Page 154 - Accelerating out of the Great Recession

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1970s by accelerating the pace at which it opened new stores.
Prior to 1973, McDonald’s had opened about 300 stores annu-
ally, but starting in that year, the company went into overdrive.
It opened 445 stores in 1973, 515 stores in 1974, and 474 in
1975. Although Burger King had been matching or surpassing
McDonald’s rate of new-store openings in the late 1960s, it
subsequently slowed to less than 200 new restaurants per year
largely owing to the caution of its new owner, Pillsbury.
Although Burger King did its best to catch up to
McDonald’s at the end of the decade, McDonald’s was too far
ahead. Jim McLamore, the cofounder of Burger King, believes
that the slowing of Burger King’s expansion in the 1970s was a
key reason why McDonald’s held a 2.2 to 1 lead over Burger
5
King in U.S. hamburger sales by the 1990s. The Burger King
example shows the risk of choosing not to respond forcefully to
the challenge posed by a core competitor even when economic
times are tough—and the reward that comes from taking the
fight to your competitors.
Contrast this with the response of Kimberly-Clark in the per-
sonal hygiene market. In 1971, Johnson & Johnson was the first
company to introduce a new “tabless” sanitary pad. The superior
design became very popular with consumers. Recognizing the
threat early on, Kimberly-Clark responded with its own tabless
product within six months. While it lost market share to
Johnson & Johnson in those six months, its quick response
helped to limit the erosion it suffered in market share.
The decisive tactics used by these companies were important
in allowing them to carve out a larger share of the slow-grow-
ing pie. Perhaps the lesson most worth remembering is that
such tactics—the unleashing of disproportionate force or
attacking the heart of a competitor’s profitability—become

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