McDonald's has established a business strategy that is not unlike other fast food chains.
Cutting costs, adjusting prices, and improving restaurant operations are the three pillars of a strategy
adopted by COO Ralph Alvarez (Adamy, 2009). Replacing older gas guzzling company vehicles with
more fuel efficient models is one way the company is cutting costs. Improving drive through process
efficiency is another way of reducing costs. When processes become more efficient, employees become
more productive and able to serve more customers. While this strategy is effective in many regions of
the globe, some weaknesses in sales, such as in Eastern European, German, and Chinese markets, must
be balanced by increased revenues in other regions, like Japan, Australia, and the UK. Roughly two
thirds of McDonald's revenues are generated from overseas markets (Adamy, 2009).
Though much of the organization's revenues come from overseas markets, McDonald's must
still maintain a competitive edge in U.S. markets. Though pricing strategy is often tied to marketing
efforts, McDonald's uses customer demand to determine which products should be reduced or
increased in price. High demand products or menu items can be reduced in price, due to larger
quantities of sales. However, the organization relies heavily on automated ordering systems, which
also track sales, to adjust prices in specific markets. Offering products customized to cultural
expectations, such as high end coffee drinks in U.S. markets, ...
The discussion focuses on the business strategies of two popular fast food chains. The discussion explains specific methods each company has utilized to improve profit. Both strategies are compared for potential effectiveness.