Operations Management: McDonald's Organizational Performance and Operations Strategy

This document discusses the contribution of operations to McDonald's organizational performance and its competitive advantage. It also assesses McDonald's operations strategy, including lean thinking and quality management, and its implications for setting up processes and supply chains.

Operations Management
EXECUTIVE SUMMARY
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Operation management refers to the effective administration of organisational practice with
the objective of covert raw material and producesa high level of efficiency. The
transformation of material attempts an organisation to provide the highest level of proficiency
by maximising the overall profitability and productivity of the firm. The first point reflects
the contribution of various operations like supply chain to deliver quality output and enhance
the performance of an organisation in terms to gain a competitive advantage. Operation
management strategies like lean thinking help to reduce the chances of wastage by carrying
out smooth and systematic functioning. To strength internal operations McDonald's company
needs to carry out transparent, traceable and vulnerable operations in terms to strengthen its
global image.
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Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
Introduction......................................................................................................................................4
Main body........................................................................................................................................4
1.0 Critically reflect on how operations contribute to McDonald’s organisational....................4
Performance. In your response, consider which processes are in place to assume the...............4
company’s competitive advantage...............................................................................................4
2. Assess McDonald’s operations strategy (i.e. ‘lean thinking’, ‘quality’, TQM) and...............8
implications for setting up processes and supply chains.............................................................8
3. Evaluate the statement “Honesty and transparency make you vulnerable. Be honest and
...................................................................................................................................................10
transparent anyway” from the perspective of McDonald’s operations function. Consider in
...................................................................................................................................................10
your response, the transparency, traceability and vulnerability of operations..........................10
4. Based on your analysis, list some recommendations to McDonald’s to remain
competitive................................................................................................................................11
in a turbulent and global business environment. Consider new trends like veganism and.......11
more environmentally conscious customer in your response....................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Operation management helps in designing and controlling the process of production and after
that redesign business operation in the methods of production of goods and services(Albrecht
and Dasigi, 2016). It is concerned with the successful conversion of raw material as well as
the workforce's efforts to derive out best possible output (Albrecht and Dasigi, 2016). This
process is concerned to maximize the overall profitability of the firm by producing the right
quality of the product within the stipulated time frame. McDonald's company has been
selected, which is a world’s leading foodservice organisation which generate around 40
billion dollars in system-wide sales. The business is spread over hundred countries on six
continents; it has unparallel global infrastructure and competencies in restaurant operations.
This report cover topics like the contribution of operations to maximise organisational
performance and gain long term competitive advantage. Determine a diverse operations
strategy whose implication helps in setting up processes or supply chain. Based on McDonald
company evaluate the statement “Honesty and transparency make you vulnerable. Be honest
and transparent anyway”. Further, list down specific recommendations that can assist the
company in overpowering its competitors within the global business environment.
1.0 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 of the company
McDonald's is the fast-food which started its operations in 1940 and has successfully
diversified its business in developed as well as emerging economies. The operations of the
company were initiated with the efforts of Richard and Maurice McDonald, which led the
company to become the world's largest chains of food outlet. It currently functions in more
than hundred countries and has approximately 35,000 restaurants all over the globe. The
managers of the company effectively carry out research and understand market dynamics as
well as the 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 processes of McDonald, has helped in successfully gaining an immense
competitive advantage.
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Contribute to operations within organisation performance
Operations are performed in keeping the customer needs in mind as well as goods and
services are designed after doing complete research about customer need and preferences. It
helps in producing qualitative food which can assist entity the organisation to achieve its
goal, which is profit maximisation. It comprises of coordination amongst internal activities
or routine task 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 helps managers to define, design and delegate the task to different
personnel based on their skill or capabilities. Therefore, the cumulative efforts of every
individual help to successfully produce a desirable result. Explanation of specific functions or
operations that helps to flourish the performance of McDonald is determined below:
Marketing:
Marketing is a process of promoting and selling goods and services, which include
advertisement and extensive market research(Jin etal., 2015). It is a business process of
identifying, anticipating and satisfying customer needs and wants. The role of marketer
within McDonald is to plan the behaviour of customers and accordingly extend or modify
their product line. The company has an extensive presence in the online platform to entertain,
gather feedbacks, reviews and rating posted via existing customers (Jinetal., 2015). Along
with that, it involves online promotion techniques which McDonald perform by conducting
the online contest or through systems which mostly gets activated to spread awareness about
the new product range. Therefore, the extensive use of digital media offers a platform to
maintain public relation by encouraging comprehensive information generated through
customers.
