Introduction To The Organization-Mcdonalds: 2.1. Internal Factors Which Would Influence An Organization

Change & Continuity in Contemporary Business
1.0.
Individual Assignment
Introduction to the Organization-McDonalds
McDonald's is the leading global foodservice retailer with more than 32,000 local restaurants serving more than 60 million people in 117 countries each day. More than 75% of McDonald's restaurants worldwide are owned and operated by independent local men and women. They serve the world some of its favorite foods - World Famous Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin (McDonalds, 2010).
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Influences to an organization
An Organization is been influenced by both external and internal factors. The environment of the organization is scanned so as to determine development and forecasts of factors that will influence organizational success. Environmental scanning refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organizations internal and external environment. It helps the managers to decide the future path of the organization.
2.1.
Internal Factors which would influence an organization
Organizations internal environment refers to the elements within the organization. This includes,
Structure of the Company System Style/Culture Staff/Employees Skills Shared Values Strategy 1|Page
UWIC BABM Batch No: 01
Organizational structure
Organizational structure refers to the way people are organized-the company's reporting structure. This structure varies from company to company. "Tall" organizations use many layers of management. "Flat" organizations use fewer levels, and managers often have a wider span of control.
The Organizational structure does influence the firms operations in many ways.
Culture- The behaviors and beliefs characteristic of a workplace are its culture. The culture and structure of an organization affect one another. A structure appropriate to the organization helps to develop a healthy culture.
Communication- In companies with rigid structures, communication tends to follow reporting lines. In companies with flatter structures, communication may occur more easily across departments.
Job Satisfaction- Studies have found a relationship between job satisfaction and organizational structure. Organizations with flatter structures may foster more feelings of self-actualization and create less anxiety in employees.
Customer Relations- Relationships with customers may suffer if departmental relationships cause the customer difficulty in getting problems addressed. Multi2|Page
functional teams that can answer a customer's questions and resolve issues have a positive effect on customer satisfaction.
McDonalds has centralized organizational structure. McDonalds has over 31,000 restaurants in 120 countries. Even though these restaurants are typically franchises, they all receive food and packaging from the same approved vendors. This means that McDonalds in Sri Lanka is same as the McDonalds in the U.S. All decision-making regarding menus and marketing are made at the corporate level in the U.S.
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Advantages and Disadvantages of using the Centralized organizational structure to McDonalds Corporation
Advantages
Uniformity of command Efficiencies created through economies of scale Creates a predictable internal environment Less technical risks No confusion over responsibilities It saves cost and time to the McDonalds corporation. Disadvantages Effective in fixed or highly regulated environments Unresponsive to dynamic external environment Ineffective at utilizing the creativity of lower level employees, thereby reducing morale Favors a command and control style of leadership
System McDonalds has a mechanistic organizational system that is characterized by confidence on formal rules and regulations, centralization of decision-making, narrowly defined job responsibilities, and a rigid hierarchy of authority. The emphasis
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is on following procedures and rules. A mechanistic system is essentially a bureaucracy. Bureaucracy is characterized by principles that include: Specialization Hierarchy (chain of command) Rules and regulations Rational decision-making Selection and promotion based on technical competence
McDonalds is an organization that has relatively mechanistic system in terms of dimensions like hierarchy of authority, centralization, rules, procedures, impersonality, chain of command, and span of control. McDonalds employees are responsible for food safety review and approval for new or changing equipment, products, or procedures that impact McDonald's at the restaurant level. It defines required food safety support roles in the regions and coordinates the appropriate resources for their training and communication. And also they are responsible for establishing food quality priorities and recommendations for the appropriate functions through analysis of system and consumer quality and safety data. Key internal stakeholders include US Menu Management, Equipment Development, Operations Development and Deployment, and Training, Learning & Development.
Style/Culture Generally the overall image and local reputation of McDonalds as an employer is shaped daily by many features, including the compensation package, benefits programs, enjoyable working place joined with numerous eagerness activities, employee development programs, and other world reputed best people practices.
