A Report On the Courses of

Services Marketing, Sales & Distribution

Management and Consumer Behaviour

For the Company

McDonalds

Division Roll No. Name of the Student Signature

A 28 PRATHAMESH BHAGWAT

A 33 RAVI SUSTE

A 44 SHRIKANT RAUT

A 47 SHUBHAM SHELKE

A 50 SWAPNIL PATIL

SUBMITTED TO
Shree Chanakya Education
Society’s Indira Institute of
Management, Pune

In partial fulfillment of the requirements of

Term End Exam Project 2020 (Semester – II)
 INTRODUCTION

McDonald's Corporation is an American fast food company, founded in 1940 as a restaurant

operated by Richard and Maurice McDonald, in San Bernardino, California, United States.
They rechristened their business as a hamburger stand, and later turned the company into a
franchise, with the Golden Arches logo being introduced in 1953 at a location in Phoenix,
Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise agent and
proceeded to purchase the chain from the McDonald brothers. McDonald's had its original
headquarters in Oak Brook, Illinois, but moved its global headquarters to Chicago in June 2018.

McDonald's is the world's largest restaurant chain by revenue, serving over 69 million
customers daily in over 100 countries across 37,855 outlets as of 2018.Although McDonald's
is best known for its hamburgers, cheeseburgers and French fries, they feature chicken
products, breakfast items, soft drinks, milkshakes, wraps, and desserts. In response to changing
consumer tastes and a negative backlash because of the healthiness of their food, the company
has added to its menu salads, fish, smoothies, and fruit. The McDonald's Corporation revenues
come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-
operated restaurants. According to two reports published in 2018, McDonald's is the world's
second-largest private employer with 1.7 million employees (behind Walmart with 2.3 million
employees).
 HISTORY

Siblings Richard and Maurice McDonald opened the first McDonald's at 1398 North E Street
at West 14th Street in San Bernardino, California on May 15, 1940, but it was not the
McDonald's recognizable today; Ray Kroc made changes to the brothers' business to modernize
it. The brothers introduced the "Speedee Service System" in 1948, putting into expanded use
the principles of the modern fast-food restaurant that their predecessor White Castle had put
into practice more than two decades earlier.[citation needed] The original mascot of
McDonald's was a chef hat on top of a hamburger who was referred to as "Speedee". In 1962,
the Golden Arches replaced Speedee as the universal mascot. The mascot, clown Ronald
McDonald, was introduced in 1965. He appeared in advertising to target their audience of
children.

On May 4, 1961, McDonald's first filed for a U.S. trademark on the name "McDonalds" with
the description "Drive-In Restaurant Services", which continues to be renewed. By September
13, McDonald's, under the guidance of Ray Kroc, filed for a trademark on a new logo—an
overlapping, double-arched "M" symbol. But before the double arches, McDonald's used a
single arch for the architecture of their buildings. Although the "Golden Arches" logo appeared
in various forms, the present version was not used until November 18, 1968, when the company
was favoured a U.S. trademark.

The present corporation credits its founding to franchised businessman Ray Kroc on April 15,
1955. This was in fact the ninth opened McDonald's restaurant overall, although this location
was destroyed and rebuilt in 1984. Kroc purchased the McDonald brothers' equity in the
company and began the company's worldwide reach. Kroc was recorded as being an aggressive
business partner, driving the McDonald brothers out of the industry.

Kroc and the McDonald brothers fought for control of the business, as documented in Kroc's
autobiography. The San Bernardino restaurant was eventually torn down in 1971, and the site
was sold to the Juan Pollo chain in 1976. This area serves as headquarters for the Juan Pollo
chain, and a McDonald's and Route 66 museum. With the expansion of McDonald's into many
international markets, the company has become a symbol of globalization and the spread of the
American way of life. Its prominence has made it a frequent topic of public debates about
obesity, corporate ethics, and consumer responsibility.
 PART II – SALES AND DISTRIBUTION MANAGEMENT

1) RECRUITMENT & SELECTION:

Staffing is the managerial function of employing and developing human resources to carry out
the activities of the organization. It entails all the processes that involve staff. Such processes
include determining the workforce requirement, methods of recruitment, actual recruitments as
well as the training and development of personnel. The function is indeed an important part of
human resource management as it also deals with performance appraisal, remuneration and
decisions relating to retaining or retrenching staff. The stages below outline the procedures that
are followed when staffing at McDonalds.

