Category: McDonald’s

Introduction

In public relations, it is important to be able to conduct an analysis of an organization to uncover its structure and the communication activities it carries out. In this paper, we will provide such an analysis of McDonalds, one of the most known companies around the world.

The Sector in which the Company Operates

McDonalds is a global corporation that operates in the restaurant industry, specifically, in the fast food branch. It opens restaurants that sell different types of fast food. The foods sold by the company include hamburgers, French fries, various desserts, beverages, etc.

The Companys Organizational Structure

The enterprises headquarters are located in Illinois, the U.S. (Contact Us par. 2). The following features are characteristic of the companys organizational structure: global hierarchy, performance-based divisions, and function-based groups. Global hierarchy means that the CEO supervises all the areas of the business, and the mandates are passed downwards to regional, local administrators, and concrete restaurant managers. Performance-based division means that the basis for it is not regional; the global structure includes the following divisions: (a) U.S., (b) International Lead Markets, (c) High Growth Markets, and (d) Foundational Markets and Corporate (McDonalds Organizational Structure Analysis par. 5).

Function-based groups mean that the company consists of separate departments, each of which deals with its own spectrum of issues. These departments include the departments of corporate affairs, marketing, human resources, national operations, regional managers, finance, information, and strategic planning (What is the Structure of McDonalds par. 3). Other departments include legal, customer services, franchising, security, hygiene and safety, property and construction, supply chain and restaurant services (What is the Structure of McDonalds par. 4).

It is also worth pointing out that McDonalds operates as a global franchisor. According to the companys official website, over 80% of the companys restaurants around the world and approximately 90% of its locations in the USA are owned and run by independent businesspeople (Our Business Model par. 2).

The Companys Communication Activities

When it comes to communication activities that McDonalds carries out, it is worth noting that the company regularly runs various advertising campaigns in order to attract new customers and retain the old ones (How do McDonalds Communicate par. 4). The enterprise continually stresses that its food is high-quality.

At a certain point, the business decided to change its external rhetoric and highlight the nutritional value of its foods; McDonalds even won a number of awards for this PR move (McDonalds Sets Up a Nutrition Network par. 4). Nowadays, the organization provides its customers with information about the nutritional value of the food it offers; this information can be obtained from informational stands inside the restaurants, as well as read on the individual packages of most foods.

It also should be observed that the company attempts to adapt its menu to the local tastes around the world, and uses that as a PR move; for instance, in the United Arab Emirates the restaurants offer foods made from halal meat, and provide respective certificates (Our Ingredients par. 1-2).

Certain political issues related to the American roots of the company sometimes arise. For instance, in 2000, citizens of Saudi Arabia started boycotting a number of American companies, including McDonalds, due to the support that the U.S. offered Israel. McDonalds responded by a charity campaign in Saudi Arabia; they would donate 26 cents from each meal sold to childrens hospitals in Palestine (Saudi Burgers to Help Palestinians par. 2, 5). On the whole, the company appears to adopt an appeasing attitude in such situations.

Conclusion

To sum up, McDonalds is a global chain of fast food restaurants. Its organizational structures main features are the global hierarchy, performance-based divisions, and function-based groups. The company regularly runs advertising campaigns; to attract customers in different countries, it attempts to adapt their menu to the local cultures. The enterprise sometimes suffers due to political issues related to its American roots, and seems to generally adopt a placating attitude in these cases.

Works Cited

Contact Us. n.d.

How do McDonalds Communicate Internally, Externally and to its Customers? 2011.

McDonalds Organizational Structure Analysis.

McDonalds Sets Up a Nutrition Network to Change Public Perception about its Menu. n.d.

Our Business Model. n.d.

Our Ingredients. n.d.

Saudi Burgers to Help Palestinians. 2000.

What is the Structure of McDonalds and How Each Department in the Organisation Interact? 2011.

McDonalds should not engage in a targeted acquisition of another company, where the discouragement is made for vertical integration specifically. However, the company should aim to conduct a horizontal integration. The recommendation is made on the basis of McDonalds current situation, which is already heavily integrated into its vertical framework. Thus, McDonalds should focus on acquiring another chain of restaurants to diversify its brand portfolio and increase its customer base by attracting market segments that are not drawn to the original brand.

It is important to note that the acquisition process can go mainly in two ways. These include vertical or horizontal integrations, where the former refers to a movement along the supply chain (McLaney, 2017). However, horizontal integration is a sideway directional acquisition, where a target is a company operating at a similar level of the supply chain (McLaney, 2009). Although it is usually better to integrate vertically to remove the risk elements from the suppliers, McDonalds is not in such a position. The company has already successfully integrated vertically, where Mcdonalds also owns most of the land that their stores are placed on so they dont have to deal with landlords or leasing costs (Washcollcms, 2017, para. 4). Therefore, the company should expand horizontally since it is fully integrated vertically with no room for significant change.

In conclusion, the recommendation is that McDonalds should acquire companies horizontally because it has no vertical dependencies. The target for horizontal acquisitions should be companies that have customer segments inaccessible to McDonalds. These might include health-conscious consumers, who view the corporations products as unhealthy. By focusing on horizontal expansion, McDonalds can capture larger market segments, which will significantly increase its market share and diversify its brand portfolio available.

Reference List

McLaney, E. (2009) Business finance: theory and practice. 8th end. Hoboken: Prentice Hall.

McLaney, E. (2017) Business finance. 11th end. Philadelphia: Trans-Atlantic Publications.

Washcollcms. (2017) Vertical integration, Mediums and Messages, Web.

