Case Study on "McDonald's Analysis Report"

Case Study 8 pages (2309 words) Sources: 6

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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 have 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 its 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 descriptive case analysis and will only convey information to the reader. However, the information provided will be detailed and substantial to enable the reader to understand the problems faced by McDonald's and how they can be resolved for the future of the compan

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y 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 its strategies in order to evaluate the opportunity for strategic alliances which provide them with a 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 is 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 its 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 the 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… READ MORE

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Quoted Instructions for "McDonald's Analysis Report" Assignment:

“

Case Analysis Report - Food Fight: The Day McDonald's Blinked - Will upload

Type:

1.Company/Industry Profiles and other â€œCase Factsâ€
The most popular type of student-written cases are company or industry profiles. This popularity stems from the fact that most of us know very little about the inner workings of the companies that influence our daily lives. For example, Kmart, the nationâ€™s third largest retailer, came very close to bankruptcy as a consequence of its aggressive entry into specialty retailing. Eventually, the company shed its excess and concentrated on reviving its stores by changing its identity to â€œBig Kmart.â€ Thus, the first reason for the popularity of these types of cases is that itâ€™s interesting and informative to find out â€œhow things areâ€ and â€œhow things workâ€ in the corporate community.

A second reason, beyond the simple pleasure of discovering the unknown, is the fact that these types of cases are excellent at providing â€œmemorable examples.â€ The information gained from the analysis of a company or industry may not be directly applicable; that is, it may not produce a reproducible model. However, these cases provide a storehouse of examples from which to draw. For example, an analysis of the Wal-Mart Corporation quickly reveals that a major factor in its emergence as the nationâ€™s top retailer, surpassing both Kmart and Sears, is its expertise in information systems. This kind of example, one that reveals the link between functional expertise, strategy, and success, provides an excellent illustration for understanding how firms compete and win.

While it is true that company and industry profiles offer excellent opportunities for student case writing, there is one important caveat. The data are relatively easy to gather; in fact, sometimes too easy. In this era of meta-search engines and web page mania, it is embarrassingly simple to generate a massive list of potential data sources. The problem is that many of these hits repeat the same information. Also, much of the information on the Web is raw data that is not supported by fact. Anyone can write a web page and, because there is a difference between journalism and research, they fail to verify the information they report. This is the classic problem of using secondary sources. One must learn to question sources and to verify the information gathered on the Web. In other words, just because you read it on the Web doesnâ€™t mean itâ€™s true! The best case studies rely on information gathered from primary sources (i.e., company annual reports, company press announcements, original research studies, and interviews with knowledgeable sources) and verification of the information gathered.

Last, a potential problem with company/industry studies concerns the depth of the analysis. Quality case analysis demands that one does not simply restate the work of others. For example, itâ€™s interesting to know that Wal-Mart depends on a sophisticated information system. But the very popularity of this observation demands that a new analyst go one step further by digging deeper.

The specifications given:

Writing the Case Analysis

As a general rule, the case analysis process and write-up should be organized in any way that contributes to the collection of relevant data and to the readerâ€™s understanding. Professor John Quelch, formerly of the Harvard Graduate School of Business and a distinguished case *****, has noted some of the elements of a good case: â€œBasically, it needs a start, a middle and an end,â€ and, he continues, â€œYou also need an exciting problem and a sense of the personalities involved.â€ Some examples follow.

Similar to the issues that distinguish a good case, a good case analyst writes with a purpose (generally persuasive),

1.Defining a Purpose
All good writing has a purpose. In case writing, the definition of purpose begins with the decision about the type of case to be written, but it doesnâ€™t end there. By definition, all cases are intended to be educational, but itâ€™s up to the ***** to target and polish the educational thrust. The ***** must decide the functional purpose of the case. A decision must be made early on about whether the case will be explanatory, descriptive, or exploratory. Below is a brief description of each type of functional purpose.

â-¦Descriptive cases are narratives that provide a detailed account of a circumstance or situation. Descriptive cases convey information only; thus, the reader is free to use the information unconstrained by any pre-existing goals of the *****.
â-¦Explanatory cases require that the ***** assume the role of an expert and use that expertise to translate a difficult subject into a language accessible to the reader. Explanatory cases remove obscurity; they exist to make the difficult comprehensible.
â-¦Exploratory cases invite the reader to tour new terrain. The ***** assumes the role of a knowledgeable but unobtrusive guide. In these cases, the reader is left to explore and experience the case. Like a professional guide leading a white-water trip through the Grand Canyon, the case ***** remains in the background, secure in the knowledge that all potentially dangerous contingencies have been identified and planned for in advance.
2.Preparing the Case
1.Organization
As a general rule, a case analysis should consist of a minimum of four primary parts:

1.The introduction, which outlines the issues and draws the readerâ€™s interest.
2.The background section, which provides insights into the broader context of events and forces surrounding the decision-making process. Focus only on the most directly relevant background and avoid superfluous details.
3.The core analysis section, which contains information directly relevant to the decision at hand.
4.The appendixes, including any necessary notes, tabulations, calculations, references, etc., which are germane but which are too long or too technical to be included in the main body of the report.*
Remember, cases are not organized around chapters; they consist of a series of labeled subsections that, as a general rule, should not exceed two pages in length. The precise labeling and position of these subsections will, of course, depend on the subject matter. It is the authorâ€™s responsibility to discover the natural divisions in the presentation. Headings should be short, informative, and directive; no key aspect of the case should be presented without calling the readerâ€™s attention to it through the use of a heading.

5.Analyzing the Data
In the early phase of the case analysis report, the primary objective of the investigator is to get acquainted with the subject. Cases provide data from a wide range of primary data sources (SEC filings, annual reports, internal memos, interviews, etc.), all of which are distinguished by the fact that they have not been contaminated by the errors or biases of others. Itâ€™s the case analystâ€™s objective to produce a solid representation of the facts to support his or her position. Rely on the facts of the case for your evidence. Case analysis rarely requires a lot of outside research since most cases are designed to be self-contained, meaning that the case typically presents enough facts in the body of the case and the appendices for the analyst to form a sound judgment. Many journalists say that a good rule of thumb is, â€œIf you canâ€™t stand behind it, donâ€™t write it.â€ Present the facts of the case that you can stand behind.

6.â€œSellingâ€ Yourself and Other Stakeholders on the Idea ****************************** Once your audience is established, itâ€™s time to prepare for some selling. When seeking cooperation, there are several ways to get the process off to a good start:
â€¢ Frame your arguments persuasively
â€¢ Understand the dynamics of your audience and the motivations of your audience
â€¢ Present facts that support your analysis
â€¢ Present recommendations backed by the case facts
â€¢ Use active language throughout the report
â€¢ Wrap-up with a conclusion and re-sell your primary findings and recommendations
*****

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