One of the most important objectives of McDonalds is to make a profit. If McDonalds does not make a profit will find it difficult to plough back money into research and development, it will find it difficult to invest in new technologies, it will not have money available to give to charities and to carry out ‘good works’ and it will not be able to increase the rewards to its employees. Of course, if you make a loss it is possible to borrow, however, lenders will look very carefully at your profit potential before parting with their funds.
It is a basic fact of business life, therefore, profit is important to McDonalds. Due to the fact that McDonalds are a Public Limited Company. They are owned by their shareholders. Of course, these shareholders want McDonalds to do well, but they also want to receive a return on their shares in the form of dividends (money paid at regular intervals to shareholders as a reward for the sacrifice they are making in buying shares). If McDonalds continue to make a loss, the shareholders will lose confidence and many would sell their shares.
While profit will continue to be the driving objective behind many businesses, for most it is likely to be an elusive objective in the medium to long term.
Is an important objective for many businesses, it is particularly important when businesses are most vulnerable:
- During their first few years of trading
- During periods of recession or intense competition
- At a time of crisis such as a hostile takeover
Most established businesses have survival as an objective. It is due to the businesses often have relatively few customers, have to spend heavily an advertising to attract customers and may have relatively inexperienced managers.
When McDonalds first entered the market they thought the first duty of the business was to survive. The guiding principle of business economics, in other words, is not the maxirnisation of profits; it is the avoidance of loss. McDonalds needed to produce the premium to cover the risks inevitably involved in each of its operation up until today.
The survival of a business when it first enters any market depends on making enough profit to make it worthwhile continuing with that business. Many businesses fold because the people they took loans off feel that they are not making enough profit to cover the efforts they are making and the risk they are taking.
Most businesses nowadays feel that survival is being one of the main objectives before profit.
In the business world in the early twenty-first century the UK faced some rapid changes, as competition increased, and so on. To survive, the intelligent organisation adapts to this changing world. For example, in recent years as environmental legislation has become tougher, McDonalds have adopted greener approaches. Some of the companies that have not done so have lost favour with consumers and governments and have disappeared or been swallowed up by other companies.
Survival is about continuing to exist today, tomorrow and into the foreseeable future.
You may not be the most profitable company today, but at least you will be there to compete into the future.
- Increasing sales or market share
Growth increases the scale of the business, resulting in higher levels of output and more sales. Many businesses pursue growth strategies because their managers believe that this is essential for survival. If a firm grows, it might be able to attract more customers, earn higher profits and begin to establish itself in the market Growth offers:
- Increased returns for the owners of the business
- Higher salaries (& more job security) for the employees of the business
- A wider range of products for the business’s existing and potential customers
McDonalds believe that the organisation that sells the most products is best placed to benefit from the cost savings that arise from producing on a larger scale.
It is easy to see why. For example, you can bake 24 cupcakes in an oven using the same amount of gas or electricity as when you produce 12. In the same way, a large company like McDonalds can benefit from using a production line 24 hours a day to mass produce items. That is why McDonalds believe they are best placed to buy products and materials at a discount from suppliers. The large-scale producer (McDonalds) is best able to spread its advertising costs over a larger output and so on.
McDonalds seeks to be market leaders in the restaurant department. They are all too aware of the importance of market share and will fight tooth and nail to gain supremacy and when they succeed in gaining the shares, they will broadcast their success far and wide. They are already identified as the major market leaders and hold an edge over their competitors interms of customer loyalty; they are would be able to hang on to it by ploughing money into investment, product improvement, and advertising and promotion.
- McDonalds believe a high stake in the market share leads to falling costs:
The cost of producing each unit will fall as the total output that has been produced increases over time. This makes sense. McDonalds believe that the more you do something the more experience you have of doing it, and the more likely you are to do it better because you can highlight faults and cut them out. Gains in efficiency stem from greater experience. McDonalds believe that this is a general principle and that, as a rough rule, average cost per unit would fall by 20% with each doubling of experience
- Providing high quality services
Companies try their best to provide good and high quality services. Sometimes it is not as easy as it may look, meaning that companies or businesses cannot sometimes achieve this.
The term ‘high quality’ is often mistakenly confused with ‘most expensive’. Yet frequently the most expensive items are not the best quality.
