Analysis Of McDonald’s: Strategic Planning, Organizational Structure, And Motivational Strategies

Questions:

McDonald’s is a leading fast-food company established in America in 1940. This organization is operating domestically and globally successfully. Statistical data shows that McDonald’s Restaurants serve foods more than 47 million customers each day and its annual return is approx $15 billion. The first of store of this organization opened in Canada in 1970, which has been expanding day by day successfully. Due to its high quality and tasty fast foods this organization becomes popular in the customer domain. They are popular in serving burgers, French fries, pizza and various types of soft drinks (McDonald’s, 2018). McDonald’s focuses on developing unique business strategies that lead this organization to develop a strong brand image in the global market. However, McDonald’s is considered as the worlds’ largest restaurant chain for its high revenue. This food zone is best known for its hamburgers and chicken products.

Studies show that McDonald’s has been increased its share through last 25 years. McDonald’s makes its business flexible by adapting globalization that maximizes their revenue along with increasing the brand recognition (Leidner, 2015). This current study will analyze the internal and external environment in the context of McDonald’s along with finding the organizational design and structure. It can be said McDonald’s is leading in the fast-food chain successfully. Their business strategy as well as the corporate strategy makes this brand famous among the customer domain. In this current report, the various prospects of McDonald’s operation will be evaluated effectively to understand the current business growth of this company. 

From the analysis of part one, it has been received McDonald’s has high brand value and strong brand recognition. Such strong brand recognition allows McDonald’s to grab a large number of customers from the different geographical region. Therefore, by utilizing this brand recognition such organization can gain advantages in the competitive market. On the other hand, the strong human resource and worldwide distribution network of McDonald’s allow this organization to improve their supply chain policy along with maximizing their brand value. The service area of McDonald’s in a few stores is poor, therefore, the customization and standardization differences lead this organization to face legal challenges (Gassmann, Frankenberger & Sauer, 2017).

These can be mitigated by developing an appropriate strategy along with improving the company policy. By using their diversification strategy McDonald’s will be able to compete in the food and beverage industry successfully. On the other hand, the low bargaining power of supplier and buyers adds value to the pricing strategy of McDonald’s that allows them to increase their sales volume (Pradhan, 2018). By marinating food safety policy McDonald’s can minimize the threat of growing concern among people towards health and hygiene. According to the popular viewpoints it can be said that McDonald’s can utilize their situation analysis in a proper way to overcome their current barrier and grab the present opportunities.

From the PESTEL analysis of McDonald’s, it has been received that political environment and government action leave a great impact on the economy of and business operation of McDonald’s in US market. Increasing international trade agreement and government guideline can affect operation process of this organization. Based on the economic factor it has been found that in developing country and USA the economy is stable that brings opportunity for McDonald’s. On the other hand, the slowdown of Chinese economy may create a big challenge for McDonald’s in this country (Dey, 2016). Social factor highlights the busy lifestyle of urban areas and increasing cultural diversity, which influences the operation process of McDonald’s effectively. Technological factors show the emerging chances for McDonald’s due to moderate R&D activity and increasing business automation.

Answer:

Environmental factors show an urge for McDonald’s to generate a sustainable business strategy to grab the opportunity in the market. Finally, the legal factor highlights health regulation act and minimum wages that should be maintained by McDonald’s to carry out a fair business. At present McDonald’s is facing legal challenges due to poor service in its few stores. Increasing concern of customers towards health and hygiene leads this organization face threat in their business (Pradhan, 2018). McDonald’s has identified this challenge by analyzing their customer feedback. These legal factors create a big challenge for this organization. However, emerging technology brings opportunity for McDonald’s as they can utilize the automation technology and digitalization to boost their operation. According to me, it can be said that McDonald’s has both opportunity and challenges in domestic and global environment, which they need to analyze properly to get the best outcome.  

The major stakeholders of McDonald’s are employee, customers, investors, and communities. Employees are the base of McDonald’s that carry out both in-house and out-house work by utilizing their skills. Customers are the major external stakeholders of McDonald’s increasing the business profit and allowing the business to sustain in a competitive environment. Investors fulfill the crisis of financial resources in this organization, which is important to create a successful business (Ayling et al., 2015). On the other hand, the community contributes more to achieving environmental sustainability in the context of McDonald’s. Among the various stakeholders, McDonalds needs to prioritize their employees as they are assets of an organization. This organization should protect the employee interest by arranging training development program, which can lead the employees to perform effectively in the market.

