University of

Greenwich
ASSIGNMENT SUBMISSION COVER SHEET

SUBJECT CODE

: OPER1027

SUBJECT TITLE

: Operation Management

PROGRAMME

: BABM

SEGi ID

: SC-KL-00048114

UOG ID

: 000918149

LECTURERS NAME

: Mr Rodrigo

LEARNING CENTRE

: SEGi COLLEGE KUALA LUMPUR

SUBMISSION DATE

: November 7 2015

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Table of Contents
Introduction ................................................................................................................................ 3
The process designs of MacDonalds restaurants ...................................................................... 3
The Drive through ............................................................................................................................... 4

Customer value .......................................................................................................................... 4

Values attribute as perceived by customers....................................................................................... 5

The five performance parameters .............................................................................................. 7

Speed .................................................................................................................................................. 7
Flexibility ............................................................................................................................................. 8
Cost ..................................................................................................................................................... 8
Dependability ...................................................................................................................................... 8
Quality ................................................................................................................................................. 8
The trade off ....................................................................................................................................... 9

Conclusion ................................................................................................................................. 9
References ................................................................................................................................ 10

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INTRODUCTION
McDonald's is the world's largest chain of hamburger fast food restaurant. McDonald was
started as a drive in restaurant by two brothers, Richard and Maurice McDonald in California,
United States in 1973. McDonald a chain of family restaurant and currently operates in 121
countries and having more than 30000 restaurant around the world with serving more than 60
million customer every day. (Scribd, 2015). The objective of this study is to analyze the
process designs of MacDonalds restaurants including the service at the tills, the drive
through and New Product Development. Additionally, customer value will be discussed by
referring to the MacDonald process to meet the customer requirements. Lastly, the discussion
about the five performances parameters will be done in order to determine how those factors
contribute to meet the customers requirement.

THE PROCESS DESIGNS OF MACDONALDS RESTAURANTS

Source: Selectsmart.com McDonald's Production Process Flowchart

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According to the Business Dictionary Process design is the activity of determining the
workflow, equipment needs, and implementation requirements for a particular process. For
any business especially for a fast-food restaurant, it is essential to choose a strategy which
will help the organisation to work in the most effective and fastest way (Acklin C. 2010).
When it comes to a fast food chain such as McDonald which usually deals with many
customers, the ordering and paying process must be developed and established in a way that
will help the organisation to maintain a high speed of processing as well as producing a high
quality of food. Therefore McDonalds products are precooked stocked and will be assembled
according to the customers order. This excellent process design will help to reduce the
waiting time and will drive to respond quickly to the demands in peak hours which are very
important for a fast food restaurant like McDonalds.

The Drive through

Additionally, the organization has implemented the drive through system which allows
customers to get meals while being in the cars. The process starts when the customer arrives at

the speaker point to make their orders. Once the customers order has been taken, it will
directly appear on the screen of the workers. Then, the customer will progress to the drive
thru casher in order to pay the bills which the amount has been already told during the orders.
After that, the customer will be directed to the next counter where the food should be
collected. Since it implementation, the drive through has significantly contributed to the
success of McDonald as up to 70% of its sales come from that process (Complex 2013).
Moreover, it is important to design new product in order to gather the needs and choices of
the customers which are tirelessly evolving (Patti P. 2010). For examples the increasing of
customers preferences toward healthy food will contribute in improving the brand image, as
nowadays people likely prioritise healthy foods.

CUSTOMER VALUE
Customer value is the benefits that a customer will get from a product or service in
correlation with the price. This benefit may be measured in financial term as well as the

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enjoyment that a customer receives from a product or service (wiseGEEK 2015). It has been
understood that value proposition doesnt just involve the price, services and benefits but also
the overall experience the customer gets when selecting and using the service or products.
Customers tend to look for the value proposition which a company has made a commitment
to deliver. These methods of processing have guaranteed McDonalds to keep on meeting its
customer needs.

Source: Finch, Byron J. Operations now: profitability, processes, performance 3rd edition

Values attribute as perceived by customers

The value transfer model suggests several strategies to add value in products and services.
Each value created is converted into perceived value and provides an avenue for enhancing
customers value perceptions. When it comes to McDonald, the value attributed involves
quality, cost and response in time.
Perceived quality refers to the consumers judgment about a products overall excellence or
superiority. McDonalds value proposition keeps offering customers something that have

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strong appeal and exclusivity which drives the fast food chain to be ranked as a brand with
the strong perception for constantly providing a great quality (Seppnen M., Paananen A.).
Perceived Cost can be defined as the worth that a product or service has in the mind of the
consumer. It is indeed a fact know, that price has a greater importance in McDonald
customers mind. Therefore, periodic pricing such as discount during breakfast lunch and
dinner time are essential in delivering values to customers since customers are always
expecting a delicious meal which will cost them less(123helpme.com). .
Response in time is one of the most important values that McDonald offers to its customers.
As the result, the organization has been ranked in 2013 as the brand with the strongest
perceptions for fast service. By establishing a fast process to respond in time to several
customers demands, McDonald reduces perceived sacrifice and thereby increases perception
of value.

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THE FIVE PERFORMANCE PARAMETERS

The food business is a high competitive industry and every organization being involved
should have the capacity to separate itself from its rivals, in order to better stand out.
Therefore, McDonalds has successfully implemented the five performance parameters in
which Speed and Quality have been prioritised over others parameters in order to
successfully meet the customers values (Scribd 2015).

