Problem
McDonald's is one of the world's most popular and successful fast-food restaurants worldwide. The company has a long and storied history, where its business model is widely studied and imitated. McDonald's Corporation's operations management (OM) supports the company's position as the largest fast-food restaurant chain in the world. McDonald's aims for maximum efficiency and productivity to facilitate business strategies that rely on low production costs. For instance, in process and capacity design, which is a part of operations management, the food service company optimizes production processes to minimize costs and enable competitive selling prices. Operations strategy and related strategic planning determine the restaurant corporation's overall business performance.
McDonald's optimizes the business to counteract competition. The company competes with Wendy's, KFC, Dunkin', Burger King, Subway, and Arby's. McCafé operations also compete with Starbucks and Tim Hortons, as well as PepsiCo beverages and Unilever's BRU coffee. The Five Forces analysis of McDonald's Corporation shows that these competing firms impose a strong competitive force, which influences the company's operations strategy and measures for optimal productivity.
In the design of goods and services, the objective is to develop the best product, given the resources and limitations of the fast-food company. In this case, McDonald's aims for high efficiency of service operations, and the standardization of goods. High efficiency and productivity in food preparation minimizes production costs. On the other hand, standardization of goods contributes to product consistency and customer satisfaction at store locations. Quality management involves matching McDonald's products to the quality expectations and preferences of target consumers. The operations strategy applies policies and measures to ensure that such matching is achieved at company-owned, franchised, and licensed locations. Product standardization comes with quality consistency, which contributes to the business strengths identified in the SWOT analysis of McDonald's Corporation. Such quality consistency helps the fast-food business satisfy consumers' expectations. However, McDonald's operations management faces the challenge of maintaining satisfactory quality despite cost minimization, which is essential for competitive selling prices.
McDonald's operations strategy maximizes the benefits of economies of scale in production processes, in order to support competitive pricing. For example, the company employs custom equipment for high-speed food preparation. In this way, operations management achieves high efficiency in production processes and the minimization of costs at corporate facilities, hubs, and restaurants. Also, company-owned, franchised, and licensed locations are established for maximum market reach. In this decision area, McDonald's operations management involves restaurants, kiosks, and the company's websites and mobile apps as venues. Other locations considered are those of third-party distributors or retailers of McCafé products, such as Walmart, Costco, Amazon, and Target. Through these locations or venues, the global fast-food restaurant chain reaches customers in traditional and online ways. Also, McDonald's organizational structure or corporate structure determines the locations of facilities and resources, including human resources.
In human resources and job design, operations management has the objective of developing and maintaining an adequate workforce for McDonald's business development. The multinational corporation supports the staffing needs of its restaurants. For example, the company has standardized training programs for skills needed in food production and preparation.
Supply chain management aims to maintain high effectiveness and efficiency throughout McDonald's supply chain. The food service company's operations management uses information technology to inform suppliers and enable them to match their operations to the company's supply needs. McDonald's has a mixture of regional suppliers for highly standardized ingredients, and local suppliers for perishables. In this context, suppliers' productivity affects the restaurant company's productivity. With this consideration, McDonald's corporate social responsibility strategy and other business strategies impose policies and rules for suppliers, in order to minimize disruptions in the supply chain.
In inventory management, McDonald's operations management objective is to ensure adequate inventory for smooth business operations with minimal disruptions in resource availability. This decision area of operations management functions as an interface between the supply chain and the rest of the food service organization. Materials from suppliers pass through inventory management, or are stored for later use, depending on the requirements of the corporation and its restaurants. Inventory management effectiveness influences productivity at store locations. In this regard, McDonald's minimizes inventory costs while supporting restaurant operations.
In maintenance, strategic decisions focus on maintaining stable operations, which correlate to the stability of operations at the company's corporate offices and stores. To maintain high productivity, McDonald's operations management monitors the needs of its restaurants, and uses the resulting data to inform maintenance teams. Third-party service providers are also used in some situations, such as for the repair of cooking equipment and machinery. In this context, operations management also uses real-time monitoring and control to ensure that decisions and actions correspond to the current conditions of the food-service company.
With reference to the above case study, explain
A. How various Operations Management principles helped Mc Donald to establish itself as a successful business.
B. McDonald's optimizes the business to counteract competition. Discuss.
C. How has McDonald combined and championed the services' as well as manufacturing operations principles such as Lean and Six Sigma?
D. "Traditional OM concepts such as Taylor's theory and Fordism are still significant in modern businesses". Explain the statement with any relevant example.
Assume that you are the Operations Manager, McDonald, UAE. Provide any 3 relevant suggestions to the business to improve its' operations in UAE.