Investigation of McDonalds
McDonald's is the largest food service company in the world. The
company regards itself as the leading global food service retailer.
With more than 30,000 restaurants serving more than 47 million people
each day in 121 countries. In 1974 McDonald's opened its first
restaurant in the UK. As of 31 December 2001, McDonald's and its
franchisees operated over 1,184 restaurants in the UK.
The business that I have chosen to investigate is McDonalds
which is a
Franchise: A business licensed to use the name, logo and expertise of
an existing, well-known business.
The benefits of a franchise are:
The Expertise of the Franchisor
When you buy a franchise, you are purchasing the years of experience
and the proven business model
of the franchise system, also known as
the franchisor. In any new business, much time and money are spent in
trial and error. A proven franchise may eliminate many of the start-up
problems. A franchise enables you to open a franchise business with
little or no previous experience in a given industry.
Instant Brand Recognition
In addition to the franchisor's experience and business model, you are
also purchasing the right to license the trademarks of the business.
Depending on the size of the franchisor and how long the system has
been in place, these trademarks can bring instant goodwill and
credibility to your business and the products and services you
A franchise system will provide training for you and possibly some of
your employees. This is usually done both at the franchisor's home
office and the franchisee's place of business. This training should
prepare you in all facets of the business including: purchasing and
inventory maintenance, handling customer complaints, dealing with
employee matters, etc. The level and length of training will vary from
system to system.
The drawbacks of a franchise are:
Working Within the System
If you have difficulty following directions or dislike working within
a system, you may find owning a franchise extremely frustrating. Many
people go into business for themselves because they want to be free of
constraints and able to do things "their way." You will not have
complete flexibility with a franchise. Conformity to the franchise
system is critical if consistency among franchises is to be
maintained. However, there are areas such as marketing where a
franchisee can be creative.
The Risk of Losing Your Business
While it is true that purchasing a franchise has less risk than
starting an independent business, there still are risks. One such
important risk is that your business can be taken away (even if it is
enjoying financial success) because you failed to follow the franchise
agreement or the franchisor's operating manual. It is critical that
you carefully review each of these documents before purchasing a
franchise and that you take care to follow all franchisor requirements
after you open your franchise location. Because you own the business,
you, to a great extent, determine the success of your venture.
Choosing the Wrong Franchisor or System
There is no specific requirement under federal law that a franchisor
has to be of a certain size, financial stability or expertise. Anyone
can become a franchisor. The Federal Trade Commission ("FTC") merely
requires the franchisor to disclose certain information to prospective
franchisees. The FTC does not review or verify this information. This
is the franchisee's responsibility. That is why it is critical that
you carefully review the Uniform Franchise Offering Circular and the
Franchise Agreement before you sign it. Just because the franchisor is
an established company and has an official looking "form" agreement
does not mean that it is in your best interests or that it is
Aims and objectives
McDonald’s vision is to be the UK’s best quick service restaurant
Aims and objectives
McDonalds’ aim (‘vision’) is to be the ‘world’s best quick service
restaurant experience. This means:
Running and opening great restaurants and providing exceptional
quality, service, cleanliness and value. This aims shows that
McDonalds wants to keep improving the quality of there products and
the cleanliness of their restaurants.
McDonalds will continue to assess its menu offering from a nutritional
stand point and to work with government and health officials to
investigate improvements. This aim shows that McDonalds want to have a
menu that appeals to all consumers and also contains healthier
McDonalds will not work with any supplier who does not adhere to the
standards required by UK and EU legislation regarding animal welfare.
Transportation, husbandry inspection and quality, hygiene. This aim
shows that McDonalds has high standard so that the restaurants only
serve fresh and clean products.
As an independent registered charity, RMCC’s main focus is
establishing Ronald McDonald’s houses and Ronald McDonald family room
at children’s hospitals. This aim show that McDonalds is a caring
company and continually helps there consumers.
Measurement of success
McDonald’s collects information from:
* Market share
* Meeting aims and objectives
McDonalds collects information form their profit records to see if
there has been any change form pervious years, McDonalds can measure
its success by calculating the difference form the year/months before.
McDonalds collects information from their market share, by analyzing
the changes in the market.
McDonalds can measure its success by growth of the company, for
example the amount of new franchises opening and new countries that
McDonald’s restaurants are being established.
McDonalds can measure its success by that awards it receives for its
health and safety, environmental policies and food quality.
