Mcdonalds Operating Strategy Essay

Introduction McDonald? s, stolon started by Ray Krov, is direct whiz of the most popular tight nourishment eating repoints across the world. They proudly make off more than than 46 million nodes in 59 different countries and have more than 30,000 different locations domestic completelyy and internationalisticly ( viands Service). The fast nutriment industry is booming at a speedy rate, especi ally the right(a) course of action, with this in mind, McDonald? s has strategically conception to stick to on top of their competitors by providing consumers with more options of healthy meals, cheaper prices, and kick downstairs remember.McDonald?s is competitive in some(prenominal) categories examples atomic number 18 price, woodland, counsel and employee training, other categories leave be explained end-to-end the preceding sections. Consumers trust McDonald? s intersections because they use some of the same trusted brands that families buy at local grocery store s.The unaccompanied difference is that their shopping cart is a whole lot bigger. trading operations COMPETITIVE STRATEGY McDonald? s slew competes in a dis personatee food market segment by providing need-satisfying products to guests. In this segment, ineffective competitors a high-priced deal drop dead without proper strategies .To sustain its viability, the McDonald? s corp employs an effective competitive dodge to seduce it stand out against competitors much(prenominal) as other fast food eaterys. McDonald? s competes on some(prenominal)(prenominal)(prenominal) bases, including cost, speed, and sustainment, their strongest priority is ? reservation customers smart (? McDonald? s Worldwide 3). The fraternity newborn-madely made drastic changes to its plainlyt on by introducing the ? make for You administration (Chase).Competition Bases revive McDonald? s competes on several bases mainly to ? make their customers happyby providing speedy, affordable, and n utritious foods. Through extensive market research and survey, the organization discovered that its customers desire speed as ane of the restaurants? top priorities.Therefore, McDonald? s vision aims to ? provide fast, friendly and accurate renovation (? McDonald? s Worldwide 5). McDonald? s realizes that specific targets be necessary to footmark the per outlinea skeletaleance of speed, and continuously takes relevant measurements to comp ar actual performance with coveted targets (measurements argon detailed later in this report in the ? shoot Managementsection).To achieve efficient service beats, the comp all utilizes proven, streamerized training processes for its employees and saucyly drive-thru layouts to reduce service measures. Along with speed, McDonald? s in all case competes by fling prices at a low cost. Cost To offer high whole tint products at low cost, requires efficient processes throughout the entire McDonald? s organization. erst again, this in tention is built into their vision statement when they claim that ? We leave behind be the most efficient provider so that we squeeze out be the outstrip set to the most populate (? McDonald? s Worldwide 5).McDonald?s in corporals several avenues to provide gr eat up value to its customers ? X integrity strategy that the companionship has employed for umteen years is the value meal. The value meal allows customers to buy a sandwich, french heat, and beverage at a discount when purchased together. McDonald? s restaurants offer from heptad to twelve value meals, both for their lunch menu and breakfast menu. ?XMore recently, McDonald? s began offering a value menu, consisting of many respective(prenominal) items costing except $1. 00 all(prenominal)(prenominal). First tested in southern California, the value menu has turn up to be very successful and has been since incorporated to the single(a) stores .?Some individual franchise owners choose to offer chance(a) specia ls of special menu items, such(prenominal) as ? $0. 39 hamburger Wednes daylights, or other similar specials. fine-looking Mac Mondays are a popular regional promotion. Nutrition McDonald? s third main competitive base is forage. The organization infrastands that health course of instruction is an increasingly popular trend therefore the organization has recently pore extraordinary efforts to promote their tender nutritious plectrons. Although non specifically built into the organization? s vision, McDonald? s has already introduced many options to achieve this inclination ?In the United States, ? Go-Active meals have been offered within the last few years. These meals take on a salad, bottled water, and a ? step-o-meter to wait on customers keep track of how many strike they take a day. ?X opposite countries have seen similar healthy options. The United landed estate saw fresh fruit bags, containing apples and grapes, as an alternative to french fries (? McDonald? s Worldwide 12). ?XNot scarce does McDonald? s care about its customers, but it is in like manner considerate of its employees? health. In Europe, the organization melted with external sustenanceists to develop an ?Employee Guidebookwhich contains tips and nutrition breeding for healthy lifestyles (? McDonald? s Worldwide 13). ?XMcDonald? s has assembled their Global consultative Council on Balanced Lifestyles. This council consists of exercise & obesity specia runs, environmentalists, and other professionals to discipline that McDonald? s takes appropriate steps in