Brand Equity Management & Crisis Response in Food Supply Chains

This assignment focuses on strategic brand management and crisis communication in the context of food supply chains. Students are required to understand the concepts of brand equity from Keller et al. (2011), apply these principles to a real-world food SC case, and evaluate its crisis response using Zhang's Situational Crisis Communication Theory.

Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Analysis of China's Mc D in aspect of meat scandal...................................................................1
TASK 2............................................................................................................................................2
Challenges to maintain a reliable supply chain in China.............................................................2
TASK 3............................................................................................................................................4
Previous measures that are taken by McDonald' s China to strengthen its supply chain............4
TASK 4............................................................................................................................................6
Steps to improve supply chain management...............................................................................6
TASK 5............................................................................................................................................7
Adoption of vertical integration...................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In this modern era, management is considered as a vital part for development of society
and business organizations. In this light, strategic management is a part of management, which
signifies effective management which is applicable with the help of diffident kinds of strategies
through which goals and objectives of a company will be achieved. In this light, this present
report will be demonstrating about Case of China: The Expired Meat Scandal (Meredith Belbin,
2011). Considering this, various aspects and concept related to supply chain management and its
challenges will be discussed. In addition to this, various measures, by which supply chain in
China can be made more effective will also be given effect. Furthermore, idea of vertical
integration is also discussed in a view to outsource for Mc D china. Along with this, its benefits
and disadvantages will also be discussed, in this present report.
TASK 1
Analysis of China's Mc D in aspect of meat scandal
In China, there are many cases which are involved in scandals related to food. There are
many companies which supply wrong and expired food items. In this regard Mc Donald was also
occupied in case of Expired meat scandal.
With reference to the given case scenario of Mc Donald's China, in relation to expired
meat scandal, it was given that US owned supplier has its subsidiary in China named as Shanghai
Husi, who was authorised to supply meat to Mc Donald's was producing lower and substandard
quality meat items and products. Mc D was considered as one of the biggest food client, so it
resulted in hampering of image of Mc D among its customers. So, in this regards, authorities of
China ordered Shanghai Husi to be shut down (Keller, Parameswaran and Jacob, 2011). So, in
this regards, question arises, what could Mc D perform in regard to gain its effectiveness and
efficiency in order to retain its customers. It can also be noted that Mc Donald’s in China has its
own significance. it conducted its operation on the basis of Foreign owned enterprises approach.
It always aims at cost leadership approach.
As per case scenario of expired meat scandal, it was found in an undercover video, that
workers of Shanghai Husi were picking up the meat products, dropped on floor and packing the
same product in a processing machine. A worker told undercover agent that he was asked by top
management to do so. So, after getting knowledge regarding this gesture done by Shanghai Husi,
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Chinese Authorities took corrective actions against supplier. The major effect of this scandal is
that many companies like Starbucks, Burger King and Yum! Had cut down all their ties from
Shanghai Husi.
Afterwards, its scandal with Shanghai Husi, it can be noted that Mc Donald’ s is a victim
in the case of expired meat scandal. It is due to reason that it was a mistake of supplier who did
not render quality meat products to cited organization. Also, they have argued in regard to this
case that supplier company has deceived them (Kerzner, 2013). Also, it created a negative
impact on business of Mc Donald’s in Japan, Korea and Hong Kong. Also, it had also created
negative impact on customers.
In this aspect, various mistakes done by Chinese Mc Donald’s are evaluated as under:
 The first and major mistake committed by Mc Donald’s in China is that the management
was not aware of effective management skills in respect of supply of goods and services.
Along with this, the top management also, did not maintain effective relationship with its
suppliers.
 In addition to this, it has been evaluated that Mc Donald’s had relied on audit, conducted
by third party, in relation to compliance with food safety rules and regulations at facilities
of suppliers (Burke, 2013).
 They did not follow franchise model for purpose of expansion its area of operations
outside China, rather than, the management of cited organization operated its activities of
business under an approach of Wholly foreign owned enterprises.
