Write a report about 4vs analysis and it's application to "Mcdonald's company".
4Vs Analysis on McDonalds
Any organization aims to make full and effective use of operations to ensure that customers are satisfied with quality, availability, cost and quantity. To achieve this an organization must efficiently produce goods through business processes that are effective. The production functions of the company and controls that have been put in place must be effective (Slack, 2015). The measures of optimization that can be used are degree of operational visibility, output volumes, demand variations and demand of products and services.
Importance of 4Vs Analysis
The 4v analysis looks at volume, variation in demand, visibility and variety. All these factors are of importance in the operations of a company. Volume is the amount of products, which are required to satisfy customer demand. It is important that companies control volumes based on demand so that they do not over produce or under produce. Lack of volume management can lead to an organization not being able to deliver or wasting resources in terms of finances and labor (Shepherd & Patzelt, 2017). It is important that when organizations are managing lead times, they need to control and adjust volumes.
Variation refers to the way in which demand levels change over periods. Organizations mostly like to have low variation though some high but predictable variations. It is important for organizations to understand variations so that they are able to adjust accordingly to customer demands. Variation in demand can apply for businesses that are seasonal for example those that sell air conditioning or ice cream. Some businesses however might have difficulty in adjusting for example if it is a fashion business. It is important that companies track demand so that they know the demand patterns.
Variety is the range of products that are manufactured by a business. Less product varieties mean that an organization has simple operation processes. When a large variety of goods are being produced the organizations operation process must allow for high variations. The production process when there is a high variety or products is mostly more specialized.
Visibility is the degree to which an operations process can be seen. Organizations which are largely manufacturing based are rarely visible Organizations that are mostly service based on the other hand are very visible. A number of organizations are mixed. Some companies chose to show low visibility.
Application of 4Vs to McDonalds
McDonalds is one of the world’s leading fast food restaurants. The company was founded in the 1930s and was established by Richard and Maurice at San Bernardino. Ray Kroc bought the McDonald franchise that had been acquired by Dick and Mac who were brothers. Currently the restaurant serves over 68 million customers across the globe in 119 countries. It has been ranked as the fastest service restaurant worldwide (Yuen & Chang, 2015). The company offers a range of fast food like chicken, sandwiches, burgers and salads. The management focuses on quality and cleanliness so that customer satisfaction is enhanced. They have also put in place drive-throughs. They ensure that staffs are trained appropriately so that they are able to operate effectively and give good service (McDonalds, 2017). The nature of McDonald’s operations can be looked at in terms of volume, variety, variation and visibility.
McDonalds is characterized by high volumes. The company serves millions of customers everyday hence production volumes have to be high so that consumer demand is met. The high volume is also because the restaurants have drive-through and customers can order for home delivery. This increases the demand for the services drastically. Due to the high volumes produced by McDonalds, the operations are characterized by high repeatability as the same types of food are offered worldwide in all Mc Donald branches. The food production process is similar hence high repeatability (Belvedere, 2014). There is also high specialization at McDonalds. The ingredients and method of cooking is similar throughout all branches. The customer service systems are systemized throughout the organization. The business relies on high capital due to the type of operations involved and the volumes that need to be met. Due to high volumes, the company benefits from economies of scale where suppliers are able to reduce low materials cost due to the high amounts being purchased by McDonald. McDonalds saves many costs due to same production processes for example production of fries through specialized process where the activities leading to the process are streamlined. Potatoes for fries are carefully selected from special regions so that consistency is maintained (McDonalds, 2017). Due to this, McDonalds is able to gain more competitive advantage than a small restaurant.
Mc Donalds reaps benefits from both volume and variety. The company has a variety that meets customer needs. The company makes its fries from potatoes, which are deep fried using pure vegetable oil. The menu for McDonalds is rich in a variety of items like juices, shakes, burgers and sandwiches among others. There are also kiddies’ products. This has ensured that the company matches the needs of the customer. It also shows the flexibility of the company since they keep introducing new products according to customer needs. It also shows that the operations of McDonald can handle complexity hence its ability to produce a wide variety of products to meet customer needs (McDonalds, 2017). The company has also tailored varieties according to country of operation as some countries do not take beef and others do not take pork. In India, for example they provide ‘paneer’ burgers.
McDonald’s operations are mostly characterized by low variations in demand hence leading to operations that are stable (Shang et al, 2015). The company is able to focus its demand based historical figures. Inventory levels are be based on past trends. The company has higher demand during school holidays and celebration seasons or holidays (Zangiski, 2013). They have therefore learnt to cater for this demand depending on season. The company maintains process workflows hence effectively dealing with customer demand and satisfaction.
McDonalds makes its operations as visible as possible to its customers. The company’s burger making process is visible at outlets. They also have you tube videos showing how some of their products for example fries are made (Chiarini, 2015). The customers are told of the ingredients that go into making their products. High operational visibility leads to the customers’ satisfaction being controlled by customer perception.
Increased competitiveness by McDonalds in the global scene calls for continous innovation and improvement culture. This enables the company have efficient operational processes. The organization is also able to manage its resources effectively (McDonalds, 2017). The analysis of McDonalds shows that the company focuses on its operations to ensure customer satisfaction.
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McDonalds (2017). About Our Food. Retrieved from https://www.mcdonalds.com/us/en-us.html
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