ABNGSSTRAMANKDNPLZamudio, Ira Gayll C. Salvador, GemMadlangsakay, EphraimJamilarin, PaoloMagcanlas, Don

1. Draw the Value Chain of a Quick Service restaurant.

Firm InfrastructureHuman Resources

Technological DevelopmentProcurement

2. How would you go about identifying McDonald’s systemic bottleneck?

In the evaluation of a value chain, the throughput is important. One will be able to identify a company’s systemic bottleneck by analyzing the capacity and processes in a particular activity, especially one of a primary. If the capacity in one activity is the least among the activities, the bottleneck occurs there. That means that the throughput is limited to the capacity of that one particular activity.

Inbound Logistics Operations Outbound

LogisticsMarketing & Sales Services

Primary Activiti

es

Secondary

Activities

If outbound logistics for example can process 5 million units of patties, while the services can process 5.5 million, the 0.5 million excess capacity of the services is wasted by the inability of outbound logistics to catch up. In this instance, measures must be taken to increase the capacity of the outbound logistics (i.e. scheduling, ordering and delivering enough patties, 5.5 million, to the restaurant).

Notes on the Primary and Secondary Activities of McDonald’s

Primary Activities1. Inbound Logistics:

a. This is the logistics of getting the raw materials into the headquarters, where it will be managed to be redistributed to the different McDonald’s restaurants. McDonald’s has to consider freight trucks, timing and packaging.

b. They use JIT order and delivery to ensure freshness of the ingredientsc. Supply chain control

2. Operations:a. This refers to the overall operations of the company: employment,

information systems, research and development, franchising, etc. b. Corporate guidelines and supply management is imposed on franchisees.

3. Outbound Logistics:a. This is logistics that pertain to the delivery of the product from the

centralized distribution system to the customer.b. Distribution is important here, therefore freight trucks, timing and audits

are key. McDonald’s uses JIT order and delivery to ensure freshness.c. Information systems are important for the assembly line, order fulfillment

and transaction recording at the cashier. d. Packaging quality reinforces freshness and ensures warm food.e. Traditional dining hours were extended to accommodate late eaters and

the changing consumer lifestyles, eating in all hours of the day.f. In response to high-traffic locations, double drive-thru lanes were added to

increase the number of customers served.4. Marketing & Sales:

a. This primary activity determines the public perception of the company and its products.

b. Health and wellness campaigns and consumer and market research are important to improve the image of the product.

c. Prices are on the lower-end without sacrificing productquality, attracting a majority of the masses, especially during times when the economy is poor.

d. McDonald’s menu has been expanded to include new products that are healthier and trending in different localities.

5. Servicesa. This is the actual person-to-person delivery of the product to the customer,

from the grill to the seat of the customer.b. McDonald’s takes pride in its fast food service, order accuracy and friendly

customer service.

Secondary Activities1. Firm Infrastructure

a. This activity ensures the viability of the restaurants as places for consumption of food, with right ambiance. The company has refurbished its interiors and exteriors to make its restaurants better for both its employees and customers.

b. McDonald’s opened its first corporate pilot green restaurant that received a LEED Gold certification in 2009.

c. They also have to be built in accessible areas, and according to standard designs of the McDonald’s brand.

2. Human Resourcesa. This ensures that the company is equipped with well-trained staffs that will

create and deliver quality products, and be managed accordingly.b. McDonald’s is the 2nd largest employer in the United States, which means

that there is a big burden on the Human Resources Department.c. They place particular emphasis on employee training by making

institutions such as Hamburger University and McDonald’s Leadership Institute that develop its managers into competent ones.

3. Technology Developmenta. This is a focus on modernization programs and making all parts of its

value chain more technologically apt, proficient and effective.b. It entered into a 5-year IT support deal with Fujitsu to improve its

modernization program.4. Procurement

a. This activity ensures that the ingredients and other materials that it purchases will be of the best cost and best quality for the requirements of the company.

b. McDonald’s has created an E-procurement system that has become the main reason for their successful supply chain management.

References:

Garuda Indonesia Cargo. (2012). Value Chain and Competitive Advantage of McDonald’s. Retrieved November 5, 2013 from http://fagansusanto.wordpress.com/2012/11/22/value-chain-and-competitive-advantage-of-mcdonalds/.

n.n. (n.d.). McDonald’s Value Chain Analysis. Retrieved November 5, 2013 from http://faculty.txwes.edu/trdanderson/course1/documents/McDonaldsValueChainAnalysis_001.pdf