This document provides an in-depth analysis of the operational management in McDonald's. It discusses the operational strategies, make/buy decision, and technological advancements in the company. The working model of a McDonald's restaurant is also explained.
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Contents INTRODUCTION...........................................................................................................................3 Operation management in McDonalds........................................................................................3 Operational Strategies..................................................................................................................4 Critical analysis on Make/ buy decision......................................................................................6 Working model of a McDonald’s restaurant:..............................................................................7 Critical analysis on Technological strategies..............................................................................8 3-D of operational strategy process...........................................................................................10 Improvement in the Operations outcomes due to buy/do decision and use of technology.......10 Recommendations..........................................................................................................................12 CONCLUSION..............................................................................................................................14 REFERENCES..............................................................................................................................15
INTRODUCTION Operation management is considered as essential department of organization that plays key role in producing goods and services. There is significant impact on various activities of organization. Operation management is mainly dependent on the operating system where integration of resources is done with goods and services (Chandra and Wella, 2017). It is the integration of the goods and services which makes the management part to be more interesting and transformational. For any organization, there are two main objectives that are performed by this department that is customer services and resources utilization. All the activities of the operational management are performed by Operation’s manager and on their decision resources utilization and customer services for their satisfaction are provided. In order to provide desired utilities to the customer and to fulfill the organizational goals they convert the input raw resources into output effective, efficient and adoptive products. There are various activities and function that are performed by operational management such as location of facilities, product and process design, plant layouts and material handling, material and maintenance management, production and planning control and at last to assist the quality of the products (Osei-Kyei and et. al., 2017). Following report is about the operational management in McDonald’s which is an international fast food company expended over many countries. Herecriticalanalysisisdoneontheoperationalmanagementofthefirmwhere understanding and application of make/ buy and technology strategy in McDonalds is shown. Operation management in McDonalds According to Azcárate, Mallor and Mateo, (2017) operation management in McDonald is completed by top management. The instruction and policies are implemented by all the branches as-well-as restaurants of the company. To achieve the organizational goals, they have operation managers that perform all the operational activities for controlling and maintaining the raw resources. The company is internationally expanded and serves fast food to over 70 million people across world (Alrhaimi and Mugableh, 2017). They are expended over 100 countries and have around 36900 restaurants. It started in 1955, having 1.5 million employees and has a revenue collection of US$24.622 billion. Being the largest fast food restaurant chain there are 10
major decision performed by the operations management. They develop strategies over various areas and their restaurants coordinate equally to serve for better productivity and performance. Effective operational management helps them to provide tough competition towards firm like KFC, Subway and Wendy’s (Alrhaimi and Mugableh, 2017). Moreover, it influences their finance, marketing and production. In the organization it is used for managing inventory, optimumallocationofresourcesandreducingcosts.Theyhavereducedtheiralltheir unnecessary activities of Global Fast Food Supplier. For the optical allocation of resources, they have used different tools, mathematical and statistical techniques such as linear integration and transportation, etc. Following are the mission and vision statement of the company: Their brand vision is to the best quick serve and service restaurant experience where they wanted to provide cleanliness, outstanding quality, values based services and zeal customer experience so that every person entering the restaurants have smile (Mission & Vision - Analysis of McDonald's.2017.). Additionally, they mission statement is to provide great value for money, outstanding services and top-quality products so that firms become customers first choices (Mission & Vision - Analysis of McDonald's.2017.). Operational Strategies Chang,WongandChien(2017)technologyanddo/buydecisionhasmadetheir production process so effective so effective. Further, they have made development through the reducing cost, improvising product quality, delivery system, and response speed and product flexibility. As stated by Bortoluzzi, Ensslin and Ensslin, (2017) McDonalds have implemented advanced technology and excellent customer service that helped them in improving their production process and provided them measurable competitive advantage. Though the company is globally, they still operate locally. To achieve these objectives McDonald's become service orientation and improved its competitive advantages through Business Process Re-engineering (BPRE), Computer Integrated Manufacturing (CIM), Just-in-Time (JIT), Flexible Manufacturing Systems (FMS), Total Quality Management (TQM), Time-Based Competition, and the Virtual Corporation (Helmreich, Klinect and Wilhelm, 2017). Improvement in the service orientation wasmadebythemthroughprovidingconstantinterpretation,intangibleandconsumable
