McDonalds Industry Life Cycle

The typical industry life cycle is a metaphor that describes how an industry grows and theoretically where it ends up (Inc., 2015). The beginning of the life cycle for the franchised fast food model basically started with McDonald's in the early 1960s, and quickly entered into a rapid growth phase. McDonalds followed this phase of the life cycle around the world, over a period of decades, to become the most dominant player in the fast food business not just domestically but globally as well. In general, McDonalds was a pioneer of the industry in many foreign markets. As an industry exits the growth stage and enters into the maturity stage, its growth rate flattens (Inc., 2015), and this is something that can be seen today with the McDonalds revenue chart (MSN Moneycentral, 2015). There is no real growth in the industry for McDonalds, because it has saturated its existing markets and there are few new market growth opportunities.

The maturity stage of the industry life cycle is characterized by fewer, larger firms. They will tend to be cash cows, earning substantial profits during this stage despite not having much growth (NetMBA, 2015). This stage can last for years. There will still be new entrants at this stage, but often they will only be able to win a little bit of share from established players. In fast food, the share held by McDonalds has generally been difficult...

This stage is characterized by declining sales and profits, and the exit of the industry by several firms. This occurs when an industry is no longer relevant. This can happen via technological innovation, but also through changes in consumer tastes. There is some belief that changing tastes are responsible for the maturity of fast food, and may ultimately lead to its decline. People have much greater exposure to good food now than they ever have, and this is diminishing market interest in fast foods.
Innovation is one of the most vital ways to prolong the maturity stage. McDonalds has done a few things in this regard, such as all-day breakfast and bringing in a healthier menu. The company has been responsive to change in consumer tastes on many fronts, something that has at least allowed McDonalds to flatline its revenue and postpone the decline stage.

Overall, the fast food industry is in the mature stage of the industry life cycle, and will need to change its approaches in order to maintain that positon. McDonalds, as the industry leader, has a cash cow position, which at least is the best position to be in. However, there is significant risk that over the long run consumer tastes are changing to the point where fast food as a whole may go into decline -- the industry…