Operations Management - McDonalds Meat Supply - Case Study Example

McDonald’s Meat Supply. McDonald’s Meat Supply. Introduction. McDonald’s as a transnational corporation works within the fast-food industry. McDonald’s is categorized as a multinational structure, as there are over 35,000 restaurants running all around the world covering over 100 countries (History of McDonalds, 2014). As a leading global food retailer, McDonald’s has a staggering 1.8 million employees. While being the biggest and most successful fast-food chain in the world, McDonald’s has strategically positioned itself as a family-friendly, low-cost fast-food restaurant (History of McDonalds, 2014). McDonalds first opened its doors in 1940 as a Bar-B-Q restaurant, with the founding McDonald brothers, Mac, and Dick. The company went international, in 1967 starting with restaurants located in Puerto Rico and Canada (History of McDonalds, 2014). The firm’s mission and values ‘center on an exceptional customer experience’ ( McDonalds, 2014). Crisis: when a crisis rocks a major organization such as McDonald’s it affects its various departments. Whenever such an incidence occurs, it is bound to affect the production process of the firm. It will affect the other departments that are linked directly or indirectly to the production department (Perrow, 1999, p. 150). McDonald’s issue of food quality in the People’s Republic of China. In developed countries like Japan and the United States of America, there are organizations that were charged with ensuring that foods, chemicals, and other products are safe for the public. But in some countries such organs are inexistent or flawed hence not functioning as they are expected to (Moss, & Gough, 2014). One such country is China, which has a name for having a pathetic food regulation. A suitable example is that of where six Chinese babies ended up dead because of drinking poisoned milk ( China Daily, 2004). There has been cases of toxic liquor (Xinhua, 2003). A severe case that cost people their lives is that of fake drugs (Xinhua, 2007). In terms of fishing, there have been cases of harmful fish in the market ( The Epoch Times, 2006). As a result of this, KFC stopped introducing large amounts of antibiotics and hormones in products that were poultry related. It was mainly done because the public stopped to purchase the chicken product. There has also been the incidence of harmful chemicals in foods (Yan, 2005). This year, however, a new record has been set, this is because, donkey and fox meat was discovered in Walmart’s food. The experts who have had interviews all seem to say that all these has a common cause for the poor regulation. Which is the difficulty of tracing the expired food to the factory, the pathetic judiciary system that is not focused on enforcing the law and the workers that are not enlightened by the appropriate working conditions and the minimum food safety standards. Because of the poor business ethics and the collapse of the organs responsible, it is estimated that 94 million member of the public gets sick, and about 8500 die annually from expired food. Every single Chinese supplier of crisis management teams should know that the government’s regulators in the country and the personnel that are responsible make their enterprises very vulnerable organizational misdeeds and human-error product harm. So that such issues do not turn into a crisis the firms responsible should indulge in inspections that are a surprise and also have a secret watch of the companies. It aimed at making sure that the food is up to standards since, the malpractices are likely to be sported red-handed. The crisis management team also should set up a crisis management plan that is mean to call back all the unsafe food, beverage or whichever products. The crisis management team should also have contact with the public, this is to inform the public before it gets hurt. The crisis management team would bare responsibility for whatever harm is done to the public if it does not have a crisis management plan. On 20/6/2014, it is said that a reporter had recorded the personnel at Shanghai Husi making alterations on the expiry date of expired meat and the sending the meat to Japanese and Chinese McDonald’s outlets. McDonald’s, the Chinese government, and OSI Food Group sent some technical experts to investigate and tell whether it was something that only happened ones or was ongoing. The conclusion of OSI’s investigators was that the Chinese managers and personnel were given a lot of freedom that they did not be accounted for. OSI noted that the quality of food and minimum level of the standard was not monitored. According to Normal Accident Theory by Perrow what happened to Chinese and Japanese McDonald’s constituted an incident and not an accident since it is in the department that it occurred. It is a mere fact that the company was able to pick up and run in just days. “Sometimes that works, like on Wall Street, where investment companies allow individuals to wager independently on stocks to avoid groupthink. But in Big Food Processing, OSI’s business, global standards need to be accurately followed by everyone and verified. The private OSI’s decentralized business model allowed Chinese managers leeway to make their decisions. The strategy that helped OSI expand quickly in China since the early 1990s. But it’s not clear there were problems. OSI expand quickly in China since the early 1990s. But it’s now clear there were problems. OSI didn’t audit enough to ensure Chinese plants followed standards coming from OSI’s Illinois headquarters and didn’t monitor its plants located 6,600 miles from headquarters in Aurora, Illinois.” (Cendrowski, 2014). Just to be brief and to the point, OSI blamed it on the poor management of the pathetic personnel. Gu Zhengua, the deputy director of the State Food and Drug Administration’s Shanghai had the opinion that the company had some arrangement so that the expiry date of the meat could be extended. As the result of the crisis, the Chinese government has arrested six individuals who were the perpetrators (Hornby et al., 2014). The Chinese government confiscated an estimated 5,000 boxes of the spoilt meat. As of now there is no reported incidence of anyone being sick or died due to the McDonald’s food crisis and revelation (Cendrowski, 2014). McDonald’s response in China. Sixty minutes after the information concerning the bad food was released on CCTV McDonald’s China became the first company to voice their concern on the official site which is called Weibo. Through the site, the company, apologized profusely and also said that it would investigate it and ensure that the consumers would be given hygienic and safe food. The organization also welcomed supervisors from various organs including the media, government and the customers (Phillip, 2014). In an estimated two hours this information which was in the form of a post had already been shared by over 8400 different types of accounts. These accounts are said to have an estimated 10 