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Value Proposition for McDonald’s Product Development


Task: You are required to write a 2000-word report for a novel business proposal you have developed. The business proposal must build upon your novel value proposition developed in assessment 1 for the existing business or organisation selected in assessment 1. You must use appropriate headings to structure the body of the report.
Your report must demonstrate:
1. Logical and persuasive articulation of: business model description; value proposition development; business operations development; supply chain development; competitive advantage; financial value capture and strategic fit (this includes elements 5 to 10 in the disciplined entrepreneurship canvas and elements 3 to 9 in the business model canvas). 40%
2. Logical and persuasive argumentation in regard to how assumptions and uncertainties related to: customer desirability; technical feasibility; and financial viability have been addressed to date and how they will be addressed in the future as described in a phased development plan. 16%
3. Logical and persuasive argumentation for the selection of the innovation tools and techniques used to support the report findings and recommendations. These must be beyond the tools and techniques used in assessment 1. Minimum five (5) additional tools and techniques must be selected from the provided list of tools and techniques. 6%
4. Logical and persuasive application of the selected innovation tools and techniques used to support the report findings and recommendations. These must be different to the tools and techniques used in assessment 1. Minimum five (5) additional tools and techniques must be applied from the provided list of tools and techniques. 8%
5. Candid and critical self-reflection about assessment 2 tasks including: a reflection on the development of personal innovation capabilities and practices; identification of own personal strengths and weaknesses; supported with suggestions for self-improvement. 10%
6. Clear flow of thought throughout the report with: a convincing executive summary; clear and succinct purpose described in the introduction; relevant structure and content within the body of the report; and a clear and succinct conclusion. 6%
7. Critical review skills and integration of relevant academic and professional literature. A minimum of ten (10) academic and professional references must be used. 4%
8. Appropriate in-text referencing and reference list. Adherence to CQUniversity APA reference style. 4%
9. Clarity of expression, grammar and spelling. Appropriate report format with good use of bullet points, illustrations and figures. Within ±10% of the word limit for report, excluding references and appendices: 2000 words. 6%


Executive Summary
Based on the current concern of developing profitability and new product development, this study has created a value proposition analysis on McDonald’s product development and initiative of promoting well-being alongside health via smart connected products. This study has been divided into identifying, the potentiality of the organization to achieve a competitive advantage, value proposition study, business model and entrepreneurship canvas to in-depth organizational effectiveness review. On the other hand, this study has concentrated on the supply chain, business operation aspect and financial value analysis based on the new product innovation idea. Emphasis has been given to uncertainties and proposed ways of mitigation also in this study.

1 .Introduction
This study will focus on McDonald’s product development and marketing in the Australian market. As part of the novel value proposition, the initiative of promoting well-being alongside health via smart connected products has been selected. This study will be divided into several parts, which will be effective in understanding how the value proposition by the selected company could be done. The first part of this study will investigate information about business model, value proposition operations development criteria and supply chain initiatives. On the other hand, this study on McDonald’s product development will concentrate on financial value, strategic fit in the market, competitive advantages and related business expansion risks for McDonald’s. With the help of tools and techniques, this study will investigate business innovation, critical and self-reflection and recommendations at the end.

Targeted problem and opportunity
It has been currently seen that this company is facing problems in sustaining its profits with the burger chain and menus, they are providing in different countries and markets. It has been reported that though the UK and France have seen an increase in profits, the profit margin in the USA remains batting average (, 2020). On the other hand, another targeted problem identified is development in the existing menu. Healthy eating habits are becoming one of the priorities of consumers around the world and in Australia. Thus, through this new product marketing, McDonald’s product development would be able to increased profit margins and competitive value opportunity in this market will also go up. The key insight in the targeted problem and opportunity is to provide maximum value of money to the consumers and developing the brand value as well.

2.Business model description for McDonald’s product development

Key Partners
Local spice producers, suppliers and consumers.

Key Activities
Selling foods to the target consumers and take away services.

Value Proposition
Quality and healthy fast food to the consumers

Customer Relationships
Online, social media, email communication

Customer Segments
Young working people and kids.

Key Resources
Human resources

Food materials

Financial resources

Company outlets

Cost Structure
Product making cost, salary, marketing cost.

Revenue Streams
Profit gain through sales

Table 1: Business model canvas
(Source: Created by the learner)

The Disciplined Entrepreneurship Canvas for McDonald’s product development
Product: Smart Connected Products Revision:1.0 Date: May 15, 2020

Raison d’Etre
Helping the business grow more sustainable way and earn consumer value.

Competitive advantage
Better quality product, innovation, cost-effectiveness and effective productivity than before

Customer acquisition
Start mapping the suppliers from the local market, testing the product quality and cost, production and direct delivery to the consumers.