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Employees, the key element play a vital role each day in shaping McDonalds all employment image through their performance behavior. Recognizing its people strength it provides the best employment experience to employees in order to achieve the goal of giving the worlds best QSR experience to their valued customers. It endeavors to recruit the best, hire the best, and provide the best place to work. The best employees are those who can facilitate themselves in the culture of McDonalds. The viewpoint of its organizational culture harmonizes with what happens internally. McDonalds is a place where people of all ages love to go while hanging out, having hunger or during their leisure time. McDonalds is not only a fun place for its customers but also for its employees.
Characteristics of McDonalds Culture: Foremost, the culture is valuable; it enables the organization to do things and behave in ways that lead to high sales, high margins, low costs, or in other ways add financial value to the firm. Because greater financial performance is an economic concept, culture, to generate such performance, must have positive economic consequences. Second, the culture is uncommon; it has attributes and characteristics that are not common to the cultures of a large number of other competitors firms. Finally, its culture is imperfectly immitigable; organizations without these cultures cannot engage in activities that will change their cultures to include the required characteristics, and if they try to imitate these cultures, they will be at some disadvantage (reputational, experience, etc.) compared to McDonalds as they try to imitate.
Staff The reputation of any business ultimately depends on the quality of its products. High quality products need high quality people to create, design, produce and deliver them. So if a business is to maintain its reputation it needs to do well at recruiting high
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quality employees. For any business offering a large element of personal service, an ability to recruit, train and retain high quality staff is particularly vital. Typically McDonald's restaurant employs about 60 people. Most employees are paid by the hour and are referred to as 'crew members'. Their primary responsibility is to prepare the food, serve customers and carry out tasks for the efficient running of the restaurants. Other hourly-paid employees who work alongside them include Training Squad Members, Dining Area Host, Party Entertainers, Administrative Assistants, Security Coordinators, Maintenance Staff, Night Closers, Floor Managers and Shift Running Floor Managers. These employees carry out more specific job functions. Their overall role, however, is to ensure the restaurant runs efficiently. The remaining restaurant-based employees are salaried managers. It is their responsibility to manage the restaurant's operations, crew and business performance. Each McDonald's restaurant is structured as an independent business, with restaurant management responsible for accounting, operations, inventory control, community relations, training and human resources. The remaining company employees are salaried office staff, working in either the Corporate or Regional Departments. For McDonald's, people are its most important asset. This is because customer satisfaction begins with the attitudes and abilities of employees and committed, effective workers are the best route to success. For these reasons, McDonald's strives to attract and hire the best, and to provide the best place to work. All businesses experience staff turnover for various reasons e.g. career change, leaving the area, returning to education, a new opportunity elsewhere. Recruiting and training staff is very expensive and businesses will look to keep staff turnover to a minimum. One way of doing this is to 'choose wisely, and treat well'. McDonald's needs people who want to excel in delivering outstanding service. To ensure the company recruits the right people, it has identified essential skills and behaviors that applicants should be able to demonstrate. For each position there is a
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job description outlining typical duties and responsibilities and a person specification defining personal skills and competences.
Skills McDonalds core competency is providing convenience when people need and want to eat fast food at prices that are competitive and provide best value for the customers money. One of McDonalds competitive advantages is its focus on consistency of quality, production of food and use of raw materials all around the world. The world recognition associated with the brand McDonalds itself is also one of McDonalds competitive advantages. The individual effort of McDonalds has been the strongest skill of its employees and the company is well reputed for its high Quality of products and service level
Shared Values McDonalds employees are committed in order to maintain its outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile." The core values McDonalds live by: McDonalds is dedicated to provide customers unparalleled levels of Quality, Service, Cleanliness and Value. They are committed to their people because they know that a diverse team of well trained individuals, working together, is the key to their continued success. McDonalds approach all aspects of their business with honesty and integrity. They will always give back to the communities in which they do business. The company gives back to the system that provides their success.
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McDonalds would celebrate their achievements, yet they always strive to achieve new heights.
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Change & Continuity in Contemporary Business 2.2.
