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UBAI2043 IT FOR MANAGEMENT (May 2013)

WRITTTEN REPORT MARKSHEET UNIVERSITI TUNKU ABDUL RAHMAN FACULTY OF BUSINESS AND FINANCE UBAI2043 IT FOR MANAGEMENT (MAY 2013) Bachelor of Commerce (Hons) Accounting
Topic: Tutorial Group: Name Student ID Programme

IT/ISs impact on FOOD AND BEVERAGES INDUSTRY: Implementations of technologies for MCDONALDS.
No 1 Items Executive Summary

T6
Date of Submission:

22/7/2013

1. CHAN KAH HUI 2. LEE KAH YEE 3. MALVEENN PREET KAUR GILL 4. MOO CHOI NYUK 5. SIM HWA KENG 6. YEE MIN NIE
Satisfactory 1 2 3 (Reasonably written) 2 3 (Reasonably written) 3 4 5 6 7

09ABB02548 12ABB07274 11ABB05909 10ABB00515 10ABB00996 12ABB07273


Excellent 4 5 (Exactly written) 4 5 (Exactly written) 8 9 10

AC AC AC AC AC AC
Marks

Poor (5%) 0

(Improper or None) 2 Discuss the impact of IT/IS on your selected industry (5%) Introduction : (10%) Name of the company of your selected industry and its brief history The companys main activities Lengthy discussion on how the three (3) IT/IS identified are used by the company of your choice in the daily business processes (30%) 0 0 1

(Improper or None) 0 1 2

(Improper or None)

(Reasonably written with overview included) 4 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 (Reasonably written) 22

(Exactly written with concise overview) 23 24 25 26 27 28 29 30 (Exactly written with relevant examples and relation to business process) 15 16 17 18 19 20 (Exactly written with concise analysis done) 11 12 13 14 15

1 5

2 6

(Improper or None)

The impact of Porters Five Competitive Forces model on the company (20%)

7 8 9 10 11 12 13 14 (Reasonably written)

(Improper or None)

Strategic use of IT/IS for competitive advantage

0 (15%)

10

(Improper or None)

(Reasonably written)

(Exactly written with concise analysis done) 4 5 (Exactly written with concise summary) 4 5 (Properly formatted and perfect standard compliance) 4 5 (Properly formatted and perfect standard compliance)

Conclusion

(5%)

3 (Reasonably written with proper summary included)

(Improper or None) 8 APA referencing (5%) 0 1 2

3 (Reasonably formatted and reasonable standard compliance)

(Improper or None)

Formatting for the report

(5%)

3 (Reasonably formatted and reasonable standard compliance)

(Improper or None)

Comments: Total Report Marks (100%) Lecturer / Tutor Acknowledgement: Name Signature

NO.

CONTENTS

PAGE

1.

EXECUTIVE SUMMARY

2.

DISCUSS THE IMPACT OF IT/IS ON YOUR SELECTED INDUSTRY

2-3

3.

INTRODUCTION

4.

EFFECTIVE IMPLEMENTATION OF IT/IS IN MCDONALDS

5-7

5.

THE IMPACT OF PORTERS FIVE COMPETITIVE FORCES MODEL ON THE COMPANY

8-9

6.

STRATEGIC USE OF IT/IS FOR COMPETITIVE ADVANTAGE

10-11

7.

CONCLUSION

12-13

8.

