INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

PPT Submitted on the topic “Management Practices”

Professor Dr. S. Rangnekar

Department of Management Studies

IIT Roorkee
Case Study
Explanation of Case Study
 About McDonald’s

● McDonald's Corporation is an American fast food

company founded in 1940
● McDonald's is the world's largest restaurant
chain by revenue
● Serving over 69 million customers daily in over
100 countries across 37,855 outlets as of 2018.
● McDonald's is the world's second-largest private
employer with 1.9 million employees
● The founder Ray Kroc believed ‘Take care of our
people and the business will take care of itself’
 1955: Ray Kroc opened
First McDonald’s in USA
1967: McDonald’s
opened first restaurant
1970: 1600 Restaurants outside USA in Canada
1980: 6000 McDonald’s
restaurants opened
1996: McDonald’s Opened
first restaurant in Mumbai
2001: McDonald’s launched
first drive thru in Mumbai
2007: McDonald’s had
more than 31,000
restaurants in 119
countries 2014: McDonald’s launched
Mobile ordering app in India
2018: McDonald makes its first
profit in India
McDonald growth over the years
McDonald's Vision and Mission
• McDonald’s corporate mission is “to be our
customers’ favourite place and way to eat and
drink.”

• McDonald’s corporate vision is “to move with

velocity to drive profitable growth and become
an even better McDonald’s serving more
customers delicious food each day around the
world.”
Major Competitors
Competitive Analysis (qualitative)
McDonald’s CPM Matrix Comparison
 Steps for construction of CPM matrix

Here we have used weighted rating system for the construction of competitive profile matrix. Some of the
important steps involved in the construction of competitive profile matrix are given below.

• In the first column, success factors of Industry are listed down (usually from 6 to 10).
• In the second column, weights are assigned to each factor ranging from 0.0 (not important
to 1 (most important). Greater weights should be given to those factors which have grater influence on
the organizational performance. The sum of all weights must equal 1.
• Each factor is rated ranging from 1 to 4 for all the firms in analysis. Here, rating 1 represents major
weakness, rating 2 shows minor weakness .Similarly, rating 3 indicates minor strength whereas rating 4
shows major strength.
• Weighted score is calculated by multiplying each factor's score by its rating.
• Total weighted score is calculated by adding the weighted scores for each variable.
 McDonald's competitive advantages

Cost
Quality Innovation Speed
Competitiveness

McDonald’s primary QSC&V (Quality,

McDonald’s McDonalds made
generic strategy is Service, Cleanliness &
constantly innovate speed of service as
cost leadership. As Value) is a corporate
the food menu their top priority ,
a low-cost provider, motto adopted
and McDonald's speed in terms of
McDonald’s offers by McDonald's to
was the first order preparation
products that are describe the
major international and delivery
relatively cheaper company's philosophy
fast food restaurant,
compared to for operating
and that it had the
competitors. restaurants.
first drive-through
window.
 Strength Weakness Opportunities Threats
Reputed brand Negative publicity Increasing demand for
Competition
Strong global presence Unhealthy food menu healthier food
Healthy issue
McDonald’s Plan to Win High employee turnover Growth of the fast food
Law issue
Strong financial performance gfhgvbvgv
Low differentiation industry
Saturated in fast-food industry
Success in target very young Legal action Globalization
Economic recession
children Use of HCFC-22 Low cost menu is
Low-cost leader Lacking breakfast menu preferred by larger number
Good socially responsible and Social trend of customers
community oriented Diverse tastes and needs
of customers
 Tows Matrix for McDonalds
Internal Internal Strengths(S) Internal Weak-
Factors nesses(W)
External
Factors
SO Strategy: Maxi- WO Strategy:
External oppor- Maxi Mini-Maxi
unities(O) Introducing new nutritious Minimizing the negative
menus publicity
Taking advantage of brand name Increasing differentiation
McDonald’s “Plan to Win”
Low-cost leadership

ST Strategy: Maxi- WT Strategy:

External threats(T) Mini Mini-Mini
Taking advantage of brand Using less Trans fat
name Switching from HCFC-22
Giving back to community into HFC
Providing new healthier menu Increasing Employee
satisfaction
McDonald’s Strategy

Key initiatives of McDonalds “Plan To Win” strategy

-Improved restaurant operations
-Low-cost strategy to compete with competitors
-Wide menu variety and beverage choices
-Convenience and expansion of dining opportunities
-Ongoing restaurant reinvestment.
McDonald’s Strategic Planning Process

