mcdonald case studyanalysis

7/29/2019 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

mcdonald case studyanalysis

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