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Joel Jacobson The topic for this case study is an article from an October 2010 Fast Company magazine

featuring new designs for McDonalds restaurants. There are many examples from the Fast article that can be traced to the concepts that are mentioned in the text book, Managing: A Competency-Based Approach, 11th Edition. Denis Weil is McDonalds Vice President of concept and design. Weil is the driving force of store design at McDonalds, and leads a team of designers at the top secret innovation center in the Chicago suburb of Romeoville. Tim Brown, CEO of Ideo, a design and innovation consulting firm, who has consulted with Weil on McDonalds customer service, calls Weil an experience engineer who isnt afraid to tap customers for input. This is an example of the concept of (chapter 9, p.288. fill in concept here)1 Plan to Win is a strategy that McDonalds has deployed in 2004. This strategy is made up of three pillars: menu innovation, store renovation, and an upgrade of the ordering experience. Knowing that McDonalds needed to change to keep growing, this concept of Anticipatory Change is being used.2 The definition of process innovation is: creating a new way of producing, selling, and/or distributing an existing good or service.3 In the article, McDonalds execs say that People eat with their eyes first," says president and COO Don Thompson. "If you have a restaurant that is appealing, contemporary, and relevant both from the street and interior, the food tastes better." 4 This is process innovation because McDonalds is looking at a new way of selling its product. McDonalds has thousands of franchisees. Each one of these stores has to function within what the company calls the system; no changes can interfere with its operational prowess. This shows pooled interdependence.5 All franchisees are independent, but everything pools into the McDonalds Corporation as a whole. They are all trying to achieve the same goal of success for the company. Design management is done very well at McDonalds, one of the few companies that excel at it. President and COO Don Thompson says of Weil, McDonalds most senior design exec ever: Hes become our center point. We never really had that before.6 This demonstrates the concept of decentralization.7 Not so much as decentralization on the corporate level, but
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Don Hellriegel, Susan E. Jackson, John W. Slocum, Jr, .2008, Managing: A Competency-Based Approach, 11th Edition, (Mason, OH: South-Western Publishing, Inc.), p. 288 2 Hellriegel et al., p. 393 3 Hellriegel et al., p. 408 4 Ben Paynter, October 2010, Making over McDonalds, Fast Company, (Issue 149), p.1, [Internet, WWW]; Available: Fast Company, 7 World Trade Center, New York, NY 10007-2195; ADDRESS: http://www.fastcompany.com/magazine/149/super-style-me.html?page=0%2C0, [Accessed: 7 October 2010]. A copy of this thesis is in the students possession and may be consulted by contacting the student at jacobsonje@msoe.edu. 5 Making over McDonalds, p.2 6 Making over McDonalds, p.2 7 Hellriegel et al., p.366

more on the design level. Weil appointed a corporate design leader for each of the companys operating regions who then contact a regional designer for local design element input. Weil is that the center and numerous corporate design leaders report to him. This is a very flat and horizontal organizational in the design area of the company, enabling Weil to call the shots quicker. The concept of geographic design can be easily identified by the companys presence in Europe and Asia. Some examples are: In Shenzhen, China, the restaurant has a casual meeting alcove divided by a space saving wall and ceiling moldings. In Paris, they use LIM design, meaning less is more. Simple contrasts such as curvaceous chairs and vertically striped walls make the space seem larger. In Goteborg, Sweden raised bar tables and free Wi-Fi are intended to draw business people. McCafes in Berlin, Germany use Swan chairs to encourage customers to relax amid images of coffee iconography.8 Geographic design is the organization of activities around a location. In this case, each McDonalds restaurant is tailored to the specific area which it is located. This helps bring the local flavor to each restaurant so patrons feel more comfortable eating there. Moreover, it helps to develop a competitive advantage in each region according to the areas customers, competitors, and other factors.9 Differentiation There are two aspects to differentiation: Division of labor: work of the organization is divided into smaller tasks. The division of labor is clearly shown in the different sectors of copy and print, marketing products, office and service, and shipping. This is an example of a division of labor since all these different areas perform a different task. Specialization: process of identifying particular tasks and assigning them to departments, teams, or divisions. Within each of these for divisions or service areas, each is broken down into small departments. 10 Copy and Print: Online Printing, Copy services, Presentations, manuals, etc. Marketing Products: Business Cards, Letterheads, Brochures, etc. Office Services: Packaging Services, Shipping Supplies, etc. Ship: Takes you directly to the FedEx site.11

Making over McDonalds 9 Hellriegel et al., p.373 1 10 Don Hellriegel, Susan E. Jackson, John W. Slocum, Jr, .2008, Managing: A Competency-Based Approach, 11th Edition, (Mason, OH: South-Western Publishing, Inc.), p. 288. 1 11 FedEx Corporation, 2010, FedEx Office, [Internet, WWW]; Available: FedEx Corporation, 942 South Shady Grove Road, Memphis, TN 38120; ADDERSS: http://www.fedex.com/us/office/ ; [Accessed: September 2010]

Integration Integration was achieved by utilizing the infrastructure that was in place when Kinkos was in place prior to FedExs purchase. Here are some FAQs from the website. When did FedEx Corporation acquire Kinko's? The acquisition was announced on December 30, 2003, and officially closed on February 12, 2004. Why did FedEx rename FedEx Kinko's to FedEx Office? The FedEx Office name better describes the wide range of services available at our retail centers and takes full advantage of the FedEx brand - long recognized for excellent customer service, quality and reliability. 12

FedEx acquired Kinkos in 2003, so it has been almost seven years since this took place, so integration has been ongoing for a while. Kinkos had many stand alone brick and mortar stores in place already, which FedEx could then use after the acquisition. And by reading the second FAQ, renaming FedEx Kinkos to FedEx Office helps them with brand recognition, which is important when trying to integrate one company into another. Vertical Design One of the concepts of vertical Design is hierarchy. The hierarchy at FedEx is quite deep. The top executives of FedEx are: Principal Officers: Frederick W. Smith, Chairman, President and CEO Robert B. Carter, Executive Vice President, FedEx Information Services and CIO T. Michael Glenn, Executive Vice President, Market Development and Corporate Communications Alan B. Graf Jr., Executive Vice President and CFO Christine P. Richards, Executive Vice President, General Counsel and Secretary13

Further down the line, there are more Chief Operating Officers that run the companies underneath the FedEx Corporation umbrella. Those are FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services. FedEx Office falls under the authority of FedEx Services.

