McDonald$$s is a short case that does not provide the comprehensive background and numerical support for a quantitative analysis, but it does work well for a discussion in conjunction with a discussion of the challenges of a low$-$cost strategy. The case highlights a crucial strategic dilemma that the company faces and that often confronts companies that compete on lower cost. Sales have been declining and McDonald$$s faces an important challenge in its core business of hamburgers. A number of smaller but fast$-$growing competitors have been offering burgers with fresh beef that are perceived as better tasting. McDonald$$s is trying a number of things to respond $($menu tweaks, kiosk ordering, delivery$),$ but its decision of how to respond to better tasting burgers is much more fundamental. If it goes with fresh beef and fresher hamburgers, what changes in its value chain will such a move require? And, what will such changes do to its cost structure?

Objectives:

Students gain experience in understanding cost structure.

Students will explore issues surrounding how firms exploit existing advantages in new markets.

Students are introduced to challenges that firms face in developing new capabilities to take advantage of new opportunities.

The case also highlights some issues in managing the value chain for cost leadership.

Instructions:

You will write a paper analyzing this case, $($See below for paper requirements and rubric.$)$ and answer the questions below. Cite all sources you use in writing this paper.

Questions:

$1.$ Why is the current generation turning away from McDonald's?

$2.$ What are some of the challenges McDonald's is facing?

$3.$ Why are changes occurring now?

$4.$ What are its advantages and disadvantages relative to competitors such as Five Guys, Smashburger, In$-$N$-$Out, etc?

$5.$ What is McDonald's strategy in burgers now? Why is it not working well now?

$6.$ What should McDonald's do going forward?