Mc Donalds stakeholders

GCSE in Applied Business (Double Award) Unit 2

5307: People and Business

Shareholders/Owners (3 legged stool)

ROLE:

Shareholders are important stakeholders as they are part of the three legged stool approach. McDonalds therefore will aim to fulfil all expectations as they believe without shareholders McDonalds will not be successful. In the UK, McDonald’s restaurants are either company owned or franchised. McDonalds only sell shares in the USA they do not have shareholders in the UK. However, shareholders would still be interested in McDonald’s performance in the UK as changes in company reputation affects share price, profits and dividends. The way McDonalds operates in the UK also directly has a big effect on the organisations reputation worldwide. Shareholders are like a special case of owners and most probably behave like any other owner. They buy shares which allow the organisation to raise money. They take risks in the business, get the rewards in return. As the owners, shareholders have an interest in the company’s financial performance. Actual and potential shareholders want to access profitability of investing in the business. They are keen to set the business in profit all the time.

EXPECTATIONS:

They want the business to do well. They want success for the business and they support it in achieving that success. They will expect McDonalds to act responsibly and in a politically correct way. If the business, for example was polluting the rivers, exploiting cheap labour overseas the shareholders and the newspapers would make their opinions clear. Shareholders expect to receive a good amount of net profit or their dividends. Dividends – a share of the profits which are paid out to shareholders. They wish the business to do successfully so that their share of property is worth more than the price they had bought it for. McDonalds do not sell shares in the UK only in US.

INFLUENCE:

Shareholders of McDonalds influence the company in many ways. Achieving to get a good reputation towards customers and thinking up ways to get more profit. They have different sets of aims such as the achievement of survival, independence, break-even, and competition. This means that the shareholder is important, if McDonalds does not make a profit, it would not survive for long, as it would be spending more money then it received. Shareholders of McDonalds have to make sure that the business is making profit so that they receive high dividends. McDonalds need an increased amount of profit; profit is the main driving force of modern economies. If consumers do not buy a product in sufficient quantities then McDonalds will have to stop producing it and replace it with something else.

Shareholders are powerful as they are able to close the business at what ever time they prefer and are able to sell the business whenever they wish. However individually shareholders have little influence over McDonalds but collectively they can influence share prices which can directly affect the overall performance of McDonald’s restaurant.

If the business does not do well then the amount of money they would receive in their dividends would go down therefore shareholders want the business to do well. The amount of shares that they have can affect the reputation of the business, meaning more people would buy their products, so this in turn would affect the value of their business. If the shareholders are not satisfied with the business, they may sell their shares, which would give the company a bad reputation, so people may not want to buy their products, reducing the value of their business.

Managers

ROLE:

The manager is in charge of the day-to-day running of the business. They set specific targets for McDonalds and have to ensure these targets are met through the daily running of the restaurant.

They are a special group of employees who may have different objectives and influence to the other employees in a business. They have to make a lot of decision-making for example they have to decide who to direct to a special area of McDonalds to do a specific job or like preparing the timetable for the employees. They have to decide who works when and where. Their main role is to supervise the staff at McDonalds, making sure everything is going according to rules and checking if the staff are doing their job properly. They have to look into the cash flows and prepare all the important financial documents. Furthermore they have to look after cash and make sure everything is up to date. Managers have to ensure that McDonalds is running fluently and healthily without having low overheads. Expect to be entitled to a small percentage of commission in the net profit. Managers have the ability to sack the staff but they are not as powerful as shareholders. They have the power of controlling the cash unit as well as the employees.

They ensure the business is doing well. They have different objectives, targets, approaches to other employees in the business. For example they may want to expand on their business. They would want their employees to work up to a certain level and high standard. They have the same aims as owners. Expect to be entitled to rewards such as free shares, bonuses, higher salaries, or profit-sharing schemes. They are expected to be paid well and to be provided job security as they are a long term worker at McDonalds. As well as being given job security they should also feel that they are part of a ‘family’ they should enjoy working and find it interesting as it effects the work put into the business. If the managers do work hard they would expect a return in a reasonable profit.

To produce new modernised designs for customers and present new goods in McDonalds. They also expect good pay, good working conditions and training promotion opportunities.

