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Case_14_McDonalds_TN - Teaching Note Case 14 McDonalds Case...

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Teaching Note: Case 14 – McDonald’s Case Objectives 1. To investigate the key external environmental issues that can affect a firm’s strategy. 2. To examine how a reevaluation of strategy involves assessment of internal activities and resources. 3. To discuss the decisions and actions that a firm has to undertake to sustain a competitive advantage, especially when pursuing growth. See the table below to determine where to use this case: Chapter Use Key Concepts Additional Readings or Exercises 1: Strategy Concept Strategic management; vision, mission, strategic objectives Visit McDonald’s website to evaluate its mission. See an embedded video of a 1967 McDonald’s TV commercial. 2: External Environment External environmental forces; Porter’s five forces model Visit investor commentary on MCD, view embedded video about current coffee strategy; read about healthy foods controversy, watch video re SuperSize Me, FastFoodNation 3: Internal Analysis Value chain; tangible vs. intangible resources; VRIN analysis 4: Intellectual Assets Human capital; intellectual capital 5: Business- Level Strategy Generic strategies Additional video viewing on McDonald’s operations is embedded in this section. Plus, see the case DVD 6: Corporate- Level Strategy Corporate strategy; diversification; synergy; acquisition 7: International Strategy International expansion Case Synopsis Even in the midst of a global economic slowdown, McDonald’s reported strong results for the fourth quarter of 2008 and announced plans to add 650 more outlets by the end of 2009. The fastfood chain’s performance was particularly impressive as rivals such as KFC and Wendy’s had not managed to cope as well with the spending downturn. Same- store sales, a key indicator of the firm’s health, actually rose by 7.2 percent during the
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last quarter from the figures reported a year earlier. Responding to McDonald’s performance, CEO Jim Skinner remarked: “We continue to be recession-resistant.” Skinner was the second person to take over the company since James R. Cantalupo had died unexpectedly of a heart attack in 2004. Cantalupo had been replaced by Charlie Bell, who also resigned a few months later in order to fight his recently discovered cancer. In spite of these changes in leadership, the firm had continued to push on the turnaround strategy that had been initiated by Cantalupo in order to address McDonald’s previous lackluster performance. The strategy, commonly refereed to as the “Plan to Win” tried to target various critical areas that needed to be addressed. But Skinner was acutely aware that the problems at McDonald’s went way beyond cleaning up restaurants and revamping the menu. The chain had been squeezed by long- term trends that were threatening to leave it marginalized. McDonald’s was facing a rapidly fragmenting market, where changes in the tastes of consumers made once-exotic foods like sushi and burritos everyday options. Many of its fast-food customers were also looking for food that was healthier and better tasting. Furthermore, competition had been
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