INTRODUCTION

McDonald's Corporation is an American multinational fast food chain, founded in 1940 as

a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They
rechristened their business as a hamburger stand, and later turned the company into a franchise, with
the Golden Arches logo being introduced in 1953 at a location in Phoenix, Arizona. In 1955, Ray Kroc, a
businessman, joined the company as a franchise agent and proceeded to purchase the chain from the
McDonald brothers. McDonald's had its previous headquarters in Oak Brook, Illinois, but moved its global
headquarters to Chicago in June 2018.
McDonald's is the world's largest restaurant chain by revenue, serving over 69 million customers daily
in over 100 countries in more than 40,000 outlets as of 2021. McDonald's is best known for its
hamburgers, cheeseburgers and french fries, although their menu also includes other items like chicken, fish,
fruit, and salads. Their best-selling licensed item are their french fries, followed by the Big Mac. The
McDonald's Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as
sales in company-operated restaurants. According to two reports published in 2018, McDonald's is the
world's second-largest private employer with 1.7 million employees (behind Walmart with 2.3 million
employees). As of 2022, McDonald's has the sixth-highest global brand valuation.
McDonald's has been subject to criticism over the health effects of its products, its treatment of
employees, and other business practices.

McDonald's Corporation

Golden Arches logo used since 2006

Headquarters in Chicago, Illinois

Type Public company

Traded as NYSE: MCD
DJIA component
S&P 100 component
 S&P 500 component
ISIN US5801351017

Industry Fast food restaurants, real estate[1][2]

Founded May 15, 1940; 82 years ago in San

Bernardino, California
Founders Richard McDonald
Maurice McDonald
Ray Kroc
Headquarters Chicago, Illinois
, 
U.S.[3]
Number of  40,031 restaurants (2021)
locations
Area served Worldwide (119+ countries)
Key people Enrique Hernandez Jr. (chairman)[5]
Chris
Kempczinski (president & CEO)
Products Hamburgers
chicken
french fries
soft drinks
soft serves
milkshakes
salads
desserts
hotcake
coffee
breakfast
wraps
Revenue  US$23.223 billion (2021)
Operating  US$10.356 billion (2021)
income
Net income  US$7.545 billion (2021)
Total assets  US$53.854 billion (2021)

Total equity  −US$4.601 billion (2021)

Number of c. 200,000 (2021)[4]
employees
Website mcdonalds.com
corporate.mcdonalds.com
HISTORY
Siblings Richard and Maurice McDonald opened the first McDonald's at 1398 North E Street at West 14th
Street in San Bernardino, California (at 34.1255°N 117.2946°W), on May 15, 1940. The brothers introduced
the "Speedee Service System" in 1948, putting into expanded use the principles of the modern fast-food
restaurant that their predecessor White Castle had put into practice more than two decades earlier. The
original mascot of McDonald's was a chef hat on top of a hamburger who was referred to as "Speedee".In
1962, the Golden Arches replaced Speedee as the universal mascot. The mascot, clown Ronald McDonald,
was introduced in 1965. He appeared in advertising to target their audience of children.