Manpower planning:

This refers to the process of estimating the labour requirements of the company. Management,
in so doing, has to consider the market and demand forces, availability of infrastructure,
government policies and so on. McDonalds has a human resource department that lays out the
overall staffing strategies and puts all the factors mentioned above into consideration when
determining the level of manpower that is required. The level of manpower is usually
determined by the number of customers in various parts of the world.

Assessment of jobs:

This refers to the elementary determination of the responsibilities and the pre-requisites for a
certain job. It also includes the relative importance of the specified job to the business.
McDonalds has clearly outlined various job descriptions for different posts in the company.
This ensures that the recruitment process of the members of staff is based on analysis of the
workload and staff requirements. Clear job specifications are also laid out to outline the abilities
and skills that are required for performing a particular job.

Sources of recruitment:

After determining the experience and qualifications required for particular jobs, the human
resource department is charged with the task of searching for qualified persons. The source of
recruitment has to be determined before asking the suitable persons to apply for the respective
jobs. These sources of recruitment can either be internal or external.
Internal sources:

It is a characteristic of most companies to consider the available staff for promotion to higher
positions in a firm before looking for members outside the company. Management may
therefore promote some of the in-house staff to fill the vacant positions. This recruitment
strategy is beneficial in many ways, in that, the higher costs of training new members of staff
are saved. On the other hand, the employees are already familiar with the culture and practices
of the firm, thus, fitting into the system instantly.

However, the major disadvantage of this strategy is that the company may not benefit from
new ideas from outsiders. Most of the managerial staff members working at McDonalds have
been those employees who had probably begun by grilling hamburgers and performing other
menial jobs. Given the amount of training and employee the company has invested in, most of
the former low-level staff members have gained from the acquired knowledge to become
skilled in their areas of expertise.

External sources:

Seeing that not all vacant posts can be filled by in house capacity, managers tend to recruit
from outside the organization. The major reason behind this is the lack of the required skills,
motives and qualifications in the internal staff. External recruitment also provides a wide
choice from which management can choose the most suitable person(s). It is with these benefits
in mind that McDonalds also takes advantage of the external sources of recruitment. External
sources of recruitment are outlined below:

Learning institutions:

A certain trend has cropped up in many organizations whereby the companies employ college
and university students who seem to have passed their interviews. McDonalds is an example
of these companies. A large proportion of junior staff in the company comprises of college and
university students. The company interviews the applicants in order to determine whether they
are good enough to promote their already established entrepreneurial culture of good customer
service.
Unsolicited applications:

Job seekers may at times apply for jobs without specific reference to a particular post but in
the hope that the company may have a vacancy. Management staff at McDonalds keeps away
such applications and contacts the applicants when there is a vacancy

Employment Agencies:

These agencies register the names of applicants who are interested in particular jobs and
organize for interviews within the companies. McDonalds works closely with such agencies
and recruit staff who are competent enough to work for them.

Media advertisements:

These are advertisements that are placed in various communication media tools such as
newspapers, magazines or even on the internet. Detailed descriptions of the job, the
qualifications as well as the required nature of the job and how to apply are contained in the
advertisements. The company has used the media to advertise for jobs such as placing adverts
on their internet sites to attract applicants.

2) SELECTION:

After a satisfactory number of applications of interested candidates have been collected through
the recruitment process, the process of selection begins. Selection refers to the process of
choosing the most suitable candidate among the interested ones. Management has to match the
skills and qualifications of the candidates with the requirements of the job then choose the most
suitable individuals. McDonalds has a detailed selection procedure whereby the candidates
have to go through a number of steps in a selection procedure.

Screening of applications:

The management of McDonalds evaluates all the applications received and then prepares a list
of candidates who are to be evaluated further. The process involves checking for the minimum
requirements in terms of qualifications, age, skills and experience. Candidates who do not pass
this stage are eliminated and excluded from further consideration.

Holding tests:

Immediately after screening of applications, a list of candidates is obtained. The shortlisted

candidates are called to the workstations or offices to prove their abilities or skills as mentioned
in their applications. An example of how this is done in McDonalds is whereby candidates are
called to the workstation and given a little task to perform such as welcoming customers in a
friendly manner. All candidates who pass the test are eligible for further evaluation whereas
those who do not qualify are eliminated. The company gives out various tests depending on the
requirements of the explicit jobs. For instance, if the test was to be carried out on management
then the tests would place more emphasis on the personality of the individual and his/her ability
to motivate staff members.

