mcdonalds: entreprenuership and franchising
DESCRIPTION
Presentation made for Marketing management case presentation to Mr. Najeeb AgrawallaTRANSCRIPT
entrepreneur
ship
and
franchising
presentersSyed Wasiq Hassan
Ghufran Waseem
Salman Zia
Summaya Mehar Iqbal
Madiha Shahid
Saad Ullah Khan
Arsalan Ullah Qureshi
1940
19’61
Ray Kroc, a multimixer
salesman becomes the
franchising agent
McDonald brothers open the first McDonald’s
and names Speedee as their company image
Ray Kroc buys out the McDonalds
brothers for $2.7 million
creation of ‘McDonald’s Center of
Training Excellence’
“Hamburger University”
1954
Big Mac invented
opens in Canada and Puerto Rico
1965McDonalds goes public
first TV Ad airs
1967
‘71
Egg
McMuffin
invented
‘79
Happy
Meals
introduced
more than 34,000 restaurants worldwide
1.8 million employees
119 countries
81% of restaurants are franchised
global overview of McDonalds
69 million people served daily
Revenues by company operated restaurants
$18.29 billion (2011)
Franchised sales
$67.65 billion (2011)
Margin of company operated restaurants = $0.83 billion
Margin of franchised restaurants = $1.9 billion
2012 2007
Company operated restaurants 6,598 6,906
Franchised restaurants 27,882 24,471
% of franchised Restaurants 81% 78%
McDonaldspresence in Pakistan
Pakistani Parallel
UFONE – Tum He To Ho!!!
started it’s operation in January 2001
Ufone became the part of Etisalat in 2006
second largest cellular company in
Pakistan
franchises = 359
service centers = 17
one stop shops = 09
PTCL PTML UFONESubsidiary Brand
Pakistani parallel (contd.)
• Both McDonald's and Ufone are the example of Brand franchising
• Both mainly depend upon there franchising instead of company owned outlets.
• Both serve the customer directly. B to C
• Mainly franchises exist in the developed areas and both have opportunity in rural part
• Both companies have used extensive marketing as there main tool for growth maximization
Q1What do you understand by the
term economies of scale?
How will economies of scale affect
McDonald’s?
economics anyone?
economies
of
scalethe advantages that
result from being large
which lead to reductions
in average costs
Long run
average cost
uniform menu offerings can be
mass produced, lowering
production costs;
the company's bargaining power
with its suppliers lowers its input
costs and boosts margins;
the company's large advertising
budget gives McDonald's a
significant competitive advantage
over its competitors.
uniform menu offerings can be
mass produced, lowering
production costs;
the company's bargaining power
with its suppliers lowers its input
costs and boosts margins;
the company's large advertising
budget gives McDonald's a
significant competitive advantage
over its competitors.
uniform menu offerings can be
mass produced, lowering
production costs;
the company's bargaining power
with its suppliers lowers its input
costs and boosts margins;
the company's large advertising
budget gives McDonald's a
significant competitive advantage
over its competitors
franchisee perspective
due to division of labor efficiency
will improve
same operations for the large
volume will lower the per unit cost
of output
how will economies
of scale affect
McDonalds? (contd.)
franchisor perspective
the more restaurants are there, the
lower the cost of production and
hence the more profit margins will
be there.
Q2You have been hired as advisor on the
Pakistani market by McDonald’s. Based
on your observations of the Pakistani market,
prepare three instructions you
would issue to the franchisee on behalf of
McDonalds, and explain why you think they are
important.
Lets eat out! Look for the Golden Arches! The closest thing to
home McDonald's is your kind of place You deserve a break today
Enjoy the best food at McDonald's We do it all for you You,
you're the one Nobody can do it like McDonald's can You deserve
a break today Nobody makes great taste of McDonald‘s It's Mac
Tonight McDonald's is your place to be Good time, great taste
There's nothing quite like a McDonald‘s You Deserve A Break
Today Food, folks and fun McDonald's Today What you want
is what you get Do you believe in magic? Have you had your
break today? My McDonald‘s Did somebody say McDonald's?
We love to see you smile Put A Smile On Smile I'm lovin' it
It's what I eat and what I do It's what I eat and what I
do...I'm lovin' it What we're made of your day like McDonald's
can We cook it all for you at McDonald's McDonald's and you
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
Lets eat out! Look for the Golden Arches! The closest thing to
home McDonald's is your kind of place You deserve a break today
Enjoy the best food at McDonald's We do it all for you You,
you're the one Nobody can do it like McDonald's can You deserve
a break today Nobody makes great taste of McDonald‘s It's Mac
Tonight McDonald's is your place to be Good time, great taste
There's nothing quite like a McDonald‘s You Deserve A Break
Today Food, folks and fun McDonald's Today What you want
is what you get Do you believe in magic? Have you had your
break today? My McDonald‘s Did somebody say McDonald's?
We love to see you smile Put A Smile On Smile I'm lovin' it
It's what I eat and what I do It's what I eat and what I
do...I'm lovin' it What we're made of your day like McDonald's
can We cook it all for you at McDonald's McDonald's and you
+ local elements in products
+ training
+ quality checks
Q3Why do you think that over 70 per
cent of new businesses fail but
90 per cent of franchises succeed?
ARE YOU WATCHING CLOSELY?
franchising
success
new businesses
failure
success
new businesses fail…
start from scratch
incomplete market research
high investment at stake
high managerial skills
high risk involved
Q4Discuss the advantages and
disadvantages of being a
franchisee.
being there own boss
selling the brand
intensive initial training
continuous support
marketing by franchisor itself
managerial talent
get a head start
shared liability
+
legal regulations
investment
profit sharing
you must play by the rules
nothing is ever free
not independent
limited duration for agreement
-
Q5Evaluate why a business might choose
a corporate objective of growth
maximization over profit maximization?