Operations - Case study

Question 1

Outline how McDonald’s achieves cost leadership in strategic role of operations

Answer 1

• the size of McDonald’s means that it has the power to employ economies of scale to create a cost advantage over competitors
• with such large-scale operations, the company has invested in technology, as well as a global operations training program
• in 2023, the company modernised its management structure, with the aim of being faster, more innovative, and more efficient

Question 2

Describe the influence of globalisation on McDonald’s operations

Answer 2

• the rise of globalisation has enabled the integration of economies, which has allowed the company to transfer capital, labour and intellectual property between nearly 42,000 restaurants in 115 countries
• McDonald’s is ranked 10th on Forbes’ list of the world’s most valuable brands

Question 3

Describe the influence of technology on McDonald’s operations

Answer 3

• McDonald’s has signed long-term agreements with delivery companies Door Dash and UberEats, which allow customers to order food online from these third-parties and have it delivered to their home. This agreement also allows delivery to be ordered from the McDonald’s app
• McDonald’s will implement in coming years “Ready On Arrival ”. This technology alerts the kitchen to begin preparing food when the customer is near the store. This saves wait times for customers and also results in hotter, fresher food

Question 4

Describe the influence of quality expectations on McDonald’s operations

Answer 4

• under the “One McDonald ’s Way” approach, the company has launched a “Best Burger” initiative. Small changes are made to how a particular a burger is cooked and assembled. For example, onions are added before the beef patty is cooked to better soak up the meat’s juices

Question 5

Describe the influence of corporate social responsibility on McDonald’s operations

Answer 5

• McDonald’s supports Ronald McDonald House Charities in 62 countries. This charity provides accommodation to family members of sick children who have been hospitalised.
• it also provides education and other support services aimed at young people. In 2022, McDonald’s, its franchisees and customers donated over US$182 million to this charity

Question 6

Provide examples of transformed resources for inputs in McDonald’s operations processes

Answer 6

• materials: In Australia, McDonald’s tries to use locally-sourced materials and claims to use 100% Australian-sourced and processed beef
• information: McDonald’s has also dramatically increased the role of digital ordering - mainly through McDonald’s’ own mobile app. This provides the company with unprecedented levels of data about customer behaviour and choices.

Question 7

Provide examples of transforming resources for inputs in McDonald’s operations processes

Answer 7

• human resources: front counter crew, kitchen crew, McCafe staff, drive-thru, delivery drivers
• facilities: McDonald’s kitchen staff use grills, fridges and fryers in order to complete their function of converting inputs into outputs. Similarly, the front counter staff need cash registers to complete transactions and communicate items required to kitchen staff.

Question 8

Outline how technology, task design and process layout is used in the transformation processes of McDonald’s operations processes

Answer 8

• technology: digital ordering methods such as the mobile app or self-serve kiosk. automated drink dispensers, digital menu boards
• process layout: the food-making process at McDonald’s is standardised and materials are organised in a manner that supports the time allotted for each task

Question 9

Outline the outputs produced in the operations processes of McDonald’s

Answer 9

• the final output for McDonald’s is food
• customer service: McDonald’s believes that customer engagement and good service are fundamental to the role of a crew member. In recruiting staff, McDonald’s expects its members to be friendly and to put the customer first.

Question 10

Provide examples of performance objectives used in McDonald’s operation strategies

Answer 10

• speed: the plant and process layout are designed to ensure the logical placement of ingredients and equipment. Ready on Arrival also increases customer perception of speed of operations
• customisation: Over the last 30 years, McCafe has increasingly offered customised coffee options, particularly in the Australian market. Although preparing coffee “made-to-order” is not as fast as the previous “one-pot” solution, consumer tastes and competition have driven this change
• cost: Wage costs have been reduced by the roll-out of self-service kiosks and mobile app ordering. These cost cuts help maintain competitive prices for consumers and improve profit margins

Question 11

Outline how supply chain management is used in McDonald’s operation strategies

Answer 11

• logistics: The major partner in Australia is a company called Martin Brower. This strategy has also allowed McDonald’s to reduce logistics costs by utilising local suppliers. For example, McDonald’s Australia makes beef patties from 100% Australian beef