.08B
Provision for Income Taxes 2.18B 2.03B 2.61B 2.62B 2.61B
Minority Interest – – – – –
Investment Gains Losses – – – – –
Other Income – – – – –
Income Before Extra ordinaries & Disc Operations 4.69B 4.53B 4.76B 5.59B 5.46B
Extraordinary Items & Discontinued Operations – – – – –
McDonalds Profit/ Loss (Net Income) 4.69B 4.53B 4.76B 5.59B 5.46B
Average Shares used to compute Diluted EPS 861.2M 944.6M 986.3M 1.01B 1.02B
Average Shares used to compute Basic EPS 861.2M 944.6M 986.3M 1.01B 1.02B
Income Before Nonrecurring Items 4.91B 4.7B 5.29B 5.59B 5.46B
Income from Nonrecurring Items -222.3M -170.03M -532.6M – –
McDonalds Earnings Per Share Basic Net 5.44 4.80 4.82 5.55 5.36
McDonalds Earnings Per Share Diluted Net 5.44 4.80 4.82 5.55 5.36
EPS Diluted Before Nonrecurring Items 5.70 4.98 5.36 5.55 5.36
Preferred Dividends – – – – –
Dividends Common – – – – –
Dividend Per Share Common 3.61 3.44 3.28 3.12 2.87

Table 2. McDonald’s 6 Year Percentage Growth

As shown above, the company has been experiencing both a decline in growth at some points while demonstrating a growth increase at some points. For instance, in the financial year 2017, the growth rate of the corporation was found to be 14.47%.It is anticipated that in the financial year ending 2018, the growth rate of the corporation will be 6.65%.This postulation gives an implication that there are indicators that have already indicated a decline. Despite the decline the corporation has made significant efforts in enhancing its customer services and attracting more customers to its organization. This is especially true in markets such as China which is highly dominated by the company’s competitor KFC. The company has been investing heavily on improving customer experience as well as developing new products that directly meets the preference of its customers. The company has also been spending a lot on advertisements to raise awareness among customers about its products. The advertising needs of the company comes in the form of sponsorships, TV ads, online and print media. As of 2012, majority of the company’s total revenues comes from Europe followed by US and the Asia-Pacific and Middle East Region. European operations of the company also generate the highest Company generated and Franchised Revenues for the company. Despite this, the company is looking optimistic at tapping the potentials of the Chinese Market especially because of the increasing proportion of middle income-class in China. The company is also looking at increasing its overseas presence other than China in order to spur revenue growth.
Factors that Influences Customer Buying Behavior for McDonald’s

After discussing the marketing strategies of the company, its strengths and weaknesses, the opportunities and threats being faced by the company and its financial performance, we will be discussing some of the factors affecting customer buying behavior among McDonalds customers.

As we have already known, customer behavior about a product is largely dependent on brand recognition. Customers’ needs to be aware of the product and how different it is from the competition so that their behavior will lean towards buying the product of the company instead of the product of its competitors. Generally, brand recognition is created through advertisement and without a doubt McDonald’s has been investing heavily on this aspect. This kind of strategy is boosted by the company through exceptional sales and promotional activities that would ensure that customers would keep coming back.

As mentioned earlier, McDonald’s has been investing heavily on Advertisement and the company makes sure that its ads directly connects to the target audience. The company makes sure that its ads creates a link to the realism of customer buying behavior. As placed by the CMO of McDonald’s UK, the company’s ads should click with customer emotions to improve positive perception about the company. The purpose of the company’s ad is to first and foremost make the customer feel positive towards its products and at the same time boost the image of the company.

McDonald’s also ensure that customer service is at the forefront of its operation. It does this by ensuring the quality and safety of its products and store premises. The company has also been addressing the needs and what the customer wants. It has been actively listening to the clamor of its customers. For example, the company launched products such chicken burgers that directly competes with KFC because this is what Chinese customer wants. The company also launched healthy products such as organic milk, salads and burgers that have vegetable patties instead of beef or chicken. These products were launched to appease customers who are health conscious and this strategy boosted the image of the company as being customer centric.

