DEVELOPING AND MAINTAINING QUALITY PRODUCTS AND SERVICES

A business exists because of its symbiotic relationship with its customers.

Customers identify their needs; in turn, businesses attempt to fulfill those needs by

providing goods and services. In the course DVD Business Concepts for the

Organizational Development Professional (2007), Dr. Soren Kaplan identifies three

common product development processes utilized by businesses using tangible resources,

such as McDonald’s, and service businesses, such as a neighborhood bank. These

processes are:

1. Product portfolio management

Mature and outdated products are evaluated, which early stage products need

additional development and which products should be introduced to new markets.

The company has to figure out where to allocate its energy and resources.

2. Front end of innovation

Teams look at emerging trends and identify new opportunities to create new

innovative products and services. They figure out what consumers’ unmet needs

are, whether stated or unarticulated. There is ambiguity, creativity, iteration and

learning, trial and error, and risk-taking involved in this process.

3. Stage gate

Teams develop ideas and products through phases using milestones. Each phase

is reviewed by senior team members before moving to the next development

phase.
Tangible Business

McDonald’s has been in the forefront of providing nutritional information of its

products, long before fast food chains were mandated by legislation. McDonald’s

establishment of its Global Advisory Council (GAC) was driven out of concern for its

consumers’ health and well-being. The corporation ensured that the council members

are comprised of medical doctors and nutritional experts from its largest global markets.

McDonald’s believes that its sustainability and increased profits are due to the

company’s nutrition and well-being strategy of offering expanded healthy selections and

nutritional information labels. Although McDonald’s has a core menu that works for the

chain, the company’s menus reflect its consumer preferences in various regional markets:

For example, McDonald’s India has a menu with vegetarian selections to

suit local tastes. Chicken and fish choices are offered, but no beef or pork
items. Israel has both kosher and non-kosher restaurants. [McDonald’s]
also introduced a line of Premium Salads in the majority of [their] nine
largest markets and several Premium Chicken offerings, including smaller
portion-sized offerings like the Petit Plaisir sandwiches in France and
chicken wrap choices in Germany, the UK and the U.S. (Nutrition and
Well-Being, 2008).

Maintaining the quality of McDonald’s products starts with supply chain

management. McDonald’s chains can use any of the following approaches to control its

inventory (Ferrell, Hirt, & Ferrell, 2008):

 Economic Order Quantity model (EOQ) – identifies maximum number of items to

order to minimize the costs of managing them.

 Just-In-Time Inventory management – order smaller quantities that arrive “just in

time”, requiring less storage space and reduces or eliminates wasted product.

 Material-Requirements Planning (MRP) – schedules precise quantity of materials

needed to make the product; used in conjunction with JIT inventory management.
 Quality control is achieved by embracing the total quality management (TQM)

strategy. According to Ferrell, Hirt & Ferrell (2008):

TQM is a philosophy that uniform commitment to quality in all areas of the

organization will promote a culture that meets customers’ perceptions of quality [which]
involves coordinating efforts to improve customer satisfaction, increase employee
participation and empowerment, form and strengthen supplier partnerships, and foster
organizational culture of continuous quality improvement. (pg. 285)

Other quality control measures that can be used are benchmarking, ISO 9000

certification, product inspections, and product sampling/testing (Ferrell, Hirt, & Ferrell,

2008).

Service Business

A local bank has to remain competitive by matching its product line with other

banks. What sets it apart from its competition are the various services that it offers to

cater to customers, such as banking hours, customer service, diversity of customer

investment portfolios, variable rates, and use of technology. In addition, banks depend

on customer feedback as a way to detect emerging trends in the financial marketplace

when offering new products and services.

Banks also embrace the TQM approach. However, it is difficult to measure the

quality of service because it is highly subjective; banks are dependent on customer

responsiveness to services offered. According to Ferrell, Hirt, & Ferrell (2008), a

business must identify which characteristics are important and devise ways to measure

those characteristics. One strategy a service business can use to measure quality

standards is benchmarking, which uses its best competitors as a barometer of its

performance. Another strategy is to have a high degree of customer contact to improve

its customer service, to identify opportunities and carve a niche using those opportunities.

A service business will use technology and be customer service oriented in order

to be successful. “Thus, service organizations must build their operations around good

execution, which comes from hiring and training excellent employees, developing

flexible systems, customizing services, and maintaining adjustable capacity to deal with

fluctuating demand.” (Ferrell, Hirt, & Ferrell, 2008, pg. 268).

Works Cited

Ferrell, O. C., Hirt, G. A., & Ferrell, L. (2008). Business: A Changing World 7th edition.
Boston: McGraw-Hill Irwin.

Nutrition and Well-Being. (2008). Retrieved October 21, 2009, from McDonald's
Corporate Responsibility Values in Practice Report:
http://www.crmcdonalds.com/publish/csr/home/report/nutrition_and_well-
being/products.html

Kaplan, Soren, PhD. (2007). Products and Services. Organizational Culture: Business
Concepts for the Organizational Development Professional [DVD]. Laureate Education,
Inc.