Logo from 1940 until 1948

Logo from 1948 until 1953

Logo from 1953 until 1960

On May 4, 1961, McDonald's first filed for a U.S. trademark on the name "McDonald's" with the description
"Drive-In Restaurant Services", which continues to be renewed. By September 13, McDonald's, under the
guidance of Ray Kroc, filed for a trademark on a new logo—an overlapping, double-arched "M" symbol. But
before the double arches, McDonald's used a single arch for the architecture of their buildings. Although the
"Golden Arches" logo appeared in various forms, the present version was not used until November 18, 1968,
when the company was granted a U.S. trademark.
The present corporation credits its founding to franchised businessman Ray Kroc on April 15, 1955. This
was in fact the ninth opened McDonald's restaurant overall, although this location was destroyed and rebuilt
in 1984. Kroc was recorded as being an aggressive business partner, driving the McDonald brothers out of
the industry.
Kroc and the McDonald brothers fought for control of the business, as documented in Kroc's autobiography.
In 1961, he purchased the McDonald brothers' equity in the company and began the company's worldwide
reach. The sale cost Kroc $2.7 million, a huge sum during that time. The San Bernardino restaurant was
eventually torn down in 1971, and the site was sold to the Juan Pollo chain in 1998. This area serves as
headquarters for the Juan Pollo chain, and a McDonald's and Route 66 museum. With the expansion of
McDonald's into many international markets, the company has become a symbol of globalization and the
spread of the American way of life. Its prominence has made it a frequent topic of public debates
about obesity, corporate ethics, and consumer responsibility.
Application of Balanced Scorecard for Mcdonald’s Corporation
The balanced scorecard developed by Kaplan and Norton (1996) has gained worldwide recognition and has
been institutionalized in many businesses as a well-known approach for managing and measuring performance
(Isomorphism-good practices tend to be copied). Likewise for businesses to be successful in managing performance,
McDonald’s Corporation also uses a balanced scorecard approach to measure performance. The four perspectives
in the balanced scorecard are aligned with McDonald Corporations Vision, Mission, and strategies. The strategies
are transformed into action through the four perspectives of Kaplan and Norton’s Balanced Scorecard. McDonald’s
performance measures are linked with its overall vision.
As the business environment continues to change, the balanced scorecards also must change. Since McDonald’s
vision and strategies are updated, the balanced scorecard measures must also change. The current balanced
scorecard of McDonald’s Corporation is also based on the four perspectives. In terms of the financial perspective,
McDonald’s main stream of revenue comes from a corporate-owned restaurant in locations, franchise royalties or
fees, and rent. With the worldwide sales from both corporate-owned and franchisees, McDonald’s Corporation can
minimize business risk within the various markets and can cope up with increased competition from Wendy’s, KFC,
and Burger King. McDonald’s revenue fluctuates with global economic conditions (McDonald Corporation, 2017).
Some of the ratios may include profit margin, revenue growth, debt to assets ratio, return on assets, interest
coverage, and revenue per employee, and profit per employee. These ratios are compared against the industry
benchmarks.
Furthermore, in terms of customer perspective, McDonald’s customers are looking for quick service with more
em- phasis on quality, freshness, healthy, and sustainable food offerings. Apart from attracting new customers,
McDonald’s is also working hard to retain customers in such a competitive business environment. Market share and
low customer complaints are one of the highest priorities. Customers are more focused on food quality, hygiene,
healthy and are more aware of sustainability issues such as beef sustainable production, environmental damage, and
McDonald’s giving back to the community in terms of corporate social responsibilities.
From the internal business processes perspective, McDonald’s continues to focus on quality improvements, improved
business processes, product consistencies, and innovations, product developments, raw materials or inputs used
from sustainable sources, technological innovations used such as self-service, free Wi-Fi (internet hotspots) and
reimaging and re-branding. These strategies from internal business processes are linked to achieving the customer
perspective and finally the financial perspective.
In addition to the above perspectives, learning and growth play an important role in achieving all the other
perspectives. McDonald’s Corporation focuses on the needs of its employees as top priorities because, without the
employees, McDonald’s will not be able to achieve its objectives. If employees are happy, this will lead to
improved processes and products in terms of quality and service enhancing customer satisfaction leading to more
sales and thus achieving the financial KPIs leading to achieving the overall objectives of the business. Some of the
scorecard measures include employee satisfaction, training, knowledge and skills, employee turnover (low is good
less training cost involved), and employee development and compensation/employee rewards. "McDonald’s has an
actual Hamburger University where it trains restaurant managers on all necessary aspects needed to run an efficient
restaurant operation
McDonald’s shows that it is committed to training its managers to follow its recipe for success in offering Quality,
Service, Cleanliness, and Value" (Andino, 2015).
However, with the current business environment, strategies need to be reformulated for businesses to remain
competitive in the complex business environment. Likewise, balanced scorecard measures need to change. The
current balanced scorecard of McDonald’s may not be applicable in the future since the strategies have to be
changed so do the measures. The measures of performance have to change with new strategies implemented by
McDonald’s. Another aspect of the Balanced Scorecard for McDonald’s is that it cannot be applied in general. The
scorecards need to be suited to individual businesses for effective measurement of business performance. Finally,
the four perspectives developed by Kaplan and Norton cannot be seen as a means to an end (consistent with the
Functionalist perspective). Other perspectives can be developed and added to the balanced scorecard which is not
captured in the McDonald’s balanced scorecard. There might be some other non-financial aspects that may have
been missed out which is critical to the success of the business. Aspects such as adding the sustainability perspective
to McDonald’s balanced scorecard or corporate social responsibility or social obligation (Community) perspectives
or wider stakeholder’s perspective may be equally important apart from maximizing financial or shareholders
wealth.

