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Published bySara Maxwell Modified over 9 years ago
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McDonald’s McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
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1-3 McDonald’s Ice Breaker Question Do you like McDonald’s? In your opinion, what changes have occurred at McDonald’s since the first time you went there? Are these changes good?
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1-4 McDonald’s 1.What situation did Cantalupo inherit when he became CEO?
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1-5 McDonald’s 2.What sources of competitive advantage does McDonald’s have? Its position by its value chain?
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1-6 McDonald’s 3.What steps did Cantalupo take to fix the problems that McDonald’s faced?
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1-7 Q1. Strategy Issues For decades, McDonald’s had a clear strategy; it stumbled as it tried to reevaluate its position. Growing interest in healthier foods (and the success of chains such as Panera Bread) caused it to rethink its strategy. Its new healthier offerings did not succeed. Cantalupo brought in from retirement when Greenberg did poorly. Greenberg’s strategic missteps: Acquiring Chipotle Mexican Grill, Boston Market, etc. Rapid introduction of 40 new menu items Poor franchisee relationship and turnover
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1-8 Q2: McDonald’s Value Chain Value Chain Activity Primary: Inbound logistics OperationsDrop in quality of food; slowdown in service; outlets not always clean; lack of consistency across chain Outbound logistics Marketing and salesPrice cuts have not increased profits: franchisee problems with $1 menu; new product introductions failed; serious product missteps (pizza, salad shaker) ServiceDecline in speed and quality of service; delays after implementing Greenberg’s kitchen changes
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1-9 Q2: McDonald’s Value Chain (contd.) Value Chain Activity Secondary: Procurement Technology development Expensive cooking process failed to get desired results; lack of success with new product introductions (McLean Deluxe, Arch Deluxe burgers) Human resource management Growth pressures leading to lower hiring standards; less training time; deterioration in service quality General administrationPoor franchisee relationship due to top-down decision making; franchisee margin declined from 15% to 4%; turnover in franchisees
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1-10 Q3. Cantalupo’s Steps Management Infrastructure New hires and promotions Franchisee Relations Listening to franchisees for new ideas (Irwin Kruger in New York City) Adapting store front to meet different needs Toughing up grading system for franchisees
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1-11 Q3. Cantalupo’s Steps (contd.) Marketing New product introductions (McGriddles breakfast sandwich) New slogan (“I’m loving it”) promoted in MTV style Relaunching McKids line (interactive videos and books) to keep brand prominent among kids
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