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Operations Management: Mcdonalds

Paper Type: Free Essay Subject: Marketing
Wordcount: 4980 words Published: 15th May 2017

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Operations management is defined McNamara this operations managements as covering all from product creation, development, production and distribution. To be successful in the area of operations management, the manager has to look at the entire production process, from choosing and working with suppliers, to the engineering, to the distribution line. This operations management handles the quality issues; he sent a damage-control team to the manufacturing plant in Canton, China, all the way from Japan and the United States to remedy the production line problems. The team of highly trained engineers managed to identify and analyze the problems, including inexperienced carmakers and design issues that prompted them to work with the suppliers and basically re-design some car parts. In addition, he also hired people with the needed experience, even if he had to pirate them from competitors.

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This operations management is explained using McDonald’s Corporation. this is the world’s most important company in the fast food business. It has in excess of 31,800 flagship restaurant serves almost 50 million people every day in excess of 119 countries worldwide. In recent times in 2003, the corporation has radically changed the course of its business by refocusing on the obedience of function superiority and marketing management which are said to be the individuality of client satisfaction. This move in their business function was the first step towards make sustainable, money-making development at McDonald’s. The company’s key hard work in growing productivity and decrease costs will be talk about in the following sections of the case study.

Problem Definition

McDonald’s is a started out in 1954. The company was place to the focus by Ray Kroc. McDonald’s skilled its phenomenal development throughout 1960’s up to 1970’s in which American measured speedy service as their main concern. Throughout 1980’s the corporation countenance the rising burger wars or the growing competition where in largest part of the players in the fast-food business are contribution the similar or like foodstuffs and military. Throughout 1990’s the company begins to countenance different problems so as to be related financial, innovation, and client relationship and franchisee relationship characteristic. As an effect, throughout late 1990’s and early on 2000, the corporation skilled unsuccessful turn-around and lackluster in auction.

Throughout the start of 2003, present are different force that should be used by the corporation in order to continue their location in the market; weak points that should be better in order to attach to the market; chance that can be used for in addition spirited benefit; and danger that should be built-in in the executive procedure in order to avoid prospect big problems.

Throughout the opening quarter of 2003, the corporation have underperformed evaluate to the attainment of 2002. The development of returns had refuse previous to the fall of the amass auction for 12 instantly months in April 2003. The corporation account a full amount of 343.8 million losses throughout the first quarter of 2003, McDonald’s first loss as a openly traded corporation owing to the accuse for final restaurants.

All through the years, advertising ideas have cause to flow from side to side and helped the company develop into one of the mainly distinguished fast foods brand globally. The brand plan for the fast food was watchfully calculated and it approaches with a happy joker makeup known as Ronald MacDonald. The Big Mac and the Egg Muffin include be a few of McDonald’s for the most part modern products. In conditions of marketing, the joyful serving of food move toward was as well a inventive as it entices kids to eat at MacDonald’s since of the toys they can obtain. Nowadays, McDonald’s is as well on the Internet bandwagon, as long as information to people finished the world with a click of a mouse.

The increasing and bustling inhabitants of today are clearly different from the populace of the earlier decades in conditions of fitness and nutritional manner and behaviors. Public today are extra worried with their physical condition and statistics than still before. Visibly, the motive for this improved attentiveness is since of the reality that information is all over the place and every information and investigate concerning food seem to connection fast foods with the increasing number of fatness. In addition, present is as well a number of rising go on a diet plan that encourage and give confidence the public to be stature awake.

This is a problem for McDonald’s since it has previously achieve the reputation of a fast food that incessantly offer greasy harmful food; while challenger contain already complete actions to decrease fats in their food. The corporation requirements to do rather about and transfer its activist image back. Therefore, the subject or problem that must be solved by the organization of McDonalds is to create a choice in conditions of contain a new marketing move toward that will create the corporation be additional attractive to the present clientele. This approach must create the McDonald’s brand name as incredible that is appealing, and then go after by the information so as to its foodstuffs are previously health friendly. In this advance, sure modification will be completed.

Task 2

Explanation of the process under consideration of McDonald’s company using a swot analysis and financial analysis this analysis is explaining.