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personality of the services. They adopted the small volume of production so that they can serve customers more easily. Additionally, as highlighted by Scarpin, Brito and Flynn, (2017) they increased technicians and engineers in the company that have provided them suitable work areas and technologies where employees can work more effectively and efficiently. Besides this, they also increased presence of professionals on the production. In order to face the global competition firm has made certain improvements in their operational management that has impacted on their manufacturing process. These are; 1Global market place: In order to gain economic advantages, they made changes in their operation (Cormier and Elliott, 2017). 2Time Quality management: This has provided them customer satisfaction and provided them chance improve more on their quality of goods and services. 3Flexibility: Improvement in the delivery, product design, demands has provided flexibility to thefirm.Thetoolsandtechniquesusedbythecompanyhasprovidedthemagile manufacturing. 4Time reduction: To serve the competitive advantages they have reduce the manufacturing time and have to increase the production speed. Quicker delivery, quality and same price has provided them global reputation. Technology: There are many changes that can be seen in the company. The use of automation,computerization,informationtechnologiesandbettercommunicationsystem revolutionized way the organization operate (Dai, Peng and Li, 2017). It has increased the product processing, manufacturing and has greatly impacted on competitiveness and quality. Using this there is more integration and the existing system has changed into new components, products, processes and materials. Along with this, it has completely redesigned the business processesandprovidedthemconceptofclean-slateapproachalongwithbreak-through improvements. Do/buy decision taking capability: It is the decision taking by the managers in operating the organization operation. It includes the worker, employers, suppliers and buyer’s decision and is totally based on the core competences (Zhu, Anagondahalli and Zhang, 2017). For the
organization their core competences lie in the supply-chain management and lean production. In order to have flexible production they use yielding manufacturing systems and multi-skilled workforce. Critical analysis on Make/ buy decision According toKrishnaswamy, (2017) for the managers there are 5 things that decides the operation in McDonalds these are forecasts of demand, plant as-well-as labor efficiency,delegateperformance,multipleshiftoperationandorganizationalpolicies. Additionally, to maximize its productivity and performance their decision completely relies on being global leader in the fast food industry (Vitasek and Fenn, 2017). McDonalds measures their notable productivity measures through increasing their order fulfillment rate in restaurants, stock out rate in their intermediate and distribution productivity and necessary delivery rate or production. One of the author Dubey and et. al. (2017) mentioned that the way the market growth has been achieved by the company is due to their effective suppliers and buyer’s decisions. They have effectively developed the strategies like Innovation strategy, Capacity strategy, Technology strategy, Improvement strategy and Operations risk (Bortoluzzi, Ensslin and Ensslin, 2017). The value Value-added services differentiate the organization from competitors and build relationships that bind customers to the firm in a positive way. McDonald uses the information, problem solving, field and sales support have supported the organization in building the competitive success (Bortoluzzi, Ensslin and Ensslin, 2017). MCDONALD EXPLOTATION OF VALUE CHAIN AND QUALITY
Figure1:Operational Management Working model of a McDonald’s restaurant: The organization has very effective, low time consuming, flexible and high standardized model for almost all their outlets. It is mentioned below:
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According to Chang, Wong and Chien, (2017) the fast food restaurants have shown that how they work from basic raw material collection to supplier’s selection for this particular raw material. These all decision is taken by managers in their make/ buy decision (Bortoluzzi, Ensslin and Ensslin, 2017). After this, they focus on the cooking part of material which is forwarded to processing and making them eatable. In order to complete this process there are many technological machines that have been installed in the outlet section. After that based on the customers’ order, priority and time they are served accordingly. The company adopted the policies of first come first serve services. The managers take care in making the decision for all the activities starting from the suppliers to delivery of raw material to the final consumption (Helmreich, Klinect and Wilhelm, 2017). Critical analysis on Technological strategies Advancement in technology plays a major role in growth and development of an organisation, on the other hand it has its own pros and cons. Implementing technology with business operations act as tonic as it provides easy functioning in all the departments. However, in the contrary technology reduces the manual work which is the major reason behind increasing unemployment. Further, McDonald’s has revolutionised its operations by implementing the use of various enhanced equipment’s. In accordance to this the enterprise offers free WIFI and hot spot to its all consumers worldwide. Moreover, the electronic payment system assists the firm in time management as it provides easy approach to processing time, preparation and payments. Apart from this the overall operations of food business depends on technology due to which it faces various problem especially at the time of transactions because sometimes when server is down it does not accept online payments (Kulkarniand Lassa,2016). In addition to this the technological up gradation demands huge amount of investment. The investment in innovation and technology interrupts the cost effectiveness and entire planning of budget which is prepared by the management keeping in mind the profitability and changing requirements of consumers. Furthermore, the food company use Nintendo DS system for providing effective training and development learning to its newly employed staff members. This helps the firm in analysing performance of workers and to evaluate employees learning and their work experience.The use of technology is increasing for food business as it assists the entity in gathering information
