McDonald's Operational Strategies and Value Chain Analysis: A Report

Desklib provides solved assignments and past papers to help students succeed.

ASSESSMENT 1
1

Executive Summary
McDonalds is the company which is chosen to see how its value chain has adopted to the new
operational trends and technological developments. The value chain that McDonald currently has
does have up-to-date technologies but does not follow many of the operational trends in its value
chain. Porters value chain is applied into the process of the organisation in order to see that it
will gain growth in the market. Differentiation method is the other one that can be applied in the
organisation that will help in seeing different customer segments.
2

Contents
Executive Summary.....................................................................................................................................1
Introduction.................................................................................................................................................3
Background of McDonald...........................................................................................................................4
Value chain paradigms................................................................................................................................5
Critically examine how value chain design can help the organization to improve operational activities and
why it is important.......................................................................................................................................7
Recommend how the organization's operations strategy best responds to the current trend by answering
the following questions:..............................................................................................................................9
Conclusion.................................................................................................................................................11
References.................................................................................................................................................12
3

Introduction
Due to the rise in technology there has also been a rise in the technological and trends in
operation management which have caused problems to occur in the organisations. These have
had an effect on the value chain of organisations. Operations management refers to the fact of
managing all of the operational process in an organisation. But due to new trends, there have
been some organisations which are lacking behind in this. The main aim of this report is to show
what the business operations that could be added into an organisation so that the customers are
satisfied and also so that that more profits are gained.
4

Background of McDonald
McDonald is one of the largest fast food chains which are present in the world. Mostly every
single person in the world would have heard about this organisation once in their life.
McDonalds Corporation is a fast food organisation which is based in America. This organisation
was originated in the late 1940s and has come a long way to become such a successful fast food
chain. The organisation started as a burger stand and has made its way to becoming one of the
most recognised fast food chains on the planet. The main advantage that the organisation had
over its competitors was that it would the burgers at a lower price and it had a self-service
counter which eliminated the cost incurred for waiters.
The rise in the number of McDonalds that was seen after it opened its first restaurant was eye-
opening as in the same year it had about a thousand outlets opened in the country itself. The
main attraction or way of marketing used by McDonald was that buy using a clown to promote
its name. This made the name of the organistion last much longer than the rest of the restaurants
that were present in the country (Boje et. al. 2013).
Another thing that should be known about the organisation is that the products it is offering. It
offers a range of burgers and other foods to the customers. But it is seen that they are customized
according to the place it is being served. Like in India there are no beef products which are
served but outside of India in countries like the United States of America such products are
served. The organisation makes sure to keep in check on how the customer will be satisfied and
what will offend them.
McDonald, like other fast food chains does not provide franchisees that much. Instead it will
send its own survey team to see that a place is fit for the organisation to operate in and it will
receive profits or not. This is done by the organisation because in giving franchisee there is the
risk of the goodwill going down if losses are occurred. So as it can be seen that McDonalds have
become such a known fast food organisation through its strategies that it has used now and again.
It has had a unique competitive edge in the market that has made it rise in the market than its
competitors (Grew, 2018).
5

Value chain paradigms
Value chain refers to the operational processes which are conducted in an organisation so that it
offers the maximum service or product to the consumers. McDonalds has its own value chain in
which it makes sure to offer the best quality of products to its customers.
McDonald has been mostly focused on what the needs to the customer are and has designed its
value chain around it. It has had innovative practices in its manufacturing and logistics
operations. One of the strategies that the organisation has is that is keeps on chaining the
supplies form which it purchases vegetables. This strategy in adopted by the organisation in
order to see that the cost is reduced. But for other products like soft drinks it depends on Coca-
Cola which has been a partner of this organisation for a long time (Strange, & Zucchella, 2017).
For outbound logistics for the organisation it can be seen that there are a number of outlets that
are present across the world. Each of these outlets is seen to have a drive through system which
is fully automated with computers will take the order of the customer rather than a person taking
the order. Such type of technological development means that there would be higher level of
production and the delivery process would be quicker hence satisfying the customers. There is
also a sky-thru delivery which is present for the Sweden skiers that is not present in other fast
food joints.
One of the most beneficial factors that is involved in the organisation is that it provides for high
speed delivery to the customers. This is done by using a variety of complex technology. One of
the technology that is used is that the orders are portrayed on a screen through which the
employees can see it quickly and prepare orders accordingly. The food products that are
received, other than the vegetables, are got frozen and are moved to a freezer where they are kept
frozen. The only thing that is done by the employees is to heat them (Vamsi et. al. 2014).
McDonald provides hygienic food to each of the customers as it keeps an device to check the
level of the oil it uses. Since each product is deep fried the oil needs to be kept in check. For this
a device is used which will let the employees know if the oil is fresh or not. This helps in giving
the customer a hygienic experience.
6

From this it can be said that the use of technology has helped the organisation rise and give
competition to its rivals. But one trend that McDonald does not follow is that of providing home
delivery in many areas. This trend is probably one of the biggest drawbacks that is present in the
organisation that may be its downfall in the market.
7

