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McDonald's Cost Control - Assignment Example

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McDonald's Cost Control

McDonald’s bigness hinders the organizational ability to control costs from the head office. The company has many smart people to realize that faster than others. This has lead McDonald’s into developing cost control tools that will help the organization achieve its targets of cost control at every branch level in every country. As a result of this McDonald’s headlined the newspapers around the world and many newspapers wrote that it has earned profit that was far above the expectations of public, analysts and other stakeholders. The result for this boost in profit was effective cost control at McDonald’s. This resulted in extremely high profits for the company. Since profit is calculated by subtracting revenue from costs, any reduction in costs is going to inflate the profit figure. This is what has happened in McDonald’s and the company enjoyed a successful year thanks to the great work done by operation managers and cost control personnel and McDonald's.’s. (Baertien & Klayman 2009) One of the ways the cost control personnel have been able control costs at McDonald’s is through the introduction of drive-through window and by providing home delivery services. This saves McDonald’s restaurant piles of money internationally. The motive behind using these schemes is to save the cost of serving customers at McDonald’s own branches. If McDonald’s serves a customer at its own branches, it involves various fixed and variable costs. Fixed costs include cost of building and maintaining a eating

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place in the restaurant. These increases the lease charges as the restaurant have to lease a larger place to accommodate customers. Other fixed costs include cost of building, repair staff, cleaner and increased number of personnel that are there to serve the customers. On the other hand, variable costs include cost of cleaning dishes, cost of sauces, lightning and other activities that are provided to the customers to entertain them. By opening smaller drive-through restaurants and by managing a system of delivering the food to customer’s own place saves McDonald’s a lot of money. That was one reason why McDonald’s profits were above the expectations of analysts in 2009. (Dopson & Hayes 2008) McDonald’s has also started using advances in technology reduce costs. This includes surveillance cameras and use of other devices to reduce employee and customer thefts. In the past, it cost McDonald’s a lot of money in term of employee theft. All of those things that were stole by the employees needed replacement and this caused the costs to increase and the company suffered in financial terms. However, the cost management personnel have solved these problems by using advances in technology. Other initiatives such as using recycled paper and taking up green initiative has also helped McDonald’

Summary

The paper dwells upon the McDonald’s Corporation as the largest fast food chain in the world. The management of McDonald’s has never faced a problem which is too difficult for them or one they cannot solve. …
Author : eulahmedhurst
McDonalds Cost Control essay example
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