regarding rivalries, demand, supply, employees, expenditure and cost. Besides, McDonald’s uses OnlineAnalyticalprocessing(OLAP)whichhelpsthemanagementinmakingeffective decisions by manipulating information. This is beneficial for all the business operations as it is the evaluation of all the necessary information from various sources. In contrast the increasing use of wireless technological tools like, media, Smartphone, applications have established easy ways for Restaurant to connect and communicate with people. The increasing activities of Media help the company in promoting their products and services in order to increase consumer base (Foxman and Kilcoyne,2013). Moreover, people these days spend their most time on accessing internet and mobile phones which becoming advantageous for the organisation because the management now focuses on promoting discounts and offers on its application every time when the person will access its mobile phone (Almeida,Bem-hajaand Alberty, 2017). On the other hand, the obese population across the globe is increasing due to which the consumers are becoming more cautious about the healthy food products and the increasing use of Media and advertisement is spreading awareness about the healthy products and diets which is major reason behind the declining sales of McDonald’s. However, in contrary the technological advancement is assisting the food business in making various type of innovation in its food products according to changing taste and preferences of buyers (Jelassi and Enders,2014). Therefore, it is being denoted that the effective and efficient use of technology is best strategy which assists the organisation in its growth and development. According to the Gaichas and et. al., (2017) McDonalds has invested a huge amount of money on creating a technology board which has help the McDonald to adopt new and new technologies in its operations with time. The main job of this board is to recommend the management to buy those kinds of equipment which are very effective in saving the energy as well as are more productive (Chandra and Wella, 2017). In 2016, as stated by Osei-Kyei and et. al., (2017) the organization has start investing money in the improvements of point to sale ordering system and at the same time linking the point to sale system with the back-office computer in all over the world. They have invested capital in the improvement of electronic payment system as well which has make possible to process the transactions in less than 4 seconds. (Azcárate, Mallor and Mateo, 2017). McDonald uses the best equipment to carry out the day to day operation in its outlet. (Alrhaimi and Mugableh, 2017 Alrhaimi and Mugableh, 2017)
3-D of operational strategy process Value: The Company sells nearly millions of products everyday too many customers. Their business operations aresystematic and repetitive in everyday processes (Scarpin, Brito and Flynn, 2017).Additionally, they have to maintain the taste, flavor, quality and nutrients level in their delivery. Their core values can be effectively seen from their customer dedication and service focus employees. The effective approaches of all the managers have provided great success to the company. Varieties: With the help of technology and better decision-making ability the company provides wide variety of choice in menu items such as: breakfasts, fruits and vegetables, children meals and even salads, just to satisfy customer's demands (Cormier and Elliott, 2017). There are 5-main ingredients on which the organization has to focus which are listed below: beef, bread, chicken, potatoes and milk. Their strategic approach to every customer from the menu items has strategically influenced all the customers. Variations: The technological improvement made by the organization is well organized that it fulfills all the changing capacity, demands, customer expectations with maintaining and ensuring flexibility (Dai, Peng and Li, 2017). The decision-making ability of the managers help them to calculate product demands, store-specific historic product mix. Through this they can easily analyze that when customer’s demands will be more and when they have brought more raw resources. Improvement in the Operations outcomes due to buy/do decision and use of technology. Quality: Due to effective decision-making ability on buyer and seller’s option and the technology has provided better advantages to the company (Zhu, Anagondahalli and Zhang, 2017). Combined integration of them has provided those effective, efficient ways and adequate capacity to fulfill market demand. With the help of this company was able to increase their productioncapacityas-well-asutilization.Theyhavedevelopedconsistencyinfulfilling consumers’ expectations and in the area of operations management. Improved production line has provided low cost products to the customers and low work load to employees.
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Cost: According to Krishnaswamy, (2017) the buy/do decision area of operations management was used in the McDonalds to implement practicality. Stakeholder’srelationship is very necessary for the organization and their satisfaction is very necessary for the company. In such harsh business environment, they are able to provide best food service in cost effective way. Due to better relationship among the suppliers and buyers they are able to deliver the products in cost effective and reasonable price (Vitasek and Fenn, 2017). They are effectively able to manage all the relationships in collaborative and collective way. This has not only provided the competitive advantages but also the best customer experience. Network diagram & critical path analysis: As per Dubey and et. al., (2017) the essential requirement for a critical path is that should form the actual functioning of the organization and should provide the way to serve its customers. It is one go he most time-consuming part of the setup that requires more time and such activities must be completed in more faster ways. The next stage to find effective suppliers and start the development of the supply chain and as usually all the organizational tasks require raw material that is completed by the supplier’s work (Chen, Hu and Song, 2017). These are two things that consume most of the organizational time and can be reduced if effective decision and strategies are used. After completion of these two setups, training of new employees must be provided in effective and way more reliable way.
