Case Notes/Answers
McDonald's Corporation, by Marne Arthaud-Day, Frank
Rothaermel
Discussion Questions:
AnAlysis: Focus on ExtErnAl And/or intErnAl EnvironmEnts
1. Which trends in McDonald’s external environment are likely to have the greatest impact on
the
company’s ability to sustain a competitive advantage?
2. How is McDonald’s positioned vis-à-vis its major competitors?
FormulAtion: Focus on BusinEss, corporAtE, And/or GloBAl strAtEGy
3. Which business-level strategy does McDonald’s employ? Is it effective? How so?
4. Which international strategy does McDonald’s employ? Is it effective? How so?
implEmEntAtion: Focus on rEcommEndAtions And How to ExEcutE tHEm
5. How should Easterbrook adapt the organizational structure of McDonald’s to achieve his
strategic plan?
6. Among all the roles played by strategic leaders, which one(s) will be most important as
Easterbrook implements his strategic plan?
, MH037T
1 2 5 9420477
R EV: September 14, 2015
T E AC H I N G N OT E
McDonald’s Corporation
Structure of the Case
The case is written from the perspective of McDonald’s CEO Steve Easterbrook. Dated approxi-
mately six months after Easterbrook assumed office in March 2015, it highlights the company’s recent
and dramatic decline in performance amidst increasing competition.
McDonald’s was started by the McDonald brothers in 1940 in San Bernardino, California. By limit-
ing the menu to burgers, fries, and drinks, Dick and Mac McDonald were able to emphasize quality
and streamline operations, leading to rapid growth. In partnership with Ray Kroc, they founded the
McDonald’s Corporation in 1955 with the vision of establishing McDonald’s franchises throughout
the United States. Kroc bought out the brothers’ shares in 1961 and oversaw a period of rapid expan-
sion throughout the 1960s and 1970s. The company had its first public offering in 1965, debuting at
$22.50 per share. It opened its first international location (Canada) in 1967. Around the same time, Kroc
started to diversify McDonald’s menu. New menu items (Egg McMuffin, Chicken McNuggets, etc.),
operational efficiency, and technological advances were the company’s main weapons throughout the
burger wars of the 1980s. Ray Kroc passed away in 1984, leaving behind a sprawling empire of more
than 7,500 restaurants worldwide.
By the 1990s, McDonald’s rapid pace of domestic expansion began to slow. The company had
varying success with further efforts to adapt its menu internationally and domestically. When Jack
Greenberg became CEO in 1998, he quickly took corrective action, announcing a geographic reorgani-
zation, a new food preparation system, and a series of job cuts, all while scrapping plans for numerous
store openings. Instead, he diversified the company’s portfolio by buying different restaurant chains
(e.g., Chipotle). These purchases were later divested when McDonald’s strategy shifted yet again in the
early 2000s.
The company went through three CEOs between 2003 and 2004, at which time Jim Skinner assumed
the top post and started to implement his “Plan to Win,” refocusing the company on execution and
innovation. Under the umbrella of the “i’m lovin’ it” advertising campaign, the restaurant featured
healthier and higher-quality foods such as white-meat chicken and salads. The restaurants themselves
were redesigned to promote a more modern experience for the consumer. Don Thompson served as
COO under Skinner, leading the successful McCafé campaign and cementing his path as Skinner’s
eventual successor. Unfortunately, McDonald’s struggled with weakening sales under Thompson’s
reign despite his efforts to optimize the menu, improve the customer experience, and make McDonald’s
McDonald's Corporation, by Marne Arthaud-Day, Frank
Rothaermel
Discussion Questions:
AnAlysis: Focus on ExtErnAl And/or intErnAl EnvironmEnts
1. Which trends in McDonald’s external environment are likely to have the greatest impact on
the
company’s ability to sustain a competitive advantage?
2. How is McDonald’s positioned vis-à-vis its major competitors?
FormulAtion: Focus on BusinEss, corporAtE, And/or GloBAl strAtEGy
3. Which business-level strategy does McDonald’s employ? Is it effective? How so?
4. Which international strategy does McDonald’s employ? Is it effective? How so?
implEmEntAtion: Focus on rEcommEndAtions And How to ExEcutE tHEm
5. How should Easterbrook adapt the organizational structure of McDonald’s to achieve his
strategic plan?
6. Among all the roles played by strategic leaders, which one(s) will be most important as
Easterbrook implements his strategic plan?
, MH037T
1 2 5 9420477
R EV: September 14, 2015
T E AC H I N G N OT E
McDonald’s Corporation
Structure of the Case
The case is written from the perspective of McDonald’s CEO Steve Easterbrook. Dated approxi-
mately six months after Easterbrook assumed office in March 2015, it highlights the company’s recent
and dramatic decline in performance amidst increasing competition.
McDonald’s was started by the McDonald brothers in 1940 in San Bernardino, California. By limit-
ing the menu to burgers, fries, and drinks, Dick and Mac McDonald were able to emphasize quality
and streamline operations, leading to rapid growth. In partnership with Ray Kroc, they founded the
McDonald’s Corporation in 1955 with the vision of establishing McDonald’s franchises throughout
the United States. Kroc bought out the brothers’ shares in 1961 and oversaw a period of rapid expan-
sion throughout the 1960s and 1970s. The company had its first public offering in 1965, debuting at
$22.50 per share. It opened its first international location (Canada) in 1967. Around the same time, Kroc
started to diversify McDonald’s menu. New menu items (Egg McMuffin, Chicken McNuggets, etc.),
operational efficiency, and technological advances were the company’s main weapons throughout the
burger wars of the 1980s. Ray Kroc passed away in 1984, leaving behind a sprawling empire of more
than 7,500 restaurants worldwide.
By the 1990s, McDonald’s rapid pace of domestic expansion began to slow. The company had
varying success with further efforts to adapt its menu internationally and domestically. When Jack
Greenberg became CEO in 1998, he quickly took corrective action, announcing a geographic reorgani-
zation, a new food preparation system, and a series of job cuts, all while scrapping plans for numerous
store openings. Instead, he diversified the company’s portfolio by buying different restaurant chains
(e.g., Chipotle). These purchases were later divested when McDonald’s strategy shifted yet again in the
early 2000s.
The company went through three CEOs between 2003 and 2004, at which time Jim Skinner assumed
the top post and started to implement his “Plan to Win,” refocusing the company on execution and
innovation. Under the umbrella of the “i’m lovin’ it” advertising campaign, the restaurant featured
healthier and higher-quality foods such as white-meat chicken and salads. The restaurants themselves
were redesigned to promote a more modern experience for the consumer. Don Thompson served as
COO under Skinner, leading the successful McCafé campaign and cementing his path as Skinner’s
eventual successor. Unfortunately, McDonald’s struggled with weakening sales under Thompson’s
reign despite his efforts to optimize the menu, improve the customer experience, and make McDonald’s
