Mcdonald’s Structure

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Organization and Organizing Case Study 1 The organization I have chosen to observe is McDonald’s. McDonald’s Corporation is a popular fast-food chain under the retail sector. It has lived to create history since the 50s and is now a global fast-food chain with more than 30,000 locations in 119 countries including Germany, Brazil, Japan and recently India (James 2009). McDonald’s have around 40 million customers visiting the store each day. In the early 80s McDonald’s was famous for its fast food but now the restaurant is mainly famous for its burgers, ice cream and French fries especially.

McDonald’s corporate symbol is very recognizable and has been successful with advertising their brand image and logo in the minds of millions of people. Furthermore, another strength of McDonald’s is the customer’s perceived product value. Customers know what to expect when they walk in a McDonald’s restaurant. The biggest area of operation happens in the kitchen place where McDonalds employees stock, prepare and organize food to be sold to customers right after their order is taken, hence explains the term fast food. McDonald’s has two structures at two different levels; the first is at the corporate level and the second, restaurant level.

The corporate’s current design type is functional while the restaurant’s current design type is divisional. Image 1: McDonald’s Corporate Structure The image above illustrates a hierarchy in McDonald’s corporate structure. It consists of the Chief Executive Officer (CEO) on top followed by the chairman of the board to the board of directors. Legal and secretary comes after, followed by human resources to President of APAC and MEA which refers to Asia Pacific, Middle East and Africa where McDonald’s franchises first opened during the 80s and 90s.

Standing 8th place in the hierarchy is Chief Operating Officer (COO) followed by Chief Financial Officer (CFO) to sales and finance managers (Leadership 2012). Henceforth, McDonald’s design type in the corporate structure is functional. Functional structures are normally used in rather big companies like McDonald’s. Employees within the company are differentiated to carry out a specialized set of tasks (Gailbraith 2010). For example, the Human Resources department’s specialized task is recruiting and training as well as making sure the right people with the ight talent are able to work within the company. A functional structure is described by a large degree of formalization, creating standardized ways of operation. Decision-making in a functional structure is centralized at the top of the hierarchy, which in McDonald’s case, done by recent Chief Executive Officer (CEO) Don Thompson (Desmond 2012). Image 2: McDonald’s Restaurant Structure The image above shows the operational level in a standard McDonald’s restaurant.

It consists with the general manager on top followed by the restaurant manager branching out the first assistant to second assistant manager while another branch comprises a shift running manager who deals with the floor manager, followed by the staff training crew and lastly the crew members. This structure proves that McDonald’s in restaurant level is divisional. A divisional structure normally consists of numerous corresponding teams focusing on a single product, which in McDonald’s case, the General Manager is the one who is in control of the other assistants and the employees focus on providing service and selling the products.

McDonald’s utilizes the divisional structure in restaurant level for the reason that a team is able to focus upon product and service with a leadership structure that supports its major strategic objectives (Gillikin 2012). Since McDonald’s corporate and restaurant structure are functional and divisional respectively, I can safely assume that McDonald’s Organization structure as a whole is a matrix. A matrix structure is basically a hybrid of divisional and functional structure. McDonald’s make use of the matrix structure to allow benefits of both functional and divisional structures to exist in one organization (Writing 2012).

The use of a functional structure within McDonald’s Corporation is definitely suitable. This is because the functional structure promotes individuals within the company to be technical specialists of their fields. If the CEO manages to coordinate the units within the company effectively, the company may achieve its goals and objectives (Gupta 2009). McDonald’s decision to use a divisional structure in a restaurant level has a lot of advantages as long as it is well managed. Leadership and good decision making is most important and in order to make t work The General Manager needs to learn and understand each division and provide direction to the division chiefs on how to accommodate new strategic directions. To this point McDonald’s is still a recognized fast food brand around the world. McDonald’s is a strong company that has faced many risks and difficulties but has learned and grown to be even stronger. The type of structure used by corporate and restaurant level respectively to be a matrix structure is definitely a suitable structure for McDonald’s and its structure should not change. (802 words)

Case Study 2 The organization I have chosen to observe for the second case study is McDonald’s as well. As discussed in the first case study, a matrix structure is a hybrid of functional and divisional structures. The functional design type for McDonald’s corporate level is suitable because of specialized results attained by different departments working together. On the other hand, the divisional structure design type for McDonald’s restaurant level is suitable as well as it is dispersed in many geographical regions with over 30,000 branches around the world.

Image 3: McDonald’s World Location Map Illustrated in the picture above are the countries that have McDonald’s fast food chains over half a century. One of the main reasons why McDonald’s is able to expand their fast food chains efficiently is because the people within the organization do profound research on a country’s culture before setting up branches there. Culture is one of the factors under the external environment. The term culture basically means values or beliefs that people have about different forms of behavior and products (Cliff 2012).

Culture is one of the most important factors that need to be studied and considered by a company before planning to set up their company. According to Britannica (2007), food is an important element in defining culture. Any changes in the food that we eat, whether in preparation, the way it is being served or being consumed diminishes the traditional beliefs of the people. The introduction of fast food restaurants such as McDonalds’s caused major influential change to foreign countries. Before the mid-90s, the phrase ‘fast food’ was almost alien in most countries other than the western countries.

