The goal of this chapter is to explore the basis of competitive advantage at the level of the individual company. Put another way, the central question with which the chapter deals is why, within a given industry, some companies do better than others.
One of the most successful companies in history that illustrates a sustained competitive advantage in the face of intensive competitive pressures is McDonald's. While McDonald's grew rapidly thanks to Ray Croc's insight that a restaurant chain with a simple and inexpensive menu would be cheaper to operate and embraced by the public- they have persisted, and grew, consistently to the present day. Over the years, a near-singular attention to precisely this insight fueled the company's expansion throughout the US, and eventually abroad.
Over its long history, McDonald's also pioneered many innovations in restaurant operations, service concepts, and franchise management. In its recent history, some aspects of McDonald's operations have come under attack from a variety of stakeholders – internal stakeholders such as franchisees, and the employees, as well as external stakeholders such as public interest groups, environmentalists, and consumer advocates against the fast food industry. While many of those battles have subsided in the public eye, McDonalds has continued to reinvent itself over, and over, and over.
Regardless of the efforts of its competitors, Burger King and local establishments in the early days, through the Wendy's and Arby's era in the 1990s, and more recently to McDonalds and boutique breakfast establishments in a US and international markets, McDonalds has persevered.
What functional strategies at McDonalds' help the company to achieve superior financial performance?
Identify the resources, capabilities and distinctive competencies of McDonalds.
How does McDonalds' resources, capabilities, and distinctive competencies translate into superior financial performance?
How secure is McDonalds' competitive advantage? What are the barriers to imitation here?"