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Operations Strategy - Coursework Example

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This paper will discuss the operations strategy process for three companies that operate in the UK’s Quick Service Restaurant (QSR) industry, namely: McDonald’s, Subway and KFC. …
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Operations Strategy
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"Operations Strategy"

Download file to see previous pages The paper begins with business description and SWOT analysis of each of these three fast-food chains. From the SWOT analysis and business background information the paper shall identify the key operations performance objectives for each company and relate them to their competitive factors. The paper shall then conclude by identifying which internal performance objectives that McDonald’s, Subway and KFC need to focus on in their operations strategy if they are to remain competitive in future. 2.0. Business description and SWOT Analysis 2.1. McDonald’s McDonald’s Corporation franchised and operated a total of 32,737 restaurants in 117 countries as at end of 2010. This essentially makes it the biggest fast-food retailer in the world. McDonald’s revenues come from sales by its own restaurants and fees – in form of royalties and rent – from its franchised restaurants. Fees levied to these franchises vary depending on a myriad of factors stipulated in the franchise agreement that typically runs for 20 years. McDonald’s realised sales slightly in excess of US$ 24 billion in 2010 which was a 6 per cent increase over the 2009 revenue figures (McDonald’s, 2011). The business is managed as distinct geographic segments, namely: the US, Latin America and Canada, Asia/Pacific, Middle East and Africa (APMEA), and Europe. The bulk of its revenues originates from Europe, US and APMEA in that descending order. Within Europe, more than half of the company’s revenue comes from three countries: France, Germany and the UK. The UK therefore is a major market for McDonalds. Also according to the 2010 Annual Report, restaurants in the U.K., France and Russia are entirely company-operated (McDonald’s, 2011, p.14). 2.1.1. SWOT Analysis Strengths McDonald’s is the global market leader in the retail fast-food industry. Its huge international presence enables it to benefit from economies of scale that bring down its costs which supports its low-cost pricing strategy. Additionally, this huge international presence, allows the company to spread risk thus so as to reduce negative effects that may emanate from poor economic performance of certain countries. The McDonald’s brand, which is among the world’s best known is another source of strength as the company benefits from all the advantages that accrue due to brand recognition and loyalty such as increased sales. An additional strength for McDonald’s comes from its large real estate portfolio. McDonald’s real estate operations bring in large revenues and allow it to open more stores. Moreover, the strategic location of McDonald’s outlets – in areas of high visibility, traffic volume and ease of access – further strengthen its brand recognition. The company has also continued to innovate in terms of its menu variety – for example introducing limited offers, introduction of healthy salads and shakes – and restaurant re-imaging. McDonald’s “Plan to Win” strategy that focuses on people, products, place, price and promotion that has been in operation since 2003 is also another source of strength as it shows alignment with the company’s corporate strategy. Weaknesses According to Zagat’s 2011 fast food survey, despite being the global leader in market share, McDonald’s was ranked third in the overall ratings of retail mega chains. This implies that the company’s average for food quality, facilities and customer service is lower than expected from its strong brand. Threats Rivalry among competitors in retail fast food industry is intense and it is slowly gravitating towards price competition largely because products and services offered by McDonald’s and its rivals are almost identical and there are virtually nil ...Download file to see next pagesRead More
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