Ansoff Matrix in McDonald’s (McDonald’s Growth Strategy)
The aim of this article is to delve into the use of Ansoff Matrix in McDonald’s. It attempts to explore whether McDonald’s considers any or all of the four growth dimensions suggested by Ansoff for its global expansion. Ansoff Matrix suggests that an organisation has four different ways to grow i.e. market penetration, market development, product development, and diversification. Surely, not all organisations have willingness or abilities to explore all these four strategies. However, what about McDonald’s?
Market penetration strategies of McDonald’s
Market penetration is about selling existing products/services to existing markets. McDonald’s applies a number of techniques to offer its current products to its existing markets. It has different kinds of products such as fries, burgers, beverages, salads, and desserts. It has meals for both adults and kids.
McDonald’s offers sales promotions such as coupons often. It has Drive-Thru facilities for its customers in some restaurants. Likewise, home delivery is also available in some countries. These marketing techniques have been very effective for it to attract more customers and serve the current ones better. The effectiveness of market penetration strategy is evident from the fact that McDonald’s made around $7.84 billion revenue in the USA alone in 2019 (Lock, 2021).
Market development strategies of McDonald’s
Developing new markets to sell existing products is an important growth strategy. McDonald’s is one of the most well-known brands in the world. It started its journey in the USA; however, did not confine itself to the home market only. Rather, it expanded and went beyond the national border. Currently, it operates in 118 countries (McDonald’s, 2021). These global markets contributed $11.4 billion to its total revenue in 2019 (Lock, 2021).
However, market development strategy is not always easy to implement. For example, McDonald’s went to Iceland in 1993; however, decided to close down its business in 2009. A number of factors such as drop in profits, recession in 2007/8, and increased import and production costs were behind the decision. Likewise, McDonald’s cannot explore potential markets such as Bermuda, Iran, Macedonia, Yemen, Montenegro, North Korea, Zimbabwe, and Bolivia as it is banned by these countries on their soil (Jones, 2018).
Product development strategies of McDonald’s
Product development is the next strategy to be analysed in the Ansoff Matrix in McDonald’s. McDonald’s often add new items to its menu. For instance, Homestyle Crispy Chicken was introduced in early 2021. However, a number of its new products such as McLobster, McGratin Croquette, Hula Burger, Pizza & McPizza, and McSpaghetti failed spectacularly in the past. Poor implementation and intense competition were behind the failures.
Diversification strategies of McDonald’s
Diversification is considered the riskiest strategy in Ansoff Matrix as it is about developing new products to present to new markets that were not addressed before. However, McDonald’s did not refrain from trying it. For example, it introduced McCafé (coffee-house) long time ago to compete with renowned coffee houses.
Likewise, McDonald’s opened two hotels in Switzerland under the name ‘Golden Arch Hotel’ in 2001. However, the hotels were closed in 2003. Surely, it was a failure; however, Michel (2007) opines that it was an opportunity for the company to learn valuable lessons from a controlled failure.
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Last update: 09 March 2021
Jones, M. (2018) 9 countries that have banned McDonald’s, available at: https://www.businessinsider.com/countries-that-have-banned-mcdonalds-2018-1?r=US&IR=T (accessed 05 March 2021)
Lock, S. (2021) Revenue of McDonald’s Corporation worldwide in 2019, by region, available at: https://www.statista.com/statistics/219453/revenue-of-the-mcdonalds-corporation-by-geographic-region/ (accessed 05 March 2021)
McDonald’s (2021) Where we operate, available at: https://corporate.mcdonalds.com/corpmcd/our-company/where-we-operate.html (accessed 05 March 2021)
Michel, S. (2007) The upside of falling flat, available at: https://hbr.org/2007/04/the-upside-of-falling-flat (accessed 01 February 2021)
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.