Management Theory and Practice - Essay Example

Introduction The business organisations in a global context are constituted by several factors both endogenous and exogenous by nature. These factors in turn are found to govern to a considerable extent the functioning or operations of the business organisations. However it is considered that though the internal factors of the business concern are such that they are controllable in nature the external or extraneous factor considerations are often found to impact the companies changing the organisational culture. Internal and external business factors are dynamic in nature and thus tend to create both long term and short term impacts upon the business organisations. These impacts also present to the business organisations large bulks of tacit knowledge which is to be explored and experimented by the business organisations to convert external threats emanating from such changes into successful opportunities (Trehan and Trehan, n.d., p.16-17). The business organisations in turn reflecting to such alterations in the external and internal environment are also found to respond dramatically. Changes or modifications in both its internal structure and business philosophy are brought about either in a reactive or unplanned fashion or through a process of effective business planning. As along external factor changes brought about changes in demands of consumers, or alterations in government regulations pertaining to trade or again changes in the structure of shareholders the organisation also needs to adapt to alterations in its internal factor constraints. Introduction of new technology or adoption of a new business process affects the existing organisational culture desiring the organisation to adapt through sustained training practices of its employees and supplier groups (Cole and Cole, 2001, p.266-267). In the light of the above discussion the paper endeavours to analyse McDonald’s sense of adaptability to its changing business environment. Factors of Changes in Business Organisations The increasing mode of globalisation has required the business corporations to synchronize its business processes to adapt itself to the changing business environments. It is observed that business organisations to successfully operate in the global climate need to customize the product or service offerings on an expanded scale. The people of different countries do depict changes in tastes and perceptions which are required by the business concerns to effectively tap and thereby bring about changes in the production or operating system. Similarly in order to tap the different markets in a much effective manner the business organisation must adjust its different policies regarding both price and distribution. The business concern through the changing of their price structure helps in pervading the minds of the consumers in a more prolific manner. Moreover the business concern should fulfil the different guidelines as envisaged by the government of the country while endeavouring to promote the different goods and services to the large number of consumers. Further the business corporations in order to internationalise their operations need to gain a large pool of people working across the globe for the company. Working across different cultures and diversities require the business organisations to act in a prudent fashion to help satisfy the needs of both the internal and external stakeholder groups like the employees, the group of suppliers, the consumers and social groups and the government at large (Yip, Loewe and Yoshino, 1988, p.1-8). McDonald in this connection while operating on the international scale had to face external and internal challenges. In the external scale the company faced restraints from production of beef stuffed hamburgers in Asiatic countries. The change in cultural factors in United States is also found to impact the operations of the company. In another external factor the promotional efforts of the company was also challenged in several countries like Puerto Rico and France and China. On the internal side the investments rendered heavily on changing the production and promotional efforts lead to reduction in the wage structure of the employees leading to further trouble and rise of conflicts (Vrontis and Pavlou, 2008, p.290-298). The internal and external factor impacts on McDonald are further broadly dealt in the subsequent sections. Organisation’s Adaptability to External and Internal Changes The business organisations through cultivation of a coordinated and well communicated business system inside the concern works to the better adaptability of the changes happening in the external business sphere. The management body of the business organisation must work to coordinate the actions of the different people spread along different hierarchies so as to evidently train the people to adapt to the changing political and social climate and work accordingly. This practice would help the business organisations to enhance their goodwill and thus would be able to expand its business operations (Morrison, 2010, p.313-314). Again the business corporations can also think about introducing new software and technological processes. This practice thereby requires developing both the educational and productivity level of the people through continuous training of the employees. Training and continuous updating of systems knowledge would help the organisational people to enhance their skills and thereby help the concern gain more profits and productivity (Grabski, Leech and Schmidt, 2011, p.45-48; Fuller et al., 2007, p.746-748). Like the above changes in the technological paradigm the business organisations would also require to conduct changes in the policies to adjust them to the external political and social changes. This would help the company meet the requirements of the new legislations passed in the different countries and thereby effectively modify their operational and human resource policies which in turn would reduce potential conflicts (Vadi and Vedina, 2007, p.104-105; Brown and Yasukawa, 2010, p.61-62). McDonald also