McDonalds: Strategy, Just-in-Time Philosophy, and Management Accounting Systems - Assignment Example

Name Institution Course Lecturer Date McDonald’s: Strategy, Just-in-Time Philosophy and Management Accounting Systems. Question 1 Historical background of McDonald’s restaurant and its Contribution to the food industry of a country McDonald’s restaurant dates back to the early 1940s when Richard McDonald and Maurice McDonald operated the first store in California. Towards the end of the1940s, the McDonald brothers initiated the “Speedee Service System” that laid down the first standards of the contemporary fast food restaurant (Ritzer, p.7). McDonald’s had been transformed within the initial seven years to a self-serve business through establishment of a streamlined system that had a simple menu. In addition, systematic structuring and building of the kitchen permitted the utilization of an assembly line that resulting in optimal efficiency. In the mid-1950s, Ray Kroc who was a businessman bought a McDonald Franchise from the McDonald brothers. He set up his first McDonald’s restaurant in Illinois in the same epoch. By the late 1950s, Kroc had established 102 locations. Kroc bought out the entire McDonald brothers’ operation that was priced at $2.7 million in the 1960s (Ritzer, p.9). McDonald’s launched the infamous Golden Arches logo in the early 1960s. Clients of McDonald’s were then familiarised with Ronald McDonald brand that targeted the children segment. Kroc invested in advertisement which proved to be a significant stimulant for the success as well as expansion of the entity. The growth that McDonald’s experienced for the subsequent two decades was phenomenal. The chain operates worldwide with more than 30,000 stores and a workforce of approximately 1.5 million persons (Mak et al., p.171-196). Apart from healthy food produced for some clients, MacDonald’s also offers nutritional information for its products to facilitate informed decision-making by clients. Question 2 Competitive Strategy of McDonald’s and its context in Miles and Snow’s strategy typology McDonald’s competitive strategy is anchored on the premise of its restaurants being situated in strategic locations (Lucas et al., p.247-261). McDonald restaurants are located in areas that are most convenient to persons such as malls. McDonald’s competitive strategy is also inclusive of brand identity that originates from its robust focus on children irrespective of local preferences across different regions. Miles and Snow’s strategy typology depicts firms as entities that use their view of the environment within which they are competing as a basis for developing adaptive strategies (Snow et al., p.3-16). For instance, McDonald’s is an Analyzer type. The Analyzer type amalgamates the Defender type and the Prospector type. The Defender type attains competitive advantage through assuming the least uncertainty by using existing products in existing markets to become more successful than the other strategic types. For example, McDonald’s business structure is founded on geographic units that facilitate alignment of products to suit diverse needs of local consumer groups in various countries. Consequently, each geographic unit produces products tailored to meet the needs of the local clientele leading to increased success. The Prospector type gains competitive advantage via entering new markets with new products. Also, the organisation is innovative and embraces new technologies, as well as, continuously adapts to the dynamic environment (Snow et al., p.3-16). For Example, McDonald’s countered the resentment towards its fast-food restaurant entrance into France by remodelling its restaurants and offering locally preferred dishes. Question 3 Just-in-Time manufacturing philosophy at McDonald’s and how it affects the company’s cost management systems The Just-in-Time manufacturing philosophy entails eradicating waste by slashing needless stock and getting rid of delays in operation (O'Grady, p.120- 127).. The objective is to offer services and commodities as required and to enhance the value-added benefits of operations on an on-going basis. The production system for a Quarter Pounder with two workstations can be used to illustrate how a McDonald’s restaurant utilizes the Just-in-time systems. The Just-in-time systems either employ pull method of materials flow. In the push method, the production of the commodity commences in advance of the client needs. Management timetables the receipt of all raw materials and approves the commencement of production in advance of the Quarter Pounder requirements (Christopher, p. 83). The flow of materials starts from the burger maker who starts the making of 24 burgers that is the capacity of the griddle. The burger maker then pushes the burgers to the final assembler when they are ready. However, the burgers may have to wait until the final assembler is ready to package the burger because the final assembler also restocks the inventory. Inventories ought to be kept at low levels because burgers that are yet to be sold after seven minutes have to be destroyed. Finally, the flow ends with the customer who buys the burger. Alternatively, the pull method can be used to manage the flow of materials from the burger maker to the final assembler and, ultimately to the client. In the pull method, the demand of items by the customer activates the production of that item. The final assembler verifies the stock level of burgers each and every time a customer buys a burger and orders six more when they are almost depleted. The burger maker then produces the six burgers that she then passes to the final assembler who packages and places the burgers in the inventory for sale. The pull method is superior to the push method in the production of burgers (Christopher, p. 103). The workers can eliminate the wastage caused by the seven-minute deadline by coordinating the two workstations so as to keep the inventory low. In addition, the production of burgers is highly defined with setup times, material as well as process times being well-defined. Consequently, the need to produce to meet anticipated needs has to be a few minutes ahead. Just-in-time system capitalizes workforce flexibility to increase efficiency (Woodburn et al., p. 34-56). For example, the workforce at McDonald’s execute tasks that require little training to perform implying that the workers are highly flexible. The employees can be shifted from one workstation to another in order to aid in relieving bottlenecks as they occur without having to turn to inventory buffers-a significant facet of the homogeneous flow of Just-in-time systems. The workers can also step in for their counterparts that are out sick or on vacation. Assigning workers out of their usual area of work might result in decreased efficiency. However, some workers may find rotation to be refreshing and a break from the monotony. Lot sizes are continuously reduced up to a point where they can no longer be decreased rather than building up a cushion in stock (Christopher, p. 105). Also, decreasing stock size decreases the inventory cycle implying that the space and duration involved in the production as well as holding inventory is minimized. In addition, small lots aid in the achievement of a uniform operating system workload. Capacities are utilized in a more efficient way by schedulers due to a more effective juggling of small lots as compared to large lots. However, small lots increase the setup frequency. For example, small lots are feasible in a McDonald’s restaurant because the operation has low setup time. A line flow strategy is capable of decreasing the incidence of set-ups (Woodburn et al., p. 63-74). Workers as well clusters of machines are capable of being arranged in a product layout that completely does away with setups when volumes of specific products are adequate. When there is an inadequate volume to maintain a line of identical products busy, group technologies are utilized in designing small capacity production lines that make families of components with attributes that are common. One-worker, multiple machines approach can also be used and translates to a one-person line to reduce setups. For instance, McDonald’s restaurant employs a one-person line when producing fish sandwiches because the same individual prepares the entire fish sandwich by himself with the aid of machines such as the steamer, buns and trays. References Ritzer, George. The McDonaldization of society 6. Pine Forge Press, 2011. Mak, Athena HN, Margaret Lumbers, and Anita Eves. "Globalisation and food consumption in tourism." Annals of Tourism Research 39.1 (2012): 171-196. McGrath, Rita Gunther. "Business models: a discovery driven approach." Long range planning 43.2 (2010): 247-261. Lucas, Marilyn T., and Olga M. Kirillova. "Reconciling the resource-based and competitive positioning perspectives on manufacturing flexibility." Journal of Manufacturing Technology Management 22.2 (2011): 189-203. Snow, Charles C., et al. "Organizing continuous product development and commercialization: the collaborative community of firms model." Journal of Product Innovation Management 28.1 (2011): 3-16. O'Grady, Peter J., ed. Putting the just-in-time philosophy into practice: a strategy for production managers. Springer Science & Business Media, 2012. Christopher, Martin. Logistics and supply chain management. Pearson UK, 2012. Woodburn, Diana, and Malcolm McDonald. Key account management: The definitive guide. John Wiley & Sons, 2012. Read More