Mcdonalds 2w5m1u

INTRODUCTION TO MANAGEMENT

Table of Contents 1

EXECUTIVE SUMMARY................................................................................................................... 2

2

INTRODUCTION TO McDonalds ...................................................................................................... 3 2.1

3

MISSION & VISION ................................................................................................................... 3

MEGA ENVIRONMENT..................................................................................................................... 7 3.1

ECONOMIC SEGMENT ............................................................................................................. 7

3.1.1

NET DISPOSABLE INCOME ............................................................................................. 8

3.1.2

INTEREST RATE ................................................................................................................ 8

3.1.3

UNEMPLOYMENT RATE .................................................................................................. 8

3.1.4

INFLATION ......................................................................................................................... 9

3.1.5

GROSS DOMESTIC PRODUCT (GDP) ............................................................................. 9

3.2

4

5

INTERNATIONAL SEGMENT ................................................................................................ 10

3.2.1

TRADE BARRIERS ........................................................................................................... 10

3.2.2

TRADE RISK ..................................................................................................................... 11

3.2.3

TRADE BENEFITS ............................................................................................................ 11

TASK ENVIRONMENT .................................................................................................................... 12 4.1

SUPPLIERS ................................................................................................................................ 12

4.2

COMPETITORS ......................................................................................................................... 14

LEADERSHIP .................................................................................................................................... 16 5.1

7 TRAITS ASSOCIATED WITH LEADERSHIP ..................................................................... 16

5.2

CORPORATE & WORK CULTURE ........................................................................................ 18

5.2.1

WORK CULTURE: McDonalds Work Culture is as follows given in their website: ........ 18

5.2.2

MOTIVATION ................................................................................................................... 19

5.2.3

TRAINING & EDUCATION ............................................................................................. 19

6

CONCLUSION ................................................................................................................................... 20

7

REFERENCES ................................................................................................................................... 21

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INTRODUCTION TO MANAGEMENT

1

EXECUTIVE SUMMARY This case study is to research the factors that affect or have influence on McDonalds.

Before the company’s’ analysed this report will give an overview of McDonalds background and history. The mega environment and task environment of the company will be discussed in this research. Furthermore McDonalds current leader, Jim Skinners’ leadership skills will be discussed.

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2

INTRODUCTION TO McDonalds

Source:

The long journey of McDonalds started with two brothers Dick & Mac McDonalds single drive-in restaurant in San Bernardino, California, in 1940. In 1948 they closed and reopened the restaurant to sell only hamburgers, milkshakes & French fries. In 1954 the entrepreneur and milkshake-mixer sales man, Ray Kroc acquired the franchise of McDonald’s restaurant. In effect Kroc opened his first restaurant in Illinois, Chicago and gave birth to ―McDonald’s Corporation‖. Since the birth McDonalds have emerged as multinational company & the leading fast-food chains in world with more than 33,000 local restaurants serving more than 64 million people in 119 countries each day.

2.1

MISSION & VISION Mission is a set of organizational goals that include both the purpose of the

organization, its scope of the operations and the basis of its competitive advantage. In other word it reveals what an organization wants to be and whom it wants to serve, it answers the question ―What is our business‖. The mission statement of McDonalds is given below: ―McDonald's brand mission is to "be our customers' favorite place and way to eat." Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to improving our operations and enhancing our customers' experience.‖

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Vision is a goal which is massively inspiring, overarching and long-term. This can be an organizational goal(s) that evoke(s) powerful and compelling mental images. Vision answers the question ―What do we want to become‖. Below is the vision statement of McDonalds. ―Our vision is to provide the world’s premier quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value.‖ McDonalds brand promise is: To provide Simple Easy Enjoyment to every customer at every visit.

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These following core values guide McDonalds actions they we strive to achieve their mission.

Logo

Description We place the customer experience at the core off all we do Our customers are the reason for our existence. We demonstrate our appreciation by providing them with high quality food and superior service, in a clean, welcoming environment, at great value. Our goal is outstanding QSC&V for each customer every time. We are committed to our people We provide opportunity, recognize talent, and develop leaders. We believe that a diverse team of well-trained individuals working together in an environment that fosters respect and drives high levels of engagement is essential to our continued success. We believe in the McDonald’s system McDonald’s business model, depicted by the ―three-legged stool‖ of owner/operators, suppliers, and company employees, is our foundation, and the balance of interests among the three groups is key.

We operate our business ethically Sound ethics is good business. At McDonald’s, we hold ourselves and conduct our business to the highest possible standards of fairness, honesty, and integrity. We are individually able and collectively responsible.

