Question

McDonald's is an excellent example of a firm that simultaneously employs both a product-differentiation and a cost-leadership strategy since its product differentiation based on cleanliness, consistency, and fun in its fast food outlets allowed the company to become the market share leader in the industry and to reduce its costs.True / False.

Answer 1

Answer:

True

Explanation:

McDonald's sells a lo different meals, and it also changes its meals depending on the countries at which they operate. E.g. in Mexico you can order McMolletes which are a type of breakfast meal (I guess), but you can also order burritos and other traditional Mexican food. In Germany, you can order Nürnberger which is a type of sausage sandwich, and the list goes on and on for every country at which they operate.

Also McDonald's offers the great advantage of selling cheap food. Basically their restaurants are among the cheapest food you can eat at many different countries, and at least you know they are prepared following certain standards (specially cleanliness).

Answer 2

Answer:

The correct answer is True.

Explanation:

Product differentiation is a competitive strategy that aims to make the consumer perceive the good or service offered by a company differently from those of the competition.

The cost leadership strategy is to find and maintain a low cost position compared to the competition, this will allow the company to obtain higher returns than the industry average.

There is a relationship between the cost leadership strategy and the possession of a high market share, this is because having a high market share allows the appearance of economies of scale and economies of experience, both contribute to reducing unit costs.