McDonald's Operations: Critical Analysis of Make/Buy & Technology

This report provides a comprehensive analysis of McDonald's operations management, highlighting the significance of make/buy decisions and technology strategies in their global success. It delves into how McDonald's leverages technology to improve production processes, customer service, and competitive advantage. The report critically examines the company's approach to operational strategies, including business process re-engineering, computer-integrated manufacturing, and just-in-time inventory management. It also assesses the impact of global market dynamics, time quality management, and flexibility on McDonald's manufacturing processes. Furthermore, the report explores McDonald's value chain exploitation and quality control measures, providing insights into how the company maintains its position as a leading fast-food chain. The analysis incorporates a working model of a McDonald’s restaurant, illustrating the flow from raw material procurement to customer service, and concludes with recommendations for further operational improvements. Desklib offers a platform to explore similar reports and solved assignments for students.

Operations
management

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.
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, 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,
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.).
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.
4 Time 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, 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.
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 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

Figure 1: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:

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 (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, 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 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 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
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
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 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 McDonalds should consider serving an international market through export agents is
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, given that internationalization has occurred in the context of a preexisting inter-