Understanding Organizations-Machines: McDonaldization - Case Study Example

Understanding organizations -Machines: McDonaldization Introduction Business organizations are those legal entities that engage themselves in the production of a good or service with the intention of selling it for a profit and are much more focused on the long run survival in achieving organizational goals such as profitability, shareholder satisfaction, market share and share price growth, corporate governance, sustainability, market leadership and so on. However the modern conceptualization of the business organization as a paradigm that sets trends to be followed by societies in which they operate thus influencing the very behavioral dynamics of the members of those societies, is far more revolutionary and thought provoking. Ritzer defines McDonaldization as "the principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as of the rest of the world” (Ritzer, 1993). Analysis George Ritzer (2007) used the term “McDonaldization” in his book “The McDonaldization of Society” for the first time in 1993. According to him social transformation processes can assume such extreme characteristics like that of a fast food restaurant. The contemporaneous paradigm of thought attributed to McDonald’s by Ritzer is of theoretical and conceptual significance in the context of the evolving organizational culture. In the first instance the organization’s ability to leave an imprint on the societal transformation process by enticing its members to adopt the former’s characteristics would inevitably have an impact on the long term organizational outcomes that concern both the society and the organization. McDonald’s has become a way of life for some Americans. The same is true for many others in other continents. For instance Asians are highly influenced by McDonald’s in their food habits. This subtle and yet highly controversial acculturation process has been at the heart of the McDonaldization of society. Ritzer based his analysis on four specific characteristics associated with McDonald’s – the level of efficiency in its operational functions, predictability of service standards, calculability in terms of delivered quantity to the final customer and standardized control processes (Handy, 2005). While service efficiency of McDonalds is quite understandable there is something lacking in Ritzer’s reliance on functional efficiency at McDonald’s restaurants in the absence of a common barometer. Thus organizations have predefined functional and operational goals to achieve in the long run. In the process they tend to become machines that continuously perform a set of tasks to remain active or rather proactive and reactive. They are proactive when they use their strengths and opportunities to respond to the external environmental threats and weaknesses of their competitors. McDonald’s is such an organization. Against this backdrop it’s essential to examine the implications of its SWOT (strengths, weaknesses, opportunities and threats) environment. SWOT analysis is a technique used by business analysts to identify and analyze environmental factors that influence a business organization’s performance in a variety of ways, including its decision making and corporate behavior (Alfino, Caputo & Wynyard, R. , 1998). SWOT analysis in respect of McDonald’s can be carried out with specific reference to internal and external environmental factors including those of the strategic competitive environment. SWOT analysis enables the organization to plan and execute its programs of action with a degree of certainty about the external environmental factors that influence its own existence. The strategically dynamic global market environment for fast food presupposes the existence of an oligopolistic market structure that in turn assumes a set of far dynamic characteristics. It’s these characteristics that have been promoted in the society at large. Thus the process of McDonaldization of society irrespective of the latter’s culture-centric or other determinant has been the biggest influence on creating and shaping the larger outcomes. In the current literature on the subject of organizational evolution, McDonald’s isn’t simply a SWOT-based story of growth and success. In fact its placing in the organizational environment of competition and marketing requires a much greater analytical focus in reference to its value creation within and without the organization (Dealtry, 1994). Its internal value chain management process has little parallel elsewhere within the industry. Similarly its external supply chain management process is perhaps one of the best in creating a systemic approach to managing supplier networks that are synonymous with product homogeneity and uniformity in organizational culture. Its current strengths are based on aspects related to a very strong associated with its super brand image, i.e. service efficiency. In addition to this its geographically diversified presence in different regions in the world including those of the emergent markets like India has enabled it to achieve growth across a broader spectrum of market segments for a variety of brands. McDonald’s has also been strategically positioned throughout the world. Its current strategic operational strength lies in this latter capability built through sustained efforts over the years. Thus exponential growth figures in demand have almost favored McDonald’s. Such outcomes produce a complex SWOT environment that in turn is underlined by organizational leadership, culture and structure. Strengths that McDonald’s and other fast food chains like the KFC have in the world today are basically futuristic and sales volume based. According