Reference no: EM132363465

Question

Read the case study below and then answer the questions that follow. This is to be presented as an informal report. 

McDonald's: New Options for that Burger

McDonald's is a giant international company, with 40,000 restaurants and 68 million customers in 120 countries. It is the world's largest hamburger fast food company. It thrives on providing the same quality food and service at a low cost worldwide. But McDonald's is in a box. After 25 consecutive years of increasing dividends, in 2014 quarterly sales fell for the first time in 17 years. At the end of 2015 there were fewer McDonald's in the United States than at the start of the year, the first time that has happened in 45 years. Labour costs are rising, tech-savvy customers are going elsewhere, and technology costs are eating McDonald's lunch. Increasingly McDonald's is looking to new technologies to help it compete. Three are robotics, mobile order app, and cloud computing.

With increases to minimum wages, McDonald's is investigating the use of robots to take orders, prepare food, and take payments. In an industry with strong rivals, McDonald's strategy of low cost and a focus on fast food requires it to use technology that can reduce cost. It currently is the second-largest private employer in the world with more than 1.9 million employees (Walmart is the largest). With that many employees, any cost saving that involves employees is very promising.

In the summer of 2016, a Phoenix, Arizona, McDonald's opened that was run entirely by robots. The claim is that the robots can run 50 times faster than a human crew. These McRobots have some other advantages-less error, better hygiene, fixed labour cost, they don't tire or feel stress and require fewer breaks. McDonald's intends to open 25,000 robot-run restaurants in the near future.

In addition to robots, McDonald's is also developing a mobile ordering and payment app. Starbucks and Domino's lead in the digitally derived sales area. Half of all Domino's pizzas are ordered via apps, and Starbucks recently passed 6 million orders a month on its mobile platform. Taco Bell has found that people order 20 percent more food when using an order app. When the Taco Bell customer arrives and clicks the "I'm Here" button on his or her phone, the drive-thru agent even knows the customer's name.

For McDonald's one goal of the order app is improved service, measured as a shorter wait time. A second goal is to increase the average size of the customer order. Down the road, the new app is expected to share data with a new McDonald's loyalty program. Further, if customers use mobile apps to order, in-store labour can be reduced, queues can be shorter, and food can be ready when customers arrive. The plan is to make food to customer order and store it in one of many small heated boxes immediately before the customer is to arrive. Then when the customer walks in, the smart- phone app downloads the box location, and the Bluetooth device on the phone opens a box where their food has been kept. When the door opens, the Bluetooth connection automatically withdraws from the customer's financial institution. Fast food even faster.

A third technology that has attracted McDonald's attention is the cloud. McDonald's already partners with Amazon's AWS to host its existing corporate applications. It would like its mobile app to be completely hosted by AWS. McDonald's also plans to outsource the development of the app. By outsourcing the contract for the app, McDonald's can save in-house labour costs and leverage the expertise of software developers at the outsourcing firm. By hosting this app in the cloud, spikes in demand during meal times can be efficiently handled. A cloud option will also make it easier for customers to use the app anywhere in the world where they find a McDonald's.

McDonald's in the 1950s revolutionized the restaurant business with its production-line principles. It once again seeks to revolutionize the industry with new technologies.

Questions:

1. Everyone does not have a smartphone. Should McDonald's delay its order app until a greater number of clients own a smartphone? Should it develop and use this technology outside of the United States first?

2. Some of the advantages of the cloud are mentioned. Are there other advantages of the cloud that will benefit McDonald's?

3. Read about Bluetooth on the Internet. Why use a Bluetooth network? What are some advantages of Bluetooth?

4. Do you or your friends use the mymacca's mobile ordering app? If not, search on the Internet for information on the mymacca's app. What, in your opinion, makes it attractive? Would you be tempted to install the app on your phone?

5. Does McDonald's have a social responsibility to employ people rather than machines?

6. What are the advantages and disadvantages for McDonald's to outsource the development of the phone app?

7. What are other uses of IT at McDonald's that would help?