EXPECTATIONS:

INFLUENCE:

They are responsible for the efficient running of the business; their job is to influence employees of the business. They should ensure that the employees are doing their job and are motivated and happy. It is important that the managers keep encouraging the employees with positive remarks as it can affect performance of employees. They are responsible for the reputation of the company as well as the success treated fairly of the restaurant. McDonalds listen to the manager’s expectations and will aim to keep them happy by offering bonus schemes and other benefits such as company cars etc. If the manager is dissatisfied with his/her working conditions and pay they may not perform up to their full potential, they wish to not do their job properly and so this brings out a negative affect on McDonalds customer service. As well as a negative affect they can also have a positive affect on the performance of the restaurant and profits. If they are self motivated and hard working they can have a large affect on the employees which would benefit the restaurant overall.

Employees

ROLE

To work in the business doing a variety of jobs, like serving customers, cleaning, administration and working hard for income. They carry out tasks stated on their contract of employment (temporary or permanent). They are at the forefront of McDonald’s business and in direct contact with their customers.

EXPECTATIONS

This is a preview of the whole essay

EXPECTATIONS

All employees will wish to see the business be successful, to keep their jobs and income. They expect to be entitled to job security, make sure their job place is secure at McDonalds. Expect to be paid well, feel as if they are part of the family, and ensure their job is safe for the foreseeable future, entitled to proper training for the future, hard work in return for profit, managers to give those promotions or exemplary bonus. They expect to have an interesting job. McDonalds ensure employees are a happy group of stakeholders as they have a big impact on McDonald’s business. McDonald’s restaurants rotate work stations so that one employee is not doing the same job for too long. They will also offer performance related bonuses. It is important that McDonalds follows the employee protection laws. McDonalds have to ensure that they protect the health, safety and rights of employees. If these laws are not followed then it is possible that McDonalds can face consequences from the government. They can be closed down.

INFLUENCE:

They are responsible for the quality of the output of the business and therefore influence the success of a business. The performance of the employees is a key factor in the success of the business. McDonalds have to ensure that employees are happy through initiatives such as family flexi working where members of family can cover each other shift. Owners and managers are usually keen to consult with the employees about their work and feelings. McDonalds ensure that the workers have flexible scheduling and keep their staff competitive. Many of McDonald’s workers are promoted higher up in hierarchy over time. If they are well-motivated and produce quality products then the business will achieve greater success. Employees would have to also explain what people are consuming and influence people to buy different things from McDonalds. They have to build a polite relationship with consumers. Employees play an important role with the customer itself, they should persuade the customer to buy their products or use their service. Employees have to make sure that they are friendly, helpful and polite towards customers in order for customers to buy McDonald’s foods. The staff’s expect to receive bonuses from the company, promotion opportunities, perks, profit sharing schemes, bonuses, special discounts, a good working environment, and a decent wage from McDonalds and job security. The employees are one of the most powerful people in the business; they determine if the business is successful as they are at the forefront of each restaurant. They can make the business run low and high. With highly trained staff’s the restaurant can do very well and make a quite a lot of profit. Also, if the staff’s were to go on strike-as they were not happy with employment conditions or pay, the business will lose quite a lot of money but this will not directly affect the business net profit. It is important for the business to keep their staff happy making sure they are not undervalued, this could be heard from other people, for example a group touring their factories. This could be passed on and people looking for a future job would go else where. If employees are always discouraged and discontented with their job products would not turn out as efficient as they should.

Franchisee:

ROLE:

The franchisees are part of the McDonalds three legged strategy. They considered as a powerful stakeholder at McDonalds. A franchisee is someone who pays the firm for the privilege of being allowed to sell its tried-and-tested product. The franchisee of McDonalds shares an agreement with them so that they can use the name and reputation of the organisation. The franchisees have to follow strict rules about how the business must be run. McDonalds also takes part of the profit and fees for franchisees, including the advertising fees.

EXPECTATIONS:

They expect their product to be successful and keep a secure place in the market. Banks are usually willing to lend money to a franchisee. McDonalds can benefit from this as they may need a loan to expand on their business or starts up another restaurant Franchisees expect continuous support from the franchiser. If there is a problem at McDonalds, the franchiser may often the answer straight away, as similar problems may have occurred with other franchisees. Franchisees expect support from McDonalds and they also expect to gain a good reputation as it is the livelihood of the franchisee.

