Mcdonalds †Operations Mgt Essay

1. What characteristics of McDonalds harvest-timeion dust have been most important in twist its record of victory and senesceth in the industry? McDonalds unique harvestion system has been central to their corporate outline. Ray Kroc immediately saw value in the McDonald brothers production methodology. The McDonald brothers controlled the preparation of distributively wag item, regulating exactly how much of each topping would go on each burger, in order to maintain consistency and uniformity. Going forward, the social club would base their business model on terzetto key tenets hold in menu, low prices, and fast service. Kroc obsessed over perfecting the operating system with these three tenets in mind. He believed that consistency and uniformity, with respect to products, should be the overarching goals of this operation strategy. It began with the Speedee Service System in 1948 and continued to sprout from that point. McDonalds operating system focused on four key are as improving the product, improving equipment, development excellent supplier relations, and developing and monitoring enfranchisementes.McDonalds had created a unique consanguinity with its franchisees and suppliers. McDonalds believed that franchise result was where they should make their profits, not primarily from the franchise fees, which had been the industry standard. This relationship fostered growth and innovation as franchisees make recommendations and provided feedback on what was working and what wasnt. McDonalds broke another industry standard by actual very(prenominal) close relationships with supplier. McDonalds worked closely with suppliers to ensure consistently high quality food products made to McDonalds exact specifications. By working with the suppliers to control the quality of their products, McDonalds was helping to ensure that a burger served at any one of their locations would get word the same, taste the same, and reinforce McDonalds reputation for q uality and consistency. The suppliers k smart that if they met the very specific standards set forth by McDonalds, they would be rewarded with the loyalty of a very lucrative customer. This relationship was mutually beneficial as the consistent demand from McDonalds helped suppliers grow alongside the chain, turning nonaged farming operations into major institutional vendors.2. What are the primary new challenges McDonalds faces in the nineties? In the early 90s, McDonalds legendary growth rate began to slow. Consumer preferences were constantly-changing and McDonalds worried that the limited menu that had served them so well over the previous decades might not be enough to drool them into the future. Going into the 1990s McDonalds faced many challenges, including increased competition in the domestic quick-service market, consumer stuff to provide healthier options, and increased environmental criticism. The major challenges outlined in the case include the spare-time activit y Casual dining restaurants, such as Chilis and Olive Garden, were becoming increasely popular. These restaurants offered a wide selection of menu items, with prices that could compete with McDonalds. Drive-thru only chains, such as Sonic and Rallys, were out-performing McDonalds on speed of service. These chains were now seeing big growth, where McDonalds expansion was slowing down. taco Bell had become another big competitor. Taco Bell focused on providing an extensive offer of inexpensive Mexican food. Taco Bell had 26 menu items under one dollar. They were able to salvage their prices low by shifting food preparation to offsite suppliers, requiring less kitchen space on-site. Nutrition was a growth concern among many American consumers, and McDonalds had become synonymous with high-fat, high-calorie fast food. There was radical pressure for McDonalds to augment their menu with healthier options, lower in fat and sodium than the tralatitious burgers and fries. Including a wi der diverseness of items on their menu was probably necessary to meet the changing needs and preferences of their consumers, save McDonalds core competencies were built nigh an operating system that was designed for speedy livery of a limited number of menu items. McDonalds had become the target of environmental activists who criticized the agricultural practices of McDonalds suppliers and the companys extensive use of disposable packaging.3. What are the key types of flexibility which McDonalds operations strategy needs to support? Which does it support and how? Which does it not support well and why? Product/service flexibility is the ability of the organization to develop new products and services which customers may find attractive. McDonalds achieved great success with the introduction of its breakfast menu in the 1970s, proving that product flexibility is an important mechanism for growth in their industry. That said, the long term success of McDonalds operating model is largely due to their commitment to maintaining a limited menu. While McDonalds should continue to develop and test new products, they need to be bourgeois about expanding their menu too much. Volume and bringing flexibility allows the operation to adjust