Operational Effectiveness Of McDonald Case Study

Introduction of Operational Effectiveness Of Mcdonald Case Study

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An organisation's operations are demonstrated as the administration of business practices in making the highest level of effectiveness probable within an organisation. The report's main objective is to analyse the organisational operation of McDonald's. McDonald's follows the divisional structure of an organisation where the provided responsibilities are dissected into different elements. The operational management of McDonald's aids the position of the organisation as the leading chain of fast-food restaurants globally (McDonald's, 2022). The global business of this fast-food organisation entails the broad classification of strategic choices and needs for the management of operations such as supply chain development and strategic HRM. The operation of the organisation is based on the decision areas, which include "quality management", "location strategy", "capacity and process design", "layout strategy", "design", and "many more". This fast-food organisation works towards accomplishing maximum productivity in respective areas of business based on strategic decisions of operation management.

No of Restaurants of McDonald's in the UK around 2017

(Source: Statista, 2022)

This leading fast-food organisation initiated its operational process in the 1960s and is serving the global value chain of 30 000 restaurants. Figure 1 suggests that McDonald's operates around 181 restaurants from the above graphical data, which have significantly reached higher in 2018 (Statista, 2022). The internal operation management of the organisation is well structured as it has well-trained employees for every task. In the study, the company's overview, its performance objective, and the factors of 4v's are also analysed. The organisation's approach is clear and precise in attaining and meeting the demand and capacity provided in the study. In the organisational operation of McDonald's, sustainability operations are overviewed, which is a high requirement for a successful business. The data sources and tools are evaluated where the pros and cons are critically mentioned.

2. Organisational operation: Evaluation

• McDonald's: Overview

McDonald's is a US-based fast food organisation which serves around 69 million customers daily in more than 120 countries. The mission of McDonald's is to create delicious food and "feel-good moments" feasible for everybody (Mcdonald's, 2022). The vision of McDonald's is to move with speed to drive profitable development and serve the customers better and more delicious foods every day.

 Number of employees of McDonald's from 2012-2021

(Source: Statista, 2022)

The statistical results in figure 2 of McDonald's reflect that it holds a workforce of around 200000 people globally at the end of 2020 (Statista, 2022). The organisation is successful in the long term due to its workforce strength and unique products, including special hamburgers and Big Macs.

 Revenue of McDonald's from 2010-2021

(Source: Macrotrends, 2022)

The graph in figure 3 is based on monthly, quarterly, and yearly, indicating that this fast-food organisation's revenue has declined in 2019 due to the pandemic and significantly increased in 2020. The annual revenue of McDonald's for 12 months ending December 31 2021, was estimated at 6 billion dollars in the home-based country, which is an almost 13 per cent increase over the year (Macrotrends, 2022). The annual sales of franchised restaurants in McDonald's UK are between £1500K and £4300K.

4 v's and performance objective

The performance objective of any business organisation depends on five factors: quality, dependability, flexibility, cost, and speed (Otoo et al., 2019). McDonald's objective is to boost its operational efficiency and effectiveness. One of their remarkable achievements is providing quality fast foods at an affordable price. As Boell and Hoof (2020) opined, this accomplishment is the success key for McDonald's to serve their customers daily. The operational and strategic objective of McDonald's is to be socially responsible for the organisation's welfare. The socially responsible organisation serves the high and standard quality food with outstanding and rapid service and great money value.

4v's of operation management of the organisation represents four types: variety, volume, variation, and visibility.

4v's	Implications
Volume	High
Variety	High
Variation	Low
Visibility	High

Table 1: 4 v’s of McDonald’s

Description

McDonald's is famous for its hamburgers. A larger volume of buns is created to fulfil the demand for large burgers. As cited by G?od (2019), McDonald's utilises specialised technologies that provide the effectiveness of higher processing values. Creating a high volume of buns provides more chances for this fast-food organisation to create them at low prices.

