McDonald’s is the largest food service company in the world. The company regards itself as the leading global food service retailer. With more than 30,000 restaurants serving more than 47 million people each day in 121 countries. In 1974 McDonald’s opened its first restaurant in the UK. As of 31 December 2001, McDonald’s and its franchisees operated over 1,184 restaurants in the UK.
The business that I have chosen to investigate is McDonalds which is a franchise.
Franchise: A business licensed to use the name, logo and expertise of an existing, well-known business.
The benefits of a franchise are:
The Expertise of the Franchisor
When you buy a franchise, you are purchasing the years of experience and the proven business model of the franchise system, also known as the franchisor. In any new business, much time and money are spent in trial and error. A proven franchise may eliminate many of the start-up problems. A franchise enables you to open a franchise business with little or no previous experience in a given industry.
Instant Brand Recognition
In addition to the franchisor’s experience and business model, you are also
purchasing the right to license the trademarks of the business. Depending on the size of the franchisor and how long the system has been in place, these trademarks can bring instant goodwill and credibility to your business and the products and services you provide.
A franchise system will provide training for you and possibly some of your employees. This is usually done both at the franchisor’s home office and the franchisee’s place of business. This training should prepare you in all facets of the business including: purchasing and inventory maintenance, handling customer complaints, dealing with employee matters, etc. The level and length of training will vary from system to system.
The drawbacks of a franchise are:
Working Within the System
If you have difficulty following directions or dislike working within a system, you may find owning a franchise extremely frustrating. Many people go into business for themselves because they want to be free of constraints and able to do things “their way.” You will not have complete flexibility with a franchise. Conformity to the franchise system is critical if consistency among franchises is to be maintained. However, there are areas such as marketing where a franchisee can be creative.
The Risk of Losing Your Business
While it is true that purchasing a franchise has less risk than starting an independent business, there still are risks. One such important risk is that your business can be taken away (even if it is enjoying financial success) because you failed to follow the franchise agreement or the franchisor’s operating manual. It is critical that you carefully review each of these documents before purchasing a franchise and that you take care to follow all franchisor requirements after you open your franchise
location. Because you own the business, you, to a great extent, determine the success of your venture.
Choosing the Wrong Franchisor or System
There is no specific requirement under federal law that a franchisor has to be of a certain size, financial stability or expertise. Anyone can become a franchisor. The Federal Trade Commission (“FTC”) merely requires the franchisor to disclose certain information to prospective franchisees. The FTC does not review or verify this information. This is the franchisee’s responsibility. That is why it is critical that you carefully review the Uniform Franchise Offering Circular and the Franchise Agreement before you sign it. Just because the franchisor is an established company and has an official looking “form” agreement does not mean that it is in your best interests or that it is non-negotiable.
Aims and objectives
McDonald’s vision is to be the UK’s best quick service restaurant experience
Aims and objectives
McDonalds’ aim (‘vision’) is to be the ‘world’s best quick service restaurant experience. This means:
Running and opening great restaurants and providing exceptional quality, service, cleanliness and value. This aims shows that McDonalds wants to keep improving the quality of there products and the cleanliness of their restaurants.
McDonalds will continue to assess its menu offering from a nutritional stand point and to work with government and health officials to investigate
improvements. This aim shows that McDonalds want to have a menu that appeals to all consumers and also contains healthier options.
McDonalds will not work with any supplier who does not adhere to the standards required by UK and EU legislation regarding animal welfare. Transportation, husbandry inspection and quality, hygiene. This aim shows that McDonalds has high standard so that the restaurants only serve fresh and clean products.
As an independent registered charity, RMCC’s main focus is establishing Ronald McDonald’s houses and Ronald McDonald family room at children’s hospitals. This aim show that McDonalds is a caring company and continually helps there consumers.
Measurement of success
McDonald’s collects information from:
* Market share
* Meeting aims and objectives
McDonalds collects information form their profit records to see if there has been any change form pervious years, McDonalds can measure its success by calculating the difference form the year/months before.
McDonalds collects information from their market share, by analyzing the changes in the market.
McDonalds can measure its success by growth of the company, for example the amount of new franchises opening and new countries that McDonald’s restaurants are being established.
McDonalds can measure its success by that awards it receives for its health and safety, environmental policies and food quality.
