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Case three: McDonald’s Competitive Strategy QUESTIONS: 1. How many of you have eaten at McDonald's recently? Have you seen signs of improving food quality and amenities? Have certain features of the fast food experience improved? If so, have they caused you to spend more money at McDonald's? 2. According to the article, since when did McDonald's get into the groove? For how long has the firm prospered? Are there reasons to think that the firm has gained a sustainable competitive advantage? Why or why not? 3. On what basis has McDonald's prospered? What are the cornerstones of its competitive strategy? Just as importantly, what strategic temptations has the firm resisted? 4. Thinking more broadly than just fast food, what aspects of competitive advantage does McDonald's illustrate? How is a company like McDonald's able to improve its position in round after round of competition? What do you think lies behind this ability? How long do you think it will last? 5. Finally, how is McDonald's competing in Asia? What is it doing differently in Asia from how it does business in North America? Can one call this "local differentiation"? How McDonald's Hit the SpotChain Focuses on Emerging Markets, Customer Convenience and Range of Pricing By JULIE JARGON McDonald's Corp. lately is as hot as French fries straight from the fryer. Ever since it adopted a strategy in 2003 that focuses on improving existing restaurants and adding new menu items, the burger giant has been on a tear.
Even during the latest economic downturn, its growth barely slowed, and in the third quarter, its revenue and profit exceeded analysts' expectations. McDonald's shares are up more than 63% in the last three years, having closed Monday at $98.48, and many analysts expect its stock to break $100 soon. The company beat the Street again last week, when it posted its 103rd month of positive global same-store sales. So what's McDonald's secret sauce? For one thing, the Oak Brook, Ill.-based chain is leaning heavily on emerging markets such as China for new-restaurant growth. The company last week reported that its Asia/Pacific, Middle East and Africa division posted the strongest same-store sales growth last month of all its business units, with sales up 8.1% from the year before. The company cited "compelling customer conveniences" as one of the growth drivers at work. Delivering food by motorbike is one of those conveniences in countries like China, Egypt and South Korea. Another is adding dessert "kiosks," or windows on the exterior of existing restaurants where pedestrians can order an ice-cream cone, bypassing the lunch line inside. All over the world, the company is updating its restaurants, modernizing the décor and adding such amenities as free wi-fi and flat-screen televisions. It has also extended restaurant hours to attract customers who don't dine during the traditional work day, and added double-lane drive-throughs to get more customers through the line more quickly.