A Detailed Report on McDonald's Operational Management Strategies

This report offers a comprehensive analysis of McDonald's operational management, examining key strategies and decisions within the fast-food giant. The report delves into the core aspects of operational management, including the integration of goods and services, customer service objectives, and resource utilization. It provides a critical analysis of McDonald's make/buy decisions, exploring how they influence productivity and performance. Furthermore, the report examines the company's technological strategies, highlighting how technology adoption has improved production processes and provided competitive advantages. The analysis covers various operational strategies, such as global market adaptation, time and quality management, and flexibility in operations. The report also includes a discussion on the working model of a McDonald's restaurant, supply chain management, and the impact of these strategies on the company's success.

Operations management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Operation management in McDonalds...................................................................................1
Operational Strategies ...........................................................................................................2
Critical analysis on Make/ buy decision.................................................................................3
Working model of a McDonald’s restaurant: .......................................................................5
Critical analysis on Technological strategies ........................................................................6
3-D of operational strategy process........................................................................................8
Improvement in the Operations outcomes due to buy/do decision and use of technology. . .8
RECOMMENDATIONS...............................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

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.
Here critical analysis is done on the operational management of the firm where
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, and now they have 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.
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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,
optimum allocation of resources and reducing costs. They have reduced their all their
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).
As McDonald have major objective is to deliver high quality of product and services to
the customer and attract them in the large manner. Thus, for attain this objective, it is very
important to cited venture to understand the actual needs and wants of the customers. In order to
delivers effective services and product to the customer supply chain management is very
significant aspect in the company. It is a process under which flow of good and services
included. In a general meaning it can be said that it is a procedure of movement, storage of raw
material, work process of inventory and finished good. With help of supply chain management,
company can easily transfer the commodity and services from manufacturer to final customers.
McDonald supply chain is based on the three logical drivers that are inventory, transportation
and facilities. In this aspect includes raw material, work in progress and finished good within the
supply chain. In the dubai distributors keep and save the stock for the 1 month and 45 days. In
the other cities of United Arab Emirates there are 2 ware houses. On the other hand in the
context of transportation, inventory moving from the place to place. Cited venture used
refrigerated vans under which it maintains a good fleet for containers. It transferring container
from port to their ware house. In addition to this, it has also reefer express fleet which they use
for transferring food ingredient to their retail outlet in order to keep good food at 22 degree
temperature. In this aspect, Dubai delivers all goods to cited venture from the port of their ware
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house. On the other hand facilities are the actual physical location in the supply chain network
under which product can stored, assembled and fabricated. From the lohar, McDonald distributes
the supplies at the other cities of United Arab Emirates.
Operational Strategies
Chang, Wong and Chien (2017) technology and do/buy decision has made their
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
was made by them through providing constant interpretation, intangible and consumable
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;
1 Global market place: In order to gain economic advantages, they made changes in their
operation (Cormier and Elliott, 2017).
2 Time Quality management: This has provided them customer satisfaction and provided them
chance improve more on their quality of goods and services.
3 Flexibility: Improvement in the delivery, product design, demands has provided flexibility to
the firm. The tools and techniques used by the company has provided them agile
manufacturing.
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4 Time reduction: To serve the competitive advantages they have reduced 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, information technologies and better communication system
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
processes and provided them concept of clean-slate approach along with break-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.
Strategy map is a diagram that is used to the document the primary strategic goals being
pursued by the organisation and management team. Strategy map is an essential tool in their
strategy and planning activities. In a simple word it can be said that it is a visual representation
of the components of the company's strategy and the relationship between the organisation's
financial, customer and internal process. In this aspect, major dimensioned considered which is
structure, nutate, governance, duration and development stage. Cited venture using effective
approach and strategy in order to attain its outcome in the market.
Critical analysis on Make/ buy decision
According to Krishnaswamy, (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, delegate
performance, multiple shift operation and organizational policies. 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
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measures through increasing their order fulfilment 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).
As McDonald is the popular fast food restaurant in the world there is need that they must
make their make buy decision based on Customers Behaviour. Such things are more important in
the marketing industry. There are various factors that are based on the customers expectation.
Standards, quality, taste and location are all among the necessary things that are required by the
consumers. For illustration, the firm has launched McArabia (grilled halal chicken with Arabic
spices and bread) for their consumer in Arab countries. For Hindus as they do not consume beef
so they have variety of chicken and egg products. Similarly, in Malaysia they have Bubur Ayam
McD s (chicken porridge) as-well-as for the South Korea they have Bulgogi Burgers (thinly
sliced meat in bulgogi marinade). In order to maintain the culture and tradition they have tried to
engage themselves into it. By understanding the consumer buying behaviour they are improving
their food menu and developing along with designing the new products. Such make-buy decision
also help in choosing the appropriate suppliers. McDonald's is highly chose among the suppliers
they want quality products that have licence, certification and legal permission.
MCDONALD EXPLOITATION OF QUALITY AND VALUE CHAIN ANALYSIS
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Figure 1:Operational Management
(Sources: Stowell and et. al., 2017)
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. According to Almeida, Bem-haja and Alberty (2017) 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
(Kulkarni and 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, as stated by
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Jelassi and Enders (2014) McDonald’s uses Online Analytical processing (OLAP) which helps
the management in making effective 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-haja and
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)
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3-D of operational strategy process
 Value: The Company sells nearly millions of products everyday too many customers.
Their business operations are systematic 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 fulfils 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 analyse 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 production capacity as-well-as utilization. They have developed
consistency in fulfilling 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.
 Cost: According to Krishnaswamy (2017) the buy/do decision area of operations
management was used in the McDonalds to implement practicality. Stakeholder’s
relationship is very necessary for the organization and their satisfaction is very necessary
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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 got the 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 analysed
and them forwarded for the process. The specifications for the raw quality are completely
analysed by the managers during the time of purchasing and manufacturing process (Vaz
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