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We give back to our communities We take seriously the responsibilities that come with being a leader. We help our customers build better communities, RMHC, and leverage our size, scope and resources to help make the world a better place. We are committed to sustainable business practices and are determined to conduct our operations in a manner that does not compromise the ability of future generations to meet their needs We grow our business profitably Our stakeholders our ability to serve our customers. In return, we work to provide sustained, profitable growth for all of our system and our investors We strive continually to improve We consider ourselves a learning organization that is green and growing which anticipates and responds to changing customer, employee, system and community needs through constant evolution and innovation. Source: http://www.mcdonalds.com.my/abtus/corpinfo/mission.asp

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MEGA ENVIRONMENT Mega environment consists of factors that can have dramatic effects on company

strategy. Company has little ability to predict the events in mega environment and therefore less ability to control them. General environment is divided in to five elements: economic, international, technological, sociocultural and legal-political element. Two mega environment factors which have effects on the success of McDonalds will be discussed.

3.1

ECONOMIC ELEMENT

The state of the country’s economy has an impact on all companies, same applied for the McDonalds all around globe. Economic factors which have a direct impact on potential attractiveness of McDonald’s strategies. Some of the key economic factors which affect McDonalds Internationally are analyzed on the next page.

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3.1.1

NET DISPOSABLE INCOME

Disposable income is the amount of the money households have available for spending & saving after deducting income tax. Disposable income is a major factor which effects McDonalds sales and revenue. When the net disposable income of customers or people increases, they spending power of consumers will increase thereby increases the spending of consumers on McDonald’s products. As more consumers purchase or McDonald’s products, McDonalds sales figures will increase, thus rise in their net income and vice versa.

3.1.2

INTEREST RATE

Bank loans and finance companies are very important for McDonald’s investments and for other purposes. When there is a high interest rate the amount the company has to repay as a loan will be higher and this will reduce the company’s investments and finances for fixed assets. This will have same effect for McDonalds. As McDonalds sell their shares in stock market and allow people to invest in their business, interest rates will affect how much money people invest in McDonalds and its stock.

3.1.3

UNEMPLOYMENT RATE

When the unemployment rate of a country is relatively low, it means that there are more people who are working thereby generating more income. This leads consumers to have a higher disposable income thus increasing the sales of McDonald’s products and their revenue and vice versa. In January 2010, the fast-food giant reported that their sales figures slipped. Analysts said that it was mainly due to the unemployment rate in U.S There is also a benefit for McDonalds when one of their franchise countries when unemployment rises. When unemployment rises, McDonalds can hire staffs at a cheaper wages.

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3.1.4 INFLATION

Inflation is the rate at which the general level of prices for goods & services is rising and subsequently purchasing power is falling. By the definition when the raw materials or core ingredients prices of McDonalds rises, it will affect their cost of production and thus rise in the final price of the product. This will have a negative effect on company as it will lose its customers due to high prices and reducing their net income. This will also reduce their shares in global market & Vice versa. In April 2011, McDonalds warned about higher food inflation. Shares fell 1.5 percent after McDonalds said it planned to offset some, but not all, of its higher food costs, with small price increases throughout the year.

3.1.5 GROSS DOMESTIC PRODUCT (GDP)

GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country's standard of living. As mentioned, when a country’s GDP is high, the standard of living of people will be higher, thus households have higher spending power. This will increase the sales and revenues of McDonalds in that country. A high GDP will also interest investors to invest in the company and will be better market to sell its shares at the best price. And vice versa.

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3.2

INTERNATIONAL ELEMENT

First let's ask our self-what's mean's international management? "A process of accomplishing the global objectives of a firm" When we can say this firm it's international? It's an enterprise that has operations in two or more countries. As we know McDonald's is the leading global foodservice retailer with more than 33,000 local restaurants in 119 countries around the world,

3.2.1 TRADE BARRIERS To be international restaurants it's not that easy there's many Hindrances in the export and import to other countries. Customs inspection, they carefully examining the foods they see their validity, and if the result is expired it you will lose the charge and fines on that. Cost for shipping, it's expensive especially in seasons in the same time any accident can't happen in the way. International competition, always the international market they have a good quality the only danger faced by the local market for many reasons The international they have fixed price they can't go down more than that because they calculated, import and customs to get the profit, in addition local market always by the government, restaurants.

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Commercial

law gives more powers

of local

restaurants from international

INTRODUCTION TO MANAGEMENT

3.2.2 TRADE RISK To be international restaurants it's all about time everything must come on time. When import the food it will in fridge but there's limited time to be there after that it will be expired.

3.2.3 TRADE BENEFITS As we have a risk In contrast we have benefits Maybe McDonald found good supplies for materials cheaper than USA. They can find also from countries a famous in technology to them to connect the restaurant together. Take the experiences of other countries. Some countries they allowed to import without customs. They build a trust with other countries if now McDonald want to open a new business he I'll acceptable anywhere around the world.

