OM 450 McDonalds Case Analysis

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OM 450 McDonalds Case Analysis

• John McAnulty
• Evan Kennedy

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Raymond Albert Kroc 1902 - 1984
Once in a while I have had great ideas strike me
in the middle of the night sweeping plans that
I could see complete, or it seemed. But, every
time, these things turned out in the clear light
of the following day to be more fanciful than
functional.
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In the Beginning . . .
. . . there was the MultiMixer

• Ray Crock invested his entire life savings to
  become the exclusive distributor of the
  MultiMixer
• Recognized deficiencies in food trade as he
  traveled
• Originally contemplated hot dogs

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1954 . . .

• Ray Krok meets the McDonalds brothers at their
  hamburger stand in San Bernardino, California at
  age 52
• Proposes expansion
• Convinces the brothers he could sell eight
  MultiMixers to each establishment, and even
  offers to open the expansions

1955 . . .

• Ray Kroc buys the rights to McDonalds and opens
  his first diner in Des Plaines, Illinois (now a
  museum)

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Supply Chain Management

• Set quality Standards recommends methods of
  packaging
• But Operators made purchases
• Concentrated orders
• Loyal buyers
• Figured ways that allowed suppliers to lower
  their cost.
• Bulk packaging
• Delivering more items per stop.
• Side benefit of purchasing system provided
  inventory checks
• Compare meat usage to bun usage
• Could easily determine what was being wasted
• Could determine if meat man was shorting them or
  if materials were being stolen

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Flexibility Menu Changes

• Grand scale changes
• Minority hiring
• Made energy efficient stores
• Became international
• Disadvantages of change
• Many older Operators resisted change
• McDonalds Operators Association
• started by unhappy operators to fight against
  the corporation.
• Claimed rumors, that did not make logical
  business sense.
• Menu change
• Came from the ingenuity of the operators
• Filet-O-Fish, Big Mac, Hot Apple Pie, and the Egg
  McMuffin were all evolved from original ideas of
  the operators.
• System image cooperative advertising muscle.

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Retail Positioning The Mini Mac

• The Monotony Index
• Much more competition in cities
• Rural areas have few other restaurants or places
  to go for free time.
• Rural areas pushed the concept of the Mini Mac.
• Focused on providing a smaller store and if store
  was successful then it could be upgraded to full
  size.
• Ray Kroc against the idea. If you think small,
  then you stay small.
• Scrapped the program after about 30 stores.
• Most of them were enlarged and ran large
  businesses.