Case Analysis of McDonald’s McCafe Coffee Initiative

Case Analysis 1 Running Head: STRATEGIC ANALYSIS

Case Analysis of McDonald’s McCafe Coffee Iniiai!e

Case Analysis "

In#oducion McDonalds’s is a $a%&u#ge# #esau#an $a offe#s di!e#se %enu and 'uic( se#!ices in 1"1 coun#ies ac#oss $e )o#ld* McDonalds $as e+,e#ienced #a,id g#o)$- ,a#ly a#i&ua&le o $e successful ad ,#o%oions and inno!aions in is %enu* T$e sales of $e co%,any )e#e inc#easing &u- %a#(e s$a#e $ad declined .A&ou McDonalds’s- "/1"0* McDonalds’s in#oduced McCafe conce, in "//1 o #egain do%inance in &#ea(fas and snac( i%e sales and #e&uild co%,eii!e ad!anage* In $is case analysis- &usiness le!el s#aegy- o#e#’s fi!e fo#ce %odel o analy2e $e ne) !enu#e ,osiion in co%,eii!e indus#y- co#,o#ae s#aegies of McDonalds and is i%,o#ance o c#eae !alue )ill &e e+,lained* Along )i$ $is- 3usificaion of cu##en co#,o#ae s#aegy and suggesions o o!e#co%e $e ,oenial &a##ie#s )ill &e discussed in $is case analysis* 4usiness le!el s#aegy of McDonalds 4usiness le!el s#aegy is an ineg#aed 5 coo#dinaed se of co%%i%ens and acions* McDonalds uses &usiness le!el s#aegy o gain co%,eii!e ad!anages &y e+,lo#ing co#e co%,eencies in $e s,ecific ,#oduc %a#(es* In oday’s co#,o#ae &usiness scena#io- $e#e a#e se!e#al (inds of &usiness le!el s#aegies used &y $e &usiness fi#% o gain $e co%,eii!e ad!anages* Cos leade#s$i,- Diffe#eniaion- focused cos leade#s$i,6 focused leade#s$i, and ineg#aed cos leade#s$i,7diffe#eniaion a#e $e %a3o# &usiness le!el s#aegies .8(u%usAlinay 5 C$a$o$- "/1/0* McDonalds use diffe#eniaion and cos leade#s$i, s#aegy o inc#ease $e %a#(e s$a#e and o gain $e co%,eii!e ad!anages .MCD8NALD’S AND THE MCCA9 C899EE INITIATI;E- "//"0* T$e ,#oduc and se#!ice offe#ed &y McDonalds is diffe#en- $ig$ly

Case Analysis < sanda#di2ed- su,e#io# 'ualiy and less cosly as co%,a#ed )i$ is co%,eio#s* =i$ $e $el, of $is- McDonalds is saisfying $e needs 5 )ans of consu%e# and ,#o!iding $ig$ cuso%e# se#!ice in $e ine#naional %a#(e .#off- "//"0* 8n $e o$e# $and- McDonalds is also ,#o!iding $e ,#oduc and se#!ice a a !e#y lo) cos as co%,a#e )i$ is %a3o# co%,eio#s suc$ as: =endy’s- >9C ,i22a $u and &u#ge# (ing* Hence- McDonalds is using ineg#aed cos leade#s$i,7diffe#eniaion s#aegy o gain $e co%,eii!e ad!anages* I %eans- McDonalds is  ,#o!iding diffe#eniae 5 $ig$ly sanda#di2ed ,#oduc a a !e#y lo) cos as co%,a#e )i$ is co%,eiions*  T$e s#aegies of cos leade#s$i, and diffe#eniaion a#e used ine#c$angea&ly )i$ in $e ine#nali2aion a,,#oac$ of McDonalds* In addiion- McDonalds s$ould also follo) focused cos leade#s$i, s#aegy along )i$ $e diffe#eniaion and cos s#aegy o c#eae $e co%,eii!e sco,e- &ecause McDonalds can easily access $e c$anged en!i#on%en* So- McDonalds can use diffe#en &usiness le!el s#aegy o c#eae $e co%,eii!e sco,e .>eillo# 5 Hul- "//?0* Co%,eii!e Analysis of Mc@Cafe In $e Resau#an indus#y- Coffee Caf is a $ig$ly co%,eii!e indus#y in $e &usiness a#eas* T$e#e a#e %any s%all Coffee Caf &usinesses in $e indus#y $a fig$ )i$ eac$ o$e# o i%,#o!e $ei# cuso%e# &ase and i%,#o!e ,#ofia&iliy* T$in( Coffee- Snice- 4 Cu, Caf and Go#illa Coffee a#e $e %a3o# co%,eio#s in $is indus#y* I is !e#y difficul o de!elo, a disinc  &#and na%e in $is indus#y .ines- "//B0* Resea#c$ 5 de!elo,%en cos affecs $e o#gani2aion  ,oenialiy in $e #esau#an indus#y* La#ge esa&lis$ed co%,anies )i$ s#ong &#and ideniies suc$ as Mc@Caf@Cafe’s do %a(e i %o#e difficul o ene# and succeed )i$in $e %a#(e,lace6 ne) en#ans find $a $ey a#e faced )i$ ,#ice co%,eiion f#o% e+ising c$ain #esau#ans* T$e#e a#e se!e#al su&siues in $is indus#y .MCD8NALD’S AND THE MCCA9 C899EE