Abstract

Despite McDonalds success in the fast-food market, it has faced severe negative publicity, which arises from various nonmarket issues. Some of the most controversial issues surrounding the firm include obesity lawsuits and defamations, the presence of carcinogens in its French fries, and being branded a perpetrator of international animal cruelty and environmental damage. The issues that must be given priority include the obesity issue together with the other issues of toxicity in McDonalds foods. The company needs to use the power of social media to curb the negative publicity that it faces at the moment. This paper talks about the four Is of McDonalds and other relevant issues.

Characterization of the four Is

Issues

Obesity is probably the most significant issue facing the McDonalds Company today. The corporation has been severally blamed for the menace due to its wide range of junk foods. As the worlds largest fast-food company, it has become a target of most health-related films such as Super Size Me. This is because the public blames the company for failing to give nutritional information concerning the items on its menu (Baron, 2010).

The other controversial issue mentioned in the text is the consumer warnings vis-à-vis the acrylamide chemical detected in McDonalds French fries. However, despite the CSPIs confirmation that the fries contained very negligible quantities of the carcinogen, McDonalds image had already been tarnished.

In addition, McDonalds has been facing a series of lawsuits and defamations. An example of such a court case is the one filed by Brazilian franchises in 2003. Another issue is the fact that the company has always been considered a sign of international animal cruelty and environmental ruin (Baron, 2010).

Interests

The interests mentioned about McDonalds nonmarket environment include the decision to promote healthy lifestyles strategies to address the issue of obesity. In addition, McDonalds has been at the forefront in sustaining antibiotics with the help of other health institutions (Baron, 2010). It also fought against growth-promoting hormones through its suppliers. Another key interest is the decision by McDonalds company to create various environmental policies to be part of ecological conservation.

Institutions

Several nonmarket institutions keep McDonalds in check. The institutions mentioned by Baron (2010) include the Centers for Disease Control and Prevention, Congress and Parliament, Competitive Enterprise Institute, the Senate, CPSI, FDA, WHO, EPA, PETA, USDA, UEP, ALF, ELF, and Greenpeace.

Information

The information by Baron (2010) in the text includes issues such as vegetarianism, mad cow disease, cheeseburger bill, and the meals and menu nutritional information relating to the obesity issue.

Time Frame for the Issues

The issue of obesity has not ended up to now since its emergence in the 20^th century. Within a period of 20 years, the percentage of obese people in America had increased by 16 percent from 1980 to 2000. The public first realized in February 2004 that fast food companies such as McDonalds were the major contributing factors to obesity. In 2004, the Cheeseburger Bill came into place to protect food industries from obesity lawsuits (Baron, 2010). 2004 was an eye-opener for various countries against fast food industries since in the same year, the issue of consumer warnings vis-à-vis the acrylamide chemical detected in McDonalds French fries reemerged. This is after its first detection and analysis in 2002 by various researchers (Milloy, 2002). In the same year, the McDonalds Company initiated various healthy lifestyles strategies to counter these health-related issues. Before 2004, the company had faced several other issues, including being branded as a sign of international animal cruelty and environmental ruin in April 2003. Still, in the same year, McDonalds faced a chain of lawsuits in Brazil from several franchisees. The company also received criticism from animal welfare groups in 2000 and suffered defamation the following year (2001).

The Issues to Be Given the Highest Priority

It is apparent that the origins of the tribulations that McDonalds faces are as a result of health issues associated with its food items. Consequently, the obesity issue together with the other issues of toxicity in McDonalds foods should get the highest priority. The current negative publicity that the company faces is a threat to its future excellence. The public has put all the obesity blames on the company since people believe that without McDonalds, the issue of obesity would reduce significantly. Despite the positive strategies that the company has put in place to regain public confidence, for instance promoting healthy lifestyles and working toward environmental conservation, the public is still skeptical about its products (Baron, 2010). This is because the public still blames the company for failing to give nutritional information concerning items on the menu, which fuels obesity. As a result, McDonalds must give priority to the issue of obesity to regain public confidence.

The overall strategy for McDonalds

McDonalds can use the power of social media to interact with its consumers to understand their grievances. Perhaps the negative publicity that the company has received is due to a lack of proper interaction with the customers (Selcke, 2012). Through social media such as Facebook and Twitter, the company can enlighten the public on the number of calories that is present in every food item. Millions of McDonalds customers can be reached via Facebook and Twitter. The company should use its Facebook pages to apologize for any bad decisions, set the record straight, and even seek advice from its consumers to enhance positive publicity (Selcke, 2012).

References

Baron, D. P. (2010). Business and its environment (6^th ed.). Upper Saddle River, NJ: Prentice Hall.

Milloy, S. (2002). French fry scare, part ii. Web.

Selcke, T. (2012). How to respond to bad publicity. Web.

Purpose and Method

The purpose of data analysis was to identify factors that affect the level of customer satisfaction of McDonalds. In order to achieve the purpose, a survey consisting of 20 questions was conducted. The acquired data were analyzed using descriptive statistics and regression analysis. First, the analysis of frequencies was used to understand what the customers liked about McDonalds and what were the major problems. Additionally, frequency tables were used to identify if the availability of healthy dining options and commitment to social responsibility were important to the customers. Second, regression analysis was used to identify if friendly staff and availability of healthy dining options had a significant impact on the level of satisfaction after controlling for age and gender. A total of nine variables were used to conduct the analysis.

Sampling Method and Characteristics

The sample utilized for the present study included 66 clients of McDonalds in UAE aged 18 and older, 20 of which were females and 44 were males. A simple random sampling method was used, as it was decided to be the most appropriate for the diverse population of McDonalds customers. According to Mellinger and Hanson (2016), simple random sampling is free from sampling biases, as each person in the population has an equal chance of being selected. The primary inclusion criteria were that the participants utilized the services of the company under analysis during the past six months and were aged 18 and older.

