Business Strategy - McDonald’s Assignment
Added on 2021-04-21
11 Pages3393 Words436 Views
Running Head: Business Strategy MCDONALD’SBusiness Strategy
Business Strategy 1Table of ContentsIntroduction......................................................................................................................................2Current Strategies............................................................................................................................2Generic strategy...........................................................................................................................2Intensive strategy.........................................................................................................................2McDonald’s Vision, mission, values and objectives.......................................................................3External Fit...................................................................................................................................4Internal Fit....................................................................................................................................4Porter’s five forces...........................................................................................................................4Industry Rivalry...........................................................................................................................4Bargaining power of buyers.........................................................................................................5Supplier’s power..........................................................................................................................5Threat of substitutes.....................................................................................................................5Threat of new entrants..................................................................................................................5PESTLE analysis.............................................................................................................................5Comparison between KFC, McDonald’s and Hungry Jack.........................................................6Recommendations............................................................................................................................6Conclusion.......................................................................................................................................7References........................................................................................................................................7
Business Strategy 2IntroductionMcDonald’s strategies are developed on the basis of gaining competitive advantage in the international fast food industry. McDonald’s is known as the biggest fast food restaurant chain inthe international fast food industry. In order to maintain its acquired position in the target market,organization has adopted intensive growth strategies. These strategies are also useful in the development of business and expansion in the global market (McDonald’s, 2018). Strategic objectives of McDonald’s dictate their operational activities which are directly linked with enhancing organizational performance in the target market along with meeting with the dynamic needs of its target and potential audience. In this report, McDonald’s current strategies will be discussed along with their mission, vision and objectives. Apart from this, their strategies will also be compared with their primary competitors i.e. KFC and Hungry Jack. Further, report will focus over the evaluation of external and internal environmental forces’ impact over the McDonald’s performance and over their strategies. The last part will discuss the strategies through which the organization could improvise its performance in order to gain desired goals and objectives. Current StrategiesMcDonald’s have adopted generic and intensive strategies for accomplishing their tasks and for developing an effective position in the international fast food industry. McDonald’s is engaged incontinuous improvement process in relation with improving their policies and the strategies to meet up with the market trends and customer requirements (Aaker, 2010).Generic strategy McDonald’s generic strategy relates with the cost leadership strategy. This strategy is one of the effective models of Porter’s model. Under this strategy, prices of the final products are reduced by reducing the profit margins or by minimising the cost of production. In relevance to this, McDonald’s delivers their products and services at cheaper rates as compared to its primary competitors i.e. KFC and Hungry Jack. Though, McDonald’s also uses product differentiation as supportive of alterative generic strategy. This strategy is useful for making one company’s products distinct from its primary competitors’. Apart from this, product differentiation strategy
Business Strategy 3is effective enough to enhance organizational performance along with gaining competitive advantage in the target market. For example: McDonald’s McPuff, McVeggie, etc. are its unique products and with this, organization has developed its unique image in the competitive business environment. Vertical integration is another generic adopted by McDonald’s to strengthen its strategies and this strategy is linked with the cost-leadership generic strategy (Akaka, Vargo & Lusch, 2013).Intensive strategy Intensive strategy adopted by McDonald’s is also known as intensive growth strategy. Followingare certain crucial growth strategies which makes McDonald’s biggest fast food restaurant in international market:Market Penetration: This is the primary strategy of intensive growth strategies utilised by McDonald’s. With the help of this strategy, organization increases its customer base inthe existing market by launching new and innovative products for other customer segments. The primary objective of adaptation of this strategy is global expansion. McDonald’s generic strategy supports this growth strategy because low costs and low prices sanction the firm to easily penetrate markets.Market development: When McDonald’s entered the fast food industry initially, market development was their primary strategy in terms of intensive growth strategy. But now things have been changed because now McDonald’s is present is every part of the globe except Mongolia, some parts of Middle East, west Asia, and African Countries and now market development is used as the secondary strategy in terms of intensive growth strategy. The main motive of this intensive growth strategy is to establish organizational image in the new locations such as expansion of McDonald’s in African and West Asian countries (Angeloska-Dichovska & Mirchevska, 2017).Product Development: This strategy has been used by McDonald’s to support their intensive growth strategies. In order to execute this strategy, McDonald’s needs to produce new and innovative products time to time such as McCafé. This strategy is also used as the defensive strategy so as to maintain the acquired position in the market as well as to uplift its position in the same market by producing unique and innovative products (Armstrong, et. al., 2015).
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