Mcdonalds †Operations Mgt Essay

1. What characteristics of McDonalds production carcass pick out been around important in building its record of success and drawth in the industry? McDonalds preposterous production organisation has been central to their corporate system. Ray Kroc presently saw value in the McDonald brothers production methodology. The McDonald brothers controlled the preparation of each card item, regulating strikely how much of each topping would go on each burger, in browse to maintain consistency and uniformity. Going forward, the friendship would base their worry model on tierce key tenets expressage carte, low prices, and fast inspection and repair. Kroc obsessed over perfecting the direct body 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 attend to System in 1948 and restd to evolve from that point. McDonalds operating system focu sed on quad key aras improving the product, improving equipment, down the stairs substantial excellent supplier relations, and catching and monitoring franchisees.McDonalds had created a unique blood with its franchisees and suppliers. McDonalds believed that franchise outgrowth was where they should make their profits, not primarily from the franchise fees, which had been the industry archetype. This relationship fostered growth and innovation as franchisees do recommendations and provided feedback on what was laping and what wasnt. McDonalds broke another industry standard by developed very close relationships with supplier. McDonalds worked closely with suppliers to correspond 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 go through that a burger served at any one of their locations would look the same, taste the same, and repay McDonalds reputation for quality and consistency. The suppliers k freshly that if they met the very specific standards set forrad by McDonalds, they would be rewarded with the loyalty of a very lucrative customer. This relationship was mutu in ally beneficial as the consistent demand from McDonalds helped suppliers grow alongside the chain, turning small farming operations into major institutional vendors.2. What argon the primary new challenges McDonalds faces in the mid-nineties? In the early 90s, McDonalds legendary growth rate began to slow. Consumer preferences were changing and McDonalds worried that the moderate batting order that had served them so well over the anterior decades might not be enough to carry them into the future. Going into the 1990s McDonalds faced many challenges, including increased competition in the home(prenominal) quick-service market, consumer pressure to provide healthier options, and increased environmental criticism. The major challenges defined in th e case include the following Casual dining restaurants, such(prenominal) as Chilis and Olive Garden, were becoming increasingly popular. These restaurants offered a wide selection of menu items, with prices that could compete with McDonalds. Drive-thru and chains, such as Sonic and Rallys, were out-performing McDonalds on speed of service. These chains were promptly seeing big growth, where McDonalds expansion was slowing down.Taco doorbell had become another big competitor. Taco Bell focused on providing an extensive offering of inexpensive Mexi rump food. Taco Bell had 26 menu items under one dollar. They were able to keep their prices low by shifting food preparation to offsite suppliers, requiring less kitchen space on-site. Nutrition was a growing concern among many American consumers, and McDonalds had become similar with high-fat, high-calorie fast food. There was extreme pressure for McDonalds to enlarge their menu with healthier options, lower in fat and sodium than th e traditionalistic burgers and fries. Including a wider variety of items on their menu was likely necessary to lose the changing needs and preferences of their consumers, however McDonalds amount competencies were built slightly an operating system that was designed for speedy delivery of a limited summate of menu items. McDonalds had become the target of environmental activists who criticized the verdant practices of McDonalds suppliers and the troupes extensive use of disposable packaging.3. What are the key types of flexibility which McDonalds operations strategy needs to livelihood? 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 whitethorn 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. T hat 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 cautious round expanding their menu too much. Volume and delivery flexibility allows the operation to fructify its output levels and its delivery procedures in order to cope with unexpected changes in how many products and services customers want, 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 meretriciousness of 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 fetch a wide variety of products an d services for its customers to choose from. The operating system 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 only if 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 accommodate 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, exac tly should focus on potential offerings that could be produced quickly and easily with their animate equipment.Products that will likely require additional time and arent aline with the restaurants traditional offerings (e.g. lasagna) should be avoided. They should consider healthier options that dummy up fit with the traditional concept of what McDonalds offers, such as vegetable burgers, or low fat chicken sandwiches. They should take steps to rectify their environmental image, by encouraging suppliers to adopt 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 basis 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 securities industry PENETRATIONFocus on publicity of vivacious product lineupF ocus on increasing 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 internationalist 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 arouse to customers in specific geographies (e.g. curries in India) Build relationships with new suppliers in legions countriesExistingMarketsNewMarketsMcDonalds should adopt a growth strategy that focuses on Market Development, with limited Product Development. McDonalds needs to take in and accept that a firm cannot grow indefinitely in a restricted territory. They cannot expect their historical 25% annual domestic growth to continue forever. Their slowing growth rates in the US purport they are likely approaching market saturation in the united States. They should stick to the operating model that has been so successful for them, and look outside(a) 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 away 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 decrease 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, draw 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 required to contribute people in for dinner. This seems to be more of a marketing issue. McDonalds needs to position themselves as top of mind when people are driving home from work, with nothing prepared for supper. Perhaps repackaging their existing products into a family package, similar to those offered by KFC, would help in this regard.