million fans. It meant that over 10 million fans were reached in just 2 hours. The information was also communicated to the public through the firm’s Chinese newsroom ( McDonald’s Chinese Newsroom, 2014). By 24 hours after the video went viral, McDonald’s China branch had informed the public that they had called back all the meat products from Shanghai Husi. It created shortages, but McDonald’s assured its customers that at least they would be safe ( McDonald’s Chinese Newsroom, 2014). And by 24th July the firm had already made an announcement that it would stop getting any food products from Shanghai Husi, and still get food products from OSI Food Company. It is because OSI Food Production Company had promised McDonald’s of better quality of food in the future ( McDonald’s Chinese Newsroom, 2014). The effectiveness of the way the crisis handling was done in China. After being sensitive about the media monitoring, McDonald’s China branch was able to sport quickly and respond to a major crisis. It enabled the McDonald’s China office to give their view of the problem and reassure the consumers before any rumors could spread any further and critics start to the crisis the firm. Additionally McDonald’s China branch had sent information that was apparent to its consumers that it is acting on the issue, it did care much for its consumers, and that it is transparent. It was all done through Weibo, which had the capability to reach many of its Chinese consumers. Some media stations have reported conflicting information from the citizens claiming that the crisis has led to the creation of a negative reputation among its customers ( Trefis Team, 2014). It has led to a reduction of its customer count. On the other hand, there are allegations that the Chinese customers will continue having their favorite meals at McDonald’s since it is their safest option (Lu, 2014). It is mainly so because the Chinese public does not expect a company to have such a high level of social responsibility, unlike the Americans. As a result of the crisis, McDonald’s Weibo and the official Chinese site still are dealing with what happened though there is more focus on the recovery than about the crisis. The Crisis has led McDonald’s to start promoting non-meat products such as coffee, barley burgers and ice creams. It aimed at making a profit even though meat is allowed (Weibo, 2014; Mcdonalds Chinese Newsroom, 2014). Through the Chinese Newsroom, the Crisis Management team has been able to ensure that the press and Chinese people up-to-date on matters of the crisis. Through this medium of communication McDonald’s has been able to keep sending messages that portray information of cooperate social responsibility that has made the Chinese customers to know that they care about the safety and quality of the foods they eat (FlorCruz, 2014). As of July 24th, they had already announced that they will still take food from the OSI group since the food group promised to improve safety and quality. However meat and any of its byproducts would not be purchased from Shanghai Husi, the facility with issues on quality and safety of its food products. The Chinese people are have perceived McDonald’s to be honest because of transparency the firm practiced in resolving the crisis. McDonald’s Japanese response. 20% of the meat produced in Shanghai Husi is sent to Japan. But Japan’s response was deferent from that of China. In Japan, the meat was called back immediately, and the public was not informed why until two days later. The simple act made the general public panic (The Japan Times, 2014). It made McDonald’s seem not concerned since to them chances that some of their Japanese consumers may be poisoned was not much of a deal (Iino, 2014). The mere fact that it was a press meeting being done at a financial conference made it seem like to them profits is what mattered most to them. Japan’s executive manager to McDonald’s behaved like he was not trained to be a good spokesperson. Rumour has it that she did not speak in an apologetic tone at all and used the press conference to promote McDonald’s rather than addressing the issue at hand (Iino, 2014). However, what Japanese McDonald’s is applauded for listening and responding to customer needs. Since the Japanese customers were concerned about the safety of foods from China, McDonald’s posted a PDF stating that it will no longer be using food from China (McDonald’s Japanese Facebook, 2014). In accordance with Smiths model of crisis generation, the crisis that was brought about by bad meat from husi had passed through all the three stages. The first stage was crisis management; it was common knowledge that China had an inadequate food inspection organs. The second stage is when disaster strikes; there was no special group of workers in the plant to inform the superiors about the quality of meat sent to them. The third and final step is crisis legitimation; 1. There should be regional crisis management plan. 2. Always be transparent about corporate responsibility. 3. Inspect all branches and publish a report. 4. Keep listening and responding to consumer complaints (Kulen, 2013). With the above recommendation, McDonald’s will recover from the 7% decline (Mathew, 2014). Recommendations. The company should have a number of secret informants other organizations that supply it with food products. The main tasks of this informants will be to alert McDonald’s executives in case of incidence where the quality and safety is compromised. Another alternative that will run parallel to this is there should be random and unexpected checks in this organizations. There should be crisis management plans for regions. It will come in handy when there is a shortage of food supply. The regional crisis management plan will come to aid areas with the crisis. The inspection should get done in all branches, and a report published. It will help in assuring consumers of quality. It will also create some competition that is naturally high for departments in an organization. Customers’ complaints should be taken seriously since they are what keeps the business running. There should be sufficient and efficient channels of communication between the customers and the organization. Reference List Anon., 2014. History of McDonalds. [Online] Available at: 10 [Accessed 11 5 2015]. Cendrowski, S., 2014. Why McDonalds supplier failed in China. [Online] Available at: http://fortune.com/2014/09/02/why-mcdonalds-supplier-failed-in-china/ [Accessed 11 5 2015]. China Daily, 2004. Milk powders kill babies, Premier orders investigation. [Online] Available at: http://en.people.cn/200404/20/eng20040420_140958.shtml [Accessed 11 5 2015]. FlorCruz, M., 2014. McDonalds China will continue to use scandal-ridden meat supplier OSI Group. [Online] Available at: http://www.ibtimes.com/mcdonalds-china-will-continue-use-scandal-ridden-meat-supplier-osi-group-1639312 [Accessed 11 5 2015]. Hornby, L., Soble, J., & Munshi, N., 2014. China detains five in meat probe. 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