INFLUENCE:

Franchisees influence the success of the business. They have the power to close down the business any time. They can also sell the business. The franchisee does no cooperate according to the agreement it could have a major affect on McDonalds. If a franchisee was not happy with the way McDonalds treated them this may show in bad performance of their restaurant which will affect the whole organisations reputation.

External stakeholders:

Government

ROLE:

The government is interested in McDonalds because if the UK has successful businesses it will have a successful economy. If McDonalds earns more so will the government. The government has to be a structure to the restaurant i.e. occasionally gives the company grants and enforcing new laws that the company must abide by. The government is provided with income through taxation from the business. In return provide them with services, for example, transport systems. Also to provide health and safety rules for customers and employees. For example give McDonalds certain limits that they can meet and take care of the litter produced by them. The government helps the business with environmental issues, charity work and gives peak prices to people in government jobs such as police officers. The government also ensures that McDonalds follow all laws and regulations. There is both local and national government each one having a different influence on McDonalds

EXPECTATIONS:

The local government expects McDonalds to help with unemployment by providing jobs in low employment areas. The local government expects to provide local jobs otherwise the government has to pay out job seekers allowance. McDonalds are expected to operate in a fair way, pollution, recycling etc. The government expects McDonalds to follow laws, health & safety factors, get rid of litter produced by them and help with unemployment. The government want McDonalds to be successful to reduce unemployment. The national government expects McDonalds to pay for taxes to them.

INFLUENCE:

The government is one of the most powerful one out of the external stakeholders because it can lose out a business very easily. Local, national and international governments affect business businesses through laws and regulations which they pass. The national government uses laws to protect employees and customers (e.g. Health and Safety at work act, trade descriptions act)

As a stakeholder in the business the government must ensure that employees and customers get all the rights they are entitled to. McDonalds cooperates with the government by ensuring that all the laws are followed and that the employees are trained to follow these laws especially when dealing with food and drink. If the employees did not know how to maintain food properly, the customers can be food poisoned.

As McDonalds is a multi-national organisation the international laws affect the in which they cooperate. Therefore this can affect company performances. The government has a major influence on McDonalds as they can directly affect how each McDonald’s restaurant operates for example the health and safety of employees as well as customers. New laws that the government introduce affect the business: e.g. consumer protection laws etc McDonalds should therefore be careful and abide by the laws given by the government. McDonalds can face serious consequences if they do not follow the rules. The government also influences the business through the taxes that they enforce; McDonalds can loose some of their profits towards this. McDonalds have to follow laws and regulations and pay tax on profits to keep the government satisfied with their expectations and interests.

Local community:

ROLE:

The local population are also stakeholders. They are particularly interested in the organisation’s:

- Employment policy – it is a source of work for them

- Environmental policy- its work affects their quality of life.

The organisation may create positive externalities, such as better local roads and transport, but it can also create negative externalities such as pollution.

The local community buy McDonald’s products. McDonalds are situated among each local community who provide McDonalds with customers and employees. Therefore the local will have a substantial interest in McDonalds as it is also the main workplace for that community as well as a socialising place.

EXPECTATIONS:

The local community expect McDonalds to provide jobs, trading conductions, and reduced litter and help keep the community be safe and tidy. McDonalds provide bins within a certain area of each restaurant. Their employees also go on litter duty where employees will walk around the local area and clear any rubbish left by customers. McDonalds have to apply for late openings and not all are granted due to opposition of some local communities. This shows it is important that McDonalds operate in a manner which does not have a negative impact on the community, the local community expect no activities which may damage their local environment.

INFLUENCE:

The local community have a definite influence towards the business as they are close to its location. The local community influence McDonalds because if they were not there then McDonalds would not have as much as a large source of jobs, also because they have employees inside the local community, more people will take sides with them. If they did not work there McDonalds could not operate if the local community are not happy they can take action which can harm McDonald’s reputation. The local community can easily take legal action against McDonalds due to noisy machinery, large buildings which take up a lot of space or anything that makes them dissatisfied. This therefore would cost McDonalds money and give them bad publicity. If McDonalds changed their closing times they have to make sure it does not disturb the public or put the public in any position that they could get harmed. They can go against McDonalds if they are harming the environment legal action can be taken against the company. The local community may boycott the restaurant if they are not happy with the way McDonalds operate.

