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Operations Management Assignment: Case Analysis of McDonalds

Question

Task: It is an individual research report on operations management assignment that is focused on ensuring that students are able to do quality research (peer reviewed articles (most important), textbook, reports, etc.) into the fast food industry. Students are expected to answer the following questions:

  • Identify both established and emerging consumer value propositions within the fast found industry.
  • Provide a process map (or flowchart) of a fast food restaurant’s order fulfillment process.
  • Discuss the application of manufacturing excellence in fast food chains
  • Review the relationship between service quality and profitability in the industry
  • Describe the current and potential operational challenges faced by managers in the fast food industry.
  • Provide recommendations for improving the service operations of the fast food restaurants.

Answer

Introduction:
Marketing is the performance of organisational activities in order to achieve the maximum level of efficiency possible within an organisation. Via operations management, materials and labour are turned into commodities and efficiency of a company.The importance of publicity in sales, market demand, overall customer perception cannot be overstated. Finance is in charge of cash flow management, financial assets, and deposits. The utilization of information flows falls under the purview of MIS.The logistics management of McDonald's Corporation respects McDonald's status as the world’s biggest fast food chain. The communications in charge of managing the customer experience manufacturing process is leadership of processes. It entails the planning, organization, scheduling, and maintenance of all resources required to deliver a company's goods and services.Since strategic planning is a managerial practice, it forms an integral part of staff, equipment, technology, documents, and other infrastructure needed for the producing goods and services.The main framework and role of each organization is operations management. That is so, either in the manufacture or business, for profit or not, whatever the scale of the business, in the sector it is. This section of the study is also prepared in order for corporate organizations to expand and evaluate the supply chain and operating processes in the sense of a well established McDonalds Company. The study presents a short discussion mostly on organization's adapted technology and on the management framework, which enable the enterprise to take top priority on the business.

Background:
The McDonald's Company is an American enterprise which deals with fast food, established in 1940 in San Bernardino, California, named Richard and Maurice McDonald's Restaurant, USA (Yan, 2020). In 2018, McDonald's has been the largest network of restaurants all over the world with over 69 million clients serving in 37,855 stores in over 100 countries.

McDonald's was working with its business strategy and name during the first decades. Since then, it has identified a workable solution. The recent history of the organization is particularly remarkable for its comparatively few note pieces. McDonald's has been growing rapidly for almost 70 years and new stores have opened up steadily while gaining and losing customer (Puzakova et al., 2015). McDonald's is most known for burgers, but it does have chicken and breakfast products. In order to meet the changing consumer tastes and the adverse reaction to the health implications of its items, the company has launched the menu of vegetables, fish products, milk shakes and fruit. The McDonald's Company's income is derived from rents, franchisees' income and corporate earnings. Two figures in 2018 show that McDonald's is the second largest private employer with a workforce of 1.7 million.

Discussion:
Management of operations includes using personnel, supplies, facilities and technological tools. Operations administrators purchase, produce and supply products to customers depending on customer requirements and business capabilities. McDonald's mission is to include affordable goods in this strategic business decision field (Candelo et al., 2016). The scale of its goods and costs therefore are focused on the most famous preferences of consumers. However, certain McDonald goods are reduced to a minimum to make it more competitive.

Identification of consumer value proposition:
Established consumer value:

McDonald's is renowned for its value offering, a constantly good meal consumed worldwide rapidly and constantly. Families, young adults, older people and businesses are the principal consumer groups. The core corporate associates of McDonald are the operators of their franchises. Over than 80% of McDonald’s outlets have been licensed at the end of 2013. Along with its distributors a three-legged platform such as retailers, franchises and McDonald's is the basis for the company's concept. For a company to be successful, every leg must prosper. Operational management primarily covers procurement, distribution and service delivery preparation, scheduling and supervision. This also stresses the distribution that makes sure a company transforms inputs into outputs effectively (Langert, 2019). Both inputs may include materials, machinery and technologies, including staff and visitors. The way to collect, package, mail and deliver a customer is to complete the order. It is procedure to stock, select and prepare a package, ship and send an automatic email to the buyer informing them that the order is in progress. In order to excel, a customer service approach must be applied in all areas of the enterprise. Customer management concentrates on obtaining, serving and retaining individual customer groups. The distribution network approach has an iterative method for the valuation of operating components for cash payments. In order to accomplish a high level objective, a business plan involves utilizing a corporate core competency. Development of a comprehensive client plan for and target audience means that the firm is better off on the business than its rivals. Organizations would benefit from synchronized campaign schedules with their wider demand forecasting programs for the long term and would monitor product predictions and inventory levels in real time. No systemic approach is effective for every business since a product contains various colors. Some organizations are in charge of any application directly and some are too big to bear the responsibility of a service provider to a logistics company. McDonalds is driven to increase the product range with increased competition for choice and nutritious ingredients (Langert, 2019). The methods used to gather order mostly in future may not evolve, but the tools that enable it to evolve to be further designed and adapted to the special needs of retailers and suppliers. Besides that trend, companies still have growth opportunities in the new field and new consumers as unique goods are required and products in several regions worldwide have to be distributed rapidly. The McDonald's Environmental Scorecard is a means of measuring the environmental efficiency of manufacturers with annual statements for energy, waste, water and air.

