Managing Business Operations with Reference to McDonald's Corporation

This report discusses the approaches of McDonald's Corporation towards capacity management, implementation of 4 D's in McDonald, evaluation of performance objectives, and average waiting time of customers in the system.

MANAGING BUSINESS
OPERATIONS WITH
REFERENCE TO MC
DONALD'S
CORPORATION

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Mc Donald's approaches towards capacity management.............................................................3
Implementation of 4 D's in McDonald........................................................................................4
Evaluation of performance objectives in McDonald...................................................................5
Question-4....................................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................1

INTRODUCTION
Managing business operations is one of the important aspect of every management of the
corporation particularly of large size organisations (Choi, Wallace and Wang, 2018). The
businesses where operations are managed in a better way, they can guarantee their long term
success in the market. The present report is based on Mc Donald's business operations along with
various approaches it has adopted towards performance management and higher customer
satisfaction. Mc Donald is a retail company in fast food industry which is based in Chicago,
United States. It has large chain of retail outlets throughout the world serving millions of
customers every day.
MAIN BODY
Mc Donald's approaches towards capacity management
Capacity management refers to the process of identifying the capacity required by the
organisation in terms of production in order to cope up with the changing demand of its products
and services. It allows management to determine the highest possible work an organisation can
perform in a given time. McDonald has the capacity to serve 70 million customers every day.
The company's sales and profit figures are continuously increasing since its establishment. The
company has a record of 100 billion sales of hamburgers in the year 1993 (Pawar, 2018). With
regards to McDonald's approach towards capacity management, here we will be explaining the
level capacity approach of McDonald.
The level capacity is the capability of the McDonald to produce at the certain level of
output to serve customer demand. In order to ensure proper flow in production process
McDonald has adopted Just In Time inventory system which allows them to get raw materials
and other resources of production as and when required. This helps them in reducing costs
associated with inventory management. Also, they have adopted pull strategy in production
process which ensures acquisition of inventory as required. The other aspect of level capacity
approach of McDonald can be explained in its fast service system which allow them to reduce
the waiting time of the customers so that these customer's demand can be satisfied with higher
level of satisfaction. Also, they are able to ensure that their customers cannot be lose to its
competitors. Along with ensuring high level of capacity through its quick services, they are
known for maintaining and improving its products quality to the highest possible level. By doing

so, they have ensured that their capacity will be reconciled with their customer demand (Glas,
Henne and Essig, 2018). If they failed to do so then their will be mismatch between demand and
its capacity, resulted in an inefficiency and unsatisfied customer demand. This mismatch can be
best avoided through acquiring new and innovative production equipments and machines and
that is what McDonald is actually doing.
Implementation of 4 D's in McDonald
McDonald has a properly defined operations right from Designing a product till its final delivery
to the customers. We will discuss these four D's of managing operations of a concern with
regards to McDonald.
Design: At this stage of operation management, manager designs the product, that it will be
going to offer to its customers (Reid and Sanders, 2019). This is the most important aspect which
must be considered with great efforts because the design of the product plays an important role in
increasing final demand of the product. It has design its product by considering the quality as the
most important factor which should not be compromised anyhow. Also, if we look at its process
design then it can be said that it has designed it in such a way that will ensure minimum time
taken for delivering services with the highest possible quality. McDonald has introduced many
innovations in its process design from time to time, to improvise its quality of product and
services.
Direct: This element of operations management stresses on directing the overall operational
strategy towards the mission and vision of the company. McDonald's management has framed
out many performance objectives which act as a guiding principles for achieving objectives,
mission and vision of the company (Gregory, 2017). For this they have set performance
standards in terms of quality, cost and speed which has taken them to the top position in the fast
food industry.
Develop: This aspect of operational management imposes responsibility on the operation
manager, where they are expected to continuously revisit its production activity in order to
optimise performance and redesign its process. This is done to ensure continuous improvement
in product quality and processes associated with it (Ivanov, Tsipoulanidis and Schönberger,

