Page 61 -

THE COHESION CASE 27

THE COHESION CASE

McDonald’s Corporation—2009
Vijaya Narapareddy

University of Denver
www.mcdonalds.com
On May 5, 2009, McDonald’s Corporation (MCD, hereafter) and Starbucks went full force cam-
paigning for the attention of coffee connoisseurs. Following its success with McCafés in Europe,
MCD surprised Starbucks with its announcement to offer lattes and mochas in its McCafés in the
United States. In an attempt to woo rival Starbucks’ customers, MCD promised to offer premium
taste at bargain prices. This announcement came at a time when Starbucks, hard hit by losses, was
closing hundreds of stores in the United States. The MCD–Starbucks fight is everywhere on the
tube, in print, and the airwaves. MCD even taunts Starbucks with ads on buses and billboards that
read “4 bucks is dumb.” Starbucks is retaliating by placing newspaper ads that read “Beware of a
cheaper cup of coffee. It comes with a price.”
In April 2009, MCD reported strong sales growth in the first quarter of 2009 in spite of reces-
sionary conditions worldwide. MCD sales in the United States increased by 4.7 percent, in Europe
by 3.2 percent, and in Asia/Pacific, Middle East, and Africa by 5.5 percent. But as the U.S. dollar
gained strength against most currencies, especially the euro, British pound, Australian dollar,
Canadian dollar, and the Russian ruble, MCD experienced $642 million in foreign currency
translation losses in the first quarter of 2009, as indicated in Exhibit 1. Undeterred, however, MCD
is forging ahead with a renewed commitment to allure coffee enthusiasts away from rivals, big
and small.

History
MCD was launched in 1940 when brothers Dick and Mac McDonald opened a restaurant in San
Bernadino, California. However, the credit of growing the corporation into a franchised, global oper-
ation is attributed to Ray Kroc, who acquired equity from the McDonald brothers and took the firm
public in 1965. MCD has a really cool history timeline called “Travel in Time with Us” located at the
http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html Web page. It reveals informa-
tion such as the following:

1979 MCD introduced Happy Meals
1981 MCD opened stores in Spain, Denmark, and the Philippines
1983 MCD entered its 32nd country
1984 Ray Kroc passed away
1987 MCD introduced Fresh Salads
1990 MCD opened a store in Moscow, Russia
1992 MCD opened a store in Warsaw, Poland
1995 MCD’s new ad was “Have You Had Your Break Today?”
1996 www.mcdonalds.com Web site introduced
1997 MCD’s new ad was “Did Somebody Say McDonald’s?”
2001 The Big N’Tasty sandwich introduced
2003 MCD introduced Premium Salads and its “Plan to Win” strategy
2006 MCD introduced Snack Wraps