Changes in the Industrial Landscape

Within the next 50 years, the corporate and industrial landscape will be particularly static with regards to the largest corporations. In order to be overtaken by new, entrepreneurial entities, a company must have at some point ceded its ability to sustain a competitive advantage to such a degree that this new, hypothetical business venture would be able to double their earnings and growth over a certain period of time (Marcus A. A., p. 197). For McDonald's, Google, Coca-Cola, or any company that has managed to attain the amount of economic and cultural impact reminiscent of these three corporate giants, this would entail an enormous amount of mismanagement. For starters, all three of these companies are the largest in their respective industries. Coca-Cola reported $48.01 billion in revenue in 2012 (KO Annual Income Statement, 2013), McDonald's (one of Coca-Cola’s primary corporate partners) reported $27.46 billion (MCD Annual Income Statement, 2013) and Google raked in $50.18 billion (GOOG Annual Income Statement, 2013).

In addition, these companies have accomplished what only the robber barons of our industrial past were able to, albeit with far more regulation and oversight: Their brand is synonymous with the products and services they provide. Much in the same way that Standard Oil and U.S. Steel were the faces of their respective industries, one cannot mention fast food, soda pop or internet search engines without inadvertently conjuring the image of these companies: A “Coke” has entered our collective vocabulary and is just as valid as a “soda;” “Googling” has done the same, and remains the verb of choice when describing an internet search, regardless of the search engine being used; McDonald’s, while battling significantly more and larger competition in relation to itself than the previous two corporations, still retains its image as the preeminent fast-food chain in the world. The corporate branches of these companies have done astounding jobs over their respective business lifetimes of maintaining their industry supremacy. While it would be possible in this age of internet startups and crowdsourced funding to create a certain amount of competition, it would be highly unlikely that any new entrepreneurial ventures would be able to overcome the staggering amount of profit and cultural pull that these three companies now enjoy.

For a case study in industrial dynamism, let’s examine the fast food industry: Specifically, McDonald's. McDonald's operates over 34,000 restaurants worldwide, employing more than 1.7 million people (“Getting to Know Us,” McDonalds Corporation, 2013). In order to reach these herculean numbers for a restaurant chain, they’ve had to deviate from their original business model significantly over the years. The purchase of the franchise in 1955 is recognized as the official beginning for the current McDonald’s corporation, and at the time there was a single restaurant that served only hamburgers, cheeseburgers, french fries, soft drinks, and milkshakes. Turning points for the fast-food industry were many in the late 20th century, with competitors introducing such revolutionary concepts as meals sized for children, a variety of menu items never before seen in these types of establishments and the response to an increasingly health-conscious consumer base. McDonald's became the first fast-food restaurant in the industry to introduce what would amount to a kids menu in 1979, leading to the creation of the Happy Meal and the addition of children’s toys with every purchase, a product so successful that it is still available on the menu to this day. McDonald’s was also at the forefront of the movement to give customers more variety: In response to the creation of the Big Boy burger chain 1967, McDonald’s released a new menu item called the “Big Mac” that very same year. The McChicken sandwich was introduced in 1980 and Chicken McNuggets in 1983, both of which prodded other fast-food chains of the era to include the addition of chicken products to their menus. Finally, in an effort to acquire part of the healthy food market share, McDonald's introduced salads in 1985 and has put their healthy menu items through several reconstructions since in order to better appeal to consumers. In addition to the rapid changes to their basic menu on a mass scale, McDonald's is also an expert at incorporating different local and regional delicacies and recipes into their restaurants, foreign and domestic. For example, McDonalds serves a “McLobster” in the New England and Atlantic Canadian areas as a seasonal menu item, makes the McChicken spicier in South East Asian countries and even creates chicken-based versions of its burgers in countries like India, where the prevailing religious philosophy of Hinduism restricts practitioner’s intake of any and all-beef products. Corporations are generally known for their rampant bureaucracy and commitment to uniformity. McDonald’s Corporation breaks this mold and remains incredibly dynamic and flexible in its ability to connect with consumers and generate successful menu items.

References

GOOG Annual Income Statement - Google Inc. Cl A Annual Financials. (2013, April 1). MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved October 11, 2013, from http://www.marketwatch.com/investing/stock/goog/financials

KO Annual Income Statement - Coca-Cola Co. Annual Financials. (2013, April 1). MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved October 11, 2013, from http://www.marketwatch.com/investing/stock/KO/financials

MCD Annual Income Statement - McDonald's Corp. Annual Financials. (2013, April 1). MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved October 11, 2013, from http://www.marketwatch.com/investing/stock/mcd/financials

Marcus, A. A. (2009). Management strategy: achieving sustained competitive advantage (2nd ed.). New York: McGraw-Hill Irwin.

McDonald’s – The Leading Global Food Service Retailer: “Getting to Know Us” AboutMcDonalds.com. (n.d.). McDonald’s – Official Global Corporate Website AboutMcDonalds.com. Retrieved October 11, 2013, from http://www.aboutmcdonalds.com/mcd/our_company.html