IT 6683/4683 CASE STUDY CASE 2-1 TACO BELL INC. (1983-1994) Cynthia Nunnally Debbie Rollins Julius Robinson Steven Wall Shashank Trivedi Lucas Varner

OUTLINE

  Introduction  The Case Studied  Case Overview Strategy  Business Model    Before (Concept, Capability, & Value).

After (Concept, Capability, & Value).

Strategic Planning  Strengths and Weaknesses.

  Opportunities and Treats.

Tactical Steps   Steps Taken and Role.

Value.

OUTLINE (CONT.)

    Factors  General Technology Factors    K-minus POS Systems Non-Technology Factors.

  Management Roles.

Incentive Change.

 Implementation of Safety Nets.

Information Technology   IT and Support of Business Model and Processes  TACO & TACO II.

Pillars of IT in the Case.

Recommendation  Solution Recommended.

  Justification.

Does it Match?

 What would you do differently.

Lessons Learned from the Case for Today’s IT Manager References and Bibliography and Acknowledgements 

THE CASE STUDIED

       F.A.C.T. Fast.Accurate.Clean.Temperature

Taco Bell Inc. 1983-1994 Location: United States Nationwide Fast-Food Chain Case 2-1 297-312 Major Sources:   Applegate, L. M., Austin, R.D., & Mcfarlan, F.W. (2003).

Corporate Information Strategy and Management:

Text and Cases (6 th Edition). New York, NY: McGraw-Hill/Irwin.

Vlessing, E.

Taco Bell Corporation.

Retrieved from http://www.referenceforbusiness.com/history/St-Th/Taco-Bell-Corporation.html

CASE OVERVIEW

 

Problem

     Current labor was intensive.

The company had no technology; manual plastic boards were used.

Employees were required to create large amounts of operational paperwork as part of their job.

The employee turnover rate was at 220%.

No drive through windows.

Managers and crew members spent a lot of time cleaning and preparing ingredients.



Background

 Taco Bell is a fast food restaurant chain that typically served Mexican food but in later years was reengineered to appeal to the American general public. In a period when most other fast food chains experienced flat domestic sales and declining profits, Taco Bell was profitable and increased its market share.



Pivotal points

  1983-1988: Modernize the physical units 1988-1991: Transforming the Business 1991-1994: Creating the Learning Organization 

BUSINESS MODEL

BEFORE    Concept    A successful Mexican fast food chain trying to find its market identity. Had a large share of Mexican fast food market (40%) but small percentage of total fast food.

Labor intensive process to provide a fresh product with little use of technology Capability      District manager, restaurant manager, assistant restaurant manager  Unrewarding and stressful relationships leading to high turnover Store operations- plastic ordering boards, clean and prep of ingredients Food prep/cooking take up 70% of space Manual creation of employee work schedules by managers Paper intensive data collection Value    Small market share of fast food industry.

 $700 million with 1,489 restaurants Potential for sizeable stake in the rapidly expanding fast food industry.

Rising brand recognition

BUSINESS MODEL (CONT.)

AFTER    Concept    A rapidly growing fast-food chain aimed at dominating the industry through competitive business practices and changing the scope of the fast food industry Expansion of brand into retail supermarkets and spread to other countries.

Streamlined operations providing FACT (Fast, Accurate, Clean, Temperature) products to customers Capability    Taco bell restaurants  Market managers, restaurant general managers, team-managed units Store operations  Consolidated cook and prep space and procedures  TACO II, voice-mail, information infrastructure Marketing  Customer service phone-line, questionnaires, surveys. Expansion of Taco Bell brand.

Value    Brand recognition Expansion into different markets: international, retail supermarkets Increased customer satisfaction   Total sales ~$4 billion in 1993 Increased fast food market share

STRATEGIC PLANNING



Strengths

 Production Speed  Convenience  Technology Advantages  Customer Loyalty  Brand Recognition  Management  Pricing  Advertisement 

Weaknesses

 Awareness  Franchise Management  Availability of Desserts  Poor nutritional value  Bad Publicity

STRATEGIC PLANNING (CONT.)



Opportunities

 Venture into newer markets  New flavors/ recipes  Focus on health Friendly Ingredients  Extended Hours of Operations 

Threats

   Competitors Awareness of info on food menu items that have harmful impacts Employee retention, high turnover rate

TACTICAL STEPS

 Steps Taken  Expand Market into different countries  Upgrade technology  Modernize physical units  Adding new menu items  Revamping Operations  Role   Increase sales world wide To make customer orders more efficient    Remodeling restaurants Expanding Customers Replacing parallel food assembly lines with double assembly line

TACTICAL STEPS (CONT.)

 Value      Continue to make Taco Bell a worldwide franchise and expand upon consumer base Decrease expenses required in remaking of orders and improve upon customer loyalty by offering not only speed but accuracy when it comes to completing orders Increasing seating capacity, adding more convenience with the inclusion of drive through windows, providing the option to dine in.

Providing more options to current customers and attracting newer ones.

Easier to serve drive through window/ improved product flow speed and capacity

GENERAL TECHNOLOGY FACTORS



K-Minus

 Referred to the reduction in kitchen size by converting it into primarily a heating and assembly station. Created larger area for customer dining as well as space for drive-through customers 

Electronic POS systems

 Tracked ordering, sales, and product data.

NON-TECHNOLOGY FACTORS

 Management Roles       Instigated FACT (Fast, Accurate, Clean, Temperature) in response to customer preferences . Management strategy based on high turnover rate.

Restaurant managers (RM) and assistant restaurant managers (ARM) in charge of daily store operations. RMs reported to the district manager who required very strict audits of the RMs managing abilities creating tension. RM was changed to restaurant general manager (RGM) to encourage independence and the idea of self-sufficiency.

