Operations and Logistics Management at McDonalds Corporation - Case Study Example

of essay’s assignment is due Operations and Logistics Management at McDonald’s Corporation Introduction Regardless of the services or products that a business offers, operations and logistics management is important (Porter 1980). Companies are able to effective new means of running their business through operations and logistics management (Slack 1991). The result of this management is increased sales and profits, greater levels of customer loyalty and a stable market position. These effects are achieved in the fast food industry by developing and applying certain business strategies. This case study is about McDonald’s Coorporation and how the company has managed to be successful in various countries. The primary goal of this paper is to determine how McDonald’s business strategies have sustained them in a global market despite completion. The relationship between corporate strategy and operations management in McDonald’s has been analysed. In addition, the paper seeks to clarify how operations strategy, process types and layout design, facility design, capacity and process design are organised and activated within the operations of the company. Lastly, the ways in which McDonald’s operations add value to the delivery of goods or services and the areas of operations management within McDonald’s that need improvement have been discussed. Overview of the Company McDonald’s Corporation is one of the most valuable and popular companies in the fast food industry. The corporation that is McDonald’s serves more than 35 million customers daily in the over 30000 outlets in 121 countries (McDonald’s Corporation 2010). In one year, McDonald’s records a profit of two billion dollars (McDonald’s Corporation UK 2010). With their ‘Happy Meals’ and low prices, McDonald’s has targeted families; especially children. Large sized families prefer McDonald’s to other hamburger chains because of their cheap prices. McDonald’s was established in 1954 in the United States and has grown to become a food chain industry. McDonald’s has become one of the most renowned fast food companies in the world primarily due to the effective approach in initiation of their marketing ideas. A careful examination of the happy clown character gave the company a trademark design. Among the most innovative products of McDonald’s were the Big Mac and the Egg Muffin (Christopher 1994). Children are attracted to eat at McDonald’s food chain stores because of the happy meal idea that awards toys and is in line with its marketing strategy. In targeting children, McDonald’s has entered into the apparel market, where it has produced McKids products that include toys, videos, casual clothes and footwear. McDonald’s has expanded its business into the internet bandwagon, where it performs advertising and promotional operations. Due to the concern form the rising cases of obesity among its consumers, McDonald’s has redefined its image globally (Harrison & Hoek 2008). Relationship between corporate strategy and operations management in McDonald’s McDonald’s is known globally by both children and adults as one of the famous food chains. Despite issues being raised against the company, McDonald’s has continued to increase its sales. A person-in-charge does the business strategies so as to improve business performance and further increase its sales. This way, McDonald’s keeps customers coming back because the company keeps improving on areas where they lack. As part of its corporate strategy, McDonald’s has been trying to create a healthier image of itself by phasing out soft drinks and the Super Size French fries (Schönsleben 2007). As an effort to slim down the menu, McDonald’s is phasing out the Super Size option because of the issues and increasing concerns being raised about obesity. Other menu changes that McDonald’s is planning are making bagels an optional item and switching to a sausage burrito and cinnamon roll as its core breakfast offering. A smaller sized version of the 14 ounce McDonald’s Fruit and Yogurt Parfait is also being sold. These changes that McDonald’s has made are in line with the strategy to provide a balanced lifestyle and at the same time a range of support and choices for their customers. How Operations strategy is organised and activated within the operations of the company To manufacture and deliver products and services on time, businesses rely on processes that act as essential operations (Beamon 1996). The operations at McDonald’s have a high degree of interface with the consumers through the fast food services and customer relations. The managers at McDonald’s monitor customer satisfaction using observations by being present personally or communication. Conflicts may be imposed by the performance measures aimed at continuous improvement at McDonald’s. Motivation of satisfaction improvement may be overlooked because improperly set standards set norms instead. The most critical aspect is the overall impression that customers get while dining at McDonald’s, rather that the measurable and assessable wealth of services and products. The operational strategy