To respond to the ever-changing culture and competition in the global food industry, McDonald’s has changed its mission statement accordingly (Meyer, P., 2019). This step is considered to be essential for commercial benefit because it sets a clear purpose and determines activities the business needs to pursue. McDonald’s corporate mission is “to be our customers’ favorite place and way to eat and drink.” The statement is market-oriented, which is shown by its purpose to satisfy customers’ needs.
The company measures its business mostly on customers’ preferences which also leads to the mission’s purpose as an indicator to set itself apart from competitors like Wendy’s, Burger King, or Kentucky Fried Chicken. Essentially, McDonald’s is aiming to become more popular than other fast-food chains, in terms of quality of food and ambiance in the restaurants.
McDonald’s headquarters are located in Chicago, Illinois, while the strategic business units are divided by continents. The company is strategically split up into the USA, Europe, Asia, and others.
This strategy aims to separate the markets from one another. When looking at the BCG Matrix, we can associate the European market with the “Star” grid. The relative market share is sufficient with further potential in growth within.
The Asian market share has not erupted quite yet. The company, however, steers towards an expansion, by working with local investors for future franchising. The goal is to open up 1500 new stores in the next five years (Asit Sharma, 2016). According to the BCG Matrix, Asia can be regarded as the “Question Mark” in the matrix.
The US market is seen as the “Cash Cow” and is able to generate profit to invest in “Question Mark”. The relative share in the market is huge, however, future growth cannot be predicted, especially due to the trendy fast-casual restaurants (industry news, 2018). Essentially, the US market funds the projects for overseas operations.
If McDonald’s is to maintain its market dominance and further enhance its efficiency, when designing its business portfolio, it needs to identify and adopt new strategies in order to grasp new market opportunities. In the following, we analyze the McDonald’s growth opportunities through the product/market expansion grid, also known as the Ansoff matrix (Kotler, 2019).
First of all, McDonald’s should achieve deeper market penetration by improving its current services. Few things are more iconic than a McDonald’s Happy Meal. The bright red box with its golden handles has become a fast-food staple since it was first introduced more than 40 years ago by Dick Brams (Misachi 2018). By strengthening its partnership with Disneyland, McDonald’s management would be able to offer to their consumers – children – superior value toys and maintain, at the same time, clever prices for their customers – parents (Leonard, 2019).
Secondly, “the most famous fast-food chain in the world” might consider to develop and sell new products to existing markets. Because of their considerable experience in the food and beverage sector, it would be strategic to invest resources for the production of signature wines beer. The beverage market is unquestionably vital in the gastronomy world, and introducing McBeer or McWines could become a total game-changer for McDonalds.
Even though McDonald’s is present in 120 countries, it can consider market development by opening in Bolivia, Ghana and, above all, in Africa, where McDonald’s is only present in four of the 54 countries (Argentesi, 2018).
Over the years, McDonald’s has tried to adopt moderate diversification strategies. A shining example is the opening of “The Golden Arch Hotels” in Switzerland. In 2001, McDonald’s expanded more within the hospitality industry by opening its original four-stars facilities but, not being competitive with other hotel chains, they went to market three years later (Azmi 2017).
In the next five years, McDonald’s might consider taking advantage of their brand power to launch a highly affordable line of clothing for children. In doing so, not only would they increase their revenue, but they could also have a well-balanced product portfolio, hence decreasing its total risk.
Azmi, A. A. (2017, February 27). Mc Donald’s Ansoff Matrix. Retrieved from https://www.slideshare.net/AtiyaAzmi/mc-donalds-ansoff-matrix.
Argentesi, S. (2018, May 28). Paesi dove non c’è il McDonald’s. Retrieved from https://www.zingarate.com/montenegro/paesi-senza-mcdonald-s.html.
Leonard, K. (2019, February 6). Customer and Consumer Definitions. Retrieved from https://smallbusiness.chron.com/customer-consumer-definitions-5048.html.
Misachi, J. (2018, June 27). Countries Without McDonald’s Restaurants. Retrieved from https://www.worldatlas.com/articles/countries-without-mcdonald-s-restaurants.html.
Meyer, P. (2019, February 20). McDonald’s Mission Statement & Vision Statement (An Analysis). Retrieved from http://panmore.com/mcdonalds-vision-statement-mission-statement-analysis.
Sharma, A. (2016, April 28). The Logic Behind McDonald’s Asia Strategy. Retrieved from https://www.fool.com/investing/general/2016/04/28/the-logic-behind-mcdonalds-asia-strategy.aspx.
jrapeepan Follow. (2010, September 27). SM_McDonald’s. Retrieved from https://www.slideshare.net/jrapeepan/smmcdonalds.
BCG Matrix for better investment decisions. (n.d.). Retrieved from https://www.sanasecurities.com/how-use-bcg-matrix-make-better-investment-decisions/.
amb, C. W., McDaniel, C. D., Shearer, J., Hair, J. F., & Boivin, M. (2019). Mktg. Toronto: Nelson Education.
Kotler, P., Armstrong, G., & Harris, L. C. (2019). Principles of marketing. Hoboken: Pearson.
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