External Factors which would influence an organization
PEST Analysis. PEST analysis is scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:

Political Economic Social Technological
Political Environment: Normally the policies of the government do not affect the organization much nor do the changes in the government influence the organization. Generally what organizations responsibility to the government is to pay different taxes which would include business taxes payroll taxes? McDonalds would take pleasure in the advantage in countries where consumer protection laws are not much strong. In countries such as Sri Lanka, where the consumer protection laws are very much strong, there is a huge expenditure associated in breach of the quality or service in the form of legal actions, grievances and lawsuits.
Economical Environment: There are several factors which can influence the operation of an organization. In comparison to the Sri Lankan McDonalds restaurant, McDonalds in countries like Sri Lanka would charge higher rates. The majority of the people in Sri Lanka fall in the middle class category and its not affordable for them to have McDonalds regular. Due to layoffs and other economic depressions of the current recession period, the profits of McDonalds might have decreased as people consider it as a luxury to go and eat out at some foreign Quick Service Restaurant.
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Social Environment: When McDonalds did enter the Sri Lankan market, people were not very much into fast food eating style; but now the industry has been influenced by the changes made in the society especially changes in the pattern of eating among young people, who was to be influenced in the acceptance of the fast food idea, but also the swift change of the pattern of lifestyle which is extremely quick now as everyday people are being running out of time, Quick Service Restaurant is the most effective way out for them. This consecutively has facilitated the organization to grow and to enhance in its profits. As McDonalds do offer Halal food majorly, so there would be no religious, cultural or ethical issues allied with the operations.
Technological Environment: Sri Lanka is a developing country and new technology equipments and techniques are always being welcomed. McDonaldss did introduce new food production techniques in Sri Lanka, which were later adopted by the US Quick Service Restaurants. Foods produced with the help of machines are considered more hygienic. However, the incessant developments in the technology sector needs McDonalds to be modernized regularly but as in Sri Lankan food producing technology is still in the development stage, so McDonalds has an edge over others in this regard. It is natural that technology has facilitated McDonalds and especially its employees as they have to serve quick services. Computers and smart cashiers are been used by the employees, in order to avoid them not getting confused and they are been provided with customized database management system.
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3.0.
Socio-economic change McDonalds
McDonald's Corporation is an international company that addresses these challenges and problems, some of which will be addressed in this report. The importance of technology and how it influences the strength of McDonald's marketing will be explained in this part. Finally, the importance of social awareness and ethics in relation is to be sent to McDonald's.
Demographic environment and global environmental factors, in demographics age of the world is changing. In many areas, often in urbanized countries such as USA, Japan and many in Western Europe, and the median age of the population due to the slowing birth rates and longer life expectancy. In the latest emerging markets such as Asia or Africa, the average age is getting younger, more often than not through higher birth rates. These trends require different marketing approaches.
McDonald's offers two segments of the population, national and global focus independently on each segment. It is really not amazing to see the TV spots, which the older generations enjoy a meal at McDonald's. A viewer is so inclined to see addressed a different commercial paper in the younger generation, which is exemplified by progressive music and urban attractions. In McDonald's stores, customers would see "Happy Meals" Even in an advertisement of the latest action film from Hollywood, and coffee that offers people over 49 cents.
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In September 2006, in Japan, McDonald's has eliminated up in a country with more rapid aging of the population and the maximum proportion of older people in the world (Statistical Handbook of Japan, 2005) which is a forced retirement policy. While the move follows legislation passed by the Japanese government, making McDonald's Japan, that the action was because of employment should be made available to everyone who has the ability and desire to work, regardless of age.
Changes occur in the cultural environment, at times significantly from city to city, from nation to nation. This is a mainly an important area for McDonald's, because food and eating habits of people is general and very social also personal. In order for McDonald's worldwide attractiveness, they need to be more localized. For example, in India, where 20% of the population is vegetarians, McDonald's Germany has 100% vegetarian diet, developed together with a mayonnaise India especially for McDonald's. They do not provide any kind of meat because local spiritual beliefs, the exchange of products from chicken and fish instead. This kind of cultural sensitivity is crucial for the international success of McDonald's.
Domestically, as in USA is always culturally diverse. This fact has not fled McDonald's. Marketing connoisseurs outlook McDonald's as the most concern in targeting the rising black and Hispanic population. The company has a long history, including the marketing and focuses on several TV spots for the segments which are probably using more urban communication and music.
