Mcdonald Case Studyanalysis
Transcript of Mcdonald Case Studyanalysis
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CASE STUDY
Mc Donalds
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INTRODUCTION
McDonalds, the leader in the fast-food wars, faced a crossroadsin the early 1990s.
Domestically, sales and revenues were flattening as competitorslike Burger King, Wendys, and Taco Bell encountered newchallenges
Sonic and Rallys competed using a back-to-basics approach of
quickly serving up burgers, just burgers, for timeless consumers. McDonalds was gathering flak from environmentalists who
decried all the litter and solid waste its restaurants generatedeach day
To counter some of the criticism, McDonalds partnered with theEnvironmental Defense Fund (EDF) to explore new ways to
make its operations more friendly to the environment. Together, EDF and McDonalds considered its impact on a wide
range of stakeholderscustomers, suppliers, franchisees, andthe environment. The company gave its franchisees muchautonomy in finding ways to eliminate environmental blight
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FACTS
McDonalds roots go back to the early 1940s when twobrothers opened a burger restaurant that relied on
standardized preparation to maintain quality the Speed
Service System.
So impressed was Ray Kroc with the brothers approach that
he became their national franchise agent, relying on thecompanys proven operating system to maintain quality and
consistency.
Over the next few decades, McDonalds used controlled
experimentation to maintain the McDonalds experience, all
the while expanding the menu to appeal to a broader rangeof consumers. For example, in June 1976, McDonalds
introduced a breakfast menu as a way to more fully utilize the
physical plant. In 1980, the company rolled out Chicken
McNuggets.
Continued
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FACTS Introduction of brown paper bags with a
considerable percentage of recycled content.
Solicitation of suppliers to produce corrugated
boxes with more recycled content, which had thetwin effect of reducing solid waste and building a
market for recycled products.
Abandonment of polystyrene clamshell containers
to hold sandwiches in favor of new paper-based
wraps that combined tissue, polyethylene, andpaper to keep food warm and prevent leakage.
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MCDONALDS SUSTAINED PROSPERITY
The secret of McDonalds success is its willingness toinnovate, even while striving to achieve consistency in the
operation of its many outlets. For example, its breakfast
menu, salads, Chicken McNuggets, and the McLean
Deluxe sandwich were all examples of how the company
tried to appeal to a wider range of consumers.
The company has also made convenience its watchword,
not only through how fast it serves customers, but also in
the location of its outlets. Freestanding restaurants are
positioned so that you are never more than a few minutesaway by foot in the city or by car in the suburbs. Plus
McDonalds is tucking restaurants into schools, stores,
and more.
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KEY THREATS
The key threats to McDonalds domestically are the lack of growthopportunities. The market is well saturated, and it would difficultto achieve double-digit growth. Other concerns are a newfoundemphasis on healthier eating. Most of McDonalds most popularfare probably in some small way contributes to the increasingincidence of cancer, heart disease, and diabetes among the
population. McDonalds are everywhere, the dining experience is never
special. And as Baby Boomers age and become more affluent, itis likely that they will leave behind their fast-food ways, if only tostep up to moderately priced restaurants like Olive Garden,Bennigans, and Pizzeria Uno. These chains have the addedadvantage of serving higher-margin alcoholic drinks. McDonalds,meanwhile, has to continually battle Burger King and Wendys,which leads to an erosion of margins for everyone. Even allianceswith toy manufacturers, while popular with consumers, do little forthe bottom line because the cost to run these promotions can be
quite expensive.
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MCDONALDS AND THE ENVIRONMENTAL DEFENSE
FUND
In some ways, partnering with the Environmental DefenseFund was a masterstroke. It brought both respectability andvalued expertise to its environmental efforts. It also provided aprimetime venue for EDF to make a difference. Anysuccesses, even if only incremental improvements, wouldhave major ramifications because of the sheer size ofMcDonalds operations.
McDonalds should continue its partnership with EDF. Withecology a growing concern among consumers, it makessense to be a good corporate citizen and get all the publicrelations accolades that go along with such an alliance. It alsopays off in the bottom line by reducing shipping costs forsupplies as well as garbage removal fees.
