McDonald's Supply Chain Management System

Nihad Guluzade                                                                       [pic 1]

Supply Chain Management

Individual assignment

Supply chain of McDonald’s Corporation

Introduction

Headquartered in Oak Brook, Illinoi, McDonald’s is an American fast food restaurant chain. It was founded in 1940 by Richard and Maurice McDonald brothers. In the earliest stage of its existence, McDonald’s was just a barbecue stand and later turned into hamburger stand. In 1955, it was bought by businessman Ray Kroc (McDonald’s, 2017). McDonald’s Corporation is described as “world’s leading global food service retailer with over 36.000 locations in over 100 countries, and serving 68 million customers (around 1% of global population) around the world” (McDonald’s, 2016). McDonald’s corporation is a publicly traded company, currently listed on NYSE, Dow Jones and S&P 500. According to McDonald’s annual report 2016, for the fiscal year company’s revenue was US$ 24.6 billion and income was US$ 7.7 billion. McDonald’s employs around 1.9 million people around the world and is a second largest employer (Ruth Alexander, 2012).

Business Strategy

More than 80 % of company’s restaurants, more precisely 31230 out of 36899 in 2016, are franchised to local business people around the world and rest are company owned and operated (McDonald’s, 2016). According to company’s franchise agreement, apart from down payment which is around 40%, franchisees have to spend some part of initially required capital in designing and renovating the restaurant. Company usually owns the building or lease it for long time, which leads to cost effectiveness, high performance and mutual trust between franchisee and franchisor (McDonald’s, 2016). Company’s main competitive advantage is its cheap prices comparing other fast food chains due to its low cost achieved by its supply chain system.

Analysis of products

McDonald’s Corporation usually offers fixed menu around the world but still there are variations depending on country’s culture and food. Company’s products include hamburgers, different type of chickens, chicken burgers, salads, French fries, soft and hot drinks, desserts .(McDonalds, 2017). Moreover, company sells different type of products on limited time and also sells full or limited breakfast menus depending on country (McDonald’s, 2016). McDonald’s chooses to have menu variations in different countries for several reasons. Company wants to have foods in menu that local people are familiar with and also to respect countries culture they exclude certain foods that is considered taboo (for example, beef in India). Examples of local menu items are McNürnburger in Germany, McShrimp in Russia, Mashed Potato Burger in China, Sausage and Egg Twisty Pasta Breakfast in China (G. Osswald, 2013).