McDonalds Corporation

Using Teams in Production and Operations Management
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Using Teams in Production and Operations Management
Describe a major global corporation: (1) a leading manufacturer or (2) a major retail or restaurant business. Describe the type of business, market share, financials, size, and global presence.
This paper will describe McDonald’s, the world’s biggest burger chain. McDonald’s business started in 1940 and was opened by Dick and Mac McDonald in San Bernardino, CA. Today, McDonald’s is the largest chain of fast food restaurants. They can be found in 120 countries and territories, serving nearly 54 million customers each day. ("NYSE MCD," 2010, p. 1)
McDonald’s made some remarkable changes to their menu since the recession to continue sales growth, and “take market share from its rivals.” ("NYSE MCD," 2010, p. 1) According to the McDonald’s report on NYSE, McDonald’s sales increased by 6% worldwide when analysts anticipated only a 3% increase, and they didn’t have to increase their prices. McDonald’s did not raise the price of their coffee either when Starbuck’s did increase their prices and the cost of other items on their menu board.
McDonald’s financial report shows their net income almost doubled in 2008, from 2395.1 million to 4313.2 million. At the end of 2010, they netted 4946.3 million; it’s amazing to see how a company is able to survive in this economy without having to increase their prices. In the global downturn, McDonald’s is one of the restaurants to make it. Their Europe locations are classier than the US locations and the profits there are phenomenal compared to the US. In 2009, the European profits totaled $2.6 billion; this is an 8% increase from 2008. This region accounts for 20% of McDonald’s global presence. ("McdonaldS Corp," 2011)

