Report On McDonald’s Organizational Structure And Key Assumptions

Specification of Key Assumptions

In this report two different sections have been discussed. At first history of McDonald’s, their organisational structure,   features of organisational structure and culture have been identified as four kind of key assumption followed by a synthesis on the manner the information for deciding their potential target market for new product was combined for decision has been elaborated.   

History of McDonald

According to Business Premium Collection (2016) McDonald’s is a US fast food chain that was established in the year 1940 as restaurant that was being managed by Richard and Maurice McDonald. Initially the fast food company started operations in California, USA. Earlier the business owners rechristened McDonald’s as Hamburger stand and later it was transformed into a franchise operating business with Golden Arches logo that was launched in year 1953 at Arizona. McDonald’s has their original head office at Illinois and later the fast food chain moved their global head quarter to Chicago during 2018. McDonald’s is the biggest operating fast food chain restaurant across the world in terms of revenue and as of year 2016 McDonald’s served around 69 million customers every day across more than 100 locations in the world with over 36,900 fast food outlets. Though they are popular for their hamburgers but McDonald’s also offer cheeseburgers, chicken menu, French fries, breakfast menu, soft beverage drinks, milkshakes, wraps and deserts. McDonald’s after being heavily criticised across the world by media and nutritionist groups for offering fast food items to customers which are unhealthy due to health concerns related to obesity had responded to new customer preferences for health conscious food products and tastes with food menus that were healthy to deal with negative criticism.   They launched several range of healthy menus like salads, fish, smoothies, fruits items etc in response of being serving unhealthy food with fast food items.  

McDonald’s revenues stream are mostly made from rent, loyalties and fee paid by franchisors along with sales that are made in their company run restaurants. As of 2012, McDonald’s had been reported as the 2^nd biggest private employer in the world after Wal-Mart with around 1.9 million staffs, of whom around 1.5 million worked for franchises.   

According to Hoovers Company Record (2018) McDonald’s revenues as of year 2017 was around 22.82 bn USD, with operating income of nearly 9.553 bn USD and net incomes as of 2017 that was reported was 5.192 bn USD. Total assets that was reported in year 2017 was 33.804 bn USD with total number of employees across the different locations worldwide being 235,000 as in year 2017.  

History of McDonald

The above figure represents McDonald’s organisational structure and hierarchy of senior leadership roles in the firm, which is headed by President and Chief Executive Officer. The leadership team has around 7 Executive VP’s and 1 Senior VP each of whom leads a particular business domain within the McDonald’s.   

McDonald’s have divisional organisational structure each of which governs separate operational domains and this kind of organisational structure helps to reinforce autonomy and flexibility within the company operations.  According to Garg (2017) organisational structure of McDonald’s has different aspects i.e. global hierarchy, performance base divisions and function base teams.    

Global hierarchy: they have a global hierarchy system of operations across all their locations in the world and this kind of system characterizes better corporate governance across its organisational structure. Like for instance the CEO of McDonald’s governs activities of all business areas and these directives flow down to middle level managers, restaurant managers and front line staffs. This attribute is generally practiced at McDonald’s organisational structure in all their international business operations.  

Performance base divisions: these are distinctive aspects of organisational structure of McDonald’s which bases new divisions of operations across the world in their organisational structure depending on performance such as US, International Lead market, High growth market and foundational market.

Function base team: McDonald’s controls function base team in their organisational structure such as under corporate operations, McDonald’s have HR, Supply chain and Procurement, Legal teams etc and this aspect of their structure capacitates them to meet foundational elements of their different business areas and needs.

At McDonald’s divisional organisational culture is being practised where their business operations and functions are categorised into four different areas or divisions based on geographical zones such as US, Europe, Asia Pacific, Middle east and Africa (APMEA) and other nations. As stated by Crawford (2015) each of the geographical divisions have their separate departments ranging from marketing, sales, finance and accounting, HR, IT and others and this kind of organisational culture had been introduced at McDonald’s in the year 2015 which has helped the company improve their operational efficaciousness within various international markets all over the world with clarified roles of Executives and employees who had been responsible for the development of different global markets.  

As can be observed from the above figure the role of international operations of McDonald’s is being divided amongst 4 Senior Executive as role of President who oversees different global functions at various levels. As stared by Garg (2013) the US market is the biggest business market of McDonald’s and is responsible for over 40% of operating outcome of the group. The high growth market segments are those markets that have huge prospect in context of extension of restaurant and franchise chains. These high growth market holds for around 10% of McDonald’s operating outcome and consists of merging markets of China, Italy, South Korea, Poland, Russia, Spain, Switzerland and Netherlands.  International lead markets are those markets that have already been established markets of McDonald’s like Australia, Canada, France, Germany and the United Kingdom. This segment accounts for around 40% of McDonald’s overall income and Foundational markets are all those remaining markets of the company that has the possibility to operate under a large base franchise model like India.      

