Topic: Case study
ASSIGNMENT REQUIREMENTS and Overview:
Using the information found in the McDonalds and Its Critics 1973 – 2009 case found on page C53 in the course textbook and various course materials; answer all elements of the following topic areas completely. Your answers should be based on the facts in case and course materials only and not on any outside research or personal opinion.
The entire case paper can be effectively written in between four (4) and five (5) pages.
The case covers the evolution of McDonald’s through the tenure of five different CEOs, each with his own focus and strategies. The various CEOs had their personal strengths and weaknesses, differing philosophies and approaches and achieved varying degrees of success for the company.
For each of the CEOs – Ray Kroc, Fred Turner, Michael Quinlan, Jack Greenberg & Jim Skinner – discuss at least one of their strategic initiatives. Your discussion should include the following:
1. A definition of the course concept that is most closely related to the strategic initiative.
2. A discussion of what specific elements of the strategic initiative relate to the course concept.
3. An assessment of why you believe the strategic initiative was or was not successful.
Please use reference from the textbook (Hill Essentials of Strategic Management).
24 Part 1 Introduction to Strategic Management
General Motors is a company in deep trouble. As car
sales in North America collapsed in 2008, GM, which
had already lost money in 2007, plunged deeply
into the red. With losses estimated at $14 billion,
the company was forced to go cap in hand to the
government to beg for public funds to help it stave
off bankruptcy. Fearing the economic consequences
of a collapse of GM, the government agreed to loan
funds to GM, but it insisted that the company have
a clear plan charting its way back to profi tability.
Ironically, such a plan was already in place at GM.
At the heart of it was a potentially huge gamble on a
new type of car: the Chevy Volt.
The Chevy Volt, which was introduced in 2010,
is a compact, four- door electric car with a reserve
gasoline- powered engine. The primary power source
is a large lithium ion battery (lithium ion batteries
are typically found in small electric appliances such
as cell phones). The battery can be charged by plugging
it into a wall socket for 6 hours; when fully
charged, it will fuel the car for 40 miles, which is
less than most people’s daily commute. After that,
a gasoline engine kicks in, providing both drive
power and recharging the lithium ion battery. GM
estimated fuel economy will be over 100 miles per
gallon, and charging the car overnight from a power
outlet would cost about 80% less than fi lling it with
gas at $3 per gallon. The car will have a starting
cost of around $41,000; however, because it uses a
battery- powered technology, buyers will be able to
take $7,500 tax credit.
The Volt was the brainchild of two men, Bob
Lutz, GM’s vice- chairman, and Larry Burns, the
head of Research & Development and strategic planning
at GM. Although Lutz in particular had always
championed large gas- hungry muscle cars, GM’s
planning told them that the market would probably
move away from the SUVs that had been a profi table
staple at GM for most of the 1990s. A number of
trends were coming together to make this scenario
First, oil prices, and by extension, gas prices,
were increasing sharply. Although driving an
SUV that gets 12 miles to the gallon might make
economic sense when gas was priced at $1 a gallon,
it did not for most people when gas was $4 per gallon.
GM’s planning suggested that due to growing
demand in developed nations, including China and
India, and limited new supplies, the days of cheap
oil were over. Second, global warming was becoming
an increasing concern, and it seemed possible
that tighter regulations designed to limit carbon
emissions would be introduced in the future. As a
major source of greenhouses gases, such as carbon
dioxide, automobiles powered by internal combustion
engines could hardly escape this trend. Third,
the cost of manufacturing lithium ion batteries
was falling, and new technology was promising to
make them more powerful. Finally, GM’s major
competitor, Toyota, with its best selling hybrid, the
Prius, had demonstrated that there was demand for
fuel- effi cient cars that utilized new battery technology
(the Prius, however, uses a conventional fuel cell
as opposed to a lithium ion battery).
Despite their analysis, when Lutz and Burns fi rst
proposed making the Volt in 2003, other managers at
GM beat them down. For one thing, GM had already
invested billions in developing fuel cells, and many in
the company did not want to suddenly switch gears
and focus on lithium ion batteries instead. Besides,
said the critics, technologically it would be diffi cult
to produce a large lithium ion battery. Others were
skeptical given that GM had already had one failure
with an electric car, the ill- fated EV1 introduced in
the 1990s. Powered by a fuel cell, the EV1 had not
sold well (according to many because the company
had not put its weight behind it).
By 2006, however, the tide had started to turn.
Not only were oil prices surging, as predicted by the
strategic planning group, but also a small Silicon
Valley start- up, Telsa Motors, had announced that
it would be bringing a lithium ion sports car to
market. Lutz’s reaction was, “if a start- up can do it,
GM can too!” So Lutz and Burns formed a skunk
works within GM and quickly put together a Chevy
Volt concept car, which they unveiled at the 2007
Detroit auto show. The concept car gained a lot of
positive feedback, and Lutz used this to argue within
Planning for the Chevy Volt
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