Managing Business Operations

This document discusses how a restaurant chain, specifically McDonald, manages operational problems, implements capacity management, and achieves performance objectives. It also explores the implementation of the Four Ds (Direct, Deliver, Design, Develop) by McDonald to improve its business.

Managing Business Operations

Table of Contents
INTRODUCTION...........................................................................................................................3
McDonald's take on capacity management.................................................................................4
Four Ds implementation by McDonald.......................................................................................5
Performance objectives of McDonald.........................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
This file is on how a restaurant chain deals with operational problems, the approaches followed
to solve them. Also it highlights the 4 Ds used in restaurant chain to improve business and
achieve performance objectives. Company being taken here is McDonald which is a big fast food
restaurant chain from America and having expanded to a number of countries.
McDonald's take on capacity management
In recent years, growth of McDonald has been unprecedented with retail chains. In mid 1990s it
has expanded its chain to nearly the double with restaurants opening up in many cities. The low
priced food items offered such as burgers became an instant hit because of an innovation and
quality infused together. The marketing campaigns further increased its popularity among
various nations. This however led to some problems of capacity management as customers kept
flocking to the restaurants with popularity of the brand. It became difficult to manage many
orders coming in at one time. Therefore, it came to people queueing up to get their orders. A
large crowd brings problems such as less seating capacity, less room for fresh air and comfort
and long waiting for orders (Jacquillat and Odoni, 2018).
Any step to be taken for improvement in a business requires planning and decision-making. The
step which has been first taken is of capacity planning. McDonald managers first established the
level of productive resources. They analysed on the factors influencing lead time, cost and
competitiveness. It is then determined how much and when to increase capacity. It is very
important that company makes available the right amount of inventory to cover the demand as
well not exceed it. The company also has to rightly judge the cost of expansion and operation as
a misjudgement can lead to heavy losses. McDonald has also implemented Just-In-Time
approach in which small amount of inventories are supplied to cater for instant demands. It also
requires support of employees who are ready for such routine to be followed. McDonald have
followed a pull strategy for this approach in which the resources are bought as and when there is
an order placed by the customer. This helps in bringing fresh material for consumption
enhancing customer experience as well as reducing production costs. It also helps in reducing the

costs of carrying inventory. It has helped McDonald put a lower pricing on the products and
wide profit margins. The purchase orders based on actual than anticipated can lead to lower
storage costs, lower cost of raw materials. It also helps make product according to customer
specifications.
McDonald has also responded to these problems to give the customers a better experience in the
way that McDonald have taken to strict standards for food preparation. They have a goal of
providing quick service and to achieve this goal, they make an inventory of food products to
meet the surging demand. There has been limit kept on the storage of food to remain in inventory
thus the inventory is not kept high but this technique has helped company to level out its
production and moderate the labour force needs. This strategy has been called level production
(Mar-Ortiz, Castillo-García and Gracia, 2020).
Four Ds implementation by McDonald
In the changing era of digitization and globalization, restaurant chains have continuously evolved
themselves to stay in competition. There has been an increase not only in restaurant business but
also customer increase in the past decades with changing lifestyle of people and people
preferring to have food outside. McDonald have implemented four Ds in the process to evolve its
business which are:
Direct
It is about directing the strategy planned for the products to reach out to the customers with cost
efficient way and reduction in operational costs. For instance,the digital strategy has been
planned out well and is being executed by the operation managers. McDonald has been creating
a team focused on digital customer engagement as the restaurant digital orders have increased by
23% over the last few years. This is focused on reaching customers and increase sales growth.
The hard copy is being replaced with digital menu using kiosks. There are also restaurant apps
on the mobiles which help access the menu. They are easy to customize and offer better
experience to customers. They give nutritional information of the order placed, mention time at
which order has been placed and when the order will be delivered. This gives customer
satisfaction that their order is not remaining unattended and is in process. The ordering on

