Mcdonalds Case

McDonalds Case Analysis

McDonalds has always been considered one of the leading fast food chains in the United States, even during recessions they have shown profits and substantial growth compared to their rivals. However, in 1990 McDonalds recorded its first ever annual loss. There are three major issues that caused McDonalds decline. First, headquarters stopped grading franchises for cleanliness, speed, and customer service. The second issue was the expansion of the menu, and the implementation of new products that would later be seen as failures. The last issue was the decline in employee training due to cutbacks by headquarters.

To fix these main problems headquarters decided to use a tough “up or out” strategy that will remove the franchisees that do not meet the standards in service and quality that McDonalds had set. The “up or out” strategy was a part of a more elaborate strategy to increase sales at all locations, improve the menu, enhance the atmosphere, refurbish outdated outlets, and extend hours of operation, which was deemed the “plan to win” strategy. The idea behind this strategy is not only to regain the competitive advantage that McDonald had once had, but also to bring back the pleasant experience that consumers once felt when visiting an McDonalds outlet.

The most dominant aspect of this “plan to win” strategy will be the implementation of McCafes throughout the outlets. By doing this all aspects of the strategy will be met. Sales will increase because they will be reaching a new market segment of coffee drinkers, the atmosphere will be a more comfortable one and will have a lounge like feel to it, and the hours of operations will not have a limit because people on road trips always want coffee, and finally the menu will be improved with the introduction of new coffees and fresh baked goods. However, the McCafe will have a low entrance barrier because the concept is not very hard to imitate by competitors. To set them apart from...