at McDonald’s balances between satisfying the customer’s experience and the operation of the restaurant’s in selling its services and products (Moore 1993). McDonald’s heads perform continuous real time observations and the employees aim at satisfying the customers. By talking to customers and receiving their feedback, McDonald’s is able to get useful information on complaints and possible problems. How Process types and layout design is organised and activated within the operations of the company To sustain competitive advantage, McDonald’s has developed three strategies namely: customer value, optimal business operations and convenience (Johnson & Randolph 1995). It is important for a company to create innovative new ideas along with information technology strategies. The teams at the McDonald’s restaurants perform miniature manufacturing facilities. McDonald’s management has developed ways to marketing itself effectively so as to reach the company’s objective of improving its business system suite (Whittington 1993). As naturally seen in fast food restaurants, a standardized menu is available at all McDonald’s restaurants. The menu consists of French fries, burgers, ice cream sundaes, sandwiches, vegetable salads, desserts and milk shakes. The Big Mac, Chicken McNuggets, Quarter Pounder with Cheese and the Filet-O-Fish are the McDonald’s innovative top sellers. In line with the business strategy to develop healthier products to adhere to the needs of customers, nutritional foods such as Salad Plus products have been included in the menu. In order to attract the British market, McDonald’s offers coffee (Magee, Copacino & Rosenfield 1995). All McDonald’s restaurants show uniformity in that they open during breakfast hours and a full or limited breakfast menu is offered. This breakfast menu consists of Sausage McMuffin, Egg McMuffin, muffins, egg sandwiches, bagel sandwiches, biscuits and hotcakes. During limited time promotions, McDonald’s tests new and other products on an ongoing basis (Maskell 1991). How Facility design is organised and activated within the operations of the company Three wheeled vehicles are used at McDonald’s to collect burger wrappings and discarded cups from the restaurants’ neighbourhoods (Pride & Ferrell 2008). The right kind of people are hired to ensure that customers are provided with good services. Staff are encouraged to be optimistic, smile, be keen on treating customers with respect and follow up on performance. The restaurants’ bathrooms are kept clean and hygienic. Concerns about a restaurant being dirty and unhygienic are raised. To make them feel comfortable, customers need to be in a clean restaurant and bathroom (Plenert 2002). For restaurants that are in the country, the ambience and looks are improved so as to achieve customer satisfaction and convenience. Customers are attracted by the WIFI technology that has been adhered to by the company. The company focuses on real-time information from the customers so that prices and the menu are adjusted in response to the competitive environment and the changing needs of the customers (Livesey 1999). How Capacity is organised and activated within the operations of the company McDonald’s extends their services to community centres for senior citizens and to family retreats in order to adapt to the healthier menus that are the latest trend (Gourdin 2006). Healthier menus are achieved by innovations done to food products. People oriented strategies are needed due to the new trend of healthier menus. As part of the business strategy, McDonald’s conducts surveys and studies to better know the best alternatives that will help the company realise its objectives. The high flexibility of McDonald’s is evidenced by the differentiation of its products in different markets. In entering foreign markets, McDonald’s has developed Teriyaki burgers in Japan, McLox Salmon sandwiches in Norway, McTempeh and McPork Burgers in Indonesia and McSpaghetti in the Philippines (Ross 1998). These differentiated products show how McDonald’s changes its products to suit the preferences and international tastes of the customers (Moore & Esther 1996). This way, even health conscious individuals find that McDonald’s is appealing to them. How Process design is organised and activated within the operations of the company The corporate strategy at McDonald’s covers effective advertising and promotions. McDonald’s tactics include the giving of promotional item offers like international trips, caps, compact disks, t-shirts, concert tickets and internet cards (Dornier et al 2008). Promotions have been done in collaborations with other companies like General Motors, Coca-cola, MTV and Sony. McDonald’s also conducts children programs. An image of family comfort is the emphasis on advertisements made by McDonald’s (Waters & Waters 1999). McDonald’s creates an image of fast food as a restaurant where families can eat, enjoy and relax together, thereby appealing to the market. Consumers play a very important role in determining whether a business will succeed or fail (Sople 2003). This is why McDonald’s focuses on the customers as they are of utmost priority. The ways in