 Moreover, they customers have also criticised Mc Donald’s China by claiming that they
had not taken proper care and attention in regard to their supply chain mechanism. They
also lacked behind in respect of oversight.
 In addition to this, one of major mistake attempted by cited organization is lack of
effective strategic management.
TASK 2
Challenges to maintain a reliable supply chain in China
Supply chain is a concept in which there is a presence of scheme of organizations,
people’s, activities and resources involved in transmission of a product or services from supplier
to respective customers of a company. In other words, it can be said that activities of supply
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chain involve conversion of raw materials and natural resources along with components into a
finished product, which is delivered to end customers.
Considering this, in this supply chain mechanism, used products and services may also
re-enter the chain of supply at any pint of time, in case where residual value is recyclable. It can
be characterised as a dynamic or complex demand and supply network. Thorough this, another
term evolved, which can be considered as an inseparable part, it can be termed as supply chain
management process (Madichie, 2015). In this light, it can be said that it is a procedure which
encompasses the management and planning of all operations and activities which are included in
procurement and sourcing as well as transformation of management actions.
Beside this, the supply chain management can be considered as a set procedure which is
related to preliminary responsibility assigned for an aim to link major functions and processes of
business inside and outside companies, with help of high performing and cohesive model of
business.
Furthermore, it has been assessed that a perfect and typical supply chain is concerned
with biological, ecological and political regulation and operation of all resources, which are
followed by extraction of raw materials by human (Stummer, 2015). It can be said that most of
the exchanges which are encountered in aspect of supply chain lies among different companies,
which basically seek to maximise and expand their field of interest.
Figure 1 Supply chain
(Source: Supply chain Success, 2017)
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In light of China, it can be said that it requires a great deal to maintain an effective and
reliable chain in the cited country. In this aspect, it can also be evaluated that there are various
challenges and measures, which should be properly analysed and evaluated in context of China.
These can be demonstrated as follows:
 In China, there is a great need and requirement of building and enforcement of diversified
food safety range and regulations.
 Also, there is a lack of education in aspect of requirements of compliances in terms of
audit in advance, enabling inspection (Zhang, 2015). Along with this, proper prevention
from window dressing should also be enforced. So that this challenge can be overcome.
 In addition to this, no strict provisions in terms of violations of laws and regulations are
framed.
 After considering this, Mc Donald's in China needs to reduce its costs and expenses as
market competition has boosted up in cited country. The cited organization also needs to
lower down operating costs and cost reduction.
 In China, one of the major challenge in respect of Supply chain management is to create
and maintain procurement network across globe, which can be in a situation to support
and react towards supply chain.
 Furthermore, in China, there is a challenge on manufactures to produce or make goods
and services of high quality which are safe in nature. If it’s not performed, then it will
also deteriorate an image of business organization.
 In context of China, Mc Donald's also requires to effect and implement shorter product
life cycle within dynamic business environment and changing demands in market by its
customers as well (Rambe and Ndofirepi, 2017). It should be done so that strategies in
context of supply chain can act as a supportive aspect to operations strategy.
Hence, it can be concluded that above mentioned are considered as a challenges in terms
of reliable supply chain management in terms of China.
TASK 3
Previous measures that are taken by McDonald' s China to strengthen its supply chain
In respect of business expansion and other profitable motives, it has been evaluated that,
there are different measures which are taken by Mc Donald's in earlier times. Beside this, it has
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also been assessed that Mc Donald's, is one of the famous fast food outlet in China. It has started
its operations in 1990.
In addition to this, after its evolution, it can be said that previous measures which are
taken by cited organization in perspective to boost its supply chain in China are demonstrated as:
 At earlier times, the company has started its operations in accordance with wholly owned
foreign chain enterprises and also joint venture model.
 After an evolution of increased regulation and investment, in China, Mc Donald's started
working as franchising business form.
 In addition to this, the cited organization has also taken a slow and cautious approach
which for the purpose of maintaining and sustaining quality of brand and control over
management.
