The most important element of Kroc’s strategy was a concept of uniformity. Thanks to his experience in sales, Kroc recognized the significance of uniform standards. His strategy guaranteed that customers of McDonald’s all over the country could anticipate receiving the meal of same size and quality in different restaurants and these expectations would be met by McDonald’s franchisees, no matter where they were located. In order to achieve this ideal of uniformity, Kroc developed standards of operation, trained franchisees and monitored all McDonald’s outlets to ensure that they met these standards. In addition, Kroc’s strategy helped to create McDonald’s brand, which was distinguished by its dedication to three key concepts: quality, service and cleanliness. At the same time, Croc’s commitment to uniformity and standard delivery did not mean that McDonald’s restaurants were unable to innovate. Quite the contrary, some widely recognized features of McDonald’s menu were created by franchisees. One of the examples of such bottom-to-top development is an introduction of “Big Mac” hamburger. First introduced only in one outlet in Pittsburg, it was later incorporated in all McDonald’s restaurants nationwide. In this way, it can be argued that Croc’s strategy supported creativity of franchisees and ensured that successful innovations were integrated in all the restaurants of this fast food chain.
How did Kroc’s successor Turner embellish McDonald’s strategy?
Write about Operations, Human resources, and general management and leadership
Turner revolutionized many aspects of fast restaurant management. He took seriously the training process of human resources and control over quality of customer service in McDonald’s restaurants nationwide.
Operations
Turner elaborated the training manual, expanding it from 15 to 360 pages and filling it with details that sought to standardize operations further. The manual included instructions on how to cook food, how to measure its quality, how to deliver it. The manual specified how many employees were needed for each stage of operation. Besides, Turner’s manual taught McDonald’s employees to prepare financial reports and work schedules, as well as to calculate and predict future sales and purchasing. All this information helped to turn the management of a restaurant into science with precise measurements and criteria. The McDonald’s employees knew exactly what they were expected to do in every moment of their work. The tutorial standardizes operations in all McDonald’s outlets and led to even more uniformity.
Human Resources
Turner’s attitude to the management as a science is reflected in the fact that McDonald’s employees were trained in a special accredited training center and received a degree in “Hamburgerology” upon the completion. Thus, Turner seriously treated the issue of human resources trainings and did not outsource it; on the contrary, he closely controlled this process and ensured the quality of training.
Another innovation that Turner established during his leadership, regarded the supervision of franchisees’ performance. Turner conducted the assessment of licensees and graded them in four primary components: service, quality, cleanliness – that corresponded to Kroc’s key values, and overall performance. Besides, the inspection and monitoring of franchisees was carried out by special consultants. The report of franchisees’ performance played a decisive role in the granting of permission to expand or open additional outlets.
Management and Leadership Style
The most dramatic change that Turner implemented, regarded the leadership style and organizational structure. Even though Turner closely controlled the performance of licensees, at the same time he opted for more decentralized organization, where decisions were made regionally, not from the headquarters. Such management style gave more space for decision-making to regional managers, who knew local conditions better than corporate officers. Therefore, they could make decisions that suited the situation in their region. Turner’s decision to decentralize McDonald’s corporation resulted in rapid expansion and increase in annual sales. However, Turner’s leadership style did not satisfy everyone in McDonald’s huge empire. Some key stakeholders, such as employees and franchisees, were not satisfied by company’s policies. Turner’s policy regarding franchisees caused a lot of complaints. Licensees were against the establishing of new McDonald’s restaurants in their area, because their sales plummeted as a result of the further expansion of the fast food corporation. Besides, the company had a right to repeal the license after 20-year contract ended. This issue also caused resentment of franchisees. Turner responded to these complaints with the establishment of the special board that engaged franchisees and helped to resolve issues that could arise. Besides, an ombudsman was appointed, who represented the interests of franchisee. This reform turned to be successful and took into account the interests of licensees.
Another issue that arose during the leadership of Turner regarded McDonald’s relationship with unions. Turner’s policy was directed against organization of labor unions. In order to ensure that employees would not organize themselves in unions, Turner utilizes several tactics: “flying squads” of managers, which served to defeat the union organizing drive, he hired anti-union labor lawyers and closed down those restaurants, where the threat of union organizing existed.
What aspects of McDonald’s management ensure that it was able to deliver a consistent strategy? Address any possible downsides of these decisions in the context of McDonald’s continued expansion.