SWOT Analysis

This SWOT analysis shows us that although there are numerous threats against the fast-food industry, McDonald’s occupies a comparatively strong position in the worldwide marketplace. According to the 5 forces model, the strongest competitive strength is linking rival sellers in the industry. This SWOT analysis shows the much strength that Mc Donald’s employs to keep itself at the top of the fast-food industry. Although there are various weaknesses, these can all be turned around following the McDonald’s Plan to Win, which was implemented with the hiring of Jim Cantaloupe. Obviously all fast-food chains are going to have to combat the new consumer health expectations, but we feel that under Cantaloupe’s leadership, McDonald’s has a strong enough consumer base to grow in the upcoming years. The financial analysis shows certain flaws in McDonald’s finances, but these are largely due to the expansionary policy in place in the company.


MacDonald’s has a strong worldwide company with its adjacent domestic challenger organism only semi its range, McDonald’s is the market head in both the domestic and international markets. MacDonald’s advantage from cost lessening in the course of economies of level since of its huge size and its enormous worldwide being there permits it to diversify risk concerned through the financial performance of exact countries. In international markets, MacDonald’s is fine located to develop and take benefit of long-standing financial development. MacDonald’s as well has a powerful real manor collection. The company’s openings are situated in area that is greatly recognized for visibility, traffic level and no difficulty of access. MacDonald’s also has special brand recognition. This powerfully brand identification generates important opportunities for the corporation. MacDonald’s is able to make additional sales because of its brand name identification. Throughout violent market planning, MacDonald’s have been equal to recall its youth market once another time.


The food manufacturing company is really saturated. As an effect of this, MacDonald’s has to contract with the viewpoint of threatening market diffusion, which can create it complicated to add new outlets. The market is estimate to increase by approximately 2% per year. There is as well a rising price competition driven by as well a lot of opponents, which decrease the corporation’s skill to increase income. Nevertheless, the speedy of the company’s center from a price menu to an additional various one has recently restricted the pessimistic result of the extreme price opposition that was conventionally taking place between the business leaders. Lack of manufactured goods improvement is a further weakness of McDonalds. The final get through for McDonald’s be the Chicken McNugget in 1983, other than again the company’s new strategy appear to contain successfully dealt with the problem throughout the fame of its new salads and additional new products.


MacDonald’s sold its Donates Pizzeria rear to its creator in 2003 and stoped Boston market process outer of the US. The company will in its place meeting point on Chipotle Grill which is the corporation’s the largest part successful non MacDonald’s branded chain of restaurants. Moreover to develop effectiveness the corporation has sluggish its expansion of McDonald’s restaurant so as to renovate and modify the image of present restaurants and addition new features for example Internet access. McDonald’s still have procedure for extra international expansion. McDonald’s still requirements to go through in lots of countries particularly in Europe, Asia and Latin America. Modification trend in eating behavior in the direction of additional health eating, observe as a risk to McDonalds can as well be observe as a chance. McDonalds introduced new finest salads and outgrowth n’ Yogurt Parfaits in the US which guide to increase in 2004 and the same goods will almost certainly carry some more increase in strange markets.


McDonald’s is bare to modify in the worldwide financial system. The company’s destructive international development has left it particularly susceptible to another countries financial slowdown. Overseas money variation is as well another problem worldwide company similar to McDonalds. The Fast food manufacturing company is flattering a gradually more competitive division. MacDonald’s maintain up with opponents through costly promotional movement which guide to partial limits to increase market share. McDonald’s is effort to distinguish itself, with new design and new menu items, but added fast food industry are responsibility the same too. McDonald’s, just like additional fast food industry, regularly obtain bad press since of its connection fatness. Improved concern for example this has led the Food Standards organization and the sector of healthiness in the UK to evaluate the advertising of ‘junk’ foods for example McDonalds to kids. Top opponents for MacDonald’s include: Yum! trademark, Inc, Wendy’s worldwide, Inc. Jack in the Box Inc, and Burger King Corporation.

Financial Analysis

McDonald’s has gone through a large turnaround period in the previous two years. This becomes very apparent when looking at McDonald’s net income between the years 1998 and 2003. Net income rose steadily between 1998 and 2000, then there was a drop-off in 2001 of over a$300 million. Then in 2002, net income plummeted over $700 million. This was due mainly to slower growth in total revenues, and large increases in operating costs and expenditures. McDonald’s showed a marked improvement in 2003, amassing $1.328 billion in net income, up over $400 million from the previous year. Although this was a large gain, McDonald’s is still not over its financial and operating troubles, and needs strong performance in the upcoming years to stay at the top in the fast food industry.