Meeting aims and objectives
McDonalds can measures it’s by seeing if they meet there aim and
objectives. For example its quality, service aim cleanliness aims.
Hierarchical structure a hierarchy is a series of levels of people,
each level controlled by the level above it. Large organizations like
limited companies may have thousands of employees. They have a more
complex and 'taller' organisational structure, which includes a number
of levels of hierarchy and division into functional areas such as
sales, finance and human resources. In the example you see the
structure of a manufacturing company.
Flat structure a simple horizontal or 'flat' structure is very
different from the complex hierarchical structure. In this kind of
structure the diagram is flat in shape; there's only one level of
command. In this diagram of a sole trader you can see the owner has
control over his assistants, he tells them what to do. The owner
probably carries out the mains functions like finance, administration,
marketing and human resources and the assistants do the selling.
The McDonald's restaurants all have a flat structure. There is one
manager who is in control of the other assistants and employees. He
takes all the decisions and he is in charge of the main functions.
This makes it very simple for the staff because all they have to do is
selling. This way they can pay more attention to the customers, so I
think this is indeed the best structure for a McDonald's restaurant.
But the McDonald's corporation has a hierarchical structure. This is a
huge company with lots of different departments which has to be
organized very well, because if the employees aren't directed in the
right way they won't do their jobs right. So this way it is all
ordered and the people can work undisturbed, this saves time and money
for the business.
McDONALD'S SENIOR MANAGEMENT
Chief Executive Officer
| | | | |
Andrew Marcus Terence Ed Philip
Taylor Hewson Haynes Oakley Cobden
| | | | |
Operations Marketing Finance Purchasing Property
Field Services Franchising Information Quality Construction/
Training/Ops- Charities Services Assurance Design
Development Security Communications Facilities
Human Resources Local Govt.
McDonald's are structured along functional lines the major areas of
· Operations (equipment and franchising)
· Development (property and construction)
· Finance (supply chain and new product development)
· Marketing (sales marketing)
Operations (equipment and franchising)
The operations department in McDonalds deals with people who work in,
or want to work in the firm. It controls the number of employees in
the firm. The operations department mainly deals with;
· Recruiting, selecting and appointing all new staff.
· Terminating employment though redundancies, retirement or dismissal.
· Negotiating grievance and disciplinary procedures with trade unions
and applying them where necessary.
The operations department helps McDonalds to meet their aim and
objectives by motivating staff and employing qualified staff.
Marketing (sales marketing)
The marketing department in McDonalds gives the consumer’s point of
view within a firm. It acts as a bridge between consumers and the
* It sets up marketing research
* It works with design and production departments to make sure that
the firms products are of a design, quality and price that
* It organises the advertising, promotion and distribution of goods
The marketing department helps McDonalds to meet their aim and
objectives by attracting newer customers.
Development (property and construction)
The development department in McDonalds plans organises and caries out
the manufacturing of a firms products. It must make sure that goods
· cheaply as possible,
· that they are of good quality
The development department helps McDonalds to meet their aim and
objectives by producing quality products.
Finance (supply chain and new product development)
The finance department in McDonalds pays the salaries of the employees
in each of the department; they keep records for example profit and
loss. The finance department helps McDonalds to meet their aim and
objectives by producing records and charts to show how the business is
McDonald’s restaurants are managed differently to the Head Offices.
They use a mainly autocratic management style. This is because they
are dealing directly with the customer, and at busy times a decision
needs to be made quickly and correctly to ensure that the customer
receives the best customer service.
Another reason for using autocratic management is that the people who
are better trained for certain tasks will be needed to do them at the
busier times, (for example serving on the till on a Saturday
lunchtime). By doing this it means that the customers get served more
quickly and efficiently. If staff were to chose what tasks they did,
then the people who were more skilled at a task wouldn't necessary be
doing it as the staff are more likely to chose the job they like best
rather then the one that they were best suited for. 7.0 (E4) (C2)
Cultures Within McDonalds
Every business is made up of different cultures, and the cultures that
are present within the business depend on the management styles and
organisational structures that are used. The different types of
cultures are: -
¯ Role Culture: - This is best suited to a hierarchy organisational
structure. This type of culture works best by every employee playing
the role that he or she has been predetermined and corresponds with
the rules and regulations of the business
¯ Task Culture: - This culture encourages people to work as a team;
this works best in a star structure.
