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McDonald's Corp. Strategy

This research involved an analysis of the strategic position, and marketing strategy of McDonald's Corp. The company licenses and operates a chain of almost 11,000 fastfood restaurants in the United States, Canada, and several other countries (Barr, 1990a).

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).

Although McDonald's serves foods other than hamburgers, the thrust of the company's operations is in the hamburger subsegment of the fastfood segment of the restaurant industry. Many of the company's products other than hamburgers are also served in a burger format, a factor which further identifies McDonald's with the industry's hamburger subsegment.


A company's strengths and weaknesses derive from its internal characteristics, while the threats to a comp...

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