McDonald

Topics: Fast food, Strategy, Fast food restaurant Pages: 7 (2149 words) Published: September 21, 2013
International Journal of Business and Management

Vol. 3, No. 11

The Business Strategy of Mcdonald’s
Jing Han
School of Economics, Yunnan University
No.2Green lake north Road, Kun Ming, Yunnan 650031, China
E-mail: hanjing0928@hotmail.com
Abstract
As one of the most successful fast food chain in the world, throughout the development of McDonald’s, we could easily identify many successful business strategy implementations. In this paper, I will discuss some critical business strategies, which linked to the company’s structure and external environment. This paper is organized as follows: In the first section, I will give brief introduction to the success of McDonald’s. In the second section, I will analyze some particular strategies used by McDonald’s and how these strategies are suitable to their business structure. I will then analyze why McDonald’s choose these strategies in response to the changing external environment. Finally, I will summarize the approaches used by McDonald’s to achieve their strategic goals. Keywords: Strategy, McDonald’s structure

Introduction
McDonald’s, originated in California, USA, 1954, has become one of the most recognized and respected brands in the world. The success achieved includes that they have established more than 30,000 franchising stores in 119 countries, serving more than 47 million people each day, and generating about $15 billions revenues annually. McDonald’s also continuously enhances its brand imagine through different social activities and the sponsorship of special events and sports i.e. as a major sponsor of the world cup since 1994 and the Champions League football in England from 1996 to 2000.(www.McDonalds.com)

How can McDonald’s achieve such success? There are many formulating strategies, which we could use for our analysis of their recipe of success such as Porter’s competitive strategies model, which includes differentiation and low-cost leadership; or Miles and Snow’s ‘strategy typology’, which defined prospector, defender, analyzer, and reactor strategy. Obviously, it is extremely important for McDonald’s to choose the most appropriate strategy to be successful. From my personal point view, to be an Analyzer is the most suitable strategic position for them to develop their business as a whole especially when they facing an extreme complex continuously changing world. As Miles and Snow defined that “The analyzer tries to maintain a stable business while innovating on the periphery. It seems to lie midway between the prospector and the defender. Some products will be targeted toward stable environment in which an efficiency strategy designed to keep current customers is used. Others will be targeted toward new, more dynamic environment, where growth is possible.” (Richard L.Daft) It is also very important to consider how McDonald’s applies these strategies and how their strategies interact with their business structure and the external environment.

1. How McDonald’s business structure influences its strategy? The McDonald’s business structure is based upon a geographic structure. When log on their website, you will be asked to choose the country that you are interested in. Actually, McDonald’s divided its operations into five geographical divisions.

(www.McDonalds.com)
72

International Journal of Business and Management

November, 2008

As shown in above pie charts that around 65% of McDonald’s restaurants and approximately 75% of its revenues are generated in the United State and Europe. So, to McDonald’s, the most important strategic approach for maintaining its leading position is to keep their major markets at the same time expanding their business into the other emerging markets. However, different consumer groups in different countries may have very different tastes and/or requirements. So each full functional geographic unit of McDonald’s was required to wholly response for producing and marketing its products in that region. Through...
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