Meeting aims and objectives
McDonalds can measures it’s by seeing if they meet there aim and objectives. For example its quality, service aim cleanliness aims.
Hierarchical structure a hierarchy is a series of levels of people, each level controlled by the level above it. Large organizations like limited companies may have thousands of employees. They have a more complex and ‘taller’ organisational structure, which includes a number of levels of hierarchy and division into functional areas such as sales, finance and human resources. In the example you see the structure of a manufacturing company.
Flat structure a simple horizontal or ‘flat’ structure is very different from the complex hierarchical structure. In this kind of structure the diagram is flat in shape; there’s only one level of command. In this
diagram of a sole trader you can see the owner has control over his assistants, he tells them what to do. The owner probably carries out the mains functions like finance, administration, marketing and human resources and the assistants do the selling.
The McDonald’s restaurants all have a flat structure. There is one manager who is in control of the other assistants and employees. He takes all the decisions and he is in charge of the main functions. This makes it very simple for the staff because all they have to do is selling. This way they can pay more attention to the customers, so I think this is indeed the best structure for a McDonald’s restaurant. But the McDonald’s corporation has a hierarchical structure. This is a huge company with lots of different departments which has to be organized very well, because if the employees aren’t directed in the right way they won’t do their jobs right. So this way it is all ordered and the people can work undisturbed, this saves time and money for the business.
McDONALD’S SENIOR MANAGEMENT
Chief Executive Officer
+—————————+—————–+———————-+——————-+ | | | | | Andrew Marcus Terence Ed Philip Taylor Hewson Haynes Oakley Cobden | | | | | Operations Marketing Finance Purchasing Property Field Services Franchising Information Quality Construction/ Training/Ops- Charities Services Assurance Design Development Security Communications Facilities
Human Resources Local Govt.
McDonald’s are structured along functional lines the major areas of activity are:
· Operations (equipment and franchising)
· Development (property and construction)
· Finance (supply chain and new product development)
· Marketing (sales marketing)
Operations (equipment and franchising)
The operations department in McDonalds deals with people who work in, or want to work in the firm. It controls the number of employees in the firm. The operations department mainly deals with;
· Recruiting, selecting and appointing all new staff.
· Terminating employment though redundancies, retirement or dismissal.
· Negotiating grievance and disciplinary procedures with trade unions and applying them where necessary.
The operations department helps McDonalds to meet their aim and objectives by motivating staff and employing qualified staff.
Marketing (sales marketing)
The marketing department in McDonalds gives the consumer’s point of view within a firm. It acts as a bridge between consumers and the production department.
* It sets up marketing research
* It works with design and production departments to make sure that the firms products are of a design, quality and price that
* It organises the advertising, promotion and distribution of goods and services.
The marketing department helps McDonalds to meet their aim and objectives by attracting newer customers.
Development (property and construction)
The development department in McDonalds plans organises and caries out the manufacturing of a firms products. It must make sure that goods are produced:
· cheaply as possible,
· that they are of good quality
The development department helps McDonalds to meet their aim and objectives by producing quality products.
Finance (supply chain and new product development)
The finance department in McDonalds pays the salaries of the employees in each of the department; they keep records for example profit and loss. The finance department helps McDonalds to meet their aim and objectives by producing records and charts to show how the business is doing.
McDonald’s restaurants are managed differently to the Head Offices. They use a mainly autocratic management style. This is because they are dealing directly with the customer, and at busy times a decision needs to be made quickly and correctly to ensure that the customer receives the best customer service.
Another reason for using autocratic management is that the people who are better trained for certain tasks will be needed to do them at the busier times, (for example serving on the till on a Saturday lunchtime). By doing this it means that the customers get served more quickly and efficiently. If staff were to chose what tasks they did, then the people who were more skilled at a task wouldn’t necessary be doing it as the staff are more likely to chose the job they like best rather then the one that they were best suited for. 7.0 (E4) (C2) Cultures Within McDonalds
Every business is made up of different cultures, and the cultures that are present within the business depend on the management styles and organisational structures that are used. The different types of cultures are: –
¯ Role Culture: – This is best suited to a hierarchy organisational structure. This type of culture works best by every employee playing the role that he or she has been predetermined and corresponds with the rules and regulations of the business
¯ Task Culture: – This culture encourages people to work as a team; this works best in a star structure.