Supply chain:
Supply chain works on providing the goods to the industry when promised so that there is no
delay or short of goods. It also works to supply qualitative products to the business when
required. To better manage the supply chain, the client needs to maintain effective
relationships with the supplier so that they get quality material at reasonable prices. In
addition to that, strong network or chains is an effective way to forecast the demand as well
as generate valuable feedbacks (Jabbour etal., 2013). Concerning McDonald company
maintain the relationship with suppliers to timely gain raw material like patties, buns,
disposable cups, sauce, packaging material and many more. It comprises the use of logistics
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as well as purchasing that assist the company is focusing on the quality as well as the
freshness of their offering. Additionally, it leads to innovation and restaurants can
successfully meet the fluctuations in customer's demand.
Production:
It is a process of converting raw material into finished good so that the goods can be provided
to the customers. It is a process where labour and capital intensive techniques are used
efficiently. McDonald being a fast-food company, has successfully served the requirement of
dynamic customers by productively catering their taste as well as requirement. Their
production process of the company within particular geographical market ultimately depends
upon the culture of the 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. The processes try to reduce wastage of time by using
innovations due to which the efficiency can be attained, and wastage can be reduced, which
will result inhigh-quality products in the economic process.
Processes involved in gaining competitive advantage
In order to enrich the experience of customers and establish broader image, McDonald’s has
effectively developed strategies to gain a competitive advantage. This has led to the
preparation of a strategic plan that enables the company to wipe out competition within the
market effectively. Herein, McDonald Company has effectively opted Penetration strategy
where it focuses on expanding its operations in the broad market at relatively reasonable or
affordable prices. Along with that company does not comprise in quality due to which it
engages full response of customer and help to gain a competitive advantage over others. In
addition to that company reduce the waiting time in ordering and placing the order due to
which it has become the zone to attract comprehensive response of customer (Jung, Lee and
Park, 2014). Even the residents, due to the global image of the company, have gained
colossal loyalty and trust over quality which helps to achieve long term competitive
advantage. Thus, to maintain the level of competitiveness, there are specific strategies
adopted by McDonald's to maintain competitive efforts. Explanation of diverse aspects that
has helped the company to gain competitive advantage is listed below:
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Speed: The company to be a first mover that means adopting new technologies so that it can
help them to increase their efficiency and provide food to the customer with increasing speed.
The manager of McDonald undergoes in-depth research to gain vital insights about the
market and accordingly bring transition in their performances. Like, the company realises that
most of the customers do not prefer going to restaurants that leads to delay in delivering
services.
Nevertheless, it company up with that concept of speedy services which is the main priory of
customers (Kang el, 2016). The HR department offered training and development session to
existing employees intending to gain core competencies. This enhances the footfall of outlet
as customers find are where they can get fast, accurate as well as quality services. Generally,
quality management department report speed performance as the speedy services enables the
company to reduce its cost and cater to customers within a specific duration.
Cost: Company tries to minimise their cost so that they can sustain the competition and
increase the margin of profit; new techniques are implemented, which helps in reducing the
cost. The objective of the company is to deliver value to the final customer for which it
lowers down the cost of the company to enhance effectiveness as well as efficient processes.
The company adopt a diverse strategy like it carries out cross-selling as well as sell the meal
at discounted prices. This assists the company to generate additional revenue to boost up the
overall sales (Kato, 2012). Further, the promotion technique of company like Mac Monday
acts as a stimulus for customers to take responsibility. Application of such techniques is a
useful way to gain the advantage of economies of scale where the company set nominal
prices and immensely generate ample revenue. This successfully helps the company to
overcome the threat of existing and new competition.
Nutrition: The goodwill for the company is a crucial component;hence, they try to provide
nutritious food to the public as they don’t want to compromise in their image at any cost. This
is one of the essential competitive strategies which is successfully opted by McDonald
company. As nowadays the health awareness amongst people has increased, this has affected
the sales of fast-food. McDonald's has redefined its product line by adding various nutritious
options to retain its existing customer and attract prospects. For instance, Go-Active meals
are served by the company, which include all the healthy combinations like salad and step-o-
meter, which is used to track the daily steps covered by the customer. Application of
innovative actions assists the company to leverage the benefit of highly competitive
advantage by effectively fulfil the desire of customers (Li, Li and Feng, 2014).
