Many fast food customers are looking for healthier and better tasting food. Moreover, competitions has been coming from quick meals of all sorts that can be found in supermarkets, convenience stores and vending machines. Demographic – customers now working around theclock, expecting 24 hour access to fast food, how toplease range of customers from kids to contractors? Sociocultural – customers preferences have changed tomore exotic foods, healthier food with better taste Economic – current economic downturn means customers might be trading down to McDonald’s if they ant to eat out Global – boundaries are disappearing, travelers moreopen to global consistency in food offerings – GoldenArches are accepted, and expected, everywhere
2. Cost leadership has been the traditional strategy for thefast- food industry, but McDonald’s kept costs under control in order to achieve parity with competitors -McDonald’s tried to develop a differentiationadvantagewhile keeping costs at a reasonable level -Differentiation requires the creation of something that isperceived industry-wide as unique and valued bycustomers -Differentiation s achieved by a firm configuring its valuechain activities to support its position so customers arewilling to pay a premium for something unique – could McDonald’s do this effectively? Value-Chain Analysis: -Sequential process of value-creating activities -The amount that buyers are willing to pay forwhat a firm provides them -Value is measured by total revenue -Firm is profitable to the extent the value itreceives exceeds the total costs involved increating its product or service Value ChainActivity How does McDonald’s create value? Primary: Inbound logistics: Hard to assess
Operations: Strived for consistency across the chain, withdiffering results. Refurbishing of restaurants,change in hours may help draw customers. Outbound logistics: Hard to assess Marketing and sales: Many product innovations failed, $1 menu didn’t go well with franchisees. I’m Loving It campaign was attempt to reach all customers. Service: Hard to assess Value ChainActivity How does McDonald’s create value? Secondary: Procurement: Info not available in the case Technology development: Adoption of expensive cooking processesfailed to generate desired results.