Operational Management For McDonald Case Study

Discuss about the Operational Management for Mc Donald Casestudy.

Mc Donald Australia was founded in 1971. In Australia the food chain store has reported sales growth for the last three years (Abkowitz, 2008). This paper seeks to analyze what Mc Donald Austalia is doing differently in terms of operational management to have a competitive advantage over other food chain stores found in this market.

Vision: the overall vision statement for this company is to become a progressive, modern burger company delivering a customer experience that is contemporary.

Mc Donald mission: the mission is to make the company a customers most favorite place a way to eat and drink. The company is dedicated to be a great place to work, positive presence in the community and delivering quality service, value and cleanliness that customers expect.

Strategies for "market domination":

Mc Donald Australia has put in place strategies that will make it maintain its leadership in the food service industry. This has changed by setting operating standards to ensure that customers get the maximum satisfaction. This also increases profits and market share through the various strategies of convenience, execution and value. 

Although the company applies same competitive strategy in all countries that they operate in, the Australian franchise has gone a step further in terms of innovation by offering customers same product but with many alternatives (Pinto, 2015). This is called the broad differentiation strategy. Mc Donald carries out intense publicity as a way of establishing its brand. 

Brand positioning and market penetration: this are strategies used by Mc Donald Australia to increase sales (Pinto, 2015). This may be in form of promotional activities by using catchy phrases like “im loving it” which is one of the strategies used in marketing to penetrate a market. They food chain store also uses personalised service such as ordering a menu through touch screen and seeing your food being prepared. This has increased peoples endearment to the brand.

New product development: Mc Donald Australia improves menus that focus on health and fit the needs of the people, this is a global  trend that generate health programs (Coleman, 2012).

The three generic strategies that Michael Porter identified that could be very well be used to outperform competitors in the industry are the same ones that Mc Donald in Austarlias food market is using to have a competitive advantage over rivals are. 

1) The general leadership in costs

Generic Competitive Strategies

2) Differentiation

3) The approach

These are strategies that are applied systematically to overcome competitors performance in the industry. It means that in some industry structures these strategies during operations when implemented are necessary to attain returns that are acceptable even when all firms are making profits.

This is when a company intends to lower its costs to be the lowest in the industry. Mc Donald has managed this very well by purchasing their products in large quantities to enjoy the economies of scale. This coupled with the various terms that the franchise has negotiated with suppliers to be getting their products at low costs has enabled Mc Donalds Australia to maintain a low cost strategy over their peers (Coleman, 2012). The company has a broad outlook that has enabled it to reduce its costs in various areas of production. The cost advantage is important for the breadth off the company.  Mc Donalds has managed to be a cost leader because it has preferential access to raw materials. A cost leadership strategy that is successful spreads in the entire enterprise, this is evidenced by the fact that Mc Donald has low overhead, high effiency , excessive control elements, and thorough budget review (De Beer, & Rossouw, n.d.). The rewards are high that are associated with concentrating on reduction of costs and extensive participation of employees in attempt to control cost. However, there are some risks associated with this strategy because the the competitors may mimic the strategy. This leads to lowering of profits of the industry in general. Also, technological advancement in the industry could make the strategy ineffective. 

This is where Mc Donald has performed very well, differentiation strategy  is when the company creates a service or product to be unique. Mc Donalds is known for its burgers, so compared to the competitors is has created itself to be a company of choice when it comes to sumptuous burgers. The company has selected several attributes that many buyers perceive as important , and placed itself exclusively to meet the needs of the people (Pinto, 2015). Due to this differentiation, the company has managed to reward itself with a higher price, which means that the company is able to get more profits as well as increase its market share. The company can also differenciate itself by providing a delivery system for its customers.  The marketing approach offers a wide range of many other factors.  However, the differentaoition strategy should be followed by only after carefully analyzing the preferences and needs of the customers. This is inorder to determine the feasibility of incorporating several characteristics of the consumers needs into a singular product with all the desired attributes (De Beer, & Rossouw, n.d.).  However , when pricing , the customers may feel the price is not justified even after the differentiation. The competitors may also copy the differentiation features in their products putting the company in a risky position.

Alternative Strategies Used

This strategy relies on selecting a narrow competition strategy within a sector.  The focus selects a group or a particular segment and creates a strategy to serve them exlusively. By optimizing the company’s strategy McDonald has sought to achieve general competitive advantage. In this market, the consumer has distinctive needs or preferences. And when Mc Donald realized that none of the companies in the market was attempting to meet the customers needs and so the company has made its menu and services to meet the needs and preferences of the consumers thus having a competitive advantage (Washington, & Miller, n.d.). Among the risk, that Mc Donalds faces by using the focus strategy is that the many competitors in the food retail market may imitate the company’s successful strategy, or the consumer preferences are diverted towards characteristics of the product that the consumers want.  The company uses Differentiation and cost leadership strategy the rewards are great as the McDonalds case shows.

