McDonald's refers to the United States fast food business, established by Maurice McDonald and Richard in the year 1940 as a restaurant-run, in California, United States. The company relaunched its business as a hamburger shop and afterward converted the business into a franchise. The company had its initial head office in Oak Brook, Illinois, however, shifted its international H.Q. to Chicago in the year 2018. As of 2016, McDonald's is leading restaurant chain through revenue, worldwide, attending more than sixty-nine million clients every day in more than a hundred nations across about 36,900 outlets (Badal, 2017). Even though it is recognized for its hamburgers, McDonald's also vend French fries, chicken products, cheeseburgers, breakfast stuff, milkshakes, soft drinks, desserts, and wraps. In reaction to altering customer preferences and the negative criticism due to the unhealthiness of its foodstuff, McDonald's has added smoothies, fish, salads, and fruit to its menu. McDonald's was ranked second-biggest private employer (after Walmart) having about 1.9 million staffs, out of which roughly 1.5 million worked for franchises as of 2012. The current paper seeks to analyze McDonald's corporate strategies.
McDonald’s universal strategy dictates its fundamental approach to the development of its business in addition to competitive advantage. As the world’s largest fast-food eatery chain the business applies its intensive expansion strategies to support sustained business growth and development. The associated strategic goals define the corporation’s functional actions, particularly in reacting to economic fluctuations and the activities of rival companies. Changes in market situations put pressure on the company to adjust or restructure its strategies (Carden, Maldonado & Boyd, 2018). Intrinsically, McDonald’s universal strategy in addition to intensive growth strategies alters with the passage of time to warrant longstanding business sustainability.
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Cost leadership is the main universal strategy of McDonald’s. This universal strategy, in Porter’s model, entails minimalizing costs to provide foodstuffs at reduced prices. As a reduced-cost supplier, the company offers commodities which are comparatively cheaper relative to challengers such as Arby’s (Lee & Lambert, 2017). Nevertheless, McDonald’s also applies extensive differentiation as an ancillary or supporting universal strategy. This supporting universal strategy entails developing the company as well as its goods to make them different from rivals. For instance, via McCafé products, the firm uses the extensive differentiation universal strategy.
Furthermore, perpendicular integration is a strategic goal associated with the company’s cost-leadership universal strategy. For instance, McDonald’s possesses facilities which generate homogenous combinations of ingredients (Badal, 2017). Moreover, cost minimization is the monetary strategic goal grounded in the cost leadership universal strategy. Also, product innovation is associated with McDonald’s extensive differentiation universal strategy.
McDonald’s applies market penetration as its principal intensive growth strategy. In using this intensive strategy, the firm grows through reaching additional clients in bazaars in which it already has actions. For instance, McDonald’s launches new eateries in Europe and North America through franchising, corporate ownership or joint ventures (Carden, Maldonado & Boyd, 2018). The strategic goal associated with this intensive strategy for growth is worldwide spreading through new sites. The company’s universal strategy promotes this intensive growth strategy since reduced prices and reduced costs allow the company to effortlessly penetrate markets.
McDonald’s, in its initial years, applied market development as its principal intensive growth strategy. Nevertheless, nowadays, market development is an ancillary intensive strategy for growth since McDonald’s by now has eateries in a majority of regions all over the globe excluding Mongolia, most African nations, and some regions of West Asia and the Middle East. The strategic goal for this intensive strategy for growth is to form new sites in new bazaars, for instance, new McDonald’s eateries in Middle Eastern or African nations in which the firm presently has no set-ups. Grounded in its universal cost leadership strategy, the company agrees with this intensive strategy for growth through the use of reduced prices to compete in novel bazaars.
McDonald’s applies product development as its supporting or tertiary intensive growth strategy. Through the application of this intensive strategy for growth, the company develops novel products with the passage of time, for example, novel McCafé products. The goal for this intensive strategy for growth is to obtain additional customers by drawing them to novel products. This intensive strategy for growth supports McDonald’s extensive differentiation universal strategy with regards to new products which make the business unique.
According to Lee and Lambert (2017), the competitive advantage of McDonald’s is grounded in the following arguments: First inexpensive prices is the company’s key competitive advantage. McDonald’s is involved with a wide-ranging use of economies of scale to realize a cost advantage. Second, exact to ‘fast food’ organization of its eateries, the company is well-known for the rapidity of consumer service with no compromising the service quality. Thirdly, taste universality in large part signifies another ground of competitive advantage for McDonald’s. Big Mac flavors practically across the globe attributable to the utilization of the identical ingredients in the equivalent amounts and solicitation of the homogenous methods of cooking all over the world. This kind of consistency in flavor has desirable implications on customer loyalty (Lee & Lambert, 2017).
In a nutshell, McDonald’s universal strategy of cost leadership facilitates the business in sustaining its market leadership. Similarly, McDonald’s extensive differentiation strategy enables this sustainability in market leadership. Nevertheless, a conceivable strategic course for company’s sustained growth is to launch more sites in unindustrialized countries in addition to in nations in which the business lacks bazaar presence. The suggested strategic objective is to promote business growth via a mixture of market development and market penetration intensive strategies .
References
Badal, P. A. (2017). McDonald’s Corporation-2015 (MCD).
Carden, L. L., Maldonado, T., & Boyd, R. O. (2018). Organizational resilience: A look at McDonald’s in the fast food industry. Organizational Dynamics , 47 (1), 25-31.
Lee, A., & Lambert, C. (2017). Corporate social responsibility in McDonald’s Australia. Asian Case Research Journal , 21 (02), 393-430.
