Contemporary Management Techniques: McDonald Case Study Sample
The Rationale for the Selected Contemporary Management Technique
Business process improvement (BPI) is a contemporary management technique that McDonald’s is yet to implement. With BPI, McDonald’s will be able to achieve its critical success factors (CSFs). Moreover, it can improve the quality of the products offered to consumers. BPI is thus an approach that McDonald’s can use to enhance its customer satisfaction levels. The company can remain competitive in the fast-food industry only if it improves some of its existing processes. BPI is essentially a technique that enables enterprise managers to identify business processes and procedures that require improvements (Blocher and Hicks, 2019). Business entities use BPI to analyze how they can eliminate wastes and reduce the time taken in providing products and services. They can further use BPI to ensure that they comply with various quality control standards and rules.
BPI techniques are essential since they enable companies to meet business objectives and customer demands more effectively. The achievement of a company’s CSFs depends on its ability to enhance the efficiency of its business processes. Primary, the goal of BPI is to transform the business enterprise’s performance. Through BPI, McDonald’s will realize an improvement in its sales and profitability levels. As a management technique, BPI is crucial since it eliminates inefficiencies in a firm’s business processes. It can also improve employee productivity. Notably, a business entity can record a reduction in its costs by streamlining its processes through BPI (Nickerson, 2014). For instance, a firm can streamline some of its processes through the adoption of new technologies.
In the context of McDonald’s, since it operates in a competitive industry, it is imperative for it to reduce the time it takes to deliver an order to a client. It can adopt new technologies to improve the efficiency of its processes. Currently, technologies affect work processes widely, particularly in the production sector. Consequently, companies have been forced to change their processes by embracing new production technologies. The current business climate requires entities to update their processes frequently and to analyze whether they are meeting their financial objectives. Moreover, they have to consistently ask themselves whether they are remaining competitive in their market. While formulating the answers to such questions, business enterprises are challenged to put in place new technological systems, procedures, and processes. These new systems and processes have the potential to influence a company’s future stability and profitability.
Certain factors are likely to drive companies to change their old processes and systems. The first factor is customer service concerns. Customers tend to raise concerns if there is a dip in the quality of products and services provided by a firm. The failure to address these concerns can lead to a reduction in an organization’s sales and profitability. Notably, a firm can address such concerns by embracing new business processes and systems. The second factor that can drive change in business processes and systems is the costs of daily operations. An increase in operations costs will require an organization to streamline some of its old processes and systems. The adoption of new systems and processes will in most instances help a firm to reduce its operating costs. The third critical factor in employee productivity. A decline in employee productivity levels may require companies to embrace new HR procedures and processes (Nickerson, 2014). Competitive challenges constitute a fourth and significant factor to drive change in an organization. Firms will only remain competitive in the marketplace if they embrace lean and efficient production processes and systems. The presence of competition will require an organization to differentiate its products from those of its rivals. Thus, firms are constantly challenged to understand the products offered by their competitors. Some of the factors that have a direct influence on a company’s competitiveness include costs, productivity, consumer needs, and customer satisfaction. Lastly, technological advances can drive companies to change their old processes and systems. Companies that keep abreast of such advances are likely to experience an improvement in their sales and profitability levels. Thus, automation of specific business processes can help organizations to improve their operating efficiency.
Description of Business Process Improvement
BPI can be described as a technique that managers use to re-design some of the organization’s existing procedures and business operations. Several firms have adopted BPI to achieve high quality in various functional areas. Moreover, they have embraced the technique to become flexible and efficient in their production processes (Philipp, Suzanne, and Gregor, 2013). Notably, effective BPI generates positive results in two critical areas—customer focus and operational efficiency. In certain organizations, the implementation of BPI has resulted in cost reduction. An improvement in the organization’s performance levels can also be realized through BPI. An organization can evaluate the impact of a BPI initiative if it uses performance indicators or CSFs to analyze and measure the results of the change process. In this case, some of the CSFs that can be used to measure change include customer satisfaction, time, product quality, and costs.