McDonald’s bottom-line in the first quarter of 2003 was $324.7 million. The dollar profit improved substantially over the next two quarters, netting $470.9 in the second quarter and $547.4 in the third quarter. As of the end of the 2003 fiscal year, McDonald’s has enjoyed 11 months of sustained sales gains, which bode well for the future. One mention of note is that McDonald’s did take a ‘big bath’ in 2002 and the first quarter on 2003, amassing a 135 million dollar loss as a result of accounting changes done to the books.

Task 3

McDonalds is discussion of relevant Operations theory in this McDonalds improve the management using a theory of TQM that means Total Quality Management.

Total Quality Management

It is a improving the operational performance been developed in the year it is providing a structured root of a improving corporation performance. To be talented to improve performance powerfully. Then, there is a take notes by means of an act plan to improve the result. The five major presentation objectives are:






We will talk about these five objectives with the drive-thru procedure of McDonalds


How a lot time do clients spend in McDonalds drive-thru?

McDonalds’ drive-thru aim is 90 seconds. Other than, is it actually able to complete this aim? No, not every one the time. Lots of people contain grumble on drive-thru mistake, waiting for their food in busy times, organism fixed in the queue, etc. As the line up gets longer, additional people select to bypass the restaurant and eat somewhere else. Therefore, how canisters McDonalds overcome these problems?

Proper drive thru management:

Seeing as queuing is on a stringent first-in first-out root; later on customers are commonly not served until every previous customer has be in use care of. So, an entire line of people among fast orders be able to be held up by an only one complex order. McDonalds canister in its place include a double line layout & if the next client’s order is ready first, after that a green light canister be use to indicator the 2nd car, so that the individual obtain his/her’s order & goes. Service times are enhanced severely for short orders, however not impacted for longer orders owing to several stay queues.

Introduction of the utilize of mobile order entry terminals:

Will permit a restaurant worker to actually go to the drive-through path and enter orders, which augment through-put by as long as 2 points of access: the menu mark and the cell phone order access terminal.

Problems related among this option include:

Interfacing the cell phone entry terminal to the present POS (Point of Sale) system,

Supporting many languages and interfaces,

continuous menu modifications and add-ons,

Safety of the employee,

Climate conditions,

Hardware expenses,

Order sequencing; and

The customer is not capable to appraisal the menu preceding to ordering.


Is McDonalds charging a set to its clients?

Can they overthrow its costs further?

Value meal strategy:

McDonald’s canisters use the cost food plans which permit clientele to buy a sandwich, French fries, and beverage at a reduction when obtained mutually. Moreover, it canister as well offer every day specials of special menu items, for example “9 Dhs joyful food on Thursdays, from 4:00 PM – 8:00PM” or additional alike specials. Additional number of people will be involved by such offer & therefore McDonalds’ middling cost will reduce. Though, the restriction is to these every day specials will take in many clienteles other than as well build it harder for McDonalds’ employees to handle a lot of people mutually & serve fast!!! So, they must await having a lot of customers & molding their operations according to that. Throughout busy phase, McDonalds needs more than 2 to 3 people who are committed to the drive-through procedure.

Energy management:

Energy expenses stand for an important segment of restaurant operating cost. Parking-lot illumination, cooking machine, ventilation systems, & further utility operating cost canister add up. These are exceptionally actual costs that impact the effectiveness of a restaurant. McDonald’s canister supply in new equipment, maintenance performs and improves a few operating process. “A few offers policy include are, supply in energy-saving tools, protected long-term energy agreement, joining energy co-ops, scheming lighting plans additional professionally, shading windows, constricting with new energy supplier, hiring energy advisor and decrease deliveries, dally cleaning and maintenance of refrigerator coils. Additionally, an almanac with the optional maintenance dates for every one piece and equipment, including monthly, quarterly and yearly verify can be finished.”


Where does McDonalds set in conditions of is service?

Not as high-quality as it use to be. Possibly the meals are agree to, other than what concerning the staff serving the clientele & the in general skill which the clients go through?

