McDonald's Company - Reasons for Choosing China - Example

Executive summary 3 McDonald’ Company 4 Introduction 4 McDonald’s China 5 SWOT Analysis 7 Strengths 7 Weaknesses 8 Opportunities 8 Threats 9 Aspects of Global HRM that will improve 10 HRM a philosophy of individual management based on the conviction that human resources are distinctively important to maintain business success. A firm gets a competitive advantage by utilizing its human resources appropriately and capitalizing on their expertise and Ingenuity to achieve the set objectives. HRM is geared towards recruiting qualified and committed people. This should be accompanied by proper management, a good rewarding systems for good performing employees. 10 Why is HRM Increasingly Important 11 Internal vs. external recruitment and selection 12 Internal Recruitment Pros and Cons 12 Compensation 13 Training and development 14 Leadership and Motivation in McDonald’s 14 Performance management 15 VISION 15 VALUES AND BELIEFS 16 ACTION 16 MOTIVATION 17 Ethics of human resource management 17 Conclusion 19 Bibliography 20 Executive summary This report analyzes the various concepts and policies applied in the operations of McDonald’s company. Its main focus is human resource management as one of the most important factors that contribute to either success of failure of an organization. The SWOT analysis of McDonald has been examined in order to understand the company. Many people find it difficult to explain the issue of Human resource Management due to its varieties of meanings. This misunderstanding of the concept reflects the various interpretations found in articles. A philosophy of individual management based on the conviction that human resources are distinctively important to maintain business success. A firm gets a competitive advantage by utilizing its human resources appropriately and capitalizing on their expertise and Ingenuity to achieve the set objectives. HRM is geared towards recruiting qualified and committed people. Worker training at McDonald's is highly structured. Ends-level staffs are first subjected to the basic Crew Training System. The program is composed of on-the job- training and is mostly vocational. Each phase of development beyond the crew level then involves a new training program, with the skills progressively becoming complex and generalized. All the employees of the firm fall into three categories restaurant staff, corporate staff, and franchise owners. The first category form the largest group since a typical McDonald’s restaurant normally employ between 50 and 65 workers. McDonald’ Company Introduction McDonald is the largest food service firm in the globe. In 1993, its sales were 23 billion dollars. It is also one of the largest employers in the US having close to half a million employees. The firm has roughly 10,000 locations including the standard sit-in restaurants, drive through windows and satellite sites. McDonald supremacy in the fast-food industry is likely to continue even in the future. Tile Company is growing continuously, as at more than 2000, McDonald's and its charters run over 28,700 restaurants globally in 120 countries and territories, distributing food and drab to over 45 million people on daily basis. Only fifteen to twenty percent of all the restaurants are owned by the firm. The rest are franchises and are operated by more than 2,659 independent owners who normally pay of a fee of between $400,000 and 700,000 for a franchise. McDonald’s licensing department controls the fee structure depending on the nature of the case and there are broad varieties of license fees resolved by considering the property and equipment costs. A skilled franchisee can make profits of up to six-figure income from one restaurant although many own two or more at any one time (McDonald’s, 2005). McDonald’s China McDonald's launched its first Hamburger University in China this month to instruct new generation of managers as foreign firms struggle to enhance and maintain Chinese talents. China is McDonald’s Inc.’s rapidly growing company in the world. According to the firm’s president in Asia, Pacific, Middle East and Africa, Tim Fenton, the firm is expanding courtesy of the nation’s increasing eating habit of ‘informal eating out’. The firm’s annual market is enlarging at an annual rate of 10% globally while in the U.S the growth rate is estimated to be between 2-to3 percent. China has been chosen as McDonald’s new Hamburger University in Shanghai due to its strategic significance to the firm. This strategy has been established as foreign firms in china are concentrating on the development of local mangers but are encountering pressure to maintain them as young, ambitious workers move on for new opportunities. This month the American Chamber of Commerce noted that surveys of 200 international firms are changing their operation strategies to adapt to increasing costs and high employee turnover (McDonald’s, 2005). Firms are required to provide improved opportunities to maintain talented workers in their firms. Reasons for choosing china China is at the moment in the Global Strategies of Multinational Companies. Long