The implementation of BPI begins with a review and analysis of a company’s existing processes and operating procedures. By implementing the complete process of BPI, a firm can pursue three goals. The first objective is the reduction of process time. Notably, BPI is implemented to analyze how a firm can conduct its business processes efficiently. As stated earlier, an organization can improve its process efficiencies through the adoption of new technologies (Philipp, Suzanne, and Gregor, 2013). Moreover, it can eliminate ineffective and useless processes. The second objective is the improvement of output quality. The implementation of BPI should enable an organization to create better products and services with the same resources. Improvement of output quality requires a firm to analyze the errors and defects in its production processes. These errors and defects can have a detrimental impact on an organization’s end products (Philipp, Suzanne, and Gregor, 2013). The third objective of BPI is waste reduction. It is necessary for a firm to implement BPI to discover wasteful business processes. These processes once identified, have to be essentially eliminated from the organization’s workflow. A firm’s overall productivity is thus likely to improve with the implementation of BPI. Further, BPI will enable employees to focus on tasks that add value to the firm.
The Implementation of BPI
Before implementing BPI, it is necessary for an organization to set clear objectives to be achieved through the particular change it is looking at. In the implementation process, the first step is to define and analyze the business entity’s existing processes and structures. This definition and analysis can be done through business process mapping. Workflow software is a typical example of a technique to track and evaluate business processes. Through this mapping process, a business entity will be able to understand how its existing processes function. Moreover, it will be able to identify and analyze those processes that are inefficient and weak (Nickerson, 2014). Thus, a business process mapping will enable managers and other stakeholders to analyze the need for change in an organization.
The second step in the implementation process is analysis. Once the existing business processes have been mapped, it will be necessary to analyze deficiencies. For instance, the organization, through its BPI implementation team, can evaluate whether certain processes are taking longer than the recommended time for completion. The team can also determine the factors, if any, causing delays in the delivery of products and services. It can also determine the business processes that have the most significant effect on product quality. Moreover, the implementation team should determine how such business processes can be made more efficient. During the analysis phase, it is crucial for managers to evaluate cost-intensive processes. It is necessary for the management team to ascertain why certain business processes are resulting in financial strain, as it will be easier to find solutions after determining a problem’s root cause. Certain business process improvement tools can be used to determine the primary causes of a particular problem in an organization. For instance, ‘Five Whys’ is a business process improvement tool that organizations can use to discover the underlying causes of a situation. Notably, the analysis will enable managers to explain weaknesses in a firm’s business procedures and processes.
The third step in the implementation phase is a redesign of the entity’s processes. After an organization has identified the inefficiencies in its old processes, it has to determine ways to address them. During this step, it is appropriate for the BPI implementation team to set the new design’s goals and objectives. The implementation team should ensure that the new processes selected have the potential to meet the organization’s business goals. Before executing the new process, the implementation team should evaluate the costs and benefits involved. While redesigning the processes, a business entity can follow certain best practices. The first practice is a selection of the right comparison metrics. With these metrics, the implementation team should compare the existing processes and operating procedures with the new ones (Nickerson, 2014). The comparison can be made based on the existing and potential efficiency; in this regard, the new processes should be more efficient than the old ones. Notably, an organization should not implement new processes that are inefficient in comparison to the existing ones. The other crucial practice in redesigning processes is to account for errors and develop a long-term vision. In certain situations, the selected solution can only be effective in the short run and may prove inefficient and costly in the long-term. In this regard, it is appropriate for the implementation team to define the scope of the proposed changes. Such a move will enable managers to determine the impact of the proposed solution. Risk analysis is thus another practice that the implementation team can follow in the pursuit of BPI, specifically in redesigning processes and procedures.
After the redesign phase, the next step is implementation. The success of BPI depends on the implementation phase. It is necessary to follow three distinct steps as part of the implementation. The first is the mitigation of risks by implementing the changes in phases. Before implementing the changes across the business entity, it is crucial to test the planned process on a small scale and benchmark it in relation to the existing process. The second essential step in the implementation phase is the acquisition of resources. An organization should have the right resources before implementing a new process. For instance, the implementation of a new technological platform requires business entities to have the necessary computer hardware and software. The third step is to inform the shareholders of the planned changes. The proposed changes can only be effective if shareholders are involved in their implementation. With their buy-in, the funds, resources, and support needed for the successful implementation of the proposed changes can be acquired easily (Nickerson, 2014). The fourth step in implementing the proposed changes is the training of employees on the new processes. Finally, the last step in the implementation of a BPI initiative is a reflection and benchmarking. During this phase, it is necessary for the implementation team to ensure that all the changes are being carried out as planned. The team should also monitor the effectiveness of the new processes and ensure that they are meeting their intended goals.