Current Balanced Scorecard of Mcdonald’s Corporation

Table 1 Financial Perspective

Objectives Performance Measures

Lag Indicators Lead Indicators

Financial Perspectives
Improve Returns to Shareholders Return on Owners Equity Cost per Product
Improve Profitability Product Profitability Profit per Product
Increase in Sales Return on Investment Cost of Inputs
Reduce Costs Economic Value Added Amount of Sales Made
Expand Business Over the World Residual Income Average Price per Product (Food)
(Franchising Business Model) Product Cost Amount of Profit Made
Return on Franchise Number of New Franchises
Return on Corporate Restaurants Amount of Revenue from Franchises
Return on Assets Amount of Investments Made
Franchise Management Sales Mix
Interest Coverage % of Franchise Royalties/Fees
Debt Ratio Rent as a % of Sales
Sales Growth Marketing Mix
Number of Drive-Thru Shops
Profit Margin
% of Revenue Growth
Revenue/Profit per Employee
Sales Growth in %
% of Debt
Table 2 Customer’s Perspective

Objectives Performance Measures

Lag Indicators Lead Indicators

Customer Perspectives
Increase Customer Satisfaction Customer Satisfaction Measure Number of Customer
Complaints Expand the Customer Base Customers Number of New
Customers
Customer Demand Market Share % of Customers Retained
Distribution Channel Offer Innovative Food Varieties Number of McDonald Branches
Customer Perception Customer Focus Areas Avg. Time to serve
customer/Order Customer Loyalty and Attitude Sales Revenue Customer Ratings
(1 to 5 Stars) Customer Affordability Customer Retention Number of
Food Varieties
Product Prices % of Customer known nutrition Informa-
tion
Number of Healthy Choice meals
Avg. Time taken to make
Order/Product Number of Foods
deemed affordable Number of New
Products Introduced Average price per
meal
% of Market Share Attained
Customers Participating in
Promos
% of meals in demand
% of Sales from Meals in Demand
Average Advertisement
expenditure

Table 3 Internal Business Processes

Objectives Lag Indicators Lead Indicators

Internal Business Processes

Improve Reliability of Services Product Development Time taken to develop new
products Improve Productivity Meal price Material Wastage
Maintain/Improve Quality of Time Taken for Food Completion Electricity Cost per Product
Food/Products
Improve Quality of Facilities Labour productivity Number of Orders Completed
Create New Innovative Products Supplier Selection Number of Contracts with reliable
suppliers
Improve the Efficiency of Store Cleanliness/Hygiene % of Fresh and Sustainable Inputs
Produc- tion Processes
Improve Environmental Perfor- Number of environmental-related
mance projects
Lower Food Prices Number of Service/Food/Facilities
Complaints
Franchise Management Number of Franchises Managed
Technological Innovations/Ad- Number of Hotspots/free Wi-Fi
vancement
Table 4 Learning and Growth

Objectives Performance Measures

Lag Indicators Lead Indicators

Learning and Growth

Improve Employee Satisfaction Employee Satisfaction Survey Number of Improvements made to
Employee facilities
Improve Employees Training Programmes % of Employees completing training
Knowledge and Skills programmes
Organizational Learning Employee Qualification/ Experi- Participative Budgeting
ence
Training and Development Innovative Food Concepts under Improvements in Working Condi-
tions
Develop Innovative Food Ideas Development Number of employee suggestions
taken into consideration.
Employee Compensation Number of qualified and experi-
enced Staff
Number of Trained Employees
Staff retention ratio/Employee
Turnover %
Number (%) of Store managers cer-
tified by Hamburger University
Number of hours of staff develop-
ment/training
Number of New Innovative Food
Ideas under Development
% of Pay Increase/Appraisal
% of employees satisfied with the
training given

This Current Balanced Scorecard of McDonald’s Corporation was prepared using the following resource
materials:
 2017 Annual Report of McDonald’s Corporation
 2011 Sustainability Score Card for McDonald’s Corporation
 McDonald’s Corporation Strategic Analysis by Andino (2015)
 Management Accounting by Smith et al. (2015)

