The purpose of this research was to perform a case analy sis on the McDonald's Corporation, the fast food industry leader.1 The time frame for the case is early 1983, with per formance data presented through 1982. Research external to the case, however, extended the analysis in time through the fall of 1989. In the following section, the salient facts of the case are presented. This presentation is followed by an iden tification and diagnosis of the problem. The concluding sec tion suggests a course of action for the company to follow in addressing the identified problem. In the development of the suggested course of action, events occurring subsequent to the time frame of the case were considered.
In early 1983, McDonald's occupied its long standing posi tion as fast food industry leader, with little or no worry that any of its competitors could dislodge it from that position in the foreseeable future. All was not peaches and cream for the company, however, as a number of uncomfortable issues pricked
1H. Openshaw, and M. McKellin, "McDonald's Corp.," Value Line Investment Survey, 21 October 1989, 326.
2 at management's tendencies toward smugness and complacency. The most significant of these issues were as follows:
1. Competitor comparative advertising suggested that McDonald's cooking methods produced a less tasty product than the competition (Burger King), and that the company's meat was not as fresh as that of the competition (Wendy's).
2. An unsubstantiated rumor linked hamburgers from some McDonald's restaurants with a rare intestinal disease.
3. The company was required to take legal action against an important franchise holder, in order to enforce its system wide cleanliness standards.
4. McDonald's suffered some well publicized setbacks in new product introductions.
5. Surveys indicated that McDonald's (a) had the lowest proportion among the three top burger chains of custo mers who like t...