This report is based on an evaluation and selection of differentiation as a strategy that McDonald’s should pursue in order to realise growth and competitive advantage in the fast food industry.
As the business environment changes, businesses are forced to change their strategies in an attempt to adapt to the changing environment neither as a means of survival, or in order to prosper. In such a case, determining the strategic position of a firm is crucial. Johnson, Scholes and Whittington define strategy as “the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations”.
The three key generic strategies that a business can use are: differentiation, focus, and cost leadership. McDonald’s is a leading multinational player in the fast foods industry that is famous for providing basic fast-food items at low cost. The firm has been very successful in implementing this strategy by taking advantage of its high bargaining power to acquire raw materials cheaply thus passing the benefits of costs savings to the end-consumer. While this strategy worked during the introductory phase of the company's business operations, McDonald’s has now been forced to pursue a growth strategy by ensuring quality and product differentiation.
Table of Contents
1. Introduction
2. MacDonald’s Macro environment
3. MacDonald’s Micro environment
4. Feasibility
5. Conclusions
6. Recommendations
Research Objectives and Themes
This report evaluates the strategic position of McDonald's within the fast-food industry and analyzes the suitability of a differentiation strategy to achieve sustainable growth and competitive advantage in a changing business environment.
- Strategic analysis of the macro and micro business environment using PESTLE and Porter’s Five Forces.
- Evaluation of internal capabilities and strategic choices using the SAF and 6M models.
- Assessment of stakeholder expectations and interests via the Mendelow Matrix.
- Development of strategic growth recommendations including R&D investment and market diversification.
Excerpt from the Book
Introduction
As the business environment changes, businesses are forced to change their strategies in an attempt to adapt to the changing environment neither as a means of survival, or in order to prosper (French, Kelly & Harriosn 2004). In such a case, determining the strategic position of a firm is crucial. Johnson, Scholes and Whittington (2005) define strategy as “the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations” (2005). The three key generic strategies that a business can use are: differentiation, focus, and cost leadership (Kraus, Harms & Schwarz 2006). McDonald’s is a leading multinational player in the fast foods industry that is famous for providing basic fast-food items at low cost. The firm has been very successful in implementing this strategy by taking advantage of its high bargaining power to acquire raw materials cheaply thus passing the benefits of costs savings to the end-consumer (Han 2008). While this strategy worked during the introductory phase of the company's business operations, McDonald’s has now been forced to pursue a growth strategy by ensuring quality and product differentiation. This report is based on an evaluation and selection of differentiation as a strategy that McDonald’s should pursue in order to realise growth and competitive advantage in the fast food industry.
Summary of Chapters
Introduction: Provides the context for corporate strategy in a changing environment and introduces the shift from cost leadership to a differentiation strategy for McDonald's.
MacDonald’s Macro environment: Examines external factors affecting the company using the PESTLE framework, covering political, economic, social, technological, environmental, and legal influences.
MacDonald’s Micro environment: Analyzes the competitive industry landscape using Porter's Five Forces and evaluates strengths, weaknesses, opportunities, and threats through SWOT and TOWS matrices.
Feasibility: Assesses the internal capability of the firm to implement new strategies based on the 6M model, covering financial resources, machinery, manpower, and market positioning.
Conclusions: Summarizes the necessity for McDonald's to adapt its strategy to maintain leadership and confirms the effectiveness of the differentiation approach.
Recommendations: Proposes actionable steps including increased R&D, market expansion in developing economies, and proactive stakeholder communication.
Keywords
McDonald's, Strategic Management, Differentiation Strategy, PESTLE Analysis, Porter's Five Forces, SAF Model, Growth Strategy, Fast Food Industry, Stakeholder Management, Competitive Advantage, SWOT Analysis, 6M Model, R&D, Market Development, Sustainability.
Frequently Asked Questions
What is the primary focus of this report?
The report focuses on evaluating and selecting a differentiation strategy for McDonald's to ensure competitive advantage and growth amidst changing consumer lifestyles and increased market competition.
What are the main thematic areas covered?
The core themes include strategic environment analysis (macro/micro), internal resource feasibility, stakeholder evaluation, and strategic growth planning using management frameworks.
What is the central research question?
The research explores how McDonald's can leverage a differentiation strategy to realize growth and maintain its leadership position within the highly competitive fast-food industry.
Which scientific models are applied in this work?
The work utilizes several strategic models, including PESTLE, Porter’s Five Forces, SWOT, TOWS, the Ansoff Matrix, the SAF model, the Mendelow Power-Interest Matrix, and the 6M model.
What topics are discussed in the main body?
The main body covers external environmental analysis, micro-environmental competitive forces, strategic growth choices, stakeholder analysis, and a detailed assessment of internal resources (Money, Machinery, Manpower, etc.).
How would you characterize this paper with keywords?
The paper is characterized by terms such as Strategic Management, Differentiation, Competitive Advantage, and Corporate Strategy.
How does the Mendelow Matrix support the strategy?
It is used to categorize stakeholders by power and interest to evaluate potential resistance and determine the communication policies necessary to ensure the success of the new strategic direction.
What does the feasibility analysis conclude regarding McDonald's?
The analysis concludes that McDonald's has the necessary financial resources, brand strength, and existing organizational structure to implement a differentiation strategy, though some investment in R&D and staff training may be required.
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- Apakshit Sachdeva (Autor:in), 2015, Evaluation and selection of differentiation as a strategy for McDonald’s, München, GRIN Verlag, https://www.grin.com/document/337921
