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MAN515 Challenges to Business Success an Operations Management
Operation management refers to the area of management which is related to the operations of the business. Operations management ensures that business operations are running in smoothly manner so that businesses are able to achieve their goals efficiently and effectively. The main aim of every business is to maximize their profits and to gain success in the market. This report is relating to the identification of challenges that are faced by companies for the success of their business. For establishing a better understanding of these challenges McDonald's has been chosen as it is the first fast food industry in the world market and running its operations properly now also. McDonald's is one of the largest restaurant chains having its stores in many countries of this world. McDonald's has an expanded business chain of the retail food business and this report will focus on operation management of McDonald's.
1. Challenges that might impact the success of McDonald's.
There are certain challenges that might impact the future of McDonald's in future are as follows.
There are several competitors of McDonald's who are operating the same business as McDonald's such as KFC, Burger king etc. According to Berisha (2014), with the advancement in technologies, all the other business is also adopting these rapid technologies in their business for providing better customer satisfaction. McDonald's needs to cope up with the changes made in the technology to run their business in this competitive world. For example with the change in technology, other food businesses are shifting towards providing online delivery of food where customers can make an online order and they can get their food delivered at their home. McDonald's does not provide online food delivery services; it has only taken away and self-services. If other competitors of McDonald's such as KFC, Burger King starts providing online food delivery services through adopting new technologies, then this will impact the business of McDonald's. As there is a lot of convenience of customers in ordering food online so they would prefer to order food online from sites other than McDonald's. This will impact the revenues and sales of McDonald's and so the success of McDonald's will get affected through this. On the other hand, if McDonald's also adopts such latest technologies then it will also be able to gain a competitive advantage in the market (Berisha, 2014).
Continues globalization of markets including 1st and 2nd world entrants
McDonald's was the first company to enter the market of the food industry in 1940 in America. After certain years it went global that it started operating its stores in various another part of the world too. This globalization resulted as expansion in the business of McDonald's as well as increase in the revenue and brand image of McDonald's. Continuous globalization resulted in the continuous growth of McDonald's and same as this many another competitor such as KFC; Burger King Etc. went global that they also started operating their stores in the countries where the stores of McDonald's were operated. This resulted in increasing the competition for McDonald's. This globalization of competitors will lead to a shift of customers from McDonald's to its competitors. This will result in a decrease in the revenues of McDonald's as well as negative impact on the success of McDonald's (Masteikiene and Venckuviene, 2015).
Changing customer expectation
In the words of Garga, and Bambale (2016), changing customer’s expectation refers to the change in the needs of customers as the customers of McDonald's are also having some expectations. They expect quality services for McDonald's and with the increase in the business of food industry, there is an increase in the number of competitors of McDonald's. In this case, if products that are provided by competitors are of better quality and low prices then McDonald's then this will impact the preferences of customers. This can also result in a shift of customers of McDonald's towards its competitors. This can also result in a change in the expectations of customers that they expect the same quality and prices from McDonald are which are provided by its competitors. In this case, if McDonald's fails to do as it is not possible for a business to provide same products as other so this will lead to customer dissatisfaction and change in their preferences. As a result of this their customer will shift towards other competitors and this will impact the revenues and so the success of McDonald's (Garga, and Bambale, 2016).
Changing job design
Job design can be called as a major function of human resource management which is related to assigning of tasks, duties, and responsibilities of an employee relating to his job as per his interest. Change in job design in McDonald's means shifting of employees in other departments. In the opinion of Adeyoyin et al. (2015), change in job design means as the restructuring of roles of employees in McDonald's. This will result in changes in the roles, responsibilities, and duties of employees. This will result as affecting their work performance. For example, any employee in McDonald's is in customer executive department and this job was assigned to him as per his interest. Further, as per change in job design, he is shifted to marketing department where he has no interest in working in the marketing department. This will result as demotivation towards working in him and this will also reduce his interest in this work. Though all this his work performance will be decreased and this will affect the overall productivity of McDonald's as employees will not be able to give sufficient output to this organization. It is not for a single employee and if this happens with majority employees as per change in job design, then this will affect the success of McDonald's at greater level due to a reduction in work performance of its employees. On the other hand, if employees at McDonald's are recruited to the departments as per their interest then this will result in increasing their work performance of employees which will result in positive impact on the success of McDonald's (Al, 2015).
