Operations management (OM) is the key method of converting inputs such as proprietary information, labor and materials among others into inputs such as value-added goods, services and products. Operations management includes control of activity, motivating employees, assuring quality, managing inventories, scheduling, capacity planning and forecasting. Operations management focuses on accounting, production management, and quality management, management of information systems, industrial engineering and design engineering (Najdawi, Chung, & Salaheldin, 2008). Through operations management, senior management of the company are concern with utilizing the available resource effectively in order to provide high quality finished goods and services that meets the needs of the customers in a cost effective manner.
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Background of the McDonalds Restaurant
McDonald restaurants was founded by Maurice and Richard McDonald brothers in 1940. They expanded the concept of “white Castle” which were the developers of fast-food restaurants, but their initial objectives were to operate fast food restaurant across the United States of America with no mindset of global venture. It is Ray Kroc who brought the mindset of global venture when he took over the company in 1955. Due to Ray Kroc aggressiveness and business strategy, the company gained greater success and soon became known around the world. As the company expanded globally, senior manager altered operation management to fit global business strategies (Schrunder, Galletly, & Bicheno, 1994). The company prioritizes in conducting extensive research about cultural practices in regions that seemed conducive for business operations. The research focused on general interest level in eating or ordering a meal in a fast-food restaurant, the type of food which is popular in the area, average body type and the analysis of the average income.
With the availability of this information, the company was able to set up fast-food restaurants in different parts of the world. Also, the company was able to appropriately set the price of the items on the menu as well as setting up the type of seating and door frames. Another important issue that needed consideration was the type of food because it influence the consumer attendance. McDonald’s mission statement states “McDonald’s brand mission is to be our customers’ favorite place and way to eat and drink (Liu, & Jiang, 2011). Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers’ experience.” Through this mission statement, the company has continuously expanded into various parts of the world.
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Operations management and Plan of McDonald restaurant
In order for McDonald restaurants to attain the ultimate goal, there is need for senior management to comprehensively consider process of forming business strategy, making decisions and make actual plan of operations management. Despite the few changes in plan that have occurred in McDonald Company, the operations and expansion of the business has been successful. Initially, McDonald’s objectives was to operate a successful burger restaurant that consistently deliver quality and health food to the customers at a lower prices. The objective remained the same even after Ray Kroc took over the company (Najdawi, et al., 2008). It is only the scope that expanded to provide quality good food to the customers around the world at a lower price. Senior management have used several operational managing tactics that have lead the company to successfully infiltrate into different parts of the world. Some of the common operational tactics that the senior management needs to focus on include quality, service, cleanliness and value (QSCV).
Quality is an essential aspect in food business because the consumer looks for quality food when choosing a restaurant to order their food. This is one of the aspects that senior management of McDonald restaurant have consistently maintained in the product of food and service to the customer. Operations management emphasizes that quality management is important because it maintains the customer base as well as attracts new customers to the restaurant. One of the operational management tactic that McDonald restaurants have banked on is the maintenance of a pool of experienced and well trained workers for a longer period to serve high number of customers on daily (Schrunder, et al., 1994). This has created good reputation to the company because customer expects quality service delivered by experienced and well trained workforce. Although, it sometimes becomes expensive to maintain experienced and well trained workforce because of the wages, McDonald Company have managed to maintained a competitive wage for the workforce thus remaining competitive advantage. In addition, the workforce is provided with free uniforms, discounted or free meals while on duty and other benefits. This make the workforce to be dedicated and performs their duties in a happy mood thus guaranteeing quality services to the customers at all times.
It is also important for senior management to understand that it is not only about managing the quality of employees, but also to maintain the quality of food to be above par at all times. In order to assure customers that the food prepared at McDonald restaurants are of high quality, the company has maintained the use of only 100 % pure beef with no preservative and additives. This is in accordance with state and federal laws that regulates the production of food by food industries (Najdawi, et al., 2008). In addition, the company sources vegetables from nearby local farms especially those uses organic inputs in the growth of vegetables in order to ensure that food served to the customers contain to contaminants and are very fresh. This also promote local farmers surrounding the location of their business. By maintaining the high standard of food quality, the customers keeps streaming back to the restaurant.
