McDonald's has the vision of being the world's best quick-service restaurant experience (2001 Annual Report). The annual report does not note a mission statement, but the About McDonald's website lists the mission statement as
"McDonald's brand mission is to "be our customers' favorite place and way to eat." Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience -- People, Products, Place, Price and Promotion. We are committed to improving our operations and enhancing our customers' experience." (AboutMcDonalds.com, 2011).
The product portfolio diagram, as constructed using the BCG Matrix (Tutor2U.net, 2011).
STARS
Hamburgers
Fries
International Operations
QUESTION MARKS
-Coffee?
- Most new menu items
Other brands (Chipotle, Pret a Manger, etc.)
CASH COWS
Lunch
Dinner
Beverages
DOGS
Breakfasts
Stars are defined as those businesses with high market share and high growth. Question marks have low market share but high growth. Cash cows have high market share and low growth. Dogs have low market share and low growth.
4. The economy of scope refers to the lowering of the firm's average costs based on having two or more different products. The 2001 Annual Report mentions that consumers want variety in their quick service food offerings. McDonalds can capture a greater portion of the quick service market share by having more offerings. This leads the company to introduce new products frequently in order to find those that resonate with the consumers. In addition, the company offers meals at breakfast. While lunch and dinner are the cash cows of the company in general, McDonald's restaurants carry fixed costs associated with management, overhead, real estate and other such costs. Thus, if they have a breakfast offering, they can spread these overhead costs around, so that they are a smaller portion of each menu item sold.
5. McDonald's have diversified in two ways. The first is that the company has focused on economies of scope. The company has diversified its menu offerings, adding at various points in its history pizzas, salads and breakfast items in order to capture a greater share of the quick service business. The company has long been geographically diversified. While the U.S. remains the core market, McDonald's has a strong presence in dozens of international markets. In addition, the company has recently embarked on a diversification program by adding new brands such as Chipotle and Pret a Manger to the company. By owning more quick service properties, McDonalds believes that it can, as a corporation, capture some of the quick service market that it cannot capture within the framework of the core McDonalds brand.
6. McDonalds typically competes as a cost leader with its core restaurant offering. It is diversified somewhat with its brand but the basic offerings -- hamburgers, fries, etc. -- are shared by a significant portion of its quick service competitors. The McCafe offering is expected to also be a cost leader, but at a higher quality level than the company's main competitor in the cost leader category, Tim Horton's.
This can be shown in a product positioning diagram that uses Porter's generic strategies as its axes.
7. McDonalds should handle…
Sample Source(s) Used
Works Cited:
About McDonalds.com (2011). Student research FAQ. McDonald's. Retrieved October 7, 2011 from http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html
McDonald's 2001 Annual Report. In possession of the author
QuickMBA. (2010). Porter's generic strategies. QuickMBA.com. Retrieved October 7, 2011 from http://www.quickmba.com/strategy/generic.shtml
Tutor2U.net. (2011). Product portfolio -- the Boston Matrix. Tutor2U.net. Retrieved October 7, 2011 from http://tutor2u.net/business/strategy/bcg_box.htm
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