Describe the company’s production or operations management. In all of McDonald’s restaurants around the globe, there are a number of operations that has a relationship with the overall strategy of the organization. Product planning is a key operation component. McDonald’s has to continue to add new products to their menu in order to meet the needs of the customers. For instance, the increasing preference of consumers towards healthy food, made the restaurant add healthier food items to its menu. A second operation that’s important is capacity planning. Capacity planning and control is the task of setting the effective capacity of the operation in which will help them respond to the demand. The operation managers will have to set its capacity of making food items in a way that responds quickly to the demand of rush hour. They also will have to make sure they have enough ingredients to prepare the food items. This is very important because if they fall short with one ingredient, they will not be able to make the food as needed. An example for such is if they run out of hamburger buns, if they don’t have the buns how will they be able to sell their #1 selling item, hamburgers? A third important part of planning is the location. McDonald’s have to plan their location in a way that customers will be willing to visit their restaurant. The main locations will be in areas where there is a huge customer base, transport access, and adequate parking. In the event they set up a store in a slow area with no traffic, this will be a bad business plan for the location. They layout design is also important, due how much equipment they utilize. Poor layout will reduce the overall capacity and productivity. The operations manager also has to develop and establish the process of cooking the food. The food will have to be well prepared, tasteful, and they will need to maintain their speed of service. The company also designs processes in which health, safety, and hygiene issues are taken into consideration. The managers will need to make sure they are introducing the latest equipment with advanced technology, since things change often. A prime factor in operations will be the job design plan. Each employee will be responsible for a particular job set, some examples includes, cooks, cashier, customer service, lead person, shift manager and store manager.
Describe and evaluate the company’s use of teams in production and operations management. The company’s use of teams in production helps to put it altogether, from processing of the food to the packaging. However; before all of this, there has to be an operations team to come up with a plan for developing, mapping, acquiring, and opening the restaurants. There was a team who thought about opening the first restaurant, Dick and Mac McDonald. It all had to start somewhere and this is what they decided to do, open the McDonald’s restaurant. “It was opened as a bar-be-cue, typical drive-in, featuring a menu and a car-hop.”("Travel Through Time with Us," 2011, Chapter 1) From there they started their journey and to build their team for the global company, McDonald’s. Each team member in a McDonald 's restaurant is an important cog in a machine that must run smoothly, efficiently and effectively, at all times. This is most true for the person running the grill. They have to ensure that the level of meats and fried products (waiting to be made into lovely sandwiches) are accurately filled and the holding times maintained at all times. They are responsible for delivering every single piece of food perfectly cooked, perfectly seasoned swiftly while maintaining the strictest of food safety policies. Adding to all of this is the fact that they make minimum wage, probably have not been trained nearly as well as they could have been, and most likely aren 't the brightest bulb in the box (otherwise, why, really, are they working for minimum wage at a hot, sweaty, demanding job?) nor are their managers joyous beacons of professionalism, in most cases, for all the same reasons. This means the grill person is probably not the most highly motivated person in the world, even if they have a phenomenally demanding job. The operations team has more responsibility because they have to actually run and operate the restaurants. The good thing is that McDonald’s offers training and the proper tools for them to be successful in their positions. They have to deal with a high level of stress with their employees as well as customers. They are responsible for mapping out a plan and knowing exactly how much food should be cooked during peak times and off peak times. They have to account for how much food is being wasted at the end of the night and for shortages in cash. The supply chain management team deals with the suppliers, who supply them with raw materials such as; buns, beef, condiments, paper products, and food packaging materials. The inventory team manages the inventory as it comes in and out of the warehouse location. They have to make sure the food is packaged and stored properly so that when it is shipped out to the various stores, nothing is spoiled or damaged. They have to ensure that the food is fresh since they deal with a lot of perishable items. The quality management team is very important to the operations team because they have to meet the legal requirements of the food being served, and they have to keep up the McDonald’s reputation. Quality of food can be difficult to maintain and that is why McDonald’s carry on a number of practices to make sure that quality food is served. One of the practices involves a visit by the food inspector of the head office and no restaurant is aware of when this visit may occur. Others includes; secret shoppers, customer surveys, and visits from managers of other restaurants.
Analyze and evaluate the company’s ability to adjust to a major economic, environmental, or natural crisis (such as the real estate crash, financial crisis, nuclear meltdown, hurricane, flood, oil spill, etc.) and communicate effectively with their employees and customers about issues caused by the crisis. McDonald’s experience during the 1998 Russian economic meltdown illustrates how leaders can perceive opportunities even in amidst a crisis. During this time, the Russian economy was experiencing hyperinflation. Some Russian citizens could not afford basic necessities. McDonald’s leadership found ways to reduce prices of menu items because of supply chain efficiency, while still maintaining the core menu that was the central component of McDonald’s brand. Efficiencies in the supply chain were accomplished by employing McDonald’s European network of suppliers to train Russian suppliers, and by building its own food production facility to ensure consistent quality of local meat, dairy and baked products. Also, McDonalds used Russia’s economic crisis as an opportunity for selective hiring of employees and designed a compensation system based on productivity. McDonald’s willingness to be price sensitive and maintain its service standards resulted in customer loyalty, which enabled McDonald’s to weather Russia’s economic crisis. According to this crisis seizing opportunities in crisis situation pressures organizations to be resourceful. For McDonalds, some of the resources already existed and could be repurposed to manage the crisis. For other organizations, attaining opportunities in crisis situations may require forming an alliance with external stakeholders. McDonald’s story highlights the role of innovation for discovering opportunities when leading a crisis. Resolving crises trains leaders to innovate as they explore what can be enhanced or eliminated in the organization. When the seeds of innovation are cultivated and institutionalized the organization is transformed.
References
McDonalds (NYSE:MCD) report: Market share, margins on the rise. (2010). Retrieved November 6, 2011, from http://www.stockmarketsreview.com/recommendations/mcdonalds_report_20101115_59520
McdonaldS Corp. (2011). Retrieved November 6, 2011, from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?symbol=MCD
Travel through Time with Us. (2011). Retrieved November 13, 2011, from http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html?DCSext.destination=http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html

References: McDonalds (NYSE:MCD) report: Market share, margins on the rise. (2010). Retrieved November 6, 2011, from http://www.stockmarketsreview.com/recommendations/mcdonalds_report_20101115_59520 McdonaldS Corp. (2011). Retrieved November 6, 2011, from http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?symbol=MCD Travel through Time with Us. (2011). Retrieved November 13, 2011, from http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html?DCSext.destination=http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html