ANALYSIS OF MCDONALD’S (IN2013): HOW TO WIN AGAIN?

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Introduction

When a task is so easy that it does not require outstanding intelligence and
skills to perform, people say one does not have to be a rocket scientist to do it.
Ironically, Jim Thompson (who was practically a rocket scientist) failed at doing what
his predecessor Skinner and his successor Easterbrook (who were not rocket scientists)
did successfully. As a matter of fact, in an interview published in QSR Magazine,
Skinner indicates: “One of my big concerns for the organization, when it sort of
thought the business was rocket science, was, could we get back to where we’d realize
it was not rocket science?” Furthermore Skinner said, “We didn’t need a lot of people
with intellectual fiber to figure out that faster service, hotter food, greater value, in a
relevant environment that our customers loved and wanted to come back to, is the
answer to any question you have about the restaurant business.” Skinner was referring
to the simple yet highly effective core competences that gave McDonalds it absolute
competitive advantage from its humble birth in the 40’s to its coming of age through
the late 90’s until its deterioration during the first decade of the 21st century. However,
even though Skinner was able to invigorate the company during his term, it was
already showing signs of problems when Thompson assumed its reins in July 2012.
The fact is that financial woes were the cause underlying CEO Greenberg’s resignation
as early as 2003 (Arthaud-Day, et al, (p. 3).

At first sight, if one considers Porter’s (1985), three generic strategies (cost
leadership, differentiation, and focus) as key elements for McDonald’s to attain and
maintain superior performance and competitive advantage, one could say that the
company, by over emphasizing cost leadership, experienced serious financial problems
at the turn of the century. McDonald’s distinctive competence in delivering effective
quick service also suffered. The damage they suffered should be no surprise
considering Kotler (2011, in Da Silva & Silva Chaves, 2017, p.1) who states that "to
have low prices is not enough to build a feasible business, you need to add quality and
services for the customer to feel that he is buying based on value”. The emphasis on
cost leadership at the expense of quality, the deterioration in service, and the
worldwide diffusion of documentaries such as Supersize Me and Food Inc., were
crucial to damage McDonald’s brand equity and brand image. The documentaries
exposed crude realities regarding the unhealthy nature of McDonald’s cheap food.
Costumers were disgusted and McDonald's desperately needed to improve costumer
satisfaction to lure them back and improve its revenues. The report includes an analysis
following guidelines in page C2 of Analyzing a Case Study and Writing a Case Study
Analysis. Recommendations relevant to the solution to the case are presented.