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Muhammad Umair

Operations
30134095
Management
ATMC, Federation
University

Contents
Executive summary.........................................................................................................................1
Introduction .....................................................................................................................................2
Report objectives ........................................................................................................................2
Company overview......................................................................................................................2
Competitive priorities of organization.............................................................................................2
Business strategy.........................................................................................................................2
What is company known for?......................................................................................................2
Business, mission, strategy..........................................................................................................3
Competitive advantage................................................................................................................4
Define 4Vs and importance of 4Vs and also recommendations for a company...........................5
Introduction..................................................................................................................................5
4Vs of a Company......................................................................................................................5
Analysis of 4Vs of McDonalds..................................................................................................6
(1) Volume...................................................................................................................................6
(2) Variety....................................................................................................................................6
(3) Variation in demand...............................................................................................................7
(4) Visibility.................................................................................................................................7
References....................................................................................................................................8

Executive summary
McDonald is a fast food chain with its operations in a huge number of countries by using
different strategies. The role of franchisees is very important in providing the quality food and
services to the employees along with huge opportunities of employment that are opened when a
new outlet is opened in any geographical boundary. McDonald possesses a sense of care about its
customer and wants to provide best place and best products to their customers. They talks about
their employees and show concern for them and also for societal responsibility. Operation
management is also an important aspect contributing to the success of McDonalds. Reducing its
cost and making its customers satisfied is one of the priorities of McDonald. This can only be
achieved by effective ways of input, throughput, processes, and control. Different measures can
be used i.e. variation, visibility to the customers, variety and volume. But they need contextual
analysis inside and outside of their organization in order to competitively sustain their
operations.

Introduction
Objectives
The objective of this report is describing the overall competitive priorities of McDonalds in
Australia along with its business strategy, mission, competitive advantages, and corporate
strategy. Along with this the operation management of organization is described in term of 4Vs
with critical evaluation and finally suggestions and conclusion is given.
Company overview
In San Bernardino, California, the very first restaurant was made by two brothers Dick and Mac
McDonald. Ray Kroc, who visited McDonald in 1954, was so impressed by their working and
operations. In this chain of fast food, 69 million customers are served every day with 36,258
restaurants in 119 countries.
With the advent of globalization, most of the restaurants of McDonald are being operated in
across the globe i.e. about 90% in United States of America, by different businessmen. The role
of franchisees is very important in providing the quality food and services to the employees
along with huge opportunities of employment that are opened when a new outlet is opened in any
geographical boundary. There are some other ways of returning the money in the form of
charities in the local areas.

Competitive priorities of organization


Business strategy in Australia
The business strategy of McDonalds in Australia includes Menu Standardization that includes
imposition of their menu and also including a breakfast menu. Regarding their marketing, their

strategies are Digital Marketing as with the advent of IT industry around the globe and Brand
Marketing. Another important strategy of their business is regarding their customer which is
known as Customer services. This is reflected in first line of their mission statement. They
value for money also.
What is company known for?
McDonald is one of the renowned restaurants in fast food industry in Australia that is best
known for its fast food products that are culturally and morally adapted according to the context
of corresponding country.
For example, the menu of McDonald for Muslim countries is based on Halal Food with no meat
of pork. While in India, the vegetarian menu is dominated with no meat of Cow.
The company is known for its fast food especially Hamburgers, Ice-cream, Happy Meal, French
Fries, Soft Drinks, Milkshakes and coffees around the world.
Business, mission, strategy
The business of the company is based on fast food products as mentioned above and the mission
can be described as,
Our mission is to be our customers favorite place and way to eat & drink. Were dedicated to
being a great place for our people to work; to being a strong, positive presence in your
community; and to delivering the quality, service, cleanliness and value our customers have
come to expect from the Golden Arches a symbol thats trusted around the world.
This is the mission statement of the McDonald that describes about the care that McDonald
possess about its customer and want to provide best place and best products to their customers.

They talks about their employees and show concern for them also. Societal responsibility is also
included in their mission statement.
Taking about the strategy of McDonald in Australia, there is vertical integration along with
horizontal collaboration. All the decisions are strategically aligned with the corporate strategy of
McDonald. The Corporate strategies prevailing in McDonald are Expansion strategy, Franchising
and Adaptation strategy. Other strategy includes Cost leadership strategy. They are trying to
minimize their operational costs in order to provide best services to their customers at a very low
cost.
Competitive advantage
The terminology of competitive advantage describes a phenomenon in which a firm gets a
differential advantage over other firms in the same sector or the industry. Michael porter
described 3 strategies that are used to get a sustainable competitive advantage. And the strategies
are