APA REFERENCING

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EXECUTIVE SUMMARY McDonalds is a fast food restaurant that offers delivery services and drive-thru services for customers convenience. Today McDonalds operating more than 30,000 restaurants worldwide which consist of 80% owned by franchise and 20% are owned by company itself. Around 1.7 million workers are employed by McDonalds worldwide. McDonalds used Information System to identify their own strength and weaknesses by using the revenue reports, employee performance record and many more. By doing so McDonalds will be able to improved their business process and operations. The best system in McDonalds is the POS system Scale of Point System. By using this system, McDonalds will be able to save time, error control point of sales systems in restaurants also eliminate or reduce human error. POS also reduce paperwork. Using this system McDonalds able to attract more customers and keep customers and get what they need in the easiest way. The other system that McDonalds used is Transaction Processing System (TPS). TPS is a system that helps to serve customers better. Transaction Processing System used to record McDonald daily transaction. This may help them to keep the useful information in order to make a better decision in the future. Besides, McDonalds also uses Made-For-You System. It can consider as a backend system in McDonald. (McDonald, 2011) Made-For-You System can help McDonald to raise their productivity and customers satisfaction. (McDonald, 2011) It has been implementing in order to create smoother, faster and more flexible kitchen system. HBS- Hyperactive Bob System. This system uses cameras on the roof of the building and also gathers point of sale information in real time to monitor the entrance and parking lots of the McDonalds. McDonald also uses Management Information System (MIS) to maintain and improve the internal control in the company. McDonald have strong decision making plan. The new entrants are not easy to enter the fast food market. Decision Support System (DDS) is used to model data and make quality decision base on data.

IMPACT OF IT/IS ON MCDONALDS Information Technology is basically a broad and diverse field. Actually, its not farfetched to say that Information Technology is practically involved in every aspect of ones life. Thus its only natural that something as everywhere as I.T. plays a major part in business. Information System is a set of interrelated process that collects, process, store, and distribute information to support decision making and control in an organization. But what exactly is the impact of Information Technology and Information System on McDonalds? Technology is playing an important part in McDonald's plans to attract more consumers into its fast food restaurants plus savings on expenditure, operational efficiency and large amount of advertisement. Technology raises a company's capability to predict sales and decide which commodities have high consumer demand. Personal computers, wireless devices and the internet have McDonalds plugged into mainstream technology. McDonalds inventive planning introduced Wi-Fi hotspots, internet terminals, and web-based games for children into its stores. With Wi-Fi hotspots in McDonalds customers can check email, access the internet and download presentations while having their food. Information systems in the McDonalds are reducing the time that customers used to waiting in line. So if they decrease period of waiting, they will boost amount of consumers and decrease time charge. In addition they will also increase the excellence of management and decrease human mistakes or errors. MacDonalds forward to control value of management by decreasing the time of each method that they are made. This method led him to be more successful and capable in process. Besides, MacDonalds also used advanced IT in processing it systems. For example building a database and calculating time of process to build up his work incessantly. McDonald does also have a system where it allows customers to order online and accept his home order from nearest brunch. This occur through a screen that shows the customer place when he/she order in the McDonalds restaurant. Then they deliver the order in less time.

Cost effectiveness. By using Information systems technology in McDonald's has provide a hand to computerize the business method and make them uncomplicated. Consequently, business become really cost effective money which made by machines. This

gives opportunity to increase efficiency and profits, which means better pay to workers and excellent working environment. Besides, internet and intranet is also being used in McDonalds in order to get connected with the stakeholders. For example, internet is being used in charge to start on their diverse marketing strategy as well as to get connected to their potential and faithful buyers. In contrast, intranet serves as a confidential communication means for the inside stakeholder of the company such as suppliers, shareholder and workers.

Effective planning from information technology can create an advantage over competing organizations in this global market and offer the information needed to maintain its leadership in the fast food industry McDonalds has taken full advantage of what technology has to offer and effective planning is its best customer.

INTRODUCTION Im Lovin It is a tagline known by everyone including kids, teenagers, and elderly people. McDonalds is the worlds number 1 fast food corporation found by Richard and Maurice McDonald in San Bernardino California in 1940. McDonalds started to grow rapidly in 1960s. Due to high demand of cheap takeaway food, McDonalds has continued to expand its business to 117 countries since the first restaurant opening in Australia during 1971. The company focuses on providing high quality of food and customer service through its product line. McDonalds also offers delivery services and drive-thru services for customers convenience. Today McDonalds operating more than 30,000 restaurants worldwide which consist of 80% owned by franchise and 20% are owned by company itself. Around 1.7 million workers are employed by McDonalds worldwide.

