McDonald’s has achieved substantial success over the years, which is exemplified by its impact throughout the world. many people know about and are customers of McDonald’s . for example, a recent survey found that 88 percent of people recognize the golden arches and associate them with McDonald’s. this is likely because McDonald’s touches a lot of people in a year . each day, about 68 million people eat at . McDonald’s, which equates to almost one percent of the world’s population. in the United States alone, McDonald’s hires approximately one million employees per year. approximately 12 to 13 percent to fall U.S. workers have been employed at McDonald’s at one time (including such famous people as Sharon Stone, singer, Shania Twain and comedian Jay Leno). given that McDonald’s includes a toy in about 20 percent of its sales, it is the world’s largest distributor of toys. finally, McDonald’s serves about one billion pounds of beef annually in the United States, which requires approximately 5.5 million head of cattle . McDonald’s is larger and has been more successful in the market than its close competitors, Burger King and Wendy’s, as well as other large competitions for the fast food customer, such as Subway and Starbucks. it has been estimated that McDonald’s has about 17 percent of the limited service restaurants in the United States . its success against competitors is demonstrated by the results of a recent review of the speciality coffees offered by fast food outlets . McDonald’s McCafe was rated higher than the “gourmet” coffees sold by Burger King (a new entrant in this product category), Wendy’s, Subway, and 7-Eleven. in fact, McCafe even stole some customers from Starbucks when it was first offered by McDonald’s. McDonald’s made a decision early to move into international markets and now one can find the golden arches in many countries across the world . however, its success has created a company of such size and reach that it is also easy to criticize. for example, in 2012 it created an advertisement that received acclaim because it included farmers and ranchers who supplied the food to McDonald’s. the evaluations showed that it was perceived to be authentic. early responses from the public were positive but over time the tweets became more negative with people voicing criticisms of the company and its food . it especially has been criticized because of its supposed contribution to the obesity problems in the United States. McDonald’s has tried to response to this criticism and the public’s concerns about obesity by offering more healthy food alternatives such as salads, chicken, and fish and by providing the amount of calories in its foods on their packaging, McDonald’s now serves more Happy Meals with Chicken McNuggets than with hamburgers. It also offers apple slices in place of French fries, it recently has introduced Fish McBites following its popular entry of Chicken McBites. In addition to providing a new food products form customers, McDonald;s now offers Wi-Fi, which has been practically popular with students. even with all of its success and rapid responses to criticism, McDonald’s must always be prepared to react to negative outcomes . For example, while its global sales revenue in 2012 increased by 6.7 percent over 2011 sales, early sales in 2013 have been discouraging . Sales in January dropped significantly in Asia, the Middles East, and Africa . It also has experienced recent sales declines in Europe especially Germany and France. Some of these reductions in sales reflect general economic conditions with which McDonald’s must regularly cope with intensifying competition from regional and global rivals . these results suggest that its global reach has helped the firm in many ways (massive economic of scope, recognition in the market) but also means that it must deal with geographic economic differences and varying competitive forces across the globe
Analyze the I/O model on McDonald’s, using the information from the opening case of Chapter 1.
Please address the following questions as in the exercise:
What are external pressures and constraints McDonald’s is facing?
What are relevant resources available to other firms in the industry? Which ones are mobile (easily duplicated) across firms?
What strategies has McDonald’s used as mentioned in the opening case? Are these strategies successful?