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FedEx Corporation, 2010, FedEx Office FAQs, [Internet, WWW]; Available: FedEx Corporation, 942 South Shady Grove Road, Memphis, TN 38120; ADDERSS: http://www.fedex.com/us/office/customersupport/officeprint/faq/general.html ; [Accessed: September 2010]
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FedEx Corporation, 2010, About FedEx, [Internet, WWW]; Available: FedEx Corporation, 942 South Shady Grove Road, Memphis, TN 38120; ADDERSS: http://about.fedex.designcdt.com/our_company/company_information/fedex_corporation ; [Accessed: September 2010]

Centralization is another concept of vertical integration at FedEx. The definition of centralization is the concentration of authority at the top of an organization or department.14 This is quite evident in the organizational structure of FedEx. Frederick W. Smith is the Chairman, President and CEO of FedEx Corporation. All other CEOs of the other FedEx companies report to him. Its difficult to tell what the span of control is at FedEx Corporation. The head of FedEx is Frederick Smith, and there are four executive Vice Presidents under him that are in charge of the other FedEx divisions. So there is the Executive Committee (shown above), the Operating Company CEOs, International Executives, and Other Key Executives (not shown). By looking at the website alone, I dont believe you can come to a definite conclusion regarding span of control. There are many top level executives within the structure of the company. Without an organizational chart of FedEx Corporation, it is very difficult to determine who reports to whom, and how deep the levels of organization go. * (Side note: A Google search was performed on September 29, 2010, for an organizational chart of FedEx Corporation, but nothing was found.) The question remains: is the span of control at FedEx too wide, too narrow, or optimal? The optimal would be that the span is not too narrow, with managers micromanaging, and not too broad so that the manager loses the ability to lead subordinates.15 I do not have enough evidence to support a conclusion one way or the other. Integration of FedEx Office (formerly Kinkos) is most definitely a mechanic system. Depending upon what service you need, whether it be copying and printing, marketing products, or office services, or to have something shipped, each one of those services has its own set of specializations. Also, if you look at the bottom of the web page, you see all kinds of information regarding FedEx. This makes it most clear that Kinkos is now a part of FedEx, and FedEx is in control of operations. 16 Kinkos was business services, an example of performance of done within their if you want to doing what it The interdependence between FedEx and Kinkos has not changed much since acquired by FedEx in 2003. Prior to this, Kinkos specialty was copying, printing, etc. FedExs specialty was shipping. Looking at their interdependence today, this is pooled interdependence. That is little sharing or resources among unit or units in tasks.17 Copy and print does copying and printing services, and the other tasks are own specialties as well. A separate ship tab will bring you to the FedEx shipping site ship a package. The two companies are still somewhat interdependent, each company does best. But now they just work as a team under the FedEx Office name.

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Hellriegel et al., p. 366 Hellriegel et al., pp. 361-362 1 16 FedEx Corporation, 2010, FedEx Office, [Internet, WWW]; Available: FedEx Corporation, 942 South Shady Grove Road, Memphis, TN 38120; ADDERSS: http://fedex.com/us/office/ ; [Accessed: September 2010] 1 17 Hellriegel et al., pp. 377-378

Bibliography

FedEx Corporation, 2010, FedEx Office, [Internet, WWW]; Available: FedEx Corporation, 942 South Shady Grove Road, Memphis, TN 38120; ADDERSS: http://www.fedex.com/us/office/ ; [Accessed: September 2010] _____ 2010, FedEx Office FAQs, [Internet, WWW]; Available: FedEx Corporation, 942 South Shady Grove Road, Memphis, TN 38120; ADDERSS: http://www.fedex.com/us/office/customersupport/officeprint/faq/general.html ; [Accessed: September 2010] _____ 2010, About FedEx, [Internet, WWW]; Available: FedEx Corporation, 942 South Shady Grove Road, Memphis, TN 38120; ADDERSS: http://about.fedex.designcdt.com/our_company/company_information/fedex_corporatio ; [Accessed: September 2010] _____ 2010, FedEx Office, [Internet, WWW]; Available: FedEx Corporation, 942 South Shady Grove Road, Memphis, TN 38120; ADDERSS: http://fedex.com/us/office/ ; [Accessed: September 2010] Hellriegel, Don, Jackson, Susan E., Slocum, John W., 2008, Managing: A Competency-Based Approach, 11th Edition, (Mason, OH: South-Western Publishing, Inc.), p. 360. _____2008, Managing: A Competency-Based Approach, 11th Edition, (Mason, OH: SouthWestern Publishing, Inc.), p. 366. _____2008, Managing: A Competency-Based Approach, 11th Edition, (Mason, OH: SouthWestern Publishing, Inc.), pp. 361-362. _____2008, Managing: A Competency-Based Approach, 11th Edition, (Mason, OH: SouthWestern Publishing, Inc.), pp. 377-378.