Descriptive Statistics

Frequencies

The analysis of frequencies was used to answer four separate questions. First, the frequency of answer to the question If fast food was healthy, would you be willing to spend more money? This question aimed at assessing how important was the availability of healthy food options for the customers. The results of the analysis are provided in Figure 1 below.

Second, the frequency of responses to the question Do McDonalds Corporate Social Responsibility and sustainable development practices influence your purchasing decision? The results of the analysis are captured in Figure 2 below.

Third, the frequency of answers to the question What do you like about McDonalds? was analyzed. The results are shown in Figure 3 below.

Finally, frequencies for the question What are the major problems you have faced at McDonalds? The results are provided in Figure 4 below.

Mean, standard deviation, minimum, and maximum values were used to describe numeric valuables. Two variables were transformed from string variables to numeric variables to conduct regression analysis. In particular, the availability of healthy food options was recoded to a Likert scale question, where 5 was easy to obtain, and 1 was difficult to get. Additionally, satisfaction level was also transformed into a Likert scale question, where 1 was very dissatisfied, and 5 was very satisfied. Descriptive statistics for relevant variables are provided in Table 1 below.

Regression Analysis

Regression analysis was conducted to assess the effect of friendly staff and availability of healthy food options on the level of satisfaction after controlling for gender and age group. Gender variable was recoded with 1 standing for Male and 2 for Female. Age Group was also recoded in alphabetical order, where 1 stood for the age group 18-24, 2 stood for the age group 25-29, 3 stood for age group 30-34, 4 stood for age group 34-40, and 5 stood for group 40 and older. The results of the regression analysis are demonstrated in Tables 2 and 3 below.

Results and Recommendations

The results of frequencies revealed some areas of improvement that can increase the level of customer satisfaction. First, more than 62% of the participants stated that if fast food were healthier, they would be ready to spend more money. This implies that the availability of healthy food options is of crucial importance for the customers. Second, 42% of the participants stated that the quality of food was the most liked feature among the four options, which implies that there is no need to improve the quality of food to increase customer satisfaction. Third, the importance of corporate responsibility was unclear, which implies that the effect of improving sustainability practices is not guaranteed to have an effect on customer satisfaction in UAE.

The regression analysis revealed that the availability of healthy food options was had a significant effect on the level of customer satisfaction (p =.004), while friendly staff had no significant effect (p =.135). Moreover, gender and age group also had no effect on customer satisfaction. This implies that the company is recommended to consider introducing new healthy food options in UAE to increase the level of customer satisfaction.

The research results, however, have several limitations that should be acknowledged. First, the sample size was comparatively small, which undermines the reliability of findings (Mellinger and Hanson, 2016). Second, the results of analysis of descriptive statistics were not checked for robustness; thus, they have limited reliability. Finally, the coefficient of determination for the regression analysis was low with adjusted R² =.127. This implies that only 12.7% of changes in customer satisfaction could be explained by the regression model. Thus, future research should focus on addressing the weaknesses of the present study by adding new variables to the regression analysis and assessing the conclusions drawn from the analysis of descriptive statistics.

Reference List

Mellinger, C. D. and Hanson, T. A. (2016) Quantitative research methods in translation and interpreting studies. Taylor & Francis.

The Top Ten Companies

The franchise list features firms from different franchise categories. According to the Entrepreneurs (2016a) ranking, the top ten companies that pursue franchising as a mode of international expansion include:

1. Jimmy Johns Sandwiches (Food).
2. Hampton by Hilton (Mid-price hotel).
3. Supercuts (Hair salon).
4. Servpro (Insurance/disaster restoration and cleaning).
5. Subway (Subs salads).
6. McDonalds (Burgers, chickens, and beverages).
7. 7-Eleven Inc., (Convenience store).
8. Dunkin Donuts (Baked food).
9. Dennys Inc., (Family restaurant).
10. Anytime Fitness (Fitness Center).

The McDonalds Restaurant Chain

McDonalds operates more than 30,000 restaurants spread over 110 nations, making it the largest eatery worldwide (Entrepreneur, 2016b). Richard McDonald and Maurice McDonald established the firms first restaurant in 1940 in the US (Entrepreneur, 2016b). The McDonalds began franchising in 1955 as a strategy to increase the return on capital. The restaurant chain sells burgers, chickens, salads, and soft drinks to millions of customers in different countries. Its revenue sources include direct sales, royalties, leases, and franchise fees.

Business Model

McDonalds business model is central to the restaurants success. It uses a three-legged stool model that brings together suppliers, franchisees, and company staff (Nelson, 2013, para. 5). McDonalds has a staff population of about 1.8 million working in company-owned outlets and operates 5,000 franchises (Nelson, 2013). The key to its success lies in the firms ability to cater for the interests of the stakeholders. It is responsive to the needs of its employees (wage increases), which helps avert strikes.

In addition, improved coordination of the three groups, i.e., staff, suppliers, and franchisees, has enabled McDonalds to build core competencies and gain a competitive advantage in the fast food sector. The business model allows the firm to offer restaurant products that reflect local tastes and preferences. Furthermore, McDonalds has the capacity to identify and nurture innovations tailored for unique local customer experiences. In this way, the franchises can retain the quality standards of McDonald, but give culturally sensitive products.

Under the franchise model, McDonalds or its franchises run restaurants through foreign license agreements, developmental licensees, and franchise arrangements (Nelson, 2013, para. 11). Therefore, the firm earns its revenue from a mix of company-operated and franchised eateries. McDonalds ensures consistency in its services and maintains superior quality in each of its franchises. It employs a competitive selection process in choosing franchisees and investors.