McDonalds would expect the local community to respect them, use their property in a good manner without vandalising, treat staff with courtesy and visit regularly in order to buy their products. This means that the local community have a big influence on the business if they do not buy McDonalds food, then the company can go bankrupt. It is important for McDonalds to stay popular with the local community. If the business has a more convenient location than its competitors, it will gain at the expense of the competition. If Burger King or Pizza Hut was opposite McDonalds, it would be up to local community to choose which is better. Therefore McDonalds has to build a positive reputation with its local community. McDonalds have to make sure that their employees and customers are happy with where the business is located. McDonalds would want the local community to try out for jobs at their premises, this would be easier for McDonalds to rely on their workers as they may be punctual as they live nearby and the workers in the local community would know a lot of customers that may turn up. This shows that McDonalds needs to get themselves a good reputation with the local community or else they can be rebelled against. This would lead McDonalds being closed down or needing a new management. Or nearby businesses or other restaurants, for example, Burger King would go into competition, being more popular then McDonalds; this would mean McDonalds sales would go down.

Suppliers (three legged stool):

ROLE

The suppliers are people who provide McDonalds with raw materials, components or services. Suppliers are stakeholders in the business, because if it fails, they will lose a customer and therefore lose sales. The suppliers are part of the 3 legged stool as they are very important stakeholders. McDonalds could not operate successfully without them. Suppliers value large contracts with companies like McDonalds because they are steady, secure business.

EXPECTATIONS:

Suppliers want regular orders from a business and loyalty as this helps them to be a successful business themselves. In return suppliers will offer good discounts for steady orders, if they don’t the business can always go elsewhere. They want McDonalds to pay them on time. McDonalds have a lot of suppliers for their products. McDonalds expect the supplier to send in the goods at the right time at high quality, at the right price. The supplier has to supply good quality products and maintain this standard.

INFLUENCE:

Suppliers can influence McDonalds through the price of their products, the quality of their products and through efficiency of how the products get to them. McDonalds may want to buy in mass, so that it is cheaper and more efficient, as there is more transported at once causing less hassle. Local companies are chosen in first priority for their raw materials because it gets to them quicker with less risk of it being damaged and also helps the local community publicise them well. If it is not efficient as there are breaks in supply and the supplier is not regular and reliable it can affect the business in a bad way. If there was a late delivery by the suppliers then McDonalds would not be happy as it has affected their business too. They might have lost customers in the mean time because their required product was not available. Therefore the suppliers are important stakeholders as they affect sales and customer service if unreliable.

The supplier can charge interest rates which will have a direct impact on McDonald’s profits. Also if there is a change in prices and for example the prices go higher then it would mean lower profit for McDonalds. If the suppliers are not happy they can easily take their products elsewhere therefore McDonalds have to satisfy their suppliers. McDonald’s have a lot of suppliers for each type of food. Mc Donald’s expect the supplier to send in the goods at the right time at high quality.

McDonald has a variety of suppliers for each type of food as follows for beef, chicken,

packaging, potatoes etc. The businesses keep the same supplier because they have customers which are familiar with the food, if there is change the business could loose out. Suppliers would want bulky orders from McDonalds to keep as their fixed supplier. Suppliers are able to increase their price of products through quality. This can cause a major effect in the profit margin of the business. The cheaper their products the easier it is for McDonalds to gain profit. This is one of the most powerful one out of the external stakeholder because it can lose out a business very easily. McDonalds believe in the three legged stool which is based on the three most important stakeholders. Suppliers are one of the three most important stakeholders. Without the suppliers, McDonalds would not have any raw materials or packaging to make their products. If there are no products produced then there would be no customers buying McDonalds food which means McDonalds would not survive. McDonalds hence aim to keep their suppliers happy by working closely with them on designing of furniture and packaging. They have large contracts and use the same suppliers for all restaurants in the UK

McDonalds will aim to fulfil supplier expectations as they feel the suppliers are an important stakeholder which is why they are part of the three legged approach. If McDonalds do not fulfil their role McDonalds feel they could not be successful.

