McDonald's business strategyMcDonalds business strategy utilizes a combination of cost leadership and

international market expansion strategies. Franchising and licensing forms of new market entry is
utilized within McDonald’s business strategy to a great extent.

Moreover, product and service standardization lies in the cornerstone of McDonalds business strategy.
McDonald’s restaurants offer substantially uniform menu that comprises hamburgers and
cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches,
Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve
cones, pies, soft drinks, coffee, McCafé beverages and other beverages.[1]

It is important to note that along with maintaining product and service standardization, McDonald’s
takes into account local tastes and preferences, when developing its menu and engaging in marketing
efforts.

McDonald’s competitive advantage is based on the following points:

Cheat prices is McDonald’s main competitive advantage. The company is engaged in an extensive
utilization of economies of scale to achieve the cost advantage.

True to ‘fast food’ format of its restaurants, McDonald’s is famous for the speed of customer service
without compromising the quality of the service.

Universality of the taste to a great extent represents another base of McDonald’s competitive
advantage. Big Mac tastes almost all over the world due to the use of the same ingredients in the same
quantities and application of the standardized ways of cooking around the globe. Such a consistence in
taste has positive implications on consumer loyalty.

It is important to note that McDonald’s competitive advantage based on costs can be difficult to sustain
in long-term perspective, since new competitors may emerge with access to cheaper resources….

McDonalds
McDonalds is known to be the largest hamburger supplying company in the world. Based in the United
States, McDonalds is a multinational that operates in about 120 countries worldwide and serves about
70 million customers daily. The company has had competitive advantage over most of its competitors
and has gone on to secure a large share of the market. In terms of quality, McDonalds produces
hamburgers that are of high quality compared to those of most competitors.

The company values quality and embraces a wide variety of fast foods that are available in many outlets
across the world. Differentiation is a strategy that is applied by the company in its production of quality
hamburgers. The company ensures that it has knowledge regarding the culture and preferences of a
given people before opening any store in order to offer differentiated products that are acceptable
among the people (Hill & Jones, 2013).

Prices for McDonalds’ products are highly competitive. The company aims at becoming the cost leader,
thus it offers foods at low costs that are hardly matched by its competitors. This is a strength that gives
McDonalds the most competitive advantage. To do this, the company ensures that the costs of
operations are at the lowest level possible. It also ensures that the supply chains are effective and
efficient (Hill & Jones, 2013).

McDonalds has embraced a branding strategy that is dynamic since the trends in the market are
changing each day. For instance, the branding is now happening via a WI-Fi look. Its brand is mostly
targeted at young people since they buy fast foods more than any other group (Hoskisson, 2008).

The branding is also aimed at building the brand image and expanding the company’s market. Finally,
top quality services are offered by McDonalds’ employees. McDonalds has introduced IT systems in its
outlets to improve the quality of services. This ensures customer satisfaction and competitive
advantage.

Burger King

Burger King is an American based multinational that supplies hamburger fast foods in about 73 countries
across the world. Despite experiencing financial difficulties earlier during its operations, the company
was able to bounce back and is currently operating globally. The company offers quality hamburgers.
However, its foods are not of the same high quality as those of McDonalds (Nilsson & Rapp, 2004).

In addition, Burger King does not have a wide variety of foods compared to McDonalds; hence it loses
part of its competitive edge. Foods are offered at a low price strategy that attracts most customers at
Burger King. Fast foods are bought mostly by the younger generation. This group will always go for
cheap foods since most of them do not have a stable income. This gives Burger King competitive
advantage.

The branding strategy for Burger King is targeted at the younger generation just like that of McDonalds.
However, the quality of branding is lower compared to McDonalds. This is another factor that makes
Burger King lose some competitive advantage to McDonalds.

Quality and fast services are offered at Burger King. It is important to note that the services offered in
most fast food hotels and the menus available are almost similar. However, McDonalds leads Burger
King in terms of IT, thus McDonalds is ahead in terms of competitive advantage (Nilsson& Rapp, 2004).

Conclusion

Most fast food hotels offer foods and services that are almost similar. The prices are low and the target
customers are also the same. Therefore, any company in the fast food industry has to do things
differently from the others for it to win competitive advantage. This is what has given McDonalds its
competitive position over other fast food chains.

McDonald’s Competitive Strategy

Executive Summary
McDonald created a global advisory council which is entrusted with the duty of providing
recommendations on nutrition. McDonald’s has spearheaded a program to introduce healthy food for
some customers. Customers can select hamburgers or salads depending upon their needs and
requirements. Additionally, apples can be selected for children when parents purchase Happy Meals.
McDonald’s products are filled with nutritional information which offers better choices and autonomy to
customers. McDonald’s aggressive business strategy is based upon the premise that its restaurants
should be located at strategic locations. Burger King’s management is dynamic because it always seeks
to utilize the power of new media as a means of ensuring that organizational targets are attained in an
effectual manner. Burger King has strived to harness the power of social media to launch new products,
track customer feedback, and respond to complaints. Burger King is also successful because of its
innovative products like its Whopper. French Toast Sticks, Caesar salads, veggie burgers, and others are
examples of innovative products that are offered to customer segments. Burger King has always had a
limited menu but it has focused on niche markets. The development of a comprehensive supply chain
management system means that KFC can control the power of its suppliers. It trains suppliers so that the
adequate standards of hygiene and safety can be maintained. Additionally, it has a monitoring and
auditing mechanism to ensure that suppliers comply with the organizational standards and
requirements. KFC’s training program for its workforce is based upon imparting technical, managerial,
and communication skills.