Case Analysis ? INITIATI;E- "//"0* T$e#e a#e a lo of ,#oducs $a cuso%e# can c$oose suc$ as: 4e!e#ages and dai#y ,#oducs* In $is #esau#an indus#y- su,,lie# ,o)e# )ould &e #elai!ely s%all* Along )i$ $is- s#eng$ of &uye#s is #elai!ely lo) in $is indus#y .Ha+ 5 =ilde- "//10* McDonalds’s co#,o#ae s#aegy McDonalds’s cu##en co#,o#ae s#aegies a#e diffe#en and &ased on s,ecialy coffee and McCafe* nde# co#,o#ae s#aegy- McDonalds’s decide di#ecion- co%,osiion and si2e of a#ge %a#(e fo# McCafe*  Direction: In o#de# o co%,ee )i$ Sa#&uc(s- McDonalds $as de!elo,ed a ,lan o

launc$ McCafe $a ,#o!ides coffee- coo(ies and ,as#ies* Along )i$ $is- i #esol!es $e issue of dec#easing %a#(e s$a#e in fas food indus#y* Composition: In co%,osiion of %a#(eing %i+ of McCafe- McDonalds $as de!elo,ed

 ,#oduc line- ,#icing s#aegies and dis#i&uion s#aegies acco#ding o co%,eiion and #e'ui#e%ens of cuso%e#s .Cole%an- Gao 5 >i%- "//0* Addiionally- co%,any ,lans effeci!e  ,#o%oional ec$ni'ues and ools o ,#o%oe $e ,#oducs of McCafe* In i%,le%enaion ea%en#e,#eneu#ial and e+,e#ienced co#,o#ae e%,loyees )i$ di!e#se &ac(g#ounds a#e included o ensu#e $e success of $is ,lan* Size: nde# si2e- a#ge %a#(e of McCafe ,#oducs is idenified* T$e %ain cuso%e#s of

McCafe )ill &e %osly cu##en cuso%e#s of McDonalds’s* Co%,any is #ying o ene# in lu+u#y %a#(e of coffee* McDonalds’s Co#,o#ae S#aegy ;alue C#eaion McDonald’s co#,o#ae s#aegies a#e &ased on ,#oduc diffe#eniaion and inno!aion $a is $el,ful o c#eae !alue fo# $e cuso%e#s and o$e# sa(e$olde#s* T$e inno!ai!e and ne)  &#ands #e,#esened !alue and fas se#!ice .G#in&la 5 Ti%an- "//<0* In $e fas food indus#y-

