McDonalds Core competencies - Case Study Example

BUSS 2065 – BUSINESS OPERATIONS Study Period 2 – 2017 Assessment Task 2 – Business Report Student’s Name Student ID Executive Summary The case presents numerous complaints from McDonald’s customers about the inability of the global restaurant chain to offer ice services to its customers round the clock. To some customers, it is almost impossible to get Mcflurry and other ice products when one visits specific McDonald’s outlets especially during off peak hours. McDonald’s employees attribute the failure of their outlets to offer ice services to the difficulty associated with interrupting the machine heating and cleaning process in order to meet unanticipated demand. One of the possible solutions to the challenge is the need to commence the cleaning process after the closure of the outlets. The other solution is the installation of supplementary machines that would be operational when the staffs clean the main machines. In order to meet the demand for its products correctly, McDonald’s should utilize demand-forecasting applications. As compared to Chick-fil-A and Wendy’s, McDonald’s targets customers from all demographics and employs sponsorships in its marketing and advertising strategies. McDonald’s and Wendy’s also strive to provide high quality products at low prices to their customers. However, Chick-fil-A adopts a higher pricing strategy for its products. Table of Contents Table of Contents 3 Introduction Numerous complaints have emanated from McDonald’s customers concerning the frequent interruptions of the ice cream services offered by the global restaurant chain. The complaints have elicited conspiracy theories as customers and other analysts try to determine the reason behind the frequent interruptions of the services. The constant report that the machine has broken down given to customers that visit outlets late at night implies other potential reasons behind the explanations. One of the theories states that McDonald’s employees do not want to make the product. According to some theories, there are specific outlets where the Mcflurry still works and offers the product to customers. The most convincing explanation, however, is the fact that McDonald’s employees find it difficult to re-clean the machines following late night orders after having cleaned the machines before. The paper describes McDonald’s core competencies and analyzes the operational management issue of broken down machines. Discussion of Issues McDonald’s Core Competencies As one of its fundamental operational pillars, McDonald’s core competency has been the provision of convenience products to customers whenever they want to eat the product at the best value for money and competitive prices possible (Jones 2015). From the core competency, it is apparent that McDonald’s endeavors to ascertain that it meet the demand for its fast foods whenever customers place the demand (Reynolds et al. 2005). As a result, the fast food restaurant does not intend to lose customer trust and loyalty. Quality consistency and the effective utility of raw materials across the world have turned out to be areas of competitive advantage for the restaurant chain. The fact that the entire world recognizes McDonald’s from the perspective of a global restaurant chain that offers high quality fast foods and best services to customers is in itself, an area of competitive advantage for the corporation. McDonald’s has also centered its efforts towards cost leadership by offering products at competitive prices. This grants the restaurant chain an upper hand as compared to its competitors in the market. In the quest to attain the objective, one of the operational principles of the restaurant chain was to ascertain the efficiency of all its stores in order to reduce the costs of running day-to-day operations (Steel Efficiency 2014). The competency enables McDonald’s to offer its fast foods at significantly reduced prices that the prices of its rivals in the market. The core competency of the restaurant chain is the speedy delivery of its fast foods to customers. In the quest to capitalize on the advantage, the global restaurant chain endeavors to simplify the process of cooking fast foods to its employees. As a result, it is imperative that all restaurant chains under the McDonald’s brand should implement a simple way of preparing its meals in order for the brand to maintain its competitive advantage of the speedy delivery of fast foods. Employees should find it easy to learn and execute the cooking processes of fast foods at the outlets. Combining the first core competency with this competency reflects the company’s vision that states that the restaurant chain endeavors to become the global leader in the provision of quick service restaurant experience to customers. Operational Management Issues in the Case At McDonald’s, employees clean the Mcflurry machine on a daily basis in order to eliminate the possibility of bacterial infections to the Mcflurry and other ice cream products. The cleaning process is a nightly automated heat cleaning process that runs for approximately four hours since its commencement. The intense heat cleaning process for the duration aims at destroying all the bacteria in the machines before the employees use the machine to prepare the product the following day. In order to disadvantage customers that may require products developed by the product, McDonald’s starts the cleaning process during off peak hours. This, however, still influences a group of late night customers negatively. In almost all the cases, such customers encounter the unavailability of the soft serve or have to wait for long durations for the completion of the cleaning process and the preparation of the soft serve by the employees. In such cases, McDonald’s employees have resorted to informing their customers that the machine has broken down implying that they cannot access the soft serve. It is evident that the tedious process associated with cleaning the machines presents the greatest challenge to McDonald’s and its employees. As a result, the employees have to strike a balance between meeting the cleanliness standards associated with the use of the machine for guaranteed safety of the customer and meeting demand during cleaning hours. According to Sarah Vaught, the cleaning process is more involving as previously thought. Before the commencement of the cleaning process, the process starts with the preparation of the machines for the cleaning exercise. The preparation is an 11-step process that starts with combining warm water with a sanitizing mix, the dismantling, and rinsing of seven parts, and brush cleaning two fixed components for one minute. Moreover, it is imperative to use a sanitized towel to wipe the machine before subjecting the machine to the heating process. The rather cumbersome process of reassembling the machine to make a soft serve ordered by a customer during the cleaning process compels employees to state that the machine has broken down. According to the scheduled activities of McDonald’s outlets, the cleaning process should start after the closure of the store. However, the case is not true in some incidences since some employees start the cleaning process before closing the store. These are the instances where customers visit the store in search of the soft serve and have to swallow the bitter reality of leaving