Introduction

Competitive advantage is determined by the presence of smart and prudent goals. Business
organizations need to have strong strategies that leverage their key strengths as a means of attaining
economies of scale. The business strategy of the organization should be based upon operational
efficiencies. Additionally, successful organizations strive to create an environment where they are able
to achieve their critical targets through dynamic business processes and functions. Organizations need
to have the ability to successfully deploy strategies that can take advantage of new opportunities.
Additionally, they must be able to respond to complex situations in an efficient and effective manner.
McDonald’s is an industry leader in the fast food industry. Its key competitive advantages have included
nutrition, convenience, affordability, innovation, quality, hygiene, and value added services. The success
of the organization has been its ability to leverage its key strengths so that it can overcome weaknesses.
The long term profitability of McDonald’s will depend upon its ability to embrace change. It needs to
improve operational efficiencies to reduce costs. It should integrate technology as a means of ensuring
that its key standards can be attainable. Burger King and KFC are two competitors of the organization.
Burger King has been successful because it has been able to focus on product diversification, reliable
customer services, and continuous innovation. KFC has been successful because of its emphasis on
quality food along with huge restaurants that provide considerable excellence to its customers.

Company Profiles
McDonald’s is one of the leading firms that is operating in the fast food industry. It has been successful
because of its cheap food. It has offered nutritional value while raising awareness about health.
Additionally, it has expanded into different markets through the use of innovative and creative
strategies. Burger King has also been a major player in the fast food industry. Its success is its ability to
target niche markets in a proficient manner. Kentucky Fried Chicken (KFC) is renowned for its recipes
including the famous fried chicken. The organization expands rapidly in international markets while
offering quality food at affordable rates.

[...]

Sources of Competitive Advantage for McDonalds (Global fast food chain)

McDonald's

INTRODUCTION :-

McDonald’s is a famous fast food brand with operations around the world in more than 100 countries. It
is both popular and successful as a fast food chain. The company mainly operates its business through
franchisees. Independent franchisees own and operate more than 90% of McDonald’s restaurants
around the globe. The success of McD’s can be attributed to several factors including food quality, menu
diversity, flavour, customer service and the ability to adapt to fast changing consumer trends. Over the
long term, McD’s aims to manage 95% of the restaurants in its system through franchisees. Its
restaurants serve a substantially uniform menu except for minor regional variations. The main items on
its menu include hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish,
several chicken sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry
desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafé beverages and other beverages.

Competition in the fast food industry has grown intense due to the rise of several local and international
brands. There are several major international fast food brands including Dominos, KFC, Burger King,
SubWay, Wendy’s and similar more that are competing for market share with McDonald’s. It is why
McD’s spends a significant sum on marketing every year. However, it is still a leading fast food chain and
has achieved a strong and leading position in the industry. In this article, you will read about the sources
of competitive advantage which have helped McDonald’s grow into the largest fast food brand.

Global Presence:

One major source of competitive advantage for McD is its extensive global presence. McDonald’s
restaurants are mainly run through independent franchisees in more than 100 countries. The
franchisees own and operate more than 90% of McDonald’s restaurants globally. United States are the
largest market for McDonald’s accounting for more than 30% of the company’s revenue. In 2017, its
revenue from U.S. was more than 8 Billion dollars. However, McD’s has continued to grow its presence
in the other significant markets too. Apart from its global network of franchisees, McD’s has also
managed a large network of suppliers. The total number of McDonald’s restaurants globally rose to
37,241 in 2018. Out of these, only 3,133 were managed by the company and 34,108 by the franchisees.
Its franchisees achieved net sales of 78.2 Billion dollars and the company’s revenue from the company
managed restaurants and franchisee fees was 22.8 Billion dollars. Global presence has led to higher sales
and revenue for the brand.

Product range & quality:

While McD’s mainly serves a uniform menu globally with no substantial variations except for small
regional ones, its menu is still quite large and diversified. The main items included on its menu are
hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken
sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts,
sundaes, soft serve cones, pies, soft drinks, coffee, McCafé beverages and other beverages. A large and
varied product range is meant to cater to the taste and needs of various groups of customers. While the
customers of McDonald’s are mainly the millennial generation, they are only the largest group. The
number of baby boomer customers of McDonald’s is also large.

Apart from it working professionals who need a quick bite also rely on McD’s for it offers the right food
at the right prices. The U.S. based McD’s restaurants and in several international markets too offer a full
or limited breakfast menu. Breakfast offerings include Egg McMuffin, Sausage McMuffin with Egg,
McGriddles, biscuit and bagel sandwiches and hotcakes mainly. Quality, choice and nutrition are highly
important to the modern customers who are health conscious people. McD’s is continuously evolving its
menu to meet its customers’ needs and choices. In this way, a large menu becomes a source of distinct
advantage for McDonald’s which is the favourite fast food brand of a very large group of customers from
all generations.

