Topics: Hamburger, Fast food, Marketing Pages: 6 (1872 words) Published: March 25, 2013
1. Which characteristics of McDonald's production system have been most important in building its record of success and growth? McDonald’s operating system is built on the characteristics of guaranteeing uniform quality and service and maintaining it remarkably consistent across all units. It mainly focused on factors such as providing customers with pleasant experience, fast service and tasty and inexpensive food. McDonald’s took several measures to ascertain consistency across units. In their ‘Speedee Service System’, they standardized their preparations methods by employing a combination of product specifications and customized equipment. While the competitors entered McDonald’s market and tried to emulate its product preparation and franchise recruiting process, McDonald’s sought out to build special set of relationships with its suppliers and its franchises. McDonald’s operating system primarily concentrated on four areas: 1. Improving the product

2. Developing outstanding supplier relationships
3. Improving equipment
4. Training and monitoring franchises
They paid a great attention to detail in the pursuit of improving the product. Product improvement was a revolutionary innovation on McDonald’s operation strategy. McDonald’s highly monitored the way farmers grew potatoes and ranchers raised beef, introduced alterations in both potato and meat processing and invented efficient cooking equipment to meet its tailored needs. Restricting itself to relatively small number of menu items helped McDonald’s spend time and effort in improving the processes, monitor their supplies and maintain consistency. McDonald’s production system heavily adhered to the standards mentioned in its operation manual, be it the way the hamburgers were made or the French fries were made. To ensure quality, products were held in transfer bins no more than ten minutes. McDonald’s was more concerned about quality. They never bargained with the supplier for the price, rather they believed in supplier making fair profits and letting the suppliers grow alongside of McDonald’s. McDonald’s meticulous attention to detail was driven by its practice of seeking to study every component of its operation to learn what worked and what failed. These studies and their results were used continuously to revise and improve and do things in better ways. 2. What are the primary new challenges McDonald's faces in the 1990s? Despite the fact that McDonald’s provided quick and consistent service to its customers, during the 1990s its sales per unit had slowed down. They were facing some vexing challenges such as growing need for flexibility and product variety. Although McDonald’s expanded in the international market, its US quick-service market went down drastically. It had 2500 franchises and 8814 restaurants and accounted for 60% of the company’s revenues and yet it needed to be supported. The primary challenges that McDonald’s faced during the 1990’s include: 1. Health and nutrition awareness amongst consumers

2. Recession attributing to reduced consumer purchasing power 3. Competitors in fast food and dine-in services
4. Competitors’ variety of menu and products
5. Competitors low pricing strategy
6. McDonald’s brand image
One of the reasons for this decline in the US quick-service market was because of demographic trends. Consumers were becoming more health conscious and aware of nutritional and dietary options while not compromising on taste. The eating habits amongst the youth and the older generations have undergone significant changes. Consumers tend to be picky in determining their daily consumptions. They have also expressed their dissatisfaction on the quality of food which was being served by McDonald’s. It is an obvious fact that burgers comprise of fat and oil and is bound to affect one’s health but their conscience as well. Besides health reasons, many Americans’ eating habits have changed towards the concept...
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