McDonald’s Company’s Operational Strategy

The operations concept, its meaning, and relevance

McDonald’s Company can use an operational strategy based on three pillars. The first pillar is the location strategy. The business should set up outlets and franchises in densely populated areas. The company will have a high demand for its food products in these locations. The operational managers should have an elaborate transportation system that ensures that the demand of the consumers is constantly met. The franchises should always have stock to serve customers.

The managers should have a system that helps the business track their opening stock, delivery levels, sales, and closing stock. This will display to the customers that the company can be relied on to have adequate in the outlets.

The second strategy is product differentiation. To cope with the high levels of competition in the market place, the company will have to offer products that are different in the industry. Customers will only pay a higher premium for products that are different (Holcombe, 2009). This requires the company to research the customer needs and preferences which usually keep on changing in the marketplace.

The differentiation in a product goes to satisfy or meet specific customer needs (Kim and Mauborgne, 1999). A lot of costs will be incurred to achieve success in product differentiation. The company should conduct customer satisfaction research and surveys. The company will have to be innovative and creative in coming up with differentiated products in the market place (Porter, 1985, p 120).

Thirdly, the operations manager should ensure product quality. The food should be fresh and well made. It should inspire or create more demand in the customer to consume more products. In this area, the company should adhere to continuous improvement principles or total quality management principles. This helps the company to consistently offer better to the customers.

Product Differentiation

It has been found to offer a more sustainable competitive advantage than other strategies in the market including the low-cost strategy (Grant, 2004, p 276). Customers are willing to pay a higher price for a product to have their needs and preferences met. A firm may have to customize their product to a particular market segment. The company finds that it cannot offer the same standardized goods in a particular market due to cultural and social factors. This is a form of product differentiation even as the company seeks to identify with the local people and build customer loyalty. A company that is driven by customer needs and wants is highly successful (Day, 1984)

Total Quality Management

In implementing total quality improvement processes, the company uses team effort and cooperation of the staff to provide quality products to the customers. It is a system that requires the staff to own the production processes and the final product to the customer (Black and Porter, 1996). The departments can no longer work alone. All the departmental efforts have to be merged and reconciled to accomplish the overall organizational goal.

The focus moves from the number of products produced to the quality of products produced (Powell, 1995). Supervisors and foremen leave the quotas system dependent. They now focus on the number of products produced with nil defects. In the service industry, it is about customer satisfaction. This is the measure of success which is a sustainable measure. The company strives to satisfy more and more customers.

Furthermore, the company works to exceed customer expectations. It even anticipates customer future needs and works to cover the gaps in the existing market products. The company has a competitive advantage as it is innovative and continuously communicates with its customers (Kandampully and Duddy, 1999) Total quality management is about analyzing the processes and service delivery of products to ensure the right processes are followed in satisfying the customers’ needs. As customers get quality products, they begin to display high levels of loyalty to the company products (Sivadass and Baker-Prewitt, 2000)

Business Operations Application

The operations concept can be applied in the McDonald’s Company in the production and service delivery of sandwiches. For the company to continue being a premier in the industry, it needs to provide quality sandwiches to its customers. The process of providing quality products should be based on continuous improvement principles. The company should keep researching customer preferences and needs and differentiate its products to meet customer needs and products. The staff should be innovative and creative. To serve and reach the maximum number of people the company should employ a location strategy where outlets are located in highly or densely populated areas.

Operations Manager’s Tasks

The management has several tasks to undertake to ensure the success of the operations strategy. To offer differentiated products, the company will have to be aware of its external environment. In the area of the social environment, the company should gather information from the customers to assist them to offer the best products in the market. The company should also understand and observe its technological and competitive environment.

They should know the strategies their competitors are employing. What are the latest technologies in use in the hospitality industry in service delivery? Secondly, the managers and staff will have to train on TQM principles and processes. Policies and procedures should be put in place to ensure the success of TQM. New roles and positions or responsibilities may arise to ensure its smooth implementation. Thirdly, the company management should employ strategies to inspire creativity and innovation in the staff. They may be in need of brainstorming meetings so that people can contribute as many ideas as possible.

References

Black S. and Porter L. (1996). Identification of the critical factors of TQM. Decision Sciences,27(1): 1–22.

Day, G. (1994). The Capabilities of Market-Driven Organisations. Journal of Marketing, 58 (4) :37-52.

Grant, R. (2004) Contemporary Strategy Analysis. New Jersey, Wiley- Blackwell.

Holcombe, R. (2009) Product Differentiation And Economic Progress. The Quarterly Journal Of Austrian Economics 12(1): 17–35.

Kandampully, J. and Duddy, R (1999) Competitive Advantage through Anticipation, Innovation and Relationships. Management Decision, 37(1);51-56.

Kim, C and Mauborgne, R. (1999) “Creating New Market Space,” Harvard Business Review: 83–93.

Porter, M. (1985). Competitive Advantage. New York, Free Press.

Powell T. (1995) Total quality management as competitive advantage: a review and empirical study. Strategic Management Journal 16: 15–37.

Sivadass, E. and Baker-Prewitt, J. (2000) An Examination of the Relationship Between Service Quality, Customer Satisfaction, and Store Loyalty. International Journal of Retail & Distribution Management, 28(2): 73-82.