Quality management refers to the management of quality in products and services so that they are able to meet the expectations of customers. Quality management is an approach which is used by business to gain a competitive advantage in this global marketplace. McDonald's is one of the largest retail chains of food industry business operating in so many parts of this world where it is famous for its quality of food and reasonable prices. Quality management affects the success of the business as for example if McDonald's continues to maintain the same level of its quality then it will be able to retain its customers for longer time and the same will result in increasing the revenues for McDonald's. This will lead to positive impact on the success of McDonald's. On the other hand, if McDonald's does not follow the same quality or if it tends to decrease the quality of its products because of any reasons then this will result in not meeting the expectation of customers. Through this, it will result in decreasing the revenues of McDonald's and so the success of McDonald's will be impacted negatively from this (Ngambi and Nkemkiafu, 2015).
The business of McDonald's is expanded worldwide. Supply chain management of McDonald's is very large that the franchisee of McDonald's is situated in every part of the world. McDonald's is the first food industry of the world hence it is the most trustworthy company relating to this industry. It has its manufacturing in many parts of this world hence it has global manufacturing that it has the same taste of products at all the stores. According to Zhang et al. (2015), This global manufacturing can affect the business of McDonald's as for example there are many stores of McDonald's in various countries but they are providing the same taste to its customers which are provided by another store of McDonald's at other places this can lead to customer dissatisfaction as the taste and preferences of customer cannot be same at all the places. This can be possible that customers at different places may expect different taste from McDonald's. In this case, if McDonald's fails to meet the expectations of its customer regarding their taste then this will result to decrease the revenues of McDonald's and negative impact on its success. On the other hand, if McDonald's fulfills the expectations of its customers regarding their tastes and preferences on its stores at different places then this will lead to positive impact on the success of McDonald's (Zhang, et. al., 2015)
2. Area of operation management that are likely to impact the success of business
There are certain areas of operation management at McDonald's which are likely to impact the success of the business are as follows.
Goods and service design
The main aim of McDonald's is to provide better quality products to its customers with reasonable prices. Operation management area of McDonald's includes strategic decisions relating to the product and services that are provided by McDonald's must be of good quality. The operation of McDonald's includes designing of products to make them more attractive and in such a way that they are able to meet the expectations of their customers. In McDonald's the main focus is on serving sizes of the products as well as on the prices on which the products are been offered to the customers. These both things are set by McDonald's as per the preferences and expectations of its customers. In order to satisfy its customers, McDonald's focuses on minimization of sizes to make them affordable for its customers. Through this McDonald's is able to provide quality products to its customers with proper size and affordable prices (Ibrahim & Primiana, 2015).
This area of operation of McDonald's impacts the success of the business as McDonald's adopts this strategy of minimizing its product size to make it affordable for its customers. This operation management impacts the success of the business it this design and prices are able to attract customers to McDonald's. The main focus of McDonald's is to meet the expectations of its customers through meeting their expectations so that it can retain customers for a longer time through providing customer satisfaction. Customer loyalty is established by McDonald's through providing good quality services to its customers. There are take away and self-services at McDonald's but excellent services are provided by McDonald's at all its outlets. This is the reason through which McDonald's is able to maintain its position in the market. Through this, it is able to retain its customers for a longer time. This helps in increasing the revenues of McDonald's. Goods and services design is the strategic decision area of McDonald's as this is the main operation of areas which impacts positively towards the growth and success of McDonald's (Ibrahim & Primiana, 2015).