¯ Power Culture: – This works well in a matrix structure. It is based around one dominant individual/leader.
¯ Person Culture: – this culture focuses on providing administrative help and support and close attention to one person in the
organisation. 7.1 McDonalds Culture
McDonalds have many different types of culture present within the business; this is because of its size and many different Offices that are situated globally. The next few sections looks at the offices of McDonalds in Britain, Europe and the main Head Office in the USA, they are all summarised together under the same section, I will also look at a McDonalds restaurants and what kind of cultures they are likely to use 7.13 McDonalds Head Offices
All of McDonalds Head Offices work in the same basic way, just on a bigger or smaller scale. They all use what appears to be a task culture.
All Head Offices are divided into different departments as listed in 5.0. All of these departments have people specially trained to do specific tasks, because all staff members are trained to do a certain job, the management of the departments leave them to carry on their jobs alone. Management however, do get involved when theirs a major decision to be made, or a massive problem. 7.14 McDonalds Restaurants
McDonalds restaurants work in a completely different way, they use more of a power culture in which the manager on duty assigns staff members with different tasks each day.
ICT in McDonalds
The impact of ICT has had huge effects on internal and external communications of McDonalds.
Communicating with customers
The internal customers of McDonalds are its employees. The external customers are the consumers.
Communication also takes place with potential customers. External customers require a different set of communication methods, sometimes called the communication mix. These will include advertising through the mass media, promotional and information literature and website selling, all of which require the use of ICT.
Without ICT all of the above would be impossible for McDonalds.
Communicating with suppliers
Developing long-term relationships with suppliers is better than chasing the lowest cost by continually changing. McDonalds work directly with suppliers on issues such as quality standards and environmental policies. Again without ICT with could not be possible for McDonalds.
Without ICT it would not be possible for McDonalds to advertise its goods to customers, so therefore would not be as successful
Launched In the year 2000, McDonald’s UK intranet provides a fast and up-to-the-minute source of information for McDonald’s restaurants management and office staff. It is a single point of reference for administrative requirements, news and marketing materials.
McNews and MIDUK
McNews was the award-wining magazine published bi-monthly for all restaurant staff. In 2002, McNews was reached as MIDUK – a lively people-focused magazine, it covers news, activates and events form restaurants around the country.
An email system in all offices and company-owned restaurants.
Employee satisfaction surveys for both office and restaurant staff are annually.
McDonalds is committed to long-term relationships with a limited number of supplier’s partners who share the company’s vision ‘to be the best’. For suppliers this means investing with the confidence that they be treated as partners in the businesses.
McDonald’s suppliers follow the exacting standards of quality, value and cleanliness set by the company. The most up- to-date and efficient food processing techniques are employed along with stringent quality assurance and food safety programmes. Great emphasis is placed on traceability system for all product ingredients to enable controls to be exercised over every link in the supply chain.
In its McDonalds preference wherever possible to purchase from supplies in the UK, providing they can meet McDonalds exacting product and hygiene standards, and are completive. Suppliers are monitored in terms of their environmental polices and the company only buys from suppliers who operate responsibly in accordance with government and EU regulations and guidelines.
McDonalds works closely with franchises, suppliers and its logistics provider to meet their commitments to quality, nutrition, and hygiene and food safety.
The responsibility of serving 3 million customers per day, makes quality a consistent goal. The company strives to ensure quality from the crop to
counter. To that end, McDonalds requires the highest standards and specifications, not just for product ingredients: every detail of production, transport, delivery, preparation and service is also exhaustively monitored.
McDonalds believes that food quality begins at the very first link in the supply chain, whether this is dairy herds, lettuces seedlings or the flour used in the buns. The company has highly trained team of quality assurance professionals, whose jobs includes verifying the companies supply chain though audits and site visits. They also work with suppliers to maintain and develop product quality and to ensure that restaurants consistently serve hot, fresh, great tasting food to all customers, every time they visit a restaurant. Independent food safety audits are also used on a regular basis to access McDonald’s supplier facilities.
New product development
McDonalds always has and always will continue to develop new products that satisfy customer’s expectation for great taste and great value.
The company’s new products development team works with suppliers to expand the menu with new core and promotional food items. Our quality assurance experts help to ensure that all food meet McDonalds high quality and safety standards.