ago many large firms were reluctant to invest in china. Of the large German and Japanese firms, only Volkswagen and the Sanyo had investments in China’s Shanghai Changchun and Shenzhen on a considerable scale. For most of that time, multinational Companies viewed China as a growing nation and not worth investing in. several changes have taken place since then. Multinational firms are starting to increase their investments in the nation on a large scale in most cases and have integrated with China’s monetary and social activities in each sector. Statistics show that 400 out of the 500 prosperous organizations have made direct ventures in over 2000 projects in china. In Pudong, Shanghai for example, the total worth of 181 projects invested by 98 organizations has hit U.S.$ 8 billion. As for the notable achievements of the country’s economy, chairman and CEO of the Boeing organization noted the improvements (McDonald’s, 2005). China’s GDP growth rate in the past 20 years has grown by more than 2.5 times compared to North America and Europe. If the principal increase rate keeps rising and it is obvious that the nation will continue to rise in terms of economic growth. Multinational firms must accord adequate importance to the promising spending power on the Chinese market. After a study of Chinese current conditions, Mr. Li Wen, Chairman of the Warner Group strongly believes that analyzing a widespread survey of the large changes in the past two decades and the trend of growth of the global economy, two positive facts can be guarantee. The first is that China’s economy has a potential future and the expansion potential is large. The second is that powerful multinational firms are finding regions with a stable economic growth rate to achieve new development opportunities. Integrating these two facts, the nation is in the reform while opening is an appropriate cooperate partner. China has already been on the focus of many multinationals in all business fields in rearranging their international economic endeavors (McDonald’s, 2005). In order to understand the firm in depth, it is necessary to analysis it SWOT: SWOT Analysis Strengths •    It has a strong global presence and is regarded as a market leader in both the domestic as well as the international markets. •    It is a worldwide brand that runs 31,000 restaurants operating in 120 nations. Of these 31,000 restaurants almost 14,000 restaurants are located in the US. •    It uses economies of scale for minimizing the cost, as its huge growth diversifies the overall risk concerned with the economic performance. •    They run an active children’s charitable trust called ‘The Ronald McDonald House’. •    It takes time in changing the Ingredients and commodities in order to meet the health standards required by USDA. •    It earns makes profits from the sale of foods as a property investor and a franchiser of restaurants. •    It has a solid real estate collection. •    It has recognized menu items such as Big Mac, Chicken McNuggets, which further support McDonalds. •    It has one of the globe’s most recognized logos. •    It is acknowledged as a socially accountable and community oriented firm. •    It adapts to the cultural variations concerning the region where the restaurant is located. •    It has positioned itself in main airports, cities, highways, tourist locations, theme parks. •    It has a competent food preparation method that adheres to the process in a systematic way. •    It takes food safety exceptionally cautiously. •    It was the first to offer the customers details about nutrition and health. Weaknesses •    Its advertisement normally targets the children •    High employee turn-over. •    It has yet to realize its objectives in organic foods •    Price rivalry with the competitors leads to low returns. •    Lack of innovative commodities Opportunities •    It can adapt to the requirements of the societies and experience an innovative product line. •    It can research ways to use ‘green’ energy and packaging which will work as a part of their promotional effort as well as fulfill their social responsibility. •    It can establish new product offerings; apply mobile text messaging to provide services that are appealing to the customers. •    It can upgrade some of its restaurant surroundings at comfortable locations to draw more customers to the firm. •    It can offer optional items that are considered to be the causes of allergy to some people. •    It can derail down the level of development in order to raise the productivity of the organization. Threats •    The recession negatively influenced the organization as a leading firm in the both the distribution of fast foods as well as revenue generation in the food industry. •    Foreign currency fluctuations are considered to be a main problem as it utilizes standard pricing for the commodities it produces. •    Many restaurants are emerging thus offer more competition and reduce the prices of goods. •    Health issues concerning the fast food chain. •    Huge investments on advertisements campaigns which reduce the benefits of market share. •    Some parents condemn the organization’s ‘cradle to grave’ advertising strategy that emphasis on kids, who carry the trend to their adulthood (McDonald’s, 2005). •    taken to court severally as a result of unhealthy food, regularly with addictive additives. •    Surfacing of main fast food competitors: Burger King, Starbucks, Wendy’s, Taco Bell, and KFC. •    The growth has made the firm susceptible to the sluggish economies of the other nations. Aspects of Global HRM that will improve HRM a philosophy of individual management based on the conviction that human resources are distinctively important to maintain business success. A firm gets a competitive advantage by utilizing its human resources appropriately and capitalizing on their expertise and Ingenuity to achieve the set objectives. HRM is geared towards recruiting qualified and committed people. This should be accompanied by proper management, a good rewarding systems for good performing employees. The HRM model emphasize on the need for search for new ways of working and core responsibility of managers in promoting change. It also focuses on fair treatment of workers as individuals instead of the traditional collective workforce. It also encourages its employees to regard management as priers as opposed to opponents (Bateman & Snell, 2004). Why is HRM Increasingly Important In the 1980’s the human resource management was about automation while the 1990’s the human resource field was about development. The field focused on delegation, involvement ownership cross functional teamwork, self managed works and teams. The discussion below is about human resource management in McDonald’s (Bateman & Snell, 2004). The Company McDonald is the largest food service firm in the globe. In 1993, its sales were 23 billion dollars. It is also one of the largest employers in the US having close to half a million employees. The firm has roughly 10,000 locations including the standard sit-in restaurants, drive through windows and satellite sites. McDonald supremacy in the fast-food industry is likely to continue even in the future. Tile Company is growing continuously, as at more than 2000, McDonald's and its charters run over 28,700 restaurants globally in 120 countries and territories, distributing food and drab to over 45 million people on daily basis.  Internal vs. external recruitment and selection The internal recruitment is the most favorite supply of candidates in the steady and developed organizations. The internal recruitment requires a firm support from other HR Processes due to the unplanned internal recruitment procedure can result to disappointments to the administration. The progression planning and strong consistency in management are required to ensure internal recruitment succeeds. The internal recruitment can put forward the possibility to change the job location to anyone in the firm, but the competent internal recruitment process requires powerful support from other processes to offer managers with the extra information to operate on. The internal recruitment procedure has to be guided by strict and decided HR Rules and HR Policies since unclear rules for the procedure can lead to a lot of tension within the firm as the best workers can be easily be taken away among diverse units and diverse managers (Bateman & Snell, 2004). Internal Recruitment Pros and Cons The Internal Recruitment can establish a solid loyalty with the firm as the workers have a opportunity to change their placement with time. The workers are not pushed to look for other placements on the external job market. The Internal Recruitment will be cheaper for the firm and can put aside the expenses devoted to the instruction and induction of new workers. Also, as the candidate is oriented to the firm, the likelihood of the disappointment is not a significant issue to the firm. The Internal Recruitment requires a firm management from the HRM Function, which can result to the difference and the HRM Function has to have a stand to have the capacity to powerful facilitator in the conflict resolution. It can result to other issues when the applicants come from a similar department. Although internal recruitment has a few disadvantages, McDonald’s will adopt the procedure in its recruitment process (Bateman & Snell, 2004). Compensation All the employees of the firm fall into three categories restaurant staff, corporate staff, and franchise owners. The first category form the largest group since a typical McDonald’s restaurant normally employ between 50 and 65 workers. Members of staff work either at the business headquarters or at one of 40 regional offices. In the restaurants crew partners comprise the entry-level rank and form the largest group by far. A huge majority are part-time staff members who compose almost a three quarter of the employees. Their salaries are low. Swing Managers comprise the first real managerial position in the hierarchy, even if their hourly earnings are only slightly higher than crew member earnings. Assistant Managers’ wages are a little bit higher. There is one Restaurant Manager per McDonald's restaurant. According to the organizations literature, almost 12% of all teens working in the U.S at the moment work for McDonald's. Turnover at the crew-level workers are youths. The rest are the seniors, working mothers, and "transitional" employees in the 20-25 age range (Montiel, 2003).   