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    McDonalds Strategic Management

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    Please provide a short response to the following questions:

    If McDonald's were to diversify would you recommend conglomerate or concentric diversification as part of its strategic plan? Why?

    Do you think it is better to concentrate on one source of competitive advantage (cost versus differentiation versus speed) or to nurture all three in a firm's operation? What are the advantages and disadvantages?

    How does strategic analysis at the corporate level differ from strategic analysis at the business unit level? How are they related?

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    Solution Preview

    Please provide a short response to the following questions:

    If McDonald's were to diversify would you recommend conglomerate or concentric diversification as part of its strategic plan? Why?

    I will encourage concentric diversification. The reasons is that that McDonald's already has an expertise in fast food and so it is desirable that it should diversify into industries that are technologically similar so that it can use its know-how to gain competitive advantage. For instance, it could acquire other fast food restaurant chains it can use its know how to advantage. On the other hand conglomerate refers to expansion by acquiring industries that are not related to its current business. Here McDonald's would not be able to use its know how for global expansion. For example, if McDonald's were to acquire a steel mill then it would not be able to use its knowledge of fast food business or franchising business in steel making. The experience and expertise of McDonald's would become irrelevant.

    During the process of diversification, it is necessary that the original industry use its experience, capabilities and know how to improve its chances of success in the new industry. This is the reason why we recommend McDonald's should go in for concentric ...

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