Diversification Strategies: a Comparison of Wal-Mart and McDonalds - Research Paper Example

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This paper "Diversification Strategies: a Comparison of Wal-Mart and McDonald’s" draws a comparison between the businesses and diversification strategies of Wal-Mart and McDonald’s in a light of its financial statistics and activity analysis. …
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Diversification Strategies: a Comparison of Wal-Mart and McDonalds
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Download file to see previous pages Having realized this, McDonald’s decided to diversify its business by including a whole range of cuisines in its menu. To achieve this, McDonald’s Switzerland resolved to develop in the hotel business. The CEO Hammer was hopeful that the hotels would do good business and based his optimism on the wide customer base. He said, “Our restaurants serve 74 million customers in a country with a population of 7 million. If only one in 1,000 of those guests choose the Golden Arch Hotel, the project will be a success” (Michel, 2008). Diversification seemed a smart option for the McDonald’s Corporation given its restaurant business had competed well in numerous saturated markets in the past. The first four-star Golden Arch Hotel was opened in March 2001 in Rumlang, a Swiss town. The five-storey 211-bed hotel cost the McDonald’s Corporation a total of $26 million. It was located in the vicinity of a McDonald’s restaurant that was drive-through. This 170-seat restaurant served the customers 24/7. In order to make sure that the hotel building was accessed only by the hotel guests, the hotel was separated from the restaurant. The second hotel was opened after a few weeks in Lully. The hotels had all a guest could ask for. Facilities offered included but were not limited to the custom-based trolley for handling the luggage, two kinds of rooms, assignment of employees to different tasks through the synergy effect, availability of the hotel room-vacancy status at the airport terminal and meeting rooms that were transformable into conference room. McDonald’s Corporation’s hotels failed to do the expected business because of three prime reasons, namely wrong choice of location, high rates and wrong time of construction. The nearest three-star hotel offered rooms...
The first four-star Golden Arch Hotel was opened in March 2001 in Rumlang, a Swiss town. The five-storey 211-bed hotel cost the McDonald’s Corporation a total of $26 million. It was located in the vicinity of a McDonald’s restaurant that was drive-through. This 170-seat restaurant served the customers 24/7. In order to make sure that the hotel building was accessed only by the hotel guests, the hotel was separated from the restaurant. The second hotel was opened after a few weeks in Lully. The hotels had all a guest could ask for. Facilities offered included but were not limited to the custom-based trolley for handling the luggage, two kinds of rooms, assignment of employees to different tasks through the synergy effect, availability of the hotel room-vacancy status at the airport terminal and meeting rooms that were transformable into conference room.
McDonald’s Corporation’s hotels failed to do the expected business because of three prime reasons, namely wrong choice of location, high rates and wrong time of construction. The nearest three-star hotel offered rooms at significantly lower rent rates than McDonald’s did. McDonald’s charged $120 and $160 for the two kinds of rooms while the nearest hotel charged between $96 and $137. Another hotel located very near to the Golden Arch Hotel with more than 50 hotels all over the world offered attractive guest-rewards programs. Kloten was another great competitor that was located nearer to the airport and had more rooms and whose meeting rooms were also larger in area. ...Download file to see next pagesRead More
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