Another factor that boosted the success of the company and somehow affected customer behavior is the fact that a large portion of the population in some countries have little time placed on food preparation and would rather order food that they can immediately consume as they go with their work or studies. This kind of behavior help develop and expand the fast food industry. Some of these customers have also diverse cultures and for this reason McDonald’s needs to create different cultural promotional menu especially in countries that have diverse ethnicities like in the US, Malaysia, Singapore and even in some parts of Europe (Iacobucci 2013).
The Purchasing Power of Customers at McDonald’s

Purchasing power of clients at McDonald’s depend on various important aspects as discussed below:
1. Personal preferences.

McDonald’s corporation often creates its product overtures depending on the dynamic requirements as well as priorities of its clients. Further, vehement price competition raises its encouragement to differentiate McDonalds from its competitors in the same industry. Economists argue that embracing a differentiation policy may assist an organization command price contention to some level (McDonald’s, 2013). The organization apprehends that the most consistent way to affect or sway customer character is by giving products and services, which anchor well with the likes, priorities, as well as aversions of the consumers in the market fragment. For instance, different communities and cultures like and believe in different types of food. This is a significant factor of tradition. Since globalization has made it possible for McDonald’s to expand into multinational market fragments, the organization encounters the cultural changes of the consumers to give foodstuffs that anchor well with the tradition and societal norms of the consumers.
Apparently, individual priorities go hand in hand with societal beliefs of individuals. Consequently, the organization’s meals and foodstuffs served or available in its restaurants are founded on the priorities of the consumers (Han, 2008). Further, according to Han, more often, McDonald’s restaurants do not prepare ready-made meals due to dynamics in culture. The client has to make an order alongside the descriptions on how he or she wants his or her meal prepared and served. Particularly for the contemporary matter, that is, Hamburger illness as well as various diseases instigated from McDonald’s ought to be controlled and deliberated for the influence on the consumer characters, as it requires setting amended or improved marketing policies to reduce such issues.

How McDonald’s responded to the Personal preference aspect of its customers

The McDonald’s trading framework is founded on a geographic framework. For instance, whenever you visit their website, you will be required to select the country you are in or the country you intend to gather information from about its operations. In reality, McDonald’s Corporation has segmented its operations into five geographic segments. Approximately 65 percent (65%) of the organizations restaurants equivalent to about 75 percent (75%) of the organization’s income are procreated in the United States of America and Europe. Therefore, for McDonald’s the most significant tactical approach for it to sustain its dominance in the fast food industry is to maintain their main markets while developing or growing their services into other upcoming and potential markets (Han, 2008). Although, according to Han, distinct customer cliques in different nations might have completely distinct pre-requisites. Consequently, McDonald’s keep introducing contemporary products for their local customers. For explicit illustration of above strategy, this paper explores McDonald’s in France, China and Korea as the case studies.

McDonald’s in France

Customers in France have been so disgruntled of the organization’s penetration. McDonald’s has enhanced its sales by revamping and refashioning its restaurants in order to attract more clients as well as try to adapt to the personal preferences of French. For instance, the company has revamped its restaurants with hardwood floors, wood-beam ceilings, comfortable armchairs as well as launching new menu items like espresso, brioche, and better affluent sandwiches. In reality, according to Han (2008), McDonald’s restaurants have triumphantly responded to the priorities of the local region. The condition or circumstance is the same all over the world. For instance, in Canada, the company has launched contemporary Canadian breakfast attributed to the Canadian culture and presumed to be greatly liked by the people of Canada. Further, in Belgium, the company has launched the McChicken Premiere that is highly appreciated by the Belgians. However, McDonald’s has been referred to as the absolute example of readjustment for the global market.

McDonald’s in China

The company first started its operation in Shenzhen in the year 1990. This was after conducting an extensive five-year research on the financial status of the locales, the type of meals they love most as well as the kind of environment they enjoy eating in. Further, their remodeling of the selling point, seats, as well as desks indicated the organization’s consideration of the body figure and structure of the locales. The company worked so hard to advertise their indigenous burgers and was determined to replicate what they had done in other parts of the world. Regrettably, they have not yet achieved great success compared to their main competitor in China today, KFC. This can be attributed to the fact that most Chinese have much preference toward chicken burgers as compared to beef burgers that are the major product for McDonald’s (See Appendix C). With the discovery of this challenge, McDonald’s has changed tact and is trying to launch better Chinese food products by including chicken in their subsequent menus to attract more customers (Han 2008).