Cost Leadership strategy


Differentiation strategy
Focus strategy

McDonalds also have different competitive advantages over the other firms in the same industry.
That can be described in two main points. The first one is that, they are striving to achieve cost
leadership strategy by serving the food at a very lower cost in comparison with their competitors.
For this purpose, the strategy used at their back operation is to minimize their cost in everyday
workings. So, efficiency is the main concern in order to reduce the cost. Therefore, first concern
is by using this cost leadership strategy; they are striving to reduce the cost in order get a
sustainable competitive advantage over their rivals in fast food industry. On the other hand, the

second competitive edge is on the delivery of their products. Their speedy delivery is another
hallmark in the life history of McDonalds. So, their cooking process is so easy that every
employee can contributes to make food when there is huge number of order or there is workload.
These are some competitive advantages that make McDonalds as one of the champions in fast
food industry.
These competitive edges are strategically aligned with organizational Corporate Vision that is
as follow,
McDonalds vision is to be the worlds best quick service restaurant experience. Being the best
mean providing outstanding quality, service, cleanliness and values, so that we make every
customer in every restaurant smile

Define 4Vs and importance of 4Vs and also recommendations for a company
Introduction
Belonging to any sector whether public, private, for-profit, non-for-profit, product or service
oriented, or any kind of industry, one of the most important priority of any organization is to
effectively using its operation while reducing its cost and making its customers satisfied. This
can only be achieved by effective ways of input, throughput, processes, and control. Different
measures can be used i.e. variation, visibility to the customers, variety and volume. (Slack,
Chambers and Johnston, 2010).
4Vs of a Company
The four aspects have significance for cost when an organization is making any product or
providing any service (Slack, 2007). But some organizations have their own direction of setting

four dimensions.
The 4Vs of a company can be as following:

Volume
Variety
Variation in Demand
Visibility

Analysis of 4Vs of McDonalds


(1) Volume
Volume of McDonalds

High

Talking about volume of McDonald, it is high in quantity. According to Gubman (2007), it every
days serve less than 1 percent of the worlds population, it derives 80% of revenue from eight
countries such as Canada, Germany, France, Japan, UK, Australia, US and Brazil. The advantage
of high volume is that, the jobs are continuously repeated resulting in the high specialization. The
concept of Economies of scale is valid here.
So, from the perspective of operation management, it is producing high volume that have a
disadvantage too, because, the present scenario is changing continuously. Customers want new
variety.
(2) Variety
Variety of McDonald

Medium

According to Krish (2009),


McDonalds burger and French fries are made a look, smell and taste very similar across the
global, despite all the different in environment variable. The product standardization is a culture

of maintaining uniformity in operations and processes through the organizational. Besides that,
McDonalds workers are work on routine and job specification, these make it enable to lowering
to production cost and unit cost.
The variety provided by McDonald is medium in nature. The advantage is as describes above is
that it results in specialization but it must focus on diverse menu providing high variety of
products.
(3) Variation in demand
Variation in demand of McDonald

High

This is the level of demand that over changes over the period of time. Due to the globalization
and a fierce competition among different food chains, the priorities of customers are changing
according to the trend.
Usually businesses prefer low variation in demand. But the McDonald is actually facing high
variation. The advantage is that, by anticipating the change and environmental scanning, it can
help the McDonald to get a sustainable competitive advantage. But disadvantage is instability,
unpredictability (What will happen in near future?), non-routinization, and high unit cost.
(4) Visibility
Visibility of McDonald

Medium

As the manufacturing businesses have low visibility and service providing firms have high
visibility, same is the case with McDonald that have medium visibility being a both product and
service oriented firm. There is standardization and high staff utilization. One of the major
advantages is that it is ok with the employees when they dont have customer contact skills.
While the other advantage of this is the low cost per unit. But the disadvantages are also there,

one of which is low satisfaction governed by customer perception.

Suggestions and Recommendations


The dimension of volume is high in nature, there the variety is medium, as mentioned above, it
can leads to the lower customer satisfaction. As external environment is fluctuating because of
which customers demand new products. In order to increase the customer satisfaction, it is a
good opportunity for McDonald to increase the variety of its product portfolio.
Same is the case in visibility that medium nature can contribute to the low customer satisfaction.
Therefore, it is necessary for McDonald to review its operation management system.

Conclusion
The external environment is changing day by day, in order to sustain in this competitive world,
McDonald has to do the contextual analysis according to present scenario. These four
dimensions described in the report have an impact on the operations of the McDonalds. If
McDonald wants to imply cost leadership strategy, then it must possess low variety, low
variation in demand, low volume and low visibility. It will result in low cost of their day to day
operations, but on the same end, it will decrease the rapport of McDonald in fast food industry.

Therefore according to the circumstances, McDonald must take the decisions win the light of
context which is very much important.

References

Foster, G., & Terry, D. (2011). Measuring the Success of Activity-Based Cost Management.
Billi, D. R., & Vivienne, W. Z. (2013). Operational risk management: a changing thought for
operations. Systems, Man and Cybernetics, ICRT Transactions on, 23(9), 1440-1444.
Slack, M. S., Chambers, Q. D., & Johnston, I. O. (2010). Utility functions for life years and health
status. Operations research, 29(2), 189-194.
Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.
Gubman, P. (2007). Nutritious Food intake: a consumer-based research in Belgium. Environment
international, 33(1), 93-97.
Krish. A. (2009). Behavioral Changes of Consumers. Multivariate Behavioral Research, 42(3),
509-529.