1. How has the competitive situation that McDonald’s faces changed since it was founded in the 1950 ?
The case traces a number of changes in the fast food market over the nearly 60 years that the case covers (it would be very surprising if there had been no change over such a long period). It is useful to distinguish between the changes that are broadly societal and apply to most companies in this industry (even if McDonald’s size and fame makes it more of a target), and the changes that have impacted McDonald’s because of competitor activity. In the first category is the general criticism of so-called ‘fast food’. Nutritional issues (high saturated fat etc.) are well known through such high publicity films as ‘Supersize Me’ (get a clip from U-tube). The recent introduction of salad bars in many of McDonald’s markets is one response to this, although McDonald’s attempts to challenge some ‘urban myths’ regarding its food sources have had only mixed success. (If time allows, promote a debate on reputational risks and how operations can affect them.) Similarly the ‘cultural imperialism’ issue in some markets (mainly, though not exclusively, France) is worth discussing. The case of Jose Bové (the farmer who was imprisoned for wrecking a half-built McDonald’s) is a good example of this. What response should McDonald’s give? Difficult one, but the CEO of McDonald’s in the UK, Jill McDonald, probably gave the best reply by stressing the benefits to society of jobs and training, while at the same time admitting some culpability; ‘We were just not as close to the customer as we needed to be, we were given a hard time in the press and we lost our confidence. We needed to reconnect and make changes that would disrupt people’s view of McDonald’s.’
It focussed on being fast cheap and reliable (in terms of the consistency of its products). Of course, at that time, it was competing only with traditional American Diners. Now, as the case indicates, other fast food operations have been established that focus on one of the competitive dimensions. So, for example, Taco Bell is cheaper than McDonald’s. Specialist drive-thru operations are faster. Branded full service restaurants have a larger menu and so on. Note that it is not necessarily McDonalds that has changes (although to some extent it has), it’s the competitive context that has rendered McDonald’s less distinctive.
2. How have McDonald’s operations activities, in terms of its design, delivery and development, influenced its operations performance objectives ?
• Focussing on a limited menu (cost)
• Clear values – Quality, Service, Cleanliness and Value (quality, cost) • Compulsive focus on process (quality, cost, speed, dependability) • Specially designed ‘fool-proof’ equipment (dependability, cost) • Strict product specifications (quality, cost)
• Standardisation (quality, cost)
• No food items held more than 10 minutes (quality)
• ‘Hamburger University’ (quality, cost, speed, dependability) • Frozen fries idea from supplier (innovation, quality, cost) • Improving the product (innovation, quality, cost)
• Strong supplier relationships (innovation, quality, cost) • Developing franchise holders (innovation, quality, cost) • Location analysis (cost)
• Quality as supplier selection criterion (quality)
• Franchisees expected to contribute (innovation, quality, cost) • Ideas from franchisees (e.g. Egg McMuffin) (innovation, quality, cost) • Innovations as a reaction to market conditions (e.g. Salads) (innovation, quality, cost) • Extended hours (quality of service)
• More drive-through (speed, quality, cost)
• ‘Plan to Win’ focus on improving the overall customer experience (innovation, quality, cost)
3. Draw an operations strategy matrix for McDonald’s.
4. Search the internet site for Intel, the best known microchip manufacture, and identify what appear to be its main elements in its operations strategy.
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