Mcdonalds diversification strategy

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Case 15

McDonald’s

Jamal Shamsie

Alan B. Eisner

Strategic Management:
Creating Competitive Advantages

McDonald’s
Discussion Question

What situation did Thompson inherit when he became CEO? What are the current forces in the external environment that might affect new CEO Thompson’s strategy?

What source of competitive advantage does McDonald’s have, and is that position supported by its value chain and other internal resources?

What other strategies did McDonald’s formulate to achieve a competitive advantage? What steps did Skinner take to fix the problems that McDonalds faced? What should Thompson do now to perhaps build on Skinner’s accomplishments?

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McDonald’s
Q1. Strategy Concept

Strategic management consists of the analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
Q1: What situation did Thompson inherit?

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Strategy is all about the ideas, decisions, and actions that enable a firm to succeed.

McDonald’s
Q1. Strategy Concept, cont.

Key Attributes of strategic management:

Directs the organization toward overall goals and objectives
Includes multiple stakeholders in decision making
Needs to incorporate short-term and long-term perspectives
Recognizes trade-offs between efficiency (cost) and effectiveness (performance)
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McDonald’s
Q1. Strategy Concept, cont.

The primary role of the organizational leader is to articulate vision, mission and strategic objectives
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Leaders face a large number of complex challenges. Leaders must be proactive, anticipate change and continually refine changes to their strategies. This requires a certain level of “ambidextrous behavior”, where leaders are alert to opportunities beyond the confines of their own jobs, and are also cooperative and seek out opportunities to combine their efforts with others. Leaders must make strategic management both a process and a way of thinking throughout the organization.

McDonald’s
Q1. Strategy Concept, cont.

Exhibit 1.6

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The primary role of the organizational leader is to articulate vision, mission and strategic objectives.

McDonald’s
Q1. Strategy Concept, cont.

Company vision
Massively inspiring
Overarching
Long-term
Driven by and evokes passion
Fundamental statement of the organization’s
Values
Aspiration
Goals
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Leaders must communicate their initial vision of the organization’s purpose: what was the original goal that evokes a powerful and compelling mental image of a shared future, one that would be massively inspiring, overarching, and long-term, that represented a destination that is driven by and evokes passion? Is the original vision still applicable given the present circumstances?

McDonald’s
Q1. Strategy Concept, cont.

Mission statements
Purpose of the company
Scope of operations
Basis of competition and competitive advantages
More specific than vision
Focused on the means by which the firm will compete
Reflects an organization’s enduring, overarching strategic priorities and competitive positioning
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The organizational mission also needs to be considered: a mission encompasses both the purpose of the company as well as the basis for competition and competitive advantages. In writing a mission statement, it is important to understand the definition of the business: 1) who are its customers, 2) what customer need is the organization trying to fulfill, and 3) how does the business create and deliver value to customers and satisfy their needs. Organizations must respond to multiple constituencies if they are to survive and prosper, and the mission provides a means of communicating to diverse organizational stakeholders. Although vision statements tend to be quite enduring and seldom change, a firm’s mission can and should change when competitive conditions dramatically change or the firm is faced with new threats or opportunities.

McDonald’s