Contents

Executive Summary

Introduction

Mc Donalds is a well known worldwide fast food restaurant. McDonalds operates over 31,000 restaurants worldwide in more than 119 countries on six continents. McDonalds has said that they serve more than 47 million customers around the world every day and have 1.5 million employees. McDonalds was founded in 1937 by Patrick McDonald but was then called The Airdome. The restaurant was at the Monrovia Airport in Monrovia, California, they sold hamburgers for ten cent and a refill orange juice for five cent. In 1940, Patrick McDonalds two sons, Maurice and Richard McDonald built a restaurant in San Bernardino, California. They renamed the restaurant to McDonalds.

McDonalds Performance Objectives

Costs
Mc Donalds aim to provide their customers with good quality food at affordable prices, in order to achieve this, the organisation has developed a cost strategy which focused on reduced combined costs of operations, this in turn helped efficiency factors of production. For example, due to trends in healthy living patterns and the high demand for good quality fast food McDonalds have matched their consumers requests and have increased sales in each particular set menu. Being a franchise, McDonalds cut costs when expanding, for example the

organisation charges franchisers an investment of around 15,000 to 20,000 (keynote,2010). to be able to use their brand image and products as a franchise.
Charging this cost means the business can expand without re-investing retained profits. The organisation also provides investors and their employees with cross-training to enhance product knowledge and the basic job role. This utilises staff production and will keep production levels at a constant in the long-term. In terms of ordering goods from suppliers, Mc Donalds will specifically order supplies needed, doing this keeps costs low due to the fact that McDonalds will not have extra stock which is not being used. This will help operations within the organisation as it will help managers and other team leaders keep a record of what needs to be ordered and when. This in turn will help achieve maximum sales. When cutting costs Mc Donalds have achieved a well established efficiency in terms of making and getting orders out to customers in a short-period of time, due to the business being able to employ more people. Last year the organisation allowed 8,154 people to study within their apprentice programmes which enabled them to achieve maths and English diplomas. This in turn increased interest in terms of working with the organisation which in the end ensures employees with the right criteria are chosen to work for the organisation.

Speed
Speed is very important in a fast food restaurant like Mc Donalds. Customers go to Mc Donalds for quick service as they expect to receive their food at the fastest speed possible. It is important for McDonalds to have a system that consists of effective communication between the workers. For example, McDonald is busy at peak times such as their breakfast hours and lunch menus. Therefore, they must ensure that their workers are on board and know exactly what process to conduct in order to prevent customer complaints. They have one employee taking orders and payments and another employee will prepare the food. This is more effective and efficient as the process is not time consuming. This will then result in McDonalds being able to serve more customers and being able to keep their customers happy, as they have kept up with their fast service. This is important to them as their customers that visit at peak times have a limited amount of time and tend to be in a hurry. Also, McDonalds will be able to reach one of their aims which are to ensure that customers leave satisfied with the service. In order to make service more efficient for customers, McDonalds introduced their drive-thru service. This helps McDonalds with operations within the organisation as producing more units will assist in keeping costs at a minimum level and production high due to the increased level of output per unit. In many McDonalds stores, the organisation have now introduced an express queue, where customers can place and receive their orders without waiting in a queue. This helps operations within the store as queues are controlled, for example the store will not be over flooded with customers and the issue of customers not being able to find a seat to eat is minimised. The use of the express queues also allow customers that take their meals away to get their order placed and given to them in a short-period of time this increases customers satisfaction and therefore reliability is increased.

Quality
McDonalds has been criticised for their quality of food and has been labelled as unhealthy. To tackle this obstacle they introduced the healthy menu which contains salads and sandwiches. McDonalds states on their website The quality of our food is at the root of everything we do. They also claim All our burgers are made from 100% beef, supplied by farms accredited by nationally recognised farm assurance schemes. Statements like these attract the customers as they are lead to believe that McDonalds have high quality and standards when producing their food. Having visited the Heathrow McDonalds store, it was clear that McDonalds kept a high standard of hygiene within their store as there were employees constantly cleaning the shop floor and the premises toilets. They make sure the tables are always clean and ready for the next customer to sit down and eat. All customers receive the same high quality service when dining in McDonalds. McDonalds employees all have a designed uniform that each employee is required to wear. McDonalds makes sure that all their employees are well presented as they are the first point that customers see and first impressions always last. McDonalds makes sure that all their staff wears hair nets and hats for hygiene purposes. McDonalds as an organisation are committed to provide a good level of service, and factor that shows this is that any products purchased from the store that are not of a satisfactory standard McDonalds will replace the product or give a re-fund. This boosts the organisations customer service and retains customer loyalty due to problems being dealt with on the spot. Things that mcds do: http://www.mcdonalds.co.uk/ourworld/environment/policy.shtml