The main product of this organisation is burgers which are categorised into many types (Mangla et al. 2018). McDonald's displays a broad classification of burgers to the customers in a standardised type acquiring the benefit of superior process technology. The organisation follows a mainly hybrid process, and the organisation provides a wide variety of products, including cookies, hamburgers, different types of burgers, fries and soft drinks.

 4v's of operation management

(Source: Raduzzi and Massey, 2019)

The variation of this fast-food industry is low in terms of demand where the operational implications are stable, predictable and low unit costs. McDonald's utilises the customers' demand patterns for the selling of products (Raduzzi and Massey, 2019). This fast-food organisation manages the small food inventory "ready to sell to customers" on demand. McDonald'smaintains customers' satisfaction by managing the optimal workflow process of the organisation.

The visibility of McDonald's is high because they display the burger-making process to the customer. The parts that are not visible to the customers are the inventory and supply of buns and patties. Topaloglu et al.(2018) mentioned that transparency is maintained between the customers and the organisation, and a trust factor is generated.

Organisation's approach toward meeting capacity and demand

McDonald's maintains the "human-centred" approach to transformation to envision new experiences for customers. Yoon and Chung (2018) stated that the drinks and foods offered by McDonald's are normal products whose supply and demand curves follow the conventions of the market. The increase in the value impacts the increase in supply. It is demonstrated that the demand remains similar or maximised in this context. McDonald's utilises particularised technologies for maintaining the operational process. The fast-food organisation's strategic approach helps meet the demand, and capacity centres on flexing and adjusting capacity. In managing the capacity and demand of their organisation, McDonald's can follow the capacity management theory to ensure the organisation's smooth operation (Tallis et al. 2018). Following this theory can assist the organisation in making sure that the resources of information technology can handle the requirements of data processing across the entire service lifecycle.

The demand for food in this fast-food organisation is huge, demonstrating that the supply process capacity needs to be high. In this context, McDonald's maintains a good term and connection with the suppliers and manages the inventory effectively to continue the smooth operation flow (Raj and Singh, 2021). The organisation highly focuses on the Lean management approach in maintaining the operation that aids the concept of continuous development. This approach is a long-term approach that systematically seeks to accomplish the incremental and small transformations to develop quality and efficiency. O'Neill (2020) argues that lean management within the organisation is essential, improving quality standards and minimising the waste reasoned by the defective products. Focusing on this approach helps the organisation develop creative thinking, comprehend the value of customers, map the value stream and enhance performance metrics.

Overall development of a company is often dependent on a company's capability to meet customer satisfaction. In this regard, understanding the customer's demands and preferences is key. A company needs to implement relevant and applicable strategies to increase its capability in acquiring customers' support (Tien, 2019). There is some important approach that can be helpful to a company in this regard. Based on different service-providing techniques, a company's capability varies. The differences in customer preferences play an important role in customising business procedures. The company McDonald's is also found to implement some effective strategies to meet customer demand.

 Strategies of capacity development

(Source: Rajawat et al. 2020)

Based on the above-presented figure, it can be said that capacity-building strategies are important to be implemented within an organisation to improve overall performance. McDonald's considers monitoring current trends within the restaurant industry and finding current innovations within this type of business. The business objective of this company is to ensure quality service to its existing customers so that more new customers are attracted by the positive review of this organisational business. Monitoring is an important element associated with three other elements. Understanding the need of customers and designing and planning for the improvement process, and finally implementing effective strategies are to be mentioned as other important elements of a capacity-building process (Hartmann et al., 2021). An organisation can follow the four most important approaches to meet customer satisfaction and increase the demand for products and services. These are a) contingency, b) human resource, c) system, and d) productivity approach.

 Four organisational approaches for increasing demand and capacity

(Source: Edeh et al. 2021)

As per recent research, McDonald's follows the contingency organisational approach that has helped this company maintain a profitable business REF. The maintenance of quality regarding services and products is an important strategy that needs to be considered by an organisation to increase its efficiency and face challenges efficiently.

