Operations Management: McDonald's Case Study

This document discusses the role of operations in McDonald's organizational performance and competitive advantage. It explores the operations strategy of McDonald's, including lean thinking, quality, and TQM, and its implications for setting up processes and supply chains. The document also evaluates the statement about honesty and transparency in the context of McDonald's operations and provides recommendations for McDonald's to remain competitive in a turbulent and global business environment, considering new trends like veganism and environmentally conscious customers.

Operations Management

EXECUTIVE SUMMARY

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
1. Critically reflect on how operations contribute to McDonald’s organisational performance.
In your response, consider which processes are in place to assume the company’s competitive
advantage.....................................................................................................................................4
2. Assess McDonald’s operations strategy (i.e. ‘lean thinking’, ‘quality’, TQM) and
implications for setting up processes and/or supply chains.........................................................7
3. Evaluate the statement “Honesty and transparency make you vulnerable. Be honest and
transparent anyway” from the perspective of McDonald’s operations function. Consider in
your response, the transparency, traceability and vulnerability of operations.............................9
4. Based on your analysis, list some recommendations to McDonald’s to remain competitive
in a turbulent and global business environment. Consider new trends like veganism and more
environmentally conscious customer in your response...............................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Operations Management encompasses the administration of routine business activities
that maximize the level of efficiency required to produce better result. It is basically concerned
with the successfull conversion of raw material as well as manpower's efforts to derive out best
possible output (Albrecht and Dasigi, 2016). This process is concerned to maximize overall
profitability of firm by producing right quality of output within stipulated time frame.
To better define the topic McDonald's company has been selected whose headquarter is
in Chicago, US. It comprises of lengthy chain of fast food restaurants that are spread across
global boundaries including both developing and developed countries. The company with the
help of wide outlets serve diverse food as well as beverages to wide range of customers by
reducing the waiting time and gain immense customer base. This report cover topics like
contribution of operations to maximise organisational performance and gain long term
competitive advantage. Determine diverse operations strategy whose implication helps in setting
up processes or supply chain. On the basis of McDonald company evaluate the statement
“Honesty and transparency makes you vulnerable. Be honest and transparent anyway”. Further,
list down certain recommendations that can assist company to overpower its competitors within
global business environment.
MAIN BODY
1. Critically reflect on how operations contribute to McDonald’s organisational performance. In
your response, consider which processes are in place to assume the company’s competitive
advantage.
Overview on company: McDonald's is the fast food company of America which started
its operations in 1940 and has successfully diversified its business in developed as well as
emerging economies. The operations of company was initiated with the efforts of Richard and
Maurice McDonald which led company to become world's largest chains of food outlet. It
currently functions in more than hundred countries and have approximately 35,000 restaurant all
over the globe. The managers of company effectively carry out research, understand market
dynamics as well as culture of people before expanding its operations and designing its menu
(Bahmani-Firouzi and Azizipanah-Abarghooee, 2014). Therefore, the operation strategy as well

as internal operations of McDonald has helped in successfully gaining immense competitive
advantage.
Contribute of operations within organisation performance
Operations within an organisation mainly focuses to align the internal operations in
order to produce favourable result that can accommodate the basic need as well as requirement
of customer. It comprises of coordination amongst internal activities or routine task with the
objective to bring culmination in primary activities and undergo predetermined result
(Haghshenas and Falaghi, 2016). Thus, operation management is considered as a centralised
activity of McDonald as it help manager to define, design and delegate the task to different
personnel on the basis of their skill or capabilities. Therefore, cumulative efforts of each and
every individual helps to successfully produce desirable result. Explanation of certain functions
or operations that helps to flourish the performance of McDonald are determined below:
Marketing: Marketing is an essential operation that can enhance the performance by
maximizing current sale as well as profitability of company. The role of marketer within
McDonald is to anticipate behaviour of customer and accordingly extend or modify their product
line. The company has wide presence in online platform which helps them to gain the feedback
and reviews of existing customers (Jin and et.al., 2015). Along with that it involve online
promotion techniques which McDonald perform by conducting online contest or through coupon
system which mostly gets activated to spread awareness about new product range. Therefore, the
extensive use of digital media offers platform to maintain public relation by encouraging
comprehensive information generated through customers.
Supply chain: The role of supply chain is to deliver right amount and quality of material
to an organisation within confined duration and at affordable prices. To better manage the supply
chain it is essential for client to maintain effective relation with the supplier so that they get
quality material at reasonable prices. In addition to that strong network or chains is the effective
way to forecast the demand as well as generate valuable feedbacks (Han and et.al., 2015). In
relation to McDonald company maintain relationship with supplier in order to timely gain raw
material like patties, buns, disposable cups, sauce, packaging material and many more. It
comprises of the use of logistics that assist company to focus on the quality as well as freshness
of their offering. Additionally, it leads to innovation and restaurant can successfully meet the
fluctuations in customer's demand.

