Description
Describes about the case analysis of Mcdonalds Corporation Case.
Case: McDonald’s OM Group Presentation
Agenda
? McDonald’s - The Company’s Profile ? Features of McDonald’s Distinguished Services ? Understanding Reasons for McDonald’s Phenomenal
Success
? ? ?
How McDonald’s able to achieve high levels of Consistency Features of Relationships with Suppliers and Franchisees – A key success factor Continuous Improvement of Technology and Processes
? Aspects of McDonald’s Service Design
? Challenges in 90s ? Analysis & Proposed Solutions ? Environmental Concern and Advantages
Mc Donald – Company Profile
? Started by Dick and Mac McDonald in 1941 as a
drive-in restaurant in San Bernardino, California. ? Ray Kroc saw the potential and founded the McDonald’s chain ? Ray Kroc made the operating system at McDonald’s his passion and focused on it to differentiate it from other restaurants ? Operates in more than 120 countries today and serves 54 million customers each day
Features of McDonald’s Distinguished Service
? Remarkable Consistency ? Speedy Service ? High Quality
? Delicious Food Items
? Low Prices
Understanding Reasons for McDonald’s Phenomenal Success
Illustration : Story of launching French Fries which showcases all the successful operational strategies of McDonalds in practice
?
?
?
?
?
Monitored the way French fries cooked in other restuarants Discovered that temperature settings on fryers have little relation with temperature of oil Used temperature sensors to determine temp readings during the cooking process Discovered that fries always perfectly cooked when oil temperature rises 3 degrees above low tem point Designed a fryer with exactly above specifications
Contd.
?
?
?
Accepted potatoes with only 21% starch content. To ensure this, monitored suppliers through instruments like hydrometers Invited and tried a few ideas from a potato processor for storage facilities with proper temperature control to maintain quality and consistency Helped that local supplier become a potato processing giant
How McDonald’s able to achieve ‘Consistency’ ?
? Standardized Preparation methods ? Every hamburger prepared in exactly same way, mustard first, then ketchup, onions and two pickles ? Employee never touches the product. Standardized instruments (Scoops, Fryer etc) are used to cook and serve precise & optimum amount of foods ? Exact Product Specifications ? Manuals carrying information on exact cooking times, proper temperature settings and precise proportions ? Limited Menu ? Provides flexibility to put lot of time and effort in improving operations ? Makes possible specialization and uniform standards
All of the above factors are interdependent and interrelated.
Contd..
? Relationships with Suppliers ? Suppliers should meet exact specifications and operating standards ? Monitoring and Evaluation ? Maintains consistency ? Monitoring done at both levels : External (Suppliers etc.) and internal (own restaurant units). Performance is graded on QSC (Quality, Service and Cleanliness)
Features of Relationships with Suppliers and Franchisees – A key success factor
• Choice of suppliers based on meeting specifications
of quality and standards rather than the vendor’s size, its position in the market or price offering
• Symbiotic Relationship
•
•
Made suppliers more innovative in process. For e.g. Innovative ways of growing potatoes and raising beef for farmers, processing methods for potatoes and inventing efficient cooking equipment Outsourcing projects to suppliers to come up with efficient ways innovative ideas and rewarding them appropriately in return. Launched Egg Mc Muffin and Chicken Mc Nuggets in collaboration with suppliers
Contd…
? Long term relationships based on mutual trust and respect
and concern for each other’s profitability
? Guarantee to suppliers for future volumes as long as they meet
standards, so that suppliers can depend solely on McDonalds
? Rewarding for Loyalty ? Rewarding Keystone, who helped launch new product Chicken Mc Nuggets a mega success by devising an efficient way to cut boneless chicken into nuggets by giving it 65% of Mc Donald’s chicken business ? Partnership with Franchisees ? 39% revenue coming from franchisee restuarants ? Make sure franchisees make money before they themselves do ? Franchisees having an edge in advertisement and purchasing
Contd…
• Attention to detail, not just about supplier prices but
also its methods of operations
o
Rigidity about meeting specifications
• Monitoring and evaluation ? Visits done scrupulously ? Deep and not just visual check, slight deviations not tolerated ? Asking for commitment to continuously improve and
innovate
Continuous Improvement of Technology and Processes
? ?
Detailed analysis of quality and procedures being followed Encouraging experimentation. High emphasis on R&D
?
Success story of French Fries
?
?
Commitment from suppliers to constantly innovate and improve This help achieve high quality and delicious menu items
Aspects of McDonald’s Service Design
? Follows
Production-Line Approach which means emphasis is more on producing efficiently rather than attending customers. attendants is to only operate machines as per specifications. Rest everything built integrally into machine itself. This reduces variations on account of handling done by different individuals
? Face to Face Tight Spec Service – The job of the
? Treat delivery of fast food as a manufacturing process
rather than a service process. So no subordination of the server to the served.
Contd..
