Due to digitalisation, modern corporations are facing fierce competition, and they implement strategic policies to gain competitive advantage in order to sustain their future growth. The management of companies uses strategic policies to improve their operations’ efficiency in order to increase their profitability. The role of strategic information system is growing between modern firms, and they use it to improve the efficiency of their business activities. This report will focus on analysing the information system of ‘McDonald’s’ to understand its influence on business operations. Information system enables different departments of an enterprise to share data with each other which assist in improving the decision-making process.
Most of the leading firms strategically implement Information System to gain and maintain a competitive advantage in the industry. McDonald’s is an American fast food chain which was founded in 1955; the company offers its services worldwide through more than 35 thousand locations. This report will analyse McDonald’s structure, products, and services to evaluate its operations and functionalities. The report will create an information system strategy for McDonald’s after analysing gaps in its business structure. Further, the challenges which occur during implementation of information system strategy will be discussed, and various recommendations will be provided to address such issues.
McDonald’s was founded in 1955 as an American fast food chain restaurant; the head office of the firm is situated in Oak Brook, Illinois, United States. The company operates in ‘fast food restaurant’ industry, and it offers its services worldwide. McDonald’s is known for offering high-quality food products at reasonable prices; the firm maintains a similar feel throughout its restaurants worldwide. The enterprise is one of the world’s largest fast-food restaurant chains with operations situated in more than 35 thousand location. The corporation generated revenue of US$24.622 billion in 2016 financial year. The company has more than 375,000 employees spread throughout its restaurants globally; in Australia, the firm has employed more than 90 thousand workers, and it is one of the largest employers in the country (McDonald’s, 2017). The products offer by McDonald’s include hamburgers, chicken, soft drinks, desserts, coffee, milkshake, French fries, salads and many others.
The corporation provides family friendly services in its restaurants, and it maintains similarity throughout its restaurants worldwide. The similarity in restaurants is appreciated by the customers since it is easier for them to book their orders. The primary competitors of the enterprise include Subway, Burger King, KFC, Starbucks and Yum Brands. McDonald’s has gained a competitive advantage due to its effective supply chain and positive relationship with suppliers. The company has successfully franchised its business, and it allows small or medium businesses to open their own McDonald’s restaurants. According to Hitt, Ireland, and Hoskisson (2014), McDonald’s serves around 1 percent of the world’s population each day which is more than 68 million people. The company fulfils its corporate social responsibilities while performing its business functions by maintaining diversity in employees and uplifting local communities’ development.
McDonald’s is known for incorporating technological advancements into its operations in order to improve customers’ experience; the firm use technology to improve the efficiency of its supply chain functions. The enterprise has incorporated ‘Information system strategy’ into its business structure which assists in improving company’s functionalities and transforming its supply chain operations. As per Rashid et al. (2013), the corporation has introduced a number of services which focus on improving its customers’ experience. For example, a large number of McDonald’s restaurants provide ‘Drive-thru’ facility which allows its customers to purchase their order directly from their cars. The company has introduced touchscreen self-ordering machines ‘Kiosk’ in various locations of New York and Singapore which allow the customer to customise their burger and individually select its ingredients manually. The gap in this system is that company have to provide training to employees and customers in order to teach them how to use the machine properly.
Sinhmar (2014) provided that McDonald’s use cloud computing technology which assists in reducing company’s operating costs; the firm use ‘SaaS model’ to get software licenses without any issue which enable them to focus on their core competencies. After moving to a cloud-based platform, McDonald’s has reported 50 percent improvement in performance of products. The gap in this system is that corporation is not using it to improve its supply chain operations. The new system can fix issues of wastage and reduce products manufacturing costs which assist the company in providing better services. McDonald’s use Transaction Processing System (TPS) strategy to perform various business functions such as employee record keeping, payroll, compensation and many others. The TPS collects transactions’ data of the firm and provides relevant information, such as supplier name, address, quality and quantity of items purchased and many others, which improve the efficiency of company’s operations.
McDonald’s also use Management Information System (MIS) which allow them to share relevant information at the right time which reduces the time of decision-making process. Rijmenam (2016) stated that the firm also uses big data technology to become a more information-centric company which allow them to take business decision according to customer preferences. The company uses big data technology to select which restaurants require ‘Drive-thru’ option based on customer predictive analytics. The gap in use of big data technology is that corporation is not using it to share detailed reports with its line managers. New information system strategy can enable company to provide drillable reports to its line managers that can assist them during the decision-making process.
Information System (IS) strategy is used by modern corporations to improve the efficiency of their operations and gain a competitive advantage over competitors; it focuses on aligning information system along with firm’s business strategy. Laudon and Laudon (2016) stated that the IS strategy analyses the data that is required in company’s strategic, operational and tactical levels in order to achieve organisational objectives. Many enterprises transform their IT infrastructure through IS strategy and reduce their operating expenses. The IS strategy enables multinational companies to share data between different departments in order to simplify their procedures. McDonald’s uses cloud computing technology to improve its customers’ experience and share data between different departments. The company can use Information System strategy to improve its supply chain and many other business operations. McDonald’s can use Information System strategy to implement automated replenishment in its supply chain that can assist them automatically book order when food supplies are low.
The firm operates in more than 35 thousand locations, and most of its franchisees buy ingredients from local suppliers; a successful Information System can be implemented by the firm to connect franchisees with suppliers, and automatically book orders when the supplies are short. Effective Information System strategy can enable McDonald’s to assess its customers’ demands and develop new products based on their requirements. McDonald’s is required to establish systematic monitoring and evaluation program to analyse its customers’ requirements and implement them into business strategies. Vivek, Beatty and Morgan (2012) provided that the firm can also improve interaction between different restaurants and management by improving its MIS strategy that will allow line managers and top-level executives to share critical information with each other that assist in decision-making process. The company can use information system strategy to transform its business strategy as per rapidly changing business environment.