A consistent strategy of McDonald’s management was guaranteed through the close supervision of McDonald’s outlets all over the country. Thanks to the constant monitoring system with the clear structure and measurement system, senior management controlled the performance of licensees and ensured quality, service and cleanliness in all the restaurants in the chain. In addition, the detailed training manual and training sessions of employees guaranteed that all the aspects of the outlet management, preparing food and customer service will be uniform around the nation. However, as the fast food chain expanded over the time, such tough control would have become more difficult to maintain. As the management and organizational structure of the corporation became more and more decentralized, with decisions made at the regional level, instead of from the center, a consistent strategy of McDonald’s corporation would become more problematic.
Evaluate how Greenberg’s changes may have actually ensured McDonald’s further growth.
Greenberg leadership style was significantly different from that of his predecessors. He sought to revolutionize the management of McDonald’s corporation and altered many aspects that were associated with McDonald’s brand. Greenberg’s strategy introduced many changes. One of them regarded human resources: if before McDonald’s executives were primarily those managers, who made their career at the corporation, Greenberg changed this practice and hired professionals from outside the company. Such change may have been beneficial in the long term, as it gained the corporation the advantage of different, distinct viewpoint. Those professionals, who were hired from other firms, could introduce a new vision for the company and bring the flow of innovations that would have helped McDonald’s to return its place as a leader in the fast food market. Another innovation considered the change and diversification of the menu. Such step may have helped McDonald’s to broaden its consumer base. The new strategy discarded a uniform limited menu, established during Kroc’s management, and introduced considerable changes in the extent and delivery of food. The main principle of food preparation became “just in time”. Fast delivery of customized items was regarded as a key concept of McDonald’s new strategy. This strategy imitated those of Burger King and Wendy’s – the main competitors of McDonald’s corporation. However, this innovation was not cheap and required additional costs to install new kitchens in all McDonald’s outlets. The strategy happened to be unsuccessful, as “just in time” delivery was not actually achieved. Probably, had the training of employees been more effective and had they had more time to adjust to this innovation, the results of this change would have been different. Rapid implementation and insufficient training led to decline in “speed-to-service” standards and customer satisfaction. The third innovation implemented by Greenberg, was the shifting of the focus from the McDonald’s brand only. Instead, Greenberg attempted to expand a single-line brand and turn it in a multiple line. To achieve this ambitious goal, Greenberg purchased various food chains: Donatos Pizza, Chipotle Mexican Grill, Aroma Cafe, and Boston Market. Even though this acquisition also did not live up to the expectation of Greenberg, the reason of this failure may be explained the negative publicity that McDonald’s received in that time and lawsuits that further damaged its reputation. It can be argued that the decision to expand McDonald’s corporation beyond one brand may have been justified and bring more profits in the long term, had the reputation of McDonald’s and its public image been more positive.
5. Evaluate McDonald’s international strategy, as presented in the written Case Study.
If you have visited a McDonalds in another country please add a paragraph about our personal experience.
McDonald’s international expansion was based on joint ventures with local entrepreneurs. In the beginning, local businessmen owned only 50% share in the business. But once it proved to be successful, local partners could buy McDonald’s share and gain full franchise rights. The Corporation controlled the performance of foreign franchisees to the greater degree, id compared with outlets in the United States. The international expansion of the corporation has started in the middle of 1960s and gradually entered more foreign markets. The most significance for McDonald’s expansion abroad played the entry into the Russian and Chinese markets. McDonald’s closely cooperated with the respective governments of these huge countries to establish a network of suppliers of key products used in the McDonald’s fast food chain. As international expansion accelerated, the profits from sales at the foreign markets outweighed those in the States. It can be argued that the shift of the focus from the domestic market to the expansion of the presence of McDonald’s brand abroad damaged the domestic sales.
I have been in McDonald’s restaurant in Saudi Arabia and noticed that menu there is somewhat different from the one in the United States. First, as the vast majority of Saudi Arabia population is Muslim, all the meat at the McDonald’s outlets is certified Halal, which means that it conforms to the Islamic Halal requirements. Beside, no pork products are served in the McDonald’s restaurants in Saudi Arabia, as its consumption is forbidden by the Islamic law. Therefore, McDonald’s takes into account the particular cultural differences and tailors its menu to satisfy its customers in distinct countries.