Financiers (banks):

ROLE:

Financiers are organisations that lend money to McDonalds, provide so that McDonalds can expand their business or renovate it. Their main interest in the business is making sure that their money is repaid or that their investment is safe. This is both commercial banks and investment banks Financiers are people like the Barclays, Halifax, and HSBC etc. There are many different types of loans a business can and depends on because of different needs. They can lend McDonalds money as a long tern or short term loan. They provide McDonalds with money to aid the running of the restaurant and expansion or to refurbish McDonald’s premises. The government in some cases may offer grants usually in areas of high unemployment and economic deprivation.

EXPECTATIONS:

To make sure the business is successful so that McDonalds can pay back long-term loans. They expect to have an involvement in decision to how the money is spent at McDonalds and to receive regular payments from McDonalds.

INFLUENCE:

Helps McDonalds to enlarge their business and maintain higher success. They are a big influence as they are providing money for the business, which means that they are taking a risk, so should have a say in how it is spent. Meetings are set up between the bank and the company so that the bank can monitor and may be change what the business is doing. Financiers can increase charge on interest rates which means McDonalds have to pay more and therefore would make less profit.

McDonalds would have to find a bank which does the right balance. Some banks do low interest but then offer a less of a good service therefore a right balance should be found. A bank can also influence McDonalds by the changing the repayment terms; the amount of time given for the money to be paid back in can be changed , which would affect how well the business has to work to get the money needed. Financiers are people like Barclays, Halifax, and HSBC etc. The disadvantage of financiers is that if a late payment is made the property would be seized by the bank. Companies like McDonalds pay for the building with ready cash which avoids interest pay. Financiers will look at the annually balance sheet to check if the company is in a stage to repay their loan. Financiers help the business, for example enlarging McDonalds so that the business can maintain further success and good reputation. Financiers can seize the business if payments are not given in and they give the start up capital for the business. McDonalds should be good with the financiers for future references like future loans and credit history.

Financiers can be very powerful stakeholders if they are not happy with performance of McDonalds they could change the agreement of the loan such as giving extensions, interest rates etc.

Customers:

ROLE:

Customers are powerful stakeholders and very important to McDonalds. Without customers McDonalds would not exist. The business depends on good customers and moreover huge quantities of customers for the business to survive and make profit. Customers provide regular sales and revenue. Regular customers are needed for the business to survive. McDonalds should have a range of advertisements to keep the customer alert of new products at McDonalds or just to simply attract the customer. Customers have opinions on how the business operates. They sometimes join together to act as a consumer pressure group. If they are unhappy with the firm’s work, or with the quality of its products, they will stop being customers.

EXPECTATIONS:

The customers expect McDonalds to follow the QSCV system which stands for quality, service, cleanliness and value. The main thing customers want is value for money. This means the food has to be at a reasonable price, for example customers would not come to McDonalds to eat fast foods at a price of something a 3 course meal would offer. The quality of food should be of a very good standard so customers will come regularly to eat (100% chicken etc). Alongside with quality food they also want good customer service and a clean environment to dine at. Customers expect McDonalds to present quality products, fast service, clear communication system, honest information, new services and so on. They would want new systems, offers, promotional products like free gifts and after sale services. McDonalds have a lot of systems which provide this for example the 99p menu and free tokens. There are internal customers in a business e.g. when one functional area needs a product or service. Customers expect rapid fine customer service. McDonalds ensures that the customers receive this. They try to keep their customers satisfied by providing them with different menus to suit their taste. For example McDonalds has made more changes to last three years then past 28 years because more customers demanded healthier options. McDonalds works really hard to satisfy all stakeholders. It was a challenge to McDonalds when customers raised problems about obesity, salt and fat. McDonald’s sales decreased when customers started wanting healthier options. Treatment should be good.

INFLUENCE:

Customers influence businesses by their spending patterns, by what they do or do not buy.

McDonalds would be making a huge amount of loss if customers stopped coming, they are a powerful stakeholder as they can run the business down as well as up. They control much of the business therefore are very important. The three main things they are interested in is quality of products, the availability of products and the price. McDonalds have to make sure that their products satisfy their customers. Good customer service would keep customers coming back. The more the customers the higher the profit. McDonalds have in the past failed to identify the needs of their customers. A couple of years back they suffered great losses due to customers demands changing and requiring healthier options on the menu, unable to receive that from McDonalds customers went elsewhere. McDonalds then had to identify their customer’s needs and make changes to their menu to win back their customers. McDonalds therefore changed their menu and now offer a vast variety in food where there are more healthy options.