Source: http://www.bme.eu.com/news/mcdonalds-across-the-world/

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4

TASK ENVIRONMENT

Task environment or can be called as specific environment is an external circumstances that a company has to deal with. The environment can be changed as the time goes by so this will directly impact to the decisions making and the actions the manager will take and eventually have an impact on the company’s ability to achieve goals. Each company has their own unique task environment as they have different target markets so they have to consider with different factors. The elements of McDonald’s task environment are considered as: customers, suppliers, competitors, pressure groups, employees and government agency. From the above mentioned elements suppliers and competitors which have high effects on the success of McDonalds will be discussed.

4.1

SUPPLIERS ELEMENT

Suppliers from the word of supply which mean make (something needed or wanted) available to someone, provide. The plural form of supply is supplies which mean a stock or amount of something supplied or available for use and suppliers is the person or the company that initiated the supply. For the company, suppliers are one of the most important parts as they are who keep the needs of the company flown in continuously, not only goods but they also provide financial and labor inputs. By knowing the important role of suppliers, McDonalds put their suppliers as ―The Three-Legged Stool‖. ―The Three-Legged Stool‖ is the way McDonalds makes a strong foundation for their business. Those McDonalds’s three important pillars are their employees, their franchisees and their suppliers. Now, we focused on McDonalds’s supplier which providing food, packaging and other products and services.

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McDonalds has a high requirement for their suppliers. As they want a great quality to provide a great taste for their foods, McDonalds needs the finest and freshest ingredients. So, to achieve the standard their suppliers have to fulfill few requirements such as the food safety policy, have a standardize preparation, high social, environmental and animal welfare standards and namely leading company. Some of McDonald’s suppliers are given below. FOOD SUPPLIERS Keystone Foods – Chicken McNuggets Lopez Foods – pure beef patties 100 Circle Farms – potatoes Dinding Poultry TPC Plus – eggs Cargill

DRINK & BEVERAGES SUPPLIERS Coca-Cola Nestle Gavina Gourmet Coffee Fonterra Dutch Lady

McDonalds as a well-known fast food company has a standards about their food quality. As we can see, McDonalds has suppliers who could be trusted, not only trusted by McDonalds but also with their customer. This trust based on the supplier performance which already proved with a certification and based on how many loyal customer they have, for example one of the McDonalds supplier, Coca-Cola, their products are certified, well-known and most favored soft drink by everyone.

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4.2

COMPETITORS ELEMENT

“……. In management , the definition of competitors means any person or entity which is a rival against another. It is also an organization in the similar industry which offers the same product or service……”

McDonalds has two different types of competitors, direct competitor and indirect competitor. McDonalds faces more competitors directly compared to indirect competitors. One of the examples of direct competitors of McDonalds are Burger King and Wendy’s, whereas indirect competitors are Dominos, Pizza Hut and many more.

Company

McDonalds

Burger King

Cost

Reasonable

Reasonable

Promotions

Various

Seldom

Franchise/Outlets

Worldwide

Worldwide

Customer Service

Good

Satisfying

Table 1 difference between McDonalds and Burger King Let’s say we take Burger King as an example to show how McDonalds overcome this company. Table 1 above shows the difference between McDonalds and one of the closest direct competitors that McDonalds is facing, Burger King. In of cost for both companies, McDonalds is just as reasonable compared to Burger King. McDonalds has plenty of promotions compared to Burger King which do have promotions but not as many as McDonalds. This is a marketing strategy that McDonalds uses to overcome their competitors.

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Speaking on franchise/outlets and customer service, McDonalds overcome the competitors with worldwide franchise and outlets everywhere, ensuring good customer service which makes the company even more successful. No matter wherever customers are, there are always McDonalds everywhere at any time. Therefore, it lots of McDonalds outlets around the world. McDonalds also places great value on its employees which is one of the reasons why McDonalds is consistently known as one of the top companies to work.

It is clear that McDonalds faces many competitors at the same time and was able to overcome them and be the world famous best fast food chain. Thereby McDonalds have competitive advantage over their rivals.

Source: http://www.princeton.edu/~ina/infographics/starbucks.html

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5

LEADERSHIP As McDonalds Vice Chairman and Chief Executive Officer, Jim Skinner

leads the world’s largest fast food company with 33,000 restaurants in 119 countries. Upon, becoming CEO in 2004, Jim Skinner set three top priorities for his leadership: long-term sustainable growth for the company; talent management and leadership development; and promoting balanced active lifestyles.

5.1 Drive: exhibit high effort level

7 TRAITS ASSOCIATED WITH LEADERSHIP As McDonalds Leader Jim Skinner has worked very hard on making the business successful and achieving its goals. So we know he has the high effort level.

