One Word

1. When Easterbrook became CEO, McDonald’s was suffering great loss in both revenue and earnings. Sales fell shapely in some area, such as Asia, Middle East, Los Angeles and Russia with the problems of food safety concern with Chinese meat supplier, shortage of French fries and some outlets in Russian area’s closing because of political dispute. In the biggest market America, McDonald’s was facing strong competition among the other fast food brands and lost its original values, consistency and convenience by expanding menu.

The current forces in the external environment that might affect the new CEO are as follows:

In general environment:

(1) Demographic: The customers’ working hours get longer and expect the whole day round of access to fast food. So the business hour may be the concern.

(2) Sociocultural: Customers nowadays’ preferences of more organic, exotic and healthier food with better taste. The adjustment of the menu and the ingredient should be highlight.

(3)Economic: Current economic downturn may lead to customers’ trading down to McDonald’s if they want to eat out.

(4)Global: Boundaries are gradually disappearing so travelers are more open to global consistency in food offerings, McDonald’s for instance.

In the competition environment:

(1) Potential entrants: More competitors are competing in the fast food business. Convincing the customers that McDonald’s menu is different from others is important.

(2) Suppliers: Suppliers of beef, eggs have little power. Soft drink suppliers have higher bargaining power. McDonald’s has to gain steady corporation with suppliers.

(3) Substitutes: Main substitute is home cooking, because it is easier to make a burger at home.

2. Cost leadership is the most traditional strategy for the fast food industry but McDonald’s tried to develop a different advantage while keeping the original one. Differentiation requires the creation of something that is perceived industry-wide as unique and valued...