Strategic Management on Mcdonald's

Topics: McDonald's, Hamburger, French fries Pages: 5 (1636 words) Published: June 10, 2008
Mcdonald's, Glory of the past? Late 1990s and Early 2000s
McDonald's Corporation (McDonald’s) is the world's largest foodservice retailing chain. The company is known for its burgers and fries which it sells through over 30,000 fast-food restaurants in over 119 countries. A majority of McDonald’s restaurants are operated by franchisees. The company also operates restaurants under the brand name ‘The Boston Market’. The company operates primarily in the US and the UK. It is headquartered in Oak Brook, Illinois and employs 465,000 people. In our assignment, the strategic focus would be on Mcdonald's Glory of the past which includes reseraching and analyzing the competitive advantages, business-level strategies related and also corporate-level strategies related. The scope of the assignment would be ranging from about 1999- 2003.

Key Dates:1
1999: Donatos Pizza Inc. is acquired.
2000: McDonald's buys the bankrupt Boston Market chain.
2002: Restructuring charges of $853 million result in the firm's first quarterly loss since going public. 2003: McDonald's sells Donatos in order to refocus on its core hamburger business.

The difficulties of the early and mid-1990s. The announcement that McDonald's would improve the taste of several sandwiches and introduce several new menu items; McFlurry desserts-developed by a Canadian franchisee,proved popular when launched in the United States in the summer of 1998. McDonald's said that it would overhaul its food preparation system in every U.S. restaurant. The just-in-time system, dubbed "Made for You," was in development for a number of years and aimed to deliver to customers "fresher, hotter food"; enable patrons to receive special-order sandwiches (a perk long offered by rivals Burger King and Wendy's); and allow new menu items to be more easily introduced thanks to the system's enhanced flexibility. The expensive changeover was expected to cost about $25,000 per restaurant, with McDonald's offering to pay for about half of the cost; the company planned to provide about $190 million in financial assistance to its franchisees before implementation was completed by year-end 1999. As it was exploring new avenues of growth, however, McDonald's core hamburger chain had become plagued by problems. Most prominently, the Made for You system backfired. Although many franchisees believed that it succeeded in improving the quality of the food, it also increased service times and proved labor-intensive. Some franchisees also complained that the actual cost of implementing the system ran much higher than the corporation had estimated, a charge that McDonald's contested. In any case, there was no question that Made for You failed to reverse the chain's sluggish sales. McDonald's was sued in 2001 after it was revealed that for flavoring purposes a small amount of beef extract was being added to the vegetable oil used to cook the french fries. The company had cooked its fries in beef tallow until 1990, when it began claiming in ads that it used 100 percent vegetable oil. McDonald's soon apologized for any "confusion" that had been caused by its use of the beef flavoring. McDonald's also had to increasingly battle its public image as a purveyor of fatty, unhealthful food. Consumers began filing lawsuits contending that years of eating at McDonald's had made them overweight. McDonald's responded by introducing low-calorie menu items and switching to a more healthful cooking oil for its french fries. Early in 2002 Cantalupo retired after 28 years of service. Sales remained lackluster that year, and in October the company attempted to revive U.S. sales through the introduction of a low-cost Dollar Menu. In December 2002, after this latest initiative to reignite sales growth failed, Greenberg announced that he would resign at the end of the year. Cantalupo came out of retirement to become chairman and CEO at the beginning of 2003. 1)Identify the firm's...
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