Training and development Worker training at McDonald's will highly be structured. At the moment, Ends-level staffs are first subjected to the basic Crew Training System. The program is composed of on-the job- training and is mostly vocational. Each phase of development beyond the crew level then involves a new training program, with the skills progressively becoming complex and generalized. Training starts immediately after recruitment with a one hour orientation of the organization. Each restaurant has its own video player and training room. Step--by --step manuals and video tapes outline each detail of the operation, everything beginning from establishing a Big Mao to a shake. Every restaurant has 25 positions from the grill area to the front counter. Trainers utilize a series of checklists as new team members move within the restaurant. A level of fitness is shown and the activity is monitored on the SOC--Station Observation Checklist (Montiel, 2003). Leadership and Motivation in McDonald’s Many organizations have adopted various management and operations philosophies and theories like reengineering, Total Quality Management and training in order to survive in the highly competitive world. Poor leadership and lack of motivation can be sources of failure of an organization. McDonald’s has not been left behind in the application of various management theories in an attempt to succeed in leading and motivating its employees. The current world changes faster than it has ever done due to constant changes in technology, stiff competition in the global world and need for quality in delivery of services and in production of goods. Effective leadership is thus mandatory for any firm to withstand competition in the business environment. Leadership is the ability to direct people and more specifically those willing to be led. Leadership involves communication, creation, vision, innovation value, confidence, participation, and intellectual curiosity and is not about the position only. A leader must be in a position to communicate ideas, discuss and seek for inputs from everyone in the team or firm. The main idea in leadership is the ability to bring together organization procedures, jobs and structures, leaders, and principles in an organization. An effective leader should comprehend high self-regards that practically every person has. A good and effective leader should be a good listener, a role model and have the ability to assign roles and duties with authority (O'Neill, 1998). Performance management Performance management includes activities to ascertain that the objectives are constantly being met in an efficient and well-organized manner. Performance management in McDonald’s will focus in the performance of the firm as a whole, a department, production procedures and employees in the firm. Performance management will be guided by the type of leaders in the organization. Some characteristics of an effective leader include: VISION An effective leader must have a vision and having a vision gives a leader a direction. This vision can assist every employee in predicting the future of their carrier or the future of the firm in the business field. It also shows what future is likely to offer in order to set objectives and goals. McDonald’s has leaders who are able to design and direct plans for the firm. The best vision is established through discussion and debate with workers who carry and execute the vision. When the workers are convinced about the objective and the reason of implementing the plan, they will struggle to achieve the vision (Montiel, 2003). VALUES AND BELIEFS The basis of each business is the principles and beliefs of workers to the running of the firm. The leaders of each firm shape the value and beliefs of the workers in the firm. This value is a power, energy, and fuel for achievement toward quality in the realization of the objectives of the firm. The values and beliefs have been the basis of what the company represents, and these two factors will continue enhancing the strength of the organization in the food industry. The great leaders of every firm pass on their own values and attitudes to the firm they led or directed. Due to that every firm has its own exceptional set of values and beliefs which constitute the nature of the organization (Montiel, 2003). ACTION Leaders must be brave and determined to realize their objectives. Leaders should have energy zeal, and courage handle all the challenges that come their way and keep moving forward successfully. The leader’s actions should be in line with the ideals like focusing on the client’s requirements, treating everyone with respect and empowering the workers to carry out their duties. MOTIVATION Motivation is a force to assist employees to attain objectives, desires, or ideas in life and work. It has a directly related to the thought processes that are obtained under a variety of internal and external conditions. In the work