Overall economics
Est R&D:$50000

Est G&A: $24000

COCA/ LTV: 20:1/7:1

Design and Build
The product will be produced by chefs and other kitchen staff

Initial market
The consumers are young working people (age-21to30)

Value creation
Get high quality healthy fast food at a convenient price

Product unit economics
For instance,

Price- $15 per month

Short-term LTV: $200

Long term LRV: $275

Short-term COCA: $10

Long-term COCA: $5

Sales channels: Direct sales and online

Email communication

Social media communication

Next market: Emerging markets

Product planning beyond BHM: Marketplace

Follow-on TAM: $ 10 million

Table 2: Disciplined Entrepreneurship Canvas
(Source: Created by the learner)

3. Value proposition for McDonald’s product development

Product detail

The use of smart connected products is an effective way to add variety to the usual foods people eat. The smart connected products will comprise of a spice that works well with chicken as well as the recipe is easy to make. This company has decided to add pineapple or Avocado as the toppings or grill bacon, which are healthy and they will be customizable as per the consumers’ choices.

Benefits to the consumers

The direct benefit to the consumers could be stated as providing healthy fast food options to them. On the other hand, it is stated in the McDonald’s product development plan that customization will be available for them as per the toppings so that people could avoid fruits or items that are allergic for them and enjoy the food (Zondag, Mueller &Ferrin, 2017).

Resources and capabilities need to develop the product

The main resources to me this food will be the availability of ingredients from the local spice makers or farmers. Other raw food materials such as chicken, bread and vegetables for making the food. The capabilities could be divided into two sections; one if human resource and the other is business capabilities to market this healthy fast food. The human resource will need a chef, other kitchen workers, supervisor who will evaluate the quantity and quality of the food items (Zondag, Mueller&Ferrin, 2017). The business capabilities will be an effective marketing strategy and communication with the stakeholders and suppliers in the business.

Table 3: Value creation analysis for the McDonald’s product development
(Source: Created by the learner)

4. Business operations development
The business environment map for McDonald’s product development is listed below;

Key trends

It has been seen that the two most important factors here are technology and rules on healthy food intake and quality measurement of foods. In this regard, McDonald’s product development will be using the takeaway services and focus majorly in online promotions for the consumers (Ajmalet al., 2017). Additionally, food quality and natural food ingredients as per the healthy food production and consumption instructions will also be maintained.

Market forces

Major forces here are the market segments, needs and demand analysis of the consumers. This company has identified the young working people aged from 21 to 30 as their main market segment and demand for healthy yet quick food servings will be maintained for their needs and demands.

Macro-economic forces

As per the commodities and resources segment, this company will be investing in cost-effective food ingredients that will retain food quality (Ajmal et al., 2017).

Industry forces

As the fast-food chain has many potential competitors in the target market, communication with the stakeholders and suppliers will be the main priority here in case of McDonald’s product development.

Table 3: Business environment map for McDonald’s product development
(Source: Created by the learner)

5.Supply chain development

McDonald’s product development

Figure 1: Supply chain capability and channel
(Source: Weiet al., 2019)

As per the above graph presented in this study of McDonald’s product development, it could be said that the new supply-chain development for the product identified will be simple. McDonald’s with directly communicate with the food material suppliers from the local market and logistics will be managed by the supervisor, whose main responsibility will be taking care of the quality and quantity of the food materials (Wei et al., 2019). After that smart connected products will be produced in the outlets of the company. The sales and marketing team will work on corresponding messages regarding new offers, availability of the food item in outlets. After that direct food will be served to the consumers.

6.Financial value capture
The financial value capture will be based on two parameters that are listed below;

Life Time Value (LTV):
The lifetime value of the product obtained through McDonald’s product development plan will be counted as a first purchase, repeat purchasing, how the company channelize their marketing policies to retail their consumer base such as changing in the price or adding variety to the products and calculation of total revenue after a year (Wang, Liu& Miao, 2019). For instance, if the product is priced as $50 then through consumer lifetime renew value could be added as $100 more and the lifetime value will be $150.

McDonald’s product development

Cost of Customer Acquisition (COCA):

McDonald’s product development

Figure 2: Cost of consumer acquisition
(Source: Friar & Mulki, 2019)

7. Competitive advantage
Core capabilities compared to competitors
The core capabilities compared to the market competitors of McDonald’s in this context are providing value for money as the new product will have cost less than the usual burgers. On the other hand, providing healthy fast food is something new in the market against competitors that needs to be considered during McDonald’s product development process. Bringing innovation to the products that this company is specialized for will always stand out against the competitors (Kumar&Pansari, 2016).

What are the unique benefits for customers obtain from the product developed through McDonald’s product development process?
Consumers will be directly benefitted from food quality, healthy food options without compromising their tastes. The customization options wit value for money will also help consumers switch to this product.

8. Strategic fit
The above proposal of bringing healthy food options in the fast-food menu of Macdonald compatible in various respects. First of all, as the problems identified, this proposal focuses mainly on the consumer aspect and how through this company could ensure profitability. The product selected here is effective for the parent company to product and market to the target consumer base. This product has the potentiality to bring and retain the consumer segments as per its food and value for money. Now, if the profitability issues are discussed, then it could be said that with unique marketing and promotional capabilities of the parent company and their exclusive partnership with suppliers’, sales volume could be double. People will trust the brand and product purchase value could be developed. 

