Lim, Alix BSA-3
Mgt 4N
Regaining McDonald's Competitive Advantage
1)How important are efficiency, quality, customer responsiveness and innovation to
McDonald's competitive position?
Efficiency: McDonald's franchisees adhere to strict guidelines and Standard Operating
Procedures (SOPs). To maximize food production and customer service, work is split between
chefs and food servers. McDonald's "Made For You" customized cooking platform provides
efficient and uniform food preparation.
Quality: McDonald's ensures product quality by following detailed SOPs and, as necessary, using
backward vertical integration. Whether you're in America or Russia, regulated cooking processes
and training guarantee high-quality cuisine. To preserve quality and favorable brand recognition,
it implements strict quality control measures, manages its franchisees, and owns restaurants
along major US highways. Only a small percentage of clients have negative experiences, and the
majority of them are loyal to the brand.
Customer responsiveness: McDonald's has stayed true to its founder Ray Kroc's basic ideals of
cleanliness and customer service. McDonald's uses a multi-domestic strategy, and company
executives go to great lengths to ensure that their perceptions of a country's culture and food
preferences are correct. McDonald's anticipates customer preferences and needs and responds
quickly. To ensure brand loyalty in its ownership of the young market, it distributes toys
connected to current entertainment markets with its kids' and preteens' meals. It caters to
customers' diverse tastes by offering a wide range of cuisine such as beef, chicken, fish, pig, eggs,
breakfast foods, fries, salads, juice, soda, desserts, ice cream, and more.
Innovation: New Tastes Menu (40-item rotating menu) and Mighty Kids Meals are two of
McDonald's recent developments (preteen version of the Happy Meal). McDonald's has acquired
156 Donato's Pizza stores, 700 Boston Market stores, 100 Pret A Manger sandwich stores in the
United Kingdom, and 41 Aroma Café stores in the United Kingdom in an attempt to expand
beyond the hamburger market. Quantum technological changes in its production principles allow
it to continually improve the flavor and texture of its food products. McDonald's is experimenting
with electronic payment methods and Internet commerce.
Above all, McDonald's has built good brand loyalty and awareness by maintaining consistency in
the quality of its products and franchises around the world. It has maintained its market focus
and competitive edge by adhering to the QSC&V (quality, service, cleanliness, and value for
money) key ideals established by founder Ray Kroc. It is dedicated to expansion through excellent
food and service.
2)Does McDonald’s have any distinctive competencies? If so, how do they impact the business?
On managing researchlibrary.org, distinctive competencies are defined as a competency that is
unique to a business organization, a competency that is superior in some aspect to the
competencies of other organizations, and that enables the production of a unique value
proposition in the business function. The building of an unbeatable competitive advantage begins
with the establishment of a distinguishing capability. As a result, understanding what this means,
McDonald's does, in fact, have unique capabilities. It has a variety of consequences for the firm.
The firm has been able to provide consistent quality items to customers in a short period of time
because to the institutionalized activity procedure. Clients can also benefit from the
organization's low-cost investment capital in the form of low-cost groceries.
3)Is McDonald’s pursuing a low-cost strategy, or a differentiation strategy?
According to (Porter 1980), organizations that pursue low-cost leadership are likely to be
protected from competition attacks, but firms that pursue differentiation strategies are
essentially attempting to cut their costs. Those companies that pursue a product differentiation
strategy will face competition from their competitors, whereas those that aim to reinvent their
products are pursuing a low-cost leadership approach. As a result, it has become increasingly
important for businesses to pursue a low-cost leadership strategy that leads to product
differentiation. Competitive advantage must be maintained to keep businesses ahead of their
competitors' high barriers to entry by moving beyond milestones to change and improve
themselves into wholly inventive businesses using protected intellectual property and creating
uniqueness in distribution channels. Mc Donald's uses extremely simple strategy methodologies
to identify its developing business and to maintain competitive advantage (Gambleand Gehani,
2013). McDonald's, as the world's largest fast food chain, relies on its aggressive growth strategy
to continue its commercial development and expansion. The company's connected strategic
objectives, which define operational activities while responding to competing firm activity and
economic developments.
4)Why did McDonald’s start to lose its competitive advantage in the 2000s? What did it do to
halt the erosion in its competitive position? What does this teach you about the sustainability
of competitive advantage?
According to the case study, McDonalds' contributions to obesity, high-fat foods, and image had
been contaminated by the early 1990s and early 2000s. McDonald's was in need of a facelift.
They changed the management and the menu items. This shows me that a business can't always
be the same. A business must always be changing.
