Comparison of McDonalds Company and British Airways - Assignment Example

Comparing Organizations: McDonald’s and British Airways Task Comparison of McDonald’s Company and British Airways McDonald’s Company Having began in 1940 as a small barbecue shop that was at the time owned and operated by Maurice and Richard McDonald, McDonald’s has grown to now completely reorganize their business as a hamburger stand using a number of product line principles. Incorporated in 1964, McDonald’s is currently recognized as the world’s leading food service retailer. The company’s operations has gradually expanded to over 100 countries where it is able to operate from over 35,000 different locations that serve an estimated over 70 million customers each day. As a result of its rather distinctive business model, all of McDonald’s restaurants are operated either directly by the company or by franchisees (McDonald’s.com, 2014). The company offers a uniform menu across all its various locations although there are a number of geographic variations that allow for the menu to adequately adapt, and suit the local tastes and preferences. The standard McDonald’s menu typically includes, the Big Mac, Chicken McNuggets, French fries, a wide array of salads, the Quarter Pounder with Cheese, snack wraps, oatmeal, sundaes, soft drinks, shakes, coffee, several chicken sandwich options, McCafe beverages and a number of other beverage options. According to McDonald.com (2014), the strength of the current alignment of the McDonald’s’s system that comprises of the company, its suppliers and franchisees has been key to McDonald’s success. By leveraging this system, McDonald’s is able to easily identify, implement and eventually scale ideas that are able to meet the customers’ changing preferences and needs. In addition to this, McDonald’s business model enables the company to consistently deliver what has been described as locally-relevant restaurant experiences to customers and help the company to be an integral part of the community that it serves. McDonald’s is managed as distinct geographical segments that include the United States, the Asia/Pacific Middle East and Africa region (APMEA) and Europe. The company is noted to also have other operations in Latin America and Canada. McDonald’s has a number of aims and objectives that primarily center on the serving of good food in what is a fun and friendly environment, emerge as a leading socially responsible company, and provide good returns to the company’s share holders. In addition to this, the company also aims to provide all its customers with food of the highest standard, value for their money and quick service. The company also wishes to become more eco-friendly and serve healthier food options (Gilbert, 2009). McDonald’s Ownership A McDonald’s restaurant can be operated through a number of avenues, these include either by an affiliate, a franchisee or directly by the corporation itself. While most of the company’s operations within the United States are operated by the company directly, the company primarily relies on the use of franchising operations in conducting its operations in its other locations. The term franchising has been used to describe many different forms of business operations, however a franchise is basically an agreement between two parties that comprise of the franchisee and the entrepreneur (franchisor). A franchise agreement grants the franchise the authorization and right to operate a specific McDonald’s restaurant at given location. McDonald’s franchise agreements usually have a time span of 20 years (Gilbert, 2009). The franchise is given a number of rights that include the right to use the McDonald’s trademark and method of operation. On the other hand, McDonald’s is able to obtain its corporate revenue through the collection of royalties, rent and the fees that franchisees are required to pay as well as the sales that the company operated restaurants are able to make. McDonald’s Organizational Structure McDonald’s employs the use of a number of different structures to help it in running its operations at different levels. These levels include; McDonald’s Corporate Organizational Structure The McDonald’s organizational structure can be described as being a functional structure. This form of a structure is normally used by big companies in organizing their operations. At the corporate level, McDonald’s organizational structure consists of the Chief Executive Officer (CEO) at the very top. This position is followed by the chairman of the board to the board of directors. Brand and social media come in after this level. The Chief Financial Officer (CFO) is next to the brand and this organizational level also has the control department. Next to this are the Chief Operating Officer (COO), Human Resource, Legal and Secretary and then Restaurants (McDonalds.com, 2014b). McDonald’s Restaurant Structure At the restaurant level, McDonald’s has adopted the use of a divisional structure to organize its operations. The restaurant structure consists of a general manager at the very top followed by a restaurant manager. The Restaurant manager is followed by a 1st Assistant manager and a shift manager. While the 1st assistant manager deals with the 2nd assistant manager, the shift running manager deals with the floor manager. This manager is followed by the staff training crew which is then followed by the crew members (Lashley, 2001). McDonald’s Geographic