There have been doubts and criticisms that McDonald’s would not make it in certain foreign countries due to culture issues but in time the company managed to prove all the critics wrong. According to Balko (2003), McDonald’s have adapted to the local culture and not the other way around. Schumpeter (2011), states that McDonald’s have indeed been careful to balance standardization with respect to local traditions. The company studied the culture of the countries they target and find out their traditional favorites.

For example, chicken porridge in Malaysia and Teriyaki pork in Hong Kong burgers. Not to forget the recent controversial news that McDonald’s is altering their menu to open the first vegetarian-only outlet in India in 2013. The company will open meat-free outlets near two pilgrimage sites in India. However, culture issues do not only apply in foreign countries but it applies in America as well. Fast food has been a cultural hit in America since the 70s and that has made McDonald’s responsible for American’s high rate of obesity by the general public.

In a year, residents of the United States spends more on fast food than in books, newspapers etc. (Champion 2012). Organization for Economic Cooperation and Development (OECD) concluded that the United States is the heaviest of 34 economically established countries (Melnick 2010). McDonald’s have been filed against many lawsuits for the cause of obesity from parents of obese children and adults. In a recent article written by Becker and Glovin (2005), a recent court case was brought by a group of overweight New York teenagers against McDonald’s seeking compensation for obesity-related health problems.

Surprisingly, the ruling is a victory for the teenagers as the suit accuses McDonald’s for hiding health risks of its food in 1987 advertisements. McDonald’s defended by stating that there was no evidence the plaintiffs, one of whom was born after 1987, could have possibly seen the advertisements. According to Judge Robert Sweet (2011) in a different case, “McDonald’s cannot be blamed by consumers who choose to eat there and it is not the place of the law to protect them from their own excess. According to Schlosser (2012), fast food is harming both adults and children as fast food is partly blamed for diabetes, heart attack and obesity. He states that people should know what they are eating, how it is made and to spend their money at places that prepares food well. He basically proposes that people should boycott fast food until restaurants start preparing healthier food. As a recommendation, what America really needs is a change of culture in their eating habits. This might sound too ambitious but good habits can be practiced one step at a time.

McDonald’s could develop menu choices that are healthy and socially acceptable but the fact is it is entirely the consumer’s choice whether they want to balance their eating habits or not. McDonald’s should not be blamed for the rise epidemic of obesity alone. If they want to blame McDonald’s, they might as well blame all marketers of sugar cereals, candies, sodas and etc. Besides, McDonald’s is only selling what the customers want. In conclusion, McDonald’s have done well in researching on culture of all over the world.

McDonald’s should not change its current structures for both corporate and restaurant level. Not everyone might agree with McDonald’s decision to open branches because of their unhealthy food but McDonald’s decision to open a vegetarian outlet only in India might actually change customer’s perception of McDonald’s. (810 words) References 1. Becker, T & Glovin, D 2005 “McDonald’s Must Face Claim That Its food caused Obesity, Panel Rules” The Washington Post, January 26, viewed 1 November 2012 < http://www. washingtonpost. com/wp-dyn/articles/A36737-2005Jan25. html > 2.

Desmond, J 2012 “McDonald’s: New Black CEO” The Root, March 22, viewed 31 October 2012 < http://www. theroot. com/buzz/mcdonalds-new-black-ceo> 3. Gailbraith, M 2010 “What is a Functional Organizational Structure,” viewed 31 October 2012, < http://www. businessmate. org/Article. php? ArtikelId=184> 4. James, R 2009 “McDonald’s Abroad,” Time, October 28, viewed 27 October 2012, <http://www. time. com/time/world/article/0,8599,1932839,00. html> 5. McDonalds 2012, The Official Board, August 10, viewed 26 October 2012 <http://www. theofficialboard. om/org-chart/mcdonald-s> 6. Melnick, M 2010 “American is officially the Fattest Developed Country in the World” viewed 2 November 2012 < http://healthland. time. com/2010/09/23/study-america-is-officially-the-fattest-developed-country-in-the-world/> 7. Schumpeter, 2011 “McDonald’s the Innovator” The Economist, viewed 28 October 2012, <http://www. economist. com/blogs/schumpeter/2011/06/fast-food-and-cultural-sensitivity> 8. Shanty, N 2011 “Organizational Structure of McDonald’s,” Management Paradise, January 31, viewed 27 October 2012, < http://www. anagementparadise. com/forums/human-resources-management-h-r/214495-organisational-structure-mcdonald-s. html> 9. Writing, A 2012 “Different Types of Organization Structure” Small Business, viewed 30 October 2012 < http://smallbusiness. chron. com/different-types-organizational-structure-723. html> 10. “What Makes McDonads” 2011, <http://www. mcdonalds. co. uk/ukhome/whatmakesmcdonalds/questions/running-the-business/company-information/can-you-provide-information-on-the-mcdonalds-corporate-structure. html>

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