Quality management refers to the process of ensuring that products and services which are used are of premium quality. This ensures that the products are reliable in all ways and are trustworthy. The main aim of McDonald's is to maximize the quality of products and services which are provided by it along with dealing with all such constraints such as cost, prices, and size of products etc. In McDonald's there are a variety of products which are provided by them to their customers. There is a large range of variety in the products of McDonald's but the main focus on McDonald's is to ensure the quality in all the products. For better quality management McDonald's uses production line method (Cetindere, et. al., 2015). Through this method, interchangeable parts are added to the products in a proper sequence manner and thus end product is created. Through this method, McDonald's ensures the quality of the products as the quality check is to be done at each level of production.
For maintaining quality consistency McDonald's uses production line method for production of its products. Through maintaining the consistency in quality, McDonald's is able to gain the trust of its customers through providing them satisfactory quality services and this impacts the success of McDonald's. For example, if McDonald's fails to maintain the quality of its products then customers will take no time in shifting from McDonald's to some other food services such as KFC, Burger King Etc. As there are so many existing competitors of McDonald's so it becomes necessary for McDonald's to maintain a good quality of its products to retain its customers from moving towards its competitors. In the words of Cetindere et al. (2015), Quality management plays a major role in the success of McDonald's as through providing better quality products since the time McDonald's is established it is able to generate so many profits. This can be seen through the expansion of the business of McDonald's in various countries. From above all discuss it can be concluded that quality management plays a major role in the success of McDonald's. Maintaining good quality leads to the success of McDonald's in positive ways and on the other hand if McDonald's fails to maintain the quality of its products or services then this will negatively impact the success of McDonald's (Cetindere, et. al., 2015).
Product selection, design and analysis
Product selection, design and analysis of products of McDonald's are focused on increasing the efficiency of products through minimizing the costs involved with it. For this, there are various strategies adopted by McDonald's for the development of its business and to gain competitive advantage relating to the selection of product and its design. McDonald's uses porter’s model for developing its strategies for minimizing the cost of its products and so it can provide the products at reasonable prices to its customers. Operation management of McDonald's includes broad differentiation strategy as a generic strategy for its business. This includes strategies for development of its products so that it can differentiate the products of McDonald's from products of other competitors (Kanagal, 2015). McDonald's cost-leadership generic strategy differentiated the selection and designing of its products. These strategies are helpful for McDonald's so that it could sustain in the market. Operation management of McDonald's includes using product development strategy as through this it develops new products time to time. Through this McDonald's is able to bring innovation in the designing of the products which are provided by McDonald's. The main focus of McDonald's is to develop those products which differentiate the products of McDonald's from the product of other such companies.
Product selection, design, and analysis play a major role in the success of McDonald's as it adopts its own strategies for designing of its products so that it is able to attract and retain customers through unique designing of its products. Selection and designing of products impact the success of McDonald's. for example if the same type of products is provided by McDonald's and KFC, there is no difference in the design of products, price of the product and other such thing related to the product are same. In such case, the customer can choose products of any company among McDonald's and KFC as there is no such other unique factor which attracts the customers towards McDonald's rather than KFC. This could negatively impact the success of McDonald's. To avoid this kind of situation McDonald's uses its own strategies for selection, designing, and analysis of its products. This helps McDonald's in differentiating its products from other available products in the market of the same type. The unique design of the products also helps in attracting new customers towards McDonald's. Through this McDonald's is able to increase its revenue through its products selection and design and this impacts the success of McDonald's positively (Kanagal, 2015).
Supply chain management
Supply chain management refers to the management of the flow of goods so that rights products could be delivered to right people at right time. For every business which wants to become successful, it is necessary for them to manage its supply chain efficiently and effectively so that they are able to manage their supplies in better ways. The supply chain of McDonald's is global as the business of McDonald's is operated throughout the world. According to Simon et al. (2015), there are various outlets of McDonald's in several parts of the world. It is difficult for McDonald's to manage its supply chain properly. With a view to managing its supply chain efficiently and effectively, McDonald's uses the strategy of supply chain diversification. As per this strategy McDonald's diversify its market in various segments and then those markets are targeted for the supply of products and services. This enables a proper flow of goods where a check is established at each level to ensure that the process is going on a right track. This supply chain diversification strategy enables McDonald's for better supply management.