International Expansion Pattern

McDonalds runs the largest restaurant chain (>30,000 outlets) globally, making it an industry leader. Up to 80% of the restaurants are operated through franchise agreements (Entrepreneur, 2016b). The firms global expansion strategy centers on quality customer service, competitive prices, and strategic location/geography. It entails a decentralization approach (with regard to suppliers) coupled with a strict monitoring of quality standards. Outside the North American market, McDonald runs franchises in the United Kingdom, China, Japan, India, Saudi Arabia, and Egypt, among other locations.

The firms expansion pattern shows that it first launched branches in high-income countries, e.g., Canada and the UK, before venturing into the emerging markets, e.g., India. In addition, the mode of entry differs between the markets. In some countries, McDonalds owns the restaurants, while in others it operates franchises with varying levels of investment. In both cases, the firm has a significant influence on the quality of services, number of branches, suppliers, and work force (Entrepreneur, 2016b). It sources its raw materials from local and regional suppliers that meet the set quality standards. The companys evaluation of market characteristics, such as labor costs and practices, taxation rates, and customer size influences its entry decisions.

Qualifications for its Franchisees

McDonalds franchise system entails any of the three partnership modes, namely, the acquisition of a new outlet, the purchase of an existing MacDonalds outlet, or the collaboration with a MacDonalds operator (McDonalds, 2016). The firm requires new operators to make a down payment equivalent to 40% of the total cost (for a new restaurant) and 25% for an existing outlet (McDonalds, 2016, para. 8). Furthermore, the source of the down payment must not be a loan or credit. The funds must come from non-borrowed capital sources such as bonds and securities (McDonalds, 2016).

The franchise costs vary depending on the nature of the market. In view of this, McDonalds requires operators to have a minimum of $500,000 in capital to be considered for a franchise license (McDonalds, 2016, para. 9). The financial obligations may be higher in cases where an operator intends to open multiple restaurants. In addition, ongoing fees are paid to McDonald throughout the franchise period. McDonalds demands a service fee equivalent to 4% of the franchisees sales every month (McDonalds, 2016, para. 11). Franchisees that use company-owned premises also pay monthly rent.

The Support and Training Provided

McDonalds provides franchisor support and training to its franchises. It offers one-week induction training to overseas staff joining its franchises. The essence of the training is to expose the employees to McDonalds quality standards and customer service. Franchise managers are enrolled in the Restaurant Leadership Program offered by the firms Hamburger University (McDonalds, 2016). Local franchises also benefit from ongoing support in the form of a newsletter, toll-free line, grand opening, internet, field operations, and national media marketing.

Research Task 2

Global competitiveness depends on the import/export practices of a country. Improved tariffs, border administration, infrastructure, and security regimes can improve market access (World Bank Group, 2016a, para. 2). The key considerations in setting up an assembly unit in Uruguay to serve Latin America include the customs clearance days, the security and safety of consignments, and the overall perception of the customs practices.

Time to Clear Exports/Imports

The duration it takes to deal with customs in clearing direct exports or imported goods can be constraint or favorable factor to a company (World Bank Group, 2016a). This period varies between countries. In Uruguay, it takes an average of 8.7 days to clear imports (globalEDGE, 2016). For small importers or firms (1-19 employees), it takes 7 days to clear imports while for medium enterprises (20-99 employees) it takes an average of 11.7 days (globalEDGE, 2016). Shipments imported by large firms (>100 employees) take approximately 6.9 days to clear through the Uruguayan customs (globalEDGE, 2016). The average clearance duration of 8.7 days is considerably lower than the regions (Latin America and Caribbean) average of 13.0 days.

Exporter firms require speedy processing of direct exports through customs. According to the World Banks (2016a) Enterprise Survey, the average period it takes to process exports is 6.2 days in Uruguay. This value includes the average of 10.0 days for small firms, 3.8 days for medium exporters, and 3.7 days for larger exporters (World Bank Group, 2016a). The average duration (6.2 days) is significantly lower than the 9.4 days it takes to clear exports in other Latin American and Caribbean countries.

Delays in customs clearance cause additional costs to importers or exporters. Delays can also affect the production cycle and increase the duration it takes to liquidate the inventory. In this view, delays can reduce net sales due to damage or depreciation, especially for perishable merchandise. Uruguay has fewer operational constraints than its Latin American neighbors do, which makes it an attractive nation for the assembly unit.

Losses Due to Theft and Breakage

The quantity of export goods lost due to pilferage or spoilage in the customs warehouses represent exportation risks. Firms would prefer a minimal loss of goods destined for export to reap maximum profits. In Uruguay, the average percentage of goods lost due to theft is zero. In addition, the rate of pilferage of goods belonging to small and medium exporters is nil. However, about 0.1% of the exports by larger firms are lost due to theft (World Bank Group, 2016b). In the Latin American region, losses due to pilferage account for 0.4% of exports (World Bank Group, 2016b). Therefore, the safety/security of freight is more stringent in Uruguays customs than in the other Latin American countries.

Breakage or damage to export goods can lead to a high return rate. In Uruguay, the proportion of goods lost due to breakage or damage constitute 0.1% of the total exports (World Bank Group, 2016a). Small exporters incur no losses due to damage or spoilage of transit goods in the customs warehouses. However, the percentage of goods lost by medium and larger exporters due to breakage accounts for 0.1% and 0.2% of exports, respectively (World Bank Group, 2016a).

At the regional level, up to 0.5% of goods meant for export becomes damaged or spoilt in the Latin American customs. In this respect, Uruguay has a better record in the handling and storage of consignments meant for export than the other nations in Latin America. Thus, an assembly unit established in Uruguay will incur fewer risks and losses than a similar factory in other Latin American countries.

Trade Constraints

Effective laws and guidelines on taxation and business permits and certification make a country a favorable place for doing business. In particular, permit processing and approval duration is a key consideration for international firms that want to invest in a country. In addition, the prevailing regulatory/legal environment indicates how well an entrant is protected from unscrupulous market practices.