McDonald’s Reputation and Marketing in Korea

It is imperative to study the performance of the corporation in North Korea to ascertain the perceptions of the company and performance in other countries. Having discussed the operations of the corporation in both China and France, it is also important to study the operations of the firm in Korea to depict a comparative analysis of the company’s operations in the three countries. Such a study will help in understanding the areas in which the corporation should improve to enhance its operations internationally. The study will also shed light on how the corporation should structure itself to achieve maximum comparative advantages. In the recent McDonalds has witnessed bad company reputation in the Korean market. It was reported that customers had complained of food poisoning in the McDonalds. Food poisoning is a serious issue that has many hotels and restaurant completely shut down (Du &Lee, 2017) In the Korean market, the McDonalds has witnessed instances of serious hygiene issues and disease associated with hamburgers. This predicament emanates from the suppliers. Ostensibly, there is a need to advance the forms of scrutinizing the supplies. For instance, fish is highly prone to bacteria that is easily passed to human belongs immediately after consumption. Many customers will not however, understand that issues of food poisoning originate from the suppliers, as they will always blame the company. The aspects of this incidents can be summarized by the statement that came after public outcry over several incidents at McDonald’s Korea. The mass media released negative articles and comments on the incidents when the McDonalds has been sued by a mother who believes her four-year-old daughter contracted hemolytic uremic syndrome (HUS), an acute liver disorder, after consuming an undercooked Happy Meal patty. Publicity of the case has led to HUS being widely referred to as the “hamburger disease” among consumers in Korea. After the shock the company has since pulled the product from its stores, though there has not been any official authorization of association. According to the official statement, McDonald’s efforts to relieving the customers’ seriously negative reaction was taken by conducting a third-party audit of its restaurants and implementing a food safety hotline as well as twice-yearly food safety training for all employees. They try reveal the transparent process of production by inviting the consumers to McDonald’s kitchens to see production procedures firsthand and will have access to information on McDonald’s farm-to-restaurant processes online. Although McDonalds took several actions to minimize the negative media and customers’ action, the statement was criticized by some consumers, with online commenters calling it belated. One of the customers comments on the statement that “McDonald’s is just putting out this statement because people are boycotting their products,”
According to Waston. (2006), McDonald’s present efforts in their endeavor to represent their products originally American and thus distinct from the other hamburgers offered at the domestic restaurants is among its efforts to redeem itself as an outstanding brand. Further, in a technique hatched to penetrate the Korean market even more and at the same time build more confidence in McDonald’s, the company has left the business to be conducted entirely by the Korean citizens. Further, it takes good care of their employees to give then always positive feelings towards their jobs and the organization at large. Watson further indicates that, McDonald’ s engages in supporting the Korean society by donating finances to the domestic charitable organizations and at the same time invests a bigger percentage of its returns in Korea. By representing itself as the company that sells and offers the original American Hamburger, McDonald has differentiated itself from the local restaurants and the citizens are believing so. This strategy has forced the rival restaurants like Lotteria to change their marketing techniques.

Concentration on Children

Among McDonald’s biggest consumers are kids. Regardless of how distinct the flavor as well as domestic preferences are, the company has put substantial focus to the kids in all the countries where it is operating. The organization has mastered the art of building a happy land perception for the kid through giving them pleasant foods packed with toys that are themed from famous cartoon movies. Additionally, the company has introduced computers with games that are intended to excite and motivate kid’s imagination as well as model their private behavior. According to Han (2008), there exist three major considerations or motives why McDonald’s has put more focus on children at McDonald’s and these are the following:

i. Kids are one of the largest, if not the largest, customer cliques to the company. Actually, McDonald’s has been considered as their treasured place to visit. This is because kid’s have identified with the company’s trademark tradition of “happiness.”
ii. The company believes that concentrating on the kids may build consistent enterprise and may give the best reason to motivate the entire family to visit McDonald’s.
iii. By creating a trademark loyalty with the kids, the company has better chances of being success in the present and in the future when the kids also grow.
2. Consumer financial stability