Structure As a result of its rapid global expansion, McDonald’s it was necessary for McDonald’s to develop a suitable structure to help in governing its global operations. McDonald’s geographic structure consist of three different regions, these are the Asia, Pacific, Africa and Middle East Region, the United States Region and the European Region. The president of each region is responsible for reporting directly to the CEO. British Airways British Airways (BA) is the United Kingdom’s national carrier and is primarily based at London’s Heathrow Airport. The airline also has a secondary base at the London Gatwick Airport. British Airways is a subsidiary of the publicly listed International Consolidated Airlines Group (AIG), and is recognized as being the UK’s largest international scheduled airline. According to BritishAirways.com (2014), the airline also operates a global air cargo business in conjunction with its scheduled passenger services. The airline flies to an estimated over 300 different global destinations and in the 2009/10 financial period, the airline carried an impressive over 32 million passengers. Aims and Objectives British Airway’s main objective is for it to focus on improving and maintaining outstanding customer service and eventually becoming the world’s leading premium airline. The airline also has a number of aims that variously include; Becoming the airline of choice for long-haul premium customer: British Airways considers Long-haul premium customers to be key to its profitability. In this regard the airline aims to use its deep understanding of exactly what is required to be long-haul customer’s airline of choice (Britishairways.com, 2014b). Be in a position to deliver outstanding services to customers at every touch point: British Airways customer facing staff members have consistently been passionate about the delivery of outstanding customer service. The airline aims to build on this by effecting a revolution in the manner in which it leads, trains and rewards its employees so as to ensure that all its customer across all routes and classes get to enjoy a premium experience(Britishairways.com, 2014b). Grow BA’s presence across key global cities: British Airways aims to provide the very best global connectivity to all its customers. In this respect, the airlines is building its presence in the top tier global cities either directly or by expanding its large network of airline partnerships. Although the already established global cities such as New York and London are already critical, the airline places a special emphasis on the development of its position in the global cities of tomorrow. Build its leading position in London: London is the home city of British Airways and is the financial and emotional heart of the company’s business. Of note is that the city is also recognized as being the biggest and most competitive international air market. It is important for Heathrow to remain a world-class hub it British Airways is to continue using London as a strong base to serve the largest international long-haul markets (Britishairways.com, 2014b). Improve the airline’s margins through the introduction of new revenue streams while meeting all o the customers’ needs: Airline revenue streams continue to be at the core of BA’s business. However, the airline aims to look at augmenting this by the building of a number of profitable ancillary services that will not only re-enforce the BA brand, but also offer customers greater value. British Airways Ownership British Airways is classified as a public limited company and this essentially means that it is wholly owned by a number of shareholders that all have separate legal identity from the business. In the event that BA was to ever get into debt, each of its shareholders will only lose the amount of share capital that they happen to have invested in the company and not their individual personal possessions. Public limited companies are large organizations whose shares are freely traded and brought on the stock exchange. The airline runs independently of any government control and its aims and objectives are designed to help it in maximizing its profit margins (Card, Blundell and Freeman, 2004). British Airways Organizational Structure It was important for British Airways to develop an organizational structure as these structures are important in the determination of how the airline will be run so as to successfully meet its objectives and aims. British Airways has what can be termed as a flat structure; this means that although the airline has a wide span of control, it nevertheless has a relatively small number of management levels. The adoption of this divisional structure is primarily as a result of the airline’s customer focused nature of business. The main advantage of having adopted this structure is that it ensures that all job roles are clearly identified, minimal amount of time is used in the airline’s decision making process and easy supervision for mangers between the various organizational departments. However, this structure has been identified as having a number of distinct disadvantages that include increased job insecurity by employees as a result of their being strictly watched over. This may have the effect of greatly de-motivating these employees and causing them to work in a less effective manner (Card, Blundell and Freeman, 2004). Task 2: McDonald’s SWOT and PESTEL Analysis SWOT ANALYSIS A SWOT analysis