Emerging consumer value:
The fast food industry of McDonald’s is gradually recognizing the change in pattern of their consumer demands. The food industry has gradually adapted many analysis based on customer data. The industry giant has stepped its analysis based on whether its customers are trading towards smaller meals or they are not opting out Cokes into their orders. McDonald’s is now planning to apply strategies for increasing its consumer value proposition especially in the areas of dinner and breakfast.

Process Map in operations management assignment

Figure 1: Process Map
(Source: created by author using Draw.io)

Manufacturing excellence application in fast food:
The high hygiene and quality in a restaurant impresses customers across the world. Both of them uphold their quality standards in an exceptional way. This brings up the issue of how millions of people in the whole chain around the world should be certain that they meet the same standards and legitimate quality concerns. McDonald's mission is to include inexpensive goods in this business decision field of operational management. The nutritional values and price of their goods are according to the most common standards of consumers. But some McDonald's offerings are reduced in size so that they are more economical. The achievement of McDonald can be directly linked to its very strong tradition, from the very first opening through to the current situation that connects the franchises. Its main drivers are people, including the consumer's product supporters. Organization structure is a reliance on symbolic principles and beliefs that form and are abstractly divided into experiences by participants in organizations, enabling them to give special meaning to the triggers found in their organizations. Specific instructions are included on cleaning, food processing, treatment of staff and hygiene. They contribute to an effective, secure and supervised growth and customer service. McDonalds' mission is to reduce production cost by promoting restaurant operations in this strategic operational decision field. The company does not promote the food and recipes served in its establishments. Instead, domestically and internationally counterparties and suppliers trade their wares with McDonald's staff.

McDonalds' quality lean manufacturing has been credited as being among the main factors in the company's rise through the ranks of something like the restaurant business.The manufacturer's knowledge management have been digitized, and operational procedures to ensure continuity across the board have been well developed.The corporation uses routine checks at and of its outlets to ensure quality requirements are respected (Nadolny&Nadolny, 2015). Furthermore, it holds monthly training and other training sessions to raise its workers' knowledge of the business quality levels and customer loyalty indicators and techniques.

Analysis of the quality and profitability:
The main approach to optimize logistical procedures and the main mechanism of obtaining customer's expression are customer support measurements. It seeks to improve the competence of its products under restrictions such as expense and price caps. McDonald's services a line method to guaranteesteadiness in product collection(Watson, 2020). Consistency in the business judgment field of operations management meets the perceptions of customers regarding McDonald's and its product. The administration of the operations addresses many technical questions including the scale of production facilities and project management approaches and the implementation of the IT core network. Other organizational problems involve inventory management, such as the standard of productivity in progress and the procurement of raw materials, product quality, manipulation of products and service policies (Tien, 2019). A business' decision to get consumer measurement is vital to progress in quality service, speed and expense maximization. The two most important elements of customer support are cost and quality. It will increase retail costs and competitors' productivity in a productive supply chain (Rajawat et al., 2020). High production also means that as their goods are shipped, they will match or surpass the consumer needs. The management of employees is focused on science that shows that employees should be compensated for achieving their defined goals. The McDonald's food supply used workplace promotions and fair salaries to honor and encourage hardworking workers (Panwar & Patra, 2017). McDonalds rewards certain monthly honors and constructive observations and cognitions of excellent and outstanding workers in various ways. The company has adopted detailed and accurate processes that regulate the workplace environment of workers and guarantee that food items sold in all its outlets to consumers are of consistently high quality (Crawford et al., 2015).