assisting its customers achieve optimal health. ?XThe bon ton is also utilizing technology to their advantage. The current McDonald? s website lets a user select any combination of menu items, place the items in the online bag, and conduct a nutritional analysis on their selections.The user erect break drink down the analysis heretofore raise than a menu item, down individual condiments, including ketchup, p ickles, etc. (? Bag a McMeal ). Not only has the company introduced many steps to envision nutrition, but it will strive to continue the trend toward nutrition. McDonald? s plans to add additional healthy menu options (fruits and vegetables) adjoin nutrition awareness among McDonald? s employees conceive new paths to deliver nutrition information to its customers, and other actions (? McDonald? s Worldwide 13).Strongest Priority ?At McDonald?s, do customers happy is what our commerce is all about. And we know it takes a lot to make that happen. We work hard to provide every customer with a choice of meals and an experience that exceeds their expectations. The preceding statement is the quote which introduces McDonald? s Worldwide collective Social Responsibility Report (2004). Although the company strives to compete on several bases, their ambient goal is customer happinesss. They r apiece this goal through a variety of efforts. McDonald? s visionary goal is to invariablely improve their organization. wizard example is the bus on duty task of completing a ? travel path every thirty minutes of his shift. During a travel path, the manager personally tabs every locution of the restaurant, including the lobby theater where customers eat the restrooms the grill area behind the counter the walk-in refrigerators and freezers the stock area as well as the entire perimeter outside the restaurant (Phillips, Eddie). Through completing travel paths, management continuously checks every aspect of the restaurant throughout the day. In addition to short name continual benefit, McDonald? s organization also thinks ahead for long term improvement.To go over that they serve 100% safe food, McDonald? s conducts food sanctuary tests tenf dis apply fourth dimensions throughout the day. The sens changes ? Food Safety book utilize by the managers several measure a year, in efforts to think toward the rising for the most appropriate variables to measure (food sa fety will be further illustrated in the ? Quality Management section). Along with internal improvement to the organization, McDonald? s also collects external information from its customers to discover which aspects the company performs well, and which aspects could be improved.The manager is supposed to talk to at least one customer during each travel path and the manager can immediately react to this immediately face-to-face communication. On a larger scale, McDonald surveys its customers two beats per year. To attract customers to submit feedback, the organization offers a free sandwich in return for a completed survey (Phillips, Kenny). In summary, McDonald? s strives to reach its goal of ? making customers happy through their normal competitive bases of speed, price, and nutrition, and they also delay customer satis incidention through continual improvement of their operations.Strategy Changes do for You McDonald? s organization recently underwent drastic strategy changes to better serve their customers. to a lower place their ? old system, the company would make several sandwiches at once, and find out the sandwiches in a warming bin until purchased by a customer. Under this system, management had to precisely holler how much food had to be put on hold. Precise prediction had to be used because if there were non enough food placed on hold, this would create the problem of increase waiting ms for customers, and too much food would cause barren of expired items.McDonald? s dramatically changed their strategy in tack together to persist in competitive with other fast food organizations. In 1999, McDonald? s washed-out $181 million to introduce their ? Made for You system (Chase). Under this new system, standard food items are not held in a bin until they are sold. In the ? Made for You system, modern technology greatly assists McDonald? s operations. When a customer places an order, the sandwich items are immediately displayed on a computer monitor in the kitchen and a tone sounds to alert the kitchen stave.Upon a new order, an employee in the kitchen will toast the bun, and assemble the sandwich accordingly. Standard items just now list the name of the sandwich, while customized orders list the sandwich name and the want condiments. Once the sandwich is assembled, it is presented to the food loading area, where a different rung person retrieves the sandwich and completes the order by adding french fries, desserts, etc. The system works the same for front counter orders as well as drive-thru orders (Phillips, Kenny). Unfortunately, the introduction of the ?Made for Yousystem did not inject easily. McDonald? s watched its customer satisfaction drop for the three consecutive years beginning in 1999 (Chase). after further research, they realized that although the new system provided fresher food, it was not as quick as the previous system. Instead of reverting back to the old system, McDonald? s continues to fine tun e ? Made for You and add new options to help the system work faster. Revitalization Plan In order to tell a component with the first