is aimed at critically evaluating the weaknesses, strengths, threats and opportunities that might face a company, project, industry or business venture. A SWOT analysis is also helpful in the organizational decision making process as it can help the executive in making well informed decision. Strength The strengths of a company are identified as the characteristics that serve to provide the organization with a crucial advantage over other companies of business ventures, that operate within the same industry. Some of McDonald’s strengths include; McDonald’s is currently ranked as the largest fast food restaurant chain in respect to the total value of its global sales which account for about 8% all global sales. With an estimated over 35,000 outlets, is ranked as the second largest outlet operator and serves over 70 million customers each day in 119 countries around the world. Another key strength that can be attributed to McDonald’s is that it has been able to develop locally adapted food menus. The company operates in numerous countries with many diverse cultures. The preferences and tastes of individuals in these countries are at times extremely different from those of the European and U.S. customers. The ability to adapt to local tastes is one of McDonald’s greatest strengths as it allows the company to cater to the tastes of all its customers (McDonald’s, 2014). McDonald’s has been able to successfully target the very young children by offering them toys with their meals, providing playgrounds and designing advertisements that target this particular demographic. Another McDonald’s key strength is that it enjoys a brand recognition that is currently valued at over $40 million. The McDonald’s company brand is considered to be the most recognized brand across the entire fast food industry. McDonald’s is also famous as a result of the Ronald McDonald Clown. More than 80% of McDonald’s restaurants are owned by independent franchisees. As a result of this business model, McDonald’s is free to focus on its marketing campaigns and perfecting its serving system (McDonald’s, 2014). Weaknesses One of the greatest McDonald’s company weaknesses is that its menu has been widely criticized as being unhealthy. In reaction to this, McDonald’s has tried to introduce a number of healthier food options into its current menu which is largely comprised of unhealthy meals and drinks. McDonald’s menu has in the past prompted widespread protests by organizations engaged in fighting the current obesity pandemic in the country (Gilbert, 2009). High employee turnover and Mac Job: The Mac Job is considered to be a low skilled and low paid job and this has caused the organization to be viewed in a negative light by its employees. As a result of this, the company constantly experiences low levels of employee performance and high employee turnover rates. This has the effect of triggering a significant increase in the employee training costs, and adding to McDonald’s overall operating costs (Gilbert, 2009). Disgruntled Franchisees: There is a considerable degree of displeasure among the company’s franchisees due to a number of reasons that include restrictive company policies and high franchisee fees. Opportunities Changing customer habits and new customer groups: the constantly changing customer habits represent a number of new needs that must be met by business enterprises. In an effort to try and satisfy the changing needs of its customers as well as tap into a new customer group, McDonald’s has been able to introduce its McExpress, McStop and McCafé restaurants. Provide allergen free menu options: There is a large market of people who are unable to enjoy McDonald’s food services as a result of their having allergic reactions to some common McDonald’s food items like gluten and peanuts. McDonald’s can look into catering to the need of this relatively untapped market by offering allergen free food items. Increasing demand for healthier foods: The increasing demand for healthier food provides an opportunity that McDonald’s can take advantage of. McDonald’s can continue to introduce healthier food options in its menu and in so doing covert its menu weakness into a strength. In line with this opportunity, the company is planning on soon opening a vegetarian only restaurant in India. Threats Growing trend in healthy eating: As a result of the concerted efforts of various health organizations and governments, people are now becoming ore conscious of the need to eat healthier foods as opposed to consuming the food that McDonald’s offers in its menu. Lawsuits: McDonald’s has had the misfortune of being sued a number of times and the company has already lost a number of suits. Lawsuits tend to be quite expensive an often require a lot of money and time. If McDonald’s does not improve its operations, there is a significant threat that it will continue to face more lawsuits (Gilbert, 2009). Children Marketing: McDonald’s has been criticized by a large number of parent advocate groups protesting against the company’s unethical children targeted marketing practices. McDonald’s has been touted as being a benchmark for the creation of a cradle to grave marketing due to their enticement of children as one year old into their restaurants. After attracting these children, the company then continues developing new products that hook these children and encourage them to continue enjoying McDonald’s products well into their adulthood. McDonald’s