Critically examine how value chain design can help the organization to improve
operational activities and why it is important.
The value chain analysis is a process that can be used by the management of McDonald to
provide valuable food products to their consumers. The management of McDonald can apply the
value chain analysis to set the activities that are needed in the organizational culture. It can
provide them different ideas about the product planning of McDonald. Porter's value chain
strategy is beneficial for providing competitive advantages to the respective organization. The
organization can recognize the primary and supportive activities that can classify them according
to their importance. The final product of McDonald can become excellent by using the value
chain analysis. The value chain analysis contains both positive and negative influence in it and it
can be seen that the original strategies of McDonald can be lost by applying the value chain
model. The operation of value chain theory is in the different segment which can create
confusion in between the various operations of the organization. The analysis could become
profitable for McDonald in their operational activities and this can be understood by the below
points:
Delivering maximum value: The value chain analysis can help McDonald to deliver the
maximum value of their food products. It is a flexible strategy that can be implemented by the
respective organization. The value chain analysis would provide a high level of competitive
advantages. The respective organization can know about the completive strategies of their
competitors. McDonald can apply the analysis and provide a better value amount of people who
are spending money on their products.
Production process: The value chain analysis provides a competitive advantage to an
organization and McDonald can increase it by applying the value chain analysis. The analysis
can recognize the circumstances of the market and their competitors. By using the competitive
strategies the respective organization can convert their strategies according to the market
situations. The production department makes foods according to the choices and taste of the
consumer.
Quality management: It is the most important factor for McDonald as they are food providing
organization so they need to maintain a better quality of their food. The value chain analysis can
8

help them to increase the product quality within restrictions, like price and cost limitations. The
value chain analysis makes the appropriate amount of product and services for the consumers.
Making better operations between different chains: As it is well known that McDonald is
containing various food chains and they have their numerous stores in different countries. The
value chain analysis would become helpful for them to maintain better operational activities
between the different stores of McDonald. It will make better collaboration between the different
operations of different stores of them (Laudon and Laudon,2016).
Capacity design: The capacity designing process of McDonald is based upon the cost-
minimization which can support the strategies of McDonald. The value chain analysis can help
McDonald to maintain the efficiency in their different activities. It was also helpful for making
an idea about adequate products according to the market demands. The value chain analysis can
help McDonald to maintain the quality of products.
Cost advantages: The primary and supportive activities can be found by McDonald with the
support of value chain analysis. After recognizing them McDonald can recognize the cost of
each activity. The management of McDonald can link their activities with their activities that can
provide them cost-related advantages. They can increase their cost in a particular area and can
reduce it in the other area of their business.
Differentiation profit: McDonald can identify the activities that can provide them a better
understanding of the values of consumers. The relevant marketing tools can be applied by them
for making it happen. The organization can evaluate these strategies to increase the values of
them. The organization can improve the food quality and taste that can be valued by its
consumers. Applying the value chain analysis, McDonald can change their food quality and taste
in comparison to its competitors (Lebbon, 2017).
9

Recommend how the organization's operations strategy best responds to the current trend
by answering the following questions:
Challenges that could be faced by McDonald in the coming future
A higher level of competition: The organization at present facing a higher level of completion
and the level can be increased in the coming future for McDonald's. There are lots of competitors
and they are also providing food services to the consumers. The important competitors of
McDonald's are KFC, Pizza Hut, Domino's, Burger King and Starbucks. These organizations are
providing a tough level of competition for McDonald's and creating challenges in front of their
respective organization. The value chain analysis can provide those better competitive
advantages to McDonald's. The level of competition is so high for them and it makes them
pressurize for creating their food products different from the other food providing organization.
Language barriers: McDonald's is having various employees from all over the world and they
belong from the different states of different counties. They use to speak their language which is
creating a barrier in from of McDonald's. The management can face this situation in the coming
future also and there will be a situation where the management cannot clarify their management
strategies in front of the employees. It will create a lack of knowledge in front of employees and
the management operations can be affected by it negatively.
Food hygiene: It can become a big issue in front of McDonald's because people now time does
not prefer to eat outside food so much. This situation could reduce the level of profitability for
McDonald's. People now time are fitness freak which makes them away from the outside food. It
is a big barrier in front of McDonald's. So, the respective organization should try to maintain the
upper level of hygiene in their food products. The better level of food can attract the consumers
towards their foods and can make some better level of profit for the organization.
Business scopes for McDonald's
McDonald's is one of the largest food providing organization in the world and they are providing
their food services all over the world. The organization is running its business in the UK since
1974 and presently operating almost 1300 stores worldwide. The organization is using
competitive strategies to provide better development and growth to their organization. The
10

market penetration is providing help to the organization and McDonalds opened their new
restaurants in North America and Europe. The different kind of joint ventures and ownership
also will be organized by them. They want to do more global expansion of their organization on
different location.
Most importantly the organization developed a long term growth plan for their future
development. The plan majorly focusing on involving better strategies and technologies for
making people aware of their new development planning. They want to provide quick services to
their consumer and for making it possible they are involving better technologies in their
organizational culture. They are also making some strategies for making a better store experience
for a consumer. They decided that they will more be engaged with the consumers of Canada by
providing them various options for payments. In Europe, they are starting their dual point service
and self-order services. These efforts would change the traditional experiences of McDonald's.
The dual –point services would be provided by them by using touch screen computers.
McDonald's is trying to make more natural products for its consumers for making trust amongst
the global population. These plans will help them in making their effective global image
(Wohlgemuth and Lütje, 2018).
11

Conclusion
From this it can be analysed that value chain is the most important factor organisation as it will
lead to their growth. The value chain analysis is mostly affected by the trends that have risen in
the market and also due to the emergence of new technology. Both of these have caused changes
to occur in the fast food organisation known as McDonald. These changes have been both
profitable and bad for the organisation as there are some factors which it has used for growth and
some which it has left out. It can be concluded that organisation need to keep up with these
operational trends in its value chain in order to keep up in the market with the competition.
12