Mcdonalds

UCP BUSINESS SCHOOL
Critical Review
Case Study: McDonalds Corporation
(Abridged)
Submitted By:
Usman Nawaz
L1F15MBAM0227
Submitted to:
Dr. Zia ul Haq
CRITICAL REVIEW
(McDonalds Corp.)
Harvard Business School
Introduction
The McDonalds Brand is one of the most well-known Brands in the world. The first
McDonald was built in 1940 by the McDonald brothers (Dick and Mac). McDonalds is a
large corporation in the fast food industry. They have been around since 1955 when Ray Kroc
started the chain of McDonalds. They have been growing ever since. McDonalds had
distinguished itself in the quick service industry through its remarkable consistency across all
units. The majority of the restaurants are owned through franchises.
Between 1990 and 1991, sales per unit had slowed down. The reasons are consumers
were changing management to wonder whether the companys operating system, suited to the
new circumstances the company faced.
To counter some of the criticism, McDonalds partnered with the Environmental Defense
Fund (EDF) to explore new ways to make its operations friendly to the environment. The
competition can get pretty intense to build customer loyalty to their food.
Challenges
To what extent should McDonalds change its operations strategy to accommodate the
growing need for flexibility and variety in products? Was it merely tweakingor a
dramatic changewhich would support the companys volume growth objectives?

To what extent would environmental concerns compromise McDonalds traditional
strengths and complicate an already challenging competitive situation?
Primary new challenges McDonald's faces in the 1990s
McDonalds, the longtime leader in the fast food wars, faced a crossroads in the early
1990s.
Domestically, sales and revenues were flattening as competitors like on its domain.
In addition to its traditional rivals Burger King, Wendys and Taco Bell, the firm
encountered new challenges.

Sonic and Rallys competed using a back - to basics approach of quickly serving up
burgers, just burgers, for time-less consumers.

On the higher end, Olive garden and Chilis had become potent competitors in the
quick service field, taking dollars away from McDonalds which was firmly
CRITICAL REVIEW
(McDonalds Corp.)
entrenched in the fast-food arena and hadnt done anything with its dinner menus to
accommodate families looking for a more upscale dining experience.
Problems
Increased variation in the supply chain. Due to extended menu problems regarding the
uniformity, quality control and speed of service were the major concerns.
Complicated preparation processes for the items such as spaghetti.
They wanted to include the dinner menu in the restaurant for that they had to come up
with complete menu.
They had a fear that their recipes would be copied by the competitors.
The problem related to protecting the environment.
The key problem to McDonalds domestically is the lack of growth opportunities. The
market is well saturated and it would difficult to achieve double digit growth.
Other concerns are a newfound emphasis on healthier eating.
Most of the McDonalds popular food items probably in small way contribute to the
increasing incidence of cancer, heart disease and diabetes among the population.
Solution (Reason behind Success)

The secret of McDonalds success is its willingness to innovate, even while striving to
achieve consistency in the operations of its many outlets. For example, its breakfast menu,
salads, Chicken McNuggets, and the McLean Deluxe sandwich were all examples of how the
company tried to appeal to a wider range of customers.
The company has also made convenience its watchword, not only through how fast it
serves customers, but also in the location of its outlets. Freestanding restaurants are
positioned so that you are never more than a few minutes away by foot in the city or by car in
the suburbs; Plus McDonalds is tucking restaurants in schools, stores and more.
McDonalds revolutionized the entire supply chain. McDonalds also establish a unique
operating system. McDonalds operating system concentrated on four areas: improving the
product; developing outstanding supplier relationships; improving equipment; and training
and monitoring franchisees. The main reason behind their success is that they build a special
set of relationships between the McDonalds corporation, its suppliers, and its franchisees.
McDonalds Success Formula
Limited Menu
CRITICAL REVIEW
(McDonalds Corp.)
Low Prices
Fast Service
To counter some of the criticism, McDonalds partnered with the Environmental Defense
Fund (EDF) to explore new ways to make its operations friendly to the environment.
McDonalds start using eco-friendly packaging and ensuring efficient solid waste disposal.
Conclusion
No doubt McDonalds faced criticism from suppliers and they have to drop a few of them
also. But the team brought a huge success in terms of providing flexibility and providing the
solutions for environmental crisis. Key to its future success will be maintaining its core
strengths an unwavering focus on quality and consistency - while carefully experimenting
with new options. McDonalds uniform operating system, taste and service is very helpful in
their growth. McDonalds was also very particular in quality of the raw materials they used
and very concerned with their suppliers. Their concern over the franchises and make them to
feel as one of their partner and to work towards prospective. Thats why McDonalds
maintain its growth despite the aggressive competition and sales decline in 1990s and still its
growing with innovation.
Recommendations
McDonalds should maintain their speedee service system and positive relationships
with suppliers and franchisers.

McDonalds should develop menu choices that are healthy and socially acceptable.
The company could also look into expanding more aggressively abroad where the
prospects for significant growth are greater, like, increase presence in Asian countries.
Use local food sources because it decreases the time to market, and also decreases the
use of fuel to transport goods.

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UCP BUSINESS SCHOOL

Harvard Business School

dramatic changewhich would support the companys volume growth objectives?

Primary new challenges McDonald's faces in the 1990s

encountered new challenges.

burgers, just burgers, for time-less consumers.

Harvard Business School

Solution (Reason behind Success)

Harvard Business School

with suppliers and franchisers.

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