PROGRAM TITLE: Higher Nationals in Bussiness

UNIT TITLE: Management and Operation

ASSIGNMENT NUMBER: 2

ASSIGNMENT NAME: Assignment 2

SUBMISSION DATE: 26/6/2022

DATE RECEIVED: 26/6/2022

TUTORIAL LECTURER: Phạm Xuân Hùng

WORD COUNT: 3029

STUDENT NAME: Phùng Đăng Quân

STUDENT ID: BKC 12247

MOBILE NUMBER: 0766134529

 Summative Feedback

Internal Verifiaction
Table of Contents
I. Report introduction.............................................................................................4
II. The Company’s introduction............................................................................4
III. Explain the business objectives of the company............................................5
IV. Choose at least TWO key operations management approaches that the
company is applying................................................................................................5
V. Introduce at least THREE internal factors of the company and assess how
they impact the operation management in the company.....................................8
VI. Assess the decisions made by the company’s leaders to deal with the
impact.......................................................................................................................9
VII. Critically analyzes how the chosen internal factors affect the business
environment in the company and its external stakeholders..............................10
VIII. Conclusion....................................................................................................11

McDonald’s
I. Report introduction
The report will be broken into five major sections. The first section will provide background
information about the company. The second section will talk about the two key operations
management that McDonald's is applying at the Company and evaluate the strengths and
weaknesses of the two methods mentioned above. Then the report will explain the importance of
these two methods to the Company's business goals. The third part will be about the Company's
three internal factors and from there the report will evaluate the decisions made by McDonald's
leadership to deal with the above impacts. Following that, in the fourth section, the report will
further analyze how the above three internal factors have affected the internal environment as
well as external stakeholders of a company. Last but not least, the last part will be the conclusion
about the parts that the report has analyzed and detailed above.

II. The Company’s introduction

Name: McDonald’s
Website: (McDonald's, 2022)
Address: Headquarters in Chicago, Illinois, U.S
Phone number: 1-630-623-3000.
McDonald's Corporation is an American multinational fast food corporation, founded in 1940 as
a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United
States. They rechristened their business as a hamburger stand, and later turned the company into
a franchise, with the Golden Arches logo being introduced in 1953 at a location in Phoenix,
Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise agent and
proceeded to purchase the chain from the McDonald brothers. McDonald's had its previous
headquarters in Oak Brook, Illinois, but moved its global headquarters to Chicago in June 2018.
(McDonald's, 2022)
Menu: McDonald's is the world's largest restaurant chain by revenue, serving over 69 million
customers daily in over 100 countries across 37,855 outlets as of 2018. Although McDonald's is
best known for its hamburgers, cheeseburgers, and french fries, they feature chicken products,
breakfast items, soft drinks, milkshakes, wraps, and desserts. The company also added salads,
fish, smoothies, and fruit in response to changing consumer tastes and a negative backlash
because of the unhealthiness of their food. McDonald's also has a combo like Happy Meal for
kids. (McDonald's, 2022)

III. Explain the business objectives of the company

McDonald's main aims are to serve good food in a friendly and fun environment. McDonald's
wants to be a socially responsible company by minimizing the amount of food waste and
providing good returns for its shareholders. The company aims to provide its customers with
food of a high standard, quick service, and value for money. (Boyd-Ragin, 2013)

