Five Essay

692 WordsOct 15, 20113 Pages
Shawna LaFleur MGT 499 WSJ Submission October 11, 2011 McDonald’s Coffee Strategy Is Tough Sell Summary McDonald’s is working to break into the coffee business with its lattes, cappuccinos, smoothies and ice-blended frappes, but McDonald’s is having a rough time breaking into the coffee industry because of the current economy, many customers are making their coffee at home. Also many McDonald’s franchisees are not willing to spend the $100,000 it will cost each store to implement the new coffees, but McDonald’s executives are promising to provide a portion of the expenses. After the McCafe drinks have been implemented in nearly 3,000 of 14,000 U.S. locations, McDonald’s made some slight changes by customer suggestions. Such as chocolate drizzle instead of chocolate powder, choice between skim or whole milk, and less printing on cups. McDonald’s also is testing hot and cold drinks that won’t be made with coffee, to reel in customers who are not fans of the coffee taste. While this is the biggest expansion for McDonald’s in 30 years, they are not seeing the sales they were hoping for. The new McCafe peaked three weeks after its launch and have slowly declined since then. McDonald’s is hoping to see an incline as it gives free samples to customers and having contests between all the store to see who can sell the most McCafe drinks. Framework Background “A corporate-level strategy specifies a action a firm takes to gain a competitive advantage be selecting and managing a group of different businesses competing in different product market. Corporate-level strategies help companies select new strategic positions-positions that are expected to increase the firm’s value.” With that being said, McDonald’s enter into the coffee industry with the McCafe specialty espresso-based drinks, competing against big companies such as Starbucks. They are pricing their drinks

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