2017). McDonald's management has adopted JIT inventory approach along with pull strategy
which allows for uniform production system. This helps them in achieving cost efficiency and
improving profitability. Also, they have acquired innovative technology for its outlets to satisfy
customers need by offering the highest quality products.
Deliver: Under this element, operation manager ensures delivery of products and services to the
final customers, that must match with the set standards of quality. McDonald has adopted a quick
delivery system which allows them to serve their customers in minimum possible waiting time
(Plough and et.al., 2017). Also, in terms of inventory management it has adopted JIT strategy
where the required quantity of materials are delivered to them only when they require it instead
of maintaining large inventories of raw material.
Evaluation of performance objectives in McDonald
Management of McDonald has set out five performance objectives, that is quality, speed,
dependability, flexibility and cost. These objectives are set in alignment with the company's
goals, objectives, mission and vision.
Quality: This is the most important factor considered by every operation manager and that is
what actually done by McDonald. Here, in order to enhance their product and service quality
they resort to maintain better services and relations with customers. As they are in service
industry, they always try for higher customer satisfaction which is necessary for improving
customer experiences. They have also acquired modern technology for delivering their services
in a quicker and efficient way.
Speed: The objective of delivering services at the fastest possible way is what comes under
performance objective of speed (Reid and Sanders, 2019). If customers will not get their
products and services delivered at the right time then their satisfaction level gets reduced and
they may prefer to avail competitors products and services. McDonald in always try for speedy
delivery and reduction in waiting time by customers, like their aim is to reduce the same to 95
seconds.

Dependability: It can be determined in terms of both externally and internally where the former
guides in developing product and services while the latter provided benefits like time and money
saving (Glas, Henne and Essig, 2018). In the context of McDonald it has a dependable system
which helps them in serving their customers on time by presenting what they have ordered.
Flexibility: It allows for possible changes in the operations (DeNisi and Murphy, 2017).
McDonald has adopted flexible processes where they can introduce timely changes in order to
cater to the changing needs of the customers and remain competitive in the market.
Cost: Under this objective, the cost aspect of the operations are considered. All business
enterprises aims to reduce its cost of production in order to set competitive prices (Ivanov,
Tsipoulanidis and Schönberger, 2017). McDonald has an ability to minimise its operating costs
which allows them to set lower prices of its products and services than its competitors.
Question-4
Average number of customers in the system = u / 1-u
Average waiting time in the system = ts / 1-u
ts = Average service time = 5 minutes
u = ra / rs
ra = Arrival rate = 25 cars per hour
rs = Service rate = ts * 12 = 5 * 12 = 60 customers in one hour
u = 25 / 60 = 0.42
Average number of customers at the till = u / 1-u = 0.42 / 1-0.42 = 0.72 or 72 customers.
Average waiting time of the customers = ts / 1-u = 5 / 1-0.42 = 5 / 0.58 = 8.62 minutes.
Interpretation: From the above illustration it can be said that the average customers waiting at
the till is quite higher than the rate at which Drive through. This may results in higher waiting
time for customers to avail their services. Mc Donald should work more and more to speed up its
services in order to manage its queue of customers.

CONCLUSION
From the above report it can be concluded that the secret there must be some secret
behind everyone's success. In McDonald's case, this secret is its ability to manage its operations
in the most efficient and effective manner. This operation management ability allowed it to serve
higher satisfaction level and good experience to its customers and that is the only reason behind
its image and position in the market.

REFERENCES
Books and journals
Choi, T. M., Wallace, S. W. and Wang, Y., 2018. Big data analytics in operations
management. Production and Operations Management, 27(10), pp.1868-1883.
Glas, A. H., Henne, F. U. and Essig, M., 2018. Missing performance management and
measurement aspects in performance-based contracting. International Journal of
Operations & Production Management.
Ivanov, D., Tsipoulanidis, A. and Schönberger, J., 2017. Global supply chain and operations
management. A decision-oriented introduction to the creation of value, 2.
Pawar, A., 2018. A study on analysis of supportable employee engagement model in
McDonald. International Journal of Information, Business and Management, 10(1),
pp.172-181.
Reid, R. D. and Sanders, N. R., 2019. Operations management: an integrated approach. John
Wiley & Sons.
Plough, A. C., and et.al., 2017. Relationship between labor and delivery unit management
practices and maternal outcomes. Obstetrics & Gynecology, 130(2), pp.358-365.
DeNisi, A. S. and Murphy, K. R., 2017. Performance appraisal and performance management:
100 years of progress?. Journal of Applied Psychology, 102(3), p.421.
Online
Gregory, L., McDonald’s Operations Management, 10 Decisions, Productivity. 2017. [online]
Available Through<http://panmore.com/mcdonalds-operations-management-10-
decisions-areas-productivity>
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