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2. Assess McDonald’s operations strategy (i.e. ‘lean thinking’, ‘quality’, TQM) and
implications for setting up processes and supply chains
Operation strategy helps the company to design their product in such a way that it sustains
and the competitive environment. At the same time, they have an X factor in achievinga
competitive advantage in the industry. The plans are specifically designed to maximise
effectiveness associated with the systematic production of goods and services by lower
downing unnecessary expenditure of company (Mohammadi, Soleymani, and Mozafari,
2014). McDonald company needs to appeal the interest of the audience by encouraging a
favourable response of customer in terms to carry out comprehensive operations and function
successfully. While bringing any revolution within internal practices company based on
operational strategy can redefine its processes as well as strengthening its supply chains.
Thus, there are different operation strategies which are discussed below:
Lean Thinking
Lean thinking is a business methodology which helps an organisation to think in a new way
due to which they get to know ways to organise human activities to provide more benefits to
society. It introduced by James P. Womack and Daniel T. Jones. This is a business
methodology, which aims for innovative ideas as it provides more benefits to society and
value to the individual. It mainly focuses on carrying out operations in such a manner which
eliminates the chances of wastage and offer value to society by ignoring certain activities
which may lead to environmental pollution. It involves the production of innovative goods
and services, which result in the 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 as all the essential material such as
hamburgers; cheeseburgers are placed at front counter reason being staff require them
repetitive to prepare orders. This leads the company to carry out mass production by reducing
the waiting time and offer extensive choices for customers. Timely processing of order
maximises the revenue of the company as they get the opportunity to cater to broad needs and
meet the requirements of people effectively. Along with that, the company offers to drive
through the option to people which maximised their efficiency. McDonald’s was the first
Lean Service organisation in 2017. Therefore, to bring specialisation training session are
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provided to existing and new staff to avoid wastage or human error by effectively carrying
out efficient production processes.
Quality
The company want to keep the quality of its product at a premium as they do not want to
comprise with its quality as it is a huge brand, measures are taken to attain supreme quality so
that it can catch the attention of more and more premium customers. This is important for the
higher performance to produce the best goods for the consumer satisfaction of society. It is
necessary to meet customer's demands and then meet expectations (Radosavljević, Jevtić and
Klimenta, 2016). Managers link quality with profitability, customer needs and low cost. It is
also used as a competitive weapon and treated in the process of long- term strategic planning.
It helps the managers to achieve the organisational goal with effectiveness and efficiency.
Total Quality Management (TQM)
TQM is a continual process of analysing and reducing errors in manufacturing; it focuses on
improving the experience of the customers and works on increasing the efficiency of
employees. This was introduced by great management consultants of a Japanese firm, named
William Edwards Deming, Joseph M and Armand V. Feigenbaum. TQM focus on ensuring
the internal guidelines and process standards to reduce errors, while “Six Sigma to reduce
defects.” It is used in manufacturing to streamline supply chain management, improve
customer service. It aims to hold all parties involved in the production process accountable
for the overall quality of the final product or service (Songetal., 2015). This approach is
beneficial to all members of the organisation and society as it improves quality. It is a long-
term investment as it is designed for long-term success.
3. Evaluate the statement “Honesty and transparency make you vulnerable. Be honest
andtransparent anyway” from the perspective of McDonald’s operations function.
This statement determines that the company need to be honest and transparent for its
employees in terms to discuss the actual situation and encourages them to participate in
decision-making processes. Along with that, all the necessary details need to be shared with
external stakeholders like customers because they are the ultimate user of offerings.
Description of internal operations like determining ingredients used and cleanness maintained
by the company is used to serve the overall market significantly (Chopra, Meindl and Kalra,
2013). The brand promise needs to be followed by companies to engage the interest of
stakeholder and explicitly gain successful performance by working for the welfare of external
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society. Thus, the transparency, traceability and vulnerability operations of McDonald are
listed down below:
Transparent operations: To retain the interest ofits customers,the business needs to
embrace the idea of the transparent operation. The existing customers of McDonald company
are allowed to access detail information, explore various choices as well as broadcast the
opinion of customers through their digital platform. Generally, the company, with the help of
its website and search engine list down operations that can be explored by customers and
resolve their query effectively. This help company to gain detail insights and focus on robust
marketing tool which helps to derive out the desirable process by better performances of the
business. This enhances the interconnectivity between internal and external stakeholders
which leads in carrying out effective performance of the company and gain competitive
functioning.
Furthermore, the company has run various marketing campaigns whose purpose is to pull
back the curtains from the operations for the company. Within these campaigns, the
representatives of the firm post valuable information about its offerings. Based on these
procedures, customers answers are resolved, which maximise the overall confidence in terms
to carry out bushiness performance successfully.
Traceability operations: These operations involve the whole processing of the food, which
starts from origin, growth, preparations and function till the delivery of output to customers.
