MGS 4010 OPERATIONS MANAGEMENT

Topic Selections:

• Quality Improvement and Quality Assurance Programs
• Inventory Management
• Location and Distribution

Question Asked:

1)  What is your quality mission?
2)  What is your current quality assurance program?
3)  How has it improved or how do you plan to improve it?
4)  How adaptable is the quality assurance process to changes in the manufacturing process?
5)  What programs are in place to minimize the cost(s) of quality
6)  How well does your organization control inventory accuracy?
7)  What is your average inventory level?
8)  What kind of system does your organization use to track inventory?
9)  What measurements/s are in place that provides the company leadership with a view of how well
      the inventory is being managed?
10) Does your organization assist in location decisions to its franchisors?
11) Does your organization use a geographical information system?
12) What transportation method does your organization use for distribution?
13) How are the decision made on where your distribution centers are located?

Porters Five Forces Analysis

Five forces – Restaurant Industry – Golden Krust

1. Threat of New Competition – Medium

• If the industry is profitable, it is more attractive to new entrants and this will decrease profitability. Barriers to entry includes:
• Start up costs – in 2010, the average start up costs for annual sales of $425,000 is $125,000 with no land purchase.
• Consumer Skepticism – Brand loyalty takes time to build and consumers are very wary of new brands.
• Golden Krust is a well-known brand in the Caribbean community and beyond.
• Additionally, there is Franchising where standards are set which each store has to follow. 
• Location – Location is most important to success of this kind of business. If there are many competitors, then, this will impact sales volume. 
• Marketing – Required extensively and needs a budget, strategy and time. As a Franchisor, the marketing strategy is done at corporate and filtered down to the individual stores. 

 2. Substitute Products and Services – Medium to Low

   
     a. Other ethnic restaurants

         i.  For example: Manhattan location has within it’s vicinity Indian, Chinese, Thai, Mexican,
             American, Greek and Others.

        ii.  Prices are comparable: within $7-10 range

   
   b. Propensity to substitute: High in non-Caribbean
         concentrated areas, Manhattan; Low in Caribbean    concentrated area such as Brooklyn, Queens
         and Bronx

3. Bargaining power of Buyers – Low

• Large number of customers with relatively small purchases
• Customers have low switching costs
• Buyers do not need a lot of information about the product – except in specialized market such as New York where calorie count is required for each menu offering
• Customers are highly price sensitive and cut back quickly in times of hardship
• Product has some degree of uniqueness (ethnic) and has accepted branding

4. Bargaining Power of Suppliers – Medium to Low

• Inputs are standard – material, labor, supplies etc
• Can switch easily between suppliers and there are many potential suppliers
• Cost of purchase has significant influence on overall costs
• Labor is cheap and non-unionized

5. Intensity of Competitive Rivalry – Medium to Low

• Main Competitor: Royal Caribbean Bakery, 
•  Other: localized Caribbean eateries
•  Industry growth – moderate
•  There is intermittent overcapacity
•  Fixed costs are relatively high portion of total costs
•  There is a significant brand identities between competitors
•  Competitors are not the same size
•  Product is not complex and does not require understanding on customers part