Their main selling products are hamburgers, double cheeseburgers, big Mac burgers, fillet-o-fish burgers, nuggets, french fries, pie, breakfast items, chicken porridge, soft drinks, milkshake, and desserts. McDonalds vision is To be the worlds best quick service restaurant and to take over the global food-service industry whereas their mission is To provide excellent quality, service, cleanliness, and value, so that we make every customer feel satisfied. McDonalds uses various types of information systems in daily operation such as, Transaction Processing System(TPS), Decision Support System (DSS), Management Information System (MIS), Made For You system, Point of Sale System(POS system), Hyperactive Bob System. TPS is used to record suppliers information when transactions occurred. DSSs function is to analyze data when they wanted to come out with a decision, for example, providing wireless service in their restaurant. Besides, MIS is used to provide periodic report to help managers monitor the business performance and its future plan. On the other hand, Made For You system is specifically designed to place customers order in which the order will automatically appear in the computer in the kitchen to increase efficiency. POS system is used to track large amounts of data and transmit the data to several workstations to speed up the business process. Last but not least, Hyperactive Bob System uses camera to monitor incoming traffic within the restaurant area so that their staffs will always be alert.
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IDENTIFY THREE (3) IT/IS AND DISCUSS HOW EACH IT/IS IS USED BY THE COMPANY OF YOUR CHOICE IN THE DAILY BUSINESS PROCESSES. The first IT we want to discuss about McDonald is Transaction Processing System (TPS). TPS is a system that helps to serve customers better. Transaction Processing System used to record McDonald daily transaction. This may help them to keep the useful information in order to make a better decision in the future. TPS also used to collect, stored, modify, and retrieved the transactions of their organization. . Above function can helps McDonald to answer some general question in conducting their business transaction. For examples, payroll, employee record keeping or paying an employee. Transaction Processing System also helps McDonald to reduce the possibility of committing fraud or difficulties in physically keeping supplier contact and their information, such as address, name, products name, and quantity of the product that they order. In addition, TPS also will ease the ordering process. Every day, McDonald has to deal with many supplier and customer. They have to use Transaction Processing System to help them to record customers transaction and information. Such as the total quantity of hamburger had been sale, type of hamburger. They also need to record the information of purchasing their raw material, and the supplier information in order to keep track the reorder level and which supplier that they need to communicate and cooperate with them when they reach their reorder level. The second Information system our group wants to highlight is Made-For-You System that implemented by McDonald. It can consider as a backend system in McDonald. (McDonald, 2011) Made-For-You System can help McDonald to raise their productivity and customer satisfaction. (McDonald, 2011) It has been implementing in order to create smoother, faster and more flexible kitchen system. Since McDonald consider as a fast food and beverage company, they have to provide fresher ingredient to their customer in order to be more famous and attract more fast foods supporter. So they have to change all their cooking equipment and communication technologies that may allows McDonald to launched this new concept.

By using this system, the customers can ensure that they can get the meal prepared after they made orders but not the meal made before their orders. This means that after the customers had make the order, the worker will just click on the screen for what you had order and the order immediately sent to the kitchen and at that time, the chef will only start to made the meal. Made-For-You System help to ensure that the customer get their meal tastier and fresher. This system helps to maintain and control the quality of the McDonalds meal. The third information system we discuss here is HBS- Hyperactive Bob System. Hyperactive Bob System uses robots to control the computer vision and artificial intelligence systems to manage the kitchens at-so called quick-service restaurants. This system is not only a mechanical humanoid bring together chicken burgers behind the counter but merges machine intelligence with human activity. Hyperactive Bob System scans the parking lot for the cars coming and cross-references traffic patterns for the preparation to the restaurant services as the bell curve of orders, the time of day, cooking times, the current amount of food in the restaurant's warming bins and issues cooking orders to the employees manning the jobs.

