The Globalisation of McDonalds and the Role of Management - Essay Example

?The Globalisation of McDonalds and the Role of Management Table of Contents Table of Contents 2 Executive Summary 3 Introduction 4 Task One 6 Task Two 8 McDonalds focuses on a number of different business strategies, many of which were unique to the company when it started out, but have since been adopted in many other businesses due to the success. 8 One of these strategies is the training of employees. Kroc introduced a unique system for this, involving a training program that became known as Hamburger University. The concept behind this was to train employees in the art of making the various products on the McDonalds menu, and to make them in a consistent and reproducible manner. Both employees and franchisees are trained at Hamburger University, and more than 80,000 have graduated from the program. This has proved to be a fundamental strategy for the business, as it has resulted in the products that McDonalds serves being consistent across locations, as well as the level of service provided (McDonalds, 2011, Serwer, 1995). 8 Another important strategy was the incorporation of both suppliers and franchisees as part of the business. This was a key strategy forwarded by Kroc, which looked at the idea of involving the suppliers and franchisees as part of the business, increasing their involvement and their stake in the business. Indeed, some suppliers have no contract with McDonalds, yet it is their only customer, and other follow the corporation overseas, supplying it both in its local and overseas ventures (Serwer, 1995). This strategy is important for business performance, as it ensures reliability of both franchisee and suppliers, as well as high performance as they feel that they are a part of the business. 8 Task Three 9 Task Four 10 Conclusion 11 Bibliography 12 BASS, B. M., BASS, R. & BASS, R. R. 2008. The Bass handbook of leadership: Theory, research and managerial applications., New York, Free Press. 12 KINCHELOE, J. L. 2002. The Sign of the Burger: McDonald's and the Culture of Power, Temple Univ Pr. 12 KROC, R. & ANDERSON, R. 1992. Grinding it out: The making of McDonald's, St Martins Pr. 12 MCDONALDS. 2011. Better, not just bigger [Online]. Available: http://www.mcdonalds.com/us/en/our_story.html [Accessed]. 12 SERWER, A. E. 1995. McDonald’s Conquers the world. Fortune, October, 17, 103-116. 12 VIGNALI, C. 2001. McDonald’s:“think global, act local”–the marketing mix. British Food Journal, 103, 97-111. 12 WATSON, J. L. 2006. Golden arches east: McDonald's in East Asia, Stanford Univ Pr. 12 Executive Summary McDonalds is a widely known brand that is recognised throughout the world. It was begun by Ray Kroc who saw potential in a small drive-in restaurant ran by two brothers. Through his passion and leadership the company grew to its current standing and continues to grow. This report focus on four aspects, first it examines what traits made Ray Kroc and James Cantalupo good leaders and good managers for the company. Following this it examines the elements of business strategies for the company and how they increase the business. Then it considers the fast food industry as a whole and finally looks at changes in organisation to make it more globalized. Introduction McDonalds is a multinational corporation that spans the globe, and is often considered one of the most successful business empires. The franchise was originally born from a drive-in restaurant named McDonald’s Bar-B-Que which began in 1940. In 1948 the restaurant was shut down for alterations and reopened as a drive-in restaurant, selling a total of nine items, the most important of which was the 15 cent hamburger. The big change to the business came when salesman 52-year old Ray Kroc visited McDonalds and takes a position as a nationwide franchising agent for the company (McDonalds, 2011). Following the introduction of Kroc to the company McDonalds become connected to many of the icons and symbols that it is associated with today. The first restaurant had red and white tiles as well as the now famous Golden Arches which were designed for the brand. Within the space of ten years more than 700 McDonald’s restaurants had opened across the United States. McDonalds expanded internationally in 1967 by opening restaurants in Puerto Rico and Canada. In the present day, the corporation has restaurants in 117 countries worldwide, with the total restaurant number totalling over 32,000 (McDonalds, 2011). McDonalds faced many challenges with its worldwide expansion. An example of this was its expansion into India. In 1996 it opened its first restaurant in New Delhi, where it drew substantial criticism for the sale of beef I its other restaurants, even though it was not offering beef products in New Delhi. McDonalds has become associated with many different things than simply food, especially on the international level. In China, the restaurants are used as means of