Since customers are the most important stakeholders, without whom McDonalds could not survive. McDonalds take customers expectations very seriously and have to respond to these. McDonalds a few years back failed to see these and suffered big losses when their customers went elsewhere to look for their desired goods.

Pressure group:

ROLE

This is an organised group of people who share similar interests, and who wish to further their interests by influencing others. They are independent organisations which fight for particular causes. Pressure groups check whether or not McDonalds are doing their job properly and if not they tell McDonalds to stop or change their activities. They have control over a range of areas including pollution, litter, illustrations used by the McDonalds opening hours. There are many examples of pressure groups like Green Peace, Encamps, Amnesty organisation, Vegetarian guides, Earth first etc.

EXPECTATIONS:

Different pressure groups have different expectations. First and foremost they expect McDonalds to listen to their needs and to act on these. They expect McDonalds to clean after litter, provide healthy food, and deal with later openings. Litter thrown by McDonald’s customers around the street is known as litter pollution and pressure groups are against this. Pressure groups also dislike late night openings as customers may be vulnerable to abuse or danger. Therefore McDonalds are expected to make sure they abide by laws set up to do with health and safety.

McLibel- this pressure group complains about McDonalds doing the following:

McDonald's employees worldwide "do badly in terms of pay and conditions”
if one eats enough McDonald's food, one's diet may well become high in fat etc., with the very real risk of heart disease."
'exploit children' with their advertising, produce 'misleading' advertising
cruelty to animals

Vegetarians and animal welfare campaigners- this campaign says that McDonalds are the world’s largest user of beef

Green Peace – This campaign often focuses on McDonald's as an industry leader promoting business practices detrimental to the environment, destruction of tropical rainforests

INFLUENCE:

Pressure groups get the media involved which cause attention to grow on McDonalds in a negative way; this can mean that McDonalds lose customers as they don’t want to be involved with an organisation that causes a bad reputation towards McDonalds. McDonald’s attempts to fulfil expectations of pressure groups such as animal rights by buying meat from animals that are not slaughtered etc. but it is impossible for them to keep pressure groups happy all of the time.

Pressure groups influence the business by checking at the store very often, doing customer surveys. They have the power to ruin the reputation worldwide if something is off beam. Pressure groups can take immediate direct action to get their point across. This is unhealthy for McDonalds as this draws media attention and public attention to the groups cause. This would mean that potential customers may decide that they do not want to buy McDonald goods due to a poor reputation. McDonalds have many schemes in place to please shareholders such as sticking to government rules and regulations or meeting the needs of the consumers. For example when people blamed McDonalds a cause for obesity levels and complained that there are not enough healthy choices, McDonalds came up with initiative ideas for a more healthier choices and a cut down in fat levels. This shows how they are a big influence to McDonalds; they can easily put the reputation of McDonalds down. Also competitors like Burger King tell income tax officer to check making trouble for the business.

McDonalds have a constant battle with pressure groups and aim to keep them happy as they do not want the negative publicity. However as there are so many pressure groups it is impossible to keep everyone happy.

Evaluation:

After investigating the different stakeholders at McDonalds in thorough detail I can establish that the most powerful stakeholders are customers, franchisees and suppliers. This is because they have great buying power if they are dissatisfied with the level of quality at McDonalds they can easily take their custom elsewhere. Franchisees are powerful in the UK as all of McDonalds restaurant are either company owned (where the manager runs the restaurant) or franchised (turn over).

McDonalds have great trust in the franchisee to operate restaurants successfully and keep their reputation high and clean. Suppliers are important stakeholders because they need McDonalds as much as McDonalds needs them. By working in a team they can meet each others needs. After recognising the most important stakeholder I can clearly declare that all stakeholders are important. Each stakeholder has different needs, McDonalds try and find a compromise with these needs and put effort to fulfil all their interests. However it is impossible to do so therefore conflicts can occur like I have discussed earlier.

Bibliography:

All information that I have, has been gathered through different research through the internet for example and also and a selection of books. I have gained some information through the trip made to McDonalds; I have gained knowledge about McDonalds in further detail by the interview made at the trip.

Haynisna Kamalendiren

Candidate Number: 2161

Centre Number: 13216