Goal
McDonald’s main goal is globalization. McDonald’s CEO and marketing executives face the pressing
challenges of strategic marketing on a regular basis may affect the company’s future for many years.
These decisions are often without the opportunity to learn the situation and make the best decision.
Moto
The Motto of McDonald is basically, To provide best Quality to their customers, providing best
Service in order to attract their customers, provide Cleanliness in order to keep retain their
customers and giving Value to its Customers which will create a good relationship between
customers and McDonald which will ultimately give benefit to the McDonald and create
goodwill among themselves.
Strategy
McDonald’s primary generic strategy is cost leadership. In Porter’s model, this generic strategy involves
minimizing costs to offer products at low prices. As a low-cost provider, McDonald’s offers products that
are relatively cheaper compared to competitors like Arby’s. However, the company also uses broad
differentiation as a secondary or supporting generic strategy. This secondary generic strategy involves
developing the business and its products to make them distinct from competitors. For example, through
McCafé products, McDonald’s applies the broad differentiation generic strategy.
McKinney's 7s Framework

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McKinney's 7s Framework of McDonald
• Structure: McDonald’s Corporation has a divisional organizational structure. Conceptually, in this structure type,
the business organization is divided into components that are given responsibilities based on operational

•
requirements.
Strategy: McDonald’s pursues business strategy of cost leadership and an aggressive international market expansion.
• System: McDonald’s systems within the restaurants refer to day-to-day activities engaged by the workforce to serve
visitors. These are routinely modified in order to increase the speed and quality
• Skills: There is no need for advanced skills and competencies for most roles in McDonald‘s restaurants. Nevertheless,
the company offers training and development to the workforce in company-owned restaurants that focus on increasing
customer service skills. Moreover, McDonald‘s Hamburger University offers training for McDonald‘s Franchisees,
managers and employees.
• Staff: There are no high requirements in terms of qualifications, work experience and employee skills and
competencies in order to be employed in a McDonald‘s restaurant. Accordingly, the pay rate offered in McDonald‘s

•
restaurants around the world equals to or is slightly above the minimum wage.
Style: Leadership and management style in McDonald‘s restaurants can be characterized as autocratic partially due to
highly standardized and automated nature of organizational processes
• Shared Values: McDonald‘s promotes the values of total dedication to customer. The company declares that
―everyday all around the globe, McDonald's is putting people, processes and practices into place to make better
food, more sustainable sourcing, happier people, a stronger community and a healthier planet

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Systems Approach to MBO

19
 Organization Structure of McDonalds

• McDonald’s Corporation has a divisional organizational structure which are flat in nature.
Conceptually, in this structure type, the business organization is divided into components that are
given responsibilities based on operational requirements.

• McDonald’s organizational structure has the following characteristics, arranged according to

significance in affecting food service business operations:
Global hierarchy
Performance-based divisions
Function-based groups

• McDonalds Follow a Flat Organizational Structure

 Organizational Structure

McDonald’s leadership team and its McDonalds leadership structure in international

organizational structure markets
Controlling mechanisms in McDonalds
• McDonald uses bureaucratic control as the major method of control, mixing it with normative control
• Bureaucratic control is known as a top-to-bottom method of control, where managers attempt to affect
workers’ behavior through punishments and bonus regarding their working performance.
• McDonald’s follows scientific management system. Sociologist George Ritzer brought out the term of
‘McDonaldization’, which referred to moving from traditional to rational modes of thought, and scientific
management’. Scientific management involves the shift of major use of human labor to machinery.
• McDonald has also applied normative control in certain area. Normative control is known as the
‘regulation of workers’ behavior and decisions through widely shared organizational values and beliefs’.
All employees at McDonald’s are chosen and trained through certain programs, filling with company
mission and values..
• Normative control lets McDonald’s employees to form a good business image as an entity. Every single
employee carries McDonald’s mission and value, and they are always ready to serve the customers in
the most efficient way.
 Controlling in McDonalds

Controlling is the measurement and correction of performance in order to make sure that enterprise objectives and
the plans devised to attain them are being accomplished

Training
To fulfil the goals and objectives of the company, McDonald’s give the first priority on staff training. McDonald’s
invests greatly in their training programme, McDonald’s presently introduced a strategy known as ‘shift in to over
drive’ and this strategy focuses on helping shift managers work more efficiently. All McDonald’s restaurants are
required to send at least one manager to participate in the new training programme

Quality management: McDonald’s company integrates different quality management factors in its business
process. To ensure quality McDonald’s apply different strategies which include speed measurements, the five P’s
(People, Product, Price, Place and promotion), employee training etc. t aims for zero defects, which are to serve hot,
fresh, testy food of good value to customers at every time.

