MASTER’S PROGRAM IN BUSINESS ADMINISTRATION
Case I
McDonald’s: Serving Fast Food Around the World
Ray Kroc opened the first McDonald’s restaurant in 1955. He offered a limited menu of high-quality, moderately-priced food served fast in spotless surroundings. McDonald’s “QSC&V” (quality, service, cleanliness, and value) was a hit. The chain expanded into every state in the nation. By 1983 it had more than 6000 restaurants in the United States and by 1995 it had more than 18,000 restaurants in 89 countries, located in six continents. In 1995 alone, the company built 2,400 restaurants.
In 1967 McDonald’s opened its first restaurant outside the United States, in Canada. Since then, the international growth accelerated. In 1995, the “Big Six” countries that provide about 80 percent of the international operating income are: Canada, Japan, Germany, Australia, France, and England. In the same year, more that 7000 restaurants in 89 countries generated sales of $14 billion. Yet fast food has barely touched many cultures. The opportunities for expanding the market are great when one realizes that 99 percent of the world population is not yet McDonald’s customers. For example, in China, with a population of 1.2 billion people, there are only 62 McDonald’s restaurants (1995). McDonald’s vision is to be the major player in food services around the world.
In Europe, McDonald maintains a small percentage of restaurant sales but commands a large share of the fast food market. It took the company 14 years of planning before it opened a restaurant in Moscow in 1990. But the planning paid off. After the opening, people were standing in line up to 2 hours for a hamburger. It has been said that McDonald’s restaurant in Moscow attracts
more visitors – on an average 27,000 daily than Lenin’s mausoleum (about 9,000 people) which used to be the place to see. The Beijing opening in 1982 ….
(halt the Japanese market) in 1996 compared to only 43 Burger King restaurants. However, the British food conglomerate Grand Metropolitan PLC that owns Burger King has an aggressive strategy for Asia. Although McDonald’s is in a very favourable competitive position at this time, can this success continue ?
Questions :
1. What opportunities and threats did McDonald’s face ? How did it handle them ? What alternatives could it have chosen ?
2. Before McDonald’s entered the European market, few people believed that fast food could be successful in Europe. Why do you think McDonald’s has succeeded ? What strategies did it follow ? How did these differ from its strategies in Asia ?
3. What is McDonald’s basic philosophy ? How does it enforce this philosophy and adapt to different environments ?
4. Should McDonald’s expand its menu ? If you say no, then why not ? If you say yes, what kinds of precuts should it add ?
5. Why is McDonald’s successful in many countries around the world ?
Case No. :2
Developing Verifiable Goals
The division manager had recently heard a lecture on management by objectives. His enthusiasm, kindled at that time, tended to grow the more …..
for finance, marketing, production, engineering, and administration. However you state them, I will expect them to add up to the realization of the division goals.’’
Questions :
1. Can a division manager develop verifiable goals, or objectives, when the president has not assigned them to him or her? How? What king of information or help do you believe is important for the division manager to have from headquarters?
2. Was the division manager setting goals in the best way? What would you have
done?
Case No. :3
The Daimler-Chrysler Merger: A New World Order?
In May 1998, Daimler-Benz, the biggest industrial firm in Europe and Chrysler, the third largest carmaker in the US merged. The carefully planned merger seemed to be a ``strategic fit.’’ Chrysler with its lower-priced cars, light trucks, pickups, and its successful minivans appeared to complement Daimler’s luxury cars, commercial vehicles, and sport utilities. There was little product-line overlap with the exception of the Chrysler’s Jeep and Daimler’s Mercedes M-Class sport utility vehicles.
The merger followed a trend of other consolidations. General Motors owns 50 percent of Swedish Saab AB and has subsidiaries Opel in Germany and Vaxuhall in England. Ford acquired British Jaguar and Aston Martin. The German carmaker BMW acquired British Rover, and Rolls Royce successfully sold its interests to Volkswagen and BMW…..
only one – in Germany.
Both the Americans and Germans can learn from each other. Germans need to write shorter reports, be more flexible, reduce bureaucracy, and speed up managerial decision making. American mangers, on the other hand, hope to learn from the Germans. As one Chrysler employee said: ``One of the real benefits to us is instilling some discipline that we know we needed but weren’t able to inflict on ourselves.’’
