Executive Summary

The purpose of this report is to know how the operation management strategies are made and

implemented in an organization. In this report it covers the operation management concept

which is utilized by the company.

Operation Strategy

Operation strategy specifies the means by which operations implements corporate strategy

and helps to build a customer driven-firm. It links long-term and short term operations

decisions to corporate strategy and develops the capabilities the firm needs to be competitive.

Basically, there are four international operations strategies which are global strategy,

transnational strategy, international strategy and multidomestic strategy. Operation

management strategy is very important since it maintains and controls all the organization

operations. Operations strategy is done after comparative marketing analysis based on

capabilities and resources of the organization. (Krajewski, Ritzman, Malhotra, Heizer and

Render 2010).

Literature Review:

The direction and scope of the organisation over the long term which achieves advantage for

the organisation through its configuration of resources within a changing environment to meet

the needs of markets and fulfil stakeholder expectations. ( Johnson and Scholes (1999) ).

Operation strategy is the process of decision making which establishes the role, objectives,

and activities of operation in order to continually support the organisation’s strategic decision

by creating a suitable infrastructure and set of distinctive capabilities. Operating being the

activities of organisational resources be they people, land, buildings, information or cash.

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Generic strategy is the marketing strategies for marketing product or services. It is the cost

leadership, differentiation, and focus. Differentiation strategy involves offering customers

something unique for which they are ready to pay price premium. Cost leadership strategy

involves one firm setting out to be the lowest cost producer in the industry by maximising

economics of scale and other sources of cost advantage. Focus strategy involves a firm

concentrating on a narrow customer segments and gains advantage competitively by offering

products developed for that niche. Firm serves such customers to the exclusion of others.

There was a question being raised up of how the generic operation strategy can adapt the

Porter operation management.

The foundations for corporate success are built on the identification and exploitation of

distinctive capabilities. The search for generic strategic of corporate success for recipes for

corporate success is doomed to be failure. There can be no such recipe because their value

could be destroyed by the very fact of their identification. (Kay, 1993)

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Company Background

Ray Kroc is the founder of Mc Donald and being established in the year of 1955 by opening

the first restaurant in Des Plaines, Illinois. Mc Donald has 30000 outlets which serves 47

million customers in more than 100 countries. Mc Donald first came to Malaysia in the year

1980 where Mc Donald’s corporation USA grant the license to Golden Arches Restaurant

Sdn. Bhd to run Mc Donald’s restaurant. On 29 th April 1982 at Jalan Bukit Bintang in Kuala

Lumpur Mc Donald opened its first restaurant. In Malaysia itself there are 194 outlets where

they keep opening 10-15 outlets yearly. It created more job opportunities for Malaysian

especially for the teenagers. Mc Donald can be said as one of the fast food company which

grows tremendously compared to KFC, Pizza Hut and others. As being competitive it focuses

towards price, quality, management and employee training.

Mc Donald’s competes with the competitive challenging market segment by providing all the

needs and wants of the customer. Fast food is an upcoming business nowadays which creates

competitor such as KFC, Pizza Hut, and Domino’s, Kenny Rogers and many more. This

entire competitor is competing very fiercely in order to attract more customers so the right

strategies have to be used by this corporation. Due to this Mc Donald’s has come out with

several strategies in sustaining its capability. Mc Donald’s compete in term of cost, speed, and

nutrition. At the same time Mc Donald gives importance to customer with the slaying of

“making customer happy”.

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Operation Management Strategies are made by the top management of Mc Donald’s and

being implemented in all the branches under instructions of top management in the written

form. The operation managers will control all the operational activities. Mc Donald’s

operation strategy is “To provide unmatched consistency in operation in support of high

product quality. This is determined by the adequate speed, low cost, and process innovation to

accommodate changes in consumer taste”. This means consistency and high performance

quality are referred as order winners whereas speed, cost and process innovation are order

qualifiers.

Speed

In conjunction with the saying of “making the customer happy” Mc Donald’s should provide

faster, reasonable, and nutritious food. People nowadays are being occupied with multiple

activities so these humans move ahead very fast. As a result, when customers step in to the

restaurant he or she requires a quick and fast service. Due to that, Mc Donald provides service

which is affordable, friendly and fast service. Apart of it the performance measurement for

speed and also an appropriate measurement to compare actual performance and required

goals. In order to upgrade the skills of employees Mc Donald’s do always send them for

training in term of working efficiently and also creates drive thru counter which is more

convenient and faster.

