McDonald’s Business Studies Case Study

Resource Description

role of operations management
● strategic role of operations management
– cost leadership, good/service differentiation

Operations → business processes that involve transformation/production
– Production = conversion of inputs into outputs

Customer focus → minimising waste, fair value for labour, low cost, reflect changes in consumerism
Profit centres → aspects of the business that derive revenue and profits
Cost centres → areas which cost is attributed

Cost Leadership → aiming to have the lowest cost & be most price-competitive

CASE STUDY: McDonald’s
→ Mcdonald’s invested in a global training program (Hamburger University) to ensure efficiency and reduce overall costs

goods and/or services in different industries

Goods/Services Differentiation

Standardisation → making products that are all the same

Product Differentiation → distinguishing products

Differentiating Goods Differentiating Services

– Product features
– Product quality
– Augmented features (add-ons or benefits)
– Time spent on a service
– Level of expertise
– Qualifications and expertise of the service provider
– Quality of the materials/technology used in service delivery

Goods Differentiation
Perishable goods → short lead times, distributed fast

Non-perishable goods → operations similar in all industries, more durable goods

Self-service → encouraging customers to take initiative

● interdependence with other key business functions

Interdependence → mutual dependency on one another

Interdependence with…
Marketing → producing goods based on market needs, marketing based on cost, product design affects transformation

Finance → cost of production, labour costs

Human Resources → staff needed for production, technology changing operations, outsourcing specialists influences

● globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

Globalisation → removal of trade barriers between nations, operating on an international scale & develop international influence

CASE STUDY: McDonald’s
→ McDonalds has 37,000 restaurants in 120 countries
→ in 2018, McDonald’s ranked 11th on Forbes list of most valuable brands
→ 2017 report showed US$91billion in sales, showing success in maintaining competitive advantage by adapting to global conditions

Supply chain management → managing the flows of goods and services, including transformation.
– Businesses need a reliable supply chain that is responsive to changes

Technology → the design, construction and application of innovation devices, methods and machinery in the operations process.

– Administrative level → organisation, planning, decision making
– Processing level → manufacturing, logistics, quality management, inventory management

CASE STUDY: McDonald’s
→ digital menu boards, automatic drink dispensers, online ordering apps

Quality → how well designed, made and functionable goods are.
– Expectations that people have of business determines the way products are designed, created and delivered.

CASE STUDY: McDonald’s
→ after complaints of coffee quality, McDonalds made a promise in 2011 that coffee would be barista made. → in 2018, Mcdonalds started using fresh (not frozen) beef patties, despite taking longer to cook, quality was improved

Cost-based Competition → derived from the breakeven point
Fixed costs = costs that do not change regardless of business activity
Variable costs = costs that vary in relation to business activity/level of production

CASE STUDY: McDonald’s
→ in 2015, Mcdonalds dominated western Europe, other businesses attempted to compete by lowering their prices
→ close focus on cost, helps them to maximise profits Government policies & Legal Regulation → Work Health and Safety Act 2011, Fair Work Act 2009, Superannuation Guarantee Act 1992, Racial Discrimination Act 1975, Taxation Act 1953 → influence business operations

CASE STUDY: McDonald’s
→ McDonalds is bound by obligations in relation to marketing, advertising, product safety and quality guarantees (Australian Consumer Law 2010)
→ they must ensure conscionable conduct at a local, state and federal level
Environmental Sustainability → business operations shaped around sustainable practices

CASE STUDY: McDonald’s
→ in 2012, McDonalds opened the Australia’s first Green star accredited restaurant in VIC

● corporate social responsibility
CSR → doing more than just complying with the law, but having higher respect for people, community and environment
Triple Bottom Line → financial profitability, social impact and environmental impact of a business.