Competitive Advantage Strategy by Michael Porter Theory of McDonalds
Presented to the Faculty
President University Indonesia
Fulfillment of the Requirements for the
Final Exam of
International Business 3
McDonald is, 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 billion 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. 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. Obviously, it is extremely important for McDonald is 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 would be targeting toward stable environment in which an efficiency strategy designed to keep current customers is used. Others would be targeting 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.
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald; in 1948 they reorganized their business as a hamburger stand using production line principles. Executive Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. A franchisee, an affiliate, or the corporation itself operates a McDonald’s restaurant. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27 percent over the three years ending in 2007 to $22.8 billion, and 9 percent growth in operating income to $3.9 billion. McDonald's primarily sells hamburgers, cheeseburgers, chicken, french fries, breakfast items, soft drinks, milkshakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, fish, wraps, smoothies and fruit. How the strategy influenced the external environment?
The external environment can divided into several sectors. In this section, I will only discuss two important parts: Competitors, social concept (healthy problem) and uncertainty situation, which, can greatly influence McDonald’s strategies. Then at the last part of this section, I will discuss one particular strategy they used which served for their future development purpose.
It is unlikely that McDonald’s can always be No.1. In an annual consumer satisfaction survey, McDonald’s has been scored dead last among fast-food restaurants since 1992. In the fourth quarter of 2002, McDonald has...
Please join StudyMode to read the full document