Thursday, February 28, 2013

Value Chain

By using Michael Porter’s “The Value Chain” we can see how McDonald’s performs to meet the customer’s wants and produce a product they are willing to pay for, from a company they trust. Below, I will evaluate a few of Porter’s primary and secondary activities.

Support activities add value by themselves or add value through important relationships with both primary activities and other support activities.
     Procurement- Helps bring in the biggest profit margin for McDonald’s. McDonald’s has maintained the same recipe for many years for some of it products, while changing some and adding more. They continue to satisfying the customers’ needs while also looking at the environment factors that are in play. McDonald’s has a development of collaborative “win-win” relationships with its suppliers; allowing them to trust them and have high buying power.
     Technology-The most important technological factor is in McDonald’s food preparation and serving. The soda machines are most efficient, in that you only have to press a button and it knows when to stop filling. This gives them an advantage to other companies because of the less amount of time it will take to get the soda prepared for the customer. Another bigger factor is their heating lamps, how they are able to create enough heat to keep everything warm without making them soggy, or ruining the contents and taste of the product.

Primary activities contribute to the physical creation of the product or service, its sale and transfer to the buyer, and its services after the sale.
     Service- McDonald’s most important asset of their business is service. They are able to customize orders for individuals and have mass producing. They have a quick response to the customer’s needs and wants. If McDonald’s was lacking in the service area, they would lose customers to Burger King and Wendy’s because of how they satisfying the customer’s needs. This is something that McDonald’s will not want to outsource because it is such a powerful and important factor to their company. It needs to be done by those who understand McDonald’s and who truly want to make a difference in individual’s lives.
     Operations-McDonald’s provides an efficient layout and workflow for everyone to be able to get the products made quickly but also effectively. Having a proper workflow area really helps McDonald’s so not all employees are in one area at once and no one is running into one another. This goes to show that McDonald’s companies have taken the time to establish the workflow area for employees to prepare the products quickly for the customers.
     Outbound Logistics-McDonald’s provides great outbound logistics because they have an effective shipping process which provides quick and easy delivery to its locations. They are able to get the food from the restaurant to its customers with a good system of work and have fast cooking time for all products ordered.
     Marketing and Sales-It seems McDonald’s is always trying to improve their brand image and name. Over the past few years, McDonald’s has stepped it up with improving their facilities, by creating a more family friendly environment while being able to enjoy delicious food. Because of the renovations and changes that they are making, they are kicking into gear by increasing their marketing in all areas, which then starts to increase their sales, making them a profitable and efficient company to enjoy any meal of the day with.

McDonald’s also has some tangible and intangible assets that help benefit the company tremendously. Its physical faculties and equipment is what makes up some of their tangible assets. Having both an environmental friendly facility and high speed equipment makes it hard for any other fast food restaurant to compete with them. McDonald’s also has some intangible assets including, their reputation, human capital, and their brand itself. Having the brand and reputation that McDonald’s has, has helped them succeed for many years now and will continue to do so in years to come.

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