Author: spr1321schow

Angus got kicked out!!

Posted on by spr1321schow

As the economy keeps changing, products’ prices keep are raising as well. A lot of the companies made a lot of changes to adapt to this economy. Not only supermarket and clothing stores are affected by the economy, so are fast food restaurants. The fast food industry are facing higher beef prices and McDonald’s have to change their menu to adjust to this change. McDonald’s have to decide what changes will keep costs low and balance customers demand. Recently, McDonald’s announced that they will have three new quarter pounders added to their menus, replacing the Angus burger.

McDonald’s tried to control their cost of operating and total revenue, but not affecting the customers too much. Therefore, they made a decision to create three new Quarter Pounders to replace the Angus burgers. The product decision have met product strategy options, there are different burgers produced with low costs. Also, they made a lot of concerns of these new burgers. For example, they understood the customers’ needs; they can attract more teenagers for the new innovation of quarter pounders. They also knew that if they raise the prices, they will scare customers away. Instead of raising the prices of their burgers, McDonald’s created and changed products to reduce costs and not affect customers demand. Moreover, the most concern of the new change is the price-conscious customers and traditional fast-food chains because McDonald’s are trying to meet fast-food market demand and provide high quality food like its competitors.

In addition, “McDonald’s executives say the strategy is necessary to steal away customers at a time when the restaurant industry is barely growing” (Choi). They have met the Product Focus, one of the basic process strategies. In product focus, products are in high volume and low variety, therefore, McDonald’s decides to bring Angus Burgers down and bring up Quarter Pounders to replace it. They did it not only for the price, but also the changes of value. Since Angus Burgers were the most expensive item on McDonald’s menus and it hasn’t made any newer variety of the Angus burgers, it would be a great decision to balance McDonald’s sales and profits. This strategy will also attract more customers to try out more new products other than quarter pounders. The value of quarter pounders is healthier and better than Angus burgers. McDonald’s provide healthier items on their menus to meet customers’ demand and new customers that are loyal to other fast food restaurants..

After reading the article, I believed that McDonald’s are not only making new quarter pounders or McMuffin to attracts customers, they are trying to change traditional fast-food chains to fast-food market demand which they can meet customers demand. As long as they can win back customers from other fast food restaurants, they can make anything that customers like and put them on menus. For example, McDonald’s in Hong Kong even put Chinese food on their menus, even though it is an American fast food restaurant. I think this is unbelievable. In the United States, McDonald’s put Mexican style McWraps and breakfast burrito on their menus.

Do you think the three new quarter pounders can satisfy those customers who like third-pounder angus burgers? Would McDonald’s be affected if their menus contain items other than American style food?

Sources:

http://finance.yahoo.com/news/mcdonalds-adding-3-quarter-pounders-160308861.html;_ylt=AoiOCNv7.6R0UnCgiu4jiiTQtDMD

How To Save J.C. Penney: Shut Hundreds Of Stores, Say Business Professors

Posted on by spr1321schow

 


J.C. Penney has been a popular shopping mall back to the time, however, currently J.C. Penney appear problems to face.J.C. Penney hired Ron Johnson as J.C. Penney CEO in June 2011, and Johnson started a new strategy of Pricing method for J.C. Penney such as “Every Day” Price and ” Best Price”. However, those methods do not help company sale profit increase. Although J.C. Penney stock has been risen, total sale of 2012 decrease a lot after Ron Johnson took over CEO position. In Fact, Johnson gave wrong strategy for J.C. Penney.

Therefore, J.C. Penney fired CEO Ron Johnson and solved problems itself. J.C. Penney have been operated for more than 100 years. In the article, Bruce Clark, a professor of marketing stated that some J.C. Penney are old, and it had not opened more new stores in the last five years. J.C Penney located from suburb to downtown, it has been experienced peak or trough. Nowadays, there are more competitors than old modernization, such as Macy’s, Sears and Nordstrom; these stores are mostly located in downtown and mid-range areas. J.C. Penney has financial problems because they did not do well in operation management. To have a good operation management, it need a great critical thinking.

In addition, in the end of article, it mentioned that the main focus of J.C. Penney for now is to open stores in higher end malls. I think that it has this idea, this main focus because it can attract more higher-income customers to shop J.C. Penney so that it can earn more sales. Also, if J.C. Penney are going to put stores in higher end malls, they have to have great critical decision to save stores. Since it will be closing 700 stores out of 1100 J.C. Penney stores, it need to offer great design of goods and services, managing quality and supply chain management. In Chapter 1, we discuss in-class of ten critical decisions, and I think these three decision areas are more concern for J.C. Penney. Since they have a bad strategy of pricing and cash drain before, it need these decisions to operate well J.C. Penney.

If J.C. Penney really decide closing stores, I believe that it is a tough decision since it is a large company with 1100 stores and open more than 100 years, and it would cause a lot of effects, such as it will make handles all closing stores problems, a lot of employee and employers losing job opportunities, destructing of  operating covenants  and paying penalty. Therefore, if J.C. Penney do not close that 700 stores and have new strategy development, I think that J.C. Penney can be back on track, for example, like the Chapter 2 strategy, the elements of operation management strategy are low-cost products, high-value offerings and efficient, flexible operations adaptable to consumers etc.  Therefore, I think that it should not close stores, and I believe that each of J.C Penney stores still have value so they should not give up, and they just need a great strategy and critical decisions of management.

Reference: http://www.forbes.com/sites/clareoconnor/2013/04/12/how-to-save-j-c-penney-shut-hundreds-of-stores-say-business-professors/