Certain methodologies can be utilized while implementing BPI. One of the primary methodologies that organizations can adopt is Six Sigma. Through this methodology, the organization can determine inconsistencies and defects in its production processes. Notably, Six Sigma can be used to determine the level of efficiency generated by a business process. Based on the DMAIC principle used in the Six Sigma methodology, the first step is to define the opportunities for improvement (Gygi and Williams, 2012). The second is to identify the metrics that an organization will use to benchmark its new processes. The third step is to analyze or uncover inconsistencies and defects in the organization’s production processes (Nickerson, 2014). The fourth step is to improve the organization’s processes; the adopted solution should help the firm to resolve any issues in the identified production processes. The last step is to monitor and control the new processes. Another methodology available to an organization to optimize business processes is the lean production technique. This technique can be used to improve employee productivity, among other core areas.
The Application of BPI by other Organizations
Several organizations have implemented BPI to improve their efficiency, competitive advantage, and productivity. Nike is a typical example of a company that has implemented BPI to see higher efficiency in its business processes. Specifically, it has adopted the lean manufacturing methodology to improve its production processes. Nike adopted the methodology in response to complaints that it was engaging in exploitative HR practices (Lean Institute Ukraine, 2018). However, the company has come to regard the implementation of the methodology as a business improvement opportunity aimed at eliminating waste in its production processes (Lean Institute Ukraine, 2018). Another of its objectives in implementing BPI is to produce quality products that meet consumers’ needs. In this organization, employees are trained on how they can improve the efficiency of various operations. Notably, Nike’s success can be attributed to an initiative known as ‘design the future’. Through this initiative, Nike has embraced new technologies and innovative techniques that have enabled it to remain competitive in the sportswear and apparel industry. Nike has also been able to reduce its defect rates and increase its lead times with BPI. For instance, the time taken to produce a new model has reduced due to the adoption of lean manufacturing processes. The adoption of lean manufacturing methodology has also enabled Nike to produce quality products at relatively low costs.
Motorola is another company that has implemented BPI initiatives. Motorola is regarded as the first company to have used the Six Sigma BPI model. It initially adopted the management technique to solve challenges relating to high defect rates. It has further embraced the technique to improve its manufacturing process and the quality of its products. In this organization, BPI has been recognized as an essential performance indicator, with the Six Sigma model used to optimize and drive improvements in the production processes (Gygi and Williams, 2012). The company has further adopted innovative techniques to improve its products. Its supply chain processes have also improved with the adoption of the Six Sigma methodology. Significantly, Motorola embraced the Six Sigma model in response to the intense competition it faced from Japanese and American phone manufacturers and a resulting decline in its sales and profitability. Therefore, to remain competitive in the industry, Motorola was forced to streamline and optimize its production processes and improve the quality of its products.
Thus, the Six Sigma project that Motorola adopted in response to productivity and competitive challenges has enabled it to be a systems-driven company. Apart from improving its production processes, Motorola has been able to reduce its production costs. The Six Sigma project has also reduced the number of employees and streamlined functions. It has further resulted in an improvement in customer satisfaction levels.
BPI’s Applicability to McDonald’s
BPI as a management technique can be applied by McDonald’s to improve its competitiveness in the food and beverage industry, as it faces stiff competition from brands such as Panera Bread and Chipotle. For McDonald’s to remain competitive, it should provide a wide range of products. BPI will also enable the company to record an increase in its sales and profitability. In past years, McDonald’s has experienced a decline in sales. For instance, in 2014, it recorded a significant reduction in sales and profitability. Moreover, the company needs to look at BPI as a tool to be more aligned with changing consumer trends. The present generation prefers to consume fresh and healthy foods due to the alarming rise in lifestyle diseases and other health challenges. In response to changing consumer tastes and preferences, McDonald’s can use BPI to alter its menu and improve the quality of its products.
