McDonalds Lawsuits

– A Decision making approach

Presented by:

Adrianne Jones

Anil K Cheerla

Mark Hatfield

The Problem

Lawsuits have alleged that McDonalds’ Restaurants are acting negligently.

• Cited for selling foods that are high in cholesterol, fat, salt and sugar. • Blamed for targeting children with it’s ads and increasing obesity among children and adults.

The lawsuits are costly and time consuming for the McDonalds Corporation. In that end, the company has had to make some changes to the meals that it serves to the customers.

Making changes to the menu items is important because it will:

•Increase McDonalds chance of winning lawsuits

•Decrease the company’s chances of being sued

•Bring in new customers

•Generate new revenue

GOAL - Preventing Lawsuits against

McDonald's

The Decision

The decision to move towards a more healthy menu is one that the McDonalds corporation should take with caution and care. Adding new healthy choices to the menu must be done as part of a campaign to draw in new customers. McDonalds must continue to welcome it’s returning customers by continuing to market some of the original menu items as well.

We would like to discuss some of the alternatives that the McDonalds Corporation could try when trying to improve it’s image and to guard against future lawsuits.

Importance of the Decision

Complex decision, not intuition

• No business succeeds without the ability to identify strategic objectives and then execute them.

• The larger the organization, the more complex the considerations, the more elusive the right choices become.

• Human elements and volumes of data, many completely irrelevant to the bottom line.

• There are cognitive limitations and any snap decision could potentially lead McDonalds in the wrong direction.

• There are many factors to consider before deciding the best alternative.

• There is a need to have a decision making process:

• Provides decision-makers with a structure to organize

• Evaluates the importance of various objectives

• Shows preferences of alternative solutions

• Facilitates decision making by using:• Empirical data & subjective judgments

Is there a need for a Structured approach?

Objectives

• Cost -How much will a decision cost and is money a driving factor?

-Capital investment

- Initial Investment- Return on Investment- Recurring Costs

• Time to Implement – 3 Months– 6 Months– 9 Months– 12+ Months

Objectives

• Buy In from regional Owners -Will franchise managers accept change?– Local Impact– Regional Impact– Urban Impact

Marketable - Will this idea sell or repulse customers?- New - Returning Customers- Lose Customers

Efficiency of Plan- Will prevent future lawsuits- Kill current lawsuits- Break even

Objectives

• Diversification of Menu- Salads

- Sugar free Juices

- Energy/Vitamin water

- Non-dried foods

- Reduced fat products

- Reduced fat oils

Alternatives

• Changing the Image of the Restaurants

• Improving food products to more nutritious standards

• Introducing additional healthy alternatives to menus

• Lobby Government agencies

Use of Pairwise comparisons

• Pairwise comparisons derive accurate ratio scale priorities• Derives priorities accurately to reflect your perceptions and

values• The evaluation process uses ratio-scale measurements• Leverage large amounts of data along with judgments and

intuition to make more informed decisions • AHP is the methodology for converting subjective

assessments of relative importance to a set of overall scores or weights

Judgments Vs. Weights

• The overall goal of avoiding lawsuits. As a team, we researched the legal disputes, evaluated the strengths, weaknesses and opportunities that exist for McDonalds.

• Collected valuable statistical data and strategic business initiatives undertaken to meet its cherished principles of Quality, Service, Cleanliness, and Value (Q.S.C.& V.).

• Based on the identified problem, we discussed the objectives and alternatives to build the model. The model was improved upon and the group finally agreed on the goal and objectives which were clustered into a hierarchical representation.

• Pair wise comparison were based on the average judgment of the group.

• Mark played the role of an Evaluator and before confirming the judgments, everyone was given the opportunity to express his or her reasoning.

• All results were synthesized, analyzed and finally validated before the final judgment.

Expert Choice Model

Sample Pairwise comparison

Sensitivity Analysis

Results from the in-depth decision study showed consistent choices

--“Low Inconsistency Ratio”--

This alternative, by far, is clearly the best given the values of McDonalds

Why is this the best alternative?

Introducing additional healthy alternatives to menus

Introducing additional healthy alternatives to menus

Clear winner• The obvious choice looking at the model

• In 5 out of 6 overall objectives• Led in the most important objective

• Diversification of Menu• The only revenue generating alternative – dual role

• May reveal McDonalds real bottom line• Board members say this was and is the best idea

Significant resultsFrom

A solid, structured model

• Quality in, quality out• Comprehensive setup proved key - iteration

• Process forced a detailed analysis• Each element was scrutinized from the lowest level to the highest

Confidence is high!