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 having 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