? Some other operational aspects ? Storage Space Designed for a predetermined mix of prepackaged and premeasured products ? Cleanliness ensured through ample trash cans
Challenges in 90’s
? Maintain Supplier Relationships ? Dropping market share ? Health conscious customer
? Competitors – Greater variety at low price
? Traditional Approach or change strategy to suit
customer taste ? Operations system built around limited menu, so if variety is added, whole operations management has to be changed which is a huge risk
Challenges in 90’s
? Adding variety will detract speed of service ? Image makeover problems ? Environment Concerns
How to address?
? Going for stricter environmental standards need not
leave out suppliers, since number is small, help them achieve those standards ? Keep menu minimal but keep updating it, take off products for which demand is less ? Mc Donald already invests hugely into Research for improving quality of food for its health conscious customers, emphasize it in promotion which will add health conscious customers
How to address?
? To take on competition, scale has to be increased ? Dining space is limited, so focus on takeaways, build
more drive through outlets, these are cost effective too ? Change the strategy slightly to cater to the needs of customers coming for dinner who expect a more leisurely pace and complete service ? Introduce new dinner menu, by adding more complete service to its strategy. This will increase the falling market share
How to address?
? Promote McDonald as a complete family restaurant
which will capture the market from its competitors in this segment ? For breakfast and lunch apply the traditional fast service and low price strategy ? Allow franchisee to come up with newer menu items
Environmental Concern
? Partnership with EDF for reducing environmental
pollution by finding efficient recycling methods, waste reduction strategies etc ? 42 initiatives focusing on reduction, reuse and recycling incorporated into Mc Donald’s operating procedures ? Stressed the importance of examining full lifecycle of all materials
Environmental Concern
? Increased recycled content in corrugated boxes led to
cost savings of $250 to $600 per store per month ? Started using durable pallets that can be used 30-40 times ? Adopted 100% recycled brown colored bags and customer understood the reason ? Mc Recycle USA program for using recycled material for constructing, renovating and equipping McDonald’s outlets in US
Environmental Concern
? Layered Sandwich wrap instead of polystyrene
packaging because it consumed 85% less energy, generated 40% less air emission, produced 80% less discharge and 60% less solid waste
Is it worth?
? Future only environmentally conscious organizations ? Customers appreciate the efforts of Mc Donald ? Reduced cost and revenues through recycled
material supply chain
? In the long run, partnership with EDF will add value
THANK YOU
doc_388751963.pptx
Describes about the case analysis of Mcdonalds Corporation Case.
Case: McDonald’s OM Group Presentation
Agenda
? McDonald’s - The Company’s Profile ? Features of McDonald’s Distinguished Services ? Understanding Reasons for McDonald’s Phenomenal
Success
? ? ?
How McDonald’s able to achieve high levels of Consistency Features of Relationships with Suppliers and Franchisees – A key success factor Continuous Improvement of Technology and Processes
? Aspects of McDonald’s Service Design
? Challenges in 90s ? Analysis & Proposed Solutions ? Environmental Concern and Advantages
Mc Donald – Company Profile
? Started by Dick and Mac McDonald in 1941 as a
drive-in restaurant in San Bernardino, California. ? Ray Kroc saw the potential and founded the McDonald’s chain ? Ray Kroc made the operating system at McDonald’s his passion and focused on it to differentiate it from other restaurants ? Operates in more than 120 countries today and serves 54 million customers each day
Features of McDonald’s Distinguished Service
? Remarkable Consistency ? Speedy Service ? High Quality
? Delicious Food Items
? Low Prices
Understanding Reasons for McDonald’s Phenomenal Success
Illustration : Story of launching French Fries which showcases all the successful operational strategies of McDonalds in practice
?
?
?
?
?
Monitored the way French fries cooked in other restuarants Discovered that temperature settings on fryers have little relation with temperature of oil Used temperature sensors to determine temp readings during the cooking process Discovered that fries always perfectly cooked when oil temperature rises 3 degrees above low tem point Designed a fryer with exactly above specifications
Contd.
?
?
?
Accepted potatoes with only 21% starch content. To ensure this, monitored suppliers through instruments like hydrometers Invited and tried a few ideas from a potato processor for storage facilities with proper temperature control to maintain quality and consistency Helped that local supplier become a potato processing giant
How McDonald’s able to achieve ‘Consistency’ ?
? Standardized Preparation methods ? Every hamburger prepared in exactly same way, mustard first, then ketchup, onions and two pickles ? Employee never touches the product. Standardized instruments (Scoops, Fryer etc) are used to cook and serve precise & optimum amount of foods ? Exact Product Specifications ? Manuals carrying information on exact cooking times, proper temperature settings and precise proportions ? Limited Menu ? Provides flexibility to put lot of time and effort in improving operations ? Makes possible specialization and uniform standards
All of the above factors are interdependent and interrelated.
Contd..