Operational process map of McDonald's

An organisation's process map helps an individual understand the relevance of a perfectly working and designed map. The starting point of the whole process is dependent on customers' feedback. After receiving the feedback from the customer, the organisation management team organise a meeting in which the relevance of each collected feedback is to be analysed (Jrew et al. 2019). Based on the discussion and evaluation, the future decision-making process of the company can be customised. Budget and implementing cost pricing strategies are considered important to ensure a more profitable and adjustable business proficiency.

 McDonald's operational process map

(Source: Jrew et al. 2019) 

Based on the above-presented map (figure 7), the operational procedure of this company can be evaluated. According to Robinson and Mazzucato (2019), the success of each part of this map depends on individual characteristics and creativeness. In order to acquire more beneficial outcomes from this company's business, developing this map and creating dialogue for more considerations can be made as required. Implementation of non-financial support can also be an important requirement identified from the developed operational map.

Sustainability operations are undertaken by McDonald's

The main objective of McDonald's in maintaining sustainability is to create a sustainable shared value. Creating such value can be helpful rot his company to spread this brand's awareness throughout the world and in the market acquisition process (Nizam et al. 2022). Sustainability is also regarded as an important part of the operation management process. Organisational risk factors can be evaluated based on a company's performance in maintaining sustainability.

 Sustainable operations

(Source: Jian et al. 2021)

The sustainable operations of McDonald's are dependent on the three most important components. Total quality management value, the safety of the organisational business process, and environmental stewardship are three of these components based on which the sustainability of a business can be evaluated (Raj and Singh, 2021). This company considers the three most important dimensions in managing sustainability in organisational business. People, profit, and the planet are these three components. These three components are also regarded as 3Ps of sustainability. In order to increase efficiency, four factors and areas of the business need to be identified. These economic, social, human, and environmental areas can be discussed.

 Strategies of sustainability

(Source: Edeh et al. 2021)

The sustainability strategy is found to be incorporated within the company McDonald's to ensure a profitable business. The strategy can be developed based on four important portions, the framework and goals of the organisation's sustainability management process. Analysing stakeholders' insights is important while considering the sustainability process. Nyamogosa and Obonyo (2022) stated that proper material assessment could ensure overall development and improvement in organisational business. Strategic analysis is considered another important consideration of this that helps understand the relevance of each strategy.

The three most important pillars of sustainability, social, environmental, and economic considerations, are regarded as implemented within McDonald's sustainability management process. The theory of CSR (Corporate Social Responsibility) is also evaluated and considered by the management team of this company to improve the service quality. The theory of corporate sustainability is another important consideration that can help create a corporate management area. In terms of being effective and influential in green economic factors, this company is found to implement related theories such as the theory of green economics (Rajawat et al. 2020). In order to understand the relevance of stakeholders in maintaining a profitable and sustainable business, the organisation is found to provide proper resources and support.

Financial controls

Financial controls are the process, policies and procedures by which the organisation controls and monitors the direction, utilising and allocating the resources. As mentioned by Chia et al. (2020), financial controls are extremely important for the organisation as it assists in maintaining the cash flow, managing resources, effectiveness of operations and profitability. In 2020, McDonald's global sales fell 7.7 % due to COVID-19.

 Operating and consolidated outcome of McDonald's

(Source: Annualreports, 2022)

The figure 10 represents the 2020 and 2019’s products data, and it provide comparisons between the year ended December 31, 2020, and the year ended with December 31, 2019 (Annualreports, 2022). From the above data, it is comprehended that in the home-based country, McDonald's revenue, operating costs and expenses have decreased significantly in comparison to the years 2019 and 2020. McDonald's UK has experienced a similar issue with the rapid pandemic, which has destroyed the financial condition.

 Total revenues by segment

(Source: Annualreports, 2022)

The organisation's revenue comprises the sales by fees from the restaurants run by a franchisee, developmental affiliates, and licences. In 2020, the operating sales of the organisation and revenues of franchisees minimised 10 per cent portraying the decline in the segment of International operated markets as a consequence of COVID-19 (Annualreports, 2022). As cited by O'Neill (2020), the decline in revenue is prevalent in the UK, Germany, France, Spain, and Italy apart from the headquarters. The organisation's performance was mixed and the capability of every market to drive the innovation and sales and growth of revenue is influenced by the number of drive-through locations. From the above analysis, it can be said that the financial controls of this fast-food organisation are not powerful, which creates an issue in the performance factor.

