McDonald’s Organizing Function of Management Billie Holloway Jack Geer July 19, 2010 Organizing Function of Management This paper shows how McDonald’s like any other organization must use the organizing function of management to have a successful business. Management must always take action. It is important for management to organize and coordinate activities that relate to the establishments policies.
Over the years management has developed from creating charts to identify business functions, creating reporting relationships, and having personnel departments that administer plans, programs and paperwork to having effective managers who use new forms of organizing. In today’s society it is important that management view their employees and customers as the most important resource available. Organizations are building establishments that are flexible and adaptive in regards to competition and customer needs.
It is important that organizations organize activities that attract people to the establishment, specify job responsibilities, put specific jobs into job categories, marshal and assign resources, and create conditions that people work together to accomplish the maximum amount of success possible (Bateman & Snell, 2009) McDonald’s Corporation McDonald’s Corporation is made of franchises and operates in 117 countries. Through all the McDonald’s Corporations they have employed more than 15 million people.
In 2009 an average of 60 million customers were served each day around the world (McDonald’s 2009 Annual Report, 2010). McDonald’s uses a collaborative management approach which has created a strong global leadership team throughout McDonald’s history. Management has taken responsibility of working together with each other’s franchises to take on new challenges and responsibilities on behalf of the Company (McDonald’s 2009 Annual Report, 2010).
McDonald’s continues to be successful because of the focus on their management enhancing long-term profitable growth, giving the recognition to management and leadership development, and offering their customers a means of eating out that will still fit their way of life (McDonald’s 2009 Annual Report, 2010). Physical Assets McDonald’s individual franchisers or company will handle the physical assets of the corporation. The majority of McDonald’s restaurants are independently owned and operated by men and women internationally.
The conventional franchise agreement has the franchisees provide part of the capital requirements. These requirements will consist of investing in equipment, signs, seating, and the decorations of their restaurant. The franchisees will also need to keep updating the restaurant though the years. Through the agreement of the organization and the franchisees the company will own the building and land that the restaurant is on or if the building is leased the company will carry the long-term lease of the building that McDonald’s franchise occupies.
By McDonald’s having full rights to the building that the restaurant is in they can control costs better and ensure that all franchises correspond with each other (McDonald’s Corporation, 2010). McDonald’s believes them to be the main franchiser or the organization and the owners of the franchises work together to give customers a great experience which in the end will help create a higher profitability for the Corporation. Although being the franchiser allows the Corporation to guide the franchises in the right direction it is important the franchise can provide the services the people in the area want and have experience in customer values.
While the franchises work together to create a memorable experience for the customers they are: 1) constantly developing new ideas, 2) improving operational standards, 3) improving marketing concepts and products, and 4) improving price strategies to fit the economy. To improve the overall performance, McDonald’s restaurants are continuously reviewing and creating new ideas that will interest the customers (McDonald’s Corporation, 2010). Monetary Although we have been seeing hard times in the economy McDonald’s was able to see profitability.
In 2009 McDonald’s was able to see an increase in sales that marked the sixth year in a row for positive sales in every geographic division of the business. The menu options give to customers helped to give a competitive advantage over McDonald competitors because the menu is within customers’ budget and conveniently the most purchased items are at the lowest prices. By McDonald’s creating a value meal menu and keeping their prices within the economy’s limits they increased their sales to reach an average of 60 million customers in one year.
The previous year was around 2 million less and in 2002 there was an incredible difference of 14 million less customers served (McDonald’s 2009 Annual Report, 2010). In 2009 McDonald’s showed strong sales and an increase in market shares around the world. The comparable sales growth in 2009 was 3. 8% and the earnings per share growth were at 9%. From 2007 through 2009 the cash return to shareholders was at $16. 6 billion. Between the years of 2007 and 2009 McDonald’s Corporation was aiming for a return to shareholders to be anywhere around $15 to $17 billion and as reports have shown the return to shareholders was on the higher end at $16. billion by the year 2009. Human Resources Human Resource Management (HRM) is also known as personnel management. HRM pertains to the formal systems for managing people in their workplace (Bateman & Snell, 2009). HRM is used more in organizations because of its strategic role of the ability to compete through people. Organizations form competitive advantages over their competing businesses when they acquire or extend their resources. Some of the important Human Resource Management advantages pertain to employees are: 1) employees bring a value to the organization; 2) employees are well organized, and 3) employees are unique.
For an organization to meet the needs of their staff they must plan strategically through the human resources to create an activity that has a purpose resulting from the organization’s main plans. There are three parts to the Human Resource Management planning process. These parts consist of: 1) planning, 2) programming, and 3) evaluating. The Human Resource Management department must be up to date on the organization’s business plan to ensure that the organization will have enough staff and the right kind of staff to accomplish the goals.
McDonald’s like any other company in the food service has high turnover rates of employees. It is Human Resource Management responsibility to draw and maintain the best employees as possible. To help keep their employees long-term, McDonald’s has created a strategy intended to offer employees unique benefits, different types of training and opportunities, and a fun environment to work in. The Human Resource Management strategy is intended to increase the level of employee dedication because the higher the employee dedication is the lower the turnover rates are.
By McDonald’s Human Resource Management designing a strategy that helps to raise the dedication of their employees, the organization is also improving customer satisfaction. By improving customer satisfaction along with employee satisfaction the business will see positive results in their business (BizEd. com, 2010). In part of the strategic planning McDonald’s has taken the time to create an employment value proposition (EVP) which conveys the value of what a company offers their employees for their dedication and job performance.
In creating the employment value proposition, McDonald’s gathered information from the staff including management and on the floor employees. The information gathered consisted of what employees liked most about the establishment and what they liked least about the establishment. From all the information gathered McDonald’s Human Resource Management was able to determine what employees valued most. They found that the majority of employees valued three different areas that consist of: 1) People and Culture, 2) Flexibility and Variety, and 3) Development and Opportunity.
From the three main areas that employees are concerned the HRM was able to create three basic elements of EVP for the establishment. These elements consist of: 1) Family and Friends, 2) Flexibility, and 3) the Future. At this time, McDonald’s is in the beginning stages of an internal launch and activation phase pertaining to the three basic elements of the new employment value proposition plan. Conclusion McDonald’s is a growing franchise that understands the importance of their commitment to their employees.
The food service business fast paced and McDonald’s is one of the largest and busiest companies in the food service industry. In the food service industry it is important to focus on the people, both employees and customers because without dedicated people it is hard to create good business results (McDonald’s Corporation, 2010). To ensure the success of McDonald’s keeps growing the management team must continue to organize and coordinate activities associated with running an international business. References Bateman, T. S. , & Snell, S. A. (2009).
Management: Leading & Collaborating in a Competitive World, Eighth Edition BizEd. com (2010). McDonald’s Company Facts. http://www. bized. co. uk/compfact/mcdonalds/mcindex. htm BusinessDictionary. com (2010). Definition: Management. http://www. businessdictionary. com/definition/management. html McDonalds Annual Report (2009). McDonald’s Corporation (2010). http://www. aboutmcdonalds. com/mcd/investors/publications. html McDonald’s Corporation (2010). At the front counter – Engaged and committed employees. http://www. aboutmcdonalds. com/mcd/csr/report/employment_experience/employment_value_proposition. html