New training programs implemented focusing on leadership and management abilities (5 days of leadership training).

District manager role changed to marketing managers emphasizing coaching and developing RGMs. Taco Bell took dramatic step by looking outside of the fast food industry to find talent. Later developed team-managed units (TMU) which were designed to manage stores in the absence of the RGM.

NON-TECHNOLOGY FACTORS (CONT.)

 Incentive Changes    Implemented raise in salary for RGMs from $28,700 to $32,000 with a potential bonus of $12,000. Later expanded to potential earning power of $60,000.

Market manager salary restructured to appeal to talented individuals. Increased average salary from $38,000 (with a $5,500 average bonus) to $48,000 with a potential bonus of $1,200 per store supervised.

The new structuring also provided opportunities for career advancement within the company    International marketing manager Managing more profitable markets Product Business management

NON-TECHNOLOGY FACTORS (CONT.)

 Implementation of Safety Nets    Created a toll-free customer service number as a way for people to comment on the quality of service and food.

Mystery shoppers were introduced to indentify issues, gather information, as well as a way to reward RGMs bonuses.

Marketing surveys were conducted by Taco Bell employees who would go to individual stores and ask customers to fill out questionnaires. This data was used in determining a stores value in its current market as well as a market manager’s bonus.

IT AND SUPPORT OF BUSINESS MODEL AND PROCESSES

TACO: Total Automation of Company Operations Personal computer in every store that is linked to a local point of sale (POS system) TACO II: Same as TACO, but designed for crew members -New and more user friendly computer system that was designed to provide crew members with the information needed to make decisions and take appropriate actions TACO and TACO II brought a change from “0.5 percent meat variance” to “300 tacos” – information that the crew members can easily interpret and quickly act on.

PILLARS OF IT IN THE CASE

 HCI : The use of POS (Point of Sale) system, CAT (Customer Activated Terminal) and extension of e-mail systems and computer conferencing  Programming : No real information about programming given, but programming was a part of building an Intellectual Network and the Infrastructure  Networking : Building a network to maintain a sense of community within the organization  Database : Shared databases incorporating “best practices” information on a wide variety of subjects  Web : With the use of web, the company was able to expand the access to critical information

RECOMMENDATION

   Solution recommended  Focus on managing the business by using real-time information to ensure the information is useful and focuses on action to help with decision making and strategic planning.

    Ensure the information is reliable and accurate to help with sales and marketing.

Focus on growth strategies.

Focus on target customers, cultures, and customer relations.

Focus on innovation.

Justification  Focus of the layout was completely changed to benefit the company’s efficiency and customer base. The configurations changed to a 30% kitchen and 70% customer service area called K-Minus. This enabled food processing to be handled on a corporate level and delivered to individual stores. Customers demanding FACT (Fast, Accurate, Clean, Temperature) so changes implemented to maximize on these four points. Does it match what happened?

 Yes because Taco Bell was reengineered from the ground up to provide faster service and better quality of service for future innovations.

RECOMMENDATION (CONT.)

 What would we do differently given what we know today (update the case)      Strive for future innovation which includes a testing site for new ideas such as a kiosk or cups with bar codes that could provide the younger generation with popular music and videos.

Provide for on-campus vendors for college students.

Implement touch screen ordering systems as well as online ordering capabilities ("New technology makes," 05).

Evaluate the importance of the expansion into International markets and how to further expand. $275 million in sales in international markets in 2011 (Novak, 2011). Look at the impact of rising health concerns about food and its preparation in conjunction with customer surveys and questionnaires

LESSONS LEARNED FROM THE CASE FOR TODAY’S IT MANAGER     Understand the relationships that exist in your management hierarchy and how people feel about them. Don’t associate harsh rules and policies with the most effective form of management. Know where you stand in your market and be able to indentify your niche and the best ways to take advantage of it.

Constantly evaluate how your company is using technology and recognize when capabilities need to be expanded.

Don’t assume HCI makes sense to everyone. Sometime systems need to adapted to be more user friendly as evident from experiences with TACO and TACO II.

REFERENCES AND BIBLIOGRAPHY Applegate, L. M., Austin, R.D., & Mcfarlan, F.W. (2003).

Corporate Information Strategy and Management:

Text and Cases (6 th Edition). New York, NY: McGraw-Hill/Irwin.

Bhasin, H. (2011, November 22). Swot of taco bell. Retrieved from http://www.marketing91.com/swot taco-bell/

New technology makes fast food faster; fgcu graduates hired

graduates-hired.aspx

. (2009). Retrieved from http://www.benseron.com/Blog/tabid/75/EntryId/1/New-technology-makes-fast-food-faster-FGCU Novak, D. (2011).

Annual report

. Retrieved from http://www.yum.com/annualreport/ SHVILKA. (2012, March 07). Overall swot analysis of tacobell. Retrieved from http://takoringsabellinhungary.wordpress.com/2012/03/07/overall-swot-analysis-of-tacobell/

Taco bell

. (n.d.). Retrieved from http://www.mbaskool.com/brandguide/food-and-beverages/635-taco bell.html

Vlessing, E.

Taco Bell Corporation.

Retrieved from http://www.referenceforbusiness.com/history/St Th/Taco-Bell-Corporation.html

ACKNOWLEDGMENTS

 We would like to thank Professor Rich for his help and guidance in completing this case study. His assignments and breakdown of IT management concepts paved the way for our success.  Lastly, we would also like to extend our gratitude to all of our other classmates and team members which provided thought provoking dialogue and insight into the world of IT management.