This system keeps an eye on the entrance and parking lots of the McDonalds with the cameras on the roof of the building to gather the points of sale information in real time. Bobs spots vehicles entering the McDonaldss parking slots and reminds the workers to know how fast should they work to serve a meal at what amount of chickens, meat, fish, fries and so on. If there is lots of people to have their satisfaction in a rush hour, this help the workers able to make an expectation for the meals that they need to be ready in that period of. Hyperactive Bob System is a technology that helps McDonalds to step forward by ensuring their staff is always be prepared. Hyperactive Bob System instructs employees for the food to prepare

based on past data by using touch screen with Artificial Intelligence. This system has giving McDonalds the ability to always be one step ahead.

DISCUSS THE IMPACT OF PORTERS FIVE COMPETITIVE FORCES MODEL ON THE COMPANY OF YOUR CHOICE. The Five Forces Model formed by Michael E.Porter helps McDonalds to stay in this highly competitive food and beverages industry. The Five Forces Model consists of bargaining power of buyers, bargaining power of suppliers, threat of substitute products or services, threat of new entrants, and rivalry among existing competitors. Firstly, the bargaining power of McDonalds customers is low. This is because in this hustle and bustle of the big city where everyone is living in such a fast paced lives, McDonalds becomes their main choice to satisfy hunger as it is well known for its fast and convenient services. Customers have not much choice to make as McDonalds is one of the fast food chains which offers low cost and differentiated products and services. Thus, McDonalds does not worry about customers loyalty. To be able to gain advantage in competitive edge, McDonalds uses IT such as Made For You system to send customers order directly to kitchen crew. This system can increase efficiency and the customers can get their orders in short time. Secondly, the bargaining power of McDonalds suppliers is high. McDonalds does not have its own factory to manufacture food. Since McDonalds attempts to provide consistency in their food serving sizes, McDonalds relies on single supplier on each product. For example, the main supplier is MacFood Services (M) Sdn Bhd while the bun supplier is HaviFoods Sdn Bhd. Not only these, McDonalds depends on beverages industry like Coca Cola and Minute Maid. McDonalds uses Transaction Processing System (TPS) to deal with these suppliers by recording the important information related to suppliers such as name, address, contact number and invoice amount. On the other hand, the threat of substitute products or services is high. McDonalds can be easily substituted by other fast food chains such as Burger King, KFC, Wendys, Subway and Carls Jr as the customers can easily switch to other products. Since the customers switching cost is low, there is nothing to stop them from purchasing substitute products. Nowadays, people are more concern about their health. As a result, they tend to look for healthier food as alternatives. The threat of substitute services is high because most of the competitors also use Point of Sale system (POS), drive-thru, delivery service same like McDonalds in running their business.

Furthermore, the threat of new entrants is relatively low. New fast food chain is hard to enter into the market as there are many well-established companies. One of the good examples of well-established companies is McDonalds. McDonalds, a low cost fast food restaurant with strong brand identity makes the new entrants even more difficult to enter as they have to face with fierce price competition. To start a new business, a firm has to spend a big amount of capital in order to survive in this competitive fast food market. Since McDonalds is using IT to support its operation such as Hyperactive Bob system, Point of Sale system (POS), Made For You system , Management Information System (MIS), Decision Support system (DSS) and Transaction Processing system (TPS), new entrants are unlikely to provide those high cost IT systems. Therefore, McDonalds does not have to fear of the threat of new entrants as there is a high barrier to entry. Last but not least, the rivalry among existing competitors is relatively high. Competitors like KFC, Pizza Hut, Wendys and Burger King often compete with each other in terms of price, customer services, efficiency of the staffs and quality of products to maximize their profits. Most of the fast food outlets are well equipped with advanced technology to increase the efficiency; McDonalds is not an exception to this. In order to survive in this competitive market, McDonalds equipped with Hyperactive Bob system in which other fast food outlets dont. Hyperactive Bob system assists McDonalds in monitoring the entry of customers within the restaurant area.