Selection Interview:

This is a means of checking the information given by the candidate in their application and
making an overall assessment on whether the candidate is suitable for the job or not. In the
interview the candidate is expected to have a face to face interaction with the employer or the
recruitment committee. This will be aimed at judging the ability of the candidate. In
McDonalds they even go a step further to find out the motives and background of the candidate
which greatly assists in assessing the suitability of the candidate.

Checking of references:
Apart from the educational qualifications, skills and expertise, the company usually ensures
that the qualified candidates have other qualities such as punctuality, friendliness and the ability
to manage their temperament. This information cannot be verified through tests, hence, it is
normally obtained from the candidate’s former learning institutions such a colleges and high
school. Former employers can also be a helpful source of such information.

Management considers that, for certain jobs such as cashiers and security officials, reliability
is a very important virtue. For experienced employees, details from previous employers are
usually of great assistance. References cited in resumes and applications may also be contacted
to provide such information so as to prove whether the candidate is trustworthy.

Medical examination:

Since McDonalds is a food chain, the health status of the employees is very important. A sick
employee with a contagious condition poses great risk to both other employees and customers
of the company. Candidates who are finally selected for the job undergo medical examination
to verify whether they are physically fit for the job.These examinations are aimed at ensuring
that injuries are minimized in the working environment and that high standards of health for
the employees are maintained. This move also ensures that the labor turnover, the cases of
accidents and the rates of absenteeism are highly reduced. These tests also reveal the suffering
of the candidate from any curable ailments since most jobs require physical fitness.

Issue of appointment letter:

When all the shortlisted candidates are finally deemed qualified for the jobs, they are offered
an official letter of appointment that clearly outlines the nature of the job, the hours of work,
payment amounts and methods among other details. A considerable amount of time is then
given for the successful candidate to join the organization.

Placement:
In the event that the candidate decides to join the organization, he or she has to give the consent
in writing to the McDonalds officials after which he/she is formally placed to perform the
specific job. The appointment of every candidate is then followed by a record of particulars of
employment known as an employment record. It is this record that is used by the company
when making decisions regarding issues such as promotions, need for training, staff cuts and
increments.
3) TRAINING:

McDonalds is one of the companies that believe in training of its labor workforce. Each year,
it trains about 55000 employees hence dedicating large amounts of revenue for this purpose.
This strategy is beneficial to both the company and the employees in that the company benefits
in terms of customer satisfaction. The company also benefits from increased revenue due to
better service from a skilled workforce. The employee gains advantage from the development
of their career.

The company has a staff training program that trains staff to be all-rounder’s and competent
enough to work in all situations. Reference materials such as videos and guides are offered to
trainees to depict the performances of certain tasks. Emphasis is placed on offering good
customer care which is the basis of their huge success over the years. The company has also
gone a step further in employee development by having leadership practices. This is a training
program that aims at improving the skills of every employee at every level so as to improve
their ability to provide comprehensive customer service, proficiency in mathematics and
financial training.

In their move to comply with corporate governance and ethics requirements, the company has
established an integrated corporate social responsibility department that provides corporate
staff leadership, support and coordination for the global social responsibility policies, programs
and reporting. A challenge that the company faces in some of its markets is the negativity that
is associated with the term McJob, therefore it tries to distinguish itself as a great place to work
both at the restaurants and at the staff level which is a great motivation for current and potential
employees.

McDonald’s corporate staff is also offered the opportunity to invest in their future in the
McDonald’s profit sharing and savings plan. The company has taken measures to ensure that
corporate and restaurant staff are enrolled in the program as it feels that the scheme is a viable
retirement plan for its employees. The plan has been growing with the introduction of new
investment plans over the years.

A wide range of choices is offered to the employees including investments in commercial assets
such as real estate investments, a global fund and a small company index fund. For participants
who are confused as to how much to save and in what areas to invest, the company offers
advice from guided choice. There is even an option of having the employee’s accounts
managed at a fee. McDonalds, in its move to offer better training to its staff worldwide, has
more than six hamburger universities around the world. These institutions act as art training
centres for restaurant staff and corporate staff. Internationally, hamburger institutions of higher
education have emerged to be the corporation’s merit centre especially in personnel training
and managerial development.

The training has emphasized consistent service, restaurant operation procedures, good quality
and cleanliness. Trainees from these institutions hold valid credits that can be applied towards
a college degree. A national vocational qualification to the crew development program is one
of the initiatives of McDonalds. Another program is the mathematics online that was
introduced by McDonalds Australia. The program offers mathematics and English instructions
online on their employee’s online community.