Supply chain management of supply chain diversification helps in maintain the supply of goods and services of McDonald's and through this McDonald's is able to deliver the right product to the right people at right time. This helps McDonald's in maintaining better relations with its suppliers. This also helps in maintaining the flow of goods of McDonald's in effective and efficient ways. This reflects the success of McDonald's as it is able to manage the flow of its products in better ways. This strategy of supply chain diversification also helps McDonald's in getting more suppliers from different countries. This helps in reducing the supply chain risks for McDonald's. Through all this McDonald's is able to manage its supply and these results in increasing the revenues of McDonald's. Proper supply chain impacts positively to the growth and success of McDonald's because through the management of supply chain McDonald's is able to support the flow of goods and its supply in various new places. This result to the expansion of the business of McDonald's and this also results in bringing more opportunities for business growth of McDonald's in new areas. From above all discussion, it can be concluded that supply chain management plays a major role in the success of business. Effective supply chain management results as a positive impact on the success of McDonald's whereas on the other hand if McDonald's is not able to manage its supply then this will negatively impact the growth of McDonald's (Simon, et. al., 2015).
Inventory design refers to management that is related to covering all the aspects that are related to inventory. Operational management area of McDonald's includes taking strategic decisions relating to focusing on minimizing the inventory cost that is related to products. Strategic decisions of McDonald’s also include supporting restaurant operations of McDonald's. Inventory management plays a major role in the business of McDonald's and for better management of inventory, there are certain strategies which are adopted by McDonald's. These strategies include McDonald's does not deal directly with its restaurant as McDonald's is not involved in selling its products and other such related material directly to its restaurant. It is involved in dealing with intermediaries and local and regional distributors. After this those regional distributors coordinate with the restaurant manager for the supply of the inventory. This strategy of indirect supply is adopted by McDonald's for better management of its inventory as it is very difficult for McDonald's to contact directly with its restaurant (Mwangi and Nyambura, 2015). Even the business of McDonald's is so expanded that is difficult for McDonald's to establish a direct link with the restaurant. This situation can result into improper inventory management as inventory is not supplied on time. This will result in stoppage of work as without inventory restaurant operation business of McDonald's cannot run their business. This will result in decreasing the revenues of McDonald's. Through adoption of this strategy through local distributors it becomes easy for McDonald's to track their inventory. Even this has resulted in making the work easier for the management of inventory. Through this process, McDonald's is able to supply inventory to its various restaurant units without any issues.
These strategies which are adopted by McDonald's have resulted in the timely distribution of inventory at various restaurant units of McDonald's. In the words of Mwangi and Nyambura, (2015), through this restaurants are able to get the inventory on time and so they can conduct their business smoothly. This will not lead to stoppage of work. Better inventory management leads to a better flow of inventory. This results in making the work easier of McDonald's as well as its restaurant units. They both can conduct their operations smoothly without any disruption. This inventory management directly leads to growth and success of the business of McDonald's. Above discussion proves that inventory management plays a crucial role in the success of McDonald's. If McDonald is able to manage their inventory then they become capable enough to grab the available opportunities. On the other hand, if McDonald's fails to do so then this could negatively impact the success of McDonald's (Gregory, 2015).
This report has concluded the importance of operations management in any business. This report has been prepared considering the challenges that could affect the success of McDonald's. This report has also focused on areas of operations management of McDonald's that could affect the success of its business in future. This report has concluded that all the aspects of business directly impacts the growth and success of such business but there are certain factors such as quality management, inventory management, goods and services design, process selection, design and analysis and supply chain design etc. which impacts the success of McDonald's.
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