McDonald’s follows mechanistic structure as the tasks performed in this company is highly repetitive in every shop of McDonald’s. McDonald’s has the divisional organizational structure including global hierarchy, function-based group and performance-based group. The different elements of McDonald’s structure and design includes worth on its own. Their work specialization method and departmentalization process are done based on the working nature of each employee. The chain of command in this organization includes processing objects each of these contains logic (Stanko & Zeller, 2014). In McDonald’s the span of control of the manager is narrow that means many subordinates are working under the supervisor. However, the centralization decision-making is carried out by the top level individuals in McDonald’s. On the other hand, centralization is done by the lower level of staffs in this organization. From this analysis, it can be said that the use of organic structure would be beneficial for McDonald’s to bring unique feature in their operation.

Among the various motivational theories, Maslow’s hierarchy of needs would be effective for McDonald’s to motivate their employees effectively. This five stage theory includes physiological needs, security needs, belongingness, esteem needs, and self-actualization. For an organization, it is crucial to meet the physiological needs of their employees to increase their self-esteem (Olsen, Popovich & Thompson, 2016). McDonald’s needs to provide a better salary structure and job security to the employees that can easily motivate them towards the work by meeting their basic needs (Pernkopf & Mayrhofer, 2017). Application of this theory allows this organization to meet the basic needs of employees that can highly motivate them.

Compliance with the health and hygiene policy: From the entire analysis it has been identified that increasing concern of people towards health and hygiene leads McDonald’s to face challenges. By following the environmental law and food and safety policy this organization would be able to avoid the legal obligation while operating in a country.

Improve the service quality through establishing effective communication

McDonald’s needs to improve service quality in their stores while delivering products. This can be done by establishing and effective communication between the stakeholders. This enables the stakeholders to share crucial information among them to meet the business objectives.

Application of benchmarking system would be effective for McDonald’s to monitor their business progress as this process provides an overview of the performance of each department in this organization. However, application of feedback control would be effective in the context of McDonald’s as it provides customer and employees feedback about the service that enables the organization to understand the stakeholder perspectives. McDonald’s should implement specific feedback and concurrent control through employee training and employee involvement (Ramadhan et al., 2018). McDonalds needs to identify whether their goal is accomplished or not by analyzing their previous performance result and current performance standard.  According to me, use of KPI would be a better approach for McDonald’s to monitor their performance effectively as this tool includes logical activities to measure the progress of an organization.

References

Ayling, C., Chan, C., Driver, E., Fletcher, S., Haugen, J., & Livingston, K. (2015). McDonald’s Canada’s 50th Anniversary Campaign.

Dey, K. (2016). The fast food industry in the UK. Analysis of McDonalds with PESTEL, VRIN and Porter’s Five Forces.

Gassmann, O., Frankenberger, K., & Sauer, R. (2017). A Primer on Theoretically Exploring the Field of Business Model Innovation.

Leidner, R. (2015). Over the counter: McDonald’s. In Working in America (pp. 55-65). Routledge.

McDonald’s. (2018). McDonald’s annual Reports. Retrieved from https://corporate.mcdonalds.com/content/corpmcd/investors-relations/financial-information/annual-reports.html

Olsen, P. E., Popovich, K., & Thompson, T. (2016). WTF? McDonald’s Minion Unhappy Meal. Journal of Critical Incidents, 9, 115.

Pernkopf, K., & Mayrhofer, W. (2017). Austria: Talent Development at McDonald’s Austria: A Compromise Between Local Demands and Global Standards. In The Global Human Resource Management Casebook (pp. 3-12). Routledge.

Pradhan, S. (2018). McDonald’s India–plotting a winning strategy. Emerald Emerging Markets Case Studies, 8(2), 1-25.

Ramadhan, T., Sumarjaya, I. W., Asih, N. I. M., & Kencana, I. P. E. N. (2018). Application of discriminant analysis in determining the purchase decision of McCafe products (case study: McDonald’s Jimbaran Bali). E-Jurnal Matematika, 7(1), 50-55.

Stanko, B., & Zeller, T. (2014). BUSINESS & ACCOUNTING ESSENTIALS: A McDonald’s E-Learning Project 2013 Annual Report.