Running Head: MCDONALDS 1

Service Organization - McDonalds

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Executive Summary

The purpose of this report is to examine the service concept of McDonald's, the world's leading

chain of hamburger fast food restaurant and the prominent global foodservice retailer. The report

also discusses how the operations of the organisation contribute to the functioning of the service

concept. After presenting the assessment of how service concept is implemented through

operations, the recommendations are discussed at the end of the report. Besides, appendices have

been included to illustrate a series of tables and figures that support the report.
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Table of Contents

Introduction ..................................................................................................................................... 4

Service Concept of McDonald's ..................................................................................................... 5

Service Operations .......................................................................................................................... 7

Product ........................................................................................................................................ 7

Place ............................................................................................................................................ 8

Price............................................................................................................................................. 8

Promotion .................................................................................................................................... 9

People .......................................................................................................................................... 9

Assessment of Operations Implemented ......................................................................................... 9

Conclusion .................................................................................................................................... 11

Recommendations ......................................................................................................................... 11

References ..................................................................................................................................... 12

Appendix 1: Evaluation of internal factors ................................................................................... 14

Appendix 2: McDonalds Data flow diagram ................................................................................ 15

Appendix 3: Cause and Effect Diagram ....................................................................................... 16

Appendix 4: Process Flow Chart of McDonalds .......................................................................... 17

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Introduction

McDonald's is the world's leading chain of hamburger fast food restaurant and the

prominent global foodservice retailer. Headquartered in the United States, the company was

founded in 1954 by businessman Ray Kroc. McDonald's serves more than 65 million customers

daily with over 35,000 local restaurants in 119 countries (Mcdonalds, 2017). The corporation

employs more than 2 million employees worldwide. It is worth noting that a McDonald's

restaurant is operated by either an affiliate, franchise, or the company itself. About 15 percent of

McDonald's restaurants are owned and operated by the corporation directly (Schaarschmidt,

2016). Most of its revenue comes from the payments, fees and rent paid by the franchisees, as

well as transactions made in the company-operated cafeterias. The essential products that are

sold in McDonald's include cheeseburgers, hamburgers, French fries, chicken products, desserts,

soft drinks and breakfast items. With an aim to minimize obesity trends and criticism, the

company often change its menu.

In the UK, most of McDonald's restaurants operate on the franchise basis. The

organizational management and strategic focus have enabled McDonald's to compete effectively

in an already competitive industry. The company focuses on providing tremendous customer

service and best operations facilitated by the employees. Along with advertising companies that

leave the brand reputation in the customer's mind, McDonald's continue not only to penetrate the

market but also widen their market segment. This report is mainly aimed to discuss the service

concept of McDonald's and examine how the subsequent operations of the company contribute to

the functioning of the service concept. Besides, the report will discuss how both the concept and

the delivery system might be improved.

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Service Concept of McDonald's

The service concept is the insight and expectations of the service itself in the thoughts of

the employers, investors, stakeholders, employer and customers (Hill and Jones, 2012). As

indicated in the figure below, the concept involves an open transformation process of

transforming inputs to anticipated outputs through the suitable application resources. More

precisely, services are cost-effective activities that lead to the place, time, psychological or form

utility. A meal in a fast food restaurant not only saves time but also it offers a psychological help

(Lee and Sozen, 2016). Developing the service concept can be considered as the ultimate step for

a corporation in generating an all-inclusive service model.

Figure 1: Service Design Model

McDonald's makes use of a restricted menu, division of labour, a homogenous product,

assembly-line strategy, task groping to enable specialised skills, all applied to the practical

principle that is shielded from the customer. Product quality and customer satisfaction are the

basis that enables McDonald's to create the exceptional fast food service. Since McDonald's was

established, the service concept has been based on the first-class quality, value, and cleanness,
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which has become an essential service direction of the company's marketing operations

(Thornton et al., 2016). Most importantly, the service concept is facilitated by the employees

who reveal positive attitudes and commitment aimed to customer satisfaction. In this case,

McDonald's restaurants concentrate on attracting and employing the best and at the same time

offer the finest place to work.

Most of the food restaurants in the UK continue to evaluate the internal, as well as

external business opportunities and hence, develop strategies that lead to a major market share.

