Extra Credit

McDonald’s is the world's largest chain of hamburger and fast food restaurant, serving around 68 million customers daily in 119 countries across 35,000 outlets. McDonald’s may recently have struggled to lure customers, but it still does far more business at each location than other rivals, such as Burger King. According to the article “How the Average McDonald’s Makes Twice as Much as Burger King” from businessweek.com, McDonald’s drew $2.6 million in revenue last year in the U.S, while Burger King’s average sales was $1.2 million. It is surprising to me that there is such a huge gap between McDonald’s and Burger King since they sell similar foods and have the same target market.

What accounts for the difference? I believe there are 3 factors that drive higher sales volumes at McDonald’s:

1. Happy Meal. Happy Meal in McDonald’s is designed for children. This strategy makes McDonald’s different than Burger King. McDonald’s has the largest share of kid’s meal sales in the fast-food industry. Happy meals attract kids very much. It usually gets around 10% of total sales from Happy Meals. This unique children-oriented marketing strategy is helpful to gain revenue and compete with other rivals.

      2. Off-peak Business. The breakfast business in MacDonald’s is really successful. Food like Egg McMuffin, is part of the fast-food vocabulary in a way Burger King can’t match. And also McCafe has now become a well-known brand that is popular among breakfast consumers. The idea to gets more customers during off-peak hours looks like a good way for McDonald’s to follow.

3. Efficiency. Compared to other fast food restaurant, McDonald is more efficient. Its drive-through service can handle more cars at peak times. McDonald’s restaurants are adding a third service window to get customers through even faster. Its waiting line is much shorter than Burger King when they are in peak hours.

Those 3 factors are what I think are critical and essential for McDonald’s success. There might be other factors I have not considered. Anyway, everything from marketing and site selection to product initiatives and franchisee selection have been historical factors. A good operations management will help a lot.

Reference:

http://www.businessweek.com/articles/2014-03-25/how-the-average-mcdonald-s-makes-twice-as-much-as-burger-king

MIS 373 WEEK 4 BLOG

In this week's blog, the article I chose titled " Why Did One of the Best U.S. Design Firms Sell Out to a Chinese Conglomerate?" from businessweek, talks about the reason why one of best U.S. design firm, Fuseproject, sells out to a Chinese marketing group, Bluefocus. This management decision they have made seems very interesting to me.

BlueFocus was established in 1996, has become the biggest communication group around Asia. The headquarters are in Beijing. The group’s major services cover Digital marketing, Public Relations, Advertising, Media, and International Social Network Service. It is one of the fastest growing communication companies in the world, with revenue of $560 million in 2013. As to Fuseproject, the CEO, Yves Béhar, is one of best designers in the world today. Béhar is the archetypal designer as entrepreneur, a talented creative with the business acumen to design products for startups in exchange for an ownership stake. His big clients include Nike, PayPal and Samsung. He also helped create the One Laptop Per Child project for children in the developing world.

It is BlueFocus’s first acquisition in America. So, why a design company sells out to a marketing group? Fuseproject has its own reasons. The CEO, Yves Béhar said he is still CEO and he still chooses their own projects and designs their own way. Fuseproject believes that the capital gained from Bluefocus can enable them to explore the market of Europe and Asia. Their current successful venture model needs to be tested to see if it is a good model in other countries. The acquisition gives Fuseproject the opportunity to expand their business using more resources. Yves Béhar says, “It’s the difference between bootstrapping every agreement and every deal and having more resources to continue what we do and extend it.”

According to the Financial Times, BlueFocus will pay $46.7 million in cash for 75 percent of Fuseproject, which was established in 1999 and now has about 75 employees in San Francisco and New York. BlueFocus believes this acquisition is beneficial. It recognizes that design isn’t only about aesthetics, but can also be the method by which businesses identify new markets. It will bring a big amount of profit when they expand to markets in the world.

Reference:

http://www.businessweek.com/articles/2014-07-25/fuseproject-looks-to-export-its-venture-model-to-europe-and-asia

MIS 373 WEEK 3 BLOG

The week 3 of MIS 373 introduced two main concepts in operations management: Statistical Process Control (SPC) and aggregate planning. The instructor mostly focused on explaining how organizations do aggregate planning and basic techniques companies can use for aggregate planning. Based on what we have learned so far, the goal of aggregate planning is achieving a production plan that will effectively utilize the organization’s resources to satisfy overall demand. The reason why organization should implement aggregate planning is that it impossible to predict with accuracy the timing and volume of demand for individual items; aggregate planning can help synchronize flow throughout the supply chain. Usually, aggregate planners are concerned with two categories: demand quantity and timing of demand.

In the real business world, it is important to utilize aggregate planning throughout operation procedures. The article titled “How Do Inventories Influence Aggregate Planning?” introduces how aggregate planning is involved in inventory management. According to the article, aggregate planning is used in map out future production plans and resource needs for the next couple months. In this case, inventory level becomes the key factor in aggregate planning, because having a proper inventory is necessary to meet production level and customer demand.

For any kind of manufacturing companies, one main purpose of aggregate planning is to find the balance between having enough inventory on hand, but not too much. The ideal balance point is one of the most important issues for the company to consider. Therefore, aggregate planning is important to learn, which helps organizations to know the accurate balance point. Aggregate planning allows leaders of the company to know resource needs across the entire organization to ensure adequate supplies are purchased in the next couple months. It also effectively reduces operation costs, because aggregate planning helps companies avoid buying more inventory than they need, which makes for higher costs of storage.

Also, relationship matters. Relationships with suppliers may influence aggregate planning significantly. For example, if one firm has strong ties with their materials suppliers, it can plan with more flexibility in completing inventory orders as needed. However, it one company has weak relationship with their suppliers, it may take longer time for them to plan their inventory purchases. Therefore, keeping a good relationship with suppliers can help manufacturing companies make better aggregate planning.

References:

(1) Srikar Velichety Eller MIS 373 Summer Session 2, 2014 slides, CH 11

(2) http://yourbusiness.azcentral.com/inventories-influence-aggregate-planning-29221.html