Mcdonald's Resources and Capabilities
What are the particular resources and capabilities that McDonalds has been relying upon for its recent turnaround?
After longstanding growth within the fast food industry, McDonald's began to experience a decline in their annual earnings in the late 90's. Prior to the decline, McDonald's was a segment leader within the fast food industry and was widely recognized for its outstanding service and quality. Once known as the benchmark company by industry insiders, McDonald's began to lose sight of their strategic vision, which, was to provide the "world’s best quick service restaurant experience". In order to improve their financial performance and once again satisfy their customer base, McDonald's chose not to emulate their competitors.
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Eating at a McDonald's 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 “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