Operations Management Report: Analyzing McDonalds' Operations

This report provides a comprehensive analysis of McDonalds' operations management, focusing on the application of value chain models to enhance efficiency and customer satisfaction. The report begins with an introduction to operations management and its significance in the modern business environment, followed by a definition of key concepts and their interrelationships within the context of McDonalds. A detailed examination of McDonalds' value chain, including inbound logistics, production, outbound logistics, marketing and sales, and services, is presented, along with the role of supporting activities such as technology integration and human resource management. The report then explores various strategies for improving operational activities, such as value chain design and effective process monitoring. Finally, the report offers specific recommendations for McDonalds to enhance its operations, including the implementation of order winners and qualifiers, strategic planning to address future challenges such as Internet of Things and industry 4.0, and alignment of corporate and operational strategies. The report concludes with an emphasis on the importance of continuous improvement and customer feedback in maintaining a competitive edge in the fast-food industry.

Operations
management
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TABLE OF CONTENTS
1) Introduction.................................................................................................................................3
2) Defining different concepts and their relationships....................................................................3
3) Ways to improve operational activities.......................................................................................5
4) Recommendations to improve organisational operations activities............................................6
References........................................................................................................................................7
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1) Introduction
In the modern era, effective management of operations and business activities is considered as
vital for the success and growth of a company. In simpler terms, operations management is
defined as the process linked with design and control of different operations and activities linked
with production (Matthias, Fouweather, Gregory & Vernon, 2017, p. 47). The process also
includes set of various activities that further supports in maximizing the profitability of an
organization in the best and every possible manner.
The present study is based on McDonalds which was established in the year 1948 and at present
it is the largest chain of fast food restaurants in the entire world. Furthermore, hamburgers of
McDonalds can be termed as the best selling and most popular products of the company. Apart
from this, wrap, muffins, fries, nuggets, ice crème, shakes etc. are some other products offered
by McDonalds. The selected business enterprise emphasize a lot on areas such as maintaining its
products and service quality and this results in enhancing the overall degree of customer
satisfaction.
McDonalds also focuses a lot on ensuring the fact that highest quality of services and products
are delivered to customers from its stores located in different places of the world. The impact of
this strategy is that it has helped McDonalds in attracting new customers and retaining the
existing ones in an appropriate manner (Marshall, Metters & Pagell, 2016, p. 1507). Other than
this, continuous improvement in products and services can be termed as another strategy which
has been employed by McDonalds for improving its degree of customer satisfaction.
2) Defining different concepts and their relationships
In simpler term, value chain model can be defined as the model which outlines set of different
activities and processes which supports companies in delivering products and services to the
final customers. Porter Value Chain Model explains that a firm’s value chain consists of set of
different activities which are used by companies with an objective to create value for the
customers in the best possible manner.
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The concept of value chain is also considered as important because it directly contributes in
providing a business with a competitive advantage over other players operating in the market.
Apart from this, the concept of value chain also supports organizations in enhancing their
profitability in the long-run (Ivanov, Tsipoulanidis & Schönberger, 2017, p. 34).
Figure 1: porter value chain analysis
(Source: Bhargav, 2018)
Considering the case of McDonalds, it can be stated that inbound logistics, production, outbound
logistics, marketing and sales and services are the major activities included in the value chain
model of the business.
In the first stage of inbound logistics, the business emphasizes a lot on areas such as receiving
different types of raw materials from the suppliers and storing the same in an appropriate manner
(Holweg, Davies, De Meyer, & Schmenner, 2018, p. 33). The basic ingredients used for the
production of hamburgers, fries and other related products are procured by McDonalds in this
activity of value chain. On the other side of this, production is the second activity in which the
inputs are converted into outputs by the selected business enterprise.
McDonalds in this process converts the raw materials and other related ingredients to its final
products which are hamburgers, fries, nuggets etc (Sterman, Oliva, Linderman, & Bendoly,
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2015, p.45). The third activity here is of outbound logistics in which the final products developed
by McDonalds are finally delivered to customers or people in the target market. The stage further
includes activities such as storage and distribution of the services and products.
In the stage of marketing and sales, different types of techniques and tools are employed by
McDonalds with an objective to create demand and awareness of its services and products
among people in the target market (Swink, Melnyk, Cooper & Hartley, 2017, p. 44). The last
stage in value chain model is of service and here different types of activities are conducted by the
business with an objective to maintain value for customers in the best possible manner. It can be
expressed that apart from the mentioned above activities, there are certain support activities also
included in the model of value chain. McDonald’s infrastructure, management of human
resources, procurement process and technology development are some common activities
included in support activities of value chain.
The pre and post services of a company also play a vital role in the entire process of value chain
and therefore, businesses are required to emphasize a lot on these areas (Hitt, Carnes, & Xu,
2016, p. 108). The pre service activities are the one in which the selected company focuses on
understanding the changing needs and demands of its customers. The information collected is
further taken into consideration to carry out changes in the process of production and service
delivery to attain the best possible degree of customer satisfaction in the long-run.
On the other side of this, the post service view of value chain outlines the fact that companies are
also required to encourage the views and opinions of customers with regards to the way in which
they perceives the products and services delivered by a business enterprise (Mahadevan, 2015, p.