Cost

Cost is another thing that must be considered since it is the one of important element which

must be efficient in dealing it. When it comes to cost it’s actually of producing high quality

products at lower cost. Mc Donald’s gives the importance of efficient in the value itself which

is “with inspired people who delight each customer with unmatched quality, service,
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cleanliness, and value every time”. Mc Donald has come out with numerous avenues to

provide great value to its customers: Mc Donald’s comes with it Mc Value meal with different

types of burger, chicken nugget and ayam goreng Mc D. When the customer purchases this

item they are also given choice of purchasing French fries and carbonated drink at discounted

price. Besides that, Mc Donald’s also offers Mc Value lunch with 10 different choices and 8

different menus for breakfast. Hence, when the ala carte menu was introduced many

individual items were being sold. This makes the user convenient where they can make choice

of what they want rather than buying one set. In fact, this individual item gets good response

from the people and also individual stores. Ever since Mc Donald’s franchise its outlet it

brings advantages. Malaysia is a multiracial country so there would be various festival being

celebrated in Malaysia. Recently, there was Hari Raya celebration so Mc Donald offers

special menu during Ramadan month for this Muslim customer to breakfast. Mc Donald’s too

offers special menu for all the festival season in Malaysia to attract more customer with

affordable price. Then when it comes to Chinese New Year Mc Donald’s will be having

prosperity burger as one of the menu for a selected period. The menus which Mc Donald’s

come out during festival season will be at affordable price.

Technology

Technology is one of the important aspects for a business to grow more expand. With

technology advancement it gives the opportunity to communication. not only measures

performance values within the organization, but it also assists in the drive through area.

When a drive through worker is taking an order, it is displayed automatically on a screen

available to the customer outside, called the Customer Order Display (COD). The customer

can review the COD and correct any mistakes, thus making the ordering process more precise.

More precise orders eliminate time wasted from correcting mistakes

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Quality Management

This is where the customer’s quality expectation must be determined and policies and

procedures established to identify and achieve that quality. Mc Donald’s really maintain its

product quality and higher cost takes place in quality maintenance and improvement

researchers. Mc Donald’s has to maintain a compulsory standard of quality and safety so that

the customer will have the confidence when consume food over there. The food inspection is

done where emphasize is given on food temperatures, expiration date and other food safety

hazard several throughout the daily operation. Each outlet will be having a standardized Food

Safety book to ensure the safety in preparing the food. Cooked food temperatures are

examined so that the foods are cooked well before being served. Expiration dates are checked

frequently so that is any foods are expired can be return to vendors. Then refrigerated and

frozen foods are also checked to ensure foods don’t get too warm and rotten. At the same time

equipment also being checked to overcome malfunction during the operation.

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Food and Nutrition

Nowadays, most of the people are concern about healthy lifestyle since it’s a biggest issue. As

everyone concerned consuming fast food brings drawbacks to the consumer. As a result, most

of the fast food company offers variety of menus which are nutritious in order to attract more

consumers. This creates awareness to Mc Donald of offering menu which is more nutritious to

compete with competitors. These are the following options of menu which are nutritious

being introduced in some countries:

In the United States with “active lifestyle” Mc Donald introduces meals which are nutritious.

The meals are snack size fruits & walnut, fruit and yogurt parfait, premium cheese salad with

grilled chicken.

In England Mc Donald introduces fruit bags, containing apples and grapes, as an alternative to

french fries.

Mc Donald also does care about their employee by showing consideration in their health. In

Europe countries this organization has come out with “Employee Guidebook” which contains

tips of going towards healthy lifestyle and also the nutrition needed by the body.

Mc Donald’s also gives importance to balanced active lifestyle by showing caringness

towards customer’s health which aims to inspire and motivate people with the active balanced

lifestyle. This gets along with theme of “it’s what I eat and what I do”.

Mc Donald’s also fully utilize the technology advancement especially in Mc Donald’s

website. In this website there are menu items with plenty of choices. The food that a

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consumer chooses from the menu will have the online nutrition table of the particular food

they selected.