Brand equity:-

Brand equity is also a major source of advantage for a fast food brand. Today’s customers are both
quality and health conscious. They want their food to be good in terms of quality and low on calories.
Their taste has changed a lot and they would rely only upon brands that ensure good quality.
McDonald’s has built a strong image as a fast food brand that only offers great quality. It has also
managed a large supply chain to ensure the availability of good quality raw material. As a fast food
brand, it is trusted by millions around the world. However, apart from food, it has all focused on
customer service. High customer convenience and a good customer experience inside the stores have
also helped the brand build strong equity. It helps retain customers as well as attract new ones and
manage a healthy bottom line. Brand equity is an important competitive strength that helps businesses
even in economically challenging situations. Otherwise, rising competition is leading to higher
operational and marketing costs.

Customer loyalty:-

Creating customer loyalty is difficult in the 21st century. Apart from intense competition and pricing
pressure, there are other reasons too that businesses have to struggle to retain their existing customers
and build strong customer loyalty. Moreover, customers have higher bargaining power and it is not very
costly for them to switch brands. In such a case there are some important factors fast food businesses
should mind to build strong customer loyalty. Brand equity, food quality, customer service, in-store
environment as well as marketing are all important to building higher customer loyalty than your
competitors.

McDonald’s has focused on all these things. Strong brand equity has resulted in high customer loyalty
but the brand still invest in R&D and marketing for higher customer engagement. Even as a fast food
brand, it has to retain heavy focus on customer service so as to retain them. Apart from a varied and
healthy menu, better in-store customer experience also helps retain customers. Today, McDonald’s is
the favourite fast food joint of millions globally which is a distinct advantage helping the company get
ahead of its rivals.

Supply chain:-

A strong supply chain is the backbone of a large and global business. To run a major fast food chain, you
need to ensure regular supply of good quality raw materials. McDonald’s and its franchisees buy food,
packaging, equipment and other goods from several independent suppliers. The Company has
established and enforces high quality standards and product specifications. It has quality centers around
the globe which ensure that the high standards company has set are consistently met. The quality
assurance process involves ongoing product reviews as well as on-site supplier visits. A Food Safety
Advisory Council, made up of McDonalds’ technical, safety and supply chain specialists, as well as
suppliers and outside academia, provides strategic global leadership for all aspects of food safety.

Apart from that McD’s works closely with suppliers for encouraging innovation, best practices and to
drive continuous improvement. Leveraging scale, supply chain infrastructure and risk management
strategies, it also collaborates with its suppliers for achieving competitive, predictable food and paper
costs over the long term (McDonald’s Annual Report 2017) . In this way, the company has managed a
strong supply chain which helps it manage high food quality and a tasty menu.
Marketing:-

Due to intense competition in the fast food industry, marketing has become more important than ever.
It is essential to keep the customers engaged and retain them so that they do not switch brands.
McDonald’s uses a mix of traditional and digital channels for advertising and promotions. In 2017,
McDonald’s incurred advertising expenses of 532.9 Million dollars and other marketing related expenses
of around 100 million dollars. However, this is not its entire expense because the franchisees also bear
and contribute to the costs of advertising and promotions. The focus of McDonalds’ marketing and
promotional efforts is on value, quality, food taste, menu choice, nutrition, convenience and the
customer experience. However, apart from promoting the brand and its products and offers, marketing
also tries to achieve higher user engagement and retention. It has helped McDonald’s build a distinct
brand image and identity among the fast food brands which works as a source of competitive advantage
achieving higher brand recall and sales.

Customer service:-

McDonald’s has always tried to achieve higher customer satisfaction. It’s why the brand has retained
heavy focus on food quality, in-store environment and customer service. It also uses digital channels to
collect customer feedback and to address complaints and issues. Higher focus on customer service has
become more essential than ever for businesses around the globe. It is because apart from helping them
build higher customer loyalty and driving customer retention rate high, it also helps the business
maintain a strong image and grow its popularity. Several brands like Starbucks have become famous by
focusing exclusively on customer service. Businesses also use it for differentiating themselves from
others. McDonald’s has also maintained heavy focus on customer service which has helped it engage
customers and achieve a competitive advantage.

Conclusion:

McDonald’s is the leading and one of the most popular fast food brands of the world. It has achieved
strong global growth and is largely managed by franchisees. However, the company plans to increase
the percentage of franchisee managed restaurants from 90 to 95% in near future. McDonald’s is most
popular for its diverse menu. However, apart from that it has some other sources of competitive
advantage too. Its focus on quality and customer service has resulted in strong brand equity. It has
managed its supply chain well which helps it ensure continuous supply of good quality raw material and
hygienic food for its customers. It is enjoying high customer loyalty and is in a position to achieve faster
growth in future. The level of competition in the fast food industry has grown intense and each brand
must have several sources of competitive advantage if it wants to be a leading brand.