The economic environment since the introduction of the dollar menu at McDonald's has in the United States three years ago, the company saw their income by 33% and the share price boom over 170%. This only can mean one thing where people want (or need) low-cost food. McDonald's states that, the companys lower-priced menus attract young, low income and ethnic group of the market. The Double-cheeseburger with a value of $ 1 more wins than any other menu items like salads and chicken sandwiches $ 3.19 to $ 4.29 (Warner, 2006). Cost: marketing in this segment was worth it. There cannot be a doubt that those who tend to the lower end of the
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economic scale of Fast-food value and convenience. McDonald's has seen this need and given the people what they need.
Has technology and marketing, McDonalds holds the new technologies and use them in as part of their marketing plan and text messaging is in forefront. McDonald's uses text messages for their promotional activities such as games and competitions. It was so successful that the company now views text messaging as an important part of their marketing plan in the USA. McDonald's believes that the consumer is using text messages for ordering their food before arriving at the restaurant and processes the payments by their mobile telecommunication provider. McDonald's is also focusing on the interests on multi-media, such as available the consumers to download music, games and movie trailers in certain areas of the restaurant. McDonald's is also using wireless Internet access (Wi-Fi) in several places. Positioned as the means of comfort, is something McDonald's instigated. Through the donation of a network open to all consumers, McDonald's is the crest of the convenience.
All technological developments are extremely important for the vision of marketing for McDonald's. Through the implementation of various strategies and stay up on new technologies that keep McDonald's are fresh and relevant to an ever-changing.
Awareness of social responsibility and social ethics is the core business of McDonald's. Ray Kroc, the founder of McDonald's, emphasized the importance of giving back to communities the company operates and philosophy of the company is now accepted. McDonald's has devoted part of its corporate website address, its rules and obligations and has an annual statement of corporate responsibility internationally available for download. The three most significant problems which McDonald's addresses are: What are they doing to speak to current trends in obesity? How are they using their purchasing power to persuade the upstream supply chain? How McDonald does as an organization impact on climate change? (McDonald's, 2010).
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McDonald's considers principles just as intensely. They have their standards of professional behavior on their corporate website, where the personal responsibility of State extends to everything they do (McDonald, 2010). In the post-Enron era, a corporate principle attaches great importance to customers. People vote with their money, and if the company is bent legitimacy ultimately discovered and consumers decide to invest elsewhere. It is significant that McDonald's not only write these words down, but follows the letter. The adage "actions speak louder than words" is absolutely untrue than business ethics.
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Conclusion
Finally to state that McDonalds Corporation faces exceptional challenges as it strives to stay the leader in fast-food around the world. Varying demographics, diverse cultures and economic issues impact its marketing strategies both at home and abroad. Attracting the diverse markets by using compassion, along with remaining contemporary by embracing new technologies and perpetuating social responsibilities and maintaining elevated standards of business ethics will go a long way in helping McDonalds maintain their global accomplishments.
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Finally, I would like to conclude my report by stating the fact that this module was really interesting at its maximum it can be. And I myself think that this subject is an essential for life for any person and this module will make a student to understand what he can do to make him/herself achieve himself/herself their objectives effectively and accurately while learning about the basic and the essentials in life where everybody will have to have basic knowledge since we all have to face these challenges in life no matter where we are employed.
"The only person who is educated is the one who has learned how to learn and change. Climb if you will, but remember that courage and strength are naught without prudence, do nothing in haste; look well to each step; and from the beginning think what may be the end.
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5.0.
Reference
Scribd, 2011. Internal & External Business Environment [online] (2009) at: http://www.scribd.com/doc/24453664/Internal-and-External-
Available
Business-Environment [Accessed 10th April 2011].
Wikipedia, The free encyclopedia, 2011. Socioeconomics [online] (2011)
Available at: http://en.wikipedia.org/wiki/Socioeconomics [Accessed 28th March 2011].
Gomez-Mejia, Luis R.; Palich, Leslie E. (1997), Article from Journal of
International Business Studies.
Brown, P. Lauder, H. (2001) Capitalism and social progress. The future of
society in a economy, Basingstoke: Palgrave Macmillan
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Change & Continuity in Contemporary Business