McDonald - The Arthur Page Society

He adds: "McDonald's stock in 1995 had a terrific year. It convinced management that
there is nothing wrong with McDonald's product, and that there is nothing wrong with
marketing strategy."
Campaign 55 was interpreted as a means of buying time for McDonald's, while the
company worked on upgrading its products in the long term. But this has not worked, and
with no replacement for Campaign 55 on the horizon, it is not easy to see how
McDonald's can add lustre to the Golden Arches.
Brundage says: "There is only one way out at this point. It must improve product quality,
for example by increasing the size of the patty (the meat in the burger) or enhancing
flavours, and it must bring out two, three or five new products."
He forecasts more aggressive pricing activity in the short-term, for example on brands
such as the Big Mac, but with no strings attached to the promotion. Pressure is growing
on McDonald's from its 2,700 US franchisees. They are increasingly confused and
perturbed by the company's strategic U-turns and angry at the apparently unaccountable
marketing and management executives. Plans and schemes are launched, they don't work,
and the same people are still in place to dream up the next strategy.
There has been much speculation that senior heads would roll after the failure of
Campaign 55, but as one analyst says: "They'll just hunker down in Oak Brook [company
headquarters in Illinois]."
McDonald's vice-chairman Jack Greenberg and senior vice-president of US marketing
Brad Ball are being held responsible for Campaign 55. But as one observer says: "Both
these men were promoted by Mike Quinlan, the chairman and chief executive. They are
his boys. He is not going to take one of them outside and shoot him."
Brundage adds: "McDonald's is an extremely insular organisation and perhaps there is a
fair amount of arrogance. The top executives feel they know their business better than
anyone and therefore there is no need to listen to anyone outside Oak Brook. That attitude
hasn't shown many signs of changing." McDonald's has for years confounded its critics
and continues to post record global growth and profits. But with such sluggish growth in
its domestic market, the corporation faces the rockiest patch in its 40-year history. The
company is imprisoned by its need to stay cheap, and is under intensifying pressure to
compensate by finding a quick fix to move product and fill cash tills. Suddenly Ronald
McDonald's carefree youth has been replaced by a mid-life crisis.
Speiser says: "McDonald's is a big machine, so when there is negative momentum, it
takes time to turn it around. But on the positive side, once you get it rolling, don't ever
underestimate the power of brand McDonald's."
Judgement rocks Ronald
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