STRATEGIC USE OF IT/IS FOR COMPETITIVE ADVANTAGE. (USE THE PORTERS 5 FORCES AND COMPETITIVE STRATEGIES TO CARRY OUT THIS ANALYSIS.) DISCUSS HOW INFORMATION TECHNOLOGY CAN BE USED BY THAT COMPANY TO SURVIVE THE IMPACT AND SUSTAIN THE COMPETITIVE ADVANTAGE. Bargaining power of McDonalds customers is related customers loyalty. Relationship between McDonald and customer is good. McDonald provides good service and delicious food to their customer. McDonald also maintains the quality and taste of food in every country. The quality of food do not has big different in every country. As a result, the customers of McDonald are more loyalty because they know the McDonald has a standard level of quality. McDonald uses Made For Me system when a customer places an order, the food item will immediately appears in computer monitor in the kitchen and a tone sound to alert the kitchen staff. The quality of hamburger will be not affect by time. McDonald uses this system to maintain their sales and customers. Therefore the customer will not easily switch to other fast food restaurant.

McDonald does not have their factory to manufacture food, so the price of material will be higher. However, McDonald has many suppliers, thus it has the power controlling the cost of material. McDonald wants to maintain their material in top quality, therefore their purchase the material direct from the local place. So the McDonalds customers can enjoy the fresh and delicious food in McDonald. McDonald use Transaction Processing System (TPS) to collection, modification and retrieval of all transaction data. McDonald can be manage quantity of material. McDonald will not be over or under order. McDonald uses Transaction Processing System to handle errors in a safe and consistent manner. Transaction data can be process in faster and safely way.

Point of Sale System (POS) is critical to gathering and applying information effectively in today's ultra competitive markets. Point of Sale System is the system to place where a retail transaction is completed. (Wuorio) McDonald uses Point of Sale System to calculate the amount owed by the customer and provide options for the customer to make payment. So the customer payment can faster process and not need to waiting long time. Point of Sale systems also offer a wide selection of features to improve control of McDonald and save time spent on inventory, purchasing and accounting.
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McDonald have strong decision making plan. The new entrants are not easy to enter the fast food market. Decision Support System (DDS) is used to model data and make quality decision base on data. Decision support system is usually computer application with a human component. (Targit Business Company) McDonald makes correct decision planning when used decision support system. Example like McDonald thought of providing wire service to customers use. The customer can be internet when they enjoy their beverage. McDonald can be analyzing the market well as other competitors when the opportunity is coming. Therefore the new entrants are not easy to survive in the market. Internal control is more important that external control. McDonald rivalry of competitor is relatively high. Therefore McDonald uses Management Information System (MIS) to maintain and improve the internal control in the company. Management Information System is a system that provides information needed to manage organization effectively. It involve three resource are technology, information, and people. McDonald use Management Information System to produce periodic report such as a daily list of employees and the hours they work or a monthly report of expenses as compared to a budget. McDonald uses Management Information System to improve the profitability and information to help the management and employees understand the business performance and plan its future direction. (May Business School) When the employees understand their responsibility, they will perform good job and loyalty to McDonald. Therefore the McDonald can be managing the competitors.

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CONCLUSION In conclusion, the success factor of McDonalds can be divided into four categorise. The first is consistency, second innovation and third global, but local and availability. First factor is consistency. No matter where you are and which brunch of McDonalds youre visiting, youre going to experience the similar experience wherever you are. Consistency, of course is the main factor of success to any franchise system and this is why McDonalds is very success in their business. Customers know what to expect and can take console in that information when making a choice on where to eat. These attempts towards process replication and effectiveness not only set the basis for McDonald's achievement from the viewpoint of customers' expectations, but also help McDonald's stay on top in a traditions where generating at a fast speed is universally accepted.

