Imc Audit Of McdonaldsEssay Preview: Imc Audit Of McdonaldsReport this essayI. Organizational BackgroundOverview of McDonalds CorporationMcDonalds Corporations history began in California, USA in the year 1953 with their founder Mr. Raymond Albert Croc. It is currently the leading global fast food retailer operating more than 30,000 local restaurants, serving approximately 50 million people everyday in more than 119 countries worldwide. Some of McDonalds products are the world famous French Fries, Chicken McNuggets, Egg McMuffins, Sundaes and Quarter Pounder. It is one of the worlds most well known and valuable brands and holds a major share in the fast-food business in almost every country they operate. (McDonalds corporation, 2006). The famous company operates other restaurant brands like Aroma Cafй and Boston Market and has a minority stake in Pret a Manager. (Hoovers, Inc., 2007) McDonalds acquires Boston market for $173.5 million in the year 2000. (About, Inc., 2007). The company also had a majority stake in Chipotle Mexican Grill. Until December, 2003 it also owned Donatos Pizza. It also has a subsidiary, Redbox, which started in the year 2003 as 5.5 meter wide automated convenience stores. McDonalds Corporations business model is slightly different from that of most other fast food chains. In addition to the normal franchise fees, supplies and percentage of sales, the company also collects rent, partially linked to sales. According to the condition of the franchise agreement, the Corporation owns the properties on which McDonalds franchises are located. (Biz/ed, 1996-2007)
Market Place and CompetitorsQuick Service Restaurant industry sales in USA are expected to reach a record $537 billion in 2007–a solid 5.0 percent increase over 2006 sales–announced by the National Restaurant Associations 2007 Restaurant Industry Forecast. (National Restaurant Association, 2007)
The fast food industry witnesses intense competition in USA. McDonalds key competitors are Burger King, Wendys and YUM!. These competitors have a similar strategy and are based on self-service, drive through, burger recipes and so on.
Structure of McDonalds CorporationMcDonalds corporate structure has become a model often cited by management gurus. The companys highly decentralized management runs its franchises with an unusual mixture of strict regimentation and entrepreneurial freedom, a style handed down by the late company founder, Ray Kroc. On one hand, McDonalds is a stickler for uniformity, indoctrinating its future managers at Hamburger University and on the other hand McDonalds also realizes that corporate headquarters is not always the best place to come up with market-sensitive ideas. (Time Inc, 2007). McDonalds are structured along functional lines. Their Chief Executive oversees five major areas of activity:
Mileage Growth, Business Innovation, Government Business, and General Innovation. The main goal is to maximize revenue generated by operating operations, even at low-cost. By maximizing growth and innovation, McDonalds excels, whereas the corporations are in the opposite direction. To further the success of McDonalds, executives are given unique opportunities. They work in more than two key areas of focus: Human resources and Corporate Accountability. While McDonalds’ management team includes some very talented employees, it also represents most of McDonald’s total workforce. On the other hand, the corporate governance structure is dominated by internal and external controls not included in the company’s internal structure and governance system. When faced with challenges that require the company to operate at its best performance, McDonalds, as a government corporation, must develop solutions to address them. A key reason McDonalds chooses to work at the speed, efficiency, and profitability of the federal corporate standard is twofold.1) It makes it easier for McDonalds to pay its employees. The corporation requires, at the very least, the presence of a top-down leadership position and a strong internal communication network. The executive leadership must be accountable for his or her own and McDonald’s own performance, and these must be monitored closely. If the company is having failures like mismanagement or poor management in the leadership, no management can blame their failure; as is the case after the “solving of the big problem”, the corporate board has the power to choose the solution within their own budget constraints. McDonalds’ control over company staff and their responsibilities makes it easier for the company to maintain the “business” and thus to attract more employees.2) It allows them to maximize long-term profitability and make the business plan more sustainable. As corporate governance changes, so too do its efforts at developing and integrating technology. When a company is trying to sell an innovative product for sale to its customers, the CEO must design a unique operating strategy to make the process feasible and thus more sustainable. In contrast, when corporations are trying to sell the same innovation for another price, they must keep working on the product. Both sides of these challenges require strategic thinking as managers of their company. “McDonalds and the American Way. . . are not competitors. They are competitors for a global market. And, they all have the same goals. To succeed, corporations must put their human capital into maximizing their success.”—Caroline P. Taylor, The Power of Strategic Management, 1995
In a recent report from Strategy Group, McDonald’s Chief Financial Officer John A. McDonald argued that the corporation’s current leadership is simply not working well, and his company needs a reorganization. Since the corporation has many large employees in its Corporate Communications Center, however, he wrote that the organization needs a new leadership structure. The
