Please read the McDonald case very carefully and answer all the 4 questions The

Question

Please read the McDonald case very carefully and answer all the 4 questions The 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)
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. Political Factors: There are certain groups in Europe and United States, that protest to the state pertaining to the health implications of consuming fast food. They claim the harmful elements present in them like Cholesterol adverely effect body leading to obesity.

2. Economic Factors: As McDonalds have global presence, therefore are affected by the changes in inflation and the exchange rates. The economic factors also determine the supply and demand relationship of the raw materiala within the organization.

3. Socio-Cultural Factors: International strategys of McDonalds seem to act on several fields to guarantee lucrative returns for the organization. The organization improves on establishing a positive mindset from their core customers.

4. Technological Factors: The mail tool for company's marketing is by television advertisments. The intergration of technology in the operations of McDonalds tend to add value to their products.

5. Environmental Factors: The social responsibility of McDonalds on a region is influenced by the operations of the company in that specific regions. These entails accusation of environmental damage. Reason why company is charged with these claims is the employment of the non-biodegradable substances for glasses and the styrofoam coffers, which is offered for the meal.

6. Legal Factors: legal aspects like tax obligations, employment standards, and quality requirements are only a few among the other equally important legal factors on which the company has to take into consideration.

Answer 2:

McDonalds constantly deals with very active and rigorous competition. Statistics and resuls show that there is always the threat of new competitor. The key results for sucess of McDonals are-

1. Quality of service: McDonalds are very committed towards achieving customer satisfaction. It consistantly look to improve its product range.

2. Quality of product: Another important are within customer service and customer satisfaction is quality of product. It is a very well known fact that sucess of food industry depends on the quality of products provided. McDonalds lead in the market share for such along period of time demonstrates its quality.

3. Internal management: Internal management is a key area in the oraganization and is mainly controlled by its IT systems. Their development within these environment are in the following sectors - Reports, Base, Forecast, and Setup.

Answer 3:

1. McDonald cutback on the opening of new outlets instead focused on increasing sales from its current outlets

2. McDonals tried to draw more customers by introduction of new products especially emphasising on healtier food options

Answer 4:

1. Giving supersizing option to customer, it allowed to get extra order of a french fries and a bigger soft drink by paying little extra

2. McDonald also trying to include more fruits and vegetables in its well know Happy Meals

3. Introduction of McCafe section

4. McDonald is now applying reimaging concept to its outlet

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