The success and survival of a business depends on several factors, among these are the business and corporate level strategies. These strategies are the ones that enables a business to have a competitive advantage. In this paper I will look on MacDonald’s business and corporate level strategies, how competitive the fast food environment is and how the slow and fast cycle markets influence MacDonald’s processes and decisions.
Corporate-Level Strategies
Corporate level strategies refer to actions that a firm implement so as to gain competitive advantage and earn above average returns. This includes managing different businesses that compete in different product markets, expanding to international markets, franchising and adaptation. A firm may acquire or merge with a competitor in what is called horizontal integration or buy clients or suppliers in what is referred to as vertical integration in order to gain competitive advantage that will benefit the firm in the long run (Hitt, 2019). But, this may if not done in a right way it may make the firm to find itself facing lawsuits due to contravening antitrust laws.
In the case of MacDonald’s, the firm has not shown any interest of joining other areas apart from fast food. The company has limited itself in the field of fast foods. The notable corporate level strategy the firm has been employing is expanding its operation in more nations. For example, the firm has operations in German, France, Canada, China, India and other Asian nations. Though, spreading the wings in the international markets is yielding results (McDonald's, McDonald's Annual Report 2020, 2021), the firm is forced to franchise in order to gain entry to some markets like India. Franchise is one area that makes MacDonald’s to have a steady income.
Competitive Environment
The fast food market is very competitive. Big firms like MacDonald’s find themselves experiencing competition rivalry even from small businesses (mcdonaldsfaq, 2021). The healthy foods movements also make the competition to be stiff as individuals shift their tastes from fast foods. Thanks to MacDonald’s because the firm has a strong brand and reputation. It also has enough resources to implement new changes in order to retain its clients. The firm for instance has introduced spicy products in its menu in order to appeal to the Indian community. One of the MacDonald’s core value is “inclusion.” This makes the firm to prepare meal for everyone and thus it has menu for every person.
The main competitor of MacDonald’s is Burger King, which is also an American fast food company. Burger King has a long history like Macdonald as far as fast food is concerned. The firm uses the same business and corporate strategy as Macdonald’s (integrated cost leadership with differentiation and international expansion.) although, Burger King has not reached the level of Macdonald its mantra of “keep it simple” is doing magic. Burger King does not add new menu. It uses existing menu to come up with new products. This gives it an upper hand in retaining and winning new clients (Lutz, 2015). But, though Burger King has good projections for growth, it cannot match or beat MacDonald’s out of the first food industry.
Market Cycles
Slow cycle markets refer to markets in which a firm’s competitive advantage is protected from imitation by other firms in the same industry for a longer period of time. This is through patents and copyrights. For example, Burger King may use its capabilities to shield Macdonald’s from imitating its menu. To enjoy the benefits of the slow cycle market a firm looks for ways to protect, maintain and extend that advantage and this can trigger acquisition processes. For example, since MacDonald’s has enough resources it may decide to acquire other upcoming competitors in expensive deals so as to remain as the King of fast food industry.
On the other hand, in fast cycle markets a firm’s capability that add to its competitive advantage is not shielded at all and the changes happens too fast. In this market competitors do not necessarily look for ways to imitate the product but improve it. The firm with the competitive advantage rather than searching for ways to protect the product from imitation searches for new innovation to come up with superior product (Hitt, 2019). For instance, due to staff’s turnover a firm like Macdonald can lose its competitive advantage as employees may transfer their knowledge to the competitor. To remain ahead the firms looks for new flavors that exiting employees are not aware of.
Conclusion
In conclusion, business and corporate level strategies are dynamic. They are not employed for a lifetime. Changes in business environment demands a change of these strategies. For example, Covid19 pandemic came with its own challenges that made a business like Macdonald to adopt online platforms, where clients can place orders that are delivered at their doorsteps. A firm that fails to change its strategies is kicked out of the market.
Business-Level Strategies
Business level strategies refers to the actions that a firm makes in order to be competitive in the industry it operates in. It is the business level strategies that a firm employ that makes it different from the competitors. This may be through performing some activities differently or performing different activities. To be competitive and earn above average returns firms choose either to lower cost than their rivals or differentiate their products in order to have a premium price. To achieve a low cost the firm must have production activities of producing their products at a lower cost than their rivals, while, if a firm chooses to be distinctive then it must be doing some of its production activities in a unique way. A firm’s capability, competence and resources determines the business level strategies that it will adopt (Hitt, 2019).
Macdonald employs integrated cost leadership with differentiation strategy in order to remain competitive. This is because the clients expect food with differentiated features at a lower cost. This makes Macdonald to have a strong relationship with its suppliers in order to be able to get products in large quantities at a lower price. This translates to lower cost of producing their menu and lower cost of their products. Also, the firm employs ways of reducing production costs like self service outlets (Drive-Thru), encouraging clients to throw their own trash and customers serve pop themselves (Metz, 2021).
To ensure Macdonald is not stuck in the middle, that is, fail to successfully implement low cost structure and differentiate its products fully, it continuously engages itself in value –chain activities. This includes evaluating what the clients wants time to time and introducing new ways as well as scraping others in their meal preparation. For example, in 2020 the company announced it will implement changes in its operations and processes in order to unlock new flavors that meets the customers tastes and profiles (McDonald's, 2020).
MacDonald’s mission states that, “to create delicious feel-good moments for everyone.” This makes the company to have a menu for every person (McDonald's, McDonald's Annual Report 2020, 2021). The Macdonald outlets globally prepares menu that attract even the low income earners. Clients are given a priority at MacDonald’s and therefore the cost of burgers is low and is prepared to meet the tastes of the local people. Though, fast foods are termed as unhealthy and are taken as the root cause of obesity, MacDonald’s avails them to even deprived communities. For example, Macdonald has outlets England and Scotland in areas where the communities around are poor (Ives, 2018).