? Relationships with Suppliers ? Suppliers should meet exact specifications and operating standards ? Monitoring and Evaluation ? Maintains consistency ? Monitoring done at both levels : External (Suppliers etc.) and internal (own restaurant units). Performance is graded on QSC (Quality, Service and Cleanliness)
Features of Relationships with Suppliers and Franchisees – A key success factor
• Choice of suppliers based on meeting specifications
of quality and standards rather than the vendor’s size, its position in the market or price offering
• Symbiotic Relationship
•
•
Made suppliers more innovative in process. For e.g. Innovative ways of growing potatoes and raising beef for farmers, processing methods for potatoes and inventing efficient cooking equipment Outsourcing projects to suppliers to come up with efficient ways innovative ideas and rewarding them appropriately in return. Launched Egg Mc Muffin and Chicken Mc Nuggets in collaboration with suppliers
Contd…
? Long term relationships based on mutual trust and respect
and concern for each other’s profitability
? Guarantee to suppliers for future volumes as long as they meet
standards, so that suppliers can depend solely on McDonalds
? Rewarding for Loyalty ? Rewarding Keystone, who helped launch new product Chicken Mc Nuggets a mega success by devising an efficient way to cut boneless chicken into nuggets by giving it 65% of Mc Donald’s chicken business ? Partnership with Franchisees ? 39% revenue coming from franchisee restuarants ? Make sure franchisees make money before they themselves do ? Franchisees having an edge in advertisement and purchasing
Contd…
• Attention to detail, not just about supplier prices but
also its methods of operations
o
Rigidity about meeting specifications
• Monitoring and evaluation ? Visits done scrupulously ? Deep and not just visual check, slight deviations not tolerated ? Asking for commitment to continuously improve and
innovate
Continuous Improvement of Technology and Processes
? ?
Detailed analysis of quality and procedures being followed Encouraging experimentation. High emphasis on R&D
?
Success story of French Fries
?
?
Commitment from suppliers to constantly innovate and improve This help achieve high quality and delicious menu items
Aspects of McDonald’s Service Design
? Follows
Production-Line Approach which means emphasis is more on producing efficiently rather than attending customers. attendants is to only operate machines as per specifications. Rest everything built integrally into machine itself. This reduces variations on account of handling done by different individuals
? Face to Face Tight Spec Service – The job of the
? Treat delivery of fast food as a manufacturing process
rather than a service process. So no subordination of the server to the served.
Contd..
? Some other operational aspects ? Storage Space Designed for a predetermined mix of prepackaged and premeasured products ? Cleanliness ensured through ample trash cans
Challenges in 90’s
? Maintain Supplier Relationships ? Dropping market share ? Health conscious customer
? Competitors – Greater variety at low price
? Traditional Approach or change strategy to suit
customer taste ? Operations system built around limited menu, so if variety is added, whole operations management has to be changed which is a huge risk
Challenges in 90’s
? Adding variety will detract speed of service ? Image makeover problems ? Environment Concerns
How to address?
? Going for stricter environmental standards need not
leave out suppliers, since number is small, help them achieve those standards ? Keep menu minimal but keep updating it, take off products for which demand is less ? Mc Donald already invests hugely into Research for improving quality of food for its health conscious customers, emphasize it in promotion which will add health conscious customers
How to address?
? To take on competition, scale has to be increased ? Dining space is limited, so focus on takeaways, build
more drive through outlets, these are cost effective too ? Change the strategy slightly to cater to the needs of customers coming for dinner who expect a more leisurely pace and complete service ? Introduce new dinner menu, by adding more complete service to its strategy. This will increase the falling market share
How to address?
? Promote McDonald as a complete family restaurant
which will capture the market from its competitors in this segment ? For breakfast and lunch apply the traditional fast service and low price strategy ? Allow franchisee to come up with newer menu items
Environmental Concern
? Partnership with EDF for reducing environmental
pollution by finding efficient recycling methods, waste reduction strategies etc ? 42 initiatives focusing on reduction, reuse and recycling incorporated into Mc Donald’s operating procedures ? Stressed the importance of examining full lifecycle of all materials
Environmental Concern
? Increased recycled content in corrugated boxes led to
cost savings of $250 to $600 per store per month ? Started using durable pallets that can be used 30-40 times ? Adopted 100% recycled brown colored bags and customer understood the reason ? Mc Recycle USA program for using recycled material for constructing, renovating and equipping McDonald’s outlets in US
Environmental Concern
? Layered Sandwich wrap instead of polystyrene
packaging because it consumed 85% less energy, generated 40% less air emission, produced 80% less discharge and 60% less solid waste
Is it worth?
? Future only environmentally conscious organizations ? Customers appreciate the efforts of Mc Donald ? Reduced cost and revenues through recycled
material supply chain
? In the long run, partnership with EDF will add value
THANK YOU
doc_388751963.pptx