ever quarterly loss that resolvinged from inefficient use of the Made for You system (Chase), McDonald?s has devised a new plan to increase profits.Previously, the bay window emphasized adding more restaurants to increase sales, but the new plan places tension on increasing sales at existing restaurants. The new plan will reduce spending, to enable more cash to constituentholders through dividends and share repurchases (Cantalupo). Specific goals of the revitalization plan are to ? XAttract new customers ?XEncourage existing customers to trim down more often ?XBuild brand loyalty ?XCreate enduring profitable ontogenesis The main goal is to increase sales by creating an exceptional customer experience.McDonald? s plans to achieve this goal by tapering on its people, products, places, prices, and promotions. circuit board Along with changes in t heir process strategies, McDonald? s has flirted with menu changes as well. plump year, they offered a ? new taste menu, where they offered a new sandwich for one week. The purpose was to offer customers a variety of options to satisfy peoples? desire for variety. However, the new taste menu proved to be ineffective. Some customers would fall in love with an item, but it would only last one week, and they would be disappointed that they couldn?t purchase their new beloved favorite sandwich.More recent changes to the menu have proved effective. McDonald? s realized that many of today? s customers seek healthy food options, and the corporation has offered items accordingly. As mentioned under ? Competition Bases, McDonald? s now offers a wider variety of nutritious items and provides information to help its customers as well as employees make informed healthy choices. QUALITY MANAGEMENT McDonald? s Corporation incorporates many character management figures in its occupancy proc ess.Some of the most important plans undertaken to ensure attribute include speed measurements, the five P? s (People, Product, Price, Place, and Promotion), employee training, and other factors. Speed One of the major quality management control factors includes minimizing the time that processes are through this ensures an effective and efficient operations. A lot of these processes are do through the use of the latest information technology, whether it was through calculating the time of the processes or even making a database to value and make improvement to their processes.For example, one measurement is called Total Time in Line (TTL) which calculates the preparation time customers spend in the McDonald? s line, from the time the customer begins enjoin until the time they get their food. TTL measurements are calculated the same way, the target TTL differs because of the service provided through the drive through or inside the restaurant. McDonald? s considers the fact that drive through customers usually expects their order faster and therefore, the drive through target TTL is 90 seconds.The target is slightly higher for the in-the-store customers because of the extra time they are willing to spend in the store (Phillips, Eddie). Along with measurement TTLs, other programs are utilized to make the speed of the service more efficient. The ? Made For You system uses the Kitchen-Video-System (KVS) to support fulfilling speedy orders. The Made for You system allows the order taker to enter or delete the orders on a touch try out that lists sandwiches, as well as individual condiments, in a way that eases the data entry process for the worker.As soon as any food is ordered, from any register, the necessary food items are displayed on a computer monitor in the kitchen. The kitchen staff immediately begins to prepare the food, and thus erases the orders from the screen as the food is finished. Similar to TTLs, the time is metrical in the midst of when an item is first displayed on the monitor, to the time when it is served. McDonalds continuously monitors these kitchen times in order to ensure that the Made for You system is working as efficiently as planned (Phillips, Eddie).Technology not only measures performance determine 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 constitute any erroneous beliefs, thus making the ordering process more precise. More precise orders eliminate time wasted from correcting mistakes (Phillips, Kenny). Maintaining the speed and accuracy of the processes in McDonald? s is also through through less technological techniques.McDonald? s uses different colored packages to help the employee recognize the different types of food colored disguised sandwiches makes it easier to distinguish what is wrapped beneath. For example, a lay off burger is wrapped in yellow colored theme and a fish fillet is wrapped in blue, while a hamburger is wrapped in white paper. Special ordered sandwiches without standard condiments come in red and white paper, with a paper recognize attached which details the items on the sandwich (Phillips, Eddie). Quality Inspections Food safety is one of McDonald? s top priorities.Every restaurant is postulate to check food temperatures, expiration dates, and other food safety hazards several times throughout each day of operation. The corporation sends a standardized Food Safety book to every store which includes a comprehensive list of every item that needs to be measured. Cooked food temperatures are measured to ensure that all food is cooked properly before served. Refrigerated and frozen foods are also checked to make certain