connecting with the world outside of China, in Korea and Taiwan eating at a McDonalds restaurant is considered a political act, often termed cultural treason (Watson, 2006). While McDonalds appears to enjoy a favoured relationship with the media in the US, the same is not true for other countries. In China, political leaders are becoming increasingly alarmed at the prevalence and influence of Western Fast Food companies such as Kentucky Fried Chicken (KFC), McDonalds and Pizza Hut. In Britain, the company has a negative relationship with the media, having sued environmentalists at one point, and is consequently subject to largely negative media reports (Watson, 2006). In France the corporation is seen as symbol of how food has become standardized, and is often viewed as a threat to local farmers and agriculture (Kincheloe, 2002). Task One The biggest factor that changed McDonalds from being a small drive-in restaurant to a multinational corporation was Ray Kroc. He became involved in the company more-or-less by chance, receiving an order from them for multi-mixers, which led to him coming to visit the owners, Dick and Mac McDonald in person. The operation was simple; they had a small menu which allowed them to concentrate on the quality of the items that they produced. Within a year, Kroc had founded the McDonald’s Corporation and within five years he had exclusive rights to the name. His desire was to produce a brand that created its products in an efficient and ordered manner, where products would taste the same regardless of which restaurant or which state they were made in (McDonalds, 2011). He promoted the company to both franchisees and suppliers by a novel method, encouraging them to work with the company rather than for the company. This method of leadership made franchisees and suppliers feel connected to the business, giving them a vested interest in providing good service to the company. In addition, Ray Kroc encouraged franchisees to follow the four principles of McDonalds: value, cleanliness, service and quality. Beyond this however, Ray Kroc allowed the franchisees much freedom, and rewarded them for creativity in creating new menu items. Many of these items became some of the more famous menu items, such as the Big Mac and the Egg McMuffin, and went a large way towards the popularity of the brand (McDonalds, 2011). Leadership is an important part of human nature that has resulted in the ability to do many things, and the role that leaders play in organizations; particularly at the management level is crucial to the success of the organization (Bass et al., 2008). Key qualities of good leaders include concern about those that they lead and an ability to engage them. Leaders are often dynamic and innovative, taking charge over situations and people, setting up tasks and requirements, while keeping their eyes open for new concepts and ideas. Management roles require a degree of leadership, but the level to which leadership occurs varies across managers. The primary role of managers is to oversee those beneath them. Depending on their position in management they are responsible for things like, maintaining good relations between employees and management, ensuring the availability of effective training for employees, ensuring finances run smoothly, etc Two of the predominant leadership figures in McDonald history are Ray Kroc and James Cantalupo. Kroc grew the company from a single store that focused on a small menu and ensuring quality and consistency of their products into a multinational corporation. He was a passionate man, willing to take chances and full of innovative ideas (Kroc and Anderson, 1992). However, his primary leadership qualities are shown through the way that he James Cantalupo is the current head of international affairs in terms of establishing and expanding the brand to new locations overseas, and meeting with the many challenges that each new location brings. He is effective both as a leader and a manager, bringing together the required resources and people to expand into the new areas while at the same time acting as a leader to the employees, and working with local people and authorities to circumvent some of the unique problems with each location. For example, Germany places restrictions on two-for-one sales and many other types of advertising and sales. Consequently, Cantalupo was required to help develop new ways to make the brand known in Germany (Serwer, 1995). Task Two McDonalds focuses on a number of different business strategies, many of which were unique to the company when it started out, but have since been adopted in many other businesses due to the success. One of these strategies is the training of employees. Kroc introduced a unique system for this, involving a training program that became known as Hamburger University. The concept behind this was to train employees in the art of making the various products on the McDonalds menu, and to make them