Case Analysis  $e#e is no co%,eio#- )$o )as a&le o %ac$ $e &#and e'uiy associaed )i$ McDonald’s Ha,,y Meal* Along )i$ $is- unde# co#,o#ae s#aegies- co%,any launc$ed !alue ca%,aign $a  ,#o%oes $e !alue of $e ,#oducs o $e cuso%e#s* In coffee %a#(e- #elia&iliy- 'ualiy and se#!ice a#e $el,ful o c#eae !alue and $ese a#e ,#o!ided $#oug$ co#,o#ae s#aegy of McDonalds* 9aco#s of McDonald’s G#o)$ T$e#e a#e !a#ious faco#s $a su,,o# $e g#o)$ of McDonalds’s and is &usiness e+,ansion* T$ese a#e as follo): Quality and Innovative Products: McDonalds offe#s 'ualiy ,#oducs a $ei# so#es $a

c#eae a ,osii!e &#and i%age in $e %a#(e* McDonald’s #esau#ans focus on 'ualiy- s,eed and accu#acy of se#!ices* Is coffee $ouses also ,#oduce consisen 'ualiy ,#oducs a diffe#en %e$ods .T$o%,son- "//10* Along )i$ $is- co%,any ,#oduces ,#oducs in inno!ai!e %anne# $a a#acs cuso%e#s o)a#ds $e co%,any and inc#eases sales and g#o)$* Quick Services: McDonalds ,#o!ides se#!ices a lo) ,#ices- good 'ualiy- safe food and

fas se#!ices* In $e 'uic( se#!ice indus#y- McDonalds is $e leade# )i$ $ig$es %a#(e s$a#e $a su,,o#s $e g#o)$ of $e o#gani2aion in o$e# ne) &usiness a#eas .G#in&la 5 Ti%an"//<0* McCafe offe#s s,ecial coffee con!enienly- 'uic(ly and a lo) ,#ices*  Positive Brand Image: Co%,any ,#o!ides 'ualiy ,#oducs a lo) ,#ices and acco#ding o

$e ases of cuso%e#s 'uic(ly $a &uilds ,osii!e &#and i%age in $e %inds of cuso%e#s* T$is  ,osii!e &#and i%age $el,s fo# o#gani2aional g#o)$* Fusificaion fo# cu##en co#,o#ae s#aegy McDonalds’s cu##en co#,o#ae s#aegy is no $e &es one* Co%,any’s co#,o#ae s#aegy is &ased on o,en %o#e so#es o inc#ease $e sales and fo# $is- co%,any gi!es f#anc$isee of is

Case Analysis B  &#and* 9#anc$isees ,aid a %on$ly #en and se#!ice fee o McDonalds &ased on a ,e#cenage of o,@line sales .Ha&e#&e#g 5 Rie,le- "//0* I is #e'ui#ed fo# $e f#anc$isees o %ac$ $e co#,o#ae sanda#ds of 'ualiy and #es,onsi&iliy o #e,#esen $e co%,any in co%%uniy in good %anne#* So%ei%es- i is difficul fo# $e co%,any o %ainain 'ualiy- 'uic( se#!ices and is  &#and i%age $#oug$ f#anc$isees* So- co%,any s$ould de!elo, &usiness inelligence s#aegy $a is &ased on ,lan o )in including ,lace- ,eo,le- ,#oducs and ,#o%oions .Nigel- "//0* Co%,any s$ould de!elo, sanda#d 'uesions and %easu#es o idenify $e cuso%e# e+,e#ience f#o% an ine#nal ,e#s,eci!e* T$e co%,any s$ould also include a oll f#ee line o# feed&ac( fo#% o a(e $e #es,onse and co%%ens of cuso%e#s #ega#ding $e ,#oduc’s 'ualiy and se#!ices* Reco%%endaions o %ainain g#o)$ If McDonalds’s McCafe iniiai!e $i a ,laeau in e#%s of g#o)$- $en co%,any s$ould a(e so%e se,s o %ainain $is g#o)$ and success and o!e#co%e on &a##ie#s* T$ese se,s o# #eco%%endaions a#e as follo):  Product  Innovation: In o#de# o %ainain g#o)$ and success- co%,any s$ould c#eae

so%e inno!aions in is cu##en ,#oduc line* Inno!ai!e ,#oducs and offe#s a#e $el,ful o a#ac ne) cuso%e#s and #eain e+ising cuso%e#s .Hi- I#eland 5 Hos(isson- "/1/0* Along )i$ $isco%,any s$ould c#eae inno!aion o# c$anges in ,#oduc line acco#ding o $e #e'ui#e%ens of cuso%e#s o# any loo,$oles in e+ising ,#oduc line* Changes in marketing mix strategies: Co%,any s$ould c#eae so%e c$anges in cu##en