 In this direction, cited organization emphasised on standardisation and operation of
efficiency and effectiveness with a main motive to reduce or minimise operating costs.
Also, global strategy of cited organization was based on cost leadership (Syrjälä, Jaskari
and Leipämaa-Leskinen, 2016). Nonetheless, in China, Mc Donald's initially was
working through adoption of differentiation approach.
 Also, they took no initiate towards maintaining an effectiveness in respect of maintaining
quality goods and services management system.
 Mc Donald’s, in China, has also lower down the cost and expenses in aspect of labour
and agricultural aspects, investment in creation of large supply chain in country for the
purpose of rendering local food and beverages to its respective customers. Also, the cited
organization only has only one outlet in China for production of meat.
 In this light, the company has adopted a supply chain mechanism which is related to three
E’s, these can be characterised as Ethics, economics and environment.
 The company has also not adopted any techniques and methods to conduct any sort of
audits and other compliances in regard to supply chain mechanism as well as food safety
management.
 In past, Mc Donald’s also did not adopt safety measures in respect of its suppliers and
also did not pay attention to goods and services namely Shanghai Husi (Spink And et. al.,
2017). As a result, they have supplied wrong and expired meat products.
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TASK 4
Steps to improve supply chain management
Supply chain management is a concept which is related with the flow and supply of
goods, products and services which includes crusade and storage of raw materials, which is in
connection to inventory in work in progress as well as finished goods. In other words, supply
chain management can be defined as an idea related to design planning, enforcement, control and
observing of activities related to supply chain activities. The basic objective of supply chain
management is to creation or building up of net value with a competitive structure as well as
synchronizing demand with supply (Zhang, 2015). It also involves measurement of performance
across globe. In this light, it can be said that there is different mechanism in aspect of supply
chain.
Apart from this, there are different areas which are related with a perspective to supply
chain mechanism. It can be featured as system engineering, industrial, procurement and logistics.
Furthermore, it can also be assessed that marketing channels play an important role in supply
chain management.
The main functions of supply chain management in context of cited organisation are as:
 It manages and regulates input of raw materials and other products into company for
purpose of rendering final products to its end customers (Yang and Jiang, 2015).
 Functions and operations can be performed by a business organization in a cost effective
manner.
 Also, through an effective supply chain management in context of Mc Donald,
evolvement of trust and collaboration among various partners of supply chain can also be
improved.
However, in relation to China and McDonald’s it has to implement various steps so as to
strengthen its position in market area, which can be demonstrated as:
 The company should make its operating activities in an efficient manner so that they can
make its business objectives in a more effective manner.
 They should always monitor their schemes and supply chain networks through which it
can keep a regular eye check on their services. In this light, there are several practices,
which should also be adopted to monitor the performance of their objectives.
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 Also, the management of cited company is desirous to increase its number of suppliers
who are based on China and also it should also enable timely audit of its accounts and
other legal items.
 Also, the cited organization should aim to change its strategy of positioning strategy to
differentiation.
 In this direction, the company should also set its objectives so that they can maintain their
effectiveness in context of supply chain mechanism (Nicolai, 2016).
 In addition to this, cited organization can enhance its supply chain mechanism by getting
liberated of spreadsheets.
 Along with this, the cited organization can also institute an effective supply chain
mechanism, which can assure working of business organization to attain and accomplish
its business objectives.
 Also, the management of cited organization should also involve its employees and
workers in order to improve chain of supply of goods and services.
 Furthermore, in order to enhance its supply chain mechanism, the business organization
needs to use real time dashboard reporting system in their operation of activities.
 Effective integration and connection of suppliers with logistical procedures should be
enabled by cited organization to get improved its supply chain mechanism.
TASK 5
Adoption of vertical integration
The concept of vertical integration is a concept which defines an arrangement within
which supply chain of a particular organization is owned by the company itself (Firoz and
Abinakad, 2016). In an ordinary case, each member and person of an organization manufacturers
different product or service, after which combination of those goods and services are done to
meet requirements of its respective customers.
