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Strategic Management

Strategic Management

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Published by Shibly

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Published by: Shibly on Apr 05, 2010
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05/28/2013

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CHAPTER 1
 STRATEGICMANAGEMENT
YOU SHOULD BE ABLE TO DO THE FOLLOWINGAFTER READING THIS CHAPTER:
1. Describe the key elements in the strategic management process.2. Discuss the three different perspectives or approaches used in understanding strategy,including the traditional perspective, the resource-based view, and the stakeholder view.3. Understand strategy formulation at the corporate, business, and functional levels.4. Explain the difference between strategic thinking and strategic planning.5. Characterize and explain the key players in the lodging and foodservice industries.
 
CHAPTER 1
STRATEGIC MANAGEMENT2
FEATURED STORY
FEATURED STORY 
EATURED STORY
 
FEATURED STORY 
MCDONALDS PLAN TO WIN
After 50 years of operation, McDonalds is revitalizing its products, and pushing innovationthrough a variety of initiatives. This foodservice giant with more than 30,000 restaurantsin 100 countries provides food to nearly 50 million customers each day, but decadesof expansion, sales growth, and profits made the burger giant complacent. By focusingon getting bigger, not better, the company stumbled in 2002, recording its first losingquarter. By 2003, U.S. sales had fl attened, as many consumers were turning to healthieroptions and restaurants with more upscale menu items, a segment sometimes referredto as “fast-casual. Morgan Spurlock s film
Super Size Me 
 , released in 2004, also seriouslydiminished the public image of the quick -service chain, as moviegoers watched Spurlock become ill and gain 25 pounds after eating only McDonalds food for one month.With pressure to get back on track, it was time for McDonalds to rethink the business.The chain devised a recovery strategy that included new menu items, redesigned restau-rants, and a focus on the consumer experience. Through a program titled “Plan to Win,McDonalds focused on making a deeper connection with customers through the fivebusiness drivers of people, products, place, price, and promotion. Using its own five Ps,the company is developing and refining new strategies to deliver value, offering productvariety, developing updated and contemporary stores, balancing the delivery of value pric-ing with more expensive items, and marketing through bold and innovative promotions.Execution of this strategy has included mystery shoppers and customer surveys, alongwith grading restaurants to help the company deliver on its people goals. New menuitems like the Fruit & Walnut Salad in the United States and deli sandwiches in Australiaare part of the commitment to serve high-quality products to satisfy customer demandfor choice and variety. Restaurants are staying open longer, accepting credit and debitcards, enabling wireless Internet access, and even providing delivery service in parts of Asia. As part of the program, franchisees and suppliers are asked to provide their opin-ions and ideas on facility design, while the company benchmarks retail leaders, such asCrate & Barrel, to help produce cleaner and smarter restaurants. The company is test-ing small handheld devices to use on what it calls “travel paths,” a process for checkingoperational failures such as the temperature inside the refrigerators. Experiments witha new grilling concept from Sweden, which grills burgers vertically instead of horizon-tally, offers space-saving possibilities for the chain. Product offerings like the McCaf é, a concept developed in the Australian market that provides gourmet coffee inside 500existing restaurants, are proving to be successful.The trouble experienced in the early part of the millennium has abated, and executives atMcDonalds have declared success after several years of progress under the Plan to Win.
 
3INTRODUCTION
 DISCUSSION QUESTIONS:
1. Will the decision to focus on Brand McDonalds yield the best returns?2. Why divest shares in the popular fast-casualChipotle Mexican Grill concept just as it beginsto take off?3. Can the premium coffee McCaf é conceptexpect to compete seriously with Starbucks?Or will McDonalds, like the market leaders inmany other industries in the past, struggle?4. How many times can McDonalds reinventitself and continue to grow?
Company revenues are up, and the firm plans to remain focused on its core business. Oneindication of its commitment to fast food was the divestiture of its seven- year ownershipstake in Chipotle Mexican Grill, a highly successful fast-casual burrito chain. With thesale of around 5 million shares of Chipotle stock, the burger maker is now refocusing onBrand McDonalds.Attracting more customers to McDonalds remains its goal for growth. In the U.S.market, the strategy is to leverage menu innovation; in Europe, upgrading the customerexperience and enhancing local relevance have driven management efforts; and theAsia/Pacific, Middle East, and Africa markets have focused on building sales throughextended hours. The question remains whether focusing on the core business will yieldmaximum return. At McDonalds, the executives are betting on the core brand and hop-ing that this strategy will pay off.
1
 
INTRODUCTION
T
he hospitality business is fiercely competitive. When McDonalds began its rapidexpansion in the middle of the 20th century, there were few fast-food alternatives.McDonalds did more than any other company to shape the fast-food market, picking up new rivals at every stage. As domestic growth began to level off, the company increased

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