6. Evaluate McDonald’s strategy in the context of the crisis it faced from a variety of stakeholders. What steps can McDonald’s take for the long term in this regard?
McDonald’s leadership effectively responded to the attacks on the corporation for its unhealthy menu that contributed to obesity and promoted unhealthy lifestyle to children. In the response to the accusations and negative publicity from nutritional experts, McDonald’s altered its menu and included healthier food choices, such as fruit, various salads, water and milk instead of soda, and chicken meat instead of beef. In addition, McDonald’s began to promote fitness program and exercising, while its advertising campaign featured its mascot Ronald McDonald as an “ambassador of balanced lifestyle”. This campaign was assessed positively by McDonald’s critics and helped to improve McDonald’s image. McDonald’s can take further steps in the same direction to ensure that its reputation will stay positive.
7. Find two different published business articles about the Fast Food Industry written in the last two years (oldest can be January 2014).
Yohn, Denise Lee. “Fast Food For Millennials By Millennials”. Forbes, 20 Apr. 2016. http://www.forbes.com/sites/deniselyohn/2016/04/20/fast-food-for-millennials-by-millennials/#1ffa0339932f
The article describes the strategy of Freshii that its founder Corrin defines as “healthy food for the masses”. While other healthy restaurants operate inside the narrow niche, serving, for instance, vegan or organic food, Freshii offers broader menu of fresh healthy products, including salads, juices, smoothies, burritos, etc. The marketing strategy of Freshii focuses mainly on millennial customers. According to its founder’s philosophy, this fast food chain “measures its success not only on financial results, but also on environmental and social impact” (Yohn, n.pag.). In this way, the company attempts to correspond to the core values of millennials. Another aspect of the Freshii’s strategy that is attractive to its core customers is participation in the “Free The Children” program that builds school kitchens in developing countries. Another interesting component of Freshii’s strategy is its public relations campaign and relationship with competitors, such as McDonald’s and Chipotle. The PR approach of Freshii seeks to change a status quo and helps to attract attention of potential customers through the use of social media.
Kowitt, Beth. “How Sweetgreen’s Co-Founders are Creating a New Model for Fast Food”. Fortune, 18 Feb. 2016. http://fortune.com/2016/02/18/sweetgreen-entrepreneurs/?iid=sr-link2
The article discusses the strategy of the fast food chain Sweetgreen. This chain provides fresh, organic, healthy, local food. Sweetgreen positions itself as “a brand that stands for something” and seeks “to feed more people better food” (Kowitt, n.pag.). The company actively uses the modern technologies. Sweetgreen’s top management follows an interesting strategy: they ensure that all corporates in the company have a chance to work in its restaurants. In addition, it differs from most fast food chains, as it does not have a headquarters and has very decentralized organizational structure.
8. What will McDonalds have to do in the future to remain competitive in the USA?
I think that McDonalds has to refocus its strategy to be more competitive in the USA. Today, they target children with its clown mascot. McDonald’s can enlarge its customer base and appeal to millennials as other new fast food chains do. Besides, the corporation can pay more attention to the impact it has on environment and reduce this negative impact. The labor relations with employees, who are underpaid and exploitation of teenagers also needs to be reevaluated and undergo considerable change. The main problem of McDonald’s brand, in my opinion, is their image of the company that provides unhealthy food and damages local farmers.
9. In your opinion, who or what are the main competitors to McDonalds and why?
Nowadays, there are a lot of various fast food chains that compete with McDonald’s for the leadership in this market. The competitors include Wendy’s, Subway, KFC, Burger King and others. These food chains attract customers in various ways: with its distinct menu, healthier food choices, and attractive prices. McDonald’s needs to diversify its menu and carry out an effective public relations campaign to gain the trust of customers and win those groups that today prefer Wendy’s and others to McDonald’s.
Works Cited:
Yohn, Denise Lee. “Fast Food For Millennials By Millennials”. Forbes, 20 Apr. 2016. Web. http://www.forbes.com/sites/deniselyohn/2016/04/20/fast-food-for-millennials-by-millennials/#1ffa0339932f . 7 Jul. 2016.
Kowitt, Beth. “How Sweetgreen’s Co-Founders are Creating a New Model for Fast Food”. Fortune, 18 Feb. 2016. Web. http://fortune.com/2016/02/18/sweetgreen-entrepreneurs/?iid=sr-link2 . 7 Jul. 2016.