McDonald’s can also use the BPI model to improve the quality of its services. It is necessary for McDonald’s to adopt new technologies that can reduce consumer wait times. Notably, a significant number of consumers have complained of the long queues and the amount of time it takes to receive their orders. McDonald’s can use the BPI concept to automate some of its processes, which will result in a sizeable reduction in customer wait times. Significantly, there is a need for McDonald’s to redesign its kitchen processes for it to remain efficient in its product and service delivery. Moreover, it can utilize BPI initiatives to introduce the effectiveness of mobile ordering applications. Through these applications, consumers should be able to place and receive orders at their homes. Currently, consumers are required to visit a restaurant to pick up their order after placing it on the mobile app. Thus, to have a competitive advantage over other firms, McDonald’s should use BPI to introduce the home delivery option in its mobile application.
McDonald’s can further apply BPI in revamping its marketing initiatives. Currently, McDonald’s is viewed as a fast-food restaurant that offers unhealthy products. Therefore, it is necessary for the company to change this perception. Through BPI initiatives, McDonald’s will be able to develop marketing messages to build a brand image of a company offering healthy products. BPI will also enable McDonald’s to focus on the quality of its products.
McDonald’s, in implementing BPI initiatives, should follow certain steps. The first step is to map out its current business processes. During this step, it is essential for McDonald’s to understand how its business processes work. Notably, this step will enable McDonald’s to analyze some of its inefficient and weak business processes. For instance, it can determine that its marketing initiatives are weak since they do not portray it as a company that focuses on providing quality services to its consumers. The other weakness that McDonald’s can identify is the considerable wait time for consumers to receive their orders from McDonald’s and other restaurant chains. Moreover, this step should enable McDonald’s to realize that it has experienced a decline in sales and profitability due to the intense competition it faces from restaurants such as Chipotle.
After mapping out its existing processes and procedures, it will be necessary for McDonald’s to analyze the root causes of its existing challenges. For instance, one of the primary reasons for many of the challenges it faces is the lack of automation in business processes. The long queues and the high wait times can be attributed to the inefficiency of its kitchen processes. Moreover, reduced sales and profitability can stem from reduced customer satisfaction levels. The sales can also reduce due to the inefficiency of its mobile ordering applications.
The third step that should be followed in implementing BPI is the redesign phase. During this phase, it is necessary for McDonald’s to analyze how it can change the inefficiencies in its old processes. The company should use certain metrics to evaluate the effectiveness of its new processes and compare them to the old ones. For instance, the new processes should increase the firm’s sales and profitability. They should further enhance the quality of their products.
After a thorough mapping of existing business processes, analyzing causes, and redesign of processes, McDonald’s should focus on the implementation of the BPI initiative, as the fourth step. During this phase, it is necessary for McDonald’s to acquire the resources that can enable it to improve its operational efficiency. Some of the strategies that McDonald’s can implement in this regard are new marketing initiatives, new mobile ordering applications, and product differentiation. While implementing these strategies, it is imperative for the implementation team to inform the company’s shareholders. The last step is monitoring and evaluation. McDonald’s, through its managers, should evaluate whether the implemented strategies have achieved their intended objectives and take the required corrective action.
Blocher, E. J., and Hicks, M. (2019). Accounting for decision making: Text and study guide. Boston, MA: McGraw-Hill.
Gygi, C., and Williams, B. (2012). Six sigma for dummies. Hoboken: John Wiley and Sons
Lean Institute Ukraine (2018). Lean manufacturing and innovation: How does Nike do it? Lean Institute Ukraine. Retrieved from https://ufuture.com/lean-manufacturing-innovation-nike/
Nickerson, W.R. (2014). Business process improvement methodologies: Common factors and their respective efficacies. The University of Gloucestershire
Philipp, G., Suzanne, L., and Gregor, Z. (2013). Analysis of techniques for business process improvement. University of Regensburg
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