Quality management: As per Stowell and et. al., (2017), for better customer experience and high- quality services McDonalds has a complex purchasing and quality assurance department. All the raw material that is entering from the suppliers are being analyzed and them forwarded for the process. The specifications for the raw quality are completely analyzed by the managers during the time of purchasing and manufacturing process (Vaz and Mansori, 2017). They have specifications for every raw material that they are having and the quality is maintained with the help of technology. Before entering to the new region McDonald’s opens make relationship in developing the supply chain for which they make higher strategies. Thus, by developing a standardized quality setup they were able to get whole global market and established as effective competitors for other companies. Recommendations McDonalds should not adhere to some mismatch between expectations and situational requirements stems from a breakdown to go after in international operations the marketing strategy procedure that is possibly established in the core marital business as the company have direct participation in the market and through a controlled marketing subsidiary having ample control over strategic marketing and its success to think thoroughly about how the business will develop over several years. While it is true that individual characteristics of an international marketing position claim a different move toward to marketing as it is not a reason for the organizational standards in marketing management to be relaxed (Azcárate, Mallor and Mateo, 2017, Alrhaimi and Mugableh, 2017). The objectives of market entry, which will contain develop for the strategy and organization adopt. The selection of market entry method like McDonalds form of marketing organization during which the company join in the market. Particular consideration will be paid to the low-intensity modes of entry as favored in market entry situations (Azcárate, Mallor and Mateo, 2017). The market entry mode decision relevant for McDonaldsshould consider serving an international market through export agentsis attractive in that it offers both low financial risk and access to substantial local operating knowledge (Gaichas and et. al., 2017). It is particularly suitable for the company to acquire better experience adopting international operating functions as the level of control is likely to be quite high,giventhatinternationalizationhasoccurredinthecontextofapreexistinginter-
organizational relationship and establish a service operation for the customer's local operations (Chandra and Wella, 2017). One drawback of franchising is the difficulty of adapting the franchised asset or brand to local market tastes even experienced corporations as McDonalds which have managed to thrive on trade-off and taken several decades and some false starts to get to this point of advanced practice. Moreover, licensing is a common method of international market entry for McDonalds with a distinctive asset, which is a key differentiating element in their marketing offer (Osei- Kyei and et. al., (2017) Thus, licensing is a practice not restricted to international markets licensing its products to manufacturers and marketers while it focuses its own efforts on its core competencies of food production and distribution and offers an effective way of entering foreign markets because it can offer low-intensity mode of market participation and adaptation of product to local markets. The marketing entry policy, with an exacting focus on the lessons learned from the strategies of other established multinationals in emerging markets and framework for evolution of international marketing strategy. The distribution unit in the country-market as a wholly- owned subsidiary, has to manage a strategy for growth and be judged on organizational criteria includingfeasibility,levelofdesiredrisk,supportabilityandcontrolissueswiththe implementation of preexisting marketing strategies such as communication platforms and target customerselection.Indeed,itisusuallyimpossibletoseparatetheprocessofmarket developmentfromtheprocessoforganizationaldevelopment.Itispossibletoidentify commonalities across companies in this process of internationalization and so to describe the usual evolution of international marketing strategy. The framework has to begin by recognizing that different objectives for market entry may produce quite different outcomes in terms of entry mode and marketing strategy. McDonalds enter international markets in following standard market entry and development strategy because of its increasing commitment pattern of market penetration, in which market entry is via independent partner to a directly controlled subsidiary of building a business in the country-market as quickly as possible but nevertheless with a degree of patience produced by the initial desire to minimize risk and by the need to learn about the country and market from a low base of knowledge.
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CONCLUSION From the above study the detail about the operation management in the organization is shown. Critical analyses on the two main factors are provided that is buy/do decision making and technology that has helped the organization to expand all over the world. In this report, various authors’viewsarepresentedbasedonoperationalmanagementofMcDonald.Further, discussion about their Operational Strategies and working model of a McDonald’s restaurant is provided. Along with this, 3-D of operational strategy process made with the help of effective decision-making ability and technology is shown. At last, improvement implemented in the Operations outcomes due to buy/do decision and uses of technology in the organization are highlighted. The success of the McDonald is completely based on the types of technologies it going to use to get the maximum production at short time.
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