McDonald’s generic competitive strategy determines the basic approach to developing the competitive advantages of the business, and the company’s intensive growth strategies focus on growing and expanding the fast-food restaurant chain.
This generic competitive strategy and the intensive growth strategies lead to competitiveness and growth that address the external pressure coming from competitors, as characterized in the Five Forces analysis of McDonald’s.
Related strategic objectives respond to competing fast-food firms, such as Wendy’s, Burger King, Subway, KFC, and Arby’s, as well as McCafé competitors, like Starbucks, Dunkin’, and Tim Hortons.
McDonald’s generic competitive strategy shapes competencies and competitive advantages for operations in the global market, with support from the intensive growth strategies of the fast-food business.
McDonald’s Generic Competitive Strategy (Porter’s Model)
McDonald’s generic competitive strategy is cost leadership, which builds competitive advantage through cost minimization. The company has standardized processes designed to maximize efficiency, minimize costs, and ensure profitability despite competitive selling prices.
High-efficiency and high-productivity processes achieved through McDonald’s operations management contribute to the success of cost leadership as a generic competitive strategy in this case.
In addition, the multinational scale of the business organization allows for economies of scale that enable cost reduction in production and in purchasing materials and ingredients used at McDonald’s restaurants.
Profitability through cost leadership as the generic competitive strategy facilitates the attainment of market leadership, which is underscored in McDonald’s mission statement and vision statement.
Many competitors also apply cost leadership as a generic competitive strategy, like Wendy’s, Subway, and Burger King, and McCafé at Home competitors, like Unilever’s BRU coffee and PepsiCo and Coca-Cola beverages.
McDonald’s intensive growth strategies depend on how this generic competitive strategy ensures competitive advantages. The competitive advantages achieved through cost leadership support McDonald’s intensive growth strategies, especially market penetration and product development.
McDonald’s Intensive Growth Strategies (Ansoff Matrix)
Market Penetration
Market penetration is the main intensive growth strategy that supports McDonald’s business development. The company’s strategic objective in using market penetration is to generate more sales in foodservice markets where the business currently has operations.
McDonald’s employs a number of ways for this intensive growth strategy, including franchising, licensing, joint ventures, and partnerships with other firms to increase the restaurant chain’s market reach.
For example, the company has agreements and partnerships for the distribution of McCafé products through retail stores and e-commerce platforms, such as Walmart, Target, Costco, and Amazon.
In this context, McDonald’s generic competitive strategy of cost leadership supports market penetration as an intensive growth strategy, with low costs and competitive prices empowering the business to penetrate the multinational market.
In market penetration, the business strengths identified in the SWOT analysis of McDonald’s add to competitive advantages for growing sales and market reach. This intensive growth strategy’s success depends on business competencies against aggressive fast-food competitors.
In implementing market penetration as an intensive growth strategy, McDonald’s marketing mix (4Ps) determines the strategies and tactics used for reaching target customers for the company’s restaurants and McCafé coffee products.
Product Development
Product development is applied as one of McDonald’s growth strategies. The company’s strategic objective in product development is to produce and sell new food and beverage products to its current markets, such as the EU and North American markets.
This intensive growth strategy is secondary in growing the business because McDonald’s mainly uses market penetration. In product development, the company has a low frequency of releasing new products, like new hamburger meals or variants of current menu items.
This intensive growth strategy of product development relates to McDonald’s generic competitive strategy of cost leadership. For example, low costs enable competitive introductory pricing to encourage consumers to buy the company’s new food products.
Industry and market trends determine the products McDonald’s develops through the growth strategy of product development. These trends, shown in the PESTLE/PESTEL analysis of McDonald’s, reflect consumer preferences and foodservice market dynamics.
Also, this intensive growth strategy influences the restaurant chain’s corporate citizenship. For example, McDonald’s corporate social responsibility (CSR), ESG, and stakeholder programs are supported through product development that suits corporate citizenship concerns.
These concerns include sustainable sourcing of ingredients to address green business trends. McDonald’s organizational culture (work culture) defines the human resource foundation for corporate citizenship efforts in using product development as an intensive growth strategy.
Diversification
Diversification is only minimally applied as an intensive growth strategy in McDonald’s business. The strategic objective of diversification is to grow the business through new products in markets outside the fast-food restaurant industry.
McDonald’s implements this strategy for intensive growth but only to a limited extent and in the area of food production. For example, McCafé at Home coffee products are in the consumer goods industry. McDonald’s has not yet maximized its growth in the consumer goods market.
Diversification requires organizational capabilities and competitive advantages for the requirements of new operations other than food service. McDonald’s organizational structure (company structure) may adopt new divisions to support this intensive growth strategy.
McDonald’s generic competitive strategy of cost leadership may no longer apply to new operations under diversification, while other generic competitive strategies may be more appropriate.
Some Insights into McDonald’s Competitive Strategy and Growth Strategies
McDonald’s generic competitive strategy and intensive growth strategies reflect strategic planning processes and characteristics. For example, business innovation priorities are translated to the fast-food company’s intensive growth strategy of product development.
Managerial preferences and decisions affect McDonald’s generic competitive strategy. For example, choosing cost leadership as a generic strategy indicates that the restaurant chain focuses on targeting all consumers through competitive advantages based on cost.
Other generic competitive strategies are less favorable to McDonald’s. For example, the generic competitive strategy of differentiation would focus on unique food and beverage products that may come with higher prices and a smaller target market or market segment.
References
- Kathuria, R., & Lucianetti, L. (2024). Aligning performance metrics with business strategy. Management Decision, 62(5), 1539-1559.
- McDonald’s Corporation – Form 10-K.
- McDonald’s Corporation – Franchising.
- McDonald’s Corporation – McCafé Coffee at Home.
- McDonald’s Corporation – Our Business Model and Growth Strategy.
- Mobarak, N. M., Nassar, M. A., & Omar Barakat, M. (2024). Cause-related marketing and its impact on brand image and loyalty: Evidence from international fast-food chains. Journal of Foodservice Business Research, 27(4), 383-408.
- Rongjun, Y., & Xuewei, L. (2025). Leveraging Growth with Business Strategy Formula. MIT Sloan Management Review, 66(2), 23-26.
- Shafiee, M. M. (2024). Competitive strategy, organisational capabilities, industry structure and marketing performance. International Journal of Procurement Management, 19(1), 37-58.