Case Synopsis

In 2019, McDonald’s acquired a company that could give instantaneous updates to the drive-through menu based on factors such as time of day, weather, and trending menu items. This was part of a plan to create more personalized experiences for McDonald’s customers. McDonald’s had been trying to attract more customers to its restaurants by offering more customized products that were also healthier. It had lost a lot of ground with consumers, especially millennials, who were defecting to traditional competitors like Burger King and Wendy’s, as well as to new designer burger outlets such as Five Guys and Shake Shack. Changing tastes were also responsible for the loss of customers that lined up at fast-casual chains such as Chipotle Mexican Grill and Panera Bread, both of which offered customized ordering and fresh ingredients.

Over the years, McDonald’s response to this growing competition was to expand its menu with more sandwiches and salads. It also started to add snacks and drinks, but the greatly expanded menu led to a significant increase in costs and longer preparation times. This forced the firm to increase the prices of many of its items and to take more time to serve customers, moving it away from the attributes that it had built its reputation upon.

Directions: 

Read the case in your text and respond to the following questions; be prepared to participate in class.

Case Questions: 

1.    What are the current forces in the external environment that might affect McDonald’s strategy?
2.    What source of competitive advantage does McDonald’s have, and is that position supported by its value chain and other internal resources?
3.    What other strategies could McDonald’s formulate to achieve a competitive advantage?