It suggests the capability of an organisation in terms to trace out or verify the history of items
serviced by an organisation for the convenience of customers. Such measurability aspect
helps to maintain the security and strengthen the supply chain to develop the processes and
maintain transparency for the customers that want to seek additional information
(McDonald’s introduces traceability across all food products in 2018. It has become a
significant component within the food and beverage industry because it led people to
examine whether they are served quality and nutritious offering.
McDonalds company has effectively undergone traceability operation as it involves the
ability that helps people to trace out all the processes of the company which start from
procurement of raw material and function till consumptions of its food items. All information
related to location and time of production is examined, which increases the awareness
amongst people and reliability of customer amongst particular brand. The company sources
products from approximately forty suppliers’ function all across the countries. The movement
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of the entire ingredient and adequately recorded by the company leads to desirable
information and maintain long term relationship with the final user.
Vulnerable operations: McDonalds can enhance its business viability by regularly carrying
out global expansion and make the product readily available to satisfy the need for residents.
The vulnerable operation, as well as risk factor, can be mitigated if the company gain insights
from the geographical market and regularly launch new products within the market.
Extensive use of digital media can enhance the traffic rate by increasing the total number of
conversions and leads to balanced growth as well as the development of outlet all globally
(Wanget al., 2017). This even helps to carry out portfolio investment to deal with aggressive
competition that can threaten the market of McDonald. Moreover, efforts need to be
maintained to accommodate the trends associated with a healthy lifestyle as it expands the
customer base of the company by effectively targeting the needs of diverse section and group.
4. Based on your analysis, list some recommendations to McDonald’s to remain
competitivein a turbulent and global business environment.
McDonalds company systematically carry out their operations due to which it has maintained
the largest chain of food restaurants all around the world. To retain competitive services and
build effective strategies, it is vital for multinational fast food to consistently analysis both
internal and external environment. The explanation of specific recommendations which can
assist McDonald company in incorporating its operations in turbulent environment are listed
below:
Maintain service differentiation strategy: The administrator of the company should
practice differentiation strategy as it helps to maintain the unique image of the brand by
overpowering competitive pressure. It helps to maintain the superior services which function
right from placing the order until its delivery. Today McDonald is highly preferred by
different audiences like family, friends and business partners because it delivers quick
services due to which most of the people consider it as a clean hangout spot which is time and
cost-effective. Based on external market company needs to bring favourable reform in terms
to deliver proficient services.
Likewise, there are certain factors such as involvement in fitness habits based on which
people have changed their diet and switch from fast food outlets to healthy eating areas. This
illustrates that the company should extend its product by adding healthy eating choices for
health freak customers. Similarly, due to climate change, people have gained colossal
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awareness about the environmental factors due to which diets like Vegan are gaining huge
responses from the market. These diets make people entirely dependent on plants rather than
consuming any food product obtained from animals or dairy products. Thus, the company can
start the new category of foods items designed exclusively for Vegans which helps to
generate a significant amount of brand awareness.
Invest in promotional mix strategy: McDonald company should significantly invest in
different promotional techniques which include both traditional as well as digital media to
maintain the brand positioning and involve repeat purchasing habits. Investments in different
strategies effectively assist the company in spreading brand awareness about its new product
and engaging customer, which finally enhances the footfall of the company (Lozano, 2012).
Diverse promotional tools like print media, social media, SEO, website, email marketing and
many more need to be used to increase the conversion rate and engagewide range of customer
significantly.
Personnel differentiation: Workplace with the availability of skilled staff helps in carry out
internal activities in more desirable manner (Ageron, Gunasekaran and Spalanzani, 2012).
This state that it should be the responsibility of McDonald company to continually invest
significant amount of time, energy and cost in training and development programmes. This
leads to the preparation of high-quality product in terms to achieve the long term growth as
well as development for carrying out better structuring of activities. Hence, these strategies
are devised to effectively engage the potential customer by leveraging the opportunity to
build an online customer base for the sustainable growth of the unit.
CONCLUSION
From the above report, it has been determined that operation management plays an ideal part
which helps to support as well as internal coordinate operations to generate optimum
performance which enhances overall productivity. To entails global competition and carry out
comprehensive strategic needs, it is the responsibility of operation management to carry out
smooth processes by maintaining supply chain. There are diverse operations like supply
chain, marking and so on which are interrelated with one other and function together to gain
favourable response. Along with that different operational strategy like Total Quality
Management and Lean thinking helps to continuously improve the operations by reducing the
chances associated with unnecessary wastage of resources. Therefore, the firm needs to
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continually upgrade its operations based on turbulent environment to gain long term
sustainable performance.
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