Business Model vs Competitive Advantage

BUSINESS MODEL VS COMPETITIVE ADVANTAGE

What is a business model?

The proprietary method used to acquire, service, and retain customers

Let’s examine McDonalds

Their business model is
Franchise model
- It’s a fast food chain catering to the masses
Franchisee buys license to operate business
Franchisee income derived by (Revenue – royalty)
Franchisor provides branding, training, etc. in exchange for royalty fees
The network spans all over the world

Clearly, their model is working VERY well
Network
31,000+ locations worldwide
Employees (2008)
- 400,000 worldwide
Financial (2008)
Net Income US$4.3bn
Revenue US$22.6bn
Brand Equity (InterBrand 2009)
- 6 th top brand worth US$32bn

What about competitive advantage?
- What you do BEST and BETTER than others
- Two types of competitive advantage(s) according to Michael Porter
Cost Advantage
Differentiation Advantage

What’s McDonalds competitive advantage?
Key Competitive Advantages
One the world’s top brand TODAY
Earned reputation for fast service
Earned reputation for cleanliness
Standardized menu thus easier to manage
Located almost anywhere in the world
World’s largest owner of corner lots
Scale
31,000 locations vs. Burger King’s 12,000

McDonalds is not alone though… 

Thus, McDonalds need to continuously compete
Possible Strategies include
Continue to out-advertise
Open more branches to gain market share
Invest heavily in training and development
Review pricing to continuously attract customers
Make their menus “HEALTHIER”

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Business Model vs Competitive Advantage

by Jim Muehlhausen on May 11, 2010

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Business Model vs Competitive Advantage — Presentation Transcript