9. Identification and assessment of assumptions and uncertainties
The main uncertainties related to this McDonald’s product development plan are listed below;

Technical feasibility

The technical feasibilities issues that this organization could face in due time is a shortage in human resource, materials and suppliers and technological advancement.

Customer desirability

The consumer desirability will depend on the product quality, value for money, product range and availability of alternatives in the market.

Financial viability

Financial validity of the company will depend on how well this company is managing its resources. The resource will include both people, product, capital and information factors (Linder &Williander, 2017).

Table 4: Business assumptions and uncertainties
(Source: Created by the learner)

10.Phased development plan to address uncertainties

Technical feasibility

For the technical feasibility could be mitigated with effective HR policies in the company, for instance, providing training to the employees, providing rewards and work-life balance. On the other hand, for technological development, this company in due time could develop online food ordering and make your burger options (Linder &Williander, 2017). Analysis and local supplier management should be done.

Customer desirability

For consumers apart from customizability option, the company should provide information on how this food is unique and the online ordering will help also.

Financial viability

Managing people, production, capital investment through robust financial strategy will help in decline this type of uncertainties in the business.

Table 5: Mitigation of assumptions and uncertainties
(Source: Created by the learner)

11. Selection of innovation tools and techniques
Selection of innovation tools and techniques has been done through identifying the mission and what are the project deliverables will be. In this regard, it could be said that McDonald has done SWOT analysis and Porters' five forces evaluation for better understanding of organizational capability to launch a new product segment and the macro-environment in which they are going to market this product. On the other hand, the consumer profile has been developed as per the targeted consumer segment. Both of these innovative tools are attached in the Appendix.

SWOT Analysis



· Enhanced quality control alongside health protocols

· Advanced technologies

· Competitive Pricing

· Effective marketing and advertisements

· Supply chain interruptions

· Weak development of products



· Innovation of new food products

· Online delivery application

· The modern age of fast food trends

· Extensive risk of investment

Table 6: SWOT Analysis
(Source: created by the learner)

Porter’s 5 Forces


Reasons for its effects

Buyer’s bargaining power (Strong)

· Low costs of switching

· Immense number of service providers

· Excessive availability of the alternatives/substitutes

Intensity of rivalry amid competitors (Strong)

· Numerous similar companies

· Extreme aggressiveness towards competition

Supplier’s Bargaining Power (Weak)

· Hefty number of suppliers

· Upright incorporation of the suppliers

· Excessive flow of supply

Threat of substitution (Strong)

· Extreme availability of similar providers

· Low costs of switching

· Compelling cost and performance ratio of the substitutes

Threat of new entrants (Low)

· Presence of strong competitors

· High Brand Value in the market

· Potential barriers caused due to high investment

Table 7: Porter’s 5 Forces
(Sources: created by the author)

12. Candid and critical self-analysis
While doing the tasks and investigating the market and business capabilities, I have understood that the food industry around the world and in Australia is competitive and there are other potential competitors exist in this market. Another thing I have understood while doing this project is that switching to healthy food options is becoming popular among young working people due to their busy lifestyle and health concerns. I have also pointed out the fact that Government initiatives in healthy food supply and production are becoming strict in this country; therefore making healthy fact food for consumers would be a great chance for Macdonald to gain competitive advantage.

13. Conclusion and recommendation
From the above analysis and discussion on the new product marketing and launching, it has been understood that McDonald’s product development is capable of capturing interests and attention of the targeted consumer segment through their established brand image and retaining the quality of the food they are going to serve. Additionally, developing and regular communication with the suppliers and stakeholders would be effective for the business and it will help retain the value of money for the business growth. It could be recommended that Online promotions and communication with potential consumers should be developed more so that regular interaction and feedbacks on products could be collected.

Ajmal, M. M., Khan, M., Hussain, M., &Helo, P. T. (2017). McDonald’s product development Conceptualizing Social Sustainability in the Business Operations.

Friar, J. H., & Mulki, J. P. (2019). The company that would not bid: A small business using a high cost of customer acquisition approach. SAGE Publications: SAGE Business Cases Originals.

Kumar, V., &Pansari, A. (2016). Competitive advantage through engagement. Journal of marketing research, 53(4), 497-514.

Linder, M., &Williander, M. (2017). Circular business model innovation: inherent uncertainties. Business strategy and the environment, 26(2), 182-196. (2020). Retrieved 2 April 2020, from

Wang, X., Liu, T., & Miao, J. (2019). A Deep Probabilistic Model for Customer Lifetime Value Prediction. arXiv preprint arXiv:1912.07753.

Wei, S., Ke, W., Liu, H., & Wei, K. K. (2019). Supply chain information integration and firm performance: are explorative and exploitative IT capabilities complementary or substitutive?. Decision Sciences.

Zondag, M. M., Mueller, E. F., &Ferrin, B. G. (2017). The application of value nets in food supply chains: A multiple case study. McDonald’s product development Scandinavian Journal of Management, 33(4), 199-212.

Target customer profile

McDonald’s product development

Market route and consumer focus

McDonald’s product development


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