restaurant apps also helps avoid long queues and helps company in capacity management
(Fettermann and et.al., 2018).
Deliver
McDonald has added to the customer convenience by introducing delivery services of its
products by launching its delivery chain McDelivery which is a global brand extension
delivering to many cities. Customers can order from various platforms like web sites, mobile app
and can also place order on their call centre. There has been kept no minimal order for delivery
which is suiting to customers however a reasonable delivery charge is placed to cover the
transportation costs. In the situation of Covid, McDonald was operating through takeaways when
lock down was imposed. It was able to operate its business through delivery systems (Terwiesch,
and et.al., 2020).
Design
The design factor plays an important role in attracting customers. It may be the exterior look of
the restaurant chain which attracts customers and it may be the interior design or innovation in
the products offered. McDonald have done both exterior design in form of lavish restaurants
having excellent furniture quality and kiosks. They have also innovated their products like
burgers which are given a new look to appeal to the customers.
Develop
At McDonald's it is a continuous process to keep innovating existing products with new features
which can give customers a new experience and keep them attached with the restaurant. The
feedback of customers is also incorporated to keep on adding new features in their favourite
food.

Performance objectives of McDonald
McDonald has worked towards improving the performance of its business focusing on these key
objectives:
Speed
It is the turn around time of when the customer place an order and finally receive the order.
McDonald has always motivated its staff to take the orders and deliver them pleasantly. They
have trained their staff in a manner in which they can execute the orders at a fast pace. Methods
like just in time inventory have ensured that the employees receive the raw materials on time and
can start processing the order soon. Digital methods being used have also reduced time for
customers placing order and receiving the message that their order has been processed
(Mehralian and et.al., 2017).
Cost
McDonald have become a large company and thus have achieved economies of scale. They have
thus reduced their costs of production and the same reflects in its pricing too. Secondly, the just
in time inventory approach used also reduces costs as this saves cost on excess inventory storage.
The positive effect of this trickles down to the customers' pockets. The delivery costs of
McDonald has also been kept reasonable. These factors have made the value of the brand as high
quality and also reasonable for customer's pockets.
Quality
The restaurant chain has maintained high quality standards since its inception. There are
inspection checks on the restaurant chains which see to it that the hygienic standards are
maintained at the dining place as well as at the pantry while processing orders. The second thing
which the stores have is customers being presented with their orders by trained staff.
Dependability

It means when the customers can depend on your product and services and also recommend the
service to others. McDonald continuous innovation in products and the serving meals on time
has created a positive brand image which can offer quality food at reasonable costs in a
reasonable time frame. Secondly, the services of home delivery working at many cities over time
have resulted in valuation of a brand which can be relied on.
Flexibility
The means of changing operations to match a customer requirements has been done by
McDonald to provide services to its customers. The example of this has been the flexible hours
of delivery to customers at night hours also. People find it convenient to order while travelling in
car when passing through drive through locations (Hammond and Churchill, 2018).
CONCLUSION
To conclude, it can be said that restaurant chain is all about fine tuning the services provided.
The customer satisfaction is most important here. The businesses in today's era have developed
new techniques to stay in competition and win over market share.

REFERENCES
Books and Journals
Jacquillat, A. and Odoni, A.R., 2018. A roadmap toward airport demand and capacity
management. Transportation Research Part A: Policy and Practice, 114, pp.168-185.
Mar-Ortiz, J., Castillo-García, N. and Gracia, M.D., 2020. A decision support system for a
capacity management problem at a container terminal. International Journal of
Production Economics, 222, p.107502.
Fettermann, D.C. and et.al., 2018. How does Industry 4.0 contribute to operations
management?. Journal of Industrial and Production Engineering, 35(4), pp.255-268.
Terwiesch, C. and et.al., 2020. A review of empirical operations management over the last two
decades.
Mehralian, G. and et.al., 2017. TQM and organizational performance using the balanced
scorecard approach. International Journal of Productivity and Performance
Management.
Hammond, H. and Churchill, R.Q., 2018. The role of employee training and development in
achieving organizational objectives: A study of Accra Technical University. Archives of
Business Research, 6(2), pp.67-74.