54). After considering the post service view of McDonalds, it has been identified that the brand
conducts customer surveys and encourages customer feedback at regular intervals with an
objective to understand whether the customers are satisfied with the services and products
offered or not.
The selected organisation has also integrated technology in its process of value chain and the
objective here is to enhance the overall effectiveness and efficiencies of its value chain processes
(Pilkington & Meredith, 2018, p. 335). Here, technology is used by McDonalds in its process of
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procuring raw materials from different suppliers. It can be also expressed that even the level of
stocks and inventory are managed by McDonalds with the help of technology.
During the process of production, technology is used by the business with an objective to speed
up the production process and maintain quality in an adequate manner (Haksever & Render,
2017, p. 37). Technology is also used by McDonalds in context of delivering products and
services through its stores and other areas. The statement can be justified by the fact that now
McDonalds has integrated technology in the form of online store which offers customers with an
opportunity to place the order online.
3) Ways to improve operational activities
It can be expressed that value chain design can help a business a lot in terms of improving
operational activities in an adequate manner. Considering the case of McDonalds, it has been
identified that its process such as production of different goods can contribute a lot in
enhancement of its operational activities.
Here, the business can focus on integrating advanced and latest technology in its production
process to attain the desired and expected outcomes (Hitt, Carnes, & Xu, 2016 p. 109). However,
it can be critically argued that integration of latest and advanced technology is not going to be an
easy task and there are wide ranges of things which the business will be required to consider.
For example, integration of latest technology will directly result in increasing the overall cost of
operations in the short run. Here, it is suggested that instead of focusing on the short term cost,
McDonalds should emphasize more on areas such as long term gains and benefits associated
with the same.
Apart from this, carrying out effective monitoring of the process is also a strategy or way which
can be employed by the business with an objective to improve its operational activity in an
appropriate manner (Reid & Sanders, 2015, p. 65). It can be asserted that improvement in
operational activities is important because it will directly contribute in the success and growth of
business in the long-run.
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4) Recommendations to improve organisational operations activities
It is suggested that McDonalds should improve its operational activities with an objective to stay
competitive in the marketplace. Here, the brand will need to focus on two major activities which
are order winners and order qualifiers. Order winners are the features of products which will
encourage customers to even consider the products offered by McDonalds. On the other side of
this, order winners are the feature which directly motivates customers to purchase the products.
It is also suggested that McDonalds needs to develop effective strategies and plans through
which it can deal with the future issues and challenges in the best possible manner. Internet of
Things and Industry 4.0 advanced technology developments etc. are some major challenges
which will be faced by McDonalds in the near future. Here, the business will be required to
develop effective plans to deal with issues linked with management of database, data capture,
data computing, descriptive analytics etc.
It is also recommended that McDonalds needs to ensure the fact that there is direct link between
its corporate strategy and operational strategies. Furthermore, these strategies need to be directed
towards encouraging the best practices for delivering services and products to the customers.
For the process of business performance management, it is suggested that McDonalds needs to
emphasize a lot on addressing issues such as degrading product quality and changing need and
demand of customers. Here, it is recommended that feedback and reviews from customers can be
taken at regular intervals so that the brand can become aware of the changes it needs to carry out
in its operations. Apart from this, monitoring of the business processes is another important
activity which is suggested for McDonalds in terms of carrying out adequate improvement in its
operations.
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References
Bhargav, H, 2018. Value Chain Analysis – make company profitable. [Online]. Retrieved from
<https://www.edupristine.com/blog/value-chain-analysis>.
Haksever, C., & Render, B. (2017). Service and Operations Management. World Scientific
Publishing Company.
Hitt, M. A., Carnes, C. M., & Xu, K. (2016). A current view of resource based theory in
operations management: A response to Bromiley and Rau. Journal of Operations
Management, 41(10), 107-109.
Hitt, M. A., Xu, K., & Carnes, C. M. (2016). Resource based theory in operations management
research. Journal of Operations Management, 41, 77-94.
Holweg, M., Davies, J., De Meyer, A., & Schmenner, R. W. (2018). Process Theory: The
Principles of Operations Management. Oxford University Press.
Ivanov, D., Tsipoulanidis, A., & Schönberger, J. (2017). Global supply chain and operations
management. A Decision-Oriented Introduction to the Creation of Value.
Mahadevan, B. (2015). Operations management: Theory and practice. Pearson Education India.
Marshall, D., Metters, R., & Pagell, M. (2016). Changing a leopard's spots: A new research
direction for organizational culture in the operations management field. Production and
Operations Management, 25(9), 1506-1512.
Matthias, O., Fouweather, I., Gregory, I., & Vernon, A. (2017). Making sense of big data–can it
transform operations management?. International Journal of Operations & Production
Management, 37(1), 37-55.
Pilkington, A., & Meredith, J. R. (2018). The diffusion network of research knowledge in
operations management. International Journal of Operations & Production
Management, 38(2), 333-349.
Reid, R. D., & Sanders, N. R. (2015). Operations Management, Binder Ready Version: An
Integrated Approach. John Wiley & Sons.
Sterman, J., Oliva, R., Linderman, K. W., & Bendoly, E. (2015). System dynamics perspectives
and modeling opportunities for research in operations management.
Swink, M., Melnyk, S. A., Cooper, M. B., & Hartley, J. L. (2017). Managing operations across
the supply chain. New York, NY: McGraw-Hill Education.
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