Surprise quality checks:

For certain, every one McDonalds restaurants previously go during periodic examination in conditions of quality checks, however they canister have additional shock checks & if the store up not succeed to outdo the examination the 2nd time, the corporate can obtain over the store and take in improved staff to make sure that the correct processes and equipment are organism used correctly.

Improve the teaching process & taking care of workers:

McDonalds can contain online e-learning tools for its restaurant workers. In adding up to this, it must create sure that the requirements of its workers are met & they are specified acknowledgment for excellent performance. Once this is completed, mechanically they will be joyful to complete their jobs & of course happy workers motivation lead to an improved service & finally happy clients!


How can McDonalds create its procedure additional reliable?

If McDonalds choose for double line layouts & a dependable system like Delphi order verification system then exclusive of any doubt its clients canister rely on its operations. They will be certain that their food will all the time be set within a particular time without several errors & they’ll be bright to obtain out fast among the double line layout.


Can McDonalds regulate its procedure to get together client necessities?

Multiple skilled workers:

McDonalds can have a multiple skilled workers in order selected flexible. Another time, this will price money except be helpful in the lengthy run.

Order on a toll free number:

McDonalds can provide their clients the choice to location their order by calling on a toll free number & provide them a single order number so that their food are all set after they come to pick them up. The disadvantage is that a worker will contain to be particularly delegate to obtain the orders when clients call.

Task 4

Comparison Theory and practical of McDonalds

In the use of the Total Quality management are using to develop the McDonalds Corporation and this analysis are tells the company of the speed, Cast, Quality, Dependability, and Flexibility aspects.

Speed Objectives

The drawback of implement the double line layout is that it will begin several times & be pricey for McDonalds to modify the layouts of every one their restaurants. Plus, a few customers will obtain truly angry if they came in first other than served second. To beat this, McDonalds be able to include 2 windows, the left one for big orders & the right window for small orders. Again, the inquiry is how the small order food will be buying to the right window if the kitchen is on the left side. Well, a worker container is particularly devoted to move the food from the left window to the right one

Adopt a new system:

McDonalds can as well adopt a new system call Delphi Order Confirmation where a digital camera is fixing to the drive-through menu system. “When an order is placed, a photo is taken of the car and/or the driver from approximately the same angle and distance that the drive-through employee would view when the car is at the payment or presenter window. The digital photo would be matched to the order record created by the POS system. The photo and order record could be presented in a variety of fashions, including a print out on the receipt with the itemized order and number. Alternatively, a touch screen with the patron’s picture and order record for each of the cars currently in the drive-through, and when the order is complete, the presenter would tap the photo on the touch screen indicating the order has been filled and the photo record would be removed from the system. This system will help shave about eight seconds from the order to delivery time. Besides order accuracy, it will also aid in speeding up the drive-thru process and address customer courtesy issues. Specific benefits to this system include easy installation and implementation with existing QSR (Quick Serve Rest) drive-through installations; minimal ongoing support required; limited risk of hardware loss/damage; increased employee safety; fully supported in multi-language settings; and continues to provide the customer an opportunity to review the menu!” (www.freepatentsonline.com)

People will be uncomfortable:

With the design, that they’re person take pictures of always they create a quick end for a twice cheeseburger among fries. Though, it’s a “non-invasive” process & the photos aren’t accumulating in the arrangement. They’re removing immediately the order is finished. Many restaurants previously have watch cameras on their location that photograph people. Another problem is that it motivation be costly for McDonalds to realize this system. Other than again, it will illustrate good results in the lengthy run!

Cost objects in

Use Customer order Display:

As soon as a drive during employee is taking an order, then it can be presented automatically on a screen existing to the client outside, call the Customer Order Display. The client can assess the Customer Order Display and correct several mistakes, thus creation the ordering procedure additional precise. Additional precise orders remove time wasted from correcting mistakes & the cost happen from order errors.

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Task 5

Impact on quality and customer focus

McDonalds consideration of the SWOT analysis and Financial analysis and Total Quality management using to develop the customer services and quality management in that the entire McDonalds’ locate for the values of Quality, Service, Cleanliness and Value, the collection of which is planned to achieve 100 % overall client satisfaction. The business operate severe specifications for every one its goods and raw materials and is answerable for increasing as well as, put into operation systems to make certain safe food of the maximum quality all over the restaurant McDonald.

