Question

Explain how McDonald's could use the cost leadership approach to develop its strategy. Give at least three examples of the possible ways through which the company would try to become a cost leader?

Explain how McDonalds could use the product differentiation approach to develop its strategy. Give at least three examples of what the company can do to differentiate itself from the competition.

Based on your answers in problems 2 and 3 above, explain which one of the two basic strategies you feel would be best for the company to choose.

Answer 1

Cost Leadership Strategy is a method which reduces the cost of the product and Increase effeciency. This method is used to provide the consumers goods and services at lower rate than its Competitors and take over the market share.

McDonalds is one of the company providing Fast food. Its there in the Fast Food industry for many Years. If they choose to opt fro Cost Leadership Strategy they could sell more units and make high profits. Some of the Examples are:

1. Lower Cost Inputs- Negotiating with the suppliers of inputs or Raw Material and purchasing at Lower Cost.
2. Hiring only Required Personnel at a lower wages.
3. Bringing Changes in the Process Design- that is by installing Technology which would decrease the cost and Increase the Efficiency.

Product Differentiation is a Marketing Stratergy where the The Organization distinguish a product from Similar Offerings on the Market. It is one of the way McDonalds can compete with its Competitors and make a special place for itself in the Market it will increase the sales of the Product and take over the Market.

1. Increasing and Improving more number of products by including regional recipies.
2. Include products in Menu for Vegans, this will help many Vegans to come to the McDonalds.
3. Include Menu for Diet Conscious Consumers like Keto Burgers or making Burger Buns made of Wheat,etc. it will Increase the number of Customers .

The Best Strategy among them that McDonalds must Follow is Product Differentiation, because in the case of Cost Leadership Stratergy there are Possibilities that the Quality and Quantity may go Down and this would result to Customer Dissatisfaction. But if the Oragnization Opts for Product Differentiation it will help to Increase the number of Customers and Sales of the Products. It will also help to make the Organization a Unique place in Market. It also make Consumer aware that the Organization Cares for its Customers.