The main differences I am going to look at are the management styles

The main differences I am going to look at are the management styles

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The main differences I am going to look at are the management styles
related to each of the companies.


This report is looking at the key differences between the two
companies that I have been independently researching. The main
differences I am going to look at are the management styles related to
each of the companies. It also looks at the different structures
within the company such as the hierarchy of the company and the range
of managers. Ethics is also going to be a key difference between the
following companies as they have very separate ideas of what are
good/bad behaviors for a business. Both companies are worldwide and
well-recognized businesses with thousands of employees and
multimillion-dollar profits.

Company X

In 1975, two teenage friends formed a company. It sold a form of
computer language for a self-assembly kit computer based upon Intel
processors. The friends were Bill Gates and Paul Allen, they named
the company Microsoft. Revenues and profits rose dramatically in the
early years. Windows 95 was what really put Microsoft on the map as
they started to make billions of dollars in profit each year. Now
Microsoft is one of the most profitable companies in the world and
Bill Gates is the wealthiest man in the world! Microsoft is now
installed in nearly all computers around the world; personally I have
never been on a computer that isn’t being run by Windows. That gives
you an idea about how big Microsoft really is. Another big issue that
concerns Microsoft is the fact that on your average high street there
will not be a Microsoft shop. There are not many Microsoft shops in
the whole of the U.K. but it is used in nearly every large companies
and shops in the world. The Microsoft headquarters are found in the
USA but also have separate smaller headquarters around the world.

Company Y

McDonalds is the world leading food services in the world today; it
has 30,000 restaurants in 119 countries and serves 47 million
customers each day of the week. It is also one of the most well
recognized companies such as Microsoft. It all started in 1955 a good
20 years before the likes of Microsoft. McDonalds is a franchised
company meaning a different person owns each restaurant but all have
to pay McDonalds main company at one time or another. They’re about
2,800 employees under the McDonalds name. The headquarters for this
company is just outside Chicago, in Oak Brook. Each country has its
own individual headquarters but all report back to the one in Oak
Brook. Even though these two companies seem the same they are very

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different in how they are run and the ethics they take. People will be
more familiar with McDonalds and the management style and employees
related to them.


Both Microsoft and McDonalds use very different approaches to
structuring their business.

McDonalds is a fast food chain that has the majority of its employees
on minimum to just above minimum wage. These are the people at the
bottom of the McDonalds hierarchy they work as the cashiers but are
theoretically just as important as the people right at the top of this

Since each restaurant is franchised then there is a miniature
hierarchy inside the main McDonalds hierarchy. This is very different
to how Microsoft works they have a much larger but flatter hierarchy.
Bill Gates is right at the top of the hierarchy but below him is a
large layer of the people working for him and each one of them has a
larger amount of people working for them.

The reasons for this is different for each company, McDonalds has a
tall hierarchy because of the many different stages there are to
achieve in the company. Such as when an employee first starts there
they are right at the bottom. Through time they can achieve promotion
up the hierarchy. Though for the first four promotions the worker is
still on the shop floor either on the tills or cooking in the back.
This is the reason the hierarchy grows large. There are still 3
levels of the hierarchy left in one restaurant after the 5 on the shop
floor meaning on average 8 in each restaurant.

The advantage of this high structure for McDonalds is that some
managers only look after 5 people or less and find it easy to keep
them hard working. Also people have a closer eye on each worker and
see both their good and bad points.

The disadvantage is the workers can get confused about who they should
be taking their orders from. Also communication form the top very
rarely gets to the bottom without being change. Much like Chinese
whispers. So sometimes the wants of the person at the top take a lot
time to be put into action by the people at the bottom. Another
problem is that they reduce the opportunities for promotion making
staff much less motivated than they could be.

The reason a flat hierarchy for Microsoft is due to the fact that they
keep everything on the small side. This works well because although
they have a very large headquarters with a large flat hierarchy,
outside of this there is not really anything that contains a need for
a the hierarchy

So because it is flatter this means there is greater communication,
which is a lot more efficient. The disadvantage of the flat structure
is sometimes one worker could be in command of over 20 workers. This
is hard to keep discipline and hard work amongst the workers. Regular
meetings will have to be called to make sure all the workers know
precisely what they are doing and achieve it at a respectful rate.