McDonalds use the term ‘quality’ to mean ‘producing a good or service to customer requirements’. Another way of defining quality is ‘fitness for purpose’. A high-quality product or service is therefore one that gives the customers what they expect or even more than they expect. McDonalds often talk about ‘delighting’ the customer. Therefore, quality products and services has become a leading objective of modern business organisations.
We live in a world in which the customer has considerable power. Customers can choose to visit one hairdresser or another, to buy one model of car or another and which college or university to take a course at. The customer will choose which organisation to do business with on the basis of their ability to satisfy customer requirements. Hence the importance of quality is major according to McDonalds. They should use this emphasis and show respect for the customer.
Of course, this notion of high quality is just as relevant for services as it is for products. For example, in recent years McDonalds have seen a rapid rise in the buying of their items through their drive through service whereby they would serve their customers whilst they are in their cars. This is because many consumers prefer the convenience of buying these services directly from their car and eating on the way.
- Developing a skilled workforce:
It is vitally important that you business or company provides a skilled workforce with employees knowing exactly what they are doing. If employees are unsure of how certain tasks must be done then training can be provided to unsure them of how it is done.
A highly skilled workforce offers a variety of advantages such as:
- Normally skilled workers are normally productive meaning that businesses are enabling to run cheaply and profitably.
- Training workers can increase their motivation and reduce the amount of employees leaving the business.
- Having a reputation of training workers makes the business attract high capable staff.
- Highly trained staff provides customers with high quality service. This is vitally important when industries are in retailing.
McDonalds include objectives related to developing people at their work in their list of objectives. For example, they set out in their objectives that they will attract, develop and motivate a team of people of outstanding quality who will share in the success they generate.
The importance of employees at McDonalds is widely recognised. McDonalds realize and acknowledge that the intelligence of their employees is the reason for their business success. They believe intelligent employees are able to add millions/billions of pounds to the value of a corporation hence are the people that use the latest information technologies, and those that interact either face to face or through some other form of communication with customers.
McDonalds believe training is an essential strategy to meet their objective of employing the best possible staff and they believe that those who are left out of the knowledge revolution will be left behind in the new knowledge economy. The more individual talent they nurture, the more economic growth they will achieve.
McDonalds have a personal objective they apply to their business, which is skill and knowledge development.
McDonalds think that any intelligent worker requires a range of skills and aptitudes that enables him or her independently to make decisions on behalf of the organisation. The sorts of decisions the intelligent employee makes require good communication skills, good interpersonal skills, the ability to work with numbers and information technology, and the ability to work effectively in problem-solving situations.
That is why McDonalds are so successful and therefore, have developed detailed training and development programmes that seek to create a skilled workforce. They always examine the process of training and development.
- Charitable or non- profit objectives:
There are many charities in the UK, such as Oxfam. Many of the charities are here today to get support from the local community in order to help those less fortunate.
- Providing services to the community:
The key objective for most organisations that operate in this country is to provide a service to the community. While these organisations run many of their activities in a profit-orientated way, this is not their sole concern. In addition, they seek to meet a responsibility to provide a service to the community.
- The objectives of some organisations include elements of the following public sector:
McDonalds do not use any of the following objectives.
- Nurture and cherish the rich diversity of the UK’s heritage, identity and cultural life; bringing people together for moments of celebration, common experience and in times of crisis.
- Enable all sides to join the debate on issues of national, regional and local significance through providing the most comprehensive news service, of range and depth, rooted in experience.
- Help people broaden their horizons through learning, and by enriching their skills to provide something of particular value to all UK licence payers, exposing audiences to new ideas, to scientific discovery, to great art, music and writing, to the spiritual and uplifting.
- Create programmes and services of real cultural value, offering the most gifted individuals in every area the opportunity to create fresh and pioneering television, radio and online services.
- Ensure no one is excluded from access to new kinds of service made possible by new technology.
Use its ability to reach into every home to engage audiences in new experiences and to act as a trusted guide in a world of abundance.
We have seen that organisations work towards different objectives. Some organisations are very profit centred while others have a much clearer concern for the people who work in the organisation and the customers or clients they serve.
Given these differing objectives, it is not surprising that the way different organisations operate varies widely. It is not difficult to sense this difference. In some of the organisations where you might work or where you are a customer, you may get the impression the organisation and its people do not care about you. In others you may feel very important.
