McDonalds

Core competencies
Focus on - Quality, Service, Cleanliness, Value (QSCV principle) Uniform, high quality standardized products Close integration with suppliers ensuring continuous supplies with high quality and less variability Quick service time achieved through continuous improvements in product as well as process Clean & pleasant ambience inside restaurants

Strategy
Deliver pleasant, fast service and tasty, inexpensive food Standardized products and with tried and tested variations Ensure consistency and uniformity across all outlets Ensure consistent high quality while keeping cost low through operational efficiency across the supply chain

Operational strategy
Standardized, limited products to
Achieve economies of scale Maintain service level

Close relationships with suppliers and franchisees to

Elicit commitment to adhere to the operations manual and to experiment Transform the supply chain by partnership Ensure consistent high quality Constantly drive innovation even from backward supply chain

Service-Process Matrix
High

Degree of Capital Intensity

Service Factory

Service shop

McDonalds

Mass Service

Professional Services

Low

Degree of Interaction & Customization

High

Product innovation
Scientific product development approach that includes development of product as well as the process in the best possible way Initiation and ideas are sought from all the stakeholders Product having economies of scale are launched

Growth and Challenges

Keeping track of the customer requirements
Growing emphasis on dietary preferences and health consciousness More variety is required

Variety vs. Consistency in operations Threat from specialist competitors

Ones focusing on full-service and greater varietyOlive Garden, Chili's, Perkins Ones focusing on extremely fast service-Sonic, Rallys. Ones offering a specialty menu like Taco Bell (Mexican)

Initiative for environmental conservation

Bringing in variety
How much of change is good?
Slowing down service time Uniformity and consistency will be tough to maintain Disrupts the existing operating efficiency built around a limited menu Hampers its reputation as a food outlet for hamburgers and quick-service However: Variety can provide strategic advantage in the market place if implemented successfully

Environment Initiatives
Waste Reduction Task force formation comprising of McDonalds and EDF members

Possibility of reduced costs through environment friendly measures

Increasing Environment consciousness amongst the customers

Method of Implementations
Fully recycled, unbleached paper brown bags Recycled content standards in corrugated boxes raised from 21% to 35%
Cost savings: $250-$600 per month per restaurant on garbage collection

Polystyrene clamshell packing: replaces by a three-layered wrap

Three areas of waste reduction:
Shipment box volume Lower levels of industrial pollution Lower volume of wrap

Business trends
Junk food eating habits are condemned due to increasing awareness 62% of sales come from off premises eating (figures at 23% in 1982) Dinner contributes only 20% of sales Competitors not able to match the operational excellence of McDonalds (e.g. Burger King)

Starting New Dinner Services

Effect on the operations
Increased costs Skilled Labor, different ambience Increased customer services.
But the services should be started after thorough market research and after scientifically optimizing the whole operations

Improved Customer turnaround rates.

Recommendations
Stick to its core competencies
Faster delivery, high quality at lower prices

Fine tuning current strategy advantageous over drastic changes

Strains operations, slows service Brand image may be affected

Recommendation Contd.
McDonalds image boosted by environmental initiative Bottom line contribution through savings in wastage and material cost Top line contribution is less, compared to that by innovative ideas

- Fresh ideas in terms of new products on the menu will help McDonalds.

THANK YOU!