# Lecture 1: McDonald's vs. Burger King - Process Analysis and Trade-offs
**Date:** July 21
**Duration:** 1.5 hours
**Instructor:** Prof. Vivek Farias
%%[[2♻️analyze(🔴capacity-variability, ✈️airline) 2025-07-21-9|🖋 Edit in Excalidraw]]%%
product managment cirriculum,
[[2025-07-21|25-07-21-08]]
should have been more
- theme of better to be lucky rather than to be smart
- quantative hedge fund,
- consulting (fixed income portion of the fund) - consider academia, two years at mit (vacation of mit continues),
- mens et manus (be able to build and do things)
- nike's second largest compny (celect), seer bio (ai protein;), cimulate (customer gpt)
- lp in different firms, care about deep intellectual idea -> but need to do things. ETHOS
---
# manual note
steve blank, epiphany (crm company - mid 90s),
agricultural startup
1. **Give funding and connections**: "Brilliant idea, you know, here's 50k right? And I'm going to write emails introducing you to a bunch of folks."
2. **Pass/refer to others**: "You know what, not for me, but here's somebody else at, you know, thinks about agriculture and so on and so forth. Maybe, maybe they're interested."
3. **Ask them to reconsider and return**: "Well, you know, have you thought of x, right? And go, think of x, and then come back."
survey is bullshit response (overly rosy). framer doesn't ;
what do you want to do with cash? 50k, (doing one industry is difficult)
go build bunch of drones
right season with the farmer (modular camera) ; how do we minize effort but maximize learning
which problem are they solving?? prove low yeld
time unit of cost, increase yield is data; root cause analysis (soil, ) -
⭐️PROBLEM STATEMENT giving farmer data that improves yield
collect all data manually and give it to farmer whether they can use it?
manage products
🙋♀️the data was the product, not drone (disagree)
1. define product - how are you adding value? (selling signals (advice) that improves yield), why should the farmer come to you (strategic value positioning). WHAT & WHY ME?
2. managing two bubbles - product (what's the problem and why should that come to you) and capabilities (my resources; financial organization, tech, supply chain, distribution)
3. 🔄capability and product
1. capability to product: unique product (novel for market place)
2. product to capability (make that investment in that capability); capability for product (resource change)
3.
one check per card (multiple checks)
expressing added value consistent offering really fast VS
how'd you be aware of this
queue -> feeling,
time, quality, flexibility, price
the way you experience time matters (mirrors behind the bartendar) 2,3,4 minutes it's ok
⭐️don't measure of time in units of time (but in utility; capability invested to lower time) -> should be mapped with dollars
market share, money based utility metric, no fast food options, i'm ok to be slower
shave off seven seconds, lower 3% for macdonalds,
🙋♀️why seven second rules leads to heavy price for flexbility ?
being 30secs off (leaving money off the table) in the product they are putting together
1. 🔺triangle (inventory),
2. 🟧square(process - stead chain, mate, table (too long, trash), assembly (condamets ketcup), micro, counter ),
3. ↔️arrow (physical flows)
4. ↕️dashed line (information flows)
macdonalds (human inventory manager)
slips (i don't want pickle), lindy
macdonald's local point is much earlier
mac don't have ♨️steam table (burger kingpull based )
macdonald is make to stock, burger is hybrid (up to steam table, it's make to stock, but then it's mto)
burger king allows flexibility (whereas macdonalds makes cutomer stand aside for customized),
how much capacity? - set up a 🧩puzzle for next time
🍾IDENTIFY BOTTLENECK. 8 burgers 480 burgers/hr , assembly (200 burgers per hr and 100 w) - capacity (200b/hr, 100w/hr VS peak demand (Friday lunch))
## Learning Objectives
- Understand fundamental process analysis concepts
- Identify trade-offs between efficiency and flexibility in operations
- Apply process mapping and capacity analysis techniques
- Recognize strategic alignment between process choice and market demands
## Case Studies
- **Primary Cases:**
- [[Lec1_McDonald_s_Corp__Condensed_.pdf]] (Students M-Z)
- [[Lec1_Burger_King_Corp_.pdf]] (Students A-L)
- **Supporting Materials:**
- [[Lec1_Production_Processes.pdf]]
- [[Lec1_Types_of_Processes.pdf]]
## Key Concepts
### Process Types Spectrum (PJBLC)
1. **Project** - Unique, one-time products
2. **Job Shop** - Low-volume, high-variety
3. **Batch** - Medium-volume, medium-variety
4. **Line Flow** - High-volume, low-variety
5. **Continuous** - Very high-volume, commodity products
### Core Trade-offs
- **Efficiency vs. Flexibility**
- **Cost vs. Customization**
- **Speed vs. Variety**
## Case Analysis Framework
### McDonald's Strategy
- **Process Type:** Line Flow (standardized)
- **Value Proposition:** Speed, consistency, low cost
- **Operational Characteristics:**
- Highly standardized menu
- Pre-made inventory (make-to-stock)
- Specialized equipment and layout
- Minimal customization
### Burger King Strategy
- **Process Type:** Hybrid (attempting customization in line flow)
- **Value Proposition:** "Have it your way" - customization
- **Operational Challenges:**
- Conflict between customization and speed
- Increased complexity in operations
- Higher labor requirements
- More inventory complexity
## Discussion Questions for Class
1. **Process Mapping:** Map out the production process for hamburger production, showing major process steps, inventories, and flows.
2. **Capacity Analysis:** For your assigned case, analyze peak hourly capacity vs. peak hourly demand for burger patties. Can they produce enough burgers?
3. **Strategic Alignment:** How well does each company's operational process align with its stated value proposition?
4. **Trade-off Analysis:** What are the fundamental trade-offs each company faces? How do they manage these trade-offs?
## 🔺 The Six Questions Framework
```
1. Capabilities? 2. Customer?
🟢 🟣
Standardized line Price-conscious
Make-to-stock Speed-seekers
\ /
\ /
\ /
5. Coordinate? ←→ 6. Compel?
/ \
/ \
/ \
🟠 🔴
Low cost leader Fast, cheap food
Consistency No customization
```
### McDonald's Analysis
1. **🟢 Capabilities:** Highly standardized equipment, pre-made inventory, specialized layout
2. **🟣 Customer:** Families seeking quick, affordable, predictable meals
3. **🟠 Goals:** Maximize throughput, minimize cost, ensure consistency
4. **🔴 Offering:** Limited menu, fast service, low prices
5. **Coordinate:** Standardization enables cost leadership
6. **Compel:** Speed and price attract value-conscious customers
### Burger King's Tension
- Trying to offer customization ("Have it your way") within line flow process
- Creates operational conflict: customization slows speed, increases complexity
- Shows the difficulty of serving two masters: efficiency AND flexibility
## Key Takeaways
- **Strategic Message:** A standardized, make-to-stock process (line flow) delivers low cost and speed, but struggles to accommodate customization, creating a core strategic trade-off.
- **Process Choice Implications:** The selection of production process type must align with market demands and competitive positioning.
- **Operational Excellence:** Success requires consistency between process design, capabilities, and customer value proposition.
## Preparation for Next Class
- Review capacity analysis concepts
- Prepare [[Lec2_JetBlue_Airways__Deicing_at_Logan_Airport.pdf]]
- Read predictable variability concepts
## Teaching Notes
- Emphasize the fundamental nature of the efficiency-flexibility trade-off
- Use concrete examples from the cases to illustrate process mapping
- Connect process choice to competitive strategy
- Highlight how operational decisions support or undermine business strategy