Marketing Mistakes and Successes, 12th Edition

CHAPTER FIVE

McDonald's: Rebirth Through a Low Growth Strategy

Few business firms anywhere in the world have been able to match the sustained growth of McDonald's. Initially, it grew with one simple product—a hamburger—and while it has broadened its product mix today, it still remains uniquely undiversified. The foundation for the success had always been the most rigid standards and controls to be found anywhere. McDonald's insisted these be adhered to by all outlets, company-owned as well as franchised, and therein was an enduring marketing strategy.

For decades, no competitor could match McDonald's unique standards of quality, service, and cleanliness. Over time, however, these standards and controls had slipped, while competitors countered its former advantage and became ever more aggressive. The ball game had changed, and McDonald's was struggling to keep the growth mode. One McDonald's CEO went on a new-store binge, but these new stores often cannibalized older outlets, to franchisees' consternation; another CEO embarked on a crusade to acquire other fast-food restaurants, but these proved a drain on profits. Then Jim Cantalupo took the company back to basics, and the company's fortunes turned around.

An ill wind now seemed to beset McDonald's. Cantalupo, 60, the savior, died suddenly of a heart attack. His successor was diagnosed with colon cancer shortly after taking office.

THE MCDONALD'S GROWTH MACHINE

When Ray Kroc took over the embryonic McDonald's, it took the company ...