Unit vs. Case Study
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Unit vs. Case Study
Product Positioning for McDonalds
Accordingly, the perceived positioning maps for McDonald’s, based on the corporate strategy the corporation outlines, correlates significantly with its expectations. Interestingly, there are locations for improvement in light of the direct competition they face in each town. In relation to the EPS/EBIT analysis, it is germane to the implementation of their strategy. As asserted, McDonald’s positioning maps correspond with its corporate strategy. The motto or tactic of the company is “Plan to Win”. In terms of personal perception, the strategy reflects the objective of a fast food restaurant to appeal to large population masses, and therefore, considerable consumer traffic. Based on McDonald’s, it is evident that the respective tactic actually represents the stride by the corporation to gain large numbers of customers not only in the United States, but also in other parts of the globe. Nonetheless, aside from the investments made by the company to increase its customer base, other elements are also responsible for the development of this strategy.
For instance, the consistent growth of the organization within the United States as well as other foreign countries is a significant factor that is attributable to the success of McDonald’s as a multinational corporation. In addition to this, the corporation has also invested considerably in the adoption and implementation of new business practices in order to maintain a strong competitive edge. For instance, McDonald’s has focused on applying sustainability in its processes, in order to contribute to the protection of the natural environment. Moreover, the organization has also introduced new blueprints of business archetypes designed to ensure a firm competitive advantage against its rivals. In this respect, not much focus is based on fixed aspects of assessing organizational performance such as product quality, the most healthy alternative, optimal customer service, or even the most comfortable ambience. Instead, based on individual perception, it is clear that McDonald’s simply wants to be a great corporation in comparison to the early years within the fast food market.
Potential Gaps or Weaknesses
The facets that define the competitive advantage of McDonald’s constitute the elements established within the company’s product positioning map. Accordingly, with respect to this outline, mentioned factors such as product quality, the healthiest alternative, optimal customer service, and atmosphere define the manner in which McDonald’s places itself and the products it offers within the fast food market. Nonetheless, the corporation is inclined to drop on the lower points especially within the fields of limited alternatives, healthy choices, ambience, and quality. This is due to the overall conservative nature of the company in relation to business practices and tactics within the general fast food market. Alternately, the points in which the corporation performs optimally in comparison to their rivals comprise the taste of their products, the speed of their services, and the reasonable prices upon which they charge their commodities. In addition, these factors correspond to sales.
Based on the potential gaps or weaknesses, the main competitors of McDonald’s illustrate a range of areas in which they illustrate better performance in contrast with the corporation respectively. For Burger King, the value of quality is reflected considerably due to the products it provides to its consumers. Accordingly, the fresh beef patties that the company provides to its consumers are deemed as quality foodstuffs among fast food enthusiasts. Moreover, in comparison to McDonald’s, the quality of the patties by Burger King is higher and therefore, a weak spot for the corporation in question. Apart from issues of product quality, McDonald’s seems to be lacking in the facet of customer service. In comparison to other fast food restaurants, the company does not maintain a strong clientele service and as such, wards off even more customers from trying out the various innovative foodstuffs that they offer on a routine basis.
However, in light of the perceptual map, the element of price is an imperative factor to consider in the analysis. Based on the prices offered by the competitors to respective consumers, McDonald’s continues to establish a low price strategy for the products it offers. In spite of issues bordering around quality, it is evident that the stance of the corporation in cost leadership gives it superior competitive advantage over its main competitors. Even though Wendy’s may offer the best-boiled potatoes in order to appeal to the female clientele base, it is hard to ignore the factor of price as a strong determinant in attracting customers to a certain product or service. Similarly, Hardee mainly offers top-notch burgers and fries. Nevertheless, the manner in which it places its products with high prices dispels prospective consumers from purchasing the alternatives they offer within the fast food market.
Product Positioning Map for McDonalds
Relevance of EPS/EBIT Analysis to Strategy Implementation
Undeniably, the determination of a proper blend of equity and debt within the capital structure of an organization can be imperative in the implementation of a successful corporate strategy. In this respect, the Earnings Per Share (EPS)/Earnings Before Interest and Tax (EBIT) Analysis is viewed as the best alternative to ascertaining whether stock, debt or a combination of the two facets constitutes the best possible choice for raising funding for strategy implementation. In theory, an organization should possess sufficient debt within its capital structure. The purpose of this is to ensure the amplification of the Return on Investment (RoI) through the application of debt on projects and goods gaining more than the expense characterizing the debt (Pignataro, 2013). As such, the EPS/EBIT Analysis functions as a fair measure for determining the beneficial alternative. Moreover, the EPS comprises a good measure for enumerating a company’s success, due to the impact it poses especially on a company’s expenditure. Hence, the technique takes note of the probability that a company would incur large expenses and utilizes it to determine the best capital alternative that will be effective in the implementation of a good company strategy.
EPS/EBIT Analysis for McDonald’s
| 100% Debt | 100% Stock | 50/50 Stock/Debt | ||||
| $ EBIT | 6,332,000,000 | 9,000,000,000 | 6,332,000,000 | 9,000,000,000 | 6,332,000,000 | 9,000,000,000 |
| $ Interest (5%) | 50,000,000 | 50,000,000 | 0 | 0 | 25,000,000 | 25,000,000 |
| $ EBT | 6,282,000,000 | 8,950,000,000 | 6,332,000,000 | 9,000,000,000 | 6,307,000,000 | 8,975,000,000 |
| $ Tax | 2,387,160,000 | 3,401,000,000 | 2,406,160,000 | 3,420,000,000 | 2,396,660,000 | 3,410,500,000 |
| $ EAT | 3,894,840,000 | 5,549,000,000 | 3,925,840,000 | 5,580,000,000 | 3,910,340,000 | 5,564,500,000 |
| Shares(outstanding) | 1,000,000,000 | 1,000,000,000 | 3,000,000,000 | 3,000,000,000 | 1,010,000,000 | 1,010,000,000 |
| $ EPS | 3.89 | 5.55 | 1.31 | 1.86 | 3.87 | 5.51 |
Based on the chart above, it is evident that the best possible alternative constitutes 100% Stock, due to the EPS values, which stand at 1.31 and 1.86 respectively. This is because of the high values that the respective figures possess, which illustrate the lowest amount of expenses that the company will incur in investing $1 billion. In contrast, the worst alternative for funding McDonalds comprises the 100% Debt, which possesses the lowest EPS values.
Reference
Pignataro, P. (2013). Financial modeling and valuation: A practical guide to investment banking and private equity. Hoboken, NJ: Wiley.