%a#(eing %i+ s#aegies o o!e#co%e on o&sacles o# &a##ie#s and ado, ne) %a#(eing %i+ o co%,ee )i$ co%,eio#s and inc#ease is %a#(e s$a#e .Ha&e#&e#g 5 Rie,le- "//0* Co%,any s$ould use ne) ,#oduc %i+- ,#ice %i+- ,lace %i+ and ,#o%oion %i+ o o!e#co%e on &a##ie#s and %ainain g#o)$ of $e co%,any*

Case Analysis  Quality and quick services: McDonalds’s McCafe s$ould ,#o!ide 'ualiy and

sanda#di2ed ,#oducs* Along )i$ $is- co%,any s$ould e%,loy )ell #ained and educaed  ,eo,le o deli!e# se#!ices o $e cuso%e#s 'uic(ly and ,leasanly .Ha&e#&e#g 5 Rie,le- "//0* Su%%a#y 8n $e &asis of a&o!e discussion- i can &e included $a McDonalds’s use diffe#eniaion and cos leade#s$i, s#aegies o inc#ease %a#(e s$a#e and gain co%,eii!e ad!anage o!e# $e co%,eio#s* I is idenified $a McCafe faces oug$ co%,eiion f#o% o$e# co%,eio#s and su&siue ,#oducs li(e &e!e#age- dai#y ,#oducs ec* Along )i$ $is- i is found $a McDonalds’s de!elo, co#,o#ae le!el s#aegies o di#ec- co%,ose and a#ge %a#(e fo# launc$ing of McCafe* McDonalds’s ,#oducs ,#o!ide !alue o cuso%e#s in e#%s of 'ualiy'uic( se#!ices and inno!aion* A,a# f#o% $is- if McCafe is failed o ac$ie!e is e+,eced g#o)$ and success- $en co%,any s$ould i%,le%en inno!aion- suia&le %a#(eing %i+ and sanda#d o %ainain $is success and o!e#co%e on &a##ie#s*

Case Analysis  1.

Refe#ences A&ou McDonalds’s ."/1"0* Re#ie!ed Fanua#y <1- "/1" f#o%: $,:77)))*McDonalds*co%7us7en7$o%e*$%l Cole%an- D*- Gao- C* 5 >i%- H* ."//0* McDonalds’s: 4#eac$ing $e Lu+u#y Coffee Ma#(e* Re#ie!ed Fanua#y <1- "/1" f#o%: $,:77)))*%cafee*cc7Classes74EM1/B7a,e#s7"//7McDonalds*,df  G#in&la- M* 5 Ti%an- S* ."//<0* in !kts " Corporate Strategy #$ * Ne) Yo#(: McG#a)@Hill Educaion* Ha&e#&e#g- A* 5 Rie,le- A* ."//0* Strategic !anagement: %heory and &pplication* >: 8+fo#d ni!e#siy #ess* Ha+- A* 5 =ilde- D* ."//10* T$e Dela Model  disco!e#ing ne) sou#ces of ,#ofia&iliy in a ne)o#(ed econo%y* $uropean !anagement 'ournal - ().?0- <@<1* Hi- M* A*- I#eland- R* D* 5 Hos(isson- R* E* ."/1/0* Strategic !anagement: Competitiveness " *lo+alization, Concepts* SA: Cengage Lea#ning*

>eillo#- 4* D*- Hul- G* T* M* ."//?0* #edico#s of fi#%@le!el ,oliical &e$a!io# in $e glo&al  &usiness en!i#on%en: an in!esigaion of s,ecific aci!iies e%,loyed &y S fi#%s*  International Business -evie.- (/.<0-
MCD8NALD’S AND THE MCCA9 C899EE INITIATI;E* ."//"0* I!ey Manage%en Se#!ices- 1@1"*  Nigel- S* ."//0* 8,e#aions S#aegy* Sou$ Af#ica: ea#son Educaion Inc* 8(u%us- 9*- Alinay- L*- 5 C$a$o$- * ."/1/0* 4usiness@Le!el S#aegies* Strategic  !anagement 0or 1ospitality and %ourism- 1@1/*

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