Operations Strategy Assignment: The Founder Assignment

What is Operations Strategy?

Operations strategy can be defined as strategy or plan that specify allocation of

resources by an organization to support its infrastructures and production. Operation
strategy is an outcome of the overall business strategy of the organization and is
designed to maximize the effectiveness of production and support elements while
minimizing costs. Operational strategy consists of the following components:

 Positioning the production system

 Product service plans
 Outsourcing
 Process and technology plans

Positioning the production

system, Product service
Corporate Mision Business Strategy Production/Service Plan Operaions Strategy
plan, outsourcing, process
and technology plan

What was Ray Kroc's operations strategy?

Kroc’s operational strategy is franchise. He believes that increasing supply would bring
about an increase in demand. Prior to meeting the McDonald’s brothers, he advocated
for increasing the supply of milkshake by selling multi-spindle milkshake machine.
Franchise also follow the same logic, empowering people in order to increase supply for
Mac-Donald’s products, thereby increasing demand of the brand and products across
America. Franchise cuts operation cost and increases demand for the products

List your top three examples of how Ray Kroc translated his operations strategy
into specific practices.

1. Franchise: Ray Kroc’s key strategy is franchise. Even though he was financially
incapable, he got a home equity loan to secure his first franchise
2. Teammates and Family: “McDonald is Family” Ray Kroc believed that McDonald
should be a family. He went in search of hard-working middle class willing to exceed
financially to lead his franchise effort. This helped him to increase the number of
franchisees
3. McDonald a Real Estate Company: Ray bought into the strategic idea of Harry to
invest in real estate by owning the land and building and leasing it to the
franchisees. Today, McDonald is one of the biggest real estate company.
Was Ray Kroc a good strategic thinker or was he just lucky?

Ray Kroc was a strategic thinker. At the age of 37years when he met the inventor of the
multi-spindle milk-shaker, he recognized that the machine would increase speed and
efficiency of making soda and milk-shaker. He got the exclusive right of marketing the
machines and this scaled him up greatly. But when sales were dwindling, he saw an
opportunity and strategically saw the franchise opportunity in the restaurant business,
he approached the McDonald brothers and sold them his idea. Even though they did not
see the big picture, he was able to get them to signing a deal with him to start the
franchise.

How does your company's operations strategy compare with Ray Kroc's?

 Service and Distribution Centers: Cummins Inc have distribution and service
centers across the world. Tis ensures that when a customer needs to buy an engine
spare parts and service his tuck, service and distribution centers are available within
a reasonable distance to the customer to get their needs taken care of.
 Electrification Business: With emissions regulation being more and more
stringent, Cummins has positioned itself for the future. It has diverted some its
resources to the electrification business such that some of its customers willing to
transition to electrified trucks have that available for them

What are your top five takeaways about operations strategy from "The Founder?

 Be Persistence and Determined: Persistence and determination was what kept

Ray Kroc going. Even though so many restaurants turned him down with his
milkshake machines, he was persistent and determined to keep marketing his
product. This led him to the Mac brothers. Also, when he suggested the idea of
franchise to the brothers, they were not convinced as they have tried once and failed
but he kept his persistent and determined attitude up and was able to convince them
into a franchise deal.
 Be Curious: Fresh ideas are born out of curiosity. When he called his office and
was told that a restaurant ordered 6 machines. He was curious to know what the
restaurant was doing differently compared to other restaurants which have turned
his down milkshake machine. Out of curiosity, he headed off to California to find out
what the restaurant was doing differently to place such order. On getting there, he
asked to look around to understand the process and invited the brother to dinner so
they could tell him about all their ideas about the restaurant.
 Try Different Options: When the told the McDonald brothers decided to move to
San Bernardino, They had no money to build a stand there. They decided to move
the current stand they had in Arcadia, but the stand would not go through a bridge
on the road. They had to saw the building into two halves to enable building pass
through the bridge.
 Be Open to New Ideas: Businesses not open to new ideas, new trends and
processes would eventually go out of business. Ray Kroc had some financial
challenges and had to go to the bank for financial help. He was turned down
 because he had been late on his mortgage payment. In the bank, he met a financial
expert; Harry Sonneborn. Harry gave Ray some fresh new ideas. That idea was
what has made McDonalds one of the biggest real estate company in the world.
Harry showed Ray how to make money not just from the restaurant business but
from real estate. This new idea involved creating a real estate company that would
buy up (or lease) the land on which all McDonald's restaurant would be built. This
grew the business significantly and aided Ray to buy out the McDonald brothers. the
food-service business, he was in the real-estate business. Harry showed him
another way of making money off the deal with McDonald brothers on selling
hamburgers and franchisees.
 Have the Right Partners: Having the right partners could help scale up a business
significantly. These partners could be the financial or managing partners. After Ray
got the McDonald brothers to agree to the franchise deal, he had no money and
decided to contact some of his rich friend to own some of the franchises. They
agreed but were not following his guidelines of standardization, automation and
discipline. He decided to get ride of his rich friends and went in search of hard-
working middle-class partners who are willing and hungry to grow their financial
status and follow the guidelines and standardization laid out by Ray. This proved to
be successful and scaled up McDonalds Corporation hugely.