¯ Power Culture: - This works well in a matrix structure. It is based
around one dominant individual/leader.
¯ Person Culture: - this culture focuses on providing administrative
help and support and close attention to one person in the
organisation. 7.1 McDonalds Culture
McDonalds have many different types of culture present within the
business; this is because of its size and many different Offices that
are situated globally. The next few sections looks at the offices of
McDonalds in Britain, Europe and the main Head Office in the USA, they
are all summarised together under the same section, I will also look
at a McDonalds restaurants and what kind of cultures they are likely
to use 7.13 McDonalds Head Offices
All of McDonalds Head Offices work in the same basic way, just on a
bigger or smaller scale. They all use what appears to be a task
All Head Offices are divided into different departments as listed in
5.0. All of these departments have people specially trained to do
specific tasks, because all staff members are trained to do a certain
job, the management of the departments leave them to carry on their
jobs alone. Management however, do get involved when theirs a major
decision to be made, or a massive problem. 7.14 McDonalds Restaurants
McDonalds restaurants work in a completely different way, they use
more of a power culture in which the manager on duty assigns staff
members with different tasks each day.
ICT in McDonalds
The impact of ICT has had huge effects on internal and external
communications of McDonalds.
Communicating with customers
The internal customers of McDonalds are its employees. The external
customers are the consumers.
Communication also takes place with potential customers. External
customers require a different set of communication methods, sometimes
called the communication mix. These will include advertising through
the mass media, promotional and information literature and website
selling, all of which require the use of ICT.
Without ICT all of the above would be impossible for McDonalds.
Communicating with suppliers
Developing long-term relationships with suppliers is better than
chasing the lowest cost by continually changing. McDonalds work
directly with suppliers on issues such as quality standards and
environmental policies. Again without ICT with could not be possible
Without ICT it would not be possible for McDonalds to advertise its
goods to customers, so therefore would not be as successful
Launched In the year 2000, McDonald’s UK intranet provides a fast and
up-to-the-minute source of information for McDonald’s restaurants
management and office staff. It is a single point of reference for
administrative requirements, news and marketing materials.
McNews and MIDUK
McNews was the award-wining magazine published bi-monthly for all
restaurant staff. In 2002, McNews was reached as MIDUK – a lively
people-focused magazine, it covers news, activates and events form
restaurants around the country.
An email system in all offices and company-owned restaurants.
Employee satisfaction surveys for both office and restaurant staff are
McDonalds is committed to long-term relationships with a limited
number of supplier’s partners who share the company’s vision ‘to be
the best’. For suppliers this means investing with the confidence that
they be treated as partners in the businesses.
McDonald’s suppliers follow the exacting standards of quality, value
and cleanliness set by the company. The most up- to-date and efficient
food processing techniques are employed along with stringent quality
assurance and food safety programmes. Great emphasis is placed on
traceability system for all product ingredients to enable controls to
be exercised over every link in the supply chain.
In its McDonalds preference wherever possible to purchase from
supplies in the UK, providing they can meet McDonalds exacting product
and hygiene standards, and are completive. Suppliers are monitored in
terms of their environmental polices and the company only buys from
suppliers who operate responsibly in accordance with government and EU
regulations and guidelines.
McDonalds works closely with franchises, suppliers and its logistics
provider to meet their commitments to quality, nutrition, and hygiene
and food safety.
The responsibility of serving 3 million customers per day, makes
quality a consistent goal. The company strives to ensure quality from
the crop to counter. To that end, McDonalds requires the highest
standards and specifications, not just for product ingredients: every
detail of production, transport, delivery, preparation and service is
also exhaustively monitored.
McDonalds believes that food quality begins at the very first link in
the supply chain, whether this is dairy herds, lettuces seedlings or
the flour used in the buns. The company has highly trained team of
quality assurance professionals, whose jobs includes verifying the
companies supply chain though audits and site visits. They also work
with suppliers to maintain and develop product quality and to ensure
that restaurants consistently serve hot, fresh, great tasting food to
all customers, every time they visit a restaurant. Independent food
safety audits are also used on a regular basis to access McDonald’s
New product development
McDonalds always has and always will continue to develop new products
that satisfy customer’s expectation for great taste and great value.
The company’s new products development team works with suppliers to
expand the menu with new core and promotional food items. Our quality
assurance experts help to ensure that all food meet McDonalds high
quality and safety standards.