This increases competition in food chain industry. As Kroc and Anderson (2016) assert,

McDonald's appreciates that the industry is competitive and has tasked its operations to

correspond with customer preferences continually. The brand's quality is globally prevalent as

McDonald's maintains the uppermost-level quality centred on the reasonable and affordable

prices (Singla, 2012). For the food service, the company offers appropriate and effective food

delivery service. In terms of quality, McDonald's has made a series of limited menu to keep the

brilliance and unique taste of the product.

The company embraces strict sanitary principles to keep a clean kitchen and dining

environment. McDonald's aims to offer distinctive service quality and high value to its customers

as it is broadly recognized that the service quality is a major aspect in defining the

accomplishment of a company (Schaarschmidt, 2016). The company has a belief that it is more

convincing in marketing the brand by using the service concept along with the service operation.

According to Hanks and Wansink (2013), the continuous change across the globe calls for an

appropriate service operation in any business corporation that is in line with the changing

customer preferences.
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Service Operations

Every fast food restaurant is operating whether as a corporation or private business is

purposed at generating a new upsurge in service operations; all aimed towards implementing and

supporting the brand quality (Brown et al., 2013). As one of the leading and the most prosperous

fast food restaurant in the world, McDonald's has numerous service operations (Appendix 4). At

the moment, McDonald's is adopting the service operations aimed to generate outstanding

experiences for its customers by product, place, price, promotion and people.

Product

The product is the physical product or service provided by the company to the customers.

It encompasses both the tangible and the non-tangible aspects such as appearances, assurance or

packaging. McDonald's offers products in the same packages in diverse countries, and the

consistency of these products attract many loyal customers (Singla, 2012). In the UK, the

company has studied the behaviour of customers and provide an entirely different menu as

compared to other countries. As such, McDonald's has been able to constantly innovate its

products based on the changing tastes and preferences of its customers. The company introduce

new products with a reputed brand, high-quality and outstanding customer-related features

(Mcdonalds, 2017).

It is worth mentioning that McDonald's has made a series of the strict menu to maintain

the distinctive freshness and taste of its product. During manufacturing, the product undergoes

many quality checks to make sure it achieves the high-quality aspect (Appendix 2). For example,

the hamburgers have to go through multiple examination catalogues, and the stock life of certain

foods should not exceed 40 days (Singla, 2012). In addition, there are strict standards that must
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be adhered while the products are being created. The products that do not meet the appropriate

criteria are eliminated before being delivered to customers.

Place

The place majorly involves the distribution networks. The company must ensure that the

product is at the right place, at the appropriate time and in the suitable amount. In the UK, almost

60 percent of McDonald's restaurants are situated within areas that are easily accessible by the

customers (Schaarschmidt, 2016). The company offers valuable places to meet the preferences

and needs of customers and enhance pleasure and happiness. Besides, McDonald's has standards

aimed to generate suitable hygienic setting and exceptional service for its customers. The

company has also established internet facilities within outlets along with exciting games and

music systems (Mcdonalds, 2017). This is meant to attract young customers and improve the

service level. Additionally, there are specific devoted areas for children where they can play

while their parents are enjoying other services in McDonald's restaurant.

Price

Pricing of products is a significant factor that determines the customer base and which

generates revenue. As Hill and Jones (2012) point out, the price must take into consideration the

proper demand-supply equation. McDonald's aims to generate appropriate revenue by keeping

the prices of products reasonable and affordable. This has been the critical concentration since

the company was established in the early 1950s. McDonald's has specific value pricing and

strategies for creating the products to increase overall revenue. In particular, the company has its

complete supply chain system and production bases of raw materials, which enable it to maintain

low prices. For now, the company also considers the prices of its competitors and the possible

means to attract more customers.

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Promotion

McDonald's has implemented various promotional activities to communicate the product

to its target customers effectively. Due to diverse places and customers, the promotional

activities are different, encompassing direct marketing, personal selling, sales promotion and

advertising. The appropriate message has to be communicated to the target customers through

the right media. Different promotion and marketing tools are used by McDonald's to

communicate to the right audience, mostly through televisions, posters, billboards and bus

terminuses (Thornton et al., 2016).

People

As the most popular fast food restaurant across the globe, McDonald's values its

customers and its workers. The company believes that a highly qualified and satisfied employee

can serve customers aptly. In this case, McDonald's has a wide-ranging hiring and training

system to provide resources for employees; thus enabling them to interact with customers

effectively (Teets, 2012). The company also inspire the workers to identify anything that may be

unpleasant to customers and avoid the potential complaints.