McDonald’s sets exacting requirements for quality and safety. It will only use essentials whose source can be traced
and which satisfy all regulations. To verify the supply chain Quality assurance staff carries out audits and site visits
in different time. They also cooperate with suppliers to improve the quality of product.
Standardizations of the product variety plays the vital role to assure quality of different items. Staff training is
simplified by the limited range and process development, including the provision of computer controlled cooking
facilities.
 Controlling in McDonalds

Quality management tools and techniques to improve operations

The quality of the services and products provided by a business is an important concern to the company and its
customers. While the cost of quality calamities can be high in themselves, customer’s confidence in the level of
quality will have a significant impact on a company’s overall prosperity in terms of future levels of demand and
the long term success of the business.
Four key points for the quality management of McDonald’s are given below:
Meet customer requirements: The core of quality conformance
Error-free work: Only on standard to aim for- to be right first time every time.
Manage by prevention: Adopting a proactive approach to managing quality leads to prevention rather than the
detection of faulty work.
Measure by the cost of quality: The key measure is the cost of doing business – doing things right the first time
reduces costs in the task of meeting customers’ needs and expectations.
Measuring performance of operations system
McDonald’s claims that the quality of its products has indeed improved, waiting times in the restaurants have an
average of 2 to 3 minutes per order
McDonald’s is also trying to improve its image and reputation through involvement and sustained investment in
projects like ‘sports coaching’ and its commitment to social responsibility
McDonald’s is famous for its lean operations to provide capacity, tight portion control and fast service. But the
drive to reduce cost is not only limited to its core tasks.
 Food Safety and quality at McDonald's

Food is at the heart of their business and they take pride in serving families.
Food safety is the absolute number one priority at McDonald’s. They work with leading food companies, academia, and
regulatory agencies on advancing food safety standards and practices globally, including serving on the board of the Global Food
Safety Initiative since 2008.
Food Safety Operating Principles
Global Approach
Their food safety management system is science and risk based. It is implemented in all markets.
Personal Responsibility
All McDonald's employees are empowered to bring ideas and take action to elevate food safety.
Accountability
Their Suppliers and Franchisees are accountable to comply with food safety standards and regulations.
Transparency
They are proactively sharing food safety practices with internal/external stakeholders.
In the Supply Chain
McDonald’s has developed and implemented science- and risk-based food safety standards based on best practices and food safety
principles including Good Agriculture Practices, Supplier Food Safety and Quality Management Systems and the Distribution Center
Quality Management Program
At the Restaurants
Food safety standards are implemented at every McDonald’s restaurant. Restaurant food safety and quality management procedures
are integrated into McDonald’s Operations and Training Program and based on Hazard Analysis of Critical Control
Points principles. All restaurant crew members receive training on food safety and managers receive more advanced training on food
safety.
The Practice of Management

A classic since its publication in 1954, The Practice of

Management was the first book to look at management as
a whole and being a manager as a separate
responsibility. The Practice of Management created the
discipline of modern management practices. Readable,
fundamental, and basic, it remains an essential book for
students, aspiring managers, and seasoned professionals.

Year of Publication:1954
ISBN : 0060878975 (ISBN-13: 9780060878979)
Publication : Harper Collins

26
BUILT TO LAST: SUCCESSFUL HABITS OF VISIONARY COMPANIES

This is not a book about charismatic visionary leaders. It is not

about visionary product concepts or visionary products or visionary
market insights. Nor is it about just having a corporate vision. This
is a book about something far more important, enduring, and
substantial. This is a book about visionary companies." So write
Jim Collins and Jerry Porras in this groundbreaking book that
shatters myths, provides new insights, and gives practical
guidance to those who would like to build landmark companies that
stand the test of time

Year of Publication:1994
ISBN : 0060566108 (ISBN13: 9780060566104)
Publication : Harper Collins

27
Internship with McDonald’s
• Human Resources Internship at McDonald’s India (West & South)
Refer below link:
[Link]
bangalore-at-mcdonalds-india-west-south1564660707
• Finance and Internal Audit at McDonald’s India (West & South)
Refer below link:
[Link]
mumbai-at-mcdonalds-india-west-south1564853935