“The generic strategies for achieving competitive advantage has gained prominence in the field of strategic management over the recent time” (BCG,1976;Buzzell,Gale & ultan,1976;Porter,1980;Hambrick,1983;Wright,1987). Porter (1980) generic strategies of differentiation, cost leadership and focus have been recognised by many managers in both the profit and non-profit making organisations as an instrument for achieving strategic objectives in organisations. It is possible for organisations to reach optimal level through cost leadership strategy or differentiation strategy and or both.”Many researchers feel a combination of these strategies may offer a company the best chance to achieve a competitive advantage” (Cross, 1999; Karnani, 1984; Miller and Friesen, 1986; Hill, 1988).
Any strategy an organisation pursue, should be capable of achieving the aims and objectives of the organisation in gaining competitive advantage over its competitors (kippenberger, 1996; surowiecki,1999;ross,1999). McDonald’s had always been an innovator in developing new fast-food products.Some of the company’s products range from the Big Mac to McGriddles Breakfast Sandwich to Chicken MnNuggets to Ice Coffee Beverages to Premium Salad etc. The company easily understand the fast-food needs of customer. It knows the kind of product to design to get the public attention. In April 2003 McDonald’s launch Premium Salads and McGriddles Breakfast Sandwich to attract health-conscious women that have stopped eating McDonald’s food due to the fat content which they claim McDonald’s food contained.
One vital way through which McDonald’s differentiated itself from its rivalry is its approach to training. The aim is to improve the efficiency of its employees so as to increase its market share, gain customer’s loyalty and lower its cost of operation ( Andrew, E; Conrad, L and Rhodri, T;2000). This logical way of training all employees, line managers as well as the screws obviously differentiated McDonald’s restaurant from other fast-food restaurants. Training enables worker to gain the skills, knowledge and character necessary for high performance and increase production.McDonald’s staff training has greatly contributed to the quick-service and cleanliness of the company in rendering good service to its customers (Lashley and Rowson, 2000). The company described training as the only best way of achieving business excellence. Moreover, McDonald’s has in the world a policy of low price.
Every day the company tries to lower price to enable people to eat good and healthy meal so as to live long. It has been estimated that 70% of McDonald’s sales are made over a period of four hours each day.McDonald’s has changed the pattern of eating in order to get more customers during the peak hours of the day for lower prices. An instance of this pricing policy was making the menu purchased in the evening at about 6pm much lower than the menu purchased in the morning and afternoon. The overall objective of the pricing strategy is to have the largest market share in the industry.
This clearly made it a cost leader in the industry. In setting price in each country McDonald’s tries to study the elasticity of demand of their product in response to price.McDonald’s Brand image is another generic strategy that helps it to achieve competitive advantage.
In 2001, McDonald’s was among the ten companies that were recognised as the most valuable companies with a good brand image (Kotler, 2003). Whenever customers see McDonald’s they also see the brand image both outside and inside restaurant, on burger wrappers and on the packaging for fries, napkins and cups. McDonald’s tries to ensure that its brand is the most advertised and well know in the world. It achieved this by localising the advertisement campaign in different countries.McDonald’s launched ”I’m lovin it” campaign on 29 September 2003 to attract young consumers. This campaign was integrated in all areas of the company, from crew training, restaurant experience to national sponsorships, promotions, television, internet etc.
The attraction of McDonald’s to young kids is a source of competitive advantage. Another generic strategy of McDonald’s is its franchise system. McDonald’s operates close to 21,000 franchised outlets in different markets (Lentz and Setrakian, 1997). The company has gained business success in its franchise operations.What it does is to allow a person that is interested in venturing in to fast-food business to use its brand for a fee. The licence agreement enable McDonald’s to set the standard of cleanliness, quality and best practice that must be adhered to by the franchisees.
Every franchisee must ensure it complies with the standard of McDonald’s branding, menus, design layouts and administration systems. Franchising enables McDonald’s to enjoy considerably faster growth and the creation of a global brand identity as well as increased economies of scale that has led to its competitive advantage in the fast-food industry.