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McDonald’s
By
MCDONALD’S AN INTRODUCTION
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving
around 68 million customers daily in 119 countries. Headquartered in the United States, the
company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald; in
1948 they reorganized their business as a hamburger stand using production line principles.
Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently
purchased the chain from the McDonald brothers and oversaw its worldwide growth.
A McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The
corporation's revenues come from the rent, royalties and fees paid by the franchises, as well as
sales in company-operated restaurants. McDonald's revenues grew 27 percent over the three years
ending in 2007 to $22.8 billion, and 9 percent growth in operating income to $3.9 billion.
McDonald's primarily sells hamburgers, cheeseburgers, chicken, french-fries, breakfast items, soft
drinks, milkshakes and desserts. In response to changing consumer tastes, the company has
expanded its menu to include salads, wraps, smoothies and fruit.
BUSINESS MODEL:
Franchise Model – Only 15% of the total number of restaurants are owned by the Company.
The remaining 85% is operated by franchises. The company follows a comprehensive
framework of training and monitoring of its franchises to ensure that they adhere to the
Quality, Service, Cleanliness and Value propositions offered by the company to its
customers.
Product Consistency – By developing a sophisticated supplier networked operation and
distribution system, the company has been able to achieve consistent product taste and quality
across geographies.
Act like a retailer and think like a brand – McDonald’s focuses not only on delivering sales for
the immediate present, but also protecting its long term brand reputation.
2. Objectives of Studying the Organization
The McDonald’s main objective is to provide its customers with food of a high standard, quick
service and value for money. They also provide good returns to shareholders.
McDonalds must set objectives in order to meet the aims of the business. A business objective
needs to be SMART objectives. SMART is an acronym which stands for specific, measurable,
achievable, and relevant and time specific.
Specific:
The business can make objectives to achieve their targets at the end of the year. The specific is
important in the business plan to find out what kind of specific targets McDonald’s needs to make.
For example, McDonald’s might set an objective of serving at least to per cent of single- order
customers within a minute of the order being placed.
Measureable:
The objective needs to be measured so that managers can see whether it has been achieved. For
example, McDonald’s could measure service times during a typical one-hour period and record
the number of times single-order customers were served within a minute of placing their order.
Achievable:
The objectives should be achievable. McDonald’s have to make sure that they have different taste
foods and serve the food as fast as possible. The manager of the McDonald’s needs to assess
whether it is feasible for employees, if they work efficiently to serve single-order customers within
a minute of the order being placed.
The objectives are very important to achieve the aims of the business, without making customer
happy they will not be able to make the profit that they want to make. So the business won’t be
able to grow. For example, by setting an objective to serve customers quickly, the McDonald’s
hopes to increase its profits by attracting and serving more customers.
Time:
The objectives should set with start and finish dates. For example, McDonald’s manager might tell
the employees that they have one month to achieve the one minute service time objectives.
The key objective of McDonald’s is to reach their aims, because they want to do better than their
competitors. McDonald's main aims are to serve good food in a friendly and fun environment, to
be a socially responsible company and provide good returns to their shareholders. McDonald’s
customers are mainly teenagers and kids. The company aims to provide its customers with food of
a high standard, quick service and value for money. They also wish to be more eco-friendly and to
serve healthier food. So they can gain more customers and it will help business to make a profit.
Making a profit will maximize the increase in sales and in market share it will help business to
grow. Objectives communicate what markers want to achieve, guide marketing actions and are
used to measure how well a plan is working. They can be related to market share, sales reaching
the market audience and creating awareness in the marketplace. Long-term objectives are broken
down into shorter-term measurable targets. Results can be analyzed regularly to see whether
objectives are being met. This type of feedback allows the company to change plans and allows
flexibility.
The main aim is to maximize profit and to provide goods/ services that are cheap and affordable
to the consumers. The best way to achieve objectives is to make more customers and to do this
McDonalds can advertise their business. If McDonalds gain more customers, that will help the
business to make more profit. It will also maximize the increase in sales and the market share. If
McDonalds makes more profit, they will be able to remain the number one retail company in the
UK.
This graph shows the differences in the market share between the other fast food restaurants.
McDonalds has leading the market share out of all of them. This proves that McDonalds has
achieved their aims of market share.
