Managing Business Operation: Case Study

This case study explores the approaches for capacity management by McDonald to reconcile demand and capacity, implementation of four Ds by McDonald's restaurants, and the importance of five performance objectives in operations at McDonald's.

Managing Business Operation
Case Study

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Approaches for capacity management by McDonald to reconcile demand and capacity...........3
Implementation of four Ds by the McDonald's restaurants........................................................4
Five performance objectives importance in operations in McDonald's......................................5
Average number of customer arriving at the till along with average time they must wait before
existing McDonald's drive Thru..................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Administration of business practices that help in creating the highest level of efficiency is
known as operation management (Bazmohammadi and et.al., 2018). This study is based on
McDonald's that makes use of effective strategies for improving customers satisfaction and
image as well. It will discuss effectiveness of JIT, TQM and other approaches.
Approaches for capacity management by McDonald to reconcile demand and capacity
McDonald serves to around 70 million customers a day but this number can be
fluctuated. For providing services to customers it is important for McDonald to have all
resources and raw materials at its store. It is found that initially as per its traditional operation, it
held raw materials and finished products at its store or warehouse as reserve and it helped this
company to make use in case of items run out of stock. But it is found that managing such
inventories are expansive and it is beneficial in cases when items run out of stock otherwise it
requires space for keeping this and also increase overall inventory cost. So, for managing
capacity as well as demand of customers, it implemented product management approach that is
known as Just in time.
Just-in-time: As per this approach of operation management, raw materials and other
materials are being acquired and purchased as per the demand of customers or when they are to
be used in production process. It reduces cost of production, warehouse space cost and overall
inventory cost (Shen and et.al., 2020). Pull strategy in the control of production is the main key
of this approach. There are several benefits that this company can take by making use of this
approach such as:
 It improves overall quality of products as it encourages employees for taking active
participation in the production process. It also helps in decreasing errors or wastes that
also lead to improved quality of final goods.
 Company can provide or deliver products to customers in a timely manner.
 Cost reduction of inventory that can increase profit.
 It prevents over production that can reduce cost and waste as well.
 It helps in performing functions smoothly and effectively.
All these benefits can al;so help this company and employees in maintaining of all
equipments as this process or approach of capacity management save time. So, they can use their
3

saved time in other functions (Kazi and et.al., 2019). So, overall it can be said that this new
approach of capacity management can be beneficial and can help company in increasing
productivity, profit, sales and reducing cost as well.
Implementation of four Ds by the McDonald's restaurants
There are 4 Ds that has been implemented by this restaurant in order to improve its
operations and taking advantages of all external and internal opportunities such as:
Direct: Directing overall strategies of operation is the main effectiveness as other aspects
depended on it. In this stage, company makes an effective plan and decide that how it can
translate its strategies into reality. By directing all employees and all responsible person it gets
function done from them. It focuses on both task and relation. As per the situation it implements
either relationships oriented strategy or task oriented strategy (Starkey and et.al., 2018).
Design: McDonald's stated some key factors that leads to its success and this tremendous
growth and it includes: preparation method, speedee service system and designed equipment. In
regard to designed equipment it is identified that this implementation of process layout and
product layout it attracts customers and makes them feel valued. Interior of this restaurant is also
effective that help it out in attracting customers. Food products are also being provided in
different sizes, tastes and varieties.
Deliver: It is other main key of its success. By analysing internal factors it found that
customers have to wait in queue for longer run that can reduce sales. Many customers return
when they see long queue so, for improving delivery of products services it increases its drive
through branches. These branches play a vital role in delivering products to customers. It is the
best for home delivery and by making sure timely delivery it improves its operations.
Digitalization of operations is also the main reason of improving delivery. Increasing rate of
Drive thru and Mc delivery also main strategy for improving operations and solving problems
that customers were facing. By closing seating areas and only offering takeaway it continued its
functions after lock down in an effective manner.
Develop: Developing existing products and strategies is other main key of its success. It
is found that McDonald's have a policy of introducing new items and adding them in menu for
attracting customers to the great extent. This policy and product development as per the needs
and changing needs of customers, help it out in increasing sales and customers experience. It
improves its image and by this it can reach to global customers (Zorpas, 2020).
4