According to Rodrigo (2016), Price is a very significant aspect in the marketing strategy of McDonald’s and plays a key role in the purchasing power of its customers. The customer’s financial stability and where they make their purchases are directly related to the pricing strategy adopted by the company. The customer purchasing power refers to the amount a customer needs to pay in order to receive or get access to the company’s products and service. McDonald’s Corporation has mastered this art well and has always endeavored itself to giving out or making available high-quality foodstuffs at a very affordable price (Rodrigo, 2016). Consequently, the organization has established a pricing framework to support this goal. For instance, the dollar menu is regarded as one of the best price policies ever employed by the company.
Analysis of MacDonald’s risk control

Diagram1 – McDonalds Risk Management Competitiveness

Diagram2 – McDonalds Risk Factors
Negative buyer power control to manage “Reputation risk”
As you can see in the Diagram -1 the company is comparably strong on its buyer’s purchasing power. As it embeds the most expansive geographic competitive factors with world-wide branches, they can implement the extensive marketing strategies to cope with the customer behaviors with its accumulated data and risk control system. There have been a lot of internal and external studies and some criticism surrounding McDonalds, on a broad range of topics such as food quality and treatment of employees. However, these contribute to changes in consumer perception of McDonalds and the food it serves. The most powerful brand power and its historical backgrounds will enhance its marketing tools where the consumers have very positive brand image based on their experiences. In this dissertation the ‘burger shock’ in the Korean market will certainly effect on the reputation negatively for a while However, the company also can handle the negative factors with its healthier food line-ups and its efforts on the food market throughout the history. Actually, a lot of customers still think the company is not having incentives on producing the hidden stale food as the company is transparent in the production lines world-wide. Introducing a healthier menu and changing the image from a junk food restaurant to a healthy food restaurant poses a huge risk due to customer’s set perception about McDonalds. Many data show that huge investment on the marketing and production line budget is already committed to the healthier items.
The company’s efforts on the controlling the risks in Korea will include “the clear disclosure on transparent production process” so that the customers will not criticize the brand’s philosophy and the brand itself rather consumers negative buyers power will not be delivering ‘severe damage on the brand image’. As we can see in the other countries’ case the hygiene issues and potential health risks will not make long-term severe risks on the McDonald sales growth.

Recommendations

There is no doubt that McDonald’s still dominates the fast food industry around the world (Appendix C). Its distance from the second fast food chain is very significant. However, in some key areas like China, there are more KFC than McDonald’s because of the apparent preference of Chinese to chicken over beef burgers. This is something that the company needs to consider in the product mix that it would be launching. On top of this, the company needs to always cater to what customer prefer by looking at the culture and norms of the country where it operates. It needs to diversify its operation in countries which have a very different culture from the American culture that the company embodies in its operation. We have also seen that the company is facing a lot of pressure from the gaining popularity of the idea of healthy food. This can be a problem given that the products of the company is generally not considered to be healthy given that most of its foods are either salty, sweet and high in cholesterol. This is something that the company needs to address especially that there are campaigns around the world to reduce consumption on fast foods which have been linked to diseases such as diabetes, stroke and obesity. Furthermore, the company needs also to address the environmental concerns of its operation. Given the size of its operation it has an indirect effect on the environment especially because some of its packaging are considered not to be environmentally friendly by some concern environmentalists.
McDonald’s ongoing risks and negatives factors should be treated seriously and simultaneously in the head management level as the food industry embeds the sensitivity and weakness against the buyers’ purchasing power. As the customers are willing to and ready to switch their products based on the reputation and media reaction the company should put more efforts on the marketing tools to manage those risks including the causes of disease. The case in Korea will be the valuation lesson on the company as the brand image cannot be sustainable if the management is not aggressively controlling those risky factors.

Nonetheless, given the size and experience of the company in the industry, there is no doubt however that it can hurdle all of these challengers. It just need to refocus its operation by considering those problems that are said to be urgent because they strike at the very heart of the company’s operation. These problems if left unaddressed will in one way or another affect customer preference in the company’s products.
Conclusion

Despite being at the top for so many years already, McDonald’s is facing a lot of pressures from competitors and from the changing behavior of its customers. The marketing efforts of the company must be leaned towards addressing the issues that we have cited above. The company needs to remain focus and do what it does best. However, it also needs to make some changes with its operation to adjust with the ever-changing customer behavior.

