McDonald’s: Half a Century of Growth15

Name
Professor
Subject
Date
McDonalds Case Study
Introduction and Background to the Case Study
The objective of this report is to demonstrate how McDonald’s has utilized innovative operations management strategies to support its corporate goals. Operations management is the most important function in any organization. It involves the process of implementing, overseeing, and controlling the production of goods and services. Although operations management is mainly concerned with the production process, its significance to other functions cannot be underestimated. When operations are managed well, all other process and services run smoothly. McDonald’s has achieved substantial competitive advantages in the fast food industry by developing an efficient operations management process. The company’s operations management system supports its mission objectives and position as the largest food service company in the world delivering high-quality standardized products to its customers.
Solutions to the Questions
How has the competitive environment that McDonald’s faces changed since it was founded?
Since McDonald’s was established in the 1950s, the competitive landscape in the fast foods industry has changed considerably. In the 1950s, there were not many franchised fast food restaurants chains. Today, this business model is very common. Over the years, some new players have entered the market and saturated it with diverse product and service offerings (Watson 61). The industry has evolved steadily into different segments based on the type of dining, product offering and pricing.

In the United States and the international market, several restaurants have emerged and have changed the competitive landscape that McDonald’s enjoyed in the 1950s. One of these companies is Starbucks, which is the world’s largest coffee retailer. Starbucks competes directly with McDonald’s in the soft drinks, beverages category and other food categories. It has an extensive network of retail stores (over 23000) in 65 different countries. The company continues to pursue expansion strategies with the aim of consolidating its market leadership position.
Another major competitor is Yum Brands. The company operates several quick service restaurants such as Pizza Hut and KFC. With its 41, 000 retail, stores in 125 countries, Yum Brand is one of the greatest competitors of McDonald’s. The two restaurants offer relatively similar menus. Subway operates 44,000 fast food locations in 100 countries making it the most significant competitor for McDonald’s. Franchisees fully own all Subway outlets. The last major competitor is Burger King. The company was founded in 1954 in the US and has grown steadily to operate 14,000 locations in more than 100 countries. Most of Burger King’s locations are owned by franchisees. It is apparent that McDonald’s main competitors have adopted the franchising model as the primary strategy for expanding their business. It has increased competition in the global restaurant industry.
How have McDonalds’ Operations Activities influenced its Operations Performance Objectives?
The company’s operations activities have affected the goals of its activities’ performance in various ways. The most important area of influence is in the design of products. McDonalds’s aim in this strategic area is to provide high quality, standardized and affordable food menus. Standardization of different menu items has made McDonald’s very popular despite stiff competition in the industry (Yuece 56). McDonald’s operations activities also influence the company’s performance objectives through quality management. The company’s robust operations management system ensures maximization of product quality within constraints such as consumer expectations, price and cost limits. The company uses a production line method to maintain consistency in product quality, which in turn satisfies consumer expectations about the McDonalds brand, which is the most reputable corporate brand in the fast food industry.
McDonald’s operations activities also influence the company’s performance objectives through process and capacity design. The company’s operations management system is based on cost minimization and efficiency (Yuece 32). To this end, the company has aligned its activities management process to focus on optimal production capacity to meet the ever increasing market demand. Supply chain and inventory management is another major way through which McDonald’s’ operations activities influence performance objectives. The company has developed a dedicated operations management system to support its global supply chain as well as inventory management processes at the various locations. Through its activities, the company seeks to reduce inventory costs.
Operations Strategy Matrix for McDonald’s