3. Tool and data source: assessment

• Company website

Every organisation can develop a company website to showcase their products and services, pricing strategies, and how unique they are from other companies in the competitive market. The company websites can help the company create brand awareness and popularise its brand to a large target audience.

Like all other food and beverage companies, McDonald's has also developed an effective website to popularise its products and services to a large group of food lovers. As opined by the scholar Kee et al. (2021), the company websites help the customers, mainly pizza and burger lovers, get reliable information about their preferred foods and pricing strategies. On the company website history of the company is also provided to make the stakeholders and customers know how McDonald's has started its business.

Every business requires well-developed websites to enhance its business growth and operation both at national and international levels. The content writer team of McDonald's has published relevant and authentic information about their products and business operations on the company website. The company also provides updated data to keep its shareholders and stakeholders informed (Chia et al., 2020). The company website also helps McDonald's increase its brand value and become popular in the virtual world. Having a strong digital or online presence, the company can either break or make for generating higher revenue. This depends on the quality of McDonald's websites, which highly impacts organisational profitability and productivity (Rajawat et al. 2020). Through this website, the company can also enhance its credibility. Developing professional and attractive company websites can help the company remain competitive with its rivals. 

Apart from all these, there are also some limitations of the company website, like food taste and texture cannot be well reviewed through the website's content. The taste and texture of the foods can only be well determined by visiting the traditional stores, experiencing the company service, and tasting the foods.

Academic paper: Strategic operations management (Brown, 2018)

Every organisation follows various strategic management operations to enhance its business productivity, value, and profitability. The management strategies also help the company grow its business rapidly at the national and international levels. Brown et al. (2018) asserted that the activities incorporated in business operations to enable the organisation to transform its basic inputs range into end-customer outputs are determined as "operatic managements". McDonald's uses transformational inputs, including machinery, equipment, building, and business operations strategies. Operation management also relies on inventory management, quality control, scheduling and capacity, logistics and supply chain management and many more (Tien, 2019). In order to enhance the business operation and value across the world, the company can also adopt strategies like digital marketing, social media marketing, process technology management, and human resource management.

McDonald's has various business operation strengths that constantly raise the company to the top of search engines. Those identified strengths are providing their customers with tasty and quality food products. Tien et al. (2020) stated that organisations use advanced technology to manage their supply chain and delivery process. Due to its quality customer service, the company has gained high brand value in the market of fast food. It also has improved health protocols and quality control, fulfilling the customers' demands and enhancing employee engagement. McDonald's is one of the leading companies valued for its "quick-service" restaurant.

McDonald's business strategy highlights that it has decided to make fast food available to its customers at a very reasonable price which will be lower than other companies in the competitive market. As opined by Dai et al. (2017), the quality of the food products will not deteriorate according to their price. This strategy has constantly enhanced the company's productivity and revenue rate and has also strengthened the customer base. The competitive strategy of McDonald's mainly focuses on nutrition, speed, and costs of the products and services. The company has always prioritised making its customers "happy" by providing them with premium products at a low cost.

• Online article

For most businesses, success is not a "random" occurrence and can be achieved by a series of correct decisions taken at the right time and in instances. The success of an organisational business depends on its meticulous preparation, planning, and execution of new business operation strategies so that the company can sustain growth in a competitive market. As opined by Zhu et al. (2017), the business operation of McDonald's constitutes many processes, like manufacturing products, inventory management, acquisition of raw materials, and delivering the end products to the customers. The operational strategy mainly focuses on improving profit rates and reducing production and operation costs for the whole business. McDonald's has also incorporated other operation marketing strategies to enhance its business growth and strengthen its customer bases, such as penetration in new market segments, improvement of the existing products and development of new products and services to fulfil market demand and customers' preferences. Proper supply chain management and huge customer engagement can also enhance the company's profitability (Meredith et al., 2019). Higher rates of employee satisfaction and engagement will benefit the company by growing its business at the international level and enhancing productivity.

