Mcdonald's Strategy
McDonald’s Strategy Report
Company profile
McDonald’s was created in 1940 as a small barbecue restaurant owned by two brothers: Richard and Maurice McDonald. It was only in 1955, when businessman Ray Kroc pitched to the brothers the idea of building a national chain, that this incredibly successful brand was developed. Now, McDonald’s has more than 34 000 restaurants, serving almost 69 million people in 119 countries every day (McDonald’s 2010). Roy Kroc introduced a three leg stool strategy – focus on the company, its suppliers and its franchisees- with the purpose of creating international standards in terms of food quality, way of preparation, cleanliness and service. McDonald’s divided its business into five main geographical areas- US, Europe, Latin America, Canada and Asia + Pacific + Middle East +Africa, strategy which ensures standardized operations and which strengthens the brand (McDonald’s 2010).
Competitive strategy
If we take into consideration Porter’s classification of competitive strategy, depending on the region, McDonald’s follows a combination of low-cost and differentiation strategies. Strategy depends on local conditions and competition, so for the purpose of this report, I will highlight US, Europe and India.
When it first started in California, United States, McDonald’s decided to gain market share and get ahead of competition by differentiating itself. First of all, it focused on only a few key products (burgers, fries, shakes and soft drinks) but offered them at much lower cost than the other restaurants in the food industry. While most burgers would sell for 25 to 50 cents, McDonald’s sold theirs at only 10-15 cents (Stinson and A Day). In addition, the company differentiated itself from competitors by offering fast food. While in other restaurants you would have to order and wait for your food to be prepared, McDonald’s was selling burgers and fries that were already cooked and ready to go. Finally, it was one of the
Company profile
McDonald’s was created in 1940 as a small barbecue restaurant owned by two brothers: Richard and Maurice McDonald. It was only in 1955, when businessman Ray Kroc pitched to the brothers the idea of building a national chain, that this incredibly successful brand was developed. Now, McDonald’s has more than 34 000 restaurants, serving almost 69 million people in 119 countries every day (McDonald’s 2010). Roy Kroc introduced a three leg stool strategy – focus on the company, its suppliers and its franchisees- with the purpose of creating international standards in terms of food quality, way of preparation, cleanliness and service. McDonald’s divided its business into five main geographical areas- US, Europe, Latin America, Canada and Asia + Pacific + Middle East +Africa, strategy which ensures standardized operations and which strengthens the brand (McDonald’s 2010).
Competitive strategy
If we take into consideration Porter’s classification of competitive strategy, depending on the region, McDonald’s follows a combination of low-cost and differentiation strategies. Strategy depends on local conditions and competition, so for the purpose of this report, I will highlight US, Europe and India.
When it first started in California, United States, McDonald’s decided to gain market share and get ahead of competition by differentiating itself. First of all, it focused on only a few key products (burgers, fries, shakes and soft drinks) but offered them at much lower cost than the other restaurants in the food industry. While most burgers would sell for 25 to 50 cents, McDonald’s sold theirs at only 10-15 cents (Stinson and A Day). In addition, the company differentiated itself from competitors by offering fast food. While in other restaurants you would have to order and wait for your food to be prepared, McDonald’s was selling burgers and fries that were already cooked and ready to go. Finally, it was one of the