Another important aspects of ensuring that Food Company remained competitive and attractive to many customers is maintenances of hygiene and cleanliness in the operation areas including bathrooms, counters, kitchen, tables and floors. Hygiene and clean environment make customers to continuously come back to the restaurant. Senior management makes sure that supervisors check the bathrooms after every three hours to six hours depending with the number of customers served daily to ensure that they are clean. Studies have shown that high standards of hygiene and cleanliness makes the new customer to feel welcome every time they enter into the restaurant and utilizes the facilities available.
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The second aspect that operations management focuses on is the pricing of items on the menu. Considering that McDonald restaurant was established with the mindset of “fast-food”, it is crucial for the senior management to price the items competitively in order to rely on product movement and the volume of the orders. By relying on the volume of sales daily, the company is able to maintain their products at low prices. Studies have shown that low pricing is one of the aspects that make McDonald fast-food restaurant to remained competitive advantage in the business (Liu, & Jiang, 2011). The readiness and the convenience of McDonald’s fast-food restaurants to lower the prices of items on the menu to a reasonable and appropriate limits is regularly monitored by senior management through market research. In order to ensure that the company maintained the low pricing as well as remaining competitive and relevant in the market, the administration of the company must remained at the top in making decisions. The decision is to ensure that customers are pleasant and at the same time business operations remains running.
Recently, the McDonald fast-food restaurant introduced “Kids Meal” into the market with the objective of making a restaurant to attract people of all ages. The company introduced toys, drinks for the kids and small portion meals which is entirely for the kids of two years and above. Since the introduction of the “Kids Meal” the sales has increased significantly because the parents would prefers the easiness of the business (Najdawi, et al., 2008). The management considered the move as an excellent decision because the sale increased rapidly after the “Kid Meal” was introduced. Feedback from the parents indicated that the move was not only beneficial to the parents, but also to the children because they get the time to enjoy the taste of the food. Also, the experience leaves the kids to desire to go back to the restaurant when they grow old.
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Recently, McDonald Company made a bold move and increased the prices of most famous brands by introducing what is referred to a “dollar menu” items. Although, the consumers showed that they were not pleased with the management decisions to increase the price, senior management encounter the outrage by including Grilled Onions Cheddar Burger and BBQ Ranch Burger (Schrunder, et al., 1994). Nonetheless, the senior management admitted that charging the prices of the items in the menu is challenging and difficult because they need to make the customers to understand the reasons that necessitate the changes.
Ten strategic OM Decisions for McDonald Restaurant
- Design of Goods and Services: McDonald’s main aim and strategic decisions which is engraved in the mission statement is to tune operations management by providing affordable goods and services. Therefore, the determination of price and serving sizes of the products are normally based on the research conducted to determine the most popular consumer expectations. However, senior managements of McDonald makes their products affordable by minimizing the size.
- Quality management: The Company aims at maximizing the quality of the products without affecting the cost of product and price of the items. This is achieved by using a production line method which is known to maintain the quality of the product.
- Process and capacity design: The Company’s process and capacity design is founded on efficiency and cost-minimization which supports the McDonalds’ strategies. The operations management emphasizes on efficiency and adequate capacity to meet the need of the consumers.
- Location Strategy: The Company ensures that the locations of the business is within the reach of many people by any means of transport. This include the utilization of market mix. Kiosks and company’s website.
- Layout Design and Strategy: The objectives of the company is to maximize the utilization of the space within the restaurant, rather than focusing on the spaciousness and comfort.
- Job Design and Human Resource: The Company utilizes training skills that is more essential and much needed in the production line and service areas. Also, experienced workers are allowed to train new employees.
- Supply Chain Management: The Company utilizes wide network around the world to source for supply. McDonald diversify its supply chain as one of the operations management.
- Inventory Management: The Company coordinate with distributors and intermediaries at the local and regional level in order to have their products and ingredients move consistently.
- Scheduling: The McDonald use local market conditions and laws to schedule for corporate convention. In addition, they utilize supply chain needs for appropriate scheduling.
- Maintenance: The Company allows the franchisees and restaurants managers to choose their own maintenance service providers.