to current market data McDonald’s sales for the year 2008 amounted to approximately $23.5 billion while net income was estimated to be approximately $4.3 billion. Income growth was estimated to be around 80%. These figures register something more than mere market share of McDonald’s (Taylor & Lyon, 1995). In fact they symbolize an otherwise highly unfolding global phenomenon, McDonaldization of the very society where its food culture has become a way of life for many. Organizations grow just in size to become virtual machines that identify themselves with social catalysts thus transforming the society in which they not only act as sellers of products but also as determinants of behavioral patterns and tendencies. The most glaring weakness of McDonald’s is the decentralized organizational structure which entails more costs through its mammoth network of restaurants. When the number of subdivisions increases with many director level positions the decision making process would be delayed. This is already apparent in some of its unwieldy restaurants in the US. The organizational structure needs to be a strength by way of its formation to enable staff to interact effectively so that organizational goals would be achieved (Lawley, 2001). Thus there is a difficulty in identifying which cost center is more ineffective as against which cost center is effective etc. The same decentralized management structure is responsible for the failure of communication within the organization. In vertically organized top-to-bottom structures there is a kind of uniformity in communication but in a huge decentralized structure like that of McDonald’s such communication can be affected. Its other weaknesses include a near total dependency on advertising to generate sales which is increasingly becoming an expensive exercise and seeking to penetrate captured markets at any cost. The latter perspective has been critically analyzed by market watchers who argue that has paid much less attention to its strategic marketing plans while in progress. When competitors come to realize the extent of per capita advertising expenditure per sale, it’s as if the code were found out. Market dominance strategies adopted by McDonald’s has helped the organization to achieve what Ritzer calls “quantifiable outcomes”. In other words the above mentioned four characteristics have enabled McDonald’s to create and then foster a novel food culture paradigm of behavior among a rising class of citizens. Opportunities that are literally available to McDonald’s in the market place are many and varied. In the first instance many of its opportunities arise from the very nature of the competitive environment. In the first place the global market growth for fast food is driven by two forces, viz. rising tendencies among youngsters to cultivate fashionable food habits and the rising real income among many including the young (Hammer, 1997). The process of McDonaldization has just been aided and abetted by this phenomenal growth. With almost 35,000 restaurants in 100 odd countries, it’s easily the mammoth organization that impacts on behavior of the average individual. Threats are substantially minimal right now except those coming from sampler competitors in local situations. These small timers cater to local needs though McDonald’s has recognized the threat in its proper perspective. Conclusion McDonaldization received attention of people in 1993 when Ritzer mentioned four organizational characteristics associated with McDonald’s in his book and almost 16 years later the society is still in the grip of McDonaldization-like influences everywhere. Organizations function just like machines at times and entice its customers into accepting its normative influences as the ultimate in otherwise personalized marketing situations (www.isu.edu). In fact societies tend to copy those very characteristics such as efficiency and calculability of standards not so much like organizations would adopt in order to achieve organizational goals but just like the tendentious behaviour of the organization if it were a person. Thus McDonald’s has gone a long way in transforming the very society in which it sells its products. REFERENCES 01. Alfino, M. , Caputo, J. S. , Wynyard, R. , 1998 , McDonaldization Revisited: Critical Essays on Consumer Culture, Praeger , Connecticut. 02. Dealtry, T. R. , 1994, Dynamic SWOT Analysis Dynamic SWOT Associates, Birmingha. 03. Doe, R. P. , Running head: Metaphors and Organizational Socialization , Retrieved From : www.isu.edu on August 26, 2009 . 04. Hammer, M. , 1997 , Beyond Reengineering: How the Process-Centered Organization is Changing Our Work and Our Lives , › Visit Amazons Michael Hammer Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central Harper Paperbacks , New York . 05. Handy, C. B. , 2005 , Understanding Organizations (Penguin Business Library) , 4th edition , Penguin Global , New York .Charles B. Handy (Author) › Visit Amazons Charles B. Handy PageFind all the books, read about the author, and more.See search results for this author Are you an author? Learn about Author Central 06. Lawley, J. ,2001 , Metaphors of Organization - Part 1, Effective Consulting , Vol. 1, No. 4, Pp.6-348 , 07. Ritzer, G. , 2007 , McDonaldization of Society , 5th edition , Pine Forge Press , California . George Ritzer (Editor) › Visit Amazons George Ritzer PageFind all the books, read about the author, and moreSee search results for this author Are you an author? Learn about Author Central 08. Taylor, S. , & Lyon, P. , 1995 , ‘Paradigm lost: the rise and fall of McDonaldization’ , International Journal of Contemporary Hospitality Management , Vol.: 7, No:2/3, Pp: 64 – 68 . Read More