1. The information to find the potential target market for new garlic cheese flavoured French fries and nuggets was combined from different forms of sources to get more relevant and significant information’s and outcomes. These included as follows:

• A Research was carried out in different existing market for nugget and French fries to find information about the current customer base such as who were the customers and what were the purchase intentions. According to Osswald, Brecht, Gentner and Mahnke (2016)research was conducted to gather information on customer characteristics and preferences, business markets which sold most of French Fries and nuggets etc to collect information on customers.  
• Research was conducted on competitors to collect information like who were the competitors target audiences, what were their market etc
• Analysis of own product where a detailed information was documented on attributes of current French Fries and Nugget product of McDonald’s, brief of product benefits etc.
• Research was made through discussion with current target audiences to determine their psychographics based on their personal characteristics that consisted of personality, behaviour, values, interests, lifestyle and frame of mind (Osswald, Brecht, Gentner and Mahnke 2016). Also information was collected to find the way the new flavoured garlic-cheese French Fries and nuggets would fit into the target customer lifestyle as well as inputs were gathered to find how and when the product will be introduced for aright markets, what features were most tempting for the target customers, what media like print, TV ads, internet ads, social media etc was mostly preferred to find information.   
   
• To determine the potential target market for new flavoured French Fries and Nuggets the final event that was made was evaluating the decisions about target market by consideration of fit of customers with product, actual benefit that target customer would receive from new product, would it meet needs, drive the target market and their affordability etc. Also evaluation was made to decide on type of media, content and ease of access for each channel for customers to make final decision on potential target market.    

Activities conducted	Department	Duration
Carrying out research in different existing market to reveal information about the current customer base	Marketing and Sales	2 months
Research on competitors	Marketing, Distribution and Supplies	3 months
Analysis of own product	R& D department	2 months
Determination  of  psychographics target market	Marketing, Customer Support	1 month
Evaluation of the decisions on potential target market for new flavoured French fries and Nuggets	All departments heads, managers and employee groups	2 months

Activities                   Duration	1 month	2 month	3 month
Research in different existing market		y
Research on competitors			y
Analysis of own product		y
Determination  of  psychographics	y
Evaluation of the decisions		y

Conclusion

Thus from the above discussion it can be concluded that McDonald’s has been a successful fast food company that has extended their business all over the world and has been practising divisional organisational structure for better clarity of roles, responsibilities across different operational area of business which helps them deliver better performance across different geographic markets as these are based on functions of performances. This kind of division helps to facilitate better opportunities across different markets of McDonald’s. Also it can be inferred that for identifying prospective target market for their new product they need to find information through conducting research to identify existing preferences of customer in different market, along with competitor analysis to decide on target markets.   

References  

Business Premium Collection. (2016).  McDonald’s corporation : Leisure and arts – company profile, SWOT & financial analysis.  London: Progressive Digital Media. Business Premium Collection. [Online]  Available: https://search.proquest.com/docview/1813468059?accountid=30552 [Accessed on 6 Nov. 2018]

Crawford, R. (2015). McDonald’s restaurants put motivation and reward at heart of business strategy. Employee Benefits, [Online]  Available: https://search.proquest.com/docview/1747605599?accountid= [Accessed on 6 Nov. 2018]

Garg, V. (2017). Executive team consensus-based perspective of organization evolution. Management Research Review, [Online] 40(9), 954-970. Available: https://search.proquest.com/docview/1938839684?accountid=30552 [Accessed on 6 Nov. 2018]

Garg, V. K. (2013). Does multi-unit franchising aid differentiation? An exposition. Journal of Applied Management and Entrepreneurship, [Online] 18(1), 3-26. Available: https://search.proquest.com/docview/1282103213?accountid=30552 [Accessed on 6 Nov. 2018]

Hoovers Company Record, (2018). McDonald’s corporation. Business Premium Collection [Online]   Fort Mill: Mergent Available: https://search.proquest.com/docview/1860751909?accountid=30552 [Accessed on 6 Nov. 2018]

Osswald, M., Brecht, L., Gentner, D., and Mahnke, T. (2016). How successful are your product launches? ISPIM Conference Proceedings, Manchester: USA [Online] 1-25. Available: https://search.proquest.com/docview/1860981994?accountid=30552 [Accessed on 6 Nov. 2018]