Customers are the foundation of successful business-level strategies and Levels should never be taken for granted. When selecting a business-level strategy the firm determines: 1. Who will be served, 2. What needs those target customers have that it will satisfy, and 3. How those needs will be satisfied.
McDonald’s answers to these 3 questions were: 1. People of various ages globally, 2. A quick, delicious, and non-expensive meal, 3. They offer a variety of breakfast, lunch, and dinner meals, snacks, and drinks for adults and children in various places around the world.
Since McDonald’s operates in 119 countries on 6 different continents they have different food selections for most, than what we see in the United States. They offer these different products because of different needs in each country, due to religion, diets, and resources of each individual country. This flexibility and knowledge allows McDonald’s to achieve global targets and compete with the other competitors.
I would have to say that McDonald’s uses the Integrated Cost Leadership/ Differentiation Business-Level Strategy. McDonald’s has strategically planned to stay ahead of their competitors by providing customers with more options of healthy meals, cheaper prices, and better service. McDonald’s is competitive in many categories like price, quality, management, and employee training.
From looking at the Direct Competitor Comparison for 2006-2008 I saw that McDonald’s was indeed ahead of the others in revenue by as little as 12 billion to as much as 22.15 billion. Obviously, they are doing something right, but in these times things change at such a fast pace that you have to know how to keep up or your competitors will blow you out of the water. Most people are also more inclined to follow trends to be accepted and fit in, so if your competitor comes out with a new product you better have something better in your back pocket or you will lose business.
To offer high quality products at low costrequires efficient processes throughout the entire McDonald’s organization. McDonald’s incorporates several avenues to provide great value at a low cost to its customers:
One strategy that the company has employed for many years is the value meal. The value meal allows customers to buy a sandwich, french fries, and beverage at a discount when purchased together. McDonald’s restaurants offer up to fourteen value meals, both for their lunch menu and breakfast menu.
More recently, McDonald’s began offering a value menu, consisting of many individual items costing only $1.00 each. The value menu has proved to be very successful and has been since incorporated to the individual stores.
Some individual franchise owners choose to offer daily specials of special menu items, such as “$0.39 hamburger Wednesdays,” or other similar specials. Big Mac Mondays are popular promotions.
Corporate Level I think that McDonald’s uses several different corporate level strategies in their Strategies corporation like forward integration, market penetration, market development, product development, and related diversification.
Forward integration is gaining ownership or increased control over distributors or retailers. McDonald’s is made up of mostly franchises which is essentially the meaning of forward integration. Franchises are costly and to open a McDonald’s this is what you would pay:
An initial down payment is required when you purchase a new restaurant (40% of the total cost) or an existing restaurant (25% of the total cost). The down payment must come from non-borrowed personal resources, which include cash on hand; securities, bonds, and debentures; vested profit sharing (net of taxes); and business or real estate equity, exclusive of your personal residence.
During the term of the franchise, you pay McDonald’s the following fees: -Fee of 4.0% of monthly...