PESTEL Analysis A PESTEL analysis is used to measure markets and is also referred to as a Macro-Environment analysis. A PESTEL Analysis examines the external factors that affect a business. These factors include the economic, social, political, technological, environmental and legal factors. Political Factors Some of the political factors that affect McDonald’s include government policies affecting the regulation of Fast Food Companies such as changes in hygiene and health policies. A number of governments have implemented measures aimed at controlling the fast food industry as a result of growing health concerns. This measure can greatly affect McDonald’s operations. McDonald’s is currently being pressured by Chinese government as it believes that the company is disrupting the country’s culture. Economic Factors As a result of operating in the international market, McDonald’s must face a number of international rules of business such as the payment of taxes to local governments. The amount of taxes paid varies as each country has different tax requirements and tax scales (Gilbert, 2009). At times, local markets are unable to successfully maintain the supply of materials and it then becomes necessary for the company to import the necessary material so as to satisfy the demand for its products. Another economic factor that greatly affects the company’s operations is that international markets are greatly affected by the economies of countries. If a country’s economy becomes unstable, the sale of McDonald’s products in the country can decrease as people become unable to afford the company’s products. Social Factors The changing lifestyle of people will affect McDonald’s performance. People are now looking into eating healthier foods and are shunning the consumption of fast food (Pride and Ferrell, 2010). When visiting fast food outlets, customers now tend to have higher expectations as they not only want quality service, they are also looking to access more conveniences that can help them in differentiating one restaurant from the next one. Young urban consumers are demanding for more technology and prefer restaurants that offer facilities such as wireless internet, credit card payment systems as well as a relaxing and cozy ambience. While expanding into other countries, McDonald’s also has to take into consideration some cultural preferences and taboos such as Hindu’s not eating beef and Muslims not consuming pork. Technological Factors It is important for McDonald’s to evaluate the technological innovations that have been adopted by its competitors and adopt these innovations so as to successfully integrate the appropriate technology into the management of the restaurant’s operations. Some of the technological innovations that the restaurant can possibly adopt include adopting the use of a supply chain management system, and inventory management systems, developing an easy ordering and payment system to be used by its customers as well as ensuring that all its locations have wireless internet technology. The proper implementation of technology can have the effort of helping the restaurant to save on costs and cause its management to become more effective. Environmental Factors McDonald’s has faced a considerable amount of criticism as a result of its being one of the world’s largest consumers of chicken, beef and potatoes. Large amounts of methane are emitted by the ranches that breed the cows that are used by McDonald’s to produce its beef products. McDonald’s once tried to introduce whale burgers in Japan but this move was met with widespread uproar as whales are classified as an endangered species. McDonald’s has previously come under attack as a result of using polystyrene packaging to warp its products. Polystyrene is difficult to recycle and the company was eventually forced to adopt the use of paper packaging (Dornfeld, 2010). Legal Factors As a fast food operator, there are a large number of procedures and regulations that McDonald’s must follow. Some of these include maintaining the Halal certification that is a major concern for its Muslim customers. Other legal factors include the company must observe include the operating hours, business registration and observing the employment laws. Bibliography Britishairways.com, 2014. About British Airways. Accessed from http://www.britishairways.com/en-gb/information/about-ba Britishairways.com, 2014b. Our Strategies and Objectives. Accessed from http://www.britishairways.com/cms/global/microsites/ba_reports0910/our_business/strat egy3.html Card, D. E., Blundell, R., & Freeman, R. B. 2004. Seeking a premier economy the economic effects of British economic reforms, 1980-2000. Chicago, University of Chicago Press. Dornfeld, D. 2010. Green Manufacturing: Fundamentals and Applications. Berlin, Springer US. Gilbert, S. 2009. The story of McDonalds. Mankato, MN, Creative Education. Lashley, C. 2001. Empowerment: HR strategies for service excellence. Routledge. McDonald’s.com, 2014. Company Profile. Accessed from http://www.aboutmcdonalds.com/mcd/investors/company_profile.html McDonald’s.com, 2014b. What Makes McDonald’s? Accessed from http://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questions/running-the -business/business-operations/what-is-the-structure-of-mcdonalds-and-how-each -department-in-the-organisation-interact.html Pride, W. M., & Ferrell, O. C. 2010. Marketing. Australia, South Western Cengage Learning. Read More