McDonalds would do well to stay in the vanguard of
corporations who have become environmentally aware. If ittries to shirk its responsibilities, it can foresee a publicrelations nightmare in the making. But if it does manage tocome up with some breakthroughs through its collaborationwith EDF, it can score a tremendous amount of goodwill withthe public, which may even provide a halo effect to mitigateany other PR troubles.
.Continued
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How far should McDonalds go on environmentalissues? There is definitely a public relations benefitin being seen as an environmental leader, and thecollaboration with EDF goes a long way in makingthat happen. Still McDonalds has had a lot of
success in giving its franchises some latitude indeveloping new solutions.
The line in the sand in determining how farMcDonalds should go with its environmental effortsis determined by the cost of the initiative relative to
the hard-dollar benefits and harder-to-quantifypublic relations buzz it gets from being in theforefront on environmental issues
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CONCLUSION
McDonalds faces some difficult challenges. Key to its
future success will be maintaining its core strengthsan
unwavering focus on quality and consistencywhile
carefully experimenting with new options. These
innovative initiatives could include launching higher-endrestaurants under new brands that wouldnt be saddled
with McDonalds fast-food image. The company could
also look into expanding more aggressively abroad
where the prospects for significant growth are greater.
The companys environment efforts, while important,should not overshadow its marketing initiatives, which
are what the company is all about.
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1)WHAT ARE THE REAL ISSUES IN OPERATIONS
STRATEGY IN MAC? CLASSIFY THEM.
The key thing that McDonalds operations strategy
has to support is experimentation. Now somewhat
long in the tooth, McDonalds needs a breakthrough
that will provide new avenues of growth. It has along history of such experimentation, which has
resulted in some new profit centers like Chicken
McNuggets and the breakfast menu. Some later
turn out to be duds like the McLean Deluxe, but
inevitably experimentation in limited outlets offersMcDonalds a way to retain its key strengths
quality and consistencywhile continuing to evolve
for new palates and pocket books.
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2)ASSUME YOU ARE THE MANAGER OF MAC AND
GIVE YOUR VIEWS / SOLUTIONS TO THE ISSUES
IN MACo Create awareness within store team members of what constitutes the
true fast-food experience
o Install a computer-based customer feedback kiosk in every restaurant
o Install a feedback program that makes it possible to quantify teamperformance
o Set up the system to screen out phony feedback
o Set up a similar feedback system for drive-thru customers
o Encourage feedback with guaranteed anonymity and surprise rewards
o Link each restaurant's feedback system to a central database
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3)WHICH CHARACTERISTICS OF MCDONALDS
PRODUCTION SYSTEM HAVE BEEN MOST
IMPORTANT IN BUILDING ITS RECORD OF SUCCESS
AND GROWTH IN THE INDUSTRY?
Their uniform operating system, taste and service
in every McDonalds outlets at every time. McDonalds was very particular in quality of the raw
materials they used and very concerned with their
suppliers.
Their concern over the franchises and make themto feel as one of their partner and to work towards
prospective.
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4)WHAT ARE THE PRIMARY NEW CHALLENGES
MCDONALDS FACED IN THE 1990S?
McDonalds, the long-time leader in the fast-food wars,faced a crossroads in the early 1990s. Domestically,sales and revenues were flattening as competitors likeon its domain. In addition to its traditional rivalsBurgerKing, Wendys, and Taco Bell the firm encountered newchallenges. Sonic and Rallys competed using a back-to-basics approach of quickly serving up burgers, justburgers, for time-less consumers. On the higher end,Olive Garden and Chilis had become potent competitorsin the quick service field, taking dollars away from
McDonalds, which was firmly entrenched in the fast-food arena and hadnt done anything with its dinnermenus to accommodate families looking for a moreupscale dining experience.
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5)How would you adopt the system to accommodate these
changes in the US?
Usage of eco-friendly packaging, ensuring efficient solid
waste disposal
Necessary changes in ambience space as per
requirement
Allocation of budget for research and development
(R & D )
Elasticity in operational time
Streamlining of menu
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6)HOW CAN MCDONALDS LAY THE BASIS FOR
FUTURE GROWTH?
McDonalds have to keep innovating the product
Developing outstanding supplier relationship
Improving the equipment
Training and monitoring the franchisees
Use advance erp and data centers