Questions :
1. Evaluate the formulation of the merger between Daimler and Chrysler. Discuss the strategic fit and the different product lines.
2. Assess the international perspectives of Eaton and Schrempp.
3. What are the difficulties in merging the organizational cultures of the two companies?
4. What is the probability of success of failure of the merger? What other mergers do you foresee in the car industry?
Case : 4
Re-engineering the Business Process at Procter & Gamble
Procter & Gamble (P&G), a multinational corporation, known for its products that include diapers, shampoo, soap, and tooth-paste, was committed to improve value to the customer. Its products were sold through various chanels such as grocery retailers, wholesalers, mass merchandisers, and club stores. The flow of goods in the retail grocery channel was from the factory’s warehouse to the distributor’s warehouses, to the stores where the grocery stores where customers selected the merchandise from the shelves.
The improvement-driven company was not satisfied with its performance and developed a variety of programs to improve the service and efficiency of its operation. One such program was the electronic data inter-change (EDI) that provided daily information about shipments from the retail stores to P & G. the installation of the system resulted in better service, reduced inventory levels, and labor cost savings. Another approach, the continuous replenishment program (CRP), provided additional benefits for P & G as ….
similar brands. The category managers were also held responsible for profits of a product categories for all stores. The switch to category management required not only new skills, but also a new attitude.
Questions :
1. The re-engineering efforts focused on the business process system. Do you think other processes, such as the human system, or other managerial policies need to be considered in a process redesign?
2. What do you think was the reaction of the brand managers, who may have worked under the old system for many years, when the category management structure was installed?
3. As a consultant, would you have recommended a top-down or bottom-up approach, or both, to process redesign and organizational change? What are the advantages and disadvantages of each approach?
Case No. : 5
Managing the Hewlett Packard Way
William R. Hewlett and David Packard are two organizational leaders who demonstrated a unique managerial style. They began their operation in a one-car garage in 1939 with $538 and eventually built a very successful company that now produces more than 10,000 products, such as computers, peripheral equipment, test and measuring instruments, and handheld calculators. Perhaps even better known than its products is the distinct managerial style preached and practiced at Hewlett-Packard (HP). It is known as the HP Way.
``What is the HP Way?
I feel that in general terms it is the policies and actions that flow from the belief that men and women want to do a good job, a creative job, and that if they are provided the proper environment they will do so.’’ Bill Hewlett, HP CoFounder
The values of the founders – who withdrew from active management in 1978 – still permeate the organization. The HP Way emphasizes honesty, a strong belief in the value of people, and customer satisfaction. The managerial style also emphasizes an open-door policy, which promotes team effort. Informality in personal relationships is illustrated by the use of first names. Management by objectives is supplemented by what is known as managing by wandering around. By strolling through the organization, top managers keep in touch with what is really going on in the company.
This informal organizational climate does not mean that the organization structure has not changed. Indeed, the organizational changes in the 1980s in response to environmental changes were quite painful. However, these changes resulted in extraordinary company growth during the 1980s.
Questions:
1. Is the Hewlett – Packard way of managing creating a climate in which employees are motivated to contribute to the aims of the organization? What is unique about the HP Way?
2. Would the HP managerial style work in any organization? Why, or why not? What are the conditions for such a style to work?
Case No.: 6
Quality as the Key Success Factor In Winning the Global Car War
Massachusetts institute of Technology (MIT) conducted an extensive study of the global car industry that compared operations at General Motors, Toyota, and the joint venture between GM and Toyota, the New United Motor Manufacturing Inc. (NUMMI) plaint in Fremont, California. The result of the study should raise some very disturbing questions about the quality and productivity of American operations, namely:
• Why did GM’s Framingham plant require 31 hours to assemble a car when the Toyota plant only required 16 hours- or roughly half the time?
• Why did the GM plant average ….
operating in Japan. Clearly, U.S. and especially European firms need much improvement in productivity and quality to be competitive in the global market.
Questions:
1. In the NUMMI joint venture, what did Toyota gain? What were the benefits for General Motors?
2. As a consultant, what strategies would you recommend for European carmakers to improve their competitive position in the global car industry?
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