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Case Analysis Mcdonalds

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Jim Cantalupo, Chief Executive Officer and Chairman


Year 2004


How can McDonald’s adapt to changing market conditions to sustain the growth it had experienced?


To have an annual system wide sales growth of between 3 and 5 percent by 2005 and beyond



1. McDonald’s has the strongest international presence and greatest amount of worldwide sales since the beginning of overseas expansion.

2. It has vast real estate holdings.


1. Lack of employee trainings, reflected on its poor service ranking.


1. With expected growth of the global food-service industry McDonald’s has more opportunity of expansion.

2. With the changing customer preference McDonald’s has the opportunity to come up with more unique and innovative ideas.


1. Increased domestic expansion led to cannibalization in existing franchises, but this was resolved by focusing more on international expansion.

2. New entrants and existing competitors.

3. Government regulations.


No assumptions.


1. Focus on its international expansion. This alternative will focus on its strength of expansion. There will be a continuous growth for McDonald’s if they will continue to expand, that is, acquiring new locations, getting more franchisee, and spreading more stores worldwide.

2. Products and services innovation. Because of the continuous changes in customer needs and wants, new and existing products will be developed to continue satisfying clients.


ACA 1 – international expansion


1. More stores, more income, especially, its real estate which they earn more.

2. Opportunity to have a larger market share.

3. The management is well-experienced in terms of expansion meaning, it can do better if they will focus on expansion.


1. Capital is not readily available for expansion that requires huge amount of investment.

2. Adapting to changes in the customer preferences in will not be answered by simply expanding.

ACA 2 – products and services innovations


1. With the changing customer preferences, innovations of can delight customers.

2. It can build competitive advantage among competitors.

3. Increase in market share because of new products available and a different experience because of good service.


1. Competitor’s ability to imitate these products and services innovations.



1. Cost-efficiency. Able to be effective in executing the plan with no or no minimal waste.

2. Sustainability on objectives. Capacity to endure and support the fulfillment of the set objectives.

3. Timeliness of expected result. How fast this ACA can get its objective.

|Cost-efficiency |1 |2 |
|Sustainability on objective |2 |3 |
|Timeliness of expected result |2 |3 |
|TOTAL |5 |8 |

1-good 2-better 3-best

In the table above, shows that ACA 2, which is the products and services innovations, got the highest score. Innovations would need lesser budget than in expansion. The objective, 3-5 percent growth can be expected if there will be a continuous product development because of the fast changes in customer preferences. Lastly, we can get faster result in ACA 2 compared to ACA 1 since expansion consumes more time in looking for possible locations and getting a franchisee. And ACA 1 is not a guarantee of its growth without having the best products and services.


|Set a board meeting to discuss the strategy to be adopted. This |Jim Cantalupo |January 2004 |
|includes analyzing information from the research and development | | |
|department (R&D). Set the budget allocation | | |
|Polishing the Plan to win strategy to be more effective |Jim Cantalupo |February 2004 |
| | |Two weeks |
|Training of people for better service |Training and Total quality |February 2004 |
| |department |2 weeks- continuous for every |
| | |new employee and refresh every |
| | |6 months |
|New product implementation |Head of the product department |February 2004 |
|Evaluate strategy based on its performance per store |Manager in charge |Start of March 2004- every |
| | |month |
|Adjustments on the strategy that needs improvement and disseminate |Training and Total quality |Once improvement is needed |
|information all the concerned department |department | |
|Performance review. Monitor market reactions on its new products |Jim Cantalupo and analysts |Start of the year 2005 |
|and services | |Continuous. |
|Assess financial returns. | | |…...

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