place, leaders have the responsibility of forming the motivation of the workers in executing their roles and enhancing the quality of goods and services (Sustar, B. & Sustar. R. 2005). Ethics of human resource management Human resource management takes up the sphere of the process of recruitment, selection, orientation, performance appraisal, instruction and development, trade relations and health and safety matters where ethics is important. Business Ethicists vary in their opinion towards labor ethics. One group of ethicists basing their argument on the logic of neoliberalsm suggest that no ethics can exist beyond utilizing human resources towards getting higher gains for the shareholders. This ideology is challenged by a second ethicist group that suggests that labor well being does not follow the goal of shareholder gains (Machan, 2007). The issues of ethics in human resource management emerge in the employment relationships in matters such as discrimination in the work places and rights and duties of employees. While some suggest that there are particular inalienable rights of places of work like right to work, privacy and right to get payments commensurable to the work done, other ideologies argue that the rights are negotiable. Ethical discourses in HRM frequently minimize the ethical behavior of organizations as if they were donations from the firm rather than rights of the workers. Except in the jobs where the business environment overwhelmingly favor workers, workers are treated as disposable and unessential and therefore they are defenselessly cornered to excessive vulnerable. The business environment is not intrinsically ethical organization that could result by the mythical undetectable hand alone, neither; it can be eluded that market is intrinsically unethical (Robinson, 2005). Recommendations All the above issues will be accorded equal consideration for the firm to successfully expand in the highly competitive food industry. The firm should employ internal recruitment in placing employees in new positions. The Internal Recruitment can create a solid loyalty of the workers with the firm as the workers will have an opportunity to change their placement with time. The workers are not pushed to look for other placements on the external job market. The Internal Recruitment will not be expensive to the firm as savings will be made on expenses devoted to the instruction and induction of new workers. In regard to compensation, all the employees of the firm fall into three categories restaurant staff, corporate staff, and franchise owners. The first category form the largest group since a typical McDonald’s restaurant normally employ between 50 and 65 workers. Members of staff work either at the business headquarters or at one of 40 regional offices. In the restaurants crew partners comprise the entry-level rank and form the largest group by far. The workers should be compensated on the basis of their rank in the firm. Performance management in McDonald’s should focus in the performance of the firm as a whole, a department, production procedures and employees in the firm. The training program in the firm will be composed of on-the job- training and should mostly be vocational. At the moment, each phase of development beyond the crew level involves a new training program, with the skills progressively becoming complex and generalized. Training starts immediately after recruitment with a one hour orientation of the organization. Conclusion In the past two decades most of the American organizations have been over controlled and under led. Leaders are team builders who depict the talent of individuals to achieve their objectives to satisfy customer needs. In today’s firms the demands is to respond to the alterations in technology and marketplace by converting to a learning organization (Miller, 2000). Communication is an important component of motivation. Leader's approach, listening, and feedback are crucial for good communication. Factors that make an employee happy include challenging job, appreciation, positive communication, good relation, wide range of responsibilities, and being part of the firm. McDonald leaders utilize communication as part of their motivation towards the employees. Leaders and workers reach out ahead of their limitations in order to enhance their relations, actions, process and visions. Most of the challenges that organizations face today are as a result of poor leadership and in appropriate management of human resources (Sustar, B. & Sustar. R. 2005). Bibliography Bateman, T.S., & Snell, S.A., 2004, Management: The New Competitive Landscape (6th ed). New York, NY: McGraw-Hill Company. 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I.,2005, Global capitalism: the new transnationalism and the folly of . conventional thinking. Science & Society, 69(3), 316. Retrieved May 13, 2010, from ProQuest database. Sustar, B. & Sustar. R.,2005, Managing marketing standardization in a global context. The Morality of Business, 2001, A Profession for Human Wealthcare. Boston, Springer. O'Neill, J., 1998, The Market: Ethics, Knowledge and Politics. London, Routledge. Read More