The Enterprise Surveys give the percentage of companies that consider a countrys regulations a constraint to business growth. In Uruguay, about 2% of firms drawn from different sectors indicate that trade regulations are an impediment to business growth (World Bank Group, 2016b). In contrast, 5% of the firms operating in the whole of Latin America consider trade laws to be a constraint to investment. Therefore, Uruguay has a more favorable business environment than its neighbors in Latin America. This outcome implies that the country has efficient trade licensing processes that reduce delays and support new investments.

In conclusion, the analysis reveals that Uruguay has a friendlier investment climate than the other Latin American countries, such as Brazil and Argentina, in the three measures. The countrys customs department takes a shorter duration to clear imports (8.7 days) and exports (6.2 days) than the regional average period of 13.0 days and 9.4 days, respectively (World Bank Group, 2016a). In addition, losses due to pilferage and breakage are lower than the regional average. The perception of the countrys trade regulations is also better than that of other Latin American countries.

References

Entrepreneur. (2016a). 2016 Top Franchises from Entrepreneurs Franchise 500 List.

Entrepreneur. (2016b). McDonalds.

McDonalds. (2016). Requirements to Open a McDonalds Franchise: McDonalds Franchise Costs.

Nelson, S. (2013). McDonalds Global Business Model, the Three-legged Stool.

globalEDGE. (2016). Uruguay: Introduction.

World Bank Group. (2016a). Enterprise Surveys: Uruguay Country Profile 2015. Web.

World Bank Group. (2016b). Enterprise Surveys: Uruguay. Web.

Introduction

McDonalds is the most prominent foodservice merchant globally. The foodservice dealer owns more than 33,500 local cafeterias. McDonalds serves approximately 68 million customers in 119 nations every day (McDonalds Corporation, 2012). The foodservice retailer owes its success to its systems, which includes its alignment, franchisees, and contractors. It delivers reliable, locally relevant cafeteria experiences to its clients, and providing community sustainability support in areas where it has operations. The firm uses its strategic direction to facilitate its capability to categorize, implement, and generate inventive ideas, which meets its clients changing needs and favorites. This paper uses the McDonalds 2011 annual report to discuss diverse aspects of the firm.

A brief overview of the Chairmans and CEOs reports

The CEO informed McDonalds shareholders that global sales had escalated by 5.6% in 2011. The operating income also escalated by 10% and the firms market leadership continued globally. During the same period, the corporation returned $6 billion to its shareholders (McDonalds Corporation, 2012). This was through share repurchases and bonus payments. Furthermore, the firm delivered approximately 35% of its returns to financiers. The CEO also indicated that McDonalds was generating innovative ways of meeting clients culinary interests. The firm is continuing to extensively diversify its menu, digitizing operations, and rebranding. The CEO underscored that McDonalds performance is significantly driven by two factors. First, is the firms continuing implementation of the Plan to Win, that has provided strategic direction for the past nine years (McDonalds Corporation, 2012). The plan concentrates on the key business drives including people, products, place, price, and promotion (McDonalds Corporation, 2012). It has kept the firm disciplined around developing its brand in entirety and improving clients experience in all local cafeterias. Secondly, the firms success originates from its collaboration with the system partners.

The chairman reported that shareholders were impressed with the performance of the firm in a tricky economic environment. The chairman indicated that the firm continued to show a passion for adhering to well thought plans, leadership, and strong systems. The firms Plan to Win was hailed as the greatest guiding strategy (McDonalds Corporation, 2012). The chairman also underscored the significance of teamwork and competence in enhancing profits and providing shareholders with value.

Analysis of McDonalds Mission Statement

The foodservice corporation mission statement focuses on clients thus, strives to make their cafeterias the preferred place and manner to eat. The firm seeks to achieve its mission statement through aligning its global operations to the Plan to Win strategy (McDonalds Corporation, 2011). The firm is also committed to an ongoing strategy for improving and promoting clients experience. It is notable that the mission statement aligns with what the company actually does.

The firms Plan to Win strategy ensures that the foodservice corporation focuses on clients (McDonalds Corporation, 2011). Clients form the core of all operations in the firm. McDonalds shows appreciation to its clients through providing food with superior quality, clean and welcoming cafeterias, and value for clients money. The mission is also aligned to the firms business model that focuses on the operators, workforces, and suppliers. The firms business operations are also conducted ethically. Its businesses are conducted at high standards of impartiality, honesty, integrity, and social accountability and responsibility (McDonalds Corporation, 2011). The alignment of the corporations activities to the mission is also seen in its strategies of responding to shifting clients, workforces, and system interests through ongoing development and innovation.

McDonalds Financial Health

Indicatively, Macdonald has a healthy financial performance. The 2011annual report indicates that since 2006, McDonalds fortunes continue to escalate. The recorded sales in the firm have continued to propagate over the years. The firm recorded massive improvements in its financial aspects in the recent past. The global sales growth escalated by 5.6% in 2011 compared to 5% in 2010, and 4.4% in 2009. Furthermore, the earnings that were distributed per share grew by $5.27 in 2011 compared to $4.58 in 2010 and $4.11 in 2009 (McDonalds Corporation, 2012).

The firm also realized total shareholder returns of 34.7% in 2011. Dividends paid to its shareholders have also escalated from $2.2, to $2.4, and $2.6 in 2009, 2010, and 2011 respectively. The market price for McDonalds shares has also escalated from $62.19, $62.44, $76.76, and $100.00 in 2008, 2009, 2010, and 2011 respectively. Its assets have also escalated over the years as it opens additional franchises. Franchisees operating under Macdonald have also increased globally in the past few years (McDonalds Corporation, 2012). Indicatively, McDonalds financial performance is healthy. There are higher probabilities that Macdonald financial performance will escalate in the coming years.

