All Growth Must End: Recovery strategies when market kings stumble
Last summer, McDonald's reported$7.2 billion in second quarter sales, a 1% improvement over the same time in 2013 but $100 million shy of the Street’s $7.3 billion estimate. The news that this giant’s Net Income was down and its miss in earnings rocked the market. In July 2014, Chief Executive Don Thompson vowed to fix the fundamentals exuding confidence in his leadership and ability to handle the problems.
By the third quarter, joining McDonald’s in reporting disappointing profits, Coca Cola cited slowdowns in global sales growth. Coca-Cola earnings fell 14% compared to 2013 as sales in US for carbonated drinks softened. McDonald’s suffered continuing pain posting lower US sales for a 4th consecutive quarter as 3rd quarter profits dropped 30%.
According to one of the iron laws of strategy, all Growth ends. Fundamentally, every business must understand wider trends and changes that impact directly and indirectly its own key revenue drivers. When and how to respond to the inevitable change in consumer preferences proves far more challenging for established brands with a broad customer base. Innovation rarely touches the core, unless key consumers shown signs of defecting. A former CMO for McDonalds remarks in Fortune summed up the challenges to be mindful of the customer and their continuing evolution. Momentum covers a lot of errors that catch up with you, and it appears that decisions that made the previous McDonald’s CEO a hero have forced the present CEO to play catch up.
Register and Join us in 2015
to discuss the role of strategy in managing the array of market expectations -- customers, employees, suppliers and investors. Please read in advance the following short articles offering lessons in managing growth from McDonald’s and Coca Cola. Be prepared to share your thoughts on a prudent recovery strategy.