The company became an awarding body, allowing them to develop and award their own
qualifications. This means that the company can therefore provide nationally recognized and
industry approved qualifications to its staff which has the positive effect of improving the
training systems and standards at McDonalds. In addition, McDonald franchises, restaurants
and staff members are offered the opportunity to participate in charities and donations for
public good. Such fundraising events and programs include donations to needy children and
child education funds all over the world.
4) MOTIVATION:

Motivating is the work managers perform to motivate, support and impel individuals to take
action. To inspire the staffs, the staffs should be reached to reach him there should be completed
consideration of the complication his make-up. Efforts of motivation should be directed
towards developing operations of company. To be successful, however they should also be
planned to demonstrate advantages to the staff. Actually, inspiration can best be achieved when
staffs are capable to combine their individual aims with those of the company. People are
important resource of an organisation. Motivation is a process by which employees are
influenced to achieve the organisational objectives. Nowadays experienced managers realise
that financial reward cannot be the only kind of motivation because some people like money,
some like personality.
Management of McDonald’s emphasise on three components to motivate the people such as
financial, non-financial encourage, and social policy. Maslow’s motivation theory includes all
this factors. Maslow states that all the needs must be fulfilled one after another. McDonald’s
allows the all employees to participate in the decision making and Restaurant Manager select
the employee of the month by assessing performance of the employee in a month then s/he is
rewarded with some amount of money. Also, Manager inspires employees for working fast.

Objectives of Motivation

• To achieve the organisational goals.

• To get best service from employee.
• To recognise the performance of employee.
5) PERFORMANCE EVALUATION (MONITORING & CONTROL):

This means judging the performance and relative abilities of employees at work in a systematic
manner. Managers are therefore able to identify employees who are either performing or not
performing their assigned duties. This duty is delegated to supervisors who appraise the
performance of their subordinates using similar and uniform methods for fair purpose. The
supervisor may also have to determine the causes of the change in performance especially if it
has fallen short of what is expected.

It is a process by which the performance of an employee is evaluated. McDonald’s conducts

performance review semi-annually. Some standards are made and defined according to which
the employees have to perform. Then after 6 months all the employees are evaluated that
whether they come up to our standards or not. An OJE (on- job- evaluation) is performed in
order to evaluate the employees. If an employee does not perform well then feedback is
provided to them so they can improve.

The appraisal process in McDonald’s includes PA forms for every particular job which
involves:

- International McDonald ‘s standards.

- Assessing the employees’ actual performance relative to these standards.

- Providing feedback to the employees.

There are four levels to evaluate the performance of employees:

• Out Standing

• Excellent

• Good

• Need Improvement

After giving the total grade to the employee the appraiser writes down about the strength and
the areas needing improvement of the employee.
Incentives:

Types of Incentives:

Performance-based pay approach that is designed to increase output, based on the performance
of individuals or groups. Incentives in McDonald’s are given to employees on basis of
performance.

1. Cash Based

2. Non Cash Based

Cash Based Incentives:

• Attendance Allowance

• Annual Allowance

• Medical Allowance

• Hard Soft Furnishing [HSF]:

Once in every year certain categories of employees can furnish their houses with the carpet,
furniture, curtains etc at the McDonald’s expense.

Non Cash Based Incentives:

• Crew of the Year

• Crew of the Month

• Branch of the Year

• Access to gift certificates

• Merchandise

• Free food
6) COMPENSATION:

McDonalds Corporation is widely recognized for its attractive payment criteria and fair
compensation for work done. Due to this, the company has a very high retention of qualified
employees. Both financial and non-financial rewards are offered to their employees around the
globe. Staffing at McDonalds involves the use of both internal and external sources.

When employee joins the McDonald's management team, he will receive the following:

Profit Sharing: Fully funded by McDonald's. Share in the profits of the most successful quick
service restaurant in the world.

Vacation: Increased vacation time per years of service.

Leaves: McDonald’s employees can also apply and obtain a leave of up to two months for
personal reasons or to study for examinations or school projects.

Company Car: Restaurant managers are eligible for a company vehicle after only three years
of service.

Educational Assistance: McDonald’s offers an educational assistance program for its

employees.

Social Activities: Enjoy a variety of activities with his team which could include an annual
Convention, summer picnic or outing, Party etc.

Uniform: All the employees accept those working in the offices are given uniforms.

Flexible hours: The restaurant opens for business 18 hours a day and that means work at
McDonald's can fit into anyone's schedule. Schoolwork, family or personal activities can be
scheduled around working hours.
 CONCLUSION

Indian food market has witnessed