without the product and the explanation that the machine has broken down. The strategic decision of some outlets to operate 24 hours in a day leaves employees with no option other than starting the cleaning the cleaning process during off peak hours. In the event that a customer places an order for the soft serve, employees cannot meet the demand since it is practically impossible to interrupt the cleaning and heating process once it starts. The fact that the product is under high temperature and pressure during the process implies that employees cannot interrupt the process to make the soft serve during the cleaning session. Improving the Efficiency of the Cleaning Process McDonald’s can improve the efficiency of the cleaning process through two options. However, the number of hours under which the outlet is in operation in a day determines the specific way of improving the efficiency of the cleaning process. For outlets that do not operate round the clock, McDonald’s can improve the efficiency of the cleaning process by issuing a directive to its employees that requires them to commence the cleaning process only following the closure of the store. The directive would play a massive role towards eliminating complaints from customers that visit the outlet in search of the soft serve only to end up leaving without the product. Whenever a customer visits an outlet during off peak hours and finds it closed, the customer cannot complain that the outlet was unable to meet his or her demand for the product. The second option applies to outlets that operate 24 hours in a day. Apparently, such outlets are open to customers all the hours of the day. As a result, a customer can visit the store either during peak hours or off peak hours. It is evident that most outlets decide to operate 24 hours in a day in order to meet the excessive demand of its products. Consequently, the outlets should install an alternative machine to operate during off peak hours and serve the demand of customers that visit the outlet during such hours. However, it is important for employees to push the cleaning button at the right time to avoid incidences of “machine breakdown”. Application of Demand Planning and Forecasting Methods It is evident that the survivability of any modern business rests on its ability to adapt to the changing business environment (Vlckova & Patak 2010). The changing consumer demand for a product is one of the probable changes in the business environment. McDonald’s should identify and implement effective demand planning and forecasting strategies to avail the Mcflurry product to its customers based on the underlying customer demand. McDonald’s should implement a demand planning and forecasting system that enables it to meet the demand of customers accurately. Apparently, good quality is equivalent to the ability of customers to receive high quality products from a firm within the shortest time possible since the placement of the order. McDonald’s ability to forecast the demand of its products would ensure that customers do not wait for long in queues before receiving their ordered products. In order for the global restaurant chain to forecast the demand for its products, it is imperative that McDonald’s should have accurate daily Point-of-Sale (POS) data for each item, the list of all products offered at the outlet, the levels of stock at the restaurants, the shipments and inventory at the distribution center, and the current marketing plan. Feeding the data into a forecasting application such as JDA Manugistics would enable the global restaurant chain to predict the demand for its products correctly (Mohamed 2004). Comparison of Business Process Operations between McDonald’s and other Fast Food Restaurants Several similarities and differences are evident in the business operations of McDonald’s as compared to the other two fast food industry giants: Chick-fil-A and Wendy’s. Firstly, just like Chick-fil-A and Wendy, McDonald’s targets multiple demographics in its marketing strategies. McDonald’s targets children just like Chick-fil-A as evidenced by their inclusion of playgrounds, a fun toy, and Happy Meals. Their strategy is effective since it enables the restaurant chain to sell products to parents as well as they come to buy foods for their children. In response to the health issues associated with the consumption of high-calorie fast foods, McDonald’s has responded by availing foods for health-conscious customers in order to retain the particular group of customers. On the pricing strategy, McDonald’s strives to become the low-cost leader in the provision of high quality fast foods to customers. Wendy’s also adopts a similar strategy to remain competitive in the market. On the contrary, Chick-fil-A adopts a higher pricing strategy that does not include value menu. McDonald’s also sponsors sporting events to take advantage of massive audiences in advertising. This is similar to Chick-fil-A and Wendy’s that sponsor sporting and community events in its marketing strategies (Cardwell 2013). Conclusion and Recommendations The case reveals that customers have posted numerous complaints concerning McDonald’s ongoing behavior of disrupting the provision of its ice services especially during off-peak hours. The main theory explaining the inability of the identified McDonald’s outlets to avail ice cream products is the difficulty associated with re-cleaning the machines on the part of the employees. However, it is evident that the tedious cleaning process discourages employees as well as the inability of employees to interrupt the cleaning process prevents employees from making the products during the cleaning process. Cleaning the machines following the closure of the outlets and the installation of additional machines to serve customers during off peak hours are some of the ways of improving the cleaning efficiency of the machines and ensuring the ability of the restaurant chain to meet the demand for its products. The need to meet the changing demand for products also necessitates the use of demand forecasting applications by the restaurant chain. McDonald’s, Wendy’s, and Chick-fil-A target all market demographics, and use sponsorship events in advertising. Reference List Cardwell, J 2013, An In-Depth Comparison of Three Fast Food Industry Giants: How Chick-Fil-A Differs from McDonald’s and Wendy’s in the Growth from Humble Beginnings to Become Multi-Billion Dollar Companies (Doctoral dissertation, The University of Mississippi). Jones, A 2015, ‘McDonald’s Tries To Win Back Key Demographics’, Market Realist. Available at: http://marketrealist.com/2015/01/mcdonalds-tries-win-back-key-demographics/ Mohamed, A 2004, ‘McDonald’s is rolling out a software system that will anticipate customer demand across thousands of European fast food…’ Available at: http://www.computerweekly.com/news/2240058399/McDonalds-gets-a-taste-of-future-demand-with-Manugistics-roll-out Reynolds, R J, Spear, A, Stark, M, Walbridge, T & Watkins, R 2005, ‘McDonald’s Corporation’. Steel Efficiency 2014, ‘The McDonald’s Success Strategy-How Can You Use It In Your Business?’ Available at: http://steelefficiencyreview.com.au/blog/mcdonalds-success-tools/ Vlckova, V & Patak, M 2010, ‘Role of demand planning in business process management’, In The 6th International Scientific Conference" Business and Management 2010". Selected paper (pp. 1119-1126). Read More