M RahmanAnsoff Matrix in McDonald’s (McDonald’s Growth Strategy)
The aim of this article is to delve into the use of Ansoff Matrix in McDonald’s. It attempts to explore whether McDonald’s considers any or all of the four growth dimensions suggested by Ansoff for its global expansion.
Ansoff Matrix suggests that an organisation has four different ways to grow i.e. market penetration, market development, product development, and diversification. Surely, not all organisations have the willingness or abilities to explore all these four strategies together at the same time. However, what about McDonald’s?
Market penetration strategies of McDonald’s
Market penetration is about selling existing products/services to existing markets. McDonald’s applies a number of techniques to offer its current products to its existing markets. It has different kinds of products such as fries, burgers, beverages, salads, and desserts. It has meals for both adults and kids.
McDonald’s offers sales promotions such as coupons often. It has Drive-Thru facilities for its customers in some restaurants. Likewise, home delivery is also available in some countries. These marketing techniques have been very effective for it to attract more customers and serve the current ones better.
One of the key reasons as to why McDonald’s has been able to penetrate various markets is its competitive pricing strategy. It ensures that customers can enjoy their favourite meals at affordable prices. This approach has enabled it to increase its market share consistently.
The effectiveness of market penetration strategy is evident from the fact that McDonald’s made around $9.42 billion revenue in the USA alone in 2022 (Statista, 2023).
Market development strategies of McDonald’s
Developing new markets to sell existing products is an important growth strategy. McDonald’s is one of the most well-known brands in the world. It started its journey in the USA; however, did not confine itself to the home market only. Rather, it had expanded and went beyond the national border.
Currently, McDonald’s operates in over 100 countries (McDonald’s, 2023). These global markets contributed $11.16 billion to its total revenue in 2022 (Statista, 2023).
However, market development strategy is not always easy to implement. For example, McDonald’s had to close its business in Iceland just after several years of operations. A number of factors such as drop in profits, recession, and increased import and production costs were behind the decision.
Likewise, McDonald’s cannot explore potential markets such as Bermuda, Iran, Macedonia, Yemen, Montenegro, North Korea, Zimbabwe, and Bolivia as it is banned by these countries on their soil (Jones, 2022). This shows that developing new market depends on lot of macro factors that go beyond the control of McDonalds.
Product development strategies of McDonald’s
Product development is the next strategy to be analysed in the Ansoff Matrix in McDonald’s. McDonald’s often add new items to its menu. For instance, Homestyle Crispy Chicken was introduced in early 2021. Likewise, Mighty McMuffin, Steakhouse Stack, and Double McPlant are some of the items that were introduced in early 2023 (Westbrook, 2023).
In response to growing concerns about the health implications of fast food, McDonald’s has introduced a range of healthier menu options. These include salads, wraps, and grilled chicken sandwiches. This commitment to offering healthier choices has helped McDonald’s stay ahead of competitors to some extent.
However, a number of its new products such as McLobster, McGratin Croquette, Hula Burger, Pizza & McPizza, and McSpaghetti failed spectacularly in the past. Poor implementation and intense competition were behind the failures.
Diversification strategies of McDonald’s
The last strategy to discuss in this Ansoff matrix of McDonald’s is diversification. Diversification is considered the riskiest strategy as it is about developing new products to present to new markets that were not addressed before. However, McDonald’s did not refrain from trying it. For example, it introduced McCafé (coffee-house) long time ago to compete with renowned coffee houses.
Likewise, McDonald’s opened two hotels in Switzerland under the name ‘Golden Arch Hotel’ many years back. However, the hotels were closed eventually. Surely, it was a failure; however, it was also an opportunity for it to learn valuable lessons from a controlled failure.
Summary of Ansoff matrix in McDonald’s
To conclude, McDonald’s strategies for global success have revolved around market penetration, market development, product development, and diversification. The company has also embraced innovation to stay ahead of competition. Despite facing challenges and criticisms, it has continued to evolve and adapt its strategies to maintain its position as a global leader in the fast-food industry.
Looking ahead, McDonald’s will need to continue focusing on innovation, sustainability, and addressing the evolving preferences of its customers. By doing so, it can ensure that it remains at the forefront of the industry and continues to enjoy global success for many years to come.
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Last update: 06 April 2023
References:
Jones, M. (2022) 9 countries that have banned McDonald’s, available at: https://www.rd.com/list/countries-banned-mcdonalds/ (accessed 05 April 2023)
McDonald’s (2023) Where we operate, available at: https://corporate.mcdonalds.com/corpmcd/our-company/where-we-operate.html (accessed 05 April 2023)
Statista (2023) Revenue of McDonald’s Corporation worldwide, by region, available at: https://www.statista.com/statistics/219453/revenue-of-the-mcdonalds-corporation-by-geographic-region/ (accessed 06 April 2023)
Westbrook, C. (2023) What is new on the McDonald’s menu in 2023? From Steakhouse Stack to McSpicy, available at: https://metro.co.uk/2023/03/30/what-is-new-on-the-mcdonalds-menu-in-2023-from-steakhouse-stack-to-mcspicy-18527249/ (accessed 04 April 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