Production: It simply refers to the process which engage human efforts and involve
factor of production to deliver significant output to customer. McDonald being fast food
company has successfully served the requirement of dynamic customers by effectively catering
their taste as well as requirement. Their production process of company within particular
geographical market completely depend upon the culture of population (Joo, Jung and Kim,
2015). For instance, within India company cannot add beef products in their menu because it can
hurt the religious belief of people and can turn down their market. Along with that to
successfully meet the requirements of customer company uses advance technology and
centralised database to cover the requirement and reducing waiting time.
Processes involved to gain competitive advantage
McDonald company in order to enrich the experience of customer and establish wide
image has effectively developed strategies in order to gain competitive advantage. This has led to
preparation of strategic plan that enable company to effective wipe out competition within
market. Herein, McDonald company has effectively opted Penetration strategy where it focuses
to expand their operations in wide market at relatively reasonable or affordable prices. Along
with that company does not comprise in quality due to which it engage wide response of
customer and help to gain competitive advantage over other. In addition to that company reduce
waiting time in ordering and placing the order due to which it has become the zone to attract
wide response of customer (Jung, Lee and Park, 2014). Even the local residence due to global
image of company have gained huge loyalty and trust over quality which help to gain long term
competitive advantage. Thus to maintain level of competitiveness there are certain strategies
adopted by McDonald's in order to maintain competitive efforts. Explantation of diverse aspects
that has helped company to gain competitive advantage are listed below:
Speed: The manager of McDonald undergo deep research in order to gain vital insights
about market and accordingly bring transition in their performances. Like, the company realises
that most of customer does not prefer going to restaurants because of waiting time. This led
McDonals company to come up with the concept of speedy services which is main priory of
customer (Kang, Zhao, Li and Horst, 2016). The HR department offered training and
development session to existing and new employees with the objective to gain core
competencies. This enhances the footfall of outlet as customer seek for food outlet where they
can get fast, accurate as well as quality services. Therefore, it has been determined that speedy

services enable company to reduce unnecessary cost by covering wide range of customers within
specific duration.
Cost: The objective of company is to deliver value to final customer for which it lower
down the cost of company in order to enhance effective as well as efficient processes. The
company adopt diverse strategy like it carry out cross selling or sell the meal at discounted
prices. This assist company to generate additional revenue in order to boost up the overall sales.
Further, the promotion technique of company like Mac Monday acts as a stimulus for customer
to cater better responses. Application of such techniques is the useful way to gain the advantage
of economies of scale where company set nominal prices and immensely generate wide revenue.
This successfully helps the company to overcome threat of existing and new competition.
Nutrition: This is one of the most essential competitive strategies which is successfully
opted by McDonald company. As nowadays the health awareness amongst people have rapidly
increased which has affected the sales of fast food companies. In relation to McDonald company
has redefined its product line by adding various nutritious options to retain its existing customer
and attract prospects. For instance, Go-Active meals is served by company which include all the
healthy combinations like salad and step-o-meter which is used to tract the daily steps covered
by people. Application of innovative actions assist company to leverage benefit of high
competitive advantage by effectively fulfil the desire of customers (Li, Li and Feng, 2014).
2. Assess McDonald’s operations strategy (i.e. ‘lean thinking’, ‘quality’, TQM) and implications
for setting up processes and/or supply chains
Operation strategy encompasses the process to make significant plan as well as policies
by making optimum use of resources in order to suitably support the strategy which is
implemented to gain long terms competitive advantage. The plans are specifically designed in
order to maximise effectiveness associated with the systematic production of goods and services
by lower down unnecessary expenditure of company (Mohammadi, Soleymani, and Mozafari,
2014). It is vital for McDonald company to appeal the interest of audience by encouraging
favourable response in terms to carry out wide operations and function successfully. While
bringing any revolution within internal practices company on the basis of operational strategy
can redefine its processes as well as strength its supply chains. Thus, there are different operation
strategies which are discussed below:

Lean Thinking: The term lean thinking was introduced by James P. Womack and Daniel
T. Jones. This is a business methodology, which aims to generate innovative ideas that provides
benefit to society and offer value to individual. It mainly focuses to carry out operations in such a
manner which eliminates the chances of wastage and ignore activities which may lead to
environment pollution. It involve the production of innovative goods and services which result
into reduction of cost and help to maximise overall profitability by addressing the need customer
(Parisio, Rikos and Glielmo, 2016). This technique is effectively implemented by McDonald
company as all the essential material such as hamburgers, cheeseburgers are placed at front
counter reason being staff require them repetitively in order to place orders. This leads the
company to carry out mass production by reducing the waiting time and offer wide choices for
customer. Timely processing of order maximise the revenue of company as they get the
opportunity to cater wide need and meet the requirements of people effectively. Along with that
company offers drive through option to people which maximised their efficiency (McDonald's
was the first Lean Service organization, 2017). Therefore, to bring specialisation training session
are provided to existing and new staff in order to avoid wastage or human error by effectively
carrying out efficient production processes.
3. Evaluate the statement “Honesty and transparency make you vulnerable. Be honest and
transparent anyway” from the perspective of McDonald’s operations function. Consider in
your response, the transparency, traceability and vulnerability of operations.
4. Based on your analysis, list some recommendations to McDonald’s to remain competitive in a
turbulent and global business environment. Consider new trends like veganism and more
environmentally conscious customer in your response
CONCLUSION

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Online
McDonald's was the first Lean Service organization. 2017. [Online]. Available
through:<https://www.linkedin.com/pulse/mc-donalds-first-lean-service-ivan-luizio-
magalh%C3%A3es>