The second factor is innovation. In the beginning, the concept of consistency and innovation tend to disagree with one another. But in surprise, this two characteristic tend to work together to allow McDonalds growth. Being consistent on the centre workings of your business doesn't mean the items or product you sell, or even the way you deliver them, have to be consistent. There should be a fine line between consistency and innovation. However, if you take the required moves, and put the work in to the lead of time, you can tweak your product without causing disturbances, and possible better serve your customers. Innovation caused from alertness to customers and franchisees has played a big role in McDonald's fending off stagnation over the years. Additionally, McDonald's creation contributions have developed over the years next to the savours of their customers thanks in part to some alert and inventive franchisees. A few examples of products that were introduced after being developed by McDonald's franchisees Filet-O-Fish, Big Mac, Hot Apple Pie, Egg McMuffin, McFlurry. These menu innovations have allowed for McDonald's to embrace creation contributions for all meal times, and the snack times that fall in between, allowing for better profitability. But McDonald's takes huge concern not to cause the customer experience when a fresh piece is launch. The third success factor of McDonalds is global, but local. Although McDonalds is a multi-national gigantic, it adjusts its business and menu to go well with home markets. This global, but local approach allows it to adapt its offers to suit the local appetite. For example,

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in some countries, McDonalds sells beer and, in India, where Hindus dont eat beef, McDonalds menus have vegetarian and non-beef options.

The fourth factor success factor is availability. Convenience is the main key factor of McDonalds success. We can find McDonalds Restaurants in anywhere either it is in suburban town or in cities. Besides, shopping centers and strip malls normally have a McDonalds built in or within walking distance. Some stores have places McDonalds restaurants within for consumer availability.

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REFERENCES Althea Thompson (n.d) (2012). Key Success Factors of McDonald's. Retrieved July 13, 2013, from http://www.ehow.com/list_7427367_key-success-factors-mcdonald_s.html Franklin County Times.(2004). HyperActive Bob spies on hungry food customers.Retrieved 1, July, 2013, from http://www.franklincountytimes.com/2004/09/18/hyperactive-bob-spieson-hungry-food-customers/ Kristiellis (n.d) (2003). McDonalds controls inventory worldwide with system. Retrieved July 13, 2013, from http://supermarketnews.com/archive/mcdonalds-controls-inventoryworldwide-system Martin Boersema (2012). McDonald's Lean Food Preparation System - Made for You. Retrieved July 13, 2013, from http://www.leansimulations.org/2012/04/mcdonalds-lean-foodpreparation-system.html May Business School. (n.d.). Retrieved july 20, 2013, from http://mays.tamu.edu/info/whatis-mis/ McDonalds.(n.d.). Retrieved 1, July, 2013, from https://en.wikipedia.org/wiki/McDonald's McDonalds. (n.d.) .History: The McDonalds Story. Retrieved 1, July, 2013, from http://www.mcdonalds.com.my/abtus/corpinfo/history.asp McD Information System . (n.d). Retrieved 1,July,2013, from http://mcdonaldsmis.blogspot.com/p/mcdonalds-is_04.html Squall (2011). benefits of IS. Retrieved July 13, 2013, from http://mcdonaldsmis.blogspot.com/p/benefits-of-is.html Squall (2011). McD Information system. Retrieved July 13, 2013, from http://mcdonaldsmis.blogspot.com/p/mcdonalds-is_04.html Targit Business Company. (n.d.). Improve decision makingwith DSS- Decision Support Systems. Retrieved from TARGIT : http://www.targit.com/en/landingpages/decisionsupportsystem/dss Wuorio, J. (n.d.). Retrieved 2011, from Microsoft Business: http://www.microsoft.com/business/en-us/resources/technology/business-software/7-reasonsto-switch-to-a-point-of-sale-system.aspx?fbid=18has6TvdEh

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