The importance of effective operations management, distinguishing a company from its competitors (through points of difference) and constant product innovations is highlighted in Macdonald’s first monthly sales decline in nearly a decade.

Macdonald’s decision to replace their operations manager during this time reminded me of Mahesh’s lecture on supply chain and operations. Mahesh stressed the significance of ensuring that products are successfully delivered to consumer at the right time, in the right quantities and in the right places to allow for maximized profits. A prerequisite for this is of course accurate forecasting. In this case forecasting may have been disturbed due to the fact that, “McDonald’s has struggled recently amid intensifying competition at home and a persistently weak economy abroad”.

MacDonald’s has tried to differentiate themselves from other fast food competitors through the introduction of, “a slightly more expensive “Extra Value Menu””. This point of difference not only distinguished them from their competitors but also would allow them to gain more market share as more healthy conscious consumers would be attracted to MacDonald’s food.

However, analyst Thompson recently asserted that MacDonald’s is returning its focus to its Dollar Menu, since the value added menu has not been as successful as was hoped. Macdonald’s may need to reevaluate their target market as it seems generally their consumers are not interested in more nutritious food but simply for a quick, cheap meal.

In order to retain and attract more consumers it is crucial for MacDonald’s to continue to innovate and experiment with their menu. Although some experiments will prove to be somewhat unsuccessful (like the introduction of healthier food options) others will help the chain to propel itself within the industry. One such successful innovation was the expansion of specialty drinks menu that “is popular and was credited for helping sales in the past year”.

Original Article:

http://www.theglobeandmail.com/report-on-business/international-business/us-business/mcdonalds-replaces-head-of-us-operations-amid-sales-struggles/article5327971/#