McDonald's Corp. Strategy

The fastfood segment of the restaurant industry is approaching, if it is not already in, the mature stage of its life cycle. The restaurant industry, as a whole, is plagued by a declining availability of good expansion sites, market saturation, and rising labor costs (Barr, 1989b). Food costs, while relatively stable at present, remain volatile (Barr, 1989b).

Intensified competition in the fastfood segment has resulted in a practice of heavy price discounting (Barr, 1989b). Price discounting reduces profitability, causes consumers to expect lower prices on a regular basis, and, in the fastfood segment, fails to build longterm volume (Barr, 1989b).

McDonald's is the industry leader in the fastfood segment of the restaurant industry, as well as it is in the hamburger subsegment (Barr, 1989a). Kentucky Fried Chicken is quite

1 2clost to McDonald's in terms of market share within the fastfood segment, while Burger King is second in the subsegment.

Industry sales in 1990 are expected to increase by 4.9 percent over 1989 levels (Barr, 1989b). By 1994, industry sales are projected to increase by a further 20.2 percent (Barr, 1990b).

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ch may be found on the following page. CHARTER McDonald's values are concerned with (1) public service, (2) community involvement, (3) providing a high value/price ratio in its products, and (4) fostering human resource development within its organization. The company is highly sucessful in adherring to and promoting its values (Cox, 1982). 6 Table 1 Company Capability Profile McDonald's Corp. =============================================================== Profile  Function Weak Normal Strong     Management x Competitive x Financial x Technical x =============================================================== GOALS The company's goals are concerned with (1) market share, (2) market penetration, (3) developing and retaining an effi cient and committed staff, and (4) expanding its international presence
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Approximate Word count = 2302
Approximate Pages = 9 (250 words per page)

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