Question

McDonald's become a "first mover" in the competitive fast food industry by becoming the first major chain to offer all day breakfast food items incuding their popular Egg McMuffin. Discuss whether you believe this gave the food giant a competitive advantage? What are the pros and cons of being the first to do something in the market?

Answer 1

McDonald's is a fast food company serving lip smacking food all around the world. It is the first fast food company serving burgers around the world and second largest fast food restaurant chain by the number of locations. It had 37241 restaurants as of 2017.

Being a first mover definitely gave Mconald's competitive advantage. The key competitive advantages that McD has include affordability, nutrition, innovation, quality and many others.

In terms of marketing, to sustain a business there are 3 strategies which should be fulfilled -

1) Cost leadership

It means that the firm offers a similar product or service as other firms but at a cheaper price.

2) Differentiation

It means that the firm offers a superior product at a similar cost to other firms inferior products.

3) Focus

It means that the firm will focus on a narrow segment in the market.

Comparing these with McD we see that is a cost leader as it offers food at a low price as compared with its competitors which ultimately makes it superior to other fast food companies. Also the quality of burgers that McD offers is quite decent as compared to other fast food companies. Thus makes McD really superior to other food companies. McD focuses on speedy delivery and universality of taste. The service is really quick and the quality of the product is really good. It focuses on the taste of the products for its consumers which has a positive implication on consumer loyalty. It has substantially uniform menu comprising hamburgers and cheeseburgers, big Mac, quarter pounder and cheese, McCafe beverages and so on. Also it is the first fast food company in the world which makes it attractive to people as people know how their products are and also the price.

Pros of being a first mover-

1) establish product as the industry standard

The first company to make a unique product gets to make the industry standard.

2) it can control resources like strategic location, hiring talented employees, etc. It can choose the best locations for its stores and factory.

3) it can gain an advantage when there is a high switcing cost for consumers to switch to other companies products.

4) it is able to tap into consumers first and make a strong impression which can lead to brand recognition and loyalty.

Cons of being a first mover-

1) the company may have to invest heavily in order to make the people like the new product.

2) later entrants can avoid all the mistakes that the first mover makes in the market.

3) if first mover is not able attract consumers with their products, later entrants can take advantage of that.

4) later entrants can revise the product and make it cheaper than the others.

5) later entrants can identify areas where the first mover isn't there and take advantage of it.