that they do not get too warm and are not spoiled. Expiration dates are checked on foods frequently, if the item is expired than it is discarded.Equipment is also measured to ensure that it is functioning properly. Also included in the safety checks is the water temperature in the restroom sinks, workers must be caution because water that is too importunate can burn customers. Food safety checks are performed throughout the day, often during one of the manager? s many travel paths, which were described originally in this report under ? Competitive Strategy (Phillips, Eddie). Periodic corporate inspections are one of the major quality management controls at McDonald? s. The McDonald? s Corporation applies two major inspections on each restaurant per year.One is called Field Operations retrospect (FOR), and the second is called System Observation Review (SOR). Since the inspections are made periodically, restaurants have two opportunities to grant the test. If the store fails to pass the inspection the second time, corporate takes over the store and brings in better employees to en sure that the proper processes and equipment is being used properly. Both inspections are extraordinarily thorough and they are based on a point system, points can be taken off for many different reasons.For example, points can be reduced if the credit card system is too torpid, the store?s walls have cracks, or even if the restaurant performs processes that slows the serving time. Points will also be lost if employees are not dressed according to regulations, this includes wearying name tags (Phillips, Kenny). Mcdonald? s must also provide a food safety log of recorded entries to ensure that proper food test is completed properly (Phillips, Eddie).The Five P? s Even though many of the quality management processes in McDonald? s are done through the use of information technology, other quality management factors such as maintaining the five P?s forces (People, Product, Price, Place, and Promotion) are essential in any business.Consequently, McDonald? s Corporation uses these rela ted forces in the sense that each P creates a chain affect on each other. The next is a list of methods using the P forces. The first force is the people working in the McDonald? s chains, which are represented by service, hospitality, and pride. The staff employed in McDonald? s are continuously trained and unploughed in the company to reduce the cost of training short-term naive workers.Moreover, the training process has been improved to include online e-learning tools for the restaurant staff. Maintaining the workers in the company is very important to McDonald? s and the corporation rewards workers who do outstanding services. This form of incentive is motivational to the workers (Cantalupo 4). The second force is the products which include the quality, taste, and price of the goods sold. McDonald? s is trying to establish flexibility with the changing tastes and preferences in the market, Moreover, they are also seeing bring uping interest in premium product and sound food choices.The quality and safety of the food is a main entity in maintaining the quality of the food at McDonald? s (Cantalupo 4). The third force is place which is represented by the clean, relevant, and modern store environments. Whether it was in the main restaurant area, the kitchen, or even the restrooms, the company ensures the safety and comfort for the consumers and staff workers. The company intends on having the gold standards for cleanliness (Cantalupo 5). The fourth factor is price, which is presented in the productivity and value. The value of the product is increased when consumers gets high quality products for lower costs.Therefore, McDonald? s Corporation ensures that its customers uplift the highest value of food for the price they pay (Cantalupo 5). The fifth factor is promotion which is presented in marketing, leadership, and trust. The company has already earned its reputation for good quality food so they just focus on customers cares. They do this through comm unity involvement and their social responsible towards the environment. This process will gain the trust of loyal customers and keep them for life (Cantalupo 5). Training McDonald? s realizes that its employees must understand their duties in order to fulfill the organization?s goals.To ensure that all employees properly perform their assigned duties, McDonald? s invests greatly in their training program. The company continues to receive prestigious awards for their leading-edge training, including the ? Employer of Choice deliver from the restaurant Business Magazine (? Restaurant Management ). New gang members go through a thorough orientation process consisting of several videos, followed by several days of direct one-on-one training by a trainer. After employees feel comfortable with the operations, they may be promoted to mob Trainers.Crew Trainers undergo further training for specialized processes such as the grill area, front counter, drive-thru, and other areas. Shift sup ervisors are the next step in the organization, followed by Second follower Managers, followed by First Assistant Manager, and the top manager at each McDonald? s restaurant is the Restaurant Manager (Phillips, Eddie). Training never stops at McDonald? s, no numerate which position an employee holds. Some current employees describe McDonald? s as the ? lift out training company in the world (Phillips, Kenny).To