Timeline
1955. Ray Kroc opens the first McDonald’s in Des Plaines, Illinois.
1957. 'Quality, Service, Cleanliness and Value' (QSC&V) becomes the Company motto.
1959. A new McDonald's opens at a rate of one every five and a half days. The 100th McDonald's
opens in Wisconsin.
1962. The Golden Arches™ become the company logo.
1966. Ronald McDonald makes his first national television appearance. McDonald's stock is listed
on the New York Stock Exchange.
1968. The 1,000th restaurant opens in Des Plaines, Illinois. The Big Mac is added to the menu.
1971. McDonald's Australia opens its first restaurant in the Sydney suburb of Yagoona.
1972. The 2,000th restaurant opens in Des Plaines, Illinois. The Quarter Pounder is introduced.
1974. The first Ronald McDonald House opens in Philadelphia, USA.
1975. McDonald’s celebrates its 20th anniversary. The Drive-Thru concept is unveiled in
Oklahoma.
1978. The 5,000th restaurant opens in Fujiswawa City, Japan. The first Australian Drive-Thru
store opens in Warrawong, NSW.
1981. Australia's first Ronald McDonald House opens at the Royal Alexandra Children's Hospital,
Camperdown NSW.
1984. Ray Kroc, McDonald's Founder and Senior Chairman, dies and Ronald McDonald
Children’s Charities (RMCC) is established in his memory.
1985. Ronald McDonald House Charities becomes a registered Australian charity.
1986. The 9,000th restaurant opens in Sydney, Australia. McDonald's opens its first restaurant
near the North Pole, with the address McDonald's, Santa Claus Lane, North Pole, Alaska.
1990. The world's largest McDonald's with 900 seats opens in Pushkin Square, Moscow. A
McDonald's restaurant opens somewhere in the world every 14.5 hours.
1991. The 150th Ronald McDonald House opens in Paris. McHappy Day is held for the first time
in Australia, raising $375,000 for Ronald McDonald House Charities and the Variety Clubs of
Australia.
1993. McDonald's becomes the second most recognised brand in the world. The world’s first
McCafe opens in Melbourne, Victoria.
1999. McDonald's opens its 25,000th restaurant in Chicago, USA. McDonald’s Australia’s
flagship burger 'The McOz™' arrives on the menu.
2000. McDonald's is the Official Restaurant of the Sydney 2000 Olympic Games, serving more
than 1.2 million meals to athletes, officials and spectators.
2001. McDonald's celebrates its 30th Birthday Down Under, and the 20th birthday of Ronald
McDonald House Charities in Australia. The McFamily rallies to support those affected by the
11th September events through donations of food, services and money. RMHC is named one of
the top 100 charities by Worth Magazine.
2003. The 100th McCafe opens in Australia.
2004. The Happy Meal celebrates 25 years (1979 - 2004). Nutrition labelling is introduced to
packaging on McDonald’s core menu items - a Quick Service Restaurant Industry First.
2005. McDonald's celebrates its 50th Anniversary on 15 April. McDonald's Australia raised more
than $715,000 for CARE Australia through its restaurants to provide immediate and long-term
assistance to those affected by the Tsunami.
2007. We update the McDonalds packaging featuring 24 faces from the first ever global casting
call.
2008. The packaging redesign goes a step further with the most comprehensive global redesign
rolled out across the world.
2011. McDonald’s now operates in 119 countries having opened stores in Bosnia and Herzegovina,
and Trinidad & Tobago
Nature of business
The Company franchises and operates McDonald’s restaurants in the food service industry. The
Company had a minority ownership interest in U.K.-based Pret A Manger that it sold in May 2008,
and a 100% ownership interest in U.S.-based Boston Market that it sold in August 2007.
All restaurants are operated either by the Company or by franchisees, including conventional
franchisees under franchise arrangements, and foreign affiliated markets (affiliates) and
developmental licensees under license agreements.