Focus on the Competition

The weakness of commerce depends on organization and people implicated inside the organization. It begins by hiring the people who can dedicate in the business’s objectives and be able to do improved job. In McDonald’s, the crew or the people can create the business get the achievement and its downfall.

Investing in the price attach is a easy thought but still facility. Happy workers make happy clientele, which generate happy shareholders. McDonald’s worth is significant to adopt a high-quality ambience that can ask the clients to come.

The mechanization of the procedure can remove the treatment and dishonesty within the corporation. In McDonald’s the mechanization procedure of the sale are introduce to create it additional competent and easy than the physically process.

The training and re-training can leave a inheritance for the prospect workers. The on-the-job training in the organization of the McDonald’s can release the gate for the chance and they can obtain the trainee to be part of the corporation.

The leadership participation in the business is the majority important strategy. But if a leader botched to administer the business, the difficulty might break the link of the business towards the people and its clients.

The power can begin in a concentrated investigate study anywhere they can discover for the new odd check they can offer to the clientele as well on their shareholders. The power as well dishonesty on the organization’s skill to examine where they can discover the explanation in their troubles. Development of some procedure and systems can build the troubles be solve. And with additional sympathetic, each and every one issue that occupy within the business whether it worried with the people or the method.

Task 6


McDonalds should not adhere to some mismatch between expectations and situational requirements stems from a breakdown to go after in international operations the marketing strategy procedure that is possibly established in the core marital business as the company have direct participation in the market and through a controlled marketing subsidiary having ample control over strategic marketing and its success to think thoroughly about how the business will develop over several years. While it is true that individual characteristics of an international marketing position claim a different move toward to marketing as it is not a reason for McDonalds standards in marketing management to be relaxed. In strengthening international expansion strategy of McDonalds market it is crucial to examine some unique international marketing challenges and discuss phases of the procedure of market entry and increase, including the following: (1995)

The objectives of market entry, which will contain develop for the strategy and organization adopt

The selection of market entry method like McDonalds form of marketing organization during which the company join in the market. Particular consideration will be paid to the low-intensity modes of entry as favored in market entry situations (1997)

The marketing entry policy, with a exacting focus on the lessons learned from the strategies of other established multinationals in emerging markets and framework for evolution of international marketing strategy

The distribution unit in the country-market as a wholly-owned subsidiary, has to manage a strategy for growth and be judged on organizational criteria including feasibility, level of desired risk, supportability and control issues with the implementation of preexisting marketing strategies such as communication platforms and target customer selection. (1995) Indeed, it is usually impossible to separate the process of market development from the process of organizational development. It is possible to identify commonalities across companies in this process of internationalization and so to describe the usual evolution of international marketing strategy. (2001) The framework has to begin by recognizing that different objectives for market entry may produce quite different outcomes in terms of entry mode and marketing strategy. McDonalds enter international markets in following standard market entry and development strategy because of its increasing commitment pattern of market penetration, in which market entry is via independent partner to a directly controlled subsidiary of building a business in the country-market as quickly as possible but nevertheless with a degree of patience produced by the initial desire to minimize risk and by the need to learn about the country and market from a low base of knowledge. (2001)

The market entry mode decision relevant for McDonalds should consider serving an international market through export agents is attractive in that it offers both low financial risk and access to substantial local operating knowledge. It is particularly suitable for the company to acquire better experience adopting international operating functions as the level of control is likely to be quite high, given that internationalization has occurred in the context of a preexisting inter-organizational relationship and establish a service operation for the customer’s local operations (2001)

One drawback of franchising is the difficulty of adapting the franchised asset or brand to local market tastes even experienced corporations as McDonalds which have managed to thrive on trade-off and taken several decades and some false starts to get to this point of advanced practice. Moreover, licensing is a common method of international market entry for McDonalds with a distinctive asset, which is a key differentiating element in their marketing offer. ( 2004) Thus, licensing is a practice not restricted to international markets licensing its products to manufacturers and marketers while it focuses its own efforts on its core competencies of food production and distribution and offers an effective way of entering foreign markets because it can offer low-intensity mode of market participation and adaptation of product to local markets.


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