Dependability

McDonalds try their best to ensure dependability for customers. On rare occasions, matters beyond McDonalds control can occur such as faulty equipment. For example, on a few occasions McDonalds milkshake machine has been broken and they have not been able to provide milkshakes for their customers. This may cause disruption as the customer may be going to McDonalds especially for a milkshake or may like to get a milkshake with their meal. As a worldwide franchise, McDonalds offer a breakfast menu which starts at 5AM. (http://opening-times.co.uk/mcdonalds-heathrow). The opening hours are from Monday Sunday 5AM till midnight. As the local customers are aware of these timings, they know they can rely on the McDonalds being open during these hours to purchase any foods they want. As some customers start early in the morning to go work, they dont eat breakfast at home and go to McDonalds for their meal. This contributes to managing operations as opening early in the morning will cater to more different consumers for example people that may be working in the early morning and those which may not have time to make breakfast at their homes. Another aspect on how McDonalds create dependability for their customers is with their car parking facilities. Most McDonalds stores that are based outside shopping centres have car parking facilities for customers who wish to take out or eat in designated bays where cars can be parked. This makes it more convenient for customers who wish to eat at home or in the car. They also have designated disabled bays for their disable customers to make parking more convenient for them to visit the store. The parking spaces are located at the front of the store so it is easier for them to access the store.

Flexibility

McDonalds offer their customers a great deal of flexibility when providing their service and products. McDonalds has a drive-thru system which allows customers to stay in the comfort of their car to order their food. This is convenient for people who have children as they do not have to get all their children out of the car to order the food and get their children back into the car after. A trip to McDonalds with several children could be a very stressful journey but with the drive-thru system it has made life a lot easier for people with children. The drive-thru provides a quick service as they have a production line in place. The first point of the drive-thru is to take orders, the next stage is to pay for your order and the last stage of the drive-thru process is to collect your order. McDonalds also offers an option for you to change the way the meal is set. For example, a chicken burger from McDonalds contains the burger bun, chicken breast, mayonnaise and lettuce. People may not want lettuce or mayonnaise in the burger so they can ask McDonalds to minus it from the burger. McDonalds will make the burger from fresh to the customers liking and then put a sticker on top of the burger to indicate which burger is a special order. They also have a meal deal which allows the customer to purchase a burger, fries and a drink for a reduced price. McDonalds is very flexible and allow their customers to replace an item from their meal deal with another item on their menu. For example, Instead of getting a drink with you meal McDonalds will allow you to replace the drink with extra medium fries. A lot of McDonalds stores open 24 hours a day and seven days a week. This allows their customers to visit a 24/7 McDonalds store at any time of the day. This is convenient for customers as they can visit the store anytime of the day and are able to enjoy McDonalds at any time of the day. A 24/7 store is suitable for customers who finish work late or for those who start work early. This is also convenient for the McDonalds employees as there are a wide range of shifts they are able to choose from. People with children may choose to work late nights when their partners are home from work who work during the day. Also people may enjoy working early mornings so they have the rest of the day to enjoy for themselves so the early shift would be ideal for them. Strategic Issues COMPETITIVE ADVANTAGE Order-winning factors, order qualifying factors, less important factors