The following table presents restaurant information by ownership type:
Developmental licensed
3,160 2,926 2,756
Affiliated
4,036 4,137 4,081
Franchised
26,216 25,465 24,471
Company-operated
6,262 6,502 6,906
4. ORGANIZATIONAL STRUCTURE
McDonald’s organizational structure was reformed in July 1, 2015 to improve the company’s
handling of its global operations. A firm’s organizational structure defines the system through
which organizational components coordinate to achieve business objectives. McDonald’s
organizational structure facilitates managing markets based on performance levels. As the largest
fast food restaurant chain in the world, McDonald’s keeps evolving to address current and
emerging market issues. The firm rolls out new products to maintain its performance in satisfying
customers. These endeavors are supported through McDonald’s organizational structure, which is
designed to adapt to the changing business environment.
The McDonald's executive organizational department areas are as follows: at the top are the
chairman and chief executive officer, and the chief operating officer. Below that, the departments
are broken down into: corporate affairs, marketing, human resources, national operations, regional
managers, finance, information, and strategic planning.
Other functional departments within McDonald's are legal, customer services, franchising,
security, hygiene and safety, property and construction, supply chain and restaurant services.
Features of McDonald’s Organizational Structure
McDonald’s has a divisional organizational structure. Each division handles a specific operational
area. The aim of this organizational structure is to support autonomy and organizational flexibility.
McDonald’s organizational structure has the following characteristics, arranged according to
significance:
4.1 Global Hierarchy. McDonald’s has a global hierarchy to cover all its operations worldwide.
This feature of the organizational structure emphasizes corporate control. For example,
McDonald’s CEO directs the activities of all business areas. Mandates are passed from the CEO
down to middle managers, and to the restaurant managers and personnel. This characteristic of
McDonald’s organizational structure is typical of most global business organizations.
4.2 Performance-Based Divisions. The performance-based divisions are the most distinct feature
of McDonald’s organizational structure. The company reorganized its structure on July 1, 2015.
Before the reorganization, the geographic divisions in McDonald’s organizational structure were
(a) U.S., (b) Europe, (c) Asia/Pacific, (d) Middle East and Africa (APMEA) and (e) Other
Countries & Corporate (OCC) including Canada, Latin America and Corporate. After the
reorganization, McDonald’s used performance as basis for the new divisions in its organizational
structure: (a) U.S., (b) International Lead Markets, (c) High Growth Markets, and (d) Foundational
Markets and Corporate. The U.S. accounts for more than 40% of McDonald’s revenues, and the
lead markets for 40%. The high-growth markets account for 10% of revenues.
4.3 Function-Based Groups. McDonald’s maintains function-based groups in its organizational
structure. For example, under corporate operations, the company has a human resource
management group, a supply chain and franchising group, and a legal group. This characteristic of
the organizational structure enables McDonald’s to address the basic functions in its business.
Organization Hierarchy:
5. PRODUCTS / SERVICES
Product: - McDonald’s places considerable emphasis on developing a menu which customers
want. Market research establishes exactly what this is. However, customers’ requirements change
over time. In order to meet these changes, McDonald’s has introduced new products and phased
out old ones, and will continue to do so. Care is taken not to adversely affect the sales of one choice
by introducing a new choice, which will cannibalize sales from the existing one (trade off).
McDonald’s knows that items on its menu will vary in popularity. Their ability to generate profits
will vary at different points in their cycle. In India McDonalds has a diversified product range
focusing more on the vegetarian products as most consumers in India are primarily vegetarian. The
happy meal for the children is a great seller among others.
McDonald’s Services
We’re here for you! At McDonald’s we know what you expect from us: convenience, good times,
friendly service, cleanliness and of course, delicious food.
Above is the diagram of McDonald’s product range and shows McDonald’s product items, depth
of McDonalds various product lines and the breadth of McDonalds product mix. *Note: This
diagram does not include all the products that McDonald’s offers and all the variety of the same
product it offers, this is just a brief diagram of McDonald’s product portfolio. As you can see
above, McDonalds has a very large collection of product items for each product line and it has
significant depth in each product line. * In an average McDonald’s restaurant there are 20+ burgers
for your choice and they continue to invent new burgers every time to satisfy consumers.
Furthermore, McDonalds has a very broad product mix, providing products from burgers, ice
cream, drinks and even salad. With the huge product range of McDonalds, advantages would be
that there are more choices for the customers and they can satisfy/suit the wants of different market
segments. Furthermore, with McDonald’s diversification of its products and its extensive product
range, it will be easier for McDonalds to grow and expand.