A Comparative Report: Competitive Strategies of McDonald's and E-Bay

This report provides a comparative analysis of the competitive strategies employed by McDonald's and E-Bay. The report examines McDonald's cost leadership strategy, emphasizing its franchising model, customer satisfaction through standardized products, and its innovative approach to menu offerings. It highlights how McDonald's maintains its market capitalization through these techniques. The report then shifts to E-Bay, exploring its customer-to-customer e-commerce business model, emphasizing its technological innovations, and the competitive advantage gained through a large, geographically unrestricted customer base. The analysis covers how E-Bay leverages bulk buying, auctioning, and online payment systems to enhance customer satisfaction and secure revenue streams, ultimately highlighting the risk-taking and innovative aspects of its business model in the e-commerce sector.

Running Head: Competitive Strategy
Competitive Strategy

Competitive Strategy 1
Contents
McDonalds Company..................................................................................................................................1
E-Bay Inc....................................................................................................................................................2
References...................................................................................................................................................5

Competitive Strategy 2
McDonalds Company
McDonald’s is world’s one of the biggest company serving fast food to all the customers
worldwide. The company has its outlets in 36,000 locations and in 100 countries. The company
serves 69 million customers daily. So it can be said that the management system of the company
is very efficient and effective. The founders of the company are, Richard and Maurice McDonald
who opened the first outlet in the year 1948 (Peteraf, Gamble, & Thompson 2014).
The reason for choosing McDonalds is that the company very smartly replicated the idea of fat
food chain from white castle company and reached on the peak of the market. Further the
management model of the company is discussed below:
The company McDonalds believes that they have gained the market capitalization through the
power of franchisees, employees and the suppliers of the company. It is the belief of the
company that in order to grow they don’t need to initiate innovation or technology in their
business, they can win with simple techniques as well; but those techniques shall be smartly
played in the market. The mission of the company says that they want to become the favorite
place of their customers (Baden-Fuller, & Morgan 2010).
Thus the company used the technique of providing the best services to the customers in a cost
efficient manner. The company does not usually amend changes in the production. Instead they
aim to gain specialization in the regular work which they perform. Also the company gained
profit from that regular activity only. The competitive advantage which the company enjoyed is
the cost leadership in the market. The main profit which the company receives is through
franchising; around 80% of the revenue is received by franchising. Thus the company used
simple business technique to gain profit in the market (Morris, Shirokova, & Shatalov 2013).

Competitive Strategy 3
Also due to quality in the taste of products along with standardization of products the company
gained the trust of the customers. The company constantly maintained the quality of the product
which led the customers to trust on the working of the company due to which the sale also
increased. Apart from customer satisfaction and menu standardization, the way through which
the company gained success is through breakfast menu item. The company led to this small
innovative change in its system by changing the menu for the breakfast. This activity of the
company shows that they care for the needs and requirements of the customers (Vitasek,
Manrodt, & Kling 2012).
This process led o major change in the sales volume of the company along with increase in the
customer base as well. The company business model shows that it does not believe in playing
aggressively in the market. Instead the company optimally uses all the given resources to achieve
the desired quality and aim to provide maximum satisfaction to the customers. The company
enjoys a market capitalization of $3,829 billion (Morris, Shirokova, & Shatalov 2013). Thus it
can be said that the company enjoys market capitalization and competitive edge in the market
only by focusing on the product of the company using cost efficient techniques so that
subsequently the price of the product is also decreased.
E-Bay Inc.
eBay is a multinational corporation holing its business online. The company is a customer to
customer e-commerce business under which all the transactions are don websites only. ebay was
found in the year 1995 by Pierre Omidyar. The company manages the buying and selling
transaction of many goods and services worldwide. The company introduced an innovative tool
to manage the business transactions efficiently (Zott, & Amit 2010).

Competitive Strategy 4
The reason for choosing eBay is that the company took a risky step to make use of innovative
technology and change the way o regular buying and selling products. Further the company used
efficient business model to gain competitive advantage within the organization. The business
model of eBay is explained below:
The company eBay is growing with a fastest speed in the e commerce business. The company
with the innovative business model is constantly increasing its customer base longer with
providing them greater satisfaction though their services as well. The company buys the products
in bulk due to which they receive products at a lower cost. Also due to innovative technology
used in the working of the business, e bay enjoys the competitive advantage of large customer
base that are not restricted with geographical boundation (Casadesus-Masanell, & Ricart 2011).
The vision of the company suggests that it wants to provide more and more services to the
customers with greater satisfaction and cost effective rates. So for that purpose the company used
the business model in following ways:
 The company uses customer to customer business model. Under this model a customer
posts products on the website and auction is made on that product. The customer bids to
purchase the product and who so ever person bids highest, the product is sold to them.
 In this way the value to product is increased and both the parties’ get satisfied through
this method. Also in this mode the company gets benefit of inventory storage cost, as
they do not have to store the inventory in their warehouses in this method.
 The website of the company links 35 million buyers and sellers all around the world. Due
to this business model, an innovative change has occurred in the market due to which

Competitive Strategy 5
people have started using online technology to make purchase or sale (Gambardella, &
McGahan 2010).
 Further one of the best feature of this C2C business model is that is a transparent form of
model under which no information is hidden by any party. The cash transactions are also
initiated through online mode making the transaction more secure.
The company eBay took a risk to implement technological innovation within their organization
and spread the use of such technology all around the world. The company derives its revenue by
communicating the information to the interested parties and joins them together to hold
transactions. Now people make online payment because of the trust of people on the business
model of the company. Also this model satisfies the requirement of both the parties through
auctioning the product (Walker, & Madsen 2016).

Competitive Strategy 6
References
Zott, C. & Amit, R., 2010. Business model design: an activity system perspective. Long range
planning, 43(2), pp.216-226.
Casadesus-Masanell, R. & Ricart, J.E., 2011. How to design a winning business model. Harvard
business review, 89(1/2), pp.100-107.
Gambardella, A. & McGahan, A.M., 2010. Business-model innovation: General purpose
technologies and their implications for industry structure. Long range planning, 43(2), pp.262-
271.
Walker, G. & Madsen, T.L., 2016. Modern competitive strategy. McGraw-Hill Education.
Peteraf, M., Gamble, J. & Thompson Jr, A., 2014. Essentials of strategic management: The quest
for competitive advantage. McGraw-Hill Education.
Baden-Fuller, C. & Morgan, M.S., 2010. Business models as models. Long range
planning, 43(2), pp.156-171.
Morris, M.H., Shirokova, G. & Shatalov, A., 2013. The business model and firm performance:
The case of Russian food service ventures. Journal of Small Business Management, 51(1), pp.46-
65.
Vitasek, K., Manrodt, K. & Kling, J., 2012. Vested: How P&G, McDonald's, and Microsoft are
Redefining Winning in Business Relationships. Springer.

Competitive Strategy 7