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    MCD Generic Strategy

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    dian amalia
    McDonald's primary generic strategy is cost leadership. It aims to be the lowest cost producer through large scale production and supply chain efficiency. McDonald's uses vertical integration, owning suppliers, distributors, and retail locations, to control costs and profits. It owns farms, food manufacturing plants, distribution trucks, and much of the land its stores are located on. This vertical integration strategy helps McDonald's achieve its goal of being the most affordable fast food option.

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    MCD Generic Strategy

    Uploaded by

    dian amalia
    573 views2 pages
    McDonald's primary generic strategy is cost leadership. It aims to be the lowest cost producer through large scale production and supply chain efficiency. McDonald's uses vertical integration, owning suppliers, distributors, and retail locations, to control costs and profits. It owns farms, food manufacturing plants, distribution trucks, and much of the land its stores are located on. This vertical integration strategy helps McDonald's achieve its goal of being the most affordable fast food option.

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    McDonald's primary generic strategy is cost leadership. It aims to be the lowest cost producer through large scale production and supply chain efficiency. McDonald's uses vertical integration, owning suppliers, distributors, and retail locations, to control costs and profits. It owns farms, food manufacturing plants, distribution trucks, and much of the land its stores are located on. This vertical integration strategy helps McDonald's achieve its goal of being the most affordable fast food option.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    573 views2 pages

    MCD Generic Strategy

    Uploaded by

    dian amalia
    McDonald's primary generic strategy is cost leadership. It aims to be the lowest cost producer through large scale production and supply chain efficiency. McDonald's uses vertical integration, owning suppliers, distributors, and retail locations, to control costs and profits. It owns farms, food manufacturing plants, distribution trucks, and much of the land its stores are located on. This vertical integration strategy helps McDonald's achieve its goal of being the most affordable fast food option.

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    © All Rights Reserved
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    Generic Strategy

    McDonald’s generic strategy determines its basic approach to developing its business and
    competitive advantage. As the biggest fast food restaurant chain in the world, McDonald’s
    uses its intensive growth strategies to support continued business development and
    expansion. The related strategic objectives dictate the company’s operational activities,
    especially in responding to economic changes and the actions of competing firms. Variations
    in market conditions impose pressure on the business to adapt or reform its strategies. As
    such, McDonald’s generic strategy and intensive growth strategies change over time to
    ensure long-term business viability.
    McDonald’s primary generic strategy is cost leadership. Cost Leadership is the mechanism of
    establishing a competitive advantage by having the lowest cost of operation in the industry.
    This strategy is especially beneficial in a market where the price is an important factor. The
    primary objective of a firm aiming to attain cost leadership is to become the lowest cost
    producer in comparison to the competitors. This is usually achieved by large scale
    production which enables the firm to attain economies of scale or by innovating the
    production process. Acquiring quality raw materials at the lowest price is the basic goal of a
    cost leadership strategy, this strategy allows McDonalds to focuses on affordability and easy
    accessibility of its produce across the globe, which leads towards high brand awareness and
    high sales growth and provides a strong competitive advantage basis. Other than charging
    low prices by lowering production cost and maximizing supply chain efficiency, McDonalds
    frequently offers discounts and coupons to achieve sales targets and handle the competitive
    pressure by its closest rival. The intended outcome of these discount and promotional
    campaigns is to increase brand popularity and encourage consumption. McDonald’s also
    focusing on expanding the market share by targeting the middle class, which makes the
    largest proportion of overall consumer market mix in most of the countries. Middle class
    consumers generally place high importance to the pricing factor and cost leadership is the
    best strategy to cater the needs of this consumer segment.

    McDonalds’s cost leadership strategy has outlined many benefits offered by this generic
    strategy, such as:
    1. gaining quick brand recognition;
    2. expanding the customer base;
    3. encouraging consumption, and
    4. achieving sales targets by emphasizing over product’s affordability and accessibility.

    Vertical integration, or in explanation as a strategy whereby a company owns or controls its


    suppliers, distributors or retail locations to control its value or supply chain is a strategic
    objective linked to McDonald’s cost-leadership generic strategy. McDonald’s is one of the
    most famous companies using vertical integration to reduce its overall costs and increase
    profits. They own factories that produce mixtures of ingredients that they can then
    distribute to all their stores by McDonald’s trucks. By owning both the ingredient
    component and the distribution transportation units it is easier to get their product to their
    restaurants by lower costs. They no longer have to pay for shipping and for assembly.  They
    also raise their own cattle and process the meat and they own agricultural industries which
    grow the potatoes for their French fries and their own vegetables for the hamburgers.
    Unlike most restaurants who must barter and pay high prices for their own ingredients,
    McDonald’s is the source of their own food manufacturing.  As further proof of vertical
    integration strategy, McDonalds also owns most of the land that their stores are placed on
    so they don’t have to deal with landlords or leasing costs. The use of vertical integration is
    why McDonald’s is one of the cheapest fast food joints in the world.

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