McDonald's and the McCafe coffee initiative

Natia t.

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McDonald's and the McCafe coffee initiative

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Abstract

McDonald Canada opened in 1976, after decade of operating in Untied States. McDonald Canada was first McDonald restaurant to be opened outside United States. Company's strategy was the same as in every country : be the first runner and leader in market, although food preparation, menu and marketing was standardized, McDonald Canada offered dining expertise close to local theme, things like : cheese , vegetables, pepperoni and deluxe pizza. The company's objective is to continually improve their menu. This will better satisfy their customers and give them more reasons to visit. Many ideas for new items on the menu come from the franchisees responding to customer demand. Consumer tastes change over time and McDonalds has to respond to these changes.

McDonald Canada had 1200 locations throughout the country and 70% of them were owed by franchisees. Company's success was based on three aspects: company, suppliers and the franchisees. It head very close relationship with all its partners, suppliers and franchisees.

Background
1. McDonald's core values
Main issue of the case
PESTEL analysis
1. Political factors
2. Economical factors
3. Social factors
4. Technological factors
5. Environment factors
6. Legal factors
Five forces model
1. Rivalry
2. Threat of new entrants
3. Suppliers' power
4. Buyers' power
Threat of substitute
The key success factors
SWOT analysis
Diversification
BCG matrix
Financial analyses
Recommendations
Appendix
Bibliography

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[...] Also in case McCafe was presented as an independent restaurant it would not guarantee the success for the company, because coffee industry is already saturated and huge coffee company's like Tim Hortons, Second cup and others already operate in most profitable regions like : Columbia, Quebec and Ontario, and without McDonald's brand name support it would be hard for McCafe to enter the industry and attract clients. In our opinion company is increasing in horizontal scope by moving from fast food segment into coffee one. [...]

[...] SWOT Analyses: Strength: Weaknesses: One of the world's best known brand Unhealthy food image names Ignoring breakfast from the menu Large market share Low customer loyalty Affective corporate strategy Huge amount of franchisees Strong chain of suppliers and partners Specialized training for managers Hamburger university Opportunities: Threats: Diversification - Entering coffee Increased competition market Threat of Substitutes Increasing Sales Legal actions related to health Increasing market share issues Introducing more health food Global recession and fluctuating in foreign currencies Strength: One of the world's best known brand names By the time of 2001 company already operates in more than 100 countries in the world, so McDonalds has established strong global presence during this time. [...]

[...] McCafé's main objective was to eliminate coffee as a barrier to sales growth, but the main question was the fact: was McCafe a short-term solution or could it eliminate barrier and give company ability to improve its sales in breakfast and snack market. (See Exhibition 1 and 2 ) PESTEL analysis: Political factors - Canada has a parliamentary democracy. Head of the state is Queen Elizabeth II, which has its representative called Governor General. Head of the government is Prime minister. [...]

[...] The majority of population is British, French and German. McDonald's should take into consideration all this aspects (cultural differences) while introducing products to customers. ( See exhibitions 3 and Technological factors- according to the fact that restaurant industry in Canada is rapidly developing, new technologies and gadgets are always welcomed. Food made with the help of machines is considered more hygienic. Environment factors- according to the fact that Canada is well known for its nature there are strict environment protection regulations. [...]

[...] Threat of new entrants: Threat of new entrants is quite low in this industry, although there are no legal barriers which would keep them from entering the industry and franchisees, that give them ability to avoid huge capital expenditure in building local stores, market is saturated with globally known companies, which have strong brand recognition. So in order to enjoy success in the industry, new entrants must spend a large amount of capital on advertising and promotion of their brand. [...]

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