Bus 508: Contemporary Business
November 4, 2013
Companies that sell a product must have a strategy for product growth. Implementing growth strategies will improve a company’s business during challenges of consumers changing demands. Consumers behavior can and will dictate a company’s diversification strategies as well as overall success. Well planned diversification strategies are very essential for a successful company in today’s rapidly growing society.
Diversification strategies help companies maintain a steady income during economic recessions. ...view middle of the document...
McDonalds.com). According to Forbes, “McDonalds global segments account for US (32%), Europe (40%) and Africa (APMEA) (22%) total revenue respectively. United Kingdom, France and Germany collectively account for 50% of Europe’s revenues and China, Australia and Japan account for over 55% of Africa (APMEA’s) revenues” (www.forbes.com). In 2011, McDonald’s reported company revenues “consisting of sales by company operated restaurants as well as fees from restaurants operated by franchise of $27,006 in millions” (www.McDonalds.com). I feel that the company justifies its successful revenues with their focus on brand, company and industry diversity strategies.
McDonald’s core business is fast food, fast service with consistent quality at every location. The company’s core business has produced billions in global sales and net income over the years and has proven to be a reason for success. The company’s success can be seen as going back to the basics of their core objective. The move would be a market departure from the firm’s diversification strategies of “banking on Boston Market and Chipotle Grill restaurants to obtain better future growth opportunities in the mature fast-food market” (www.forbes.com). Although this diversification strategy didn’t pay off for McDonald’s it allowed them opportunity to focus on their core business. Moreover, it took them back to the basics of what they started the brand/company with.
The company found themselves on the chopping block with their expansion and use of social media outlets such as Twitter and Face book. “McDonalds launched a campaign called ‘McD Stories’ on Twitter in hopes to get inspiring stories about Happy Meals, but it turned into ‘McD’s Horror Stories’” (www.forbes.com). Moreover, it was a learning experience for McDonalds and other corporate social media networks. Since social media is growing, the company has improved its website by offering a variety of features geared toward all age groups male and female.
When a company develops a strategy that links its product divisions around the world, it takes a risk. Linking assumes that markets in Asia will benefit from the same strategy as markets in North America. McDonald’s diversifies product offerings in every country based on market needs. “It works best if a strategy includes both international and national diversification” (www.forbes.com). The international appeal of McDonald’s brand exemplifies the advantages of globally linked strategies. McDonald’s holds a strong competitive position due to its global priorities of optimizing its menu, modernizing customer experience and broadening accessibility to its brand.
Drive-thru lanes have become the dominant sales stream for McDonalds in the past decade. However, there are fewer options in densely crowded cities around the world where space is so scarce the restaurant isn’t able to offer drive-thru lanes. Moreover, McDonalds has implemented delivery service...