McDonalds Performance in the Next Five Years

The analysis of McDonalds financial health indicates that the fortunes have been escalating over the last six years. The investors have increased their capital in the firm over the years thus, obtaining better share returns and dividends annually. The corporation has also continued to attract additional clients globally. Evidently, franchisees have made this possible by opening more franchises globally. It is significant to recognize that Macdonald performance is set to get better in the next five years (McDonalds Corporation, 2011). This is because the financial health analysis has shown tremendous improvements.

Conclusion

Macdonald Corporation is the worlds best foodservice dealer. Globally, the firm serves approximately 68 million people in its cafeterias. The performance of Macdonald has continued to grow over the years. The firm has implemented diverse activities to guide its strategic direction. Macdonald developed the Plan to Win strategy that guides its operations focusing on clients. Notably, the firm has a healthy financial performance indicated by its growth.

References

McDonalds Corporation. (2011). McDonalds Corporation 2010 Annual Report: Form 10  K. Web.

McDonalds Corporation. (2011). Mission & Values. Web.

McDonalds Corporation. (2012). McDonalds Corporation 2011 Annual Report: Form 10  K. Web.

Current and Recent Economic Conditions

The Canadian economy is currently experiencing growth that had already surpassed, in some ways, the pre-pandemic period when there was a significant recession. It is evidenced by GDP and unemployment figures, which slightly exceed the values of January-February 2020 after a prolonged increase from May 2020 to today (Statistics Canada, 2022a; Statistics Canada, 2022b). These indicators indicate the return of production to pre-crisis levels, as well as the restoration of the purchasing power of citizens. However, several signals show negative changes in this situation in the economy. First, since the pandemics beginning, when inflation was even below zero, it has risen to almost 8%, hitting new all-time highs (Trading Economics, 2022a). The situation also required appropriate interventions from the authorities, who began to return the countrys key rate to the level of 2018 (Trading Economics, 2022b). These actions are caused by the threshold of a new economic crisis due to the complicated geopolitical situation in Eastern Europe.

It is very likely that against this background, GDP growth and unemployment may reach a plateau if the growth trend of the critical rate and inflation continues. High vital rates make it difficult to lend to households and businesses, which has caused, for example, housing construction and mortgage lending to sag significantly (Statistics Canada, 2022c). If, in the first quarter of each year, such a decrease is natural, then these trends are already noticeable during the year before and after that. Inflation and complicated lending significantly reduce the purchasing power of the population and, accordingly, business revenue. Thus, GDP growth, for now, is still recovering from the pandemic, adjusted for inflation. The future state of the Canadian economy is unlikely to boom, given the dynamics of these indicators. This paper analyzes two companies: McDonalds and Starbucks.

Political and Social Trends

The selected companies represent the food industry, implying establishments for visitors. Working with delivery aggregators is an essential step in business development dictated, among other things, by the pandemic trends. Due to the long-term consequences of the spread of the virus, political security trends are likely to remain in place even after the situation is brought under control. Therefore, these companies must increase operating costs to maintain stricter security conditions for customers on an ongoing basis. As the financial analysis shows, Starbucks significantly increased its long-term debt ahead of 2020, which proved to be a financial cushion as part of the store closures and crisis (Macrotrends, 2022a). At the same time, the company could significantly increase revenue even minus the cost of goods sold in 2021, which indicates the social trends of returning to everyday life and the value of such actions.

A similar trend is observed at McDonalds, although in smaller volumes in revenue, but in more enormous net profits, indicating efficiency. The only difference is that this companys assets/liabilities ratio did not experience significant jumps (Macrotrends, 2022b). Share prices sank in 2020 but began to recover quickly and rise by 2022, after which they began to decline again. Growth is likely due to adaptation to new political trends and changes and works with delivering food and drinks and the gradual return of visitors. A disruption in the supply chain most likely caused the fall due to the aggravated situation in the east of Europe, which created new political trends.

The Industry in Which Companies Operate

The restaurant industry, which includes McDonalds and Starbucks as separate representatives, has been experiencing significant difficulties since the pandemic lockdowns and partial bans. On the eve of the new year, 2021, legislation banned sales during a specific period, significantly hitting industries that stocked food for the holiday (Bundale, 2021). This ban affected Starbucks and McDonalds chain outlets less, but revenue was probably lost.

These companies directly participate in several trends at once. Starbucks may have lost share prices due to pay scandals, leading to the formation of workers unions in Canada, following the example of the United States (Subramaniam, 2022). On the other hand, the company pays for travel to places where abortion is legal for its employees (Chapman & Durbin, 2022). This balance at the social level creates unsustainable dynamics in stocks. In addition, both Starbucks and McDonalds have exited the Russian market, which will affect the companies revenue in 2022 financial statements (Reuters, 2022a; Reuters, 2022b). Accordingly, globally, companies are beginning to experience a crisis due to the exit from a large market and the disruption of supply chains, while in the Canadian market, they are also forced to adapt to security conditions due to the consequences of the pandemic, but they survive these obstacles much better.

Financial Statements

The Revenue/Sales Dollar Amounts and Net Income After-Tax Dollar Amounts

Table 1. Income Statements (Macrotrends, 2022a; Macrotrends, 2022b).

Financial Ratios

Table 2. Financial Ratios (Macrotrends, 2022a; Macrotrends, 2022b).

