executive summary (updated)
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Executive Summary
The purpose of this report is to know how the operation management strategies are made and
implemented in an organization. In this report it covers the operation management concept
which is utilized by the company.
Operation Strategy
Operation strategy specifies the means by which operations implements corporate strategy
and helps to build a customer driven-firm. It links long-term and short term operations
decisions to corporate strategy and develops the capabilities the firm needs to be competitive.
Basically, there are four international operations strategies which are global strategy,
transnational strategy, international strategy and multidomestic strategy. Operation
management strategy is very important since it maintains and controls all the organization
operations. Operations strategy is done after comparative marketing analysis based on
capabilities and resources of the organization. (Krajewski, Ritzman, Malhotra, Heizer and
Render 2010).
Literature Review:
The direction and scope of the organisation over the long term which achieves advantage for
the organisation through its configuration of resources within a changing environment to meet
the needs of markets and fulfil stakeholder expectations. ( Johnson and Scholes (1999) ).
Operation strategy is the process of decision making which establishes the role, objectives,
and activities of operation in order to continually support the organisations strategic decision
by creating a suitable infrastructure and set of distinctive capabilities. Operating being the
activities of organisational resources be they people, land, buildings, information or cash.
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Generic strategy is the marketing strategies for marketing product or services. It is the cost
leadership, differentiation, and focus. Differentiation strategy involves offering customers
something unique for which they are ready to pay price premium. Cost leadership strategy
involves one firm setting out to be the lowest cost producer in the industry by maximising
economics of scale and other sources of cost advantage. Focus strategy involves a firm
concentrating on a narrow customer segments and gains advantage competitively by offering
products developed for that niche. Firm serves such customers to the exclusion of others.
There was a question being raised up of how the generic operation strategy can adapt the
Porter operation management.
The foundations for corporate success are built on the identification and exploitation of
distinctive capabilities. The search for generic strategic of corporate success for recipes for
corporate success is doomed to be failure. There can be no such recipe because their value
could be destroyed by the very fact of their identification. (Kay, 1993)
(http://www.mbaknol.com/wp-content/uploads/2010/08/generic-strategies-porters-
mbaknol.jpg)
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Company Background
Ray Kroc is the founder of Mc Donald and being established in the year of 1955 by opening
the first restaurant in Des Plaines, Illinois. Mc Donald has 30000 outlets which serves 47
million customers in more than 100 countries. Mc Donald first came to Malaysia in the year
1980 where Mc Donalds corporation USA grant the license to Golden Arches Restaurant
Sdn. Bhd to run Mc Donalds restaurant. On 29th
April 1982 at Jalan Bukit Bintang in Kuala
Lumpur Mc Donald opened its first restaurant. In Malaysia itself there are 194 outlets where
they keep opening 10-15 outlets yearly. It created more job opportunities for Malaysian
especially for the teenagers. Mc Donald can be said as one of the fast food company which
grows tremendously compared to KFC, Pizza Hut and others. As being competitive it focuses
towards price, quality, management and employee training.
Mc Donalds competes with the competitive challenging market segment by providing all the
needs and wants of the customer. Fast food is an upcoming business nowadays which creates
competitor such as KFC, Pizza Hut, and Dominos, Kenny Rogers and many more. This
entire competitor is competing very fiercely in order to attract more customers so the right
strategies have to be used by this corporation. Due to this Mc Donalds has come out with
several strategies in sustaining its capability. Mc Donalds compete in term of cost, speed, and
nutrition. At the same time Mc Donald gives importance to customer with the slaying of
making customer happy.
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Operation Management Strategies are made by the top management of Mc Donalds and
being implemented in all the branches under instructions of top management in the written
form. The operation managers will control all the operational activities. Mc Donalds
operation strategy is To provide unmatched consistency in operation in support of high
product quality. This is determined by the adequate speed, low cost, and process innovation to
accommodate changes in consumer taste. This means consistency and high performance
quality are referred as order winners whereas speed, cost and process innovation are order
qualifiers.
