Mcdonald Case

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McDonald Case

The food industry is a highly competitive market and midsize sit-down restaurant chains have been especially hard-hit as consumers cut back discretionary spending such as eating out due to the recent recession. McDonald’s however, has been very successful in a market that has proven very difficult for other restaurants; while most other restaurant chains are struggling to stay open McDonald’s has actually grown its sales and its profits. They’ve done this in part to their strategy of expanding their menu to healthier items and increasing their beverage, snack, and breakfast offerings. Another part of McDonald’s extraordinary success during the recent recession is the fact that half of its stores are located overseas where a weakened dollar has meant higher profits from local currency. This has been especially beneficial to help offset weaknesses in other areas that may not be as profitable such as its long-term strategy of expanding into the gourmet coffee market. While its strategy of increasing sales and trying to gain a foot hold in the upscale coffee market may have been a strength thus far, depending on the changing landscape and environment it has the potential of becoming a weakness. The tide has turned on the recession and the dollar is growing stronger again which will diminish the offset it has provided. Couple that with the fact that Starbucks and other gourmet coffee outlets have experienced a marked decrease in sales, McDonald’s may find that their investment in this beverage area has indeed been ill-timed.

As the market leader, McDonald’s looks for new customers and for more usage from existing customers in order to expand total market demand, which historically benefits the dominant player in the market the most-which in this case of course is McDonald’s. How does McDonald’s maintain its growth phase when the…...

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