1. Why has McDonald’s sustained its prosperity for so long?
McDonald’s has built its success on a legendary operating system. McDonald’s designed its operating system to ensure consistency and uniformity across all outlets. Operating procedures guaranteed customers the same quality of food and service. I analyze the key factors of McDonald’s operation system as a five P’s of operation management.
McDonald’s was more concerned with getting quality. To ensure the quality and taste, they controlled supplier’s products beyond the price and standardize detailed of processing.
2. Planning & control system- Developing outstanding supplier relationships
The working definition of TQM that was developed for application throughout the business unit is as follows. “Doing the right things right, the first and every time, in a mode of continuous improvement, focused on customer satisfaction” which would provide direction for other business decisions and practices: To be a recognized leader in our industry, working with pride, integrity and teamwork provide products and services of unmatched quality and value to our customers.
The fry maker and the drink machine at the McDonald’s do not need human attendant. They were custom-designed to blend with existing cooking equipment, known as ARCH (Automated Restaurant Crew Helper). It not only keeps uniformed best quality but also helps in sales forecasting and production planing. This is also to remove labor as possible from kitchen area and move it to the service counter.
4. People- Training and monitoring franchisees
When McDonald’s sold franchises, it made sure that it’s partner would make money before the company did and insisted that corporate revenue come not from initial franchise fees but from success of the restaurants themselves. Together with corporate management and suppliers, franchisees infused McDonald’s with an entrepreneurial spirit. All three partners balanced one another, just as the entrepreneurial inventiveness within each balanced their collective emphasis on disciplined standards of quality.
5. Plant- restaurant service categories: QSC
McDonald’s evaluate ands assist field service operation of each of its restaurants. It is summarized to evaluate in three categories: Quality, Service and Cleanliness (QSC).
2. What are key threats to its future success?
The best support of firm’s long term competitiveness is concerned as operating strategy. The basic operation priorities have been identified include cost, product quality, reliability, delivery speed, changes in demand, flexibility, and new product introduction speed, and other criteria particular to a given product. There are a lot of competitors for this basis. McDonald’s changes to date had increased variation throughout the chain-whether in menu offerings, building plans, or eating experience- would pose formidable challenges to McDonald’s in maintaining its remarkable quality control and speed of service. The operating system had been constructed to ensure uniformity, quality, and speed at all McDonald’s restaurants. If the chain intended to offer a wider variety of foods, it could disrupt an operating system built around a limit menu. Increasing variety posed another potential dilemma for McDonald’s. As the chain responded to pricing challenges from competitors, higher volume became imperative. To generate higher volume at each restaurant, speed became more important, and speed could not be risked on a new product.
3. What are the key types of flexibility which McDonald’s operations strategy needs to support?
Flexibility, from a strategic perspective, refers to the ability of a company to offer a wide variety of products to its customers. An important element of this ability to offer different product is the time required for a company to develop a new product and to convert its process to offer the new product.
Uniformity and consistency had formed McDonald’s focal point. Catering to customers had always been the company’s focal point, but to meet changing and divergent customer needs, McDonald’s was exploring many different options, and management thought a basic question had to be answered. Would the chain’s new concern with flexibility in meeting customers’ changing needs require a fundamental change in McDonald’s bedrock strategy? or was this just a new, albeit incredibly complicated, situation once again adaptable to the company’s traditional approach?
Early responses to new customer desire and intensifying competition represented just a piece of the company’s maelstrom of creative activity. Further efforts were in progress as well.
4. Why did McDonald’s undertake its collaboration? How should McDonald’s proceed next?
Consumers have been changing. They are worried about the effects the products or its package might have on the environment. While this awareness is growing up, a new challenge had been approached: protecting the environment. While many companies had seen the outbreak of environmentalism in the late 1980’s as a threat, McDonald’s saw an opportunity: the chance of knitting a responsible environmental policy into its evolving operations strategy.
McDonald’s take Environmental Defense Fund (EDF) as a new partner. They engaged EDF to help address environmental concerns, one aspect of increasingly complex situation in which the company now found itself. For the private corporation of McDonald’s stature to collaborate with an environmental organization entailed significant risk and required willingness, by both parties, to consider new ways of thinking about operation practices. The partnership turned out to be a success, generating advances in area beyond waste reduction.
McDonald’s had announced its McRecycle USA. Program. They achieve to improve functionality of package, reduce waste and volume of boxes. Moreover less pollution was handled. McDonald’s did fact adopt the 100% recycled bag, suddenly recognizable in its advertising campaign and thoroughly explained in brochures available at each restaurant.
The business was growing more complex even environmental initiative. McDonald’s faced with unprecedented challenges for variety and flexibility in its service. The choices were clear. First, the company could rely on its traditional recipe based on consistency and quality through standardization, one which had made it the paragon of success in the quick service business. Alternatively, McDonald’s could make some changes in its basic strategy-by allowing even more franchisee autonomy and continuing to provide a growing variety of offering and service in its restaurant.
5. How should McDonald’s respond to Burger King’s October 1st announcement?
On Oct.1st, 1992, Burger King, biggest competitor of McDonald’s, announced a dinner menu, and that it would begin table service between 5p.m and 8 p.m. in its company-owned restaurants.
Lunch and breakfast customers were concerned with speed and convenience, but dinner was more of an event, and customer expected full meals and more complete service. The trend s for lunch and breakfast seemed to be headed in the opposite direction. Only 20% of McDonald’s sales come from dinner. McDonald’s is needed to introduce new dinner items as early as possible as it had for breakfast. That might be the good way to increase total revenue and market share.
Production and operations management; manufacturing and services, Chase, Aquilano and Jacobs
Harvard business school Mcdonald corporation 9-693-028