The Business/Product Cycle of the Companies

McDonalds adapts its dishes to different countries and offers various seasonal novelties, the best of which remain on the menu. However, there is no horizontal diversification in McDonalds products, while Starbucks enters the markets for retail coffee in packages. The companys increased expenses on the line expansion are noticeably reflected in the crisis year in the net profit margin. McDonalds, being a more financially efficient organization, generally has more robust liquidity and financial leverage, except for highly high long-term debt. Accordingly, Starbucks production cycles are expanding, and the supply chain is becoming more complex while covering a more expansive geography in logistics, including retail. McDonalds, like Starbucks, is a non-cyclical company, so one of the first to recover from the severe restrictions of the pandemic and showed significant growth in shares and revenue. However, current product sales are only growing, like those of competitors. At the same time, it is much more difficult for local networks to adapt and compete with the ability to deliver and maintain the market price of products with global companies.

The Risks That Apply to the Companies Stocks

Currently, the world is on the verge of a significant crisis due to complications in supply chains due to the geopolitical situation in Europe. Shares of non-cyclical companies during an economic downturn are protective for investors, but both organizations are deprived of a large market and, accordingly, financial resources to pay dividends. Participation in local scandals does not significantly impact the share price. The balance will be found through regular adaptation to new crisis challenges. It is worth noting that McDonalds survived the pandemic better than Starbucks, but Starbucks has diversified its business into new markets with a firm brand name. All negative factors are balanced to some extent by positive ones; therefore, it is worth evaluating possible risks precisely from a number of negatively influencing determinants. In addition, the companies are already showing a significant boom in growth, which is currently accompanied by a fall, which is likely to continue on a small scale until the situation in the global market stabilizes.

References

Bundale, B. (2021). Frustration, anger grow among restaurateurs over lack of data linking industry to COVID-19. The Globe and Mail.

Chapman, M. and Durbin, D.-A. (2022). Starbucks will cover travel for workers seeking abortions. The Globe and Mail.

Macrotrends. (2022a). Starbucks  30 Year Stock Price History | SBUX.

Macrotrends. (2022b). McDonalds Market Cap 2010-2022 | MCD.

Reuters. (2022a). Golden Arches make way for hamburger and fries after McDonalds Russian exit. The Globe and Mail.

Reuters. (2022b). Starbucks to leave Russian market after nearly 15 years. The Globe and Mail.

Statistics Canada. (2022a). Gross domestic product (GDP) at basic prices, by industry, monthly (x 1,000,000).

Statistics Canada. (2022b). Employment and unemployment rate, monthly, unadjusted for seasonality.

Statistics Canada. (2022c). Canada Mortgage and Housing Corporation, housing starts, under construction and completions, all areas, quarterly.

Subramaniam, V. (2022). Wave of unionization of Starbucks stores in the U.S. shows signs of making its way to Canada. The Globe and Mail.

Trading Economics. (2022a). Canada Inflation Rate.

Trading Economics. (2022b). Canada Interest Rate.

Introduction

The strategic change initiative is an important part of the strategic change as the aspect that influences the whole organization and all employees. The first step in implementing strategic change is usually called strategic change initiative (Anderson, 2003, p. 89). As it is impossible to start without knowing what to change and how the staff members will react, a common strategic change initiative includes evaluation of the current situation and information provided to employees on the importance of change and the influences of it for them.

Palmer, Dunford, and Akin (2008) provide a clear explanation of change images and actions performed in each case (pp. 24-32). The image of change manager affects greatly the way the change is applied to the organization. Thus, in the case of McDonalds, it would be reasonable to choose the image of Director for a change manager because it ensures that the control over the situation is in the hands of a manager and that he adequately treats the situation and understands that some changes (internal or external) can influence the success of events.

Application Analysis

It is important to take into account specific nature of the business and choose the right image that can be applied to strategic change initiative. Thereby, Anderson (2003) suggests three contributions for successful implementation of strategic change initiatives for organization development. Thus, bottom-line organization development Fully integrates evaluation into change management. Builds mastery in the mechanics of evaluation.

Maximizes the value of pilots (p. 89) which can be really effective in this case. When the McDonalds organization decides to implement strategic change initiatives, it would be necessary to take into account the importance of evaluation methods and processing of results so that they are used to the full capacity in the future. The more information is gathered on the issue, the more appropriate image can be introduced as strategic change initiative.

Lessons Learned

I have learned that information and its evaluation are of primary importance for implementation of strategic change initiative because change management cannot be carried out effectively without sufficient information on the issue. The value of information and its assessment are of great importance for further changes that can be introduced in the process of strategic change initiatives implementation and after critical assessment. Moreover, different images of a change manager can influence greatly the process of change hence affecting the outcomes and motivation of employees.

A practicing manager can apply the knowledge obtained earlier to better manage change by means of assessment of effectiveness of change in terms of effectiveness of work performed by employees (this can be conducted through direct observations, interviews, or surveys and questionnaires), effectiveness of business (by means of monitoring of weekly results in terms of sales), and reputation of the company because changes can be as positive as negative but always influential. Besides, a change manager can use both images of managing control and shaping to ensure that the outcomes are achievable regardless of the external changes.

The change concept of evaluation of information was applied effectively and according to the situation. However, it is important to have some hypothesis to be ready to change the strategy in order not to ruin the positive effect produced by changes implemented earlier. So, critical assessment and inferring from results are very important in this situation.

Reference List

Anderson, M. C. (2003). Bottom-line organization development: Implementing and evaluating strategic change for lasting value. Burlington: Butterworth-Heinemann.

Palmer, I., Dunford, R., & Akin, G. (2008). Managing organizational change. 2^nd ed. Boston: McGraw-Hill.

What kinds of factors (external or internal) would influence consumers store choice?

Internal factors (Khanlari, 2015) will possibly influence consumers store choice more than external factors in this case.