Modern firms implement information system strategy into their business in order to improve the efficiency of their operations, but, they face various issues while aligning it with business strategy. The companies face various issues while implementing information system strategy into their business structure because of rapidly changing marking conditions. McDonald’s deals with a larger number of franchisees who are situated in different countries and implementing an information strategy that covers each of them is difficult for the organisation. The company has to evaluate its business environment and culture before implementing an information system strategy to ensure that employees are ready for new technological advancements. Galliers and Leidner (2014) stated that many employees might oppose new IS strategy by providing that it is useless and ineffective. The corporation has to ensure that employees are comfortable with new IS technologies, and they are able to use them correctly while performing daily operations.
Similarly, the customers might also get frustrated by the implementation of new technology such as the use of touchscreen system to place orders. Continuous frustration and opposition are signs that company has failed to implement an effectively align its business strategy with the information system. As per Issa-Salwe, Ahmed, Aloufi and Kabir (2010), the complexity of information system strategy can decrease company’s sales and increase employees’ retention rates. McDonald’s operates in more than 35 thousand locations globally and it can difficult for management to supervise each division. Lack of management supervision can increase the problem for McDonald’s since it might be difficult for them to implement Information System strategy for each restaurant. Lack of effective relationship between employees and management can create various problems in the implementation of IS strategy. Due to a large number of locations, McDonald’s also face difficulty in collecting and assessing MIS data from different restaurants.
By monitoring and assessing MIS data, the corporation can provide drillable reports to its line managers that assist them in taking appropriate business decisions. The firm collects a larger number of customer data from its global operations, and it might face difficulty in assessing such data properly. McDonald’s might face issues relating to employee engagement because it deals with more than 375,000 employees; it is difficult for a corporation to train each worker about information systems and it also increases its operating costs. According to Poister (2010), Information system strategy works properly if the employees are able to utilise it while performing their day-to-day business activities properly. McDonald’s also face difficulty in identifying errors in information systems because in some cases, staff did not have the technical knowledge to fix the issue which disrupts the entire IS strategy of the firm.
Following policies can be implemented by McDonald’s in order to address various challenges related to implementing Information System strategy into its operations.
Conclusion
From the above observations, it can be concluded that modern corporation uses Information System strategy to improve the efficiency of their operations which provide them a competitive advantage. Organisations can align their business strategy along with information system to improve the efficiency of supply chain and operations. McDonald’s use various information system strategies to effectively operate its business operations such as cloud computing, MIS, big data, TPS, and others. The company can improve its supply chain operations and increase its customers’ experience by implementing a successful Information System strategy. The firm might face various difficulties while implementing IS strategy such as employees opposition, high expenses, lack of management commitment, lack of technical expertise, non-detection of errors, and others. In order to address these issues, the enterprise can implement various policies such as training its employees, hiring IT specialists, establishing effective relationships, increasing top-level managers responsibilities, establishing systematic monitoring system and others. McDonald’s can sustain its future growth by effectively implementing IS strategy in its business operations.
References
Galliers, R.D. and Leidner, D.E. eds. (2014) Strategic information management: challenges and strategies in managing information systems. Abingdon: Routledge.
Hitt, M.A., Ireland, R.D. and Hoskisson, R.E. (2014) Strategic Management: Concepts: Competitiveness and Globalization. 11th ed. Ohio: South-Western College Pub, pp. 3-5.
Issa-Salwe, A., Ahmed, M., Aloufi, K. and Kabir, M. (2010) Strategic information systems alignment: Alignment of IS/IT with business strategy. [PDF] JIPS, 6(1), pp.121-128. Available at https://www.researchgate.net/profile/Abdisalam_Issa-salwe2/publication/220635737_Strategic_Information_Systems_Alignment_Alignment_of_ISIT_with_Business_Strategy/links/09e41513d69426f770000000.pdf [Accessed 12th January 2018].
Laudon, K.C. and Laudon, J.P. (2016) Management information system. Delhi: Pearson Education India.
McDonalds. (2017) Macca’s People. [Online] McDonalds. Available at: https://mcdonalds.com.au/about-maccas/people [Accessed 12th January 2018].
Poister, T.H. (2010) The future of strategic planning in the public sector: Linking strategic management and performance. [Online] Public Administration Review, 70(s1). Available at https://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2010.02284.x/full [Accessed 12th January 2018].
Rashid, A., Zamzuri, M., Ahmad Izzuddin, T., Abas, N., Hasim, N., Abd Azis, F., Aras, M. and Shahrieel, M. (2013) Control of Automatic Food Drive-Through System using Programmable Logic Controller (PLC). International Journal of u-and e-Service, Science and Technology, 6(4), pp.41-50.
Rijmenam, M.V. (2016) From Big Data to Big Mac; how McDonalds leverages Big Data. [Online] Datafloq. Available at https://datafloq.com/read/from-big-data-to-big-mac-how-mcdonalds-leverages-b/403 [Accessed 12th January 2018].
Sinhmar, S. (2014) Consequence of information technology in business. International Journal of Education and Management Studies, 4(2), p.156.
Vivek, S.D., Beatty, S.E. and Morgan, R.M. (2012) Customer engagement: Exploring customer relationships beyond purchase. [Online] Journal of Marketing Theory and Practice, 20(2), pp.122-146. Available at https://www.tandfonline.com/doi/abs/10.2753/MTP1069-6679200201 [Accessed 12th January 2018].
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