Sustainability Issues Relevant to Mcdonald’s Corporation’s Operations

"Sustainability requires organizations to consider the interrelated impacts of their activities on the economy,
the environment and society. Sustainability is based on the concept of sustainable development, which meets the
needs of the present without compromising the ability of future generations to meet their own needs" (Smith et al.,
2015). The concept of sustainability is vital and critical for businesses to consider the impact of their activities on
the environment, economy, and society. This involves generating revenue in ways that cause minimal damage to the
economy, environment, and community in which we live, work, and operate.
Furthermore, this has led businesses to adopt sustainable reporting practices which lead them to practice and prepare
"reports that measure and communicate the economic, environmental and social impacts of organizations activities"
(Smith et al., 2015). Sustainability reports are also known as triple bottom line reports, corporate social
responsibility reports, and social or environmental reports. Most businesses use sustainability frameworks such as
Global Reporting Initiating Frameworks (GRI), The International Integrated Frameworks to monitor and report
sustainability (Smith et al., 2015). There are many benefits of sustainable performance reporting such as improved
reputations, more sales,
reduce risks, innovative products, and greater market share. However, KPMG International, 2013 cited in Smith et
al. (2015) stated that sustainable reports are highly criticized due to firms’ painting a rosy picture by providing
favorable sustainable reports without actual sustainable practice for the betterment. Thus, does not contribute to
sustainable performance unless and until firms are following it and contributing to a sustainable environment,
economy, and community. However, with strict GRI guidelines, firms are not able to easily deceive the
stakeholders.
McDonald’s Corporation sees environmental and societal issues as serious concerns and the company is very
keen and active to promote sustainable development through their various programs and initiatives undertaken at
regional and global levels. The 2017 Annual Report of McDonald’s Corporation stated that "the company
continuously endeavors to improve its social responsibilities and environmental practices to achieve long term
sustainability, which benefits McDonald’s and the communities it serves" (McDonald Corporation, 2017).
The sustainability issues relevant to McDonald’s Corporation are the Environment, Society and Economy. These are
the three key pillars of sustainability. Firstly, in terms of the environment, "the company monitors developments
related to environmental matters the company has already begun to undertake its initiatives relating to the
preservation of the environment, including the implementation of more energy-efficient equipment and management
of energy use and more sustainable sources practices in many of its markets" (McDonald Corporation, 2017).
McDonald’s Corporation is concerned with protecting the environment in terms of air, water, and land pollution as
such introduced the use of recycled papers for food packaging rather than plastic and waste and energy reduction
programs. The paper bags are more user and environment-friendly. In terms of sustainable reporting, McDonald
Corporation has developed corporate social responsibility reports using scorecards and using the Global Initiative
Reporting Framework for its reporting. McDonald’s strives to be an environmentally responsible and community
reputable business. In 2011, McDonald Corporation developed the Global Sustainability Scorecard measuring the
progress and achievements in sustainability. Apart from the environment, McDonald’s has been promoting nutrition
and wellbeing by introducing healthy and quality meals from sustainable inputs. McDonald’s has very strict
requirements for quality food and safety standards. Andino (2015) stated that McDonald’s appreciates the
sustainable business model focussing on energy conservation and waste reduction. McDonald’s continuously
reviews its supply chain practices with more organic and sustainable sources of food (Andino, 2015).
Moreover, when it comes to food sources, McDonald’s ensures that food inputs are from sustainable sources of
supply. McDonald’s has an Animal Welfare program that looks into sustainable beef production, restriction in the use of
antibiotics on animals for meat purposes, proper treatment of animals, and management and care. Other
environmental initiatives undertaken by McDonald’s involve collaborating to protect rainforests; minimizing
environmental impacts of food through environmental scorecards such as sustainable fisheries program, reducing
and managing solid waste through reduce, reuse and recycle, conserving natural resources, encouraging
environmental values and practices, environmental accountability, environmental education programs, awareness
through picture advertisement on the paper package on endangered animals, practising energy efficiency through
green building, energy management and energy-efficient sources and finally sustainable packaging and waste
management (McDonald Corporation, 2006).
The next sustainability issue is the economy. McDonald’s Corporation contributes to the economy of many
nations’ in terms of gross domestic product, economic growth, employment, human and physical capital, economic
development, productivity, and technology keeping in mind future generations and making the world a better place
to live in than to worsen it. In terms of social or community, McDonald’s ensures that its operations have maximum
benefits to the society such as offering quality and healthy food as people are more aware of their health and
environment. Minimizing negative externalities imposed on the society as a result of McDonald’s operations such as
health cost due to their food being unhealthy (mostly fried foods with high sodium or salt content) and
environmental damage through the land, water, and air pollution. However, McDonald’s Corporation continues to
give back to society and its stakeholders in terms of its corporate social responsibility, community sponsorship,
corporate social reporting, employee involvement corporate volunteer programs, and creation of Ronald McDonald
charities in cash or in-kind and. The charity aims to support children in terms of their health and wellbeing. Such
programs lead to an optimistic change in society. Society also looks forward to corporate to give back as a social
obligation. This boosts corporate image, reputation in society boosting profits for the company in the long run. This
is consistent with the Social Contract Theory and Legitimacy Theory in terms of meeting society’s expectations.
Thus, sustainability issues are very much relevant to McDonald’s Corporation’s operations because huge profits
are generated from the sources where sustainable issues are very much common. Since McDonald’s derives huge
financial
 benefits, they need to conserve the environment for future generations. The sources of revenue are derived from the
environment and community. McDonald’s Corporation needs to ensure that they do not exploit the environment and
people to generate surplus value or have a negative effect on society. An idea developed from Marxism - Capitalism
and the labor process. Exploiting and squeezing out the surplus value from labor. Therefore, McDonald’s engages
in sustainable practices such as conserving the environment and energy and corporate social responsibility by giving
back to its people so that they continue to be profitable, dominant, and sustainable in the long run. Otherwise, there
would be serious implications for not engaging in sustainable practices such as loss of sales, profitability, market
share, reputation and the future of McDonald’s could be at stake. Thus, McDonald’s Corporation takes sustainability
issues as a serious business to ensure their long term survival in the global fast-food industry as number one.

