McDonalds Case Study

Table of Contents

Executive Summary ..............................................................i

1.0 Introduction 3

1.1 Business Unit 3

1.2 Modification of Happy Meal 3

2.0 Aim of the project 3

3.0 Key objectives of the project 3

4.0 Feasibility Analysis 4

4.1 Market Analysis 4

4.1.1 Competition 4

4.1.2 Demographic Influences 5

4.1.3 Target Market 6

4.1.4 Past and future Trend 6

4.1.5 Sales and Marketing 7

4.2 Financial projections 8

4.2.1 Financial history 8

4.2.2 Future cost of the Hearty Meal 8

4.2.3 Sales estimation 9

4.3 SWOT Analysis 9

4.4 Culture and Social 10

4.5 Legal & Regulation 10

4.6 Production, Knowledge and Operating Requirements 11

4.6.1 Raw materials 11

4.6.2 Knowledge 11

4.6.3 Operational 12

5.0 Viability & Conclusion 12

6.0 Appendix 3

Appendix I: Competitors of McDonalds 13

Appendix II: Table and Graph 14

Appendix III: Start-up cost 16

Appendix IV: Income estimation 17

Appendix V: Financial Statement of McDonalds (2007-2009) 18

Appendix VI: The Project Team 21

Appendix VII: Annotated Bibliography 23

7.0 Reference List 25

1.0 Introduction

1.1 Business Unit

McDonald's is one of the most successful fast chains the fast food industry since Ray Kroc's took over McDonald's in 1954. It is known that fast food culture has become a way of life or trend both globally and locally. According to Mitchell (2001), "fast food appears to have become a staple of diets in Asia Pacific including Malaysia because of the busy lifestyle and ease of access to a wide variety of fast food restaurants that have proven to be a powerful combination".

1.2 Modification of Happy Meal

From the past, it showed that McDonald's was facing lawsuit threat especially for the Happy Meal (Berr 2010). This is due to the incorrect way of advertising way that McDonald's used to attract kids into buying Happy Meal. Parents think that McDonald's uses toys to attract kids are an unethical way of advertising (Cox 2010). It has directly affected the increased of obesity rate of kids.

To overcome the current negative issue, our group intends to modify the Happy Meal into a healthier product which is Hearty Meal. With the initial funds of 5 millions, it enables us to change the ingredient in Happy Meal by replacing it with ingredients that suitable for children's growth. The modification product with be launched in December 2010.

McDonald's will launch few campaigns regarding to the Hearty Meal which can be enhanced with the organization's CSR. It will be clearly stated in the key objectives of the project below. To be successful in this project, it is important to analyze the feasibility study of the project to understand the viability of the project.

2.0 Aim of the project

Overall, our aim in the modification of the existing products, which is Happy Meal to Hearty Meal, is to create awareness on healthy lifestyle towards younger generation. According to the Nutrition Month Malaysia (2010) "Statistics disclose that children who are from 7-12 age groups have the highest overweight prevalence among children below the age of 18." Thus, the modification is to encourage the younger generation to consume healthier foods as the number of child obesity is increasing rapidly worldwide.

3.0 Key objectives of the project

First of all, a marathon for youths aged 7 to 12 will be organized by the beginning of year 2011 to create awareness on the importance of healthy lifestyle. The main purpose of this activity is to remind and influence the youths to exercise more and get exposed to the outdoor activities besides staying indoor to maintain a healthy lifestyle.

Apart from that, a healthy campaign will be developed in 15 elementary schools around Malaysia by mid of 2011. This is to raise awareness on health-conscious among the generation Z. There will be talks and freebies given to the students as to attract them and to let them sample the new modification of product which is The Hearty Meal. In addition, the results can be used for market testing.

McDonald's Malaysia has also come up with a plan to covers 20% of overall McDonald's sales by the end of 2011. This means that The Hearty Meal will have popular demands between the consumers and will be starting to earn visible profit.

By the end of 2012, The Hearty Meal will be introduced to other countries in S.E.A. region. This would enable more children all over the world to have the opportunity to eat healthily and happily. Besides, children would be exposed to health-conscious eating habits since young who would significantly reduce the percentages of obesity-related diseases in the coming years.

Last but not least, the initiative to launch The Hearty Meal is to reduce the percentage of childhood obesity and there will be a targeted 6% decrease in childhood obesity cases in Malaysia by the end of 2012.

4.0 Feasibility Analysis

4.1 Market Analysis

4.1.1 Competition

As a leading fast food company in Malaysia, it is no surprise that McDonald's has the highest number of sales. However, while introducing Hearty Meal, McDonald's will face intense competitions, such as Subway, KFC and Burger King, which already introduced healthier