So, from the above discussed all implemented Ds it can be said that these all can
improves its operations and can help make it able in making its effective position in the market.
Five performance objectives importance in operations in McDonald's
Performance objectives play a vital role as by developing and setting performance
objectives company can meet their main vision and mission of performing all functions. All
these objectives are being developed by companies on the basis of their operations. Some
performance objectives of McDonald's restaurants that can improve its overall performance
include:
 To improve quality of products and services.
 To improve customers experience.
 To reduce overall operating cost and adopting competitive pricing strategy.
 To produce high quality of food.
 To reduce waiting time of customers.
On the basis of above discussed performance objectives it can be said that by
accomplishing al;l these goals, it can improve its overall operations and also improve image.
McDonald's has not only established these goals but also striving hard for accomplishing these.
For accomplishing each goal it has developed some strategies such as:
For improving overall quality of services and products it focuses on TQM approach.
This approach helps it out in reducing errors or wastes that leads to the best quality (Neyestani,
B., 2017). Also it is found that by delivering goods to customers in a timely manner it increases
value. For accomplishing other performance objective goal of increasing customers experience
and retaining them with the company for the long run, it reduces current waiting time for
customers. For this purpose it makes use of its drive thru branches and it is also found that
customers find easier in collecting products from there. They also help this restaurant in
delivering products at expected set time. It makes sure that picking up and delivery time of
products to customers is as per the expected time. For improving overall services it makes use of
advanced technology such as online booking, home delivery and digitalization of operations.
5

For accomplishing other goal to have competitive prices and reducing overall operational
cost, it made an effective strategy and reduces investing in unnecessary tools and cost in wrong
selection and recruitment strategy. It is also found that implementation of just in time approach
also helps it out in reducing inventory cost and warehousing cost. It also makes it able in
improving customers satisfaction, increasing profit and productivity as well. It makes proper
planning and as per the plan it performs it functions that reduces errors and also reduces cost. By
doing so, it provides products to customers at lower prices than its competitors. For reducing
waiting time and improving quality of food products it focuses on proper controlling and
monitoring and makes sure that skilled workforces are following all guidelines for managing
food quality (Starkey and et.al., 2018).
Average number of customer arriving at the till along with average time they must wait before
existing McDonald's drive Thru
Λ= It refers average number of arrivals per hour or mean arrival rate of customers.
Rate of this at McDonald's is 25 per hour
μ = It refers average number of people that are being served per time period or known as mean
service rate.
Average time service at McDonald's is 5 minute.
p=Λ/μ= average utilization of the system that is known as drive thru.
P=25/5=5.
L= Λ/ μ- Λ=It refers the average number of customers that come in the service system that is:
25/5-25=1.25.
W=1/ μ- Λ: It refers the average time that customers spent waiting in the system.
0.05 sec.
So, from the above calculation it can be said that average time of waiting by customers in
the system will be 0.05 sec. Average number of customers arrive at system will be 1-2
(Operational Strategies of McDonald's, 2020).
6

CONCLUSION
From the above study it has been summarized that operational management approaches
play a vital role as it helps in improving quality of products. Quality is the main key of success of
restaurants that help them out in increasing productivity and customers experience. It has
discussed effectiveness of some approaches of operation management and four Ds such as: JIT,
design, development and others.
7

REFERENCES
Books and Journals
Bazmohammadi, N. and et.al., 2018. Optimal operation management of a regional network of
microgrids based on chance-constrained model predictive control. IET Generation,
Transmission & Distribution. 12(15). pp.3772-3779.
Kazi, D.S. and et.al., 2019. Cost-effectiveness of alirocumab: a just-in-time analysis based on the
ODYSSEY outcomes trial. Annals of internal medicine. 170(4). pp.221-229.
Neyestani, B., 2017. Principles and Contributions of Total Quality Mangement (TQM) Gurus on
Business Quality Improvement. Available at SSRN 2950981.
Shen, F. and et.al., 2020. Probabilistic just-in-time approach for nonlinear modeling with
Bayesian nonlinear feature extraction. Chemometrics and Intelligent Laboratory Systems.
196. p.103895.
Starkey, A.J. and et.al., 2018. A genetic algorithm based system for simultaneous optimisation of
workforce skills and teams. KI-Künstliche Intelligenz. 32(4). pp.245-260.
Starkey, A.J. and et.al., 2018. A genetic algorithm based system for simultaneous optimisation of
workforce skills and teams. KI-Künstliche Intelligenz. 32(4). pp.245-260.
Zorpas, A.A., 2020. Strategy development in the framework of waste management. Science of
The Total Environment. 716. p.137088.
Online
Operational Strategies of McDonald's. 2020. [ONLINE] Available through
:<https://www.slideshare.net/SiddhiSharma5/marketing-and-operational-strategies-of-
mcdonalds>
8