The success of any organization in general and business organizations in particular depends on the efficiency of the management. The management plays a significant role in establishing strategies and policies, as well as implementation of such policies and strategies to ensure successive growth of the organization. McDonald is one such organization where the management or rather the leadership has played a significant role to turn around the company and making it more profitable as compared to its performance previously. This essay will limit itself to the study of performance of McDonald in terms of planning, organizing, leading as well as controlling the activities of this company; leading to the undeniable improvement of the company evident from the improvement in its profits.
One of the vital functions of management is planning. A blueprint of all the activities that are to be undertaken within a given period of time must be drawn if the management is to succeed in achieving the objectives and goals of the organization. The most significant factor that has to be taken into consideration while planning is the vision of the company. At the beginning, McDonald management aimed at expanding the company by enhancing through opening of new branches in different locations, (Bloomberg Businessweek, 2008, pp. 1-3). This seemed to work up to the late 1990s as the company was able to outdo its competitors using this strategy. However, later on other strategies had to be put into place to facilitate growth as the company had reached a saturation point in venturing into new locations. The best strategy that the management thought best to turn around the company to make it more profitable is diversification. For instance, besides starting operating for long hours the company started producing a variety of food products as well. Actually, some of the shops are now being opened 24/7. In order for this plan to have a significant impact, the management had to embark on marketing strategies, (David, 2003, pp. 2-4). This explains why the company’s shops are unique both in terms of paintings and construction, distinguishing it from the competitors. Moreover, the company has ventured into international markets, further expanding its revenues by acquiring a large market share.
The other function of the management is organizing. Planning only is not enough to ensure the success of a company. Implementation of the plans has to undertaken and if not carefully done, the plans will not give the intended outcomes. Moreover, poor implementation may lead to significant losses which may in the long run financially paralyze the company. One of the modes that McDonald’s management uses in implementing these strategies is through franchising. As a franchiser, the company gets royalties from its franchisees, (Arndt, 2007, pp. 64). It is approximated that the company has been getting royalties of approximately 4% of its sales. Additionally, being a franchiser, the company owns the land as well as the buildings in a good number of locations where its franchisees are located worldwide. Based on this, it was a good opportunity for the company to engage in real estate business, (Capell, 2008, pp. 3-5). Although this strategy had been used from the time it started the franchising business, it did not prove to be profitable as it was intended. In order to make the real estate business profitable, the management came up with an idea of forming a separate real estate company. This company was to lease stores and property from local landlords and then subleases them to the franchisee. This has proved to be more profitable has the Company’s revenues are supplemented by large income from the rent paid for the leased properties.
It was mentioned above that organizational leadership plays an important role in the growth of such organization. For the case of McDonald, executive leadership has been the key factor in improving the company in terms of profitability. Even though there has been high turnover, there has been a strong succession of CEO, (David, 2003, pp. 3-5). For instance, the company’s real estate business proved to be more profitable when Harry Sonneborn took over from Kroc, which is good indicator of successive succession. Additionally, the management not only monitors its sales, but also the costs of production of various products. Being a financial specialist, Harry ensured that the financial status of the company improved from time to time leading to the financial growth that this company enjoys today.
Undoubtedly, without control of the strategies that the management has developed and implemented the impacts of these strategies may not be observed. Therefore, control is another crucial function of the management. In McDonald, the management has established standards that should be met, (Arndt, 2007, pp. 64). Employees of the company have to operate and relate to one another as well as the customers according to regulations of the company. For instance, the company is known to be producing a variety of high quality products and this is one of the reasons why its customers keeps on improving as compared to its competitors. The other thing is that, the company has put into place policies that must be strictly followed by all the units as well as all over the globe. For instance, although time of operation differs from one franchisee to another depending on where it is located, the company has set a certain duration for which its shops should be opened.
Finally, as mentioned above management plays a crucial role in the growth of any organization. The four major functions of the management are: planning, organizing, leading, and controlling. Planning involves drawing a blueprint that will act as a guide to reach or rather achieve the objectives and goals of an organization, while organizing involves the implementation of the plan. Leading is concerned with how well the executive will guide other members of the organization in undertaking the daily activities of the organization. Lastly, controlling is concerned with how the management control directs all the activities of the organization so as to achieve a certain objective.
Works Cited
Arndt, M. McDonald’s 24/7. New York: Businessweek. 2007. Retrieved on 21st April 2011,
from http://www.businessweek.com/magazine/content/07_06/b4020001.htm
Capell, K. A Golden Recipe for McDonald’s Europe. New York: Businessweek 2008. Retrieved
on 21st April 2011, from http://www.businessweek.com/globalbiz/content/jul2008/gb20080717_293203_page_2.htm
David, G. The Great American Icon ain’t What it used to Be, 2003. Retrieved on 21st April 2011,
from http://web.ebscohost.com.ezp01.library.qut.edu.au/ehost/detail?sid=cf3be004-1007-4b5d-959d-11278fd431ee%40sessionmgr14&vid=1&hid=15&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=anh&AN=9438109
