And please read the McDonald case very carefully and answer the 4 questions The
ID: 435007 • Letter: A
Question
And please read the McDonald case very carefully and answer the 4 questionsThe 4 questions are:
1- What are the key forces in general and industry environments that affect McDonald’s choice of strategy? (You are required to cover the External analysis- mainly General Environment analysis and Porter’s five forces)
2- What key internal resources and assets does McDonald have that might help it support its competitive advantage and sustain it over long period of time? (You are required to cover the Internal analysis- mainly Value Chain Analysis and Resource based view
3-How did McDonald pursue its business level strategy? (generic strategies)
4- What other strategies did McDonald’s formulate to achieve a competitive advantage? What steps did Skinner take to fix the problems that McDonalds faced? (You are required to cover the corporate level strategies focusing on diversification)
Case 5 McDonald's Even in the midst of a global economic slowdowm, areas where restaurant sales are still growing "We do so McDoealds reported serong results for the fourth quar- well because our strategies have been so well planned out, ter of 2008 and announced plans to add 650 more outlets said Skinner in a by the end of 2009 (see Exhibits I and 2). The fast-food recent innerview At the same time, Skinner has been monitoring pric- performance was particularly impressive as rivals ing in order to make sure the menu stays affordable with- such as KFC and Wendy's had not managed so cope as well out hurting the firm's profit margins Even as it continues with the spending downturn. Same-store sales, a key indi to wrestle with cost increases, McDonald's has maintained cator of the firm's health, actually rose by 7.2 percent dur. the pricing on is Dollar Menu, which gencrates almost quarter from the figures reported a year earlier. 15 percent of sotal sales. In December 2008, McDonald's Responding to McDonald's performance, CEO Jam Skin did decide to replace its $1 double cheeseburger with the McDouble, a similar burger that is less expensive to make Analysts actribute the continued saccess of McDoa- because it has less cheese. Steven Kron, an analyst with ald's to its "Plan to Win" strategy, which was first outlined Goldman Sachs, emphasized the attractiveness of the by James R. Cantalupo over six years ago after overexpan- firm's affordable Dollar Menu: "When people are seeking ner remarked:"We continue to be sion caused the cha was to increase sales at existing locations by improving Nevertheless, there are strong concerns in to lose focus. The core of the plan value, these guys have a very powerful component that menu, refurbishing the outlets, and extending hours. McDonald's will continue to be squeezed by long-term The firm also added snacks and drinks, two of the few trends that are threatening to leave it marginalized. The chain is facing a rapidly fragmenting market, where Uenenity,wih te of a changes in the tastes of consumers have made once-exotivc enenityoods like sushi and burritos everyday options. Mamy of its fast-food customers continue to switch to food that is Exhibit 1 Income Statement (in thousands of dollars) Total revenue Cost of revenue Gross profit Operating expenses: 23,522,400 14,883,200 8,639,200 22,786,600 9,819,000 12,967,600 21,586,400 14,602,100 Selling, general, and administrative 2355,500 48,500) 7,429,400 1,774 800 3,763,400 2,405,000 134,200 445,100 Nonrecurring Operating income or loss Income from continuing operations Total other income/expenses net Earnings before interest and taxes Interest expense Income before tax Income tax expense Net income from continuing ops 6,680,600 522,600 6,158,000 1,844,800 313,200 103,200 3,982,200 10,100 3,572,100 1237,100 2335,000 123,300 4,568,400 402,000 4,166,400 1,293,400 2,873,000 Nonrecurring events Discontinued operations 60,100 2,395,100 671,200 3.544,200 Net income ,313,200 Source: McDonald's
Explanation / Answer
1. The key forces in general and industry environments that affects McDonald's choice of strategy :
2. Strong Internal Resources and Assets of McDonalds :
3. McDonalds is pursuing Differentiation strategy. They always focus on bringing innovative menu options and prodcuts in order to attract the customers and keep them satisfied. The attractive ambience and high level customr services is the startegy pursued by the company to keep the customers loyal and satisfied.
4. MCDonalds main focus is on offering the best services to the customers. They come up with attractive and innovative menu options to offer the best options to the customers. Being a fast food outlet, they offer quickservices to the customers and attractive ambience to offer best services. Providing comfortable ambience, attractive ambience and music are some of the changes brought about by Skinner to keep the customers happy.