Business level strategies refers to the actions that a firm makes in order to be competitive in the industry it operates in. It is the business level strategies that a firm employ that makes it different from the competitors. This may be through performing some activities differently or performing different activities. To be competitive and earn above average returns firms choose either to lower cost than their rivals or differentiate their products in order to have a premium price. To achieve a low cost the firm must have production activities of producing their products at a lower cost than their rivals, while, if a firm chooses to be distinctive then it must be doing some of its production activities in a unique way. A firm’s capability, competence and resources determines the business level strategies that it will adopt (Hitt, 2019).
Macdonald employs integrated cost leadership with differentiation strategy in order to remain competitive. This is because the clients expect food with differentiated features at a lower cost. This makes Macdonald to have a strong relationship with its suppliers in order to be able to get products in large quantities at a lower price. This translates to lower cost of producing their menu and lower cost of their products. Also, the firm employs ways of reducing production costs like self service outlets (Drive-Thru), encouraging clients to throw their own trash and customers serve pop themselves (Metz, 2021).
To ensure Macdonald is not stuck in the middle, that is, fail to successfully implement low cost structure and differentiate its products fully, it continuously engages itself in value –chain activities. This includes evaluating what the clients wants time to time and introducing new ways as well as scraping others in their meal preparation. For example, in 2020 the company announced it will implement changes in its operations and processes in order to unlock new flavors that meets the customers tastes and profiles (McDonald's, 2020).
MacDonald’s mission states that, “to create delicious feel-good moments for everyone.” This makes the company to have a menu for every person (McDonald's, McDonald's Annual Report 2020, 2021). The Macdonald outlets globally prepares menu that attract even the low income earners. Clients are given a priority at MacDonald’s and therefore the cost of burgers is low and is prepared to meet the tastes of the local people. Though, fast foods are termed as unhealthy and are taken as the root cause of obesity, MacDonald’s avails them to even deprived communities. For example, Macdonald has outlets England and Scotland in areas where the communities around are poor (Ives, 2018).
Corporate-Level Strategies
Corporate level strategies refer to actions that a firm implement so as to gain competitive advantage and earn above average returns. This includes managing different businesses that compete in different product markets, expanding to international markets, franchising and adaptation. A firm may acquire or merge with a competitor in what is called horizontal integration or buy clients or suppliers in what is referred to as vertical integration in order to gain competitive advantage that will benefit the firm in the long run (Hitt, 2019). But, this may if not done in a right way it may make the firm to find itself facing lawsuits due to contravening antitrust laws.
In the case of MacDonald’s, the firm has not shown any interest of joining other areas apart from fast food. The company has limited itself in the field of fast foods. The notable corporate level strategy the firm has been employing is expanding its operation in more nations. For example, the firm has operations in German, France, Canada, China, India and other Asian nations. Though, spreading the wings in the international markets is yielding results (McDonald's, McDonald's Annual Report 2020, 2021), the firm is forced to franchise in order to gain entry to some markets like India. Franchise is one area that makes MacDonald’s to have a steady income.
Competitive Environment
The fast food market is very competitive. Big firms like MacDonald’s find themselves experiencing competition rivalry even from small businesses (mcdonaldsfaq, 2021). The healthy foods movements also make the competition to be stiff as individuals shift their tastes from fast foods. Thanks to MacDonald’s because the firm has a strong brand and reputation. It also has enough resources to implement new changes in order to retain its clients. The firm for instance has introduced spicy products in its menu in order to appeal to the Indian community. One of the MacDonald’s core value is “inclusion.” This makes the firm to prepare meal for everyone and thus it has menu for every person.
The main competitor of MacDonald’s is Burger King, which is also an American fast food company. Burger King has a long history like Macdonald as far as fast food is concerned. The firm uses the same business and corporate strategy as Macdonald’s (integrated cost leadership with differentiation and international expansion.) although, Burger King has not reached the level of Macdonald its mantra of “keep it simple” is doing magic. Burger King does not add new menu. It uses existing menu to come up with new products. This gives it an upper hand in retaining and winning new clients (Lutz, 2015). But, though Burger King has good projections for growth, it cannot match or beat MacDonald’s out of the first food industry.
Market Cycles
Slow cycle markets refer to markets in which a firm’s competitive advantage is protected from imitation by other firms in the same industry for a longer period of time. This is through patents and copyrights. For example, Burger King may use its capabilities to shield Macdonald’s from imitating its menu. To enjoy the benefits of the slow cycle market a firm looks for ways to protect, maintain and extend that advantage and this can trigger acquisition processes. For example, since MacDonald’s has enough resources it may decide to acquire other upcoming competitors in expensive deals so as to remain as the King of fast food industry.
On the other hand, in fast cycle markets a firm’s capability that add to its competitive advantage is not shielded at all and the changes happens too fast. In this market competitors do not necessarily look for ways to imitate the product but improve it. The firm with the competitive advantage rather than searching for ways to protect the product from imitation searches for new innovation to come up with superior product (Hitt, 2019). For instance, due to staff’s turnover a firm like Macdonald can lose its competitive advantage as employees may transfer their knowledge to the competitor. To remain ahead the firms looks for new flavors that exiting employees are not aware of.
Conclusion
In conclusion, business and corporate level strategies are dynamic. They are not employed for a lifetime. Changes in business environment demands a change of these strategies. For example, Covid19 pandemic came with its own challenges that made a business like Macdonald to adopt online platforms, where clients can place orders that are delivered at their doorsteps. A firm that fails to change its strategies is kicked out of the market.
