Operation management is a specific area of business activity that is concerned with the administration of various business practices (including production and service delivery), with the primary objective to create the highest level of performance possible within this or that organization. Basically, it is a never-ceasing process of converting raw materials, labor, and energy (often referred to as “inputs”) into value-added goods and services (“outputs”) as efficiently as possible, which means obtaining the maximum operating profit for the company (Rastogi 9).
The level of operation management in McDonald’s Corporation, which discussed in the paper at hand, asserts the company’s position as the most popular fast-food restaurant in the world. It coordinates a lot of strategic areas in order to achieve optimal efficiency, and successfully copes with tough competition, as well. However, at present, potential consumers are reconsidering their behavior in order to be able to adapt to the demands of a healthy lifestyle, fast-paced routine, and the current economic crisis. This is causing a substantial decrease in demand and aggravates competition. It means that production management must deviate from its normal course, in order to overcome these obstacles and keep the profit at least at the same level. Thus, the case study approach chosen for this paper aims to give insight into the issue of operational activities of the company, and the way they can be modified when the company faces a crisis.
The major activities of an organization generally include planning, development, product design, production management, control, labor supervision, materials handling, system productivity assessment and maintenance, management of inventory level, cost control, logistics, sales, and marketing, etc. Operation management has to ensure that in the process of utilization of resources, minimal possible waste occurs, while the client is completely satisfied with the result (Rastogi 10).
However, these goals can be rather difficult to achieve. Successful operation management is the result of coherent operational activities, both within a company and with its external partners. They are all interdependent and overlapping. As evident from the list of activities, the process is complex and multifaceted, which means that the coordination of its constituents can be complicated by various sources of uncertainty (Johnson 5). For instance, manufacturing depends on the quality of labor and materials, sales, and marketing may be affected by increasing or decreasing demand and logistics can be disrupted because of unfavorable weather conditions.
Thus, managers of each separate activity should:
- be aware of everything that happens in the related activities, both internal and external, bearing in mind that they can affect their own sphere of responsibility;
- communicate timely information to other managers, whose areas can be influenced by their activity;
- coordinate interactions with representatives of other organizations that are somehow connected with the firm (Johnson 8).
Any organization strives to enhance its productivity through operation management. However, before passing on to the analysis of a particular case, it seems necessary to point out what key aspects of performance can be indicative in terms of operational efficiency. Thus, an organization with effective operation management:
- knows its customers: Operation management bears in mind existing brands, meaning that products are strategically designed in order to satisfy potential customers;
- effective in its interactions: The company has clear expectations, communication is conducted successfully at all levels, and inappropriate behavior is corrected immediately;
- knows its financial state and potential: Successful operation management always keeps track of spending and income;
- knows what motivates the team: Leaders should understand what incentives are the most effective for workers;
- knows how to assess the performance of the team: The quality of labor has to be monitored regularly in order to introduce corrections;
- provides the necessary training for its staff: The growth of the company largely depends on the qualifications of its employees;
- sticks to solid standards: In order to win the staff’s and the customers’ respect and trust, operation managers must ensure that the company is consistent in everything it does (Bucolo, Wrigley, and Matthews 21).
If we assess McDonald’s Corporation according to the enumerated criteria, we can conclude that it implements all decisions of operation management to improve the company’s performance and aid in securing the position of a global leader. Namely, the company’s operational activities run as follows:
- It provides a unique design of goods and services. The company is oriented to offer affordable products. However, within the range of an average price, it manages to meet the most popular expectations of an ordinary customer. Some of the products are made smaller, in order to combine both price and design attraction.
- It guarantees quality standards. Within existing limitations, the company has achieved the maximum possible quality of its products. The main operational activity in this field is meant to achieve consistency, which satisfies customers, as they always know what to expect (Jerome 73).
- It maintains process efficiency. Although its major goal is cost-minimization, the company manages to increase efficiency and capacity utilization.
- It establishes locations that provide the best market reach. The company’s operational activity in this sphere includes diversifying its presence on the market and appearing in the form of restaurants, kiosks, and a mobile app. It allows the company to reach more potential customers (Jerome 74).
- It pays due attention to layout design. This activity implies the most effective and practical utilization of space in physical locations. McDonald’s does not focus on spaciousness but still manages to provide comfort.
- It gives the staff the proper training. The company demonstrates a high level of organizational culture, providing its employees with opportunities for learning.
- It supports diversification all over the world. McDonald’s has a lot of suppliers from different regions, in order to minimize risk (Roy 3).
- It analyzes fluctuations of local demand. The company performs regular assessments in order to adapt to local conditions and potential consumers’ preferences.
- It allows managers to choose maintenance service providers. At the same time, the corporation has certified providers of kitchen equipment, which means that this operational activity is performed at both the regional and the corporate level (Roy 4).
Despite aiming in the right direction in operation management, McDonald’s still has to meet a lot of challenges that have shaken up its leadership during the crisis. The company had to close more than 700 restaurants around the world because of low performance. Consumers’ attention has shifted to Burger King, Subway, Kentucky Fried Chicken, and other chains that offer food of the same quality, but with faster service and lower price. The paradox is that the McDonald’s menu is now too complicated: it includes too many items to choose from (Roy 5).
People who come to eat fast food simply do not have time for choosing. Besides, healthy options, added to attract vegetarians and people with a healthy lifestyle, backfired in the long run. The corporation tried to restore its reputation after being accused of using genetically modified products that have been shown to cause obesity and cancer. Surprisingly, salads have not gained popularity. Moreover, they often turn off regular customers, who feel at loss because of an ever-increasing number of variants and the feeling of guilt for overeating (Roy 6). It seems a good idea to return (at least partially) to the original menu, which would also allow for reducing prices.
Taking the crisis into account, the corporation now provides the customer free Wi-Fi access to the Internet, which attracts a lot of people, especially students, who sometimes spend their whole day there.
McDonald’s also pays a lot of attention to children, providing them with “Happy Meals,” toys, and “happy lands.” This is a successful strategy, as it makes the whole family come to a restaurant. Besides, it is a kind of investment in the future. However, it would be reasonable to invent a separate menu for kids, to include products that are both healthy and tasty. The problem is that many parents are now worried about the threat of obesity. Thus, no sugar-added drinks or desserts should be included in Happy Meals, in order to eliminate these concerns.
It would also be advisable for the corporation to attach more significance to regional cuisines that shape the preferences of the population. Sometimes, the chain is ignored, because it does not feature any favorite ingredient present in the local traditional cuisine (Roy 7).
Therefore, the conclusion that can be drawn is that effective operation management is crucial for any company, no matter how large-scaled, well-established, and popular it may be. This practice helps companies to enhance productivity and obtain a competitive advantage.
Works Cited
Bucolo, Sam, Cara Wrigley, and Judy Matthews. “Gaps in Organizational Leadership: Linking Strategic and Operational Activities through Design‐Led Propositions.” Design Management Journal 7.1 (2012): 18-28. Print.
Jerome, Kristine P. “A Case of McDonald’s Restaurant the Built Environment and the Perpetuation of the Phenomenon of Globalisation.” Proceedings 3rd conference of the Interior Design / Interior Architecture Educators Association. (2007): 71- 79. Print.
Johnson, Blake. “Coordination and Management of Operational Activities Subject to Uncertainty.” U.S. Patent Application No. 12/020,996. Print.
Rastogi, Manoj Kumar. Production and Operation Management. Laxmi Publications, Ltd., 2010. Print.
Roy, Sancharan. “Recession? I’m Lovin’it: A Case of Mcdonald’s.” Indian Journal of Economics & Business 8.2 (2009). Print.