its output levels and its delivery procedures in order to cope with unexpected changes in how many products and services customers requisite, when they want them, and/or where they want them.McDonalds equipment and work flows were designed for maximum efficiency. Speedy service was critical to increase volume of gross sales per unit time. With respect to delivery models, McDonalds had also developed a number of different building designs, such as drive-thru only facilities and cafs suitable for small towns. They also placed McDonalds in new venues, such as schools, hospitals and airports. Mix flexibility allows an organization to produce a wide mixing of products and services for its customers to choose from. The operating sys tem at McDonalds had been constructed to ensure uniformity, quality and speed in all of their restaurants. If they introduce a wide variety of foods it would disrupt an operation strategy built around a limited menu. McDonalds may have wanted to offer a wide variety of products but it would be a real challenge to maintain their standards with respect to quality, speed, and pricing.4. How would you adapt the system to placate these changes in the US? McDonalds could adapt their system in several ways to accommodate the changing trends in the US market. They could develop more drive-thru only locations. Off-premise consumption had risen from just 23% in 1982 to 62% in 1990 and overhead costs would be lower under this model. In keeping with this theme, McDonalds should continue to develop smaller outlets in venues like schools, airports, and sporting arenas. They should continue to work on product development, but should focus on potential offerings that could be produced quickly and easily with their existing equipment.Products that will likely require minimal brain dysfunctionitional time and arent aligned with the restaurants traditional offerings (e.g. lasagna) should be avoided. They should fill healthier options that still fit with the traditional concept of what McDonalds offers, such as veggie burgers, or low fat chicken sandwiches. They should take steps to improve their environmental image, by encouraging suppliers to accompany environmentally responsible practices, and by looking for opportunities to reduce unnecessary packaging. This will provide dual benefits by improving their image and reducing costs at the same time. 5. How can McDonalds lay the origination for future growth?The Ansoff product-market matrix outlines four possible strategic directions a firm can take, in order to grow.Existing Products New Products mart PENETRATION concentrate on on promotion of existing product lineupFocus on change magnitude number of restaurants in USFocus on increasing sales in existing restaurantsPRODUCT DEVELOPMENTFocus on developing new menu items to add to current lineupExplore ways to modify operating system to allow speedy delivery of new itemsBuild relationships with new suppliers to source inputs for new menu items at low costMARKET DEVELOPMENTFocus on delivering core menu items in international locations Focus on increasing number of restaurants in countries where the chain has had most success Focus on increasing sales in existing overseas restaurantsDIVERSIFICATIONTry out new menu items in international locationsFocus on developing new menu items that appeal to customers in specific geographies (e.g. curries in India) Build relationships with new suppliers in host countriesExistingMarketsNewMarketsMcDonalds should adopt a growth strategy that focuses on Market Development, with limited Product Development. McDonalds needs to recognize and accept that a firm cannot grow indefinitely in a restricted territory. They cannot e xpect their historical 25% annual domestic growth to continue forever. Their slowing growth rates in the US suggest they are likely approach path market saturation in the United States. They should stick to the operating model that has been so successful for them, and look outside US borders for growth opportunities. McDonalds should not try to be all things to all people. McDonalds needs to recognize who their customers are, and what they expect when they go to McDonalds. The company should not deviate too far absent from their original business model (limited menu, low prices, fast service).McDonalds should focus on delivering their core products to an ever expanding geographic territory, instead of complicating their operating model, increasing service time, and decreasing margins, by offering an ever-expanding array of menu items. New menu items should be easy to deliver with existing equipment and established workflows (e.g. veggie burgers, lamb burgers, dip patties, chicken burgers). With respect to US sales, the case cited that only 20% of McDonalds sales came from dinner. This may be a possible frontier for growth, but an entirely new menu should not be infallible to bring people in for dinner. This seems to be more of a marketing issue. McDonalds needs to localize themselves as top of mind when people are driving home from work, with nothing prepared for supper. by chance repackaging their existing products into a family package, similar to those offered by KFC, would help in this regard.