Mcdonald's Hbs Case Review

Topics: 1990s, 1990, Operating system Pages: 5 (1383 words) Published: July 21, 2010
* What is McDonald’s key value proposition?

* McDonald’s key value propositions are listed below. These propositions helped McDonald’s to build an unparalleled network of loyal suppliers and entrepreneurial franchisees that contributed greatly in moving the McDonald’s bandwagon ahead. The propositions not only differentiated McDonald’s from the competition but also helped build an operating model that was extremely difficult to emulate. The key value propositions are: * Quick service & tasty inexpensive food

* Standardization of preparation methods with exact product specification using customized equipment * Consistently high quality and uniformity across all outlets. * A unique operating system

* A special set of relationship between the McDonald’s corporation, its suppliers and its franchisees often described as a three-legged stool. The stool is only as strong as the three legs and thus each supported the weight of McDonald’s equally. * Restaurant’s service is measured in terms of three categories QSC (Quality, Service & Cleanliness), imparting ‘V’ for Value. * Corporate-level strategy can be defined as centralized decisions making process which are uniformly deployed at the franchisee level across the globe. * Innovation at franchise level was centralized, standardized and put across all the outlets.

* Determine the key elements of Operation Strategy of McDonald’s?

* The key elements of the operations strategy implemented by McDonald’s were: * Revolutionizing the entire supply chain, introducing innovation in product & process * Standardizing operating procedure in the form of Operating Manual detailing exact cooking times, proper temperature settings & precise portions for all food items * Improving the product

* The Three-Legged stool
* McDonald’s followed a philosophy that is often referred to as the Three-Legged Stool. One of the legs is McDonald’s, a second leg is our franchisee partners and the third leg is our supplier partners. The stool is only as strong as the three legs. * Developing outstanding supplier’s relationship, caring about supplier’s operation & being sensitive about their profit margins and thereby earning supplier loyalty was what formed one of the other two tools in the McDonald’s stool! This way, the growth & profit of the suppliers was inexorably tied with McDonald’s. * McDonald’s seeked hands-on franchisees – active, on-premise owners prepared to work full-time running their McDonald’s operation – not just investors. The franchisee/company relationship stresses personal commitment to the business and emphasizes people, community commitment, financial management and a sharing of goals, principles and ideals. * Improving efficient equipment tailored to restaurant’s need * Training & monitoring franchisees

* Initially restricted menu sizes.
* Constant evaluation & assistance of restaurants
* McDonald’s consistently studied every component of its operation, experimented & revised its best operation methods revised and practice again & again.

* What are the challenges McDonald’s faced in the 1990s?

* McDonald’s faced numerous challenges in the 1990’s from competitors that specialised in proving speed and service to those that offered greater variety band those that featured discounted menus. The major challenges that McDonald’s faced were: * Change requirement in Operating strategy: - The most perplexing question vexing top management was the extent to which McDonald’s operating strategy was to be changed to accommodate the growing need for flexibility & variety in products. * Managing volume: - In the US alone, McDonald’s is serving over 20 million customers every day. Management of quality service to so many people as well as attracting more business becomes a formidable challenges in a huge dimension, especially in the wake of...
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