McDonald'sThe purpose of this paper to analyze the organization through its goals, origins, stakeholders, structure, culture, technology, processes, outputs and environmental forces

? Competency-Based People Systems and Culture - Specialists address selection, performance development, assessment and planning. They also identify development needs, design curricula, build staff models, define job competencies and create performance appraisal documents.

? Recruitment and Retention - Specialists help in designing interviews and selection processes.

These practice areas work with all levels of the organization, from C-level executives to counter staff at individual restaurants.

Stakeholders

McDonald's considered its impact on a wide range of stakeholders-customers, suppliers, franchisees, and the environment. The company gave its franchisees much autonomy in finding ways to eliminate environmental blight. The company's hope was that from these divergent approaches, it stood a greater chance of finding solutions with broad applicability than if it had tried to pursue a one-size-fits-all approach from the outset.

Every day McDonald's serves more than 47 million customers around the world.

The company has roughly 10,000 Locations which include the standard sit-in restaurants, drive through windows, and satellite sites. McDonald's dominance in the fast-food industry is not likely to disappear anytime soon. Tile Company is expanding continuously, as at December 2000, McDonald's and its franchises operated over 28,700 restaurants worldwide in 120 countries and territories, serving food and drab to over 45 million people daily.

The Organization Structure:

The Franchise Agreement grants the right to the franchisee to run a specific McDonald's Restaurant for a set period of time, usually twenty years. These rights include the use of the McDonald's trademarks, restaurant decor and designs, signage and equipment layout, the formula and specifications of the menu items, as well as McDonald's methods of operating, stock control, bookkeeping, accounting and marketing.

In return, the franchisee agrees to operate the restaurant in accordance with McDonald's standards of quality, service, cleanliness and value. McDonald's regularly checks the quality of the franchises output and failure to maintain standards could threaten the license. The franchisee is also expected to become involved in local events and charities. Ray Kroc believed strongly that a business must be prepared to put something back into the community in which it operates.

The franchisee, for all the training and support McDonald's offers, is running his or her own business. They fund the franchise themselves and therefore have much to lose as well as gain. This makes them highly motivated and determined to succeed.

Whilst the franchisees have to agree to operate their restaurants in the McDonald's way, there still remains some scope for innovation. Many ideas for new items on the menu come from the franchisees responding to customer demand. Developing new products is crucial to any business, even one which has successfully relied on a limited menu for many years. Consumer tastes change over time and a company needs to respond to these changes. Innovation injects dynamism and allows the firm to exploit markets previously overlooked or ignored. The introduction of the Egg McMuffin in 1971, for example, enabled McDonald's to cater initially for the breakfast trade. Filet-o-Fish, Drive-thrus and Playlands were all products or concepts developed by franchisees.

The three-legged stool - the suppliers

A third group of stakeholders, critical to the success of the franchise operation, is the suppliers. As McDonald's considers the quality of its products to be of absolute importance, it sets standards for suppliers that are amongst the highest in the food industry. McDonald's believes in developing close relationships with suppliers - everything is done on an open accounting, handshake trust basis.

The supplier's work closely with McDonald's to develop and improve products and production techniques. This close interdependency is described as a three-legged stool principle, and involves McDonald's, the franchisees and the suppliers. Suppliers that are able to meet the quality standards set down by McDonald's have been able to share in the growth and success of McDonald's.

McDonald's is the largest food service company in the world. In 1993, annual sales stood at 23 billion dollars. It is also one of biggest employers in the United States, with over half a million workers.

Only fifteen to twenty per cent of the restaurants are actually company-owned. The rest are franchises, run by 2,659 independent owners who pay a fee of between $400,000 and $700,000 for a franchise. McDonald's licensing department handles the fee structure on a case by case basis, and there are a wide variety of license fees determined by property and equipment costs. A skilled franchisee can earn a sex-figure income from a single restaurant; most own 2 or more restaurants.

McDonald's are structured along functional lines. Their Chief Executive oversees five major areas of activity:

* Operations (equipment and franchising)

* Development (property and construction)

* Finance (supply chain and new product development)

* Marketing (sales marketing)

* Human Resources (customer services, personnel, hygiene and safety)

Culture

McDonald's Corporation is an organizations which have been described as possessing strong cultures (Mintzberg, 1979; Roberts & Hunt, 1991). Kilmann, Saxton, and Serpa (1986) defined strong cultures as those where organization members place pressure on other members to adhere to norms. While the organizations possess strong and cultures, it needs different levels of structure. The organization produces a highly standardized product thousands of times daily necessitating substantial structure. Given that high levels of structure are most suitable in stable environments with relatively simple tasks (Burns & Stalker, 1961), and a forest fire presents anything but a stable environment with simple tasks, structure may not be the appropriate device for behavioral control and may even be detrimental to employee performance.

McDonald's culture of quality, service, cleanliness, and value is needed to reduce behavior variability in its widely dispersed employees working in restaurants spread throughout the world. The McDonald's cultural values impact employee behavior because, although most of these values are not formally recorded, the practices have become institutionalized, and a high degree of uniformity of behavior is achieved worldwide. Thus, structure acts to effectively regulate behavior. However McDonald's culture also serves to reduce behavioral variability among widely dispersed employees.

Technology processes

For years, the company has made a variety of technology investments with mixed results.

In addition to the wireless trial, McDonald's, which at the end of last year shelved a big project to build a real-time network, has looked into self-service restaurant kiosks and various customer payment technologies.