Elements of Intel’s Operations Strategy
Apple is an IT company that specializes in the production of microprocessors for personal computers. The operations management process at Intel has proven to be integral as far as the enterprise’s business objectives are concerned. Since it was founded, Intel has committed itself to delivering a high experience to the end users of its products. The company achieves this by striving to promote satisfaction by its customers (Jargosch and Jurich 19). The most important element of Intel’s operations strategy is support for business operations. It involves expanding the company’s production capacity to meet the ever-increasing market demand for its products. For several years, Intel has been the market leader in the production and sale of microprocessors. The company endeavors to expand its production capacity so as to maintain a substantial competitive advantage over rivals in the industry. Intel continues to make plans for further expansion regarding product portfolio and target market. These plans are aimed at strengthening the ability of the company to defend itself against aggressive marketing by rival companies.
The second element of Intel’s operation strategy is current operations management. It entails achieving consistency in the production of high-quality hardware and software applications to meet the diverse needs of its clients. It has empowered the company to build a significant and growing customer foundation (Jargosch and Jurich 27). As a result, Intel’s products and services are marketed in virtually every country in the world. The current operational functions pursued by the company depend mainly on internal and external factors related to its operating environment. The operations and strategy department play a fundamental role in coordinating and streamlining operations while maintaining the strategic focus on core competencies.
Analysis of the Situation
Operations management is a major issue of concern for McDonald’s. To preserve its viability in the fiercely competitive market, McDonald’s sets its overall operations management goal as increasing the satisfaction of its customers. As a way to achieve this broad goal, the company focuses its activities strategies on enhancing the competitive basis of speed, health, cost, and nutrition. Over the years, the company has improved the composition of its menus with the aim of improving dietary and health outcomes for its customers (Yuece 52). The company created a revitalization plan as a guiding principle of its operations management process. The program encompasses the various areas of business associated with making customers happy. These include supplier relations, food preparation and customer service. In all these areas, quality management remains an integral consideration. To ensure consistency in food production and handling, the fast food restaurant uses sophisticated information systems and strictly enforced quality standards. It ensures highest levels of quality in aspects of the company’s business operations. To implement standards, the company undertakes routine inspections at each restaurant including those owned by the franchisees.
Through rigorous training processes, McDonald’s ensures that all its employees have the required knowledge and skills to meet the company’s operations management standards. This objective of offering continuous training and development opportunities to staff is to make the business’s customers happy. Many suppliers from different industries and countries deliver raw materials and other products to McDonald’s. The company has streamlined the operations management process to ensure that supplies are delivered in time and that transactions are completed without any unnecessary delay (Yuece 37). The company reassures that its products are fresh by giving preference to local suppliers. It also saves transportation time and cost, which adds to the company’s bottom-line. To ensure consistent quality of products, McDonald’s publishes guidelines for procurement of goods from suppliers. The company also takes advantage of its long-term relationships with suppliers and distributors to avoid harmful products and reduce costs.
As part of its operations management process, McDonald’s has implemented systems to support the forecasting process. The company uses qualitative forecasting methods to gather essential information from employees, customers, suppliers, experts and other groups. This information is usually collected through surveys and other appropriate correspondences (Yuece 91). The process has enabled the company to excel in creating innovating innovative menus imbued with local tastes and preferences, and in making customers happy. Actually, the entire forecasting process resolves around the core goals of making customers happy and willing to visit the company’s stores again. The company works towards this goal with strong quality management, competitive basis, and efficient supply chain.
Conclusion and Recommendations
The competitive landscape for McDonald’s has changed significantly since the company was founded in the 1950s. Through innovative operations management strategies, the company has conquered the restaurant industry and is now the largest and most popular fast food chain in the world. Through its global chain of franchises, McDonald’s continues to focus on more global expansion while still enhancing its competitive position. Despite stiff competition in the industry, McDonald’s has built a very powerful brand name, an indication that its operations strategies are quite effective. To benefit more from its operations processes, it is recommended that the company:
Develops different operations strategies tailored to the local market conditions. It has been established that the competitive environment varies between countries. In Asia, there are not many McDonald’s stores despite the immense potentials presented by this market. Implementing different strategies for the different market will enhance McDonald’s ability to guard against competitors in its key markets (Chase and Apte 378).
The company should extend its operations to the hospitality industry (particularly in hotels). This market sector has been growing over the years and remains very attractive especially for established firms such as McDonald’s. The company can exploit its brand name to build hotel chains across the world to tap into this lucrative market. The company can also explore another market such as Africa and the Middle East (Slack, Brandon-Jones and Johnston 211).

Works Cited
Chase, Richard B. and Uday M. Apte. A History of Research in Service Operations: What’s the Big Idea? Journal of Operations Management, vol. 25, no. 2, 2007, pp. 375-386. Print.
Yuece, Ilhan. SWOT Analysis of McDonald’s and Derivation of Appropriate Strategies. Boston: GRIN Verlag, 2012. Print.
Slack, Nigel, Alistair Brandon-Jones and Robert Johnston. Essentials of Operations Management. Harlow, England: Financial Times Prentice Hall, 2011. Print.
Jargosch, Reiner E. and Joseph Jurich. Intel Corporation Patent Landscape Analysis. Chicago: IPGenix LLC, 2013. Print.
Watson, James. Golden Arches East: McDonald’s in East Asia. New York: Stanford University Press, 2006. Print.