McDonalds aim is to satisfy their consumers through the five performance objectives named above. Over the past few years, McDonalds has managed to change their operations depending on competitive factors. Also its high standard of image that they retain in all stores, the products they produce, and the services they provide to customers Features the business can retain such as high quality, quick and dependable services, original products, consistent low prices, and the companys performance objectives is what determines its order-winning, qualifying and less important factors. High quality products and services offered by the company are what defines its order-winners and keep customers loyal to McDonalds. The company performs objectives to the best of its ability therefore, at a qualifying level which relates to speed, dependability, flexibility and quality performances. Operational costs are cut due to the benefits that the consumers will have as they will be able to have a more valued price when purchasing products from the organisation i.e. the recession which would force the organisation to lower prices. McDonalds has recently chosen to diversify their menus. They have chosen specific meals which are represented in a highly nutritional value. This diversifies the organisation to its competitors for example, they guarantee 100% beef (McDonalds, 2010). In addition, McDonalds have also renovated all their stores to attract more customers. They have gone for a more retro/modern to match more popular trends in society. For Example, Before: After:

http://ghpprojects.com/images/mac.png

http://www.mcdonalds.co.uk/aboutus/development/overview.shtml

Design Issues

McDonalds consider better, not just bigger strategy (aboutmcdonalds, 2009) as their service concept for 2010. This shows that although they are franchising over the world, and becoming a very large they are encountering problems. For this reason, they have decided to become better as it would allow for the company to have exceptional customer experiences (aboutmcdonalds, 2009. In terms of operations management, important factors that McDonalds concentrate are on the marketing mix; People, products, price, place and promotion. The organisation aims to differentiate their brand image for example they have now re-designed some of their logos with the slogan Im lovin it this particular strategy is designed to keep consumer always sub-consciously aware of their organisation. This in turn increases the rate of operations within the organisation as consumers are more likely to visit their store due to this marketing technique. As the slogan is already quite catchy the organisation also decided to get a celebrity voice; Justin Timberlake to sing it in the advertisements which also enhances credibility from the organisation. The organisation focuses on three key areas: Service enhancement Restaraunt re-imgaing Menu innovation

We intend to further differentiate our brand, increase customer visits and grow market share by pursuing initiatives in three key areas: service enhancement, restaurant reimaging and menu innovation. These efforts will include leveraging technology to make it easier for restaurant staff to quickly and accurately serve customers, accelerating our interior and exterior reimaging efforts and innovating at every tier of our menu to deliver great taste and value to customers. As we execute along these priorities and remain disciplined in operations and financial management, we expect to increase McDonalds brand relevance, widen our competitive lead and, in turn, grow sales, profits and returns. As we do so, we are confident we can meet or exceed the long-term constant currency financial targets previously discussed despite expectations for a continued challenging global economic environment in 2010. To that end, about half of the $2.4 billion of planned 2010 capital expenditures will be invested to reimage existing restaurants with the other half primarily used to build new locations.

There are many different types of principles which defy how McDonalds is managed, these consist of: always talk bout management or operations management The first principle is Purpose. McDonalds will carry out many methods of research to obtain data about their consumers. For example, they may above the line and below the line research, which would allow the organisation to see past trends and potential future trends in terms of targeting the right consumer and meeting their requirements Power is a key factor that McDonalds utilise to increase their market share. The organisations uses their well-known and attractive service concepts to obtain large share in the fast food market. Being so well known McDonalds Have opened many chain stores around the united Kingdom which account for 75% of their total stores (McDonalds 2010). McDonalds however have a large amount of competition, for example, Burger King and Subway restricts the size of market share that McDonalds obtain due the increase in competitor marketing activity. TO VDO Profit profit over the years, add a graph and talk bout it
Strong global performance positively impacted cash from operations, which totaled $5.8 billion in 2009. Our substantial cash flow, strong credit rating and continued access to credit provide us significant flexibility to fund capital expenditures as well as return cash to shareholders. About $2.0 billion of cash. from operations was invested in our business primarily to open 868 restaurants (511 net, after 357 closings) and reimage about 1,850 existing locations. After these capital expenditures, we returned our free cash flow to shareholders through dividends and share repurchases. In 2009, we returned $5.1 billion consisting of $2.2 billion in dividends and $2.9 billion in share repurchases. This brought the total return to shareholders to $16.6 billion under our $15 billion to $17 billion target for 2007 through 2009.

how much the market share is, competitor REMEMBER

Members shareholders, dividends, benefits employees may receive

 Customers how are they satisfied, customer service, Business relationships merging? Y havent they merged with other companies?

Refernces http://www.keynote.co.uk/market-intelligence/view/product/2322/franchising? highlight=MCDONALDS&utm_source=kn.reports.search