Assessment of Operations Implemented

McDonald's operates discrete policy and guidelines of operations. It indeed focuses on

various issues such as health, protection of the employee and the environment. All these aspects

are recognised and controlled in the UK through licensing of restaurants. Fast food has been

widely regarded as the unhealthy food that may lead to serious complications for adults and

children (Appendix 1). This challenge may provide the opportunity for other food chains that

offer a healthier menu to take advantage of the market share (Figure 2). Besides, the companies
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in the fast food industry are not exempted from problems and disputes. In particular, McDonald's

has experienced difficulty in cases where the economy is affected by inflation and changes in

exchange rates (Fowler and Bridges, 2012). Thus, clients face an appraisal impasse through their

distinct budgets, as regards to their expenses in fast food restaurants.

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Figure 2: SWOT analysis of McDonald's

Conclusion

It is apparent that McDonald's is practicing the service operation to generate outstanding

experiences for its customers on the basis of product, place, price, promotion and people. Even

though the company has realized many successful accomplishments in providing its excellent

service to the customers, there are still some weaknesses affecting the service quality. These

weaknesses include obesity problem caused by the fast food as well as product challenges caused

by inappropriate management. Most people are becoming health conscious, now focusing on

healthy eating rather than low priced products. Thus, the company should focus mostly on its

weaknesses.

Recommendations

McDonald's should design a strategy that addresses the social changes of customers as

well as introduces healthy fast food options. Furthermore, McDonald's should realize that

promotion of its products is not just an advertising purpose. The company should establish a

promotional strategy and advertising campaign that is determined by the size of the market, the

nature of the market and the inclinations of customers. In this case, McDonald's can address the

aspect of product, price and market in a way the customer will feel pleased and happy.
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References

Brown, S., Blackmon, K., Cousins, P. and Maylor, H. (2013). Operations Management: Policy,

Practice and Performance Improvement. Abingdon: Routledge.

Fowler, K. and Bridges, E. (2012). Service environment, provider mood, and provider‐customer

interaction. Managing Service Quality: An International Journal, 22(2), pp.165-183.

Hanks, A. and Wansink, B. (2013). Happier Meals: How Changes in McDonald’s Happy Meals

Altered Food Choices. Journal of Nutrition Education and Behavior, 45(4), pp.S39-S40.

Hill, C. W. L., & Jones, G. R. (2012). Essentials of strategic management. Australia, South-

Western/Cengage Learning.

Kroc, R., & Anderson, R. (2016). Grinding it out: the making of McDonald's. New York: St.

Martin's Griffin. Print.

Lee, Y. and Sozen, E. (2016). Food allergy knowledge and training among restaurant

employees. International Journal of Hospitality Management, 57, pp.52-59.

Mcdonalds, UK (2017). What's New - New to Our Menu | McDonald's UK. [Online]

Mcdonalds.com. Available at: https://www.mcdonalds.com/gb/en-gb/menu/whats-

new.html [Accessed 3 Jan. 2018].

Schaarschmidt, M. (2016). Frontline employees' participation in service innovation

implementation: The role of perceived external reputation. European Management

Journal, 34(5), pp.540-549.

Singla, V. (2012). Role of service quality and customer satisfaction in predicting customer

loyalty. Journal for Global Business Advancement, 5(3), p.248.

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Teets, C. (2012). Golden opportunity: remarkable careers that began at McDonald's.

Kennebunkport, Me, Cider Mill.

Thornton, L., Ball, K., Lamb, K., McCann, J., Parker, K. and Crawford, D. (2016). The impact of

a new McDonald's restaurant on eating behaviours and perceptions of local residents: A

natural experiment using repeated cross-sectional data. Health & Place, 39, pp.86-91.
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Appendix 1: Evaluation of internal factors

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Appendix 2: McDonalds Data flow diagram

(https://creately.com/diagram/example/hpinvfbj/McDonalds%20DFD)
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Appendix 3: Cause and Effect Diagram

(https://www.smartdraw.com/cause-and-effect/)
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Appendix 4: Process Flow Chart of McDonalds

(http://www.ewshm2016.com/process-flow-diagram-template.html)