Ever since nutritious food is becoming concern of individual Mc Donald’s has put high effort

in coming up with new menu even the raw material price is high. This organization introduces

food such as fresh vegetables and fruits which is very healthy. Mc Donald’s also create more

awareness of health for the employees and also in the matter of providing and updating the

nutrition information regularly same time strictly follows the guidelines of health

organizations.

Training

Mc Donald’s also provides training opportunities for all their employees so that they can

perform well in doing their duties. Training is given to the employee by monitoring their

performance and being assigned in the area that they are weak. Mc Donald’s has received

prestigious award as a company of which has greater involvement in training. Basically, in

recruiting new employee they must go through orientation process consist of several videos,

several days session of direct one to one training by a trainer. After employees feel

comfortable with the operations, they will be promoted to crew trainers. Crew trainers must

undergo additional training for specialized processes such as the grill area, front counter,

drive-thru, and other areas. The next step would be the shift supervisors, followed by second

assistant manager, first assistant manager and the highest position in each Mc Donald’s

restaurant would be the restaurant manager. Training doesn’t stop at one position but it

continues up to restaurant manager with the perception of no one is perfect in this world.

Employment in Mc Donald’s can be said as flexible approach as part of commitment to

diversity. In order to make sure that their quality management is good surveys are done to get

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feedback from customers in term of customer service. Even feedbacks are taken from

employee regarding the matters of training being given whether it is good and in which area it

should be improved.

Restaurant Inspection

Mc Donald’s believes in their high quality product where they obtain the product directly

from suppliers rather than the Mc Donald’s Corporation. It is well known Mc Donald’s

Malaysia only have a single supplier which is Mac Food Services Sdn. Bhd. Hence of, good

relationship with the supplier the ingredients are purchased at a reasonable price but the

branches still have to follow the safety precautions and procedures of a franchised restaurants.

Due to this, Mc Donald’s corporation will have announced and unannounced visit to

international Mc Donald’s restaurant around the places. This is to warrant that proper

guidelines are being practiced. Grading is done based on their routine and expertise.

Acceptable grading will give the opportunity to open new franchise locations.

Supply Chain Management

These strategies tell of what is to be made and what is to be purchased. Mc Donald’s uses this

strategy and follow just in time inventory system. This means they only order raw material

once it is finished since it is perishable item. Food quality is the main key for Mc Donald’s

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since its being served to the customer. Their ingredient are as follows 100% halal beef, halal

farm fresh chicken, apples, vegetables ,potatoes ,fruits, eggs, fish and vegetables. Vegetables

are grown in Malaysia, China, USA, and Australia. Every ingredient will have different

supplier. The main supplier for Mc Donald in Malaysia would be the Mac Food Services Sdn.

Bhd. This means Mc Donald’s has to maintain good relationship with the supplier since there

is one single supplier only. Moreover, this supplier has obtained the halal certification since

before. In this case if Mc Donald’s wants to change the supplier they will face difficulties

since the new supplier must obtain halal certification to supply ingredients. Obtaining halal

certification is a long process even if Mc Donald’s wants to switch different supplier is

difficult situation. Mc Donald’s has to ensure the quality since the menu concentrates on

main ingredients such as beef, chicken, bread, potatoes and vegetables. Food quality is very

important and if anything goes wrong it can damage the reputation and affects the

organization. Gaining back this reputation will take a long time. Their emphasis on safety and

origin of ingredients highlights the efforts McDonald's make to allay fears among the general

public over nutrition and modern farming methods.

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Strongest Priority

Mc Donald’s basically gives importance to their customer. At the same time this organization

also involve in good works such as gift of smile, sponsorship and Ronald Mc Donald’s House

Charities. Basically, this will create good perception in public point of view.

Mc Donald’s always want to be the best fast food outlet so it keeps on improving on all

matters. It can closely be linked with manager’s duty where every thirty minutes the manager

will check everything in the restaurant. It starts from the lobby area, the walk in refrigerators

and freezers, the stock area and outside the restaurant. The management also will come and

recheck back in order to be efficient.

