Mcdonald’s Using Blue Ocean Strategy
McDonald’s is using Blue Ocean Strategy (BOS). Blue Ocean Strategy states that an organization can produce higher growth and profits by creating new demand in an uncontested market space than by competing head-to-head with other suppliers for known customers in an existing industry. First, McDonald’s is using the value innovation concept of BOS. By this, McDonald’s believe that product/service differentiation and lower cost are achievable simultaneously. The value innovation of McDonald’s can be seen at McCafés. There are five branches of McDonald’s Malaysia have McCafés (Kota Damansara, Centre Point at Bandar Utama, Titiwangsa, Sunway Pyramid and Taman Connaught). Now, McCafés Malaysia are offering fifteen products including various types of coffee and chocolate drinks, muffin, brownie and cakes. McCafés create a new market for McDonald’s by attracting new customers to McCafés. People who seldom go to McDonald’s and love drinking coffee or love eating cakes would go to McCafés to have a coffee and a piece of cake. Besides, the coffee is cheaper than at high-end coffee shops such as Starbucks, so McDonald’s can attract the people who cannot afford a Starbucks coffee. At the same time, McCafés’ new design and new store layout with combined restaurants and McCafés or the new stand alone McCafés add increased value for the customers by providing a more comfortable atmosphere. This will give a better image of McDonald’s to existing and new customers and increase the sales. Hence, McDonald’s has created differentiation with the competition and has redefined and expanded its market space. McCafés have taken McDonald’s a step forward the fast food category. On the other hands, McDonald’s is using Blue Ocean Strategy’s concept of strategy canvas. Graph 1 shows the value curve for McDonald’s, which provides a graphic depiction of McDonald’s relative performance across its industry’s factors of competition.
The curve for