Desire to lead: leaders have strong desire to influence &

As President and Chief Operating Officer of the McDonald’s Restaurant Group, skinner led

lead others.

the operating for all of the company’s global restaurants.

Honesty & Integrity: leaders build trusting relationship

Skinner previously worked as Executive

within company, followers & outside relationships.

Vice President and International Relationship

Consistency in word & deed

Partner for Central Europe, Middle East, Africa, and India and has made trustworthy relationships around the world.

Self-confidence: leaders have to show their confidence in

Skinner has always been confident with the

rightfulness of company’s goals & strategies.

business strategies and made McDonalds achieve its goals.

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Intelligence: leaders must be intelligent enough to gather,

Skinner is one of the three architects of

synthesize & interpret information and need to be able to

McDonald’s worldwide revitalization plan

create visions, solve problems & make correct decisions.

launched in 2003 that turned the company around and re-focused on customer strategies, business disciplines and close global alignment. As he became CEO he made his top priorities as: talent management and leadership development; and promoting balanced active lifestyles.

Job Relevant Knowledge: they should have high degree

Skinner began his career in 1971 as a restaurant

of knowledge about company, industry and technical

manager trainee and since then has held numerous

matters.

leadership positions. Skinner served as Vice Chairman of McDonald's Corporation, and had management responsibility for APMEA and Latin America, in addition to overseeing most corporate staff functions. Since the beginning of 2003, he was able for McDonald’s Japan Limited. Before becoming Vice Chairman, he served as President and Chief Operating Officer of the McDonald’s Restaurant Group, with operating leadership for all of the company’s global restaurants. With these experiences he has lot of knowledge about McDonalds and its operations.

Extraversion: leaders are energetic & lively people.

McDonalds have involvement in youth sports, local charities, and events that inspire the world, giving back is an essential part of the way the company operates every day.

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5.2

CORPORATE & WORK CULTURE

When analyzing McDonalds Leadership, it’s useful to analyze their work culture and how it’s maintained. 5.2.1 WORK CULTURE: McDonalds Work Culture is as follows given in their website:

Working Here We believe the words ―Welcome to McDonald’s‖ should apply to our employees just as much as our customers. We’re proud of our food, and we’re just as proud of the jobs we create.

Flexible Schedules We believe in flexible schedules that fit into the way you live your life and can help you reach your goals. We’ll also give you the mentorship and guidance you need to succeed.

Celebrating Diversity We believe that different people, from different backgrounds, with different interests, combine to make our ideal work force. McDonald’s is committed to diversity in hiring—actually, we’re an industry leader—from our restaurants to our supplier networks to our owners.

Empowering You We believe in giving you the tools you need to succeed, whether it’s the chance to own your own restaurant or tackle the corporate ladder. To be the best company we can, we have to offer the best opportunities, and we’d like to believe that some of the best ones around are right here.

Source:

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5.2.2 MOTIVATION McDonalds have strong motivational factors for their employees by providing safe and clean environment to work, flexible schedules and high wages. One of the most important motivational elements used by McDonalds is Best Employee award they give each month. Each year, the top 1% of McDonald’s store managers are honored with Ray Kroc award, which recognizes their ion for perfection

5.2.3 TRAINING & EDUCATION McDonald’s corporate management believes in training and leadership at all levels. McDonalds provide training and internship programs in their world renowned Hamburger University. McDonalds founder Ray Kroc once said, ―if we are going to go anywhere, we’ve got to have talent. And I’m going to put my money in talent.” McDonalds & Hamburger University continues to promote that philosophy every day.

In 2007, Dow Jones/Marketwatch named Skinner ―CEO of the Year,‖ and Restaurants & Institutions magazine bestowed him ―2007 Executive of the Year.‖ In 2008, Skinner was named one of ―America’s Best CEOs‖ by Institutional Investor magazine. Chief Executive magazine named Skinner the "2009 CEO of the Year" and he was also named as one of Barron’s ―30 Most Respected CEOs.‖ From the above analysis n discussion we can conclude that McDonalds will grow & be more successful in the future under the current leader, McCEO Jim Skinner.

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CONCLUSION

Based on the analysis done, it is recommended for McDonalds to forecast their mega & task environmental factors, as these factors are indirect and it’s very difficult to anticipate. The strategies used by McDonalds in tackling the environmental issues are very effective. As McDonalds is a multinational company they need to provide same services and products all around the globe. Furthermore McDonalds need to improve their marketing strategies as there is high level of competition in fast food industry. In conclusion is doing very well compared to the threats they have been facing through environmental factors and they need to improve their strategies and improve the success of the business internationally.

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