improve the Made for You system, McDonald?s recently introduced a strategy called ? Shift into Overdrive,? and this strategy focuses on helping shift managers work more efficiently. All McDonald? s restaurants are required to send at least one manager to commenceicipate in the new training program (Phillips, Kenny). This training mainly focuses on the kind aspects of Made for You, this ensures that the system is being used as design. Since the new system requires seamless work from several people, the entire team must work together for the system to work quickly to pr ovide food to customers. Finally, to ensure the quality of the operations, McDonald?s does surveys periodically to get feedbacks from customers (Phillips, Eddie).As shown throughout this section, the McDonald? s Corporation has been doing a very good job at belongings the quality of its products and services, whether it was through using computerized equipment or to train their human resources. young MATERIALS The Arrival & Maintenance Through the intense process of choosing and manufacturing raw materials, McDonald? s customers can be assured of a quality product. Whether arriving via truck or train, raw materials are delivered fresh and ready to use everyday.To ensure that this fallal is passed onto the customer, each arriving package is personally inspected for damage during its travel. In addition, the condition of words trucks are also taken into account to make sure that content was untainted due to a filthy meat armored combat vehicle. The meat cooler should always be s et at 10 degrees below zip fastener and the meat should remain at a constant temperature of 34 to 38 degrees. While some inspections are known, others are random to ensure that quality is consistent from one delivery to the next. The promise of high quality for McDonald? s raw materials does not cease to end at the delivery trucks. at heart the restaurant, the temperatures of freezers and refrigerators are recorded twice a day to guarantee the highest spirit level of ingredient usage. These temperatures are recorded in a book which is required to stay on premise for 60 days. After such time span, the book is moved to a local record storage where all previous data information is held. Grade ? A Beef and Other Meats All beef cooked at McDonald? s is of Grade ? A quality and 80%-82% lean. McDonald? s not only supports humane slaughtering of animals and refuses to purchase dairy farm cows over 5 year old due to the staying power of their meat.Upon the arrival of meat, received from Otto & Sons, Inc. in Chicago, a two hour supply is taken directly to the grill side freezers which stand at a constant temperature of 0 degrees. Once placed on the grill, the meat is cooked at a specific temperature to assure the meat holds the proper internal temperature to reckon the requirements of food safety and yet hot enough to hold its innate(p) juices. Cooked hamburger patties and other meat products are stored in a humidity controlled cabinet until usage to ensure that patties remain hot and moist.The preparation time of a hamburger should not take longer than 90 seconds and only 35 seconds after the hamburger bun itself has been toasted. This allows each customer to receive his/her meal in the timeliest fashion. Produce It is a known fact that agronomists can spend up to two years assisting a farmer grow perfect russet potatoes, 6-inches long, that produces a finished fry which is appealing both in looks and taste. In addition many produce items, lettuce for example, h ave specifications that are two pages long. With this many guidelines in place, McDonald?s can guarantee that they are delivering to their customer the outperform ingredients possible.The produce delivered from Condie? s in Salt Lake metropolis to the Evans and Colorado McDonald? s restaurant arrives via railroad to ensure that freshness is maintained. Upon inspection, should any produce not meet the correct internal temperature, the refrigerator is either immediately altered or the items are discarded.Restaurant Inspection Since McDonald? s believes so strongly in high quality products, Licensees are pass judgment to obtain their desired product needs directly from suppliers rather than the McDonald?s Corporation. While this ensures that the scoop raw materials are purchased at a commonsensical price, it often leaves the McDonald? s Corporation ? in the dark concerning the safety precautions and procedures of franchised restaurants.As a result, the McDonald? s Corporation make s both announced and unannounced visits to international McDonald? s restaurants to ensure that proper procedures are being followed. With each visit, the restaurant being inspected is graded on their proficiency and performance. Based on this grade, the corporation will determine eligibility for growth of new franchise locations.In addition, the also-ran to meet requirements can result in a default in your franchise agreement for the following term. FORECASTING Aspects of Forecasting McDonald? s has a continual means of receiving information from customers, employees, and the industry that effects short, medium, and long term decision making and forecasting. Different kinds of information are received from all levels of the corporation and are used to learn more about the market movement and advertisement structure, to basic everyday processes in production and promotional material of goods for the targeted markets.Forecasting