1. In your own words, what would you describe as the five roots of opportunity e
ID: 386686 • Letter: 1
Question
1. In your own words, what would you describe as the five roots of opportunity explored in creating McDonald’s?
2. What type of franchise is McDonald’s?
3. Based on the movie, “The Founder,” what drawbacks or negative aspects of franchising did Ray Kroc experience as a franchisee of McDonald’s?
4. Based on the movie, “The Founder,” what factors would you attribute to Ray Kroc’s success in purchasing McDonald’s? In your opinion, did Richard (Dick) and Maurice (Mack) McDonald use good legal counsel or judgment when signing the agreement to sale McDonald’s to Ray Kroc? Explain your answer.
Explanation / Answer
1. In your own words, what would you describe as the five roots of opportunity explored in creating McDonald’s?
The five roots of opportunity explored in creating McDonald’s are
Problems : Drive in restaurants took the same amount of time to deliver hamburger and fried as traditional restaurants did. McDonald’s invented the concept of fast food which enabled them to operate extremely efficiently and fulfil and order within 2 mins or less. This attracted a huge demographic that was looking for quick service restaurants instead of their traditional diners and drive ins.
Changes : McDonald’s identified a changing trend in consumer preferences when it came to food and beverages. Not only was their target demographic was looking for quick service restaurants instead of their traditional diners and drive ins but was also turning to fast food and beverages like coca cola.
Inventions : McDonald’s not only invented the quick or the fast food restaurant industry but it also invented the systems, processes, operational layout of their kitchen, logistics etc in order to increase efficiency.
Competition : McDonald’s primary competition were drive in's , soda shops, dinners and restaurants attached to gas station. They were quick to identify and differentiate themselves from their competition.
Technological Advances : McDonald’s didn't just invent new systems and processes in their operations but they also invested in commercial kitchen technology that was way ahead of it's time. They were one of the first restaurants in the United States which custom made their commercial kitchen equipment to suit their production needs.
2. What type of franchise is McDonald’s?
McDonald’s is an operator / owner managed fast food franchise. This meant that the company doesn't privately own and operate all their restaurants and kiosks but licences the right to operate to individual owners or large hospitality companies. They do so by collecting an upfront franchise fee as well as a % of the total sales at their respective franchises.
3. Based on the movie, “The Founder,” what drawbacks or negative aspects of franchising did Ray Kroc experience as a franchisee of McDonald’s?
Ray Kroc experienced the following difficulties as a franchisee of McDonald’s
- Rigid Compliance & Regulatory Structure : The original franchise agreement that Ray Kroc signed didn't allow him to make even the slightest of amendments to their operations , pricing or the menu. Which made it extremely difficult for him to innovate and make the over all process more efficient.
- Branding Challenges : The original franchise agreement maintained a firm grip on their traditional mom and pop branding / logo on their restaurant chain. Their logo and their brand identity reflected a more traditional approach to a restaurant as opposed to the one Ray Kroc was trying to establish.
4. Based on the movie, “The Founder,” what factors would you attribute to Ray Kroc’s success in purchasing McDonald’s? In your opinion, did Richard (Dick) and Maurice (Mack) McDonald use good legal counsel or judgment when signing the agreement to sale McDonald’s to Ray Kroc? Explain your answer.
I would attribute Ray Kroc’s success in purchasing McDonald’s to the following factors :
Poor Legal Counsel : Richard (Dick) and Maurice (Mack) has really poor legal counsel. Had they invested in a more seasoned attorney who would shield them from legal ramifications they would've been in a better position to defend themselves against such a hostile take over.
Non Compete Laws and Non Disclosure document didn't cover their systems and process which was their unique selling proposition. They didn't cover recipes , the commercial kitchen technology that was used their operations.
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