• Their openness to experience (a part of the five-factor model) will have an impact on whether they are ready to use the new technologies offered by McDonalds.
• Such values as hedonism (the desire to taste food the components of which were chosen by the customer) and stimulation (the wish to have new experience) will also have an influence. Hedonic motivation will play an important role in purchasing from McDonalds.
• The customers lifestyle (the ways in which they spend money, and their interests) will let them allocate money to McDonalds products.
• The clients perception of McDonalds brand will let them choose this restaurant due to its perceived quality.
• The consumers beliefs about dietary issues might also drive them to use the digital kiosks for creating customised burgers.

What steps of the consumer decision-making process are more likely to be affected by McDonalds innovations?

The steps of the consumer decision-making process (Hoyer, MacInnis, & Pieters, 2013) will be affected as follows:

• The need recognition will not be affected much, because clients will still use McDonalds when they are hungry or wish to spend leisure.
• The search for information will not be influenced considerably, because most clients will still rely on internal search.
• While evaluating the alternatives, it is likely that the clients will consider the new services (such as charging ones mobile phone or using the new tablets to use the Internet, games, and social networks) and options (ordering customised burgers) when choosing which restaurant to go to at the moment.
• Purchase decisions will also be affected by the new options available at McDonalds. For example, the clients will make their choices in accordance with the option to have unlimited French Fries (as long as it is available). They will purchase the new items on the menu; buying customised burgers appears to be a very attractive proposal.
• Consumption will probably not be affected much, for the clients will still consume their products mainly in McDonalds cafes or take them away to eat them soon while they are still warm.
• Post-consumption evaluation will be affected, because clients will assess the new experiences (tables, customised burgers) after using the restaurants.

References

Hoyer, W. D., MacInnis, D. J., & Pieters, R. (2013). Consumer behavior. Mason, OH: South-Western Cengage Learning.

Khanlari, A. (2015). Strategic customer relationship management in the age of social media. Hershey, PA: IGI Global.

Introduction

The type of organizational structure is an important element of the overall functioning of a company due to the dependence of job design and the achievement of company goals through the structural connections between employees. At McDonalds, the hierarchical structure of the organization fits the companys goals and mission since it is a clear, subordination-oriented, and controllable structural model. Indeed, since McDonalds builds its competitive advantage on the standardization principles, the franchising of its facilities with the same principles and standards is only possible through a hierarchical structure. Figure 1 demonstrates the chart of the organizational structure used by McDonalds.

Assessment of the Appropriateness of the Method of Departmentalization

The organizational structure at McDonalds is designed on the basis of the method of geographical departmentalization. According to Williams et al. (2017), such an approach to forming departments within a company implies assigning responsible bodies within specific geographical units. Since McDonalds is a global company with facilities in various countries, such a method is particularly appropriate. Indeed, the heads of geographical departments are given the opportunity to function according to the rules of business in a given country, which allows for a more successful localization of services and products (Williams et al., 2017). Thus, the choice of the departmentalization approach is reasonable and justifiable by the companys global strategy and business model.

Implication for Authority

The hierarchal organizational structure with geographical departmentalization implies a particular mode of authority distribution. At McDonalds, the structure of the company allows for a clear definition of a chain of command through the tracking of a vertical subordination of each lower-ranked unit to the higher-ranked ones, leading toward the CEO (Williams et al., 2017). The structure implies a significant role of centralized authority, according to which the control and decisions are executed under the management of the head unit, the CEO, and the Board of Directors. In such a manner, the power of making a decision within the realm of the responsibilities assigned to each employee in their respective departments is executed from top to bottom. This approach allows for better control and quality assurance of the completion of company tasks at all levels of operations and management. However, given the geographical departmentalization approach, McDonalds structure implies a delegation of authority for the purposes of product and service localization.

Implications of the Current Organizational Structure for Job Design

The job design that is implied in such an organizational structure is job specialization. It means that each employee in their assigned positions performs strictly according to their responsibilities and tasks (Williams et al., 2017). Such an approach is validated by the standardization efforts and might be considered appropriate to the business model of McDonalds. The benefit of job specialization is inherent in the ultimate productivity and effectiveness of performance at each position. Indeed, as stated by Williams et al. (2017), since the development of skills for task completion within the job specialization framework takes little time, repetition and excellence lead to successful performance. However, such a job design might be considered monotonous and diminish job satisfaction.

Conclusion and Recommendations

To summarize the evaluation of McDonalds organizational structure, one might state that the selected hierarchical structure matches the companys goals and mission. It allows for clarity in responsibility and authority distribution and allows for centralizing power while assigning clear tasks to each department. The geographical departmentalization method is validated by the global expansion of the franchised facilities standardized by the company. In such a manner, the departments of the organization in each country are equally overseen by the central branch of management. It also suffices a specialized gob design to ensure high standards and performance excellence at each position throughout the structure. However, there are several weaknesses in the evaluated organizational structure. In particular, they include the overload of managing positions that might have been avoided, as well as the excessive reliance on the job specialization that might compromise employees job satisfaction. Therefore, a set of recommendations is presented to improve the companys opportunities through organizational structure changes.

Firstly, it is recommended to consider shifting the job design from job specialization to job rotation to allow the employees to differentiate their daily tasks, learn new skills, and contribute their potential creative to the companys benefits. Indeed, within the current state of affairs, the employees in their assigned positions are limited to continuous performing of the same tasks multiple times per day, which might hinder their job satisfaction levels and ultimately diminish the effective performance of the whole department, branch, or company. Secondly, one might recommend McDonalds to reconsider the positions in each of the departments to maximize the automation of processes that might be performed without human involvement. In such a manner, the company will be able to save on the costs of wages and advance the opportunities for consumer experiences. In such a manner, the company will manage to enhance its competitive advantage among rivals operating in the fast-food industry. Moreover, it will solidify the organizations position in the market.

Reference

Williams, C., Champion, T., & Hall, I. (2017). MGMT: Principles of management (3d ed.). 4LTR Press.