Speed
In conjunction with the saying of making the customer happy Mc Donalds should provide
faster, reasonable, and nutritious food. People nowadays are being occupied with multiple
activities so these humans move ahead very fast. As a result, when customers step in to the
restaurant he or she requires a quick and fast service. Due to that, Mc Donald provides service
which is affordable, friendly and fast service. Apart of it the performance measurement for
speed and also an appropriate measurement to compare actual performance and required
goals. In order to upgrade the skills of employees Mc Donalds do always send them for
training in term of working efficiently and also creates drive thru counter which is more
convenient and faster.
Cost
Cost is another thing that must be considered since it is the one of important element which
must be efficient in dealing it. When it comes to cost its actually of producing high quality
products at lower cost. Mc Donalds gives the importance of efficient in the value itself which
is with inspired people who delight each customer with unmatched quality, service,
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cleanliness, and value every time. Mc Donald has come out with numerous avenues to
provide great value to its customers: Mc Donalds comes with it Mc Value meal with different
types of burger, chicken nugget and ayam goreng Mc D. When the customer purchases this
item they are also given choice of purchasing French fries and carbonated drink at discounted
price. Besides that, Mc Donalds also offers Mc Value lunch with 10 different choices and 8
different menus for breakfast. Hence, when the ala carte menu was introduced many
individual items were being sold. This makes the user convenient where they can make choice
of what they want rather than buying one set. In fact, this individual item gets good response
from the people and also individual stores. Ever since Mc Donalds franchise its outlet it
brings advantages. Malaysia is a multiracial country so there would be various festival being
celebrated in Malaysia. Recently, there was Hari Raya celebration so Mc Donald offers
special menu during Ramadan month for this Muslim customer to breakfast. Mc Donalds too
offers special menu for all the festival season in Malaysia to attract more customer with
affordable price. Then when it comes to Chinese New Year Mc Donalds will be having
prosperity burger as one of the menu for a selected period. The menus which Mc Donalds
come out during festival season will be at affordable price.
Technology
Technology is one of the important aspects for a business to grow more expand. With
technology advancement it gives the opportunity to communication. not only measures
performance values within the organization, but it also assists in the drive through area.
When a drive through worker is taking an order, it is displayed automatically on a screen
available to the customer outside, called the Customer Order Display (COD). The customer
can review the COD and correct any mistakes, thus making the ordering process more precise.
More precise orders eliminate time wasted from correcting mistakes
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Quality Management
This is where the customers quality expectation must be determined and policies and
procedures established to identify and achieve that quality. Mc Donalds really maintain its
product quality and higher cost takes place in quality maintenance and improvement
researchers. Mc Donalds has to maintain a compulsory standard of quality and safety so that
the customer will have the confidence when consume food over there. The food inspection is
done where emphasize is given on food temperatures, expiration date and other food safety
hazard several throughout the daily operation. Each outlet will be having a standardized Food
Safety book to ensure the safety in preparing the food. Cooked food temperatures are
examined so that the foods are cooked well before being served. Expiration dates are checked
frequently so that is any foods are expired can be return to vendors. Then refrigerated and
frozen foods are also checked to ensure foods dont get too warm and rotten. At the same time
equipment also being checked to overcome malfunction during the operation.
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Food and Nutrition
Nowadays, most of the people are concern about healthy lifestyle since its a biggest issue. As
everyone concerned consuming fast food brings drawbacks to the consumer. As a result, most
of the fast food company offers variety of menus which are nutritious in order to attract more
consumers. This creates awareness to Mc Donald of offering menu which is more nutritious to
compete with competitors. These are the following options of menu which are nutritious
being introduced in some countries:
In the United States with active lifestyle Mc Donald introduces meals which are nutritious.