McDonald’s Corp's sales have decreased 6% to $4.71B since 31 March 2020, according to a new report. Net income declined by 17 percent to $1.11B. In regional economy, the revenues decreased by 10 percent to US$2.4 billion, foreign trade industries and businesses fell by 2 percent to US$439.1 million, and international supply markets fell by 10 percent to USD 2.4 billion. Free cash flow is perceived to be a key factor in measuring the revenue capacity of capital investors in industry since the numbers are not applicable in terms of depreciation, depletion or amortization (Yamin&Alharthi, 2020). McDonald's cumulative free cash flow shares have been 16.60% annually in the last 12 months. In the last three years there has been an average free cash flow per distribution of 15.00 per cent per year. The overall rate of increase in free cash flow throughout the last five years is 9.00% annually. The net Free Cash Flow stood at 5.70% a year for the last 10 years.

Challenges:
Some of the related to ethical issues are consumer security, protection of employees, sustainability of goods, waste disposal, emissions, routine activities, job tension, constraining business atmosphere, employment policies, working time volatility, energy usage, power consumption (Assis et al, 2019). Overheads can conveniently be installed in the form of administrative costs, insurance, rental charges, or utilities. Excessive overheads could be especially harmful if not handled in a timely way, meaning that small companies face quite a major challenge (Yulianti, 2020). McDonald's advertise their products as nutritious but the irony is that junk foods are refined and rich in calories, salt and sugar, poor in vitamins and protein. Such a diet is associated with increased risk of cardiovascular disease, stroke, diabetes and several diseases. Low salaries are paid to staff in the fast-food sector. In trying to select a company's process approach, managers must rely on consumer needs, cost and quality (Cook et al, 2016). In all these ways, Burger King's approach worked well. They have been able to enhance the efficiency of their goods, adapt them to their consumers' needs and even reduce costs. Their capital is not linked in the production of new products or in item lines not enticing to the consumer. In reality, McDonalds did the contrary (Khan et al, 2020). McDonald's don't pay over time fees, since staffs are very busy. Pressure to maintain high income, low labor rates leads to underemployment, because employees tend to struggle more and more. As a result, there are common injuries. Most workers are individuals with few jobs and thus no other option but to work. Enforcement and regulation may be an important problem if it is not adequately dealt with. With the evolution of economies and technology (Osei-Kyei& Chan, 2017), a whole new range of laws will be brought with them. Unfortunately, companies sometimes don't know what they're asked of or don't appreciate. There are fines and sanctions in place at this stage, and a dilemma that could possibly be overcome.

Recommendations:
Any service which exceeds the team or even the requirements of the customer must be reduced. Here can be helpful quick solutions, including the utilization of cloud storage, free phone calls, telecommuting and rental instead of purchasing office facilities (Ruparathna et al., 2017). New technologies can be adapted for the advancement of the work process which will help to complete the order and other tasks very easily and it will take less time. Also it will help to maintain the records efficiently which will help in the analysis for future growth of the company (Ramos et al., 2018). The individual teams should define, articulate and settle on their goals instead of using simple financial metrics. Identify how outputs are assessed, track success and assess management cycle efficiency. Customer satisfaction is the main thing in this business. So, they should put more effort in taking feedbacks regularly and work on the feedbacks for the maintaining a better relationship with the customers. Consider bringing in an advisor or a third party who could really track how the work is made available online and can determine when the customer experience goes wrong. They can help to choose from the best customer-oriented workers to rationalize the method of transfer (Annarelli&Nonino, 2016). The cash balance is monitored by several money management techniques. Take a look at applications that will produce budgets, measure VAT, automate payments and warn users to unexpected results (Hu et al., 2020). Whenever practicable it could be recommended to look at fixing expenses. Essentials such as power prices can be set.

Conclusion:
Hence, from the research it is observed that operations management plays important role in organization to manage the business. The management of operation is associated with the most effective regulation of manufacturing processes and activities and includes firm methods used by businesses to improve manufacturing productivity. The connected supply chain involves of people, organizations, resources, practices and technology that help to create and distribute a product or service. The sale of products to consumers is another major facet of operational management. This involves ensuring the delivery of goods in the specified limit. Management of operations usually often monitors consumers to ensure the goods fulfill the requirements for consistency and features. As a business, McDonalds is a global success. In all over the worlds McDonalds have very similar structures, and even though there are variations, the effects on their standard American operating structure are minimal. For the smallest number of workers McDonald's manufacturing process treats McDonald's salary somewhat differently. McDonald's systems were rapidly established for an ever-growing restaurant industry and were produced at an extraordinary rate. McDonalds built an accessible, profitable supply chain focused less on corporate wisdom and more about people's intelligent and core beliefs that draw upon their company's equal treatment. However, due care and imagination would nevertheless become exceptional. When planning and training are well implemented, the business will increase and continue to overcome its rivals.

