McDonald is one of the most internationally recognizable companies within the hospitality industry. Although I have not worked with McDonald ever, I am quite familiar with it as one of closest friends has been working with the marketing team of this restaurant chain for last four years. He keeps telling me about his company, how it runs its business so that it can maintain its top position within the fast food sector world wide.
Apart from listening to my friend about his company, I also do research on McDonald by reading stories relating to McDonald published in various magazines, newspapers and on various websites as I am a fond of McDonald food staffs and love this fast food restaurant chain. McDonald Corporation listed in New York stock exchange has emerged as one of the world’s largest chain of fast food restaurants. It is most popular for its hamburger. Its customer base is so huge that worldwide it sells its products to around 47 million people on daily basis.
The menu of McDonalds includes various sorts of burgers like hamburgers, cheese burgers etc. , products made of chicken, different sorts of breakfast items, French fries, various kinds of shakes, desserts and soft drinks. Mcdonald’s, however, quite often gets criticized over the healthiness of its products. These products are considered to be one of the important factors which are taking active part in increasing obesity in the western countries. The company, however, has made some effective measures in response to the rising obesity trend in the western countries and the criticism over the healthiness of its signature products.
It has made some modifications to its menu by introducing several healthy food items like different types of salads, wraps and fruits. In spite of getting criticized over the healthiness of its products and having increasing competition within the industry, McDonald has been able to maintain its strong position within the industry it operates in. Its popularity has not decreased. Thus it would be quite interesting to look at the sources of its competitive advantage which have helped it to win the competition.
In order to examine the sources of competitive advantage of McDonald, the strengths of the company will be analyzed in detail as strength of any company can be defined as a distinctive competence of the firm that gives it a competitive advantage in the market place. A firm can gain its strength from its financial resources, the image of its brand, leadership quality within the market and buyer-supplier relationships. (Competitive advantage, 2010; Ghosh, et al. n. d) In case of McDonald’s, its biggest strength is its brand image.
Since McDonald’s is one of the most known chains of fast food in the world, its brand recognition seems to be its biggest strength. Its marketing campaign always focuses on brand recognition through continuous promotion of the brand name. Through its extensive marketing campaign world wide the company has been able to create an image in the people’s minds and introduce them to the fast food culture. Its customer base ranges from kinds to old generation. It has nearly 30,000 branches in as many as 120 nations across the world.
However, 80 percent of its revenues are generated from the market of eight countries including US, UK, Japan, Australia, Canada, France, Brazil and Germany. The company has been able to expand its stores on the basis of three core strengths- cleanliness, delivery speed and customer care. McDonald has created a corporate symbol and through its highly successful marketing campaigns all round the world it has been able to develop a brand image and establish its logo in the minds of the people across the world.
People are attracted to this logo and brand image and this attraction brings them to the stores. Although a number of competitors have emerged in the fast food industry, its rigorous marketing campaigns which are based on the company’s internal resources, external conditions and its relations with its shareholders have been able to strongly maintain its brand value in the market. (Ghosh, et al. n. d; Vijayarani, n. d. ) The brand name will not work in longer run unless brand value is mixed up with high quality product value.
In order to obtain and maintain a strong position in the market, every company needs to use an appropriate marketing mix and product occupies one of the most significant positions within the marketing mix. Product value has been one of the greatest strengths of McDonald’s. When a customer enters into a McDonald’s store he/she know what to expect. The company places huge importance on its human resource and takes appropriate steps to satisfy it customers as well as its employees.
As far as the product related issue is concerned, the company is also found to be quite innovative in introducing new products according to changing trends and tastes of the people. Not only that, it also offers different menu to the people living in different countries according to their tastes and the country’s culture. Fro example, in India it offers a menu which is completely different from its international offerings. In the stores situated in India, it has eliminated ham, mutton and beef burgers from the menu.
India is found to be the only country where McDonald offers vegetarian menu. Which is more interesting is sauces, cheese etc, are also completely vegetarian in India. In India according to changing taste and preference of the customers, it has introduced Chicken Maharaja Mac. Thus the biggest strength of McDonald lies in the fact that it brings an internationally reputed brand with high class food quality and brilliant customer specific product features. This strength provides the company with huge competitive advantage. Vijayarani, n. d. ; Ghosh, et al. n. d) Till now only the sources of competitive advantages of McDonald have been discussed. But in order to survive amidst strong competition a company has to possess sustainable competitive advantages. Hence, it is now the time to look into sustainable competitive advantages of McDonald’s. For a company, its sustainable competitive advantage can be defined as the advantage which seems to be difficult or unfeasible for other companies to own or infiltrate.
The brand value, cost structure, vibrant customer care or its patent can be considered as sustainable competitive advantages for a company. An advantage should be considered as sustainable advantage only if the advantage has a distinct character or it is proprietary in nature. The sources of sustainable competitive advantages for McDonald’s can be as follows: ( Reidenbach and Goeke, 2006; Vijayarani, n. d) – In order to build sustainable competitive advantage there should be a good integration and coordination between the company’s managerial and organizational process.
If such integration takes place then there would be created the essential value as everyone will be chasing a common goal. In order to develop sustainable competitive advantage an organization is required to learn and introduce changes according to the need of the time and it should always be flexible towards changes that takes place in the external environment of the company, such as changes in customer’s taste and preferences, changes in government or legal restrictions, and development in the areas of technology.
For McDonald’s, one of the principal reason behind surviving within current market competition is that the company is placing its focus on sustainable competitive advantages by making efforts to integrate organizational behavior with managerial expertise. McDonald’s, however, did not recognize the need of building sustainable competitive advantage previously. Earlier McDonald’s used to ignore this advantage as it was more interested in expanding its outlets across the globe than focusing on its core advantages.
As a result of it, the company did not experience any massive change in its revenues with opening up of new outlets. In fact, it suffered huge loss unless it recognized the importance of building sustainable competitive advantage. The company was right in detecting the need of the hour and bringing about changes in its management process in order to possess completive edge over its competitors. ( Lamb et al. 2008; Levy and Weitz, 2001) – A company can obtain an excellent position in the market through its financial, structural, and technological assets.
All these assets significantly help in building sustainable competitive advantage for an organization. McDonald’s has been able to obtain a strong position in the market by its abundant financial resources along with plentiful structural and technological assets. Since 2003, the company has started to concentrate on identifying and implementing these assets in right direction that would bring improvement to the company. Thus these assets build one of the greatest advantages for the company. (Lamb et al. 2008; Levy and Weitz, 2001)
Apart from all these, the vision and mission with which the company started its journey can be considered as one of the biggest competitive advantage fro McDonald’s. McDonald’s ability to sustain its dream over the years has provided it with a huge competitive advantage over its competitors. When a brand revolves around its vision in order to sustain and work in lieu with it, this results in developing significant sustainable competitive advantage for the brand. The McDonald’s started its business in order to help those people who did not have much time to cook or were too busy to go to an appropriate restaurant.
The vision of McDonald’s was to offer quick service, and high quality food staffs at cheap rate. Over the years the company has been able to sustain this vision. Lamb et al. 2008; Levy and Weitz, 2001) Thus to sum it up it can be said that McDonald’s has been able to implement its best value based strategy by utilizing all its advantages which are unique to it and can not be copied by any of its competitors and thus it has build its competitive advantages which the company has been able to sustain over the years.