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  • Published on: 14th September 2019
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Prepared by Martina Velikova

McDonald's

Organisational Structure and Management

McDonald's is a leading American hamburger and fast food restaurant chain.  It is founded in 1940 as barbecue restaurant by Richard & Maurice McDonald in San Bernardino, California. Mc Donald's is in the hospitality industry, owning more than 30 000 restaurant units around the world.

In 1948 the two brothers started using production-line principles in their practice, which up to now are core element of the company's heart. Thanks to this innovative practice, the company keeps growing since and today servers approximately 70 million people daily in 119 countries.

McDonald's is the largest restaurant chain in the world. Mc Donald's is based in Oak Brook, Illinois and plan to move to Chicago by 2018. Today McDonald's is publicly-traded corporation. Public corporation is a company whose possession is dispersed among the general public in many shares which are unreservedly exchanged on a stock trade or in over the counter markets. More than 70% of the retail branches are owned separately by independent owners with franchise agreements.

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Diagram 1.

The structure of an organisation is the sum total of the ways in which it divides its labour into distinct task and then achieves coordination among them. The company has Tall Functional Structure, because the tasks are grouped into departments based on similar skills and expertise. The tall structure has a large amount of levels of management hierarchy and it is with narrow span of control. People from each department have a different share of responsibility. For example first assistant manager may be working under the store manager but report to supervisors or even contact marketing managers and franchise department in case they need to.

Functional organisation have a number of advantages. High operational efficiency, tight and centralised control and responsibilities are clearly defined and understood. Resources are used efficiently. Specialised equipment is located where it is needed most. Unfortunately, there are some disadvantages. People put the goals of their own groups before the goals of the organisation. In my opinion Mc Donald's uses the structure very successful and use it in the best way possible if we consider that the company is example and role model for a prosperous firm.

Mc Donald's accredit to Scientific Management (Taylor) theory. Providing training, organisation of the job by management not workers, the use of promotion where hard work is appreciated and rewarded are all principles of Taylor's theory. For example in 1961 the company built Hamburger University for training staff.

McDonald's uses transformational leadership style. This visionary leadership style is focused on change and leader motivates followers to achieved results. The Great Man Theory of Leadership asserts that leaders are rather born not made and call for certain qualities like charm, persuasiveness, intuition and more. McDonald's has offered their employees self-growth practices, motivation skills, work in teams so that each worker relay on others and a stress-free atmosphere. I believe that the results the company achieves with its style of leadership is proving to be a winning strategy to follow therefore I would keep its management style.

Marketing management

Marketing mix (7Ps) is a unique blend of product, place, promotion, pricing, people, process and physical evidence designed to mutually satisfy exchanges with a target market. It includes various elements as follows which form the core of a company' s marketing system and help to achieve marketing objectives.

Products – This element of the marketing mix covers the various organizational outputs (goods and services) that a company provides to its target customers. McDonald's is primarily known for its burgers as their main product, but I believe the unique packaging of each item the company sells has played major role in satisfying customers' needs and helped the growth of the brand in the early days.

Place/Distribution – McDonald's always looks for the best locations to provide custom-ers with convenience. It builds restaurants in airports, tollways, malls, colleges, neighbour-hoods and sells through a direct channels – face to face, offering counter service and most of the time both indoor and outdoor seating. It has multiple distribution channels. For example, drive-through service was later adopted mainly by restaurants near highways.

Promotion - It defines the approaches which the company communicates with the cus-tomers. For its advertisements Mc Donald's uses online media, print media, radio, TV and sales promotion to attract more customers to its restaurants as discount coupons ad freebies for certain products. In addition the company uses direct selling, such as local government, community events and parties for corporate clientele.

Prices - The customers' perception of value is an important determination of the price charged, because this draws a mental picture of what a product is worth. The danger of using low price as a marketing tool is that the customer may feel that quality is being compromised. In comparison to competitors such as Burger King or KFC, McDonald's offers wide range of prices while its rivals are lacking large variety of cheap items. Prices are elastic because every item has individual price. Brand strength is high so it is the popularity of it therefore it charg-es extra.

Processes - The whole process is visible to the customer. The fast food joint allows its customers to view and judge the hygienic standards at Mc Donald's by allowing them to en-ter the area where the process takes place.

People - The regular staff in Mc Donald's have a standard uniform and the company specially focuses on friendly and prompt service to its customers from their employees.

Physical evidence - Mc Donald's focuses on clean and hygienic interiors of its outlets and at the same time the interiors are attractive and the fast joint maintains a proper decorum at its joints.

Marketing department has to ensure a marketing mix is created that appeals specifically to target audience. Mc Donald's marketing department analyses the information from ongo-ing marketing researches delivered by their customers. Creating the right marketing research helps to win customer's loyalty and increases sales so a strong brand name is maintained.

McDonald's does not have particular audience – it targets everyone, from children to adults. If we further examine the market segmentation regarding geographical characteristics, I come to the conclusion that local dishes, if integrated properly in the menu and adjusted to McDonald's standards may be a very positive for the company because of its widespread in-fluence over the globe. In this way all McDonald's restaurants will have at least one specific to the location item, turning it into an even more interesting and loved brand.

Supply chain management

Supply chain management is a process. It consists of the series of activities and organisations that materials move through their journey from initial suppliers to final customers. It is linkage of strand of operations that provides goods and services through to end-customers.

It encompasses the planning and management of all activities involved in procurement, sourcing, conversion and all logistics management activities. Moreover it includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, customers and third party service providers. Supply chain management integrates supply and demand management within and across companies. McDonald's has a world-class global supply chain and thousands of supply partners that purchase food, packaging, equipment and other goods.

Raw Materials

The raw materials are the ingredients that will go into producing the finished product. Mc Donald's uses buns, beef, paper cups, salads and packaging. The company spent years setting up a Cold Chain which is necessary to maintain the integrity of food products and retain their nutrition value and freshness.

Suppliers

The company works in good relationships with suppliers to encourage innovation, continuous improvements and assure best practices. It has different suppliers for chicken, cheese, beef, fish etc. All products are delivered to restaurants by Keystone Distribution (partner).

Manufacturing

All raw materials in Mc Donald's work- in- progress and finished products are handled on a First In, First Out basis. They are used in the order they are received. In that way products are always fresh and sold in the way they are made.

Distribution

The company does not have factories or distribution centres so communication with suppliers is a necessity. The company tracks everything from daily point-of-sale data for each item, restaurant stock levels and its marketing plan for promotional items and local menus to distribution centre and inventories. Food is prepared by customer's demands and is handled in branded bags for take outs or on branded trays to eat in.

Retailing

Every restaurant of the chain has golden arches, symbol of McDonald's brand. This is one of the unique things about the company and its retail strategy and help customers feel the atmosphere of the brand.

Final customers

The company has achieved massive success and managed to maintain its customers happy and satisfied with their food and atmosphere. But, people may grow indifferent and soon after the business stops evolving it will start to repel people which will lead to loss of income and popularity. Essential strategy McDonald's should employ in near future to avoid loss of customers is to keep improving all aspects of business and continue bettering the company even on higher and higher scales.

Summary and Conclusions

Dividing its labour, strong brand name, unique and innovative internal business processes, strong relationship with suppliers to ensure food tastes always the same have all helped McDonald's become the best in its industry. As I said above, it might be really beneficial for the business if it begins a campaign and includes one local dish to restaurants in every different country in order to further shock, satisfy and serve the huge network of loving customers of McDonald's.

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