McDonald's Cost Leadership Strategy
McDonald's Cost Leadership Strategy
It is based on:
Sell standardized goods or services;
Process innovation;
Efficiency;
Maintain competitive levels of differentiation.
MCDONALDS COST LEADERSHIP STRATEGY
(1)
It is based on:
Product and Service Standardization
(McDonalds restaurants offer substantially uniform menu that
comprises hamburgers and cheeseburgers, Big Mac, Quarter
Pounder with Cheese, Filet-O-Fish, several chicken sandwiches,
Chicken McNuggets, and many others).
Product Differentiation
(McDonalds develops the business and its products to make them
distinct from competitors. For example, McCaf products).
Efficiency
(McDonalds is famous for the speed of customer service without
compromising the quality of the service itself).
MCDONALDS COST LEADERSHIP STRATEGY
(2)
Cheaper Products
(McDonalds offers products that are relatively cheaper compared to
its competitors).
Vertical integration
(McDonalds owns facilities that produce standardized mixtures of
ingredients).
Economies of scale
Specific Products for Specific Markets (McDonalds
takes into account local tastes and preferences, when developing its menu and
engaging in marketing efforts).
MCDONALDS COST LEADERSHIP STRATEGY
(3)
Product Innovation
MCDONALDS MISSION
STATEMENT
Differences:
McDonalds pushes maybe too much on new
products development;
McDonalds does not have a centralized corporate
staff;
IS MCDONALDS PROPERLY STRUCTURED TO REACH ITS
CURRENT & FUTURE STRATEGIC GOALS?
Because its functional structure follows more than 80% the one that aims to
implement a cost leadership strategy. They are, moreover, already the
cost leaders in their market, which means that their actual structure is
already the best one.
Many of their strategic goals are already reached, and many others, in my
opinion, will be reached in the near future such as operating our
business ethically (everyone has heard at least ones some stories about
McDonalds food quality; their aim in the future must be to improve their
ethics when it comes to select their ingredients).
Its structure lacks of centralization and the managers are pushing hard on
new products development, but this is also a result of a needed-not-
completely-following of a cost leadership strategy.