What caused McDonald’s to stumble?
The failures of McDonald’s were concluded as 4 main reasons, consumer dissatisfaction, over expansion, inaccurate marketing strategy and poor internal control. Examples are showed as below: i) McDonald’s failed to fulfill the expectation of customers. It is claimed that their services are rude, slow and inaccurate. Low satisfaction of customers caused the sales of McDonald to keep flat. ii) Keen competition in quick-service restaurant industry, the industry was only projected to expand in line with inflation but McDonald’s were opening restaurants at a rate higher than comparable companies, which opened 1130 restaurants per year. Especially, McDonalds’ expand too fast in emerging countries like Russian and China, and they serves in oil station, airlines and hospital. They made a very ambiguous strategy in the consideration of place for running business. iv) Gimmick of McDonald’s Slogan was no more impressive. The slogan at the early Millennium was “We Love to see you Smile” This gives no buzz from the customers. What levers did McDonald’s top management pull to restore shareholder value? In 2003, McDonald’s top management had made respond to the declining trend of their company. CEO, Mr Skinner, has urged to run the revitalization “Plan to Win”. The focus of the plan is “on being better, not just bigger”, and he advocated that McDonald’s should reinforce their core value QSC&V They had also setup a clear financial goal to their restaurants individually. They setup the sales grow target, margin improvement target, net income target for their restaurants. Skinner has decided to stop expansion of their numbers of restaurants, and they focus on improving the current restaurants. This implied that the top management would like to increase the market shares per point of distribution point rather than expand the distribution points. This direction can lower the capital expenditure for McDonald’s to relieve the pressure of short-term...
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