which McDonald’s operations add value to the delivery of goods or services Customer satisfaction information is collected by the customer relation managers at McDonald’s in order for appropriate operational performance measures to be taken (Crouch 2004). From the customer information, positive action for satisfaction performance is taken. The McDonald’s manager needs to talk to the customers as he or she circulates through the restaurant. During this time, the customers are usually receiving the best performance services. The operations performance at McDonald’s finds that customer feedback is the most critical measure of success. From the feedback gotten from the customers, McDonald’s places solutions on problems encountered by the customers and this improve the current level of satisfaction at the restaurants (Mintzberg 1990). Observing the customer while they are being served and talking to the customers in real time is a belief that the McDonald’s managers find to be crucial to monitoring the satisfaction of customers. McDonald’s believes that information gathered from customers is valuable in making decisions that affect the restaurant. McDonald’s employees and managers are encouraged to communicate and respond to customers whenever customers are in the premises. Feedback from customers such as fax, emails or letters are considered important in ensuring customer satisfaction. Areas of OM within McDonald’s which need improvement As much as McDonald’s is a successful corporation in different countries, it is important to remember that preferences and cultural background of any one market continue changing (Howard 1999). Because of this, it is inevitable for new markets to emerge. The food service industry is faced with strict competition, and therefore McDonald’s should implement operation management strategies that will reach out to the new markets. Conduction of consumer studies is a significant initial step that McDonald’s can take. This way, McDonald’s will be aware of the new market segments and the latest trends in the market. Consumer research can give information on changes in food preferences. In addition, this strategy will ensure that McDonald’s increases its market scope in the individual countries (Fitzgerald & Moon 1996). Emerging markets in the individual countries should be addressed through advertisements and promotions. The integrated marketing approach is an effective way to do this. Currently, McDonald’s uses television commercials, printed advertisements, the internet and promotional offers. Using an integrated marketing strategy will optimise each of the promotional media. Integrated marketing will enable interactivity, which in turn will allow for counter flow of information within the targeted market and will reach to outside markets as well (Arnold 2003). Through integrated marketing, McDonald’s will generate better business effects and gain more marketing advantage by combining core strategies with different means of communication. Through integrated marketing, multiple communication voices are coordinated strategically (Fisher 1992). The main goal of integrated marketing is to optimize the effect felt by the consumer and non-consumer through persuasive communication. The marketing mix elements such are public relations, advertising, promotions, package design and direct marketing are coordinated for the trade and professional trade market. Conclusion Through quality standards and efficient strategies McDonald’s has been a successful operator in the food service industry. McDonald’s has gained entry even in some of the most challenging markets, and this is evidenced by its international market growth. McDonald’s has been able to offer its products through its strong sense of customer satisfaction and quality service. Support of McDonald’s in its various markets is achieved by the modification of products to suits the needs of the market, doing effective promotions and offers and implementing affordable prices (Robeson, Copacino & Howe 1994). Although McDonald’s has been successful, it is important for the company to take into account that competition in the food service industry is constantly growing (Prakashan 2001). Several domestic and foreign fast food chains that offer products that are similar to those offered by McDonald’s exist and are supported by consumers. The efficiency and speed in the McDonald’s restaurants needs to improve. To ensure that McDonald’s sustains its competitive advantage, constant strategic change is crucial. McDonald’s adapts to its target market’s cultural needs. This goes on to show that indeed, McDonald’s is a company that is open to change and is willing to learn. References Arnold, D 2003, Strategies for entering and developing international markets, Prentice Hall. Beamon, B 1996, ‘Performance measures in supply chain management’, Proceedings of the 1996 Conference on Agile and Intelligent Manufacturing Systems, Rensselaer Polytechnic Institute, Troy, New York, NY. Christopher, M 1994, Logistics and supply chain management, New York, NY. Crouch, A 2004, Fast-food business strategy, The Raw Prawn Blog. 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