IV. Choose at least TWO key operations management approaches that the company is
applying
1. Explain the chosen operations management approaches
Total quality management
Total quality management is a management method of an organization or enterprise, oriented on
quality, and based on the participation of all members to bring about long-term success through
customer satisfaction. (Thị, 2019)
 Just-in-time Inventory
The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders
from suppliers directly with production schedules. Companies employ this inventory strategy to
increase efficiency and decrease waste by receiving goods only as they need them for the
production process, which reduces inventory costs. This method requires producers to forecast
demand accurately. (BANTON, 2022)
2. Explain how the managers of the company are managing the approaches
Total Quality Management
McDonald's CEO Chris Kempczinski has applied total quality management to improve the
company's service quality. Specifically, Chris requested that all employees are at work on time,
are neatly dressed, and are clean. The employees must make sure that the customers constantly
receive safe food, which implies that the employees must wash their hands often to remain clean.
Furthermore, employees must follow Standard Operating Procedures, through which customers
will always receive outstanding quality and service. The meat and chips are properly fried, and
the vegetables are thoroughly washed before serving to customers.
Another Total Quality Management is that the staff relies on teamwork and high energy to get
the job done, without keeping customers waiting long for their food.
Furthermore, the management of McDonald's insists that their restaurant is always as clean as
possible. This means that McDonald's restaurants are always neat, sparkling, and clean. As
McDonald's represents quality, the staff provides fast, accurate, and friendly service with a smile.
(UKessays, 2015)
Just-in-time Inventory
CEO of McDonald's Fast Food restaurant has applied the Just-in-time system to its business
operations. The Just-in-time system has helped McDonald's restaurants reduce inventory costs
and waste. Before using the Just-In-Time Inventory method, McDonald's Fast Food Restaurant
used the traditional strategy of pre-cooking all the burgers and placing them under lights to keep
them hot. Now, in advanced technology, it is changed from the traditional method to the modern
strategy of Just-In-Time Inventory. When applying this operating method, the employees must
be trained methodically and meticulously by the leaders of the Company. McDonald's can
produce burgers within 90 seconds when applied Just-in-Time systems in business. (Ipl, 2022)
3. Critically evaluate the management of the approaches in the chosen company.
Total Quality Management
Advantages:
One of the main goals in total quality management is to provide the best possible experience to
the customers. When McDonald's uses Total Quality Management, it can anticipate customer
complaints and desires, address them at the source, and improve on Company's services.
Attracting and keeping top-notch employees is one of the most significant challenges for
companies in general and McDonald's in particular. With Total Quality Management in place, it
can engage and motivate employees and help them realize their full potential.
The company's market share will increase when McDonald's has a good reputation in the
industry. McDonald's revenue and market share should expand over time as the company
improves its products and services, resulting in long-term competitive advantages. (Rahman,
2022)
Disadvantages:
By implementing the tools of Total Quality Management, McDonald's can improve its processes,
however, it does not mean that customers will like them more. Service procrastination due to the
implementation of Total Quality Management may dissatisfy many of the clients.
The processes of an organization are essential to its success. The application of Total Quality
Management of McDonald's to bring the best service to customers is necessary. However, when
the Company tries to change it for the better, there are always some costs involved, which can be
higher than usual. (Rahman, 2022)
Just-in-Time Inventory
Advantages:
With Just-in-Time Inventory Management, McDonald's has a faster turnaround of stock, which
means that the Company does not need a lot of warehouse or storage space to store goods or
materials. Ultimately, this will reduce the amount of storage space McDonald's will need to rent
or buy, which will free up funds for other parts of the Company.
Just-in-Time inventory management is an ideal method for McDonald's franchisees when they
do not have the capital needed to purchase large amounts of inventory at once. Ordering raw
materials in reserve only when needed allows the Company to maintain a steady and smooth
cash flow. (PLANETTOGETHER, 2021)
Disadvantages:
McDonald's does not carry as much stock while implementing Just-in-Time Inventory
Management. That is because the Company bases its stock on demand forecasts, and if those
forecasts are erroneous, McDonald's will not have enough stock on hand for its customers. This
is one of the most common issues with the Just-in-Time Inventory.
Having to rely on the timelessness of suppliers for each order puts McDonald's at risk of
delaying customers’ receipt of goods. This is why it is important for McDonald's to choose
reliable suppliers and have a strong relationship with them so that the Company can make sure
that it has the materials to meet customers' demands. (PLANETTOGETHER, 2021)
4. Explain the importance and value of the upper management in achieving the business
objectives.
Total Quality Management
As mentioned above, the main goal of Total Quality Management is to provide the best customer
experience and service. It makes sense for McDonald's to use Total Quality Management
because the main goal of McDonald's is also to provide customers with the best experience along
with high standard food, fast and reliable service. Therefore, McDonald's using Total Quality
Management is extremely accurate when it helps the Company achieve its business goals and
also improves the overall quality of the Company's work. (Wowessays, 2020)
Just-in-Time Inventory
McDonald's is a fast food service company, so having too much inventory is extremely taboo.
Unlike other companies, food is something that cannot be kept and preserved for a long time. So
it makes sense for McDonald's to use Just-in-Time Inventory Management because the purpose
of this method is to minimize the waste of the Company's inventory. Just-in-Time Inventory
Management also helps McDonald's achieve the Company's business goals. That goal is to
become an environmentally friendly Company by minimizing excess inventory. (Karmarkar,
2017)
Recommend how the leaders of the company can improve the management of such
operations approaches to meet the business objectives.
For Total quality management, this approach focuses on providing the best possible customer
experience with McDonald's superior quality services. But the company also needs to invest
money to improve its marketing and products so that McDonald's can reach more potential
customers.
By guaranteeing that the stuff McDonald's buys from its suppliers will be enough, the Company
uses this technique for Just-in-time management to address the issue of excess inventory. But
McDonald's also needs to make sure to keep in touch and work with many different suppliers so
that if the Company's main supplier has a problem, McDonald's can still have the ingredients to
serve the customers.