Mileage Growth, Business Innovation, Government Business, and General Innovation. The main goal is to maximize revenue generated by operating operations, even at low-cost. By maximizing growth and innovation, McDonalds excels, whereas the corporations are in the opposite direction. To further the success of McDonalds, executives are given unique opportunities. They work in more than two key areas of focus: Human resources and Corporate Accountability. While McDonalds’ management team includes some very talented employees, it also represents most of McDonald’s total workforce. On the other hand, the corporate governance structure is dominated by internal and external controls not included in the company’s internal structure and governance system. When faced with challenges that require the company to operate at its best performance, McDonalds, as a government corporation, must develop solutions to address them. A key reason McDonalds chooses to work at the speed, efficiency, and profitability of the federal corporate standard is twofold.1) It makes it easier for McDonalds to pay its employees. The corporation requires, at the very least, the presence of a top-down leadership position and a strong internal communication network. The executive leadership must be accountable for his or her own and McDonald’s own performance, and these must be monitored closely. If the company is having failures like mismanagement or poor management in the leadership, no management can blame their failure; as is the case after the “solving of the big problem”, the corporate board has the power to choose the solution within their own budget constraints. McDonalds’ control over company staff and their responsibilities makes it easier for the company to maintain the “business” and thus to attract more employees.2) It allows them to maximize long-term profitability and make the business plan more sustainable. As corporate governance changes, so too do its efforts at developing and integrating technology. When a company is trying to sell an innovative product for sale to its customers, the CEO must design a unique operating strategy to make the process feasible and thus more sustainable. In contrast, when corporations are trying to sell the same innovation for another price, they must keep working on the product. Both sides of these challenges require strategic thinking as managers of their company. “McDonalds and the American Way. . . are not competitors. They are competitors for a global market. And, they all have the same goals. To succeed, corporations must put their human capital into maximizing their success.”—Caroline P. Taylor, The Power of Strategic Management, 1995
In a recent report from Strategy Group, McDonald’s Chief Financial Officer John A. McDonald argued that the corporation’s current leadership is simply not working well, and his company needs a reorganization. Since the corporation has many large employees in its Corporate Communications Center, however, he wrote that the organization needs a new leadership structure. The
Operations (equipment and franchising)Development (property and construction)Finance (supply chain and new product development)Marketing (sales marketing)Human Resources (customer services, personnel, hygiene and safety) (Biz/ed, 1996-2007)The Board consisting of the Board of Directors itself determines its size within the range of 11 to 24 members required by the Companys Certificate of Incorporation. As on 23rd August, 2006 the board of directors consists of 13 people including the CEO. The only management member of the board is the CEO. The CEO shall resign from the board at the time that his or her service in that capacity terminates.
The Executive Management team comprising of 16 people have different roles and responsibilities and the team consists of Executive Vice President and COO and President of Central Division, USA. The company divided the Northern American market into 5 divisions and under each division there are 6-9 regions. (McDonalds Corporation, 2006)
Image and Positioning of McDonalds CorporationBrand image is nothing but a perception of a particular product or a particular brand by the consumer. (About, Inc., 2007). A brand is unlikely to have one brand image, but several, though one or two may predominate. In the year 2003, under the theme “Im Lovin It”, McDonalds Corporation intends to promote the brand image as a lifestyle instead of a name associated with an occasional meal out. It will create a more contemporary image in an effort to woo back young diners. Ronald McDonald, the iconic mascot clown of McDonalds is given a sporty new makeover – he would look more energetic, his structure has been changed from paunchy to make him look slimmer. (BBC News, 2005). With this strategy McDonalds projects a fun, caring and healthy brand image. Safeguarding McDonalds image is a top priority for the company. “In the IMC program, strong image can be used as strength to create strategic advantages for the firm” (Clow 2004, 28). Since McDonalds corporation was established about 50 years ago, it uses the logo of a golden arch which is still very popular among many customers. McDonalds logo can be easily recognized and makes people get associated with its menu. “Purchasing from a familiar corporation is perceived to be a safer strategy than purchasing from an unknown (Clow 2004, 30)” this key reason makes people prefer McDonalds to other restaurants. In addition, McDonalds also launched its cartoon character – Ronald McDonald and tries to embody the firm as fun and caring. “The character Ronald McDonald is so popular that he ranks second in recognition to Santa Claus among children who are in the age group of 4 to 7 years.
(Japan Today, 2007)In the year 2006, after 30 years the 51 year old fast food giant adopts a hip new look. The chain redesigns its 30,000 eateries with comfortable armchairs, cool hanging lights, premium coffee, Wi-Fi access, and photos on the walls. (The McGraw-Hill Companies Inc., 2007).
McDonalds Performance is based on its brand image and exponential historic growth and of course the factor that McDonalds