in this context is observed to render large amount of changes in its operational and service approach. It is observed that while operating in the Asian countries like India the company had to modify its operations to help in the production of vegetable and chicken hamburgers devoid of any beef ingredients. Similarly while operating in Puerto Rico the company had to change its promotional language to Spanish to help penetrate to a larger mass. Though all these helped to increase the sales of the company yet it also led to the rise of production and administrative costs for the company. Speaking on environmental and governmental regulations the company had to switch over to the use of recycled materials for packaging and thus the use of plastic packets were curbed. The firm in order to penetrate the market on a large scale had to keep the price of its products low and thus adjustments were carried out through reduction in wage and salary structure leading to internal conflicts (Vrontis and Pavlou, 2008, p.290-298).. The Case of McDonald’s-Overview of the Operations McDonald holds one of the top most statuses in the field of global restaurant business. The firm is viewed to gain market leadership in the global market through operating via a chain of 30,000 restaurants operating in a local manner along several countries around the globe. By virtue of its large scale operations the concern is observed to have gained large amount of brand popularity in the global market for fast food industries. A recent overview of the operations of the company reflects that it has transformed itself from focusing onto a consumer profile targeted at certain specific market or markets to a market driven entity. The fast food chain has also gain hold of large scale promotions both through positioning itself through billboards or through deriving large scale sponsorships to help gain an enhanced space in the minds of the consumers in newer markets (Kanner, 1990, p.16, 19). Further the company also changed its way of operations through switching over to the use of environmental friendly packages. It was found that the company which once largely used packs made of harmful chemicals shifted over to the use of environmental friendly bags made up of recycled base materials (Brown, 2005, p.173). The operational philosophy of McDonald is also found to render large amount of importance to the concept of customization. In that the management team of the company works hard to fulfil the needs and desires of the consumer profile based along several markets through conducting adequate consumer surveys regarding their tastes and interests and then producing food products accordingly (Williams, Champion and Hall, 2011, p.60). In another case it is observed that McDonald in order to cater to the changing market dynamics increasingly worked to modify its food offerings to include healthy and tasty products. Further the promotional campaigning of the company was also changed to highlight the eating fantasy in the minds of the large number of consumers. These changes brought about in its operational and promotional philosophy helped the company to gain huge amount of sales and revenue productivity in a short span of time (Hill and Jones, 2008, p.428). External and Internal Factors of McDonald’s The case of McDonald shows that like any other business organisation it is also constituted by both internal and external factors. The external factors of the company are constituted by the actions of the suppliers, the consumers, the government of the nation, the legal and regulatory guidelines as framed by such authoritative bodies and the social and environmental regulations of the country in general. These factors are also regarded as the macro environmental factors of the business organisation. On the other hand in relation to such external factor considerations the internal factors of the company also known as the micro environmental factors like the psychology of the employees and the union members, the operational policies of the company, the vision and missionary guidelines also govern the business. Further understanding of the impact of the external and internal factors on the company’s operation can be conducted based on the PESTEL analysis and also through the Porter’s Five Forces Model which can be produced as under. Similarly the impact of the internal factor considerations can be conducted through the 7P’s model of the service company. McDonald’s Adaptability to Changes in its External and Internal Environment The impacts of the external and internal environment of McDonald on its operational framework and its adaptability to the same can be presented in the form of certain analysis like the PESTEL and Porter’s Five Forces Model. PESTEL Analysis Through the use of PESTEL Analysis the macro environmental factors pertaining to the political, economic, social, environmental and legal considerations would be analysed. In regards to the political climate it is observed that McDonald running its operations in countries like Russia, Japan, China and France had to face conflicting issues with the running political system of the nation. It is found that in regions like Russia and Japan the company had to face issues where it was demanded by the government to pronounce and write the name of the concern through the use of local phonetics. This led to a problem in their recognition being diluted. Further in regions like China and France the government of the country did not desire the prevalence of local sales. In regards to the above effects the management team of the concern decided to extend their liaison efforts with the regulatory bodies prevalent in the countries and draw a solution to the above issues. In regards to the economic factors it is observed that the company in order to tap the market base of the developing countries had to work on a strategic note in lowering the prices of the products. It is observed that the company had to take resort to low promotional investments in order to help in lowering of the prices of the different products. This helped the company to expand its operations in regions