Operational strategy is important for fast food companies like McDonald's as it involves specifications and refining the company's business operation strategies. Operation strategy also helps the marketers and professionals of the company to develop strategic, operational plans and initiatives and aims to enable the business and various departmental units to successfully implement the entire business strategy (Richards, 2017). McDonald's provides its entire management with feedback regarding its overall business operation effectiveness and profitability by following the operational management strategy. The company also develop SMART pans to deliver results and implement these action plans to achieve the goals and betterment of its business operation in the upcoming future.

• Process mapping

Origin of process mapping:

The prepared process map depends on the business knowledge acquired by evaluating the operational business management process of McDonald's. Both in internal and external terms, this map is to be published.

Purpose and objective:

The main objective of developing a process map is to provide a clear structure of the organisational considerations and tasks. As opined by Van Steenbergen et al. (2018), the order replacement and serving procedure, customer attending, and other relevant parts of a whole maintenance process must be included within an operational process map. The process map is found to be open to challenges and further evaluation. In terms of updating the process map, significant customer recommendations can be considered important.

Value creation:

In order to implement process development strategies an organisational process map is very important (Hamza and Karabulut, 2021). Customers and the operation management team of McDonald's can make significant decisions regarding the development of organisational business based on this developed process map. This price map can be helpful for a company to analyse the budget regarding decisions and consider the direct participation of the internal stakeholders.

Limitation:

In order to implement new innovations and developmental strategies, adaptiveness is required (Jian et al., 2021). The responsible employees involved in making procedures of process maps are often found to lack adaptability. Personal challenges in miscommunication can also present difficulties regarding this matter that can affect the overall development and improvement of the organisation. More clear and innovative outcomes from the budget regarding considered can be expected from this map which is an important limitation of this process.

3. Conclusion

Based on this discussion, it can be concluded that the overall performance of an organisation depends on the successful implementation of strategies regarding operational management. The current location of the company McDonald's is identified in this report. The operational management process of this company in the current business position is evaluated here that can impact future development procedures of this company. A flexible investing procedure adopted by this company is also identified in this report. Based on the developed operational process map, current business positions and the company's plan for future development can be evaluated. Identified capacity and demand-related strategies and approaches are significant for improving this company's overall business management and customer satisfaction relate approaches. In terms of recommendations, some points need to be noted as follows.

• Investment procedures can be more impactful and appropriate by implementing recent considerations in the investment process.
• Technological advancements need to be adopted by this company to ensure more profitable outcomes for the business.
• Demand and capacity management of McDonald's can be more influential by evaluating the continuously changing nature of customer preferences and demand.

Segments of operational performance and financial control regarding information are important to understand the financial performance of this company that can help this company grow further. Significant data sources are also identified that can help understand the relevance of each of the sources. The reason and importance of process mapping, considering online articles and websites are important for considering this analysis as relevant and significant.

References

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Websites

Annualreports, 2022, About Annual Report, Available from: https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_MCD_2020.pdf [Accessed on: April 29, 2022]

Macrotrends, 2022, About McDonald's Revenue 2010-2021 | MCD, Available from: https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/revenue [Accessed on: April 29, 2022]

Mcdonalds, 2022, About How the business works, Available from; https://www.mcdonalds.com/gb/en-gb/franchising/the-financials.html [Accessed on: April 29, 2022]

Mcdonalds, 2022, About Mcdonalds, Available from: https://www.mcdonalds.com/gb/en-gb.html [Accessed on: April 29, 2022]

Statista, 2022, About Number of McDonald's employees worldwide 2012-2021, Available from: https://www.statista.com/statistics/819966/mcdonald-s-number-of-employees/ [Accessed on: April 29, 2022]

Statista, 2022, About Number of McDonald's restaurants in the United Kingdom (UK) in 2017, by region, Available from: https://www.statista.com/statistics/1088435/mcdonald-s-uk-restaurants-by-region/ [Accessed on: April 29, 2022]