Notes on questions

Question 1 How has the competitive situation that McDonalds faces changed since it was
founded (in its current form) in the 1950s?
The case traces a number of changes in the fast food market over the nearly 60 years that the case
covers (it would be very surprising if there had been no change over such a long period). It is useful to
distinguish between the changes that are broadly societal and apply to most companies in this
industry (even if McDonalds size and fame makes it more of a target), and the changes that have
impacted McDonalds because of competitor activity.
In the first category is the general criticism of so-called fast food. Nutritional issues (high saturated
fat etc.) are well known through such high publicity films as Supersize Me (get a clip from U-tube).
The recent introduction of salad bars in many of McDonalds markets is one response to this,
although McDonalds attempts to challenge some urban myths regarding its food sources have had
only mixed success. (If time allows, promote a debate on reputational risks and how operations can
affect them.) Similarly the cultural imperialism issue in some markets (mainly, though not exclusively,
France) is worth discussing. The case of Jose Bov (the farmer who was imprisoned for wrecking a
half-built McDonalds) is a good example of this. What response should McDonalds give? Difficult
one, but the CEO of McDonalds in the UK, Jill McDonald, probably gave the best reply by stressing
the benefits to society of jobs and training, while at the same time admitting some culpability; We
were just not as close to the customer as we needed to be, we were given a hard time in the press
and we lost our confidence. We needed to reconnect and make changes that would disrupt peoples
view of McDonalds.
In the second category, the following diagram probably best summarises the issue.

Conformance
quality

Price

McDonalds original
relative market position

Specification
quality
McDonalds relative
market position now

The solid line in the

diagram
represents
the
Variety /
Speed of service competitive position in the
relative
customization
companys early period. Then, it focussed very clearly on being fast cheap and reliable (in terms of
the consistency of its products). Of course, at that time, it was competing only with traditional
American Diners. Now, as the case indicates, other fast food operations have been established that
focus on one of the competitive dimensions. So, for example, Taco Bell is cheaper than McDonalds.
Specialist drive-thru operations are faster. Branded full service restaurants have a larger menu and so
on. Note that it is not necessarily McDonalds that has changes (although to some extent it has), its
the competitive context that has rendered McDonalds less distinctive.

Question 2 How have McDonalds operation activities, in terms of its Design, Delivery and
Development, influenced its operations performance objectives?
Start this question by asking students to identify all the operations activities that are mentioned in the
case. Then ask them to identify what performance objectives are influenced be each of these
activities. (Dont worry if there is disagreement among students, or indeed with our list below, that
does not matter. The main issue is that they start to see a connection between what one does in an
operation and how it performs.)

Focussing on a limited menu (cost)

Clear values Quality, Service, Cleanliness and Value (quality, cost)

Compulsive focus on process (quality, cost, speed, dependability)

Specially designed fool-proof equipment (dependability, cost)

Strict product specifications (quality, cost)

Standardisation (quality, cost)

No food items held more than 10 minutes (quality)

Hamburger University (quality, cost, speed, dependability)

Frozen fries idea from supplier (innovation, quality, cost)

Improving the product (innovation, quality, cost)

Strong supplier relationships (innovation, quality, cost)

Developing franchise holders (innovation, quality, cost)

Location analysis (cost)

Quality as supplier selection criterion (quality)

Franchisees expected to contribute (innovation, quality, cost)

Ideas from franchisees (e.g. Egg McMuffin) (innovation, quality, cost)

Innovations as a reaction to market conditions (e.g. Salads) (innovation, quality, cost)

Extended hours (quality of service)

More drive-through (speed, quality, cost)

Plan to Win focus on improving the overall customer experience (innovation, quality, cost)

Question 3 Draw an operations strategy matrix for McDonalds.

The operations strategy matrix shown here is a slightly simplified attempt to relate some of the
activities and performance objectives mentioned in the case.
Resource Deployment

Conformance quality

"Fool-proof" equipment
Specification quality

Location analysis
Speed of service

Clear values
Strict specifications
Hamburger University
Clear values

Focus on process
Supplier relationships

Strict specifications

Focus on process

Clear values

Supplier relationships
Franchise relationships

Clear values
Hamburger University

Hamburger University

More drive-through s

Variety /
customization
Limited menu

Price

Focus on process
Limited food holding
Supplier relationships
Franchise relationships

Focus on process

Clear values

Location analysis

Supplier relationships

Strict specifications

"Fool-proof" equipment
Standardization
More drive-through s

Limited food holding

Hamburger University

Design

Delivery

Development

Again, do not worry if students do not replicate this exactly, the matrix is not intended to be a
prescription or a mechanism for any kind of right answer. But do discuss a couple of points with
students.
Note how some activities affect many performance objectives. In particular, Clear objectives,
Hamburger University, Focus on process and Supplier relationships.
Note how some performance objectives are the target for many operations activities, most notably
conformance quality and price (cost). This fits McDonalds founding strategy.
Note how the least populated performance objective is Variety / Customisation, as one would expect
from McDonalds.
Finally, note how the operations strategy matrix tells the story of McDonalds in an efficient manner
that prompts debate.

Market Competitiveness

"Fool-proof" equipment