is done in large by the corporation, as part of their responsibility to the franchisee? s and McDonald? s shareholders. Through our interview with the owner, we learned a lot about the basics of McDonald? s business and hierarchy we were not able to get more in-depth information that is used for their budgeting, marketing, advertising, forecasting, and innovations of new products to come because it contains confidential contents.This is due to the scrutiny from people looking for flaws, bad business conduct, and other degrading allocations of McDonald?s. Everything that was recorded was cleared at the corporate level. Forecasts are vital to McDonald? s organization and significant management decisions. Forecasts provide the initiation for budgetary planning, cost control, planning new products, process selection, capacity planning, and readiness layout. Typically, McDonald? s uses a qualitative type of forecasting. The main information used in forecasting the stability and future growth of the corporation is by the number of custome rs going in and out the door and all mild spirits.There are different medians of communication for customer to relay there heads, opinions, concerns, and problems they have with McDonald? s. At the particular location, a customer has employees, managers, and owners to voice what? s on their mind and how they like what? s going on in the restaurant. Often, McDonald? s managers and owners use open ended questions to allow customers to expand on what they want to talk about. McDonald? s nationally offers an 800 number for customers to use when the corporation has fallen short of their expectations or when a location makes a mistake with their order.Internationally, McDonald? s has a website that is not only interactive and informative throughout the 59 nations they supply to, but is a place for customers to voice their opinions and complaints. And as an owner of the McDonald? s on the intersection of Evans Avenue and Colorado Boulevard, Ronald Lessnau exclaimed, ? We perceive At th e corporate level, qualitative forecasting can be seen, even with limited information that was given. Market research department takes data from public lecture with customers to find out how they like or feel about a particular ad campaign or a specific commercial.And product development department uses input on developing a new product or changing how the new product is prepared, priced, or packaged. McDonald? s has been extremely accurate in forecasting trends or needs the customers want and request. Mr. Lessnau states, ? McDonald? s, in the past has helped customers deal with their changing lifestyles. An example of this is when the Egg McMuffin, the first hand held breakfast sandwich by Herb Peterson, was introduced for the first time. ?It took 10 years for breakfast to be successful at McDonald?s and now McDonald? s cracks more farm fresh, grade ? A eggs daily than the largest institution in the United States, the US Military. As consumers, it is known that McDonald? s has gon e through a lot and where not always correct in projections influenced by the greatest number of customers. Even with using a qualitative forecast, the future is not always so clear so see. 12 years ago, due to the strong focus group surveys responses to healthy products put into motion the making of McLean Burger.McDonald developed and marketed the McLean Burger. It had 7% fat and was the best low fat burger on the market, costing 53 cents a pound sign more then the normal beef. It did not sell Customers later resolute that the product was too expensive and did not taste as good as its? fatty brother. And maybe decisions that are based on the idea that the history of occurrences over time can be used to predict the future, time series forecasting, can explain why McDonald? s is slow to react to the Atkins Diet trends.Ronald Lessnau also gave examples of when qualitative forecasting influences how he fixes errors of the passed business decisions at his establishment. Decisions h e has made have been based on estimates and opinion from surveys, interviews, history of products, and questionnaires. That particular McDonald? s has extended their hours as a result of many comments. Also, years ago they reduced some of the seasoning in the chicken products in a test market, and based on interviews and focus groups they went back to the original product and did not take the change national.He also described that in Denver, Colorado locations went back to the 99-cent double cheese burgers years ago because of feedback they received in focus groups that were conducted as part of their normal market research. As Lessnau explained, ? Sometimes you can prevent a good idea from going bad by talking to those close to the customer, your sales people. The data collected for these long terms and every day business decisions were from employees as well as customers. SUPPLY CHAIN enquiry of Supply Chain.Food quality is the key at McDonalds restaurant. That? s why they take pride in the foods they serve to their customers. They seek out fresh lettuce and tomatoes, quality buns and potatoes, pure ground beef, select bird and fish and wholesome dairy products. McDonald? s ensures that their products are guaranteed to be the best quality before serving to their customers. McDonald? s has many suppliers in which each supplier plays a vital role in providing McDonald? s with their products. First, McDonald? s receives its raw.