Mc Donald’s do very concern about every single step they are making which will bring

drastic changes in long term. It more closely relate to cleanliness in preparing the food and

safety of the food. The items that available are officially approved by Halal association

especially the pure halal beef and halal farm fresh chicken. This halal certification gives

Muslim and non Muslim customer confidence of eating at Mc Donald’s. This is because in

some countries competitor’s outlet pork being served such as outback steak house in Australia

but this thing doesn’t happen in Mc Donald’s throughout the world.

In order to improve Mc Donald’s in all subject matters they also collect secondary

information through surveys and questionnaire. This is where the manager who is in travel

path will just drop and asked feedback from customer by face to face communication which

will build stronger relationship with customer. In encouraging the customer in giving

feedback Mc Donald’s will give something in return.

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 In summary, McDonald’s strives to reach its goal of “making customers happy”

through their normal competitive bases of speed, price, and nutrition, and they also ensure

customer satisfaction through continual improvement of their operations.

Recommendation

Mc Donald’s Malaysia already involves in the good work such as gift of smile, sponsorship

and Ronald Mc Donald House Charities which already created good brand image among

public yet they also should work on the aspect of outdoor events and catering. This is done by

KFC and Pizza Hut and it has make them become famous. Catering takes place normally in

the event of School Canteen Day, company anniversary, family day, sports day and teacher’s

day. When this type of events is organised more people will come forward. Moreover, for

catering KFC and Pizza Hut offer few packages which is affordable. This type of packages

can be considered by Mc Donald since it is very profitable in the long term for Mc Donald. At

the same time in the future Mc Donald can consider of having a special section in their outlets

to do parties such as birthday bash, farewell party, get together and new born baby party.

Another aspect that Mc Donald’s can work on is in their menu aspects. As it is well known

both KFC and Mc Donald are offering the same product by using chicken as the base. Yet to

be considered Mc Donald’s use beef for the Big Mac and prosperity burger and fish for the

fish fillet. Even using chicken is not a problem but Mc Donald’s can try using roasting

method for the Mc Donald’s fried chicken which is less calories and fat. Customers also

willing to pay even the price are higher since it is healthier. This is because people are very

health conscious so it understandable they will go for healthier food. In long term more

customers will come to Mc Donald’s and it will increase the profit.

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Conclusion

As what is recommended Mc Donald can concern about adopting it in future but yet things

like cost has to be prioritise first since it is the most important element in a business. This

recommendation would be beneficiary if it being practised in the long term. This is because

setting up such facilities or getting involve in new scope will take some time and incur high

cost since it is a huge thing to be carried out and can’t be done simply as Mc Donald’s wish.

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Refrences:

1.Pizza Hut [online] (cited 20 October 2010) Available from <URL:

http://www.pizzahut.com.my/dining/special-party.html

2.KFC [online] (cited 20 October 2010) Available from <URL:

http://www.kfc.com.my/catering-event.html

3.Mc Donald’s [online] (cited 20 October 2010) Available from <URL:

http://www.mcdonalds.com.my/index.asp

4.Mc Donald’s [online] (cited 20 October 2010) Available from <URL:

http://www.mcdonalds.com.myabtusCSR.pdf

5.Corporate Social Responsibility [online] (cited 15 October 2010) Available from <URL:

http://www.mcdonalds.com.myabtusCSR.pdf &

http://www.aboutmcdonalds.com/mcd/csr.html

6.Operation Strategy [online] (cited 20 October 2010) Available from <URL:

http://www.referenceforbusiness.com/management/Ob-Or/Operations-Strategy.html

7.Generic Strategy [online] (cited 20 October 2010) Available from <URL:

http://www.qfinance.com/dictionary/generic-strategy

8.Halal [online] (cited 20 October 2010) Available from <URL:

http://www.halal.com/main.php?do=homenews&action=view&newsid=248

9. Haberberg, A. & Rieple,A.(2001) The Strategic Management of Of Organisations, Prentice

Hall/Financial Times

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10. Heizer. J & Render. B (2008) Operation Management (9th edn), Pearson Prentice Hall,

New Jersey

11. Krejewski.J, Ritzman. P, & Malhotra. K (2010) Operations Management Process and

Supply Chain (10th edn), Pearson, New Jersey

12. Porter’s Generic Strategy [online] (cited 20 October 2010) Available from <URL:

http://www.mbaknol.com/wp-content/uploads/2010/08/generic-strategies-porters-

mbaknol.jpg

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