Speed
Speed refers to the ability to produce something or to perform a service at an acceptable rate
of time (TheFreeDictionary.com). When it comes to McDonald, the operations process is so
well designed that every customer who comes is served quickly. The company has set a
preparation time for burgers and other menu items which will ensure customers to receive the
orders within 3-4 minutes, even during the busy hours.

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Flexibility
Flexibility points out to versatility of the procedures and change in the assortment of product
or service rolling out operations to be more adaptable to improvements in customer
requirements. As customer tastes change, McDonald's need to expand the scope of new meals
that it offers. McDonalds offers a great flexibility to meet customers' first choices. It offers an
adjusted accumulation of culturally significant menu in the markets, for both adults and kids
and is increasing the choices. McDonalds has many prepared staff keeping in mind the end
goal to be flexible. It keeps up movement based arrangement of work among the team
individuals permitting them to be sufficiently flexible in the work they do.

Cost
Cost refers to minimizing the expense of the procedure, prompting a less expensive service.
The most ideal method to cut down the expenses is to concentrate on the customer
requirements i.e. satisfying the quality goal in both product design and operation, as a method
of removing eliminating rework and waste. McDonalds have a very much arranged expense
control system. It has a well-established low cost supply chain. They endorsed Just-In-time
process that minimizes the expense of irrelevant storage and waste. Therefore, food can be
sold at a lower cost in light of the fact that the cost does not retain the expenses of unsold
food. Eventually this implies lower expenses for McDonald's (Barbra Dozier's Blog 2015).

Dependability
Dependability as the quality of being able to be counted on or relied upon is very essential to
develop a good reputation of respecting promises to deliver on time. McDonald's has a more
dependable process for the customers by offering the orders on time. They have qualified
staffs that make sure that customers will get their orders in a specific time.

Quality
Each organisation has the willing to provide product with zero defect. This will contribute to
gain an advantage over it competitor as customers are always looking for high constant
quality. In addition, quality target drives to certain policies and procedures in operations in
order to provide a service that the customer requires. At McDonald's the representatives are
prepared to plan and present suppers as indicated by certain methodology that are entirely
upheld, particularly in the planning and treatment of crude and cooked items.

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The trade off

Since the implementation of the drive thru process, customers have been complaining about
the waiting time for their meals to be ready especially in busy times. By noticing that the cars
are getting stuck in the queue and as the line is getting longer, many customers choose to
bypass the restaurant drive thru and get their food from other restaurants competitors.

CONCLUSION
Operation management function exists in each organisation. It is focusing on accomplishing
the process conversion of raw materials into a completed item. Also viable operation
management enhances performance in the process. McDonald's Corporation is a standout
among the most recognized organizations worldwide. By implementing, operational
management process, the organization has the objectives to reduce expenses, enhance product
quality, punctual delivery of their product to customers and constant performance of every
single operational activity.

Word count: 1474

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REFERENCES
123helpme.com, (2015). Mcdonald's Case Study :: Business Case Study. [online] Available
at: http://www.123helpme.com/mcdonalds-case-study-view.asp?id=166353 [Accessed 4
Nov. 2015].
Acklin, C. (2010). Design-Driven Innovation Process Model. Design Management Journal,
5(1), pp.50-60.
Barbra Dozier's Blog, (2015). Critical Evaluation of McDonalds Performance Objectives.
[online] Available at: https://barbradozier.wordpress.com/2015/06/08/critical-evaluation-ofmcdonalds-performance-objectives/ [Accessed 4 Nov. 2015].
BusinessDictionary.com, (2015). What is process design? definition and meaning. [online]
Available at: http://www.businessdictionary.com/definition/process-design.html [Accessed 3
Nov. 2015].
Freeonlineresearchpapers.com, (2015). Total Quality Management (TQM) 5 performance
objectives. [online] Available at: http://www.freeonlineresearchpapers.com/total-qualitymanagement-objectives [Accessed 4 Nov. 2015].
Mcdonaldsoperations.blogspot.my, (2009). McDonalds Operations. [online] Available at:
http://mcdonaldsoperations.blogspot.my/ [Accessed 4 Nov. 2015].
Paananen, A. and Seppnen, M. (2013). Reviewing customer value literature: Comparing and
contrasting customer values perspectives. IC, 9(3).
Phillips, J. and Phillips, P. (2010). The power of objectives: Moving beyond learning
objectives.Performance Improvement, 49(6), pp.17-24.
Scribd,

(2015). Mcdonald's.

[online]

Available

at:

http://www.scribd.com/doc/24502172/Mcdonald-s#scribd [Accessed 4 Nov. 2015].

TheFreeDictionary.com,

(2015). speed.

[online]

Available

at:

http://www.thefreedictionary.com/speed [Accessed 4 Nov. 2015].

UKEssays, (2015). Over View Of Mc Donalds Fast Food Company Marketing Essay.
[online] Available at: http://www.ukessays.com/essays/marketing/over-view-of-mc-donaldsfast-food-company-marketing-essay.php [Accessed 4 Nov. 2015].

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wiseGEEK, (2015). What is Customer Value? (with pictures). [online] Available at:
http://www.wisegeek.com/what-is-customer-value.htm [Accessed 3 Nov. 2015].

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