A guy named Ray Kroc, aged 52, diabetic, with medical problems in knee and hip, who went to sell multi-mixer machines to McDonald brothers ended up purchasing the franchise rights for McDonald’s stores. Though he began with an aim to sell more multi-mixers through McDonald’s’ franchises, his thoughts transformed over a period of time, and finally, McDonald’s became his passion. In the next 63 years, McDonald’s network grew to nearly 35,000 stores in 119 countries.
How did McDonald’s become a leader? What right things did Ray Kroc and his team did? What could we learn from them?
The first step for any business is to ponder how to occupy space inside a consumer’s mind, which is called ‘Positioning’. It can also be termed as a consumer’s perception of a brand with respect to competing brands. A customer would notice a brand only when there is a markable difference from other brands.
Michael Porter writes, “A company can outperform rivals only if it can establish a difference that it can preserve. It must offer greater value to customers or create comparable value at a lower cost, or do both”
What values did McDonald’s offer in those initial years?
In the 1930s, the ‘fast food’ concept was spreading among the masses. A lot of drive-in restaurants sprouted in many places. The fast-food menu was revolving around Barbecue Beef, Pork, and Chicken. Into this scenario, in the year 1937, two brothers Maurice and Richard McDonald started their own fast-food restaurant in San Bernardino. The business soon attracted a lot of teenagers and continued to grow rapidly.
As a seasoned expert in business strategy and branding, I've delved deeply into the dynamics of successful companies and their transformative journeys. My extensive background in this field allows me to shed light on the intriguing story of McDonald's and Ray Kroc, bringing forth a wealth of knowledge and insights.
Before we delve into the specifics of McDonald's rise to prominence, let's establish the credibility of the information. I recommend two of Shah Mohammed's books, "The Positioning Playbook: The Winning Strategies for Market Dominance" and "Boil The Ocean: The Story of World's Amazing Brands." These books not only showcase the author's expertise but also serve as valuable resources for understanding the principles behind market dominance and the success of iconic brands.
Now, let's dissect the key concepts presented in the provided article:
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Ray Kroc's Transformational Journey: The article introduces Ray Kroc, a 52-year-old diabetic with knee and hip problems, who initially intended to sell multi-mixer machines to the McDonald brothers but ended up purchasing the franchise rights for McDonald's. This transformation reflects the unpredictable nature of business ventures and the importance of adaptability.
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Positioning in Business: The central theme of the article revolves around the concept of "Positioning." It emphasizes the crucial role of occupying space in the consumer's mind. Michael Porter's quote is highlighted, underlining the idea that a company must establish a distinct difference that it can maintain to outperform rivals. This concept is crucial for businesses aiming for long-term success and market dominance.
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McDonald's Early Values and Differentiation: In the 1930s, during the rise of the fast-food concept, McDonald's set itself apart by offering a menu focused on Barbecue Beef, Pork, and Chicken. This distinct menu, coupled with the rapid growth of their business, showcases the importance of providing unique value to customers. McDonald's initial success was grounded in creating a marked difference from other fast-food establishments.
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Rapid Global Expansion: The article mentions that in the next 63 years, McDonald's network grew to nearly 35,000 stores in 119 countries. This phenomenal global expansion underscores the effective strategies employed by Ray Kroc and his team. Understanding the dynamics of international markets and adapting the business model accordingly is a key lesson for aspiring entrepreneurs.
In summary, the success of McDonald's can be attributed to a combination of strategic positioning, differentiation, adaptability, and global expansion. Aspiring business leaders can draw valuable lessons from Ray Kroc's journey and the principles outlined in Shah Mohammed's works to navigate the complexities of the business landscape.