V. Introduce at least THREE internal factors of the company and assess how they impact
the operation management in the company.
Internal factor 1
McDonald's CEO Steve Easterbrook has been slow to adapt to changing consumer tastes. Steve
and the Company's management did not dare to make changes because they were hesitant and
afraid of the risks when changing McDonald's menu.
Internal factor 1 impact
McDonald's sales have declined in the domestic fast food market. Consumers tend to prefer
healthy food instead of fried products. At the same time, McDonald's was struggling to compete
with the rise of innovative new American fast-food chains like Chipotle and Shake Shack.
(doanhnhansaigon, 2017)
Internal factor 2
McDonald's employees are extremely disrespectful and unethical towards homeless people. A
McDonald's employee used a hamburger to lure the homeless man closer and then splashed
water on his face as a joke. The entire incident was recorded by guests and posted on social
media.
Internal factor 2 impact
Many people flooded the McDonald's homepage and left extremely negative comments. They
criticized McDonald's management for allowing the Company's management and employees to
have disrespectful attitudes toward homeless people. Accompanying the critical comments were
a series of 0-star reviews directed at the Company. (Sương, 2018)
Internal factor 3
McDonald's revenue decreased markedly because the service quality, as well as the company's
service methods, were too outdated compared to the current 4.0 era. To respond to the new
consumer trends of the market, McDonald's must find ways to enhance the personal experience
to retain loyal customers and attract new customers.
Internal factor 3 impact
When McDonald's repeatedly failed to make a profit, it resulted in the Company's employees
feeling extremely depressed. The morale of employees continuously bottomed out and
culminated in the fact that many employees no longer believed in the decisions of their superiors.
(IPOS, 2022)

VI. Assess the decisions made by the company’s leaders to deal with the impact
Internal factor 1
McDonald's has decided to appoint Chris Kempczinski as the new CEO of the Company and
change the entire senior leadership team according to Chris' wishes. This decision of McDonald's
is correct because thanks to Chris' leadership and willingness to change, the Company's profit
before tax and interest margin has increased by 3.4 percentage points in 2 years to a figure of
32.3% at the end of 2017. The Company's stock price has increased by about 25% since Chris
Kempczinski became CEO. (doanhnhansaigon, 2017)
Internal factor 2
After the incident became viral on social networks, McDonald's took extremely decisive actions.
McDonald's posted a post on the Company's homepage to apologize and promise such incidents
will never happen again. McDonald's also immediately fired the employee who threw water in
the face of the homeless man along with his manager. Moreover, the Company also held a
meeting to open a training course on how employees behave towards customers. (Sương, 2018)
Internal factor 3
In early 2015, McDonald's just launched a sales application on smartphones. But it was not until
early 2017 that the company decided to invest more heavily in this application. McDonald's has
launched a phone ordering and delivery service that makes it easier and faster for customers to
order and receive food. Launching an ordering and receiving app is a wise move for McDonald's
when consumers have had to wait too long.
When the company launched a service application in the Chinese market, this move had
extremely positive effects. After only six months of launch, 45% of McDonald's customers have
downloaded this service application on their phones. This number continued to increase to 60%
when McDonald's decided to deliver to the home if customers ordered through the company's
app. Thereby, the online ordering application with a home delivery service has also collected $ 3
billion in revenue for McDonald's as of the end of 2018. (IPOS, 2022)

VII. Critically analyzes how the chosen internal factors affect the business environment in
the company and its external stakeholders.
Internal factor 1
After appointing Chris Kempczinski as the new CEO of McDonald's, the morale of the
company's employees has improved significantly. Most of the employees felt extremely excited
when Chris presented his ideas and future plans to help McDonald's regain its former position.
But there are also some employees who do not fully believe in Chris' leadership ability because
they think he is inexperienced.
When hearing the news that McDonald's fired the old CEO and made Chris the new CEO of the
Company, the share price of McDonald's dropped sharply. At that time, McDonald's
shareholders were also extremely skeptical of Chris' leadership ability. Many shareholders sold
the dividends they were holding to avoid losses.
Internal factor 2
After firing the employee and the employee's manager, McDonald's held a meeting to conduct a
training course on how the employee should behave with customers. McDonald's has also
analyzed and reviewed the requirements to be able to apply to be an employee of the Company.
Moreover, McDonald's has also changed all employees of the human resource recruitment
department so that unfortunate events do not happen again.
After the Company made changes in the personnel recruitment department as well as reminding
employees about their attitude to customers, the customer feedback when eating at McDonald's
has also become better and more positive.
Internal factor 3
With the launch of an online ordering application, McDonald's has completely broken through in
terms of revenue. Thereby, the morale, as well as the quality of work of employees, also
improved significantly.
McDonald's has received a lot of positive reviews from customers since the introduction of the
online ordering application. The Company has successfully exploited both the psychology and
buying trends of customers. The number of customers ordering goods online from the Company
increased dramatically. This has indirectly reduced the number of potential customers of other
fast food companies.

VIII. Conclusion
Through the above report, readers can easily see the two key operations management
McDonald's is applying and the strengths and weaknesses of these two methods. The report also
showed how the above two methods were applied by the CEO of McDonald's in the company.
Following that, the report clarified three internal factors within the Company and how
McDonald's handled them. In the end, the reader will be able to see how those 3 internal factors
affect the internal environment and external stakeholders of a company.
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