in a consistent and reproducible manner. Both employees and franchisees are trained at Hamburger University, and more than 80,000 have graduated from the program. This has proved to be a fundamental strategy for the business, as it has resulted in the products that McDonalds serves being consistent across locations, as well as the level of service provided (McDonalds, 2011, Serwer, 1995). Another important strategy was the incorporation of both suppliers and franchisees as part of the business. This was a key strategy forwarded by Kroc, which looked at the idea of involving the suppliers and franchisees as part of the business, increasing their involvement and their stake in the business. Indeed, some suppliers have no contract with McDonalds, yet it is their only customer, and other follow the corporation overseas, supplying it both in its local and overseas ventures (Serwer, 1995). This strategy is important for business performance, as it ensures reliability of both franchisee and suppliers, as well as high performance as they feel that they are a part of the business. Task Three The fast food industry is booming worldwide, with many Western based fast food companies expanding worldwide into every continent except Antarctica, and places as different as New Delhi, China, Australia, Canada, Britain, New Zealand, etc. McDonalds is the forerunner of these companies, but others are swiftly following, including businesses such as Kentucky Fried Chicken (KFC), Burger King and Pizza Hut. In the US, the market for McDonalds is waning somewhat, with many new menu additions in recent years to attempt to entice customers that now have a large range of options when it comes to fast food, and in many cases are starting to be more choosy. For example, there is a demand for healthy foods and healthy alternatives, which McDonalds has attempted to meet. It has seen the addition of healthier options to menus such as salads, smoothies and wraps, as well as an overall increase in the healthiness of even the staple McDonalds foods. However, managers argue that the health of the burgers and food served isn’t an issue, McDonalds is simply fulfilling the demands of the public who are, in general, looking for convenient, fast, food (Serwer, 1995). In the overseas market, the corporation is faring better. New restaurants are estimated to open once every three hours, and the restaurants are playing an important role in the local culture (Watson, 2006). There is a large market for fast food overseas, but to take advantage of this business need to focus on international advertising and marketing, particularly as each of the international locations has their own unique challenges and opportunities (Vignali, 2001). Task Four On taking the role of the new CEO of McDonalds one organizational structure that I would look at changing the way in which international growth is approached, in order to make the corporation more multinational. One problem with McDonalds is that there is significant recognition based on the name alone, and in many cases this recognition is not positive. I would look at the company working more with the individual areas it branches out into, working with local industries and agriculture rather than bringing suppliers from overseas. In addition, I would look at those opposed to the development of McDonalds and work with them to placate some of their concerns. This would allow the symbolism of the brand to be improved. Conclusion McDonalds is a multinational corporation that has spread far since its roots in a single restaurant owned by the McDonald brothers. The leadership and management abilities, as well as the innovation and vision of Ray Kroc lead the company to expand greatly, both nationally and across international borders. The current head of international for McDonalds James Cantalupo focuses on expanding the company internationally, and it performs well at the international level. Locally however, the company risks becoming stagnant as growth rates decrease, and there is wide range of choices in terms of fast food for consumers. If I took over from James Cantalupo I would look at changing the way McDonalds interacts with local industry when they enter a new area. Bibliography BASS, B. M., BASS, R. & BASS, R. R. 2008. The Bass handbook of leadership: Theory, research and managerial applications., New York, Free Press. KINCHELOE, J. L. 2002. The Sign of the Burger: McDonald's and the Culture of Power, Temple Univ Pr. KROC, R. & ANDERSON, R. 1992. Grinding it out: The making of McDonald's, St Martins Pr. MCDONALDS. 2011. Better, not just bigger [Online]. Available: http://www.mcdonalds.com/us/en/our_story.html [Accessed]. SERWER, A. E. 1995. McDonald’s Conquers the world. Fortune, October, 17, 103-116. VIGNALI, C. 2001. McDonald’s:“think global, act local”–the marketing mix. British Food Journal, 103, 97-111. WATSON, J. L. 2006. Golden arches east: McDonald's in East Asia, Stanford Univ Pr. Read More