McDonald's Growth Strategies

Strategic Management
(McDonald’s Growth Strategy)
De Silva, Joyce Antoinette P.

Ramis, Schaznae
BSA 202
Dr. Angelita P. Ocampo
McDonald’s is the leading fast food organization in the world. It started way back
in 1954. It all started when Raymond Kroc its founder saw a hamburger stall in San
Bernardino, California. He wanted to transform the American Restaurant industry, so he
made himself as a pioneer. Today, McDonald’s is one of the most valuable brands
around the world. The growth strategies determine McDonald’s approach to growing its
business in the global fast food restaurant industry.
McDonald’s uses three growth strategies, the Market Penetration, Market
Development and Product Development. McDonald’s uses market penetration as its
primary strategy for growth. In applying this growth strategy, McDonald’s grows by
reaching more customers in markets where it already has operations. For example,
McDonald’s opens new restaurants in North America and Europe by franchising, joint
ventures or corporate ownership. A strategic objective connected to this growth strategy
is global expansion through new locations. McDonald’s generic strategy supports this
growth strategy because low costs and low prices empower the firm to easily penetrate
markets. Way back 2010, McDonald's in United States had a new strategy to penetrate
the market in the upcoming summer. The objective of market penetration is to sell more
of the current product to the current market segment. This can be a low risk marketing
strategy because often the company knows the product and the segment very well.
What McDonald's is planning to do in the upcoming summer is offer soft drinks, no
matter what size, for a $1. The company would like their locations to become a
destination of preference for beverage buyers for a 150 day period this summer. The
reason the restaurants can offer the soft drinks for $1 is that these drinks usually
account for about a 90% profit margin. Hopefully, by discounting the soft drinks they will
increase consumers, which will therefore buy other products and increase the total
sales mix. Some franchise owners are worried about this promotion that might hurt the
bottom line because the high margin on soft drinks often offsets the low margins on
other products. The McDonald's strategy is to steal customers not only from other
restaurants but from other places consumers buy soft drinks, like 7 eleven. Then when
the customer is in the McDonald's they will introduce other new beverage such as,
smoothies, frappes and ice coffee. The company has a strategy to add $125,000
additional new sales per store in new beverage sales alone.
Market development is now a secondary growth strategy because McDonald’s
already has restaurants in most regions around the world, except Mongolia, some parts
of the Middle East and west Asia, and the majority of African countries. The objective for
this growth strategy is to set up new locations in new markets, As an example
McDonald’s open a branch in African or Middle East countries because there are still no
operating McDonald’s restaurant there. Based on its generic strategy of cost leadership,
McDonald’s supports this growth strategy by using low prices to compete in new
markets. In addition, McDonald’s has adopted a market development strategy for
expanding into growing economies, especially those of Asian countries. The Golden
Arches have set their sights on penetrating Asian market, as those markets have high
income potential. McDonald’s already enjoys unqualified success in Tokyo, Seoul,
Beijing, India and United Arab Emirates, to name a few Asian markets. There are many
other markets throughout the Asian region that offer the promise of high sales, market
share and profit for the creative fast food company that is fast enough on its feet to set
up operations there.
McDonald’s uses Product development as its tertiary or supporting strategy for
growth. In applying this growth strategy, McDonald’s develops new products over time,
such as new McCafé products. As of now they introduced new flavor of their Mcflurry
they made “McFlurry with Oreo Matcha” and “McFlurry with milo” .They also introduced
new flavors of sundae. The “Hazelnut Brownie Oreo Sundae”, “Cookie Dough Oreo
Sundae” and “Butter cream graham sundae” .McDonald’s also releases new flavors of
shake shake fries. The “Cheese” “Barbeque” and “Honey butter”. And also a new
released product is about the flavors of Japan. There are two new flavors of burgers
and one flavor of McFloat and shake shake fries. The new flavors of burger are namely
“Teriyaki Samurai Burger” and “Ebi Burger”, while in the McFloat is called “Strawberry
Sakura McFloat” and last is the new flavor of fries, the “Nori Shake Shake fries”.
McDonald’s also improved their Spaghetti; they stick to the Filipino taste which is the
“sweet” type of spaghetti. Another one is they launched a spicy chicken. These new
products may be variations of existing products, or entirely new products. The strategic
objective for this growth strategy is to capture more consumers by attracting them to
new products. This growth strategy agrees with McDonald’s broad differentiation
generic strategy in terms of new products that make the company distinct.
To sum it up, McDonald’s certainly uses only the three growth strategies which
are the Market Penetration, Market Development and Product Development. It helps the
McDonald’s to aim the winning market share. The company increases their profit,
market sales, and their scale of operations and to reduce the production cost per unit.
By the use of these growth strategies, McDonald’s the leading fast food organization
and still continuing to grow.

McDonald's Growth Strategies

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McDonald's Growth Strategies

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Strategic Management

(McDonald’s Growth Strategy)

De Silva, Joyce Antoinette P.

Bernardino, California. He wanted to transform the American Restaurant industry, so he

business in the global fast food restaurant industry.

McDonald’s uses three growth strategies, the Market Penetration, Market

Development and Product Development. McDonald’s uses market penetration as its

ventures or corporate ownership. A strategic objective connected to this growth strategy

What McDonald's is planning to do in the upcoming summer is offer soft drinks, no

additional new sales per store in new beverage sales alone.

Market development is now a secondary growth strategy because McDonald’s

this growth strategy is to set up new locations in new markets, As an example

markets. In addition, McDonald’s has adopted a market development strategy for

income potential. McDonald’s already enjoys unqualified success in Tokyo, Seoul,

and still continuing to grow.

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