It also backed a number of technology ventures. In March, it partnered with other investors, including Kraft and Blockbuster, to put $80 million behind an online take-out and delivery company called Food.com, now GeoComm Systems. Not that Ronald McDonald was gearing up to bring Big Macs to your office-or even allow you to order them online for pickup; the move was explained as a marketing initiative. The purpose behind the initiative isn't clear, and since Geocomm remains private, there's no way to tell what financial returns it has yielded for McDonald's-if any.

Three months after the Food.com investment, McDonald's formed an Internet business incubator, called eMac Digital, in partnership with venture capitalist Accel-KKR. EMac Digital invested in several high-tech companies: NewPOS International, a point-of-sale developer; FSC, a franchise services company that provides accounting and back-office services; and it paid for the assets of Apigent Solutions, an application service provider. The amounts of the transactions were not disclosed. In May, McDonald's sold, for an undisclosed amount, its share in eMac Digital back to Accel-KKR citing a need to focus on "revitalizing core business."

Other McDonald's technology experiments have been more low key. In 2000, McDonald's initiated a number of wireless payment systems trials. These systems are based on radio-frequency identification (RFID) technology. Customers supply McDonald's with credit or debit account information and are given cards with chips embedded in them. Then, when they make a purchase, they simply wave their cards over in-store RFID "readers," which identify customers and charge their credit or debit account. Visa says fast-food customers spend 30% to 50% more when paying with a card.

The trials are in various stages-some ended without fanfare. "It's hard to say what the future of this technology will be, but we'll be interested to see where it goes," says McDonald's spokesperson Lisa Howard.

The company also tested a fingerprint-based payment system. Customers gave McDonald's their credit or debit card information and had their prints scanned. Then, to make a purchase, customers simply pressed their thumbs against a print scanner at the register. The trial began in January 2002, but ended within a few months-customers didn't like the idea of being fingerprinted by McDonald's.

While the payment system trials continue, McDonald's plans to push out its wireless access service. It's available right now at 10 McDonald's in Manhattan. And, according to a company Web site, it will offer the service in "several hundred restaurants in the next few months."

Mats Lederhausen, McDonald's business-development chief, said at the March launch of the service that "McDonald's pioneered convenience so it makes perfect sense for us to offer our customers a great way to unwire, unwind, enjoy an Extra Value Meal and catch up on e-mail."

Outputs

Speaking of billions, McDonald's claims that it has sold 99 billion burgers or 99 Gigaburgers (GB). Yet this news is not reassuring to those familiar with the older McDonald restaurant signs. Could this be a case of Burger 100 B, or B100B? Once those age-old Golden Arches flip over with that fateful 100 billionth burger, McDonald's is at risk of advertising a grand total of "00 Billion Burgers Sold." While this dire forecast is unlikely to cause much havoc, McDonald's spokesperson Chuck Ebeling does admit that the expensive signs will be difficult to change. And change they will. The old signs are being remodeled to catch up to the times. When that fateful 100 billionth burger is sold, no worries. Ebeling told the Wall Street Journal that keeping the world informed of the number of hamburgers sold simply isn't "meaningful to most customers."

Aside from such legendary fare as Big Macs and French Fries, McDonald's also totes brand name products like Chicken McNuggets, Filet-O-Fish, Quarter Pounders, Hotcakes, and Sausage, among other delightfully tempting artery-cloggers. Nevertheless, everything hasn't been food, folks, and fun. The company has been stung by a number of failed promotions such as the adult-targeted Arch line of sandwiches, heightened competition from Burger King and Wendy's, and a heavily publicized law suit over a scalding cup of coffee.

Environmental influences

The key threats to McDonald's domestically are the lack of growth opportunities. The market is well saturated, and it would difficult to achieve double-digit growth. Other concerns are a newfound emphasis on healthier eating. Most of McDonald's most popular fare probably in some small way contributes to the increasing incidence of cancer, heart disease, and diabetes among the population.

But I feel the key threat to McDonald's continued success is its very ubiquity. Because McDonald's are everywhere, the dining experience is never special. And as Baby Boomers age and become more affluent, it is likely that they will leave behind their fast-food ways, if only to step up to moderately priced restaurants like Olive Garden, Bennigans, and Pizzeria Uno. These chains have the added advantage of serving higher-margin alcoholic drinks. McDonald's, meanwhile, has to continually battle Burger King and Wendy's, which leads to an erosion of margins for everyone. Even alliances with toy manufacturers, while popular with consumers, do little for the bottom line because the cost to run these promotions can be quite expensive.

Conclusion

McDonald's places emphasis on the training and development of its employees. They aim to provide career opportunities for people to achieve their potential. The firm offers both full and part-time career opportunities, which helps staff to combine work with family or educational commitments.

Job progression is used to encourage employees who got their first job in the company to progress to management positions. These promotions are based on the performance of the staff member. Over 40% of McDonald's managers started as hourly-paid staff members in the restaurants. Over half of the company's middle and senior managers have moved up from restaurant-based positions.

The three major perspectives of organizations are a rational system, a natural system and an open system, organization of which is open to and dependent on the environment and circumstances, there are connections both with external (such as competition, economy, customers' preferences) and internal (staff training, management) components.

McDonald's faces some difficult challenges. Key to its future success will be maintaining its core strengths-an unwavering focus on quality and consistency-while carefully experimenting with new options. These innovative initiatives could include launching higher-end restaurants under new brands that wouldn't be saddled with McDonald's fast-food image. The company could also look into expanding more aggressively abroad where the prospects for significant growth are greater.

The company's environment efforts, while important, should not overshadow its marketing initiatives, which are what the company is all about.

Bibliography

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5. http://www.mcdonalds.com/ - the official web-site of McDonald's

6. http://[email protected]/ - McDonald's Business Practices Office