Case Study: Mcdonald's Case Analysis Report

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MCDONALD'S CASE ANALYSIS REPORT

Case Analysis Report

McDonald's case analysis report

McDonald's has grown significantly from the early days of having a single outlet to the current status where it has more than 26,000 restaurants which are located in 120 countries. The company no serves 15 billion customers every year with sales topping 40 billion dollars. It has, however, not been smooth sailing for McDonald's since the company has suffered from serious problems as a result of the company's decision-making being shaky and many of their products and their marketing strategies having failed terribly. One such strategy that failed was the one that involved the Arch Deluxe sandwich which was targeted at adults. The company ran a massive campaign to increase their sales which was a serious flop. Further to this, the company faces steep competition from rivals such as Burger King which keeps the management constantly on their toes trying to come up with new and innovative ways to help McDonald's gain and maintain their competitive advantage. The problems faced by the company were analyzed in detail to provide this case analysis report which is divided into three major sections. The first section gives a brief background of the problems faced by McDonald's while the second section is a discussion of the major problems which McDonald's is facing. The last section offers suggestions on how these problems can be resolved and a strong evaluation of each of the recommendations mentioned. This case analysis report is structured as a descriptive case analysis and will only convey information to the reader. However, the information provided will be detailed and substantial to enable the reader understand the problems faced by McDonald's and how they can be resolved for the future of the company or organization.

Background information

This analysis is conducted with core competence as the major concept under analysis. Prahalad and Hamel (1990)

define core competence as the collective learning inside an organization which creates the capacity for the organization to coordinate the diverse skills in the organization and also integrate different forms of technologies in order to gain competitive advantage. The authors argue that companies must first identify which their core competencies are and how they provide the company with potential access to a wide market base which makes a significant contribution to the benefits of the consumers and the company's competitive advantage as a result of competitors being unable to copy the strategies under use by the organization. The authors also state that a company must also reorganize their strategies in order to evaluate the opportunity for strategic alliances which provide them with competitive advantage and/or focus on their development internally as a source of competitive advantage.

McDonald's has engaged in fierce competition with its major rival, Burger King, which has led the companies in a constant race to deliver food that is hot and value-priced. The marketing strategies in use by the two organizations have been quite similar with none willing to accept to be outdone by their competitor. Though the targeting strategies for the two organizations are quite different with McDonald's aiming at providing their customers with value for money, cleanliness, and outstanding quality and service, and Burger King being aimed at ensuring consumer satisfaction through their high flexibility, since their target consumers overlap, this is the major source of the competitive rivalry in the industry.

McDonald's strategic context

The definition of strategic context given is that it is a combination of three factors which help company managers to by Tushman and Charles a O'Reilly (2002)

understand the various opportunities and hindrances that fall before the organizations. The first factor is the environment in which the organization operates while the second are the resources that are available to the organization. The last factor is the history of the organization which shows the development of the organization and the changes that have taken place over the years. The authors also state that once the company or organization has made its strategic choices, it is able to understand their strategic context in order to define the critical tasks that should be undertaken and ensure that these critical tasks are in line with the culture, people and activities in the organization. Strategic choices can be incorrect and may act as critical tasks off the organization's target. They may also be misaligned relationships and lead to dramatic changes to the organization over the years. Swank, 2003()

McDonald has undergone many drastic changes over the recent years with the most recent being the adoption of the "Made for You" system of hamburger production which has the objectives of improving the response time of providing service to customers, giving a greater allowance for customized orders by customers and improving the freshness and quality of the food by measuring the temperature of sandwiches, crispness of lettuce or sogginess of buns. Though this improvement was quite costly to the organization, it has allowed McDonald's to gain greater competitive advantage, provide better services to the customers and better their market position. It has also greatly changed the history of McDonald's which did not encourage customized customer orders at first. The management must have realized this was an important consideration for customers and thus the need to incorporate a system that allowed them to be able to give greater flexibility to customer orders.

Core analysis

Inefficiencies in production

During the early years of the design of the McDonald's hamburger production system, the company majorly focused on efficiency and consistency of the quality of products sold to consumers. The company aimed at providing uniformly high quality to consumers who were served low cost fast foods in a friendly and clean environment. However, this system required many of the company's staff to be on the lookout for traffic coming into the store to avoid backlogs which caused customers to wait longer than their usual time. Considering this system needed as many as five people to operate in the grill area during the busiest times with many other stations requiring double or even triple number of employees, there were few who could keep an eye on the incoming traffic at the store. In addition to this, bin workers had to spend a major part of their time on shift watching the incoming traffic and matching it against the bin inventories in order to build sandwich suppliers and prevent customers waiting for long periods. McDonald's production system also created a lot of loopholes which led to huge losses as a result of many food items that stayed too long being discarded. These may have been the major reason for inefficiencies in the McDonald's hamburger production system.

Longer wait times

Over the past couple of years, the trend in the fast food industry has been focused on combining speed with convenience and quality. The company has, however, over the years failed to achieve their speed target of less than 2 minutes waiting time per customer. The company has come quite close to this target though they have failed to make their waiting time less than 2 minutes. This has caused the company to be beaten by Wendy's which is the only store that provide services to customers with a shorter waiting time than McDonald's. The inefficiencies earlier cited in McDonald's production system contribute greatly to this difference in wait time between them and competitors. However, McDonald's has managed to beat Burger King though by a minimal margin which is an indicator that McDonald's production system is much better than that of Burger King.

Health of McDonald products

McDonald's has also had issues with health professionals, health advocates and other consumer activists who accuse the company of creating a significant production to the high cholesterol levels in the country as well as the frequent episodes of heart attacks, obesity and diabetes. This has caused the customers to have a negative perception of the company though they have strived to improve this over the years by assuring the public of the safety of their products.

Lack of flexibility

Another problem that faces McDonald's is the lack of flexibility in the company's menu as a result of their lack of accommodation for customized customer orders. Though the company has over the years allowed customers to give specifications of their hamburgers such as omission of lettuce or other products, these consumers have to wait longer than the other customers who take regular products. This shows that McDonald's current operations prevent the organization from creating allowances for consumers with customized orders to receive their products in good time.

Recommendations

McDonald's has been a success for many years as a result of its constant growth and expansion which has, however, made it difficult for the organization to grow its core competencies which include speed of service, quality and consistency. These core competencies are the focus of the recommendations given to McDonald's for the resolution of the described problems. By striving to improve their core competencies, McDonald's will be able to improve the customer service they offer to customers… [END OF PREVIEW]

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