Management Styles

There are two main management styles these are what McGregor believes,
theory x and theory y management. But aside from these there are four
management styles that fit into those 2 and are adopted by people and
companies around the world. These are autocratic, democratic,
paternalistic and laissez-faire management. Microsoft and McDonalds
both show different types or management styles.

At McDonalds there is only really one type on management and that’s a
theory x. So the managers are generally autocratic, this means people
get told what they have to do rather than asked or have a choice.
E.g. the manager would ask a cashier to work on the till for 5 hours
and the cashier doesn’t really have a choice. This is because the
work that has to done is unskilled so no qualifications are needed
meaning people don’t work where they are best in the company they work
were they get told to work.

This type of management is very bad for morale in the workforce which
is what explains McDonalds high staff turnover rate. People tend to
work less efficiently at jobs they don’t like and this is true of
McDonalds staff because they work for pay, not job satisfaction.
Managers being demanding on people that don’t really want work there
means it doesn’t take long for people to have had enough then leave.

This is a totally different type of management to what is used at
Microsoft. At Microsoft the managers are more theory y mangers. They
adopt a democratic style of management, meaning they let the workers
become a lot more involved in where they should work and decisions in
the company has to make. At the end off all this the highest in the
hierarchy will make the final decision based on what was discussed.
The managers let people do what they want to do as long as it’s in the
right direction. Another reason the managers are democratic is
because people like to work at Microsoft as they really enjoy it and
have trained and worked to be there, unlike McDonalds. This means an
autocratic style is not needed to make people work hard. Also as the
jobs are a lot more technical there only certain people for each job
meaning they work at what they are best at and then all group together
to finish a certain product. E.g. Windows 2000 had hundreds off
people working on it every day but certain people had certain things
to do. Such as one department would just work on the starting up and
closing down of Windows for home use. Where as another department
would work on Microsoft Office.

Business Ethics

Ethics refers to a code of morally correct behavior, which a lot of
businesses like to think they follow closely. This can be many
different things; some companies such as Body shop stock everything
they believe to be morally right. E.g. against animal testing.
Whereas other companies think its more about ethics in the business
environment such as employee rights and ethics towards other
companies. Microsoft and McDonalds both have the same goal at heart
and that’s to make a big profit. How they go about it could be very
different for some companies.

McDonalds boasts a lot of charity work on their website and it boasts
in its adverts a lot about less salt and the more healthy options.
And true charity work is ethical by a TNC (Trans National
Corporation). But the question asked is does McDonalds do this
because they are thinking about people’s welfares or because they want
to make money.

Microsoft also does a lot of charity work for the less fortunate them
themselves. But you also have to ask the question weather bugs are
purposely put into their programs so you buy add on packs making them
more money.

Both McDonalds and Microsoft have to cover the ethics that are in the
law such as the human rights act (2000) because they have to. An
ethical business would go further than they have to.

Microsoft from research has proved to be an ethical business it not
only looks after its employee’s really well but thinks about the needs
for people when they make their products. They do everything by the
book from looking at there website.

McDonalds also looks like a ethical business although it doesn’t look
after its employees as well as Microsoft does, it doesn’t seem to
exploit them like other companies do. A lot of people in the USA have
complained that eating McDonalds makes them fat but they can’t really
use this as an excuse. Because they have control of there own bodies
and McDonalds isn’t acting in an unethical manor to make them eat
their food.


This report has looked at three aspects of Microsoft and McDonalds and
compared them against each other. From this it has shown differences
and similarities in its results. There seem to be more differences
between the companies than similarities although from what can be seen
there will not be many companies that act similar to Microsoft. Its
seems to me that Microsoft stands alone as a mega company.

McDonalds is worldwide but Microsoft will be used in nearly every
computer system in the world and have even brought out their own
console that is doing very well.


Bill Gates and the making of Microsoft James Wallace

Working for McDonalds in Europe Tony Royale

Business Studies for AS Hodder and Stoughton
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