Mcdonalds Resources and Capabilities free essay sample

In order to improve their financial performance and once again satisfy their customer base, McDonalds chose not to emulate their competitors. Instead, they chose to use their existing resources and capabilities to identify emerging asymmetries during the turnaround around between 2003 and 2007. By using a combination of their current infrastructure, human capital, marketing capabilities and new product introductions, the management team was once again able to pursue market opportunities that built on these leveraged capabilities. One of the first resources used to initiate their turnaround was the infrastructure of their current restaurant base. After realizing that rapid franchise growth was providing stagnant returns and substandard performance as well as jeopardizing their customer’s restaurant experience due to poor food quality and service, the company decided to focus on generating sales from its existing outlets and revamping the outdated look of their older restaurants. Revamping and remodeling the inside to fit within today’s culture allowed McDonald’s to be more inline with savvier consumer tastes and trends. We will write a custom essay sample on Mcdonalds Resources and Capabilities or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Another way McDonalds was able to increase sales in these newly decorated restaurants was to introduce new products that matched the cultural trends such as premium coffee as well as adding several stores which had bakeries. While many of the prior new product introductions were noted as failures with consumers (Arch Deluxe, McLean Deluxe), McDonald’s had the insight to jump on the healthy trend sweeping the U. S. (Value Innovation – Monitoring Value Curves of consumers) and began introducing more health conscience menu items such as salad entrees, all white chicken meat, and apple dippers instead of french fries in Happy Meals. Another resource McDonald’s addressed during their turn-around period was the management team itself. Despite shareholder sentiment to bring in an outsider to run the company, the board of directors pulled former Vice-Chairmen James Cantalupo out of retirement to lead this change in direction. The board saw Cantalupo as â€Å"someone who knew the company well and could move quickly to turn things around. † Although Cantalupo died unexpectedly shortly after returning to the company, his Plan to Win is credited with providing the insights discussed above with the new market opportunities that McDonalds was beginning to experience. How has it been able to use these to create value innovation? The steps taken above by McDonalds were a means to again become more relevant with their customers as well as striving to make their competition irrelevant though the use of strategic logic called value innovation. McDonald’s ignored industry practice of simply expanding via new store creation. Instead, McDonald’s decided to divest non-burger chains and use its cash to newly decorating and renovating its current properties. These newly decorated McDonald chains were a stark contrast of the industry standard restaurant themes of the past. Customers were now able to enjoy their meals lounging in sofas while watching large television screens. Eating at a McDonalds restaurant was now becoming a lifestyle experience rather than just a place to go to have a burger. Rather than looking through the lens of their existing assets, capabilities and business structure, McDonalds acted like they started anew and assessed business opportunities without being biased or constrained by where they are at a given moment. They had the insight that the true value innovators within the firm lied within the individual franchisee owners. Because of this, though traditionally corporate headquarters preferred to centralize decision making, the upper management team started to allow the localization of their franchisees by providing franchisee owners the freedom to experiment with store layouts and design. When a store owner found a design that worked for him, they would notify other store owners and let them decide if they wanted to update accordingly. Furthermore, McDonald’s positioned the brand â€Å"differently in different locations, at different times of the day and to target different customer segments†. Through this resource, McDonald’s created value innovation which helped them provide a durable competitive edge in the communities in which they operate. Another value innovation technique McDonald’s utilized was instead of focusing on the differences between customers, they focused on the powerful commonalities in the features that customer’s value. In relating this to the McDonald’s case, the direction McDonalds took to offset the cultural trend of a healthy lifestyle, McDonald’s revamped their menu. This enabled them to still focus on the customers who serve the core of their market segment, but allowed them to gain new customers who value a healthy choice option. Adding new menu items such as garden fresh salads and fresh fruits enabled McDonalds to tell their customers that they are serious about offering healthy choices that not only meets the healthy lifestyle, but tastes well in the process. Although the majority of customers who enter McDonalds still order hamburgers, the healthier menu options available make it easier for families to continue eating at their restaurants. In essence, McDonalds though in terms of the â€Å"total solution buyers seek† and enabled McDonalds to â€Å"try to overcome the chief compromises their industry forces customers to make. † McDonalds proved that they could not only be cheap and quick, but that they still could offer a healthy alternative. In summary, McDonalds used its resources to create value. They chose not to emulate their competitors in the fast food industry as they had an â€Å"ambition to dominate the market by offering a tremendous leap in value† to the consumers. McDonalds now provides the total solution customers seek for their quick service dining on the three platforms of product, service and delivery which takes them beyond the industries traditional offerings. They defied conventional logic and the conventional value curve and offered a new value curve that would enable them to experience profitable growth in the future. .