Mcdonald's Company Name: Mcdonald's Industry: Case Study

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McDonalds also places strong emphasis on marketing to children, including the use of playgrounds in its restaurants. As a result, McDonalds is able to maintain some pricing power over its customers and to attract customers to its restaurants despite strong competition from a wide number of sources.

Issues and Challenges: McDonald's operates in a number of mature markets, where growth is slow. Growth is now focused not only on overseas markets but for the most part on less desirable overseas markets, the China and India excepted. This has slowed the pace of growth for the company in recent years. Another challenge has been the economic downturn that saw many customers reduce their meals away from home. The result of these two challenges has been that McDonald's saw a reduction in its revenue in fiscal 2009 (MSN Moneycentral, 2010).

The childhood obesity issue is the latest in a string of challenges faced by McDonalds from a variety of health and environmental activists. This particular challenge has come with class action lawsuits (Holguin, 2003) and has forced McDonalds to face bans on toys in Happy Meals, which had previously served as an inducement for children to eat at their restaurants (Allen, 2010). There are also negative public relations consequences for these legal actions as well, that could convince some parents to keep their children away from McDonalds.

Course of Action Recommended: McDonald's cannot please all the people all of the time. They are a natural target for activists and the obesity challenges are just another in a string of similar risks faced by the company.

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A legal fund should be set aside to fight the claims, but the company should also be prepared to make subtle changes to its menus to ward off such future claims. Dramatic action, however, is not needed.

The company should also continue to focus on growth opportunities where they exist in the developing world. The best opportunities may be gone, but whatever today's best opportunities are should be pursued. Shareholder expectations should be managed accordingly, however, so that past growth and profitability levels are not expected.

The company should approach the economic downturn as an opportunity to reduce costs and to reign in its debt levels. McDonald's is still making substantial profits, but the debt level is probably too high and there is always room to cut costs further. The company should also use its strength to squeeze additional price cuts from suppliers in order to preserve its high margins.

Opinion: McDonalds is a very strong company, which makes this an interesting case study. There is certainly no need to reinvent the wheel with McDonalds, as its business strategy has proven over the long run to be more than adequate to manage its challenges. That said, even strong companies have room to make minor improvements. This case provides an opportunity to recognize what companies can do in response to temporary challenges that can yield permanently positive results.

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