Alternative Ways Sustainability Issues Can Be Reflected on Mcdonald’s Corporation Current

Balanced Scorecard

Furthermore, one way in which sustainability issues could be reflected in McDonald’s Corporation’s BSC is
through building sustainability measures into the current BSC. McDonald’s can "integrate relevant lag and
lead economic,environmental, and social measures within existing BSC perspectives, by working from
sustainability strategies and objectives through the normal BSC cause and effect process. Given the wider
range of stakeholders that influence and are influenced by the sustainability approach", customers may be
redefined as a stakeholder or social perspectives (Smith et al., 2015). Fig. gives an example of how
McDonald’s can blend in with the sustainability issues relevant discussed above within the four

perspectives.
Fig. Sustainability Issues Infused Within Four Perspectives. (Source: Smith et al. (2015)
Adapted from Epstein
Moreover, the second way in which sustainability issues could be reflected in McDonald’s
Corporation’s BSC is through adding environmental or social perspective to the BSC. Smith et al. (2015)
stated that apart from infusing sustainability issues into the four perspectives, some businesses may add as
an additional or fifth perspective. A fifth perspective should only be added if sustainability issues such as
environmental and social impacts do not fit within the other four perspectives. Epstein cited in Smith et al.
(2015) stated that adding another perspective may be possible where:
 Sustainability is considered a part of the business’ core strategy and important to creating competitive
advantage.
  This additional perspective is needed to focus managers’ attention on sustainability as a core
corporate value.
 A business has important sustainability issues, for reputation or impact.
• Resources allocated to sustainability are large (as this perspective will emphasize the link between
the use of these resources and strategy)",
It is important that when an additional sustainability perspective is added to the existing four, it links
up with the other perspectives and shows the cause and effect through a strategy map. The economy,
environment, and social impacts are linked to relevant measures in each of the original perspectives
(Smith et al., 2015).
Table 5 Sustainability Perspective

Objectives Performance Measures

Lag Indicators Lead Indicators

Sustainability Perspective
Economy Recycled Papers % of Bio Fuel/diesel
Environment Energy Management % of recycled package
Society/Corporate Social Pollution % of supplier package
Re- sponsibility
Sustainable Reporting Animal Welfare Amount of energy cost
Rainforest/Mineral Energy usage per transaction
Energy Efficiency % trained in sustainability
Training Amount of Donations
Offering Menu Choice % of Animals treated with care
Suppliers Conservation - number of the
cleanup
campaign
Community Amount donated
Choices Number of frameworks used
Restricting antibiotics Number of animals got
antibiotics Consumer/Employee Awareness % of
Beef/chicken/fish sustainability
Sustainable Reporting % of sustainable and healthy food
Frame- works
% of consumers/employees
aware of sustainability
Number of Sustainability
frameworks used in reporting
Community Fun Race -
Promoting Healthy Living
% resource
consumption/conserva- tion of
environment
 This sustainability addition to the current BSC of McDonald’s Corporation was prepared
using the following resource materials:
 2017 Annual Report of McDonald Corporation
 2011 Sustainability Score Card for McDonald’s
 McDonald Corporation Strategic Analysis by (Andino, 2015)
 Management Accounting by (Smith et al., 2015)
Finally, the third way in which sustainability issues could be reflected in McDonald’s
Corporation’s BSC is through developing a separate sustainability scorecard. McDonald’s
Corporation has already prepared a separate sustainability scorecard that shows their progress
and achievements in meeting the targeted sustainable goals. The reference point is the 2011
Global Sustainability Scorecard for McDonald’s. The 2011 sustainability scorecard was
prepared using major headings such as nutrition and well-being, sustainable supply chain,
environmental responsibility, employee experience, and community. The common performance
indicators addressed three major sustainability issues namely economic, environmental, and
societal goals in a separate sustainability scorecard of McDonald’s.