On the contrary, there is a concept which is related to production of several products of
goods and services which are interrelated. While, vertical integration is another concept in which
different management styles has been demonstrated. in other words, it can be said that it is a
method or technique which is related to evade problem of hold up.
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On other hand, outsourcing is a method in which there is a contract which is formed
within two business organizations in terms of business process, operational and non-core
functions which are related with another party. It includes contracting both in domestic and
foreign aspects.
So, considering this, Mc Donald’s should adopt vertical integration. It is due to reason
that there if cited organization would adopt vertical integration, then it will not create any supply
of poor quality of goods and services (Spink And et. al., 2017). As in accordance with the
concept of vertical integration, the company has integration with its own supply chain
management. Also, there are several benefits which can be demonstrated as:
 It is consisting of lower costs in its transactions.
 It also enables the synchronization in terms of effective coordination and synchronization
in terms of products and services.
 Also, it as an ability to monopolize its marketplace throughout a chain with the help of
market foreclosure (Supply Chain Explained, 2017).
It created various benefits for society and societal people by reducing uncertainty.
 It can also be noted that local and domestic companies are in a better position in against
of foreign competition.
CONCLUSION
From the above mentioned research project this is concluded that supply chain
management system which helps in manage all over activities and operations of company as well
as assist to provide effective quality of products to customers as per their requirements. There
has been explained about supply chain concept it includes some stages as well as defined
regarding McDonald China: The expire meet scandal concept. Supply chain management aids to
maintain healthy relationship with customers and employers of firm as well as helps to enhance
profit level of cited company that's why it is very essential to manage them with the help of
appropriate methods and techniques.
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REFERENCES
Books and Journal
Meredith Belbin, R., 2011. Management teams: Why they succeed or fail.Human Resource
Management International Digest.19(3).
Keller, K.L., Parameswaran, M.G. and Jacob, I., 2011.Strategic brand management: Building,
measuring, and managing brand equity. Pearson Education India.
Kerzner, H., 2013.Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Burke, R., 2013. Project management: planning and control techniques.New Jersey, USA.
Madichie, N.O., 2015. The European'horsemeat scandal': A welcome opportunity for the halal
supply chain?.Journal of Customer Behaviour.14(1). pp.63-82.
Stummer, R., 2015. ERP traceability and data capture.MHD Supply Chain Solutions.45(3). p.48.
Zhang, Z., 2015. An Evaluation of Crisis Response Performance of Husi Food Co. during its
2014 Food Safety Scandal-Using the Situational Crisis Communication Theory.
Rambe, P. and Ndofirepi, T.M., 2017. Ethical perceptions of employees in small retailing firms:
A case of indigenous-owned fast-food outlets in Zimbabwe.South African Journal of
Economic and Management Sciences.20(1). p.14.
Syrjälä, H., Jaskari, M.M. and Leipämaa-Leskinen, H., 2016. Object Agency of a Living/Non-
Living Animal Entity: The Case of Horse/Horsemeat. InConsumer Culture Theory(pp.
65-91). Emerald Group Publishing Limited.
Spink, J. And et. al., 2017. Food fraud prevention shifts the food risk focus to
vulnerability.Trends in Food Science & Technology.62. pp.215-220.
Zhang, M., 2015. International Franchising: Food Safety and Vicarious Liability in
China.Franchise Law Journal.35(1). p.93.
Yang, Z. and Jiang, L.A., 2015. Managing corporate crisis in China: Sentiment, reason, and
law.Business Horizons.58(2). pp.193-201.
Nicolai, F.G., 2016. Bad reputation, customer attrition and marketing of the future: can the
management of a company save it from a scandal?.
Firoz, N.M. and Abinakad, M., 2016. Food Safety and Ethics in Foreign Markets.Conflict
Resolution & Negotiation Journal.2016(4).
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Online
Supply Chain Explained, 2017. [Online]. Available through:
<http://www.supplychainrecruit.com/content/supply-chain-explained-26.htm>. [Accessed on
21st, July, 2017].
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