Reference:
Annarelli, A. and Nonino, F., 2016. Strategic and operational management of organizational resilience: Current state of research and future directions. Omega, 62, pp.1-18.

Assis, L.S., Camponogara, E., Menezes, B.C. and Grossmann, I.E., 2019. An MINLP formulation for integrating the operational management of crude oil supply. Computers & Chemical Engineering, 123, pp.110-125.

Candelo, E., Casalegno, C.G. and Civera, C., 2016. Communication for preventing reputational risk. McDonald’s strategy and its impact on the Italian market.

Cook, D.M., Husband, P.S. and Boxall, J.B., 2016. Operational management of trunk main discolouration risk. Urban Water Journal, 13(4), pp.382-395.

Crawford, A., Humphries, S.A. and Geddy, M.M., 2015. McDonald's: A Case Study in Glocalization. Journal of Global Business Issues, 9(1).

Hu, X., Sun, L., Zhou, Y. and Ruan, J., 2020. Review of operational management in intelligent agriculture based on the Internet of Things. Frontiers of Engineering Management, pp.1-14.

Khan, A.H., Cao, X., Li, S. and Luo, C., 2020. Using social behavior of beetles to establish a computational model for operational management. IEEE Transactions on Computational Social Systems, 7(2), pp.492-502.

Langert, B., 2019. The Battle To Do Good: Inside McDonald’s Sustainability Journey. Emerald Group Publishing.

Nadolny, A. and Ryan, S., 2015. McUniversities revisited: a comparison of university and McDonald's casual employee experiences in Australia. Studies in Higher Education, 40(1), pp.142-157.

Osei-Kyei, R. and Chan, A.P., 2017. Perceptions of stakeholders on the critical success factors for operational management of public-private partnership projects. Facilities.

Panwar, D. and Patra, S., 2017. Localization in Fast Food industry: A case study on McDonald’s strategy in India. Journal of Arts, Science & Commerce, 8(1), pp.70-74.

Puzakova, M., Kwak, H. and Bell, M., 2015. Beyond seeing McDonald's fiesta menu: The role of accent in brand sincerity of ethnic products and brands. Journal of Advertising, 44(3), pp.219-231.

Rajawat, A., Kee, D.M.H., Malik, M.Z.B.A., Yassin, M.A.Q.B.M., Shaffie, M.S.I.B.A., Fuaat, M.H.B., AlDosari, N. and Santoso, M.E.J., 2020. Factors: Responsible for McDonald's Performance. Journal of the Community Development in Asia (JCDA), 3(2), pp.11-17.

Ramos, T.R.P., de Morais, C.S. and Barbosa-Póvoa, A.P., 2018. The smart waste collection routing problem: Alternative operational management approaches. Expert Systems with Applications, 103, pp.146-158.

Ruparathna, R., Hewage, K. and Sadiq, R., 2017. Developing a level of service (LOS) index for operational management of public buildings. Sustainable cities and society, 34, pp.159-173.

Tien, N.H., 2019. Customization and Standardization of the Business Strategy of Foreign Enterprises in Vietnam–the McDonald’s Case and the Fast Food Sector.“. International Journal of Research in Marketing Management and Sales, 1(2), pp.44-50.

Watson, J.L. ed., 2020. Golden arches east: McDonald's in East Asia. Stanford University Press.

Yamin, M. and Alharthi, S., 2020. Measuring impact of healthcare information systems in administration and operational management. International Journal of Information Technology, 12(3), pp.767-774.

Yan, Y., 2020. 1. McDonald's in Beijing: The Localization of Americana. In Golden arches east (pp. 39-76). Stanford University Press.

Yulianti, N.M.D.R., 2020. Pengaruh Brand Image, Green Marketing Strategy, Dan Emotional Desire TerhadapKeputusanPembelianProdukMcdonald’s. JurnalIlmiahManajemendanBisnis, 5(1), pp.70-80.

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