Fig 1: Radar Diagram for Mc Donalds

Cost=2

Flexibility=2

Dependability=3

Quality=4

Speed=3.5

The financial perspective: the vision of the operations processes from this perspective allows to detect and to define the indicators that facilitate to reduce costs and to increase the productivity.

The perspective of the internal processes: it allows observing the way in which the processes are developed and the activities are carried out to establish the appropriate indicators.

The learning / growth perspective: how to bring value to the operations processes by improving the knowledge and training of the teams involved.

The client's perspective: the client's vision of the company, determined largely by its level of satisfaction with the service / product offered (the ultimate objective of the processes and activities involved in the supply chain) makes it possible to define The appropriate indicators.

The following are the challenges of operational management. Globalization: globalization has led to a reduction in trade barriers, transportation technology and advancement of technology hence so many companies have been set up in the market. The fast food market in Australia has been infiltrated by so many international brands .  Consequently, this brings competition in the market (Terrill, & Middlebrooks, 2000).  The company’s therefore will be forced to reduce its prices in order to remain competitive . As the operations manager is the one who is responsible for  functions such as organizing, planning, coordination and controlling to ensure that the product remains competitive. The operations manager must be creative and innovative enough for the company to have competitive advantage for its products.

Cost Leadership Strategy

Another challenge is sustainability, business operational sustainability can be used as a method of evaluating whether the business can be sustainable without risking future resources.  Operations manager of the company must concern themselves with pillars such as welfare,safety , economic and environmental sustainability. Effective operations manager should implement best practices for sustainability purposes.

Ethical conduct is yet another challenge that faces operations managers. Ethics is a subset of business ethics meant to ensure that the function of production activities are not damaging to the society or to the consumer (Smith, 2006). Unethical behaviour has contributed to demise of big companies like Tyco, Enron and many other firms. Hence, being ethical across all business sectors such as human resource, accounting, sales and marketing, and production. The operations manager ensures that all the activities conducted within the organization are ethical.

Conclusion

In recent years, business activity as well as service providers has evolved exponentially. Globally, business growth, not only in volume, but in complexity and quantity of services, has multiplied. This phenomenon, among others, together with the financial scandals of the last decade, has raised awareness about corporate risk management processes. And within those processes, the administration of a particular risk, which until a few years ago was not managed, nor measured, nor adequately evaluated (Smith, 2006). Mc Donald has done well in operations management that is why it has a competitive advantage over its competitors.

But apart from the competition referred to the products, the competition also refers to the services that the company offers, if the pizzerias have home service McDonald's has AutoMac. Looking for quality is found at McDonald's and that is known by all consumers."A risk is a risk, these affect the potential of the gains, whether arising from commodity prices, fire equipment, regulatory changes, or adverse media coverage . Finally, how do you deal Your risks is the basis of how you see the main mission of your company and is the reason investors invest in this. The company employs an extremely rigid trading system. There are specific rules for doing everything from setting the distance between the wall and the refrigerator to the exact temperature at which the potatoes should be fried. All these methods are detailed in special manuals.McDonald's will only be effective to the extent that it manages to establish a partnership with its employees (EndoMarketing), franchisees, suppliers, to provide exceptionally high value to the company.

References

Abkowitz, M. (2008). Operational risk management. Hoboken, N.J.: John Wiley & Sons.

Beer, S. (2000). Decision and control. Chichester [u.a.]: Wiley.

Coleman, J. (2012). Operational Mid-Level Management for Police. Springfield: Charles C Thomas.

De Beer, A., & Rossouw, D. Focus on operational management.

Lambin, J., & Schuiling, I. (2012). Market-driven management. Paris: Dunod.

North, K., & Varvakis, G. Competitive strategies for small and medium enterprises.

Pinto, C. (2015). Operational Risk Management. Momentum Press.

Smith, A. (2006). Encyclopedia of junk food and fast food. Westport, Conn.: Greenwood Press.

Terrill, C., & Middlebrooks, A. (2000). Market leadership strategies for service companies. Lincolnwood, Ill.: NTC Business Books.

Washington, K., & Miller, R. Restaurant, food & beverage market research handbook 2014-2015.