References

Du, L., & Lee, M. J. (2017, September 04). McDonald’s Cooperates in Food Probe as Korea Halts Bulgogi Burger Sales. Retrieved October 25, 2017, from https://www.bloomberg.com/news/articles/2017-09-04/mcdonald-s-cooperating-with-korea-as-bulgogi-burger-sales-halted
Han, J. (2008). The Business Strategy of Mcdonald’s. International Journal of Business and Management, 3, 11th ser., 72-74. http://dx.doi.org/10.5539/ijbm.v3n11p72
Rodrigo. (2012, July 04). Strategic Analysis (SWOT, PESTEL, Five Forces) of McDonalds – The WritePass Journal. Retrieved October 25, 2017, from https://writepass.com/journal/2012/12/the-term-restaurant-is-an-establishment-where-food-is-prepared-and-served-to-the-people-and-alwaysalmost-refers-to-any-sort-of-dine-in/
Rodrigo. (2016, October 13). Analysis of McDonald’s Corporation – The WritePass Journal. Retrieved October 25, 2017, from https://writepass.com/journal/2016/10/analysis-of-mcdonalds-corporation/
Bak, S. (n.d.). McDonald’s in Seoul: Food Choices, Identity, and Nationalism. In Golden Arches East: McDonald’s in East Asia, Second Edition (2nd ed., pp. 137-155). California: Stanford University Press.
Iacobucci, D (2013). Marketing management student edition, 4th edn, Cengage Learning, South-Western, USA

Appendices

A. New McDonalds’s Strategy

B: Revenue, Profits – MCD Annual Income Statement

Fiscal year is Jan – Dec. 2016 2015 2014 2013 2012
McDonalds Revenues or Net Sales 24.62B 25.41B 27.44B 28.11B 27.57B
Cost Of Goods Sold (COGS) 14.42B 15.62B 16.99B 17.2B 16.75B
McDonalds Gross Profit 10.2B 9.79B 10.46B 10.9B 10.82B
Research & Development Expense – – – – –
Selling General & Admin Expense 2.46B 2.64B 2.51B 2.14B 2.21B
Income Before Depreciation Depletion Amortization 7.74B 7.15B 7.95B 8.76B 8.6B
Depreciation Depletion Amortization – – – – –
Non Operating Income 6.3M 48.5M -6.7M -37.9M -9M
Interest Expense 884.8M 638.3M 570.5M 521.9M 516.6M
McDonalds Pretax Income 6.87B 6.56B 7.37B 8.2B 8.08B
Provision for Income Taxes 2.18B 2.03B 2.61B 2.62B 2.61B
Minority Interest – – – – –
Investment Gains Losses – – – – –
Other Income – – – – –
Income Before Extraordinaries & Disc Operations 4.69B 4.53B 4.76B 5.59B 5.46B
Extraordinary Items & Discontinued Operations – – – – –
McDonalds Profit/ Loss (Net Income) 4.69B 4.53B 4.76B 5.59B 5.46B
Average Shares used to compute Diluted EPS 861.2M 944.6M 986.3M 1.01B 1.02B
Average Shares used to compute Basic EPS 861.2M 944.6M 986.3M 1.01B 1.02B
Income Before Nonrecurring Items 4.91B 4.7B 5.29B 5.59B 5.46B
Income from Nonrecurring Items -222.3M -170.03M -532.6M – –
McDonalds Earnings Per Share Basic Net 5.44 4.80 4.82 5.55 5.36
McDonalds Earnings Per Share Diluted Net 5.44 4.80 4.82 5.55 5.36
EPS Diluted Before Nonrecurring Items 5.70 4.98 5.36 5.55 5.36
Preferred Dividends Acc Pd – – – – –
Dividends Common – – – – –
Dividend Per Share Common 3.61 3.44 3.28 3.12 2.87

C;

D:

E:The Growth Rate of the company