like Ghana. The social climate of different nations is found to create a deep impact in changing the operational process of McDonald. In fact the changing local culture of nations like United States from family to youth culture required the firm to start producing fast and high calorie foods. This changed the way of operations of the firm in that country. Moreover in regards to its operations in countries like India the company had to start the production of beef free burgers either made of chicken and vegetable. This shows that such impacts through altered its operational process yet helped the company to enhance its innovation fervour. Another social impact considerably observed is the impact of language such that the company while working on the promotional campaign in Puerto Rico had to take resort to Spanish language. This showed the process in which the company worked to internationalise its operations. In terms of technological operations the company is observed to conduct large amount of technological transfers while tending to operate effectively in the Russian region. It is observed that on learning that the Russian technological resources failed to meet the company’s expectation in producing quality food products McDonald worked to transfer its technological expertise to the Russian market to help produce products like French fries. Working on the environmental front it is observed that the company in order to abide by the environmental norms of different developed and developing countries decided to abandon the use of carry packs. The company decided to enhance the use of recycled packaging materials so as to save the environment from harmful gases. Speaking on the legal parameters it is observed that the company in order to restore its goodwill relationships with the government of the different nations worked to abide by the regulatory frameworks of such countries. The above analysis reflects the macro environmental impact over the operations of McDonald. The analysis of the impact of micro environmental factors over McDonald can be rendered through the Porter’s Five Forces Model. Internal forces in action like the competition faced from several competitors like KFC and firms like Burger King. McDonald has a considerable leverage over setting a potential distribution channel system and in procuring the right quality and quantity of raw materials. This has helped the company in setting potential barriers to the entry of new companies to their trade areas. Several fast food joints like Pizza Hut and other popular and unpopular companies are cropping up in several areas making the company feel the threat of potential completion emanating from the production of different substitutes. This has led the company in going for the addition in its product mix. Focusing on both the internal and external consumer groups the company is found to lower down the cost of its different products and in increasing wage benefits. To keep the internal consumers or the employees happy the company seeks to render adequate amount of wages and bonuses through the incurring of lesser cost over promotional and other activities. However in practice the company fails to render such increases. Again the outside buyers are kept happy by lowering down the price of the products. In regards to the suppliers it can be mentioned that McDonald works deliberately to coordinate the different supplier groups by providing them with formal training on both ethical and operational parameters. This fact helps the company in enhancing its relationship with the supplier base and also helps the internal supplier potential to rightly adapt to the changing needs of the society (Vrontis and Pavlou, 2008, p.290-298). Critical Review of the Impact of External and Internal Factor Considerations over McDonald It is found that internal and external factor considerations like employees and consumers have created a deep impact on the company’s operations thus making McDonald face huge loss in business and goodwill. The process of internationalisation has led to the spreading of McDonald’s business in several regions for which the company faces severe criticism on the type of products that is manufactured. Ethical and quality issues hamper the operations of the firm. Thus the company had to take resort to newer means of production and also to the production of several variants. This increases the production cost for which the company targets to draw the same from increased promotion. Again the promotional campaign is criticised by external social and cultural factors again targeting increase in the administration costs. These increases in the cost of production and other administrative costs thus prompt the company to curtail the wages of the employees and labourers thus leading to unrest in the industry. In fact though the company focuses on enhancing the productivity of the concern through improved learning of factor considerations and enhancing the technological climate the same faces several negative ethical impacts owing to the impact of both external and internal factors (Ferrell and Ferrell, 2005, p.1-8). Conclusion Business organisations round the world function based on several factors that constitute the external and internal environments of the concern. These factors like employees, suppliers, consumers; government and the like in turn are found to affect the business operations on a dynamic scale. The consumers pertaining to different nations tend to impact the production of different products of the firm through changes reflected in their tastes and likings. Similarly the government and regulatory bodies also tend to impact the functioning of the organisation in a sporadic manner. In regards to the above situation the case of McDonald is analysed in the paper. It is found that owing to factorial impacts both positive and negative situations emanate for the business organisation. References Brown, M. (2005). Corporate integrity: rethinking organizational ethics and leadership. Cambridge University Press. Brown, T., and Yasukawa, K. (2010). 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