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McDonald's - Operation Strategy

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Melody Cheung

on 17 February 2014

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Transcript of McDonald's - Operation Strategy

"I'm lovin' it"
room for improvement...
Jing Han (2008)
Literature Review
Small product range; burgers, chicken nuggets, wraps
Small market; customers from lower income groups
Simple production line
Staff is small and limited

McDonald’s operational strategy is to anticipate customer traffic patterns and food selection based on a detailed analysis of sales history and trends. This information is used to prepare various menu items in the right quantities and at the right time in order for the food to be ready for the customer when they arrive.

Robert H. Lowson, (2002) "Operations strategy: genealogy, classification and anatomy", International Journal of Operations & Production Management, Vol. 22 Iss: 10, pp.1112 - 1129

Listed at #6 in the Forbes
World's Most Valuable Brands

As of 2011,
out of
restuarants in
119 countries
were franchised or licensed

Supplemented "
fast and convenient"
ideal by adding healthier options for a "
more natural"

Expanding into quality coffee sector with
Wickham Skinner (1974)
Learn to focus their plants (or even departments within plants) on a limited range of technologies, volumes, markets
and products, and that strategies, tactics
and services should all be arranged to support that focus.

Svoboda,S.(1995) McDonald’s Environmental Strategy, [URL:http://www.umich.edu/~nppcpub/resources/compendia/CORPpdfs/CORPcaseA.pdf]
International Journal of Business and Management, Vo. 3, No.11 ,
November 2008, pp.72-74

The Business Strategy of McDonald’s by Han J., School of Economics, Yunnan University.

5 performance objectives must be achieved (Cost, quality, speed, dependability, flexibility) to satisfy customers' wants

Due to the variation of consumers’ taste and requirements in different countries, McDonald’s divided its operations into
5 geographical divisions
to better target its market.

Service is fast (
) and is of satisfactory quality with low prices. Despite this, McDonald's is still developing new products for their regional consumers as well global ones (

Market requirements have been translated into operational decisions by satisfying the needs of local consumers as well as pursuing the “maximum local development”. (Han, 2008)

McDonald's redesigned the style and furnishings to suit the body shape of the Chinese. However, they neglected the fact that chicken is preferred over beef in China - hence KFC's success over McDonald's.

To combat this, McDonald's tried to adapt to Chinese tastes by adding more chicken related meals on the menu.

McDonald’s is being
to provide wider rang or products and services in order to retain customers.

Again, McDonald’s had made changes to the presentation of their restaurant. They installed wood-beam ceilings, comfortable armchairs as well as adding to the menu items which the French would favour, such as Espressos and other quality drinks.

In general, McDonalds focused on children, building ‘Happy land” and “Happy meal”. This didn't just build brand loyalty, but also sold the American culture to the children (enjoyable individual life).
effects of the 5 objectives
Each franchise has the same setup, core menu and same standards for service –
increasing consumer confidence in the brand.

Menu and equipment are essential for McDonald’s overall concept.
Constant innovation of high-density kitchen equipment and computer systems
New ‘build-your-own-burger’ concept in South Carolina

Franchising to locals as a part of long-term strategy
Supplemented ‘fast and convenient’ with ‘healthy and natural’
Pay attention to trends, e.g. globalization trend in 1970s & 1980s
Static supplier situation – as orders are immense

Quality of food and service is satisfying
McDonald‘s has used consistency for global success
Avoided by certain demographics due to lack in health quality

Low cost due to standardized labour
Use of franchising cuts down costs and increases the global demand

Bob Langert, McDonald's vice president of Corporate Social Responsibility:

"Echelon's technology will also enable our franchisees to create restaurants that are easier to operate, facilitate preventive maintenance and provide new services while saving energy
New initiatives focused on customization and speed
of service → Build-your-own-burger

Introduce new point-of-sale technologies to enhance restaurant manager and crew retention, boosting productivity
COO Jim Johannesen on new prep tables:

"An immediate ability to satisfy our customers in a greater way than we currently are.”
Introduce more "healthy eating" and "natural" options, perhaps similar to the McCafé

New facilities for Drive-Thru and ordering
food and service
literature review
Han J, (2008) "The Business Strategy of McDonald’s, School of Economics", International Journal of Business and Management, Vol. 3, No.11, pp.72-74

Robert H. Lowson, (2002) "Operations strategy: genealogy, classification and anatomy", International Journal of Operations & Production Management, Vol. 22 Iss: 10, pp.1112 - 1129

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