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Case synopsisCase synopsis
12,611 quick service restaurants spread world wide.
In the USA alone Mc Donald serves 20 million customers
everyday
Mc Donald brothers opened the first drive in restaurant in1941.
Mc Donalds operating system concentrated on four areas
Improving theproduct
Developing
outstandingsupplier
relationship
Improvingequipment
Training andmonitoring
franchisee
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Contd..Contd..
Continuousevaluation of therestaurants took
place & accordinglyQSC ,V grades were
given.
Mc Donalds achievesuccess by focusing
on limited menu lowprices and fastservice.
Mc Donalds slogan
was what you want iswhat you get.
Mc Donalds mostmenacing competitorswere Burger
King,Wendys,KFC.
In 1990,in collaboration with EDF Mc
Donalds gave an eco friendly dimensionto their business by forming a waste
reduction task force, using brown bags& various other measures.
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Role of supplier and franchisee forRole of supplier and franchisee for
effective operation strategyeffective operation strategyBrought a supplier loyalty that the restaurant
business had never seen.
A simple hand shake secured every
arrangement between Mc Donalds andsuppliers.
Initially small and fledgling suppliers were togamble on Mc Donalds after rufusal of food
processing giants like Kraft,Heinz and Swift.Mc Donalds reffered its 3500 franchisee asits partners.
Partners would make money before thecompany did.
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Phases of life cyclePhases of life cycle
Raw materials Acquisition
Manufacturing Processing andformulation
Distribution and Transportation
Use/Re-use/Maintenance
Recycle
Waste Management
INPUTS
OUTPUT
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Focused on a simple formula- limited menu lowprices and quick service.
Restricted its menu to 10 items, when
restaurants in 60s and 70s offered a variety ofmenus.
In early 1990, Mc Donalds cutting pricesaveraged 20%
Cheeseburgers sold for only 69cents
Mc Donalds Happy Menu (complete childrensmeal)was sold at only $ 1.99.
Factors pertaining to growth
and success of Mc Donalds
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ContdContd
Engineersintroduced a
special french-fryscoop and a grill
that preparedhamburgers halfthe time of others.
Mc. Donaldsengineers has
introduced a pizzaoven that could
prepare pizzaswithin 5 minutes.
To ensure qualityand taste, no
products werekept for morethan 10 minutes inthe transfer bin.
Mc Donalds
distinguish itself inthe quick serviceindustry.
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Primary new challenges of McPrimary new challenges of Mc
Donalds in 1990Donalds in 1990Share of US quick service market dropped
from 18.7% in 1985 to 16.6% in 1991.
Sales per US outlay dropped to 3.7%.
Hamburger consumption fell to 17% in 1990from 19% in 1982.
The quick service industry grew at an annualrate of 8.7% in 1980s but in 1990s during
inflation it tried hard to keep up the pace.The service industry market became
complex with new entries, who emulated McDonalds strategy to capture their ownsegments.
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ContdContd
Entities like Chili, Olive Garden, Sonic andR
ally etc proved to be tough competitors.
Taco Bell owned by PEPSI used the cost
based strategy to compete prices, thus itserved 60%more customers and their andsales rocketed to 63%.
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Basis for the future growthBasis for the future growth
To maintain an uniform growth rate.
To review the work of the task force.
Serving quality foods at a low price.
Maintaining consistency and qualitythrough standardization.
Unprecedented challenges for variety and
flexibility in its services.By allowing greater franchise autonomy.
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