The meals are snack size fruits & walnut, fruit and yogurt parfait, premium cheese salad with
grilled chicken.
In England Mc Donald introduces fruit bags, containing apples and grapes, as an alternative to
french fries.
Mc Donald also does care about their employee by showing consideration in their health. In
Europe countries this organization has come out with Employee Guidebook which contains
tips of going towards healthy lifestyle and also the nutrition needed by the body.
Mc Donalds also gives importance to balanced active lifestyle by showing caringness
towards customers health which aims to inspire and motivate people with the active balanced
lifestyle. This gets along with theme of its what I eat and what I do.
Mc Donalds also fully utilize the technology advancement especially in Mc Donalds
website. In this website there are menu items with plenty of choices. The food that a
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consumer chooses from the menu will have the online nutrition table of the particular food
they selected.
Ever since nutritious food is becoming concern of individual Mc Donalds has put high effort
in coming up with new menu even the raw material price is high. This organization introduces
food such as fresh vegetables and fruits which is very healthy. Mc Donalds also create more
awareness of health for the employees and also in the matter of providing and updating the
nutrition information regularly same time strictly follows the guidelines of health
organizations.
Training
Mc Donalds also provides training opportunities for all their employees so that they can
perform well in doing their duties. Training is given to the employee by monitoring their
performance and being assigned in the area that they are weak. Mc Donalds has received
prestigious award as a company of which has greater involvement in training. Basically, in
recruiting new employee they must go through orientation process consist of several videos,
several days session of direct one to one training by a trainer. After employees feel
comfortable with the operations, they will be promoted to crew trainers. Crew trainers must
undergo additional training for specialized processes such as the grill area, front counter,
drive-thru, and other areas. The next step would be the shift supervisors, followed by second
assistant manager, first assistant manager and the highest position in each Mc Donalds
restaurant would be the restaurant manager. Training doesnt stop at one position but it
continues up to restaurant manager with the perception of no one is perfect in this world.
Employment in Mc Donalds can be said as flexible approach as part of commitment to
diversity. In order to make sure that their quality management is good surveys are done to get
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feedback from customers in term of customer service. Even feedbacks are taken from
employee regarding the matters of training being given whether it is good and in which area it
should be improved.
Restaurant Inspection
Mc Donalds believes in their high quality product where they obtain the product directly
from suppliers rather than the Mc Donalds Corporation. It is well known Mc Donalds
Malaysia only have a single supplier which is Mac Food Services Sdn. Bhd. Hence of, good
relationship with the supplier the ingredients are purchased at a reasonable price but the
branches still have to follow the safety precautions and procedures of a franchised restaurants.
Due to this, Mc Donalds corporation will have announced and unannounced visit to
international Mc Donalds restaurant around the places. This is to warrant that proper
guidelines are being practiced. Grading is done based on their routine and expertise.
Acceptable grading will give the opportunity to open new franchise locations.
Supply Chain Management
These strategies tell of what is to be made and what is to be purchased. Mc Donalds uses this
strategy and follow just in time inventory system. This means they only order raw material
once it is finished since it is perishable item. Food quality is the main key for Mc Donalds
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since its being served to the customer. Their ingredient are as follows 100% halal beef, halal
farm fresh chicken, apples, vegetables ,potatoes ,fruits, eggs, fish and vegetables. Vegetables
are grown in Malaysia, China, USA, and Australia. Every ingredient will have different
supplier. The main supplier for Mc Donald in Malaysia would be the Mac Food Services Sdn.
Bhd. This means Mc Donalds has to maintain good relationship with the supplier since there
is one single supplier only. Moreover, this supplier has obtained the halal certification since
before. In this case if Mc Donalds wants to change the supplier they will face difficulties
since the new supplier must obtain halal certification to supply ingredients. Obtaining halal
certification is a long process even if Mc Donalds wants to switch different supplier is
difficult situation. Mc Donalds has to ensure the quality since the menu concentrates on
main ingredients such as beef, chicken, bread, potatoes and vegetables. Food quality is very
important and if anything goes wrong it can damage the reputation and affects the
organization. Gaining back this reputation will take a long time. Their emphasis on safety and
origin of ingredients highlights the efforts McDonald's make to allay fears among the general
public over nutrition and modern farming methods.
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Strongest Priority
Mc Donalds basically gives importance to their customer. At the same time this organization
also involve in good works such as gift of smile, sponsorship and Ronald Mc Donalds House
Charities. Basically, this will create good perception in public point of view.
Mc Donalds always want to be the best fast food outlet so it keeps on improving on all
matters. It can closely be linked with managers duty where every thirty minutes the manager
will check everything in the restaurant. It starts from the lobby area, the walk in refrigerators
and freezers, the stock area and outside the restaurant. The management also will come and
recheck back in order to be efficient.
Mc Donalds do very concern about every single step they are making which will bring
drastic changes in long term. It more closely relate to cleanliness in preparing the food and
safety of the food. The items that available are officially approved by Halal association
especially the pure halal beef and halal farm fresh chicken. This halal certification gives
Muslim and non Muslim customer confidence of eating at Mc Donalds. This is because in
some countries competitors outlet pork being served such as outback steak house in Australia
but this thing doesnt happen in Mc Donalds throughout the world.
In order to improve Mc Donalds in all subject matters they also collect secondary
information through surveys and questionnaire. This is where the manager who is in travel
path will just drop and asked feedback from customer by face to face communication which
will build stronger relationship with customer. In encouraging the customer in giving
feedback Mc Donalds will give something in return.
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In summary, McDonalds strives to reach its goal of making customers happy
through their normal competitive bases of speed, price, and nutrition, and they also ensure
customer satisfaction through continual improvement of their operations.
Recommendation
Mc Donalds Malaysia already involves in the good work such as gift of smile, sponsorship
and Ronald Mc Donald House Charities which already created good brand image among
public yet they also should work on the aspect of outdoor events and catering. This is done by
KFC and Pizza Hut and it has make them become famous. Catering takes place normally in
the event of School Canteen Day, company anniversary, family day, sports day and teachers
day. When this type of events is organised more people will come forward. Moreover, for
catering KFC and Pizza Hut offer few packages which is affordable. This type of packages
can be considered by Mc Donald since it is very profitable in the long term for Mc Donald. At
the same time in the future Mc Donald can consider of having a special section in their outlets
to do parties such as birthday bash, farewell party, get together and new born baby party.
Another aspect that Mc Donalds can work on is in their menu aspects. As it is well known
both KFC and Mc Donald are offering the same product by using chicken as the base. Yet to
be considered Mc Donalds use beef for the Big Mac and prosperity burger and fish for the
fish fillet. Even using chicken is not a problem but Mc Donalds can try using roasting
method for the Mc Donalds fried chicken which is less calories and fat. Customers also
willing to pay even the price are higher since it is healthier. This is because people are very
health conscious so it understandable they will go for healthier food. In long term more
customers will come to Mc Donalds and it will increase the profit.
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Conclusion
As what is recommended Mc Donald can concern about adopting it in future but yet things
like cost has to be prioritise first since it is the most important element in a business. This
recommendation would be beneficiary if it being practised in the long term. This is because
setting up such facilities or getting involve in new scope will take some time and incur high
cost since it is a huge thing to be carried out and cant be done simply as Mc Donalds wish.
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Refrences:
1.Pizza Hut [online] (cited 20 October 2010) Available from
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10. Heizer. J & Render. B (2008) Operation Management (9th
edn), Pearson Prentice Hall,
New Jersey
11. Krejewski.J, Ritzman. P, & Malhotra. K (2010) Operations Management Process and
Supply Chain (10th
edn), Pearson, New Jersey
12. Porters Generic Strategy [online] (cited 20 October 2010) Available from