mcdonalds - Flinders University Flinders Business School...

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Flinders University Flinders Business School BUSN 3055 Strategic Management Main Assignment Lecturer: Kevin Kirchner Done by : Chat Ming Kai 2071841
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BUSN 3055 Strategic Management (2071841) Introduction McDonalds has evolved through its management and service through the years. This can be explained from below on why it resulted in the present McDonalds that everyone is familiar with. Foundations: Ray Kroc, (1955-1973) Cost of leadership Under the McDonald’s brother operation, burger prices became cheaper because they wanted to focus on the cost of leadership as product differentiation was their secondary focus. To ensure that there was a competitive advantage over its competitors, all costs were lowered, mainly from the fact that they did not need intensive training on their workers, which resulted in a decrease in labor expense that allowed for the price of its products to be lowered. They further increase the productivity of their workers through simplifying their menu, making it easier for their workers to process. Through simplifying their menu and decreasing their labor costs, economies of scale was achieved, thus reducing the per unit cost of their products. Product differentiation Ray Kroc had many experience in franchising as he owns many of them. He further
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went on to purchase McDonald. McDonalds was so successful due to the uniformity that was achieved through a set of systems. The products were very different from its fast food competitors as the service was quick and the quality of the food was high. This was because supervision on the franchise was monitor by following the standards set by him. It is a good strategy as this enables customers to develop brand loyalty and also as the quality of the product was maintained; it was able to satisfy its customers’ needs Superior innovation There were many trial and errors that McDonald faced in its innovation but one major success was its creation of its burgers, especially Big Mac. This created an opportunity for McDonalds to have a competitive advantage as there wasn’t a similar product, like Big Mac, in the market. They are the pioneer of double decker hamburgers. The reason why this was so popular, although it was much more expensive than other burgers in the market, was because customers at that time burn more calories than the present average person. They needed something with a bigger portion as they needed energy to do their daily routines (i.e. they walked more as transportations wasn’t that advance at that time). This product satisfies the needs and wants of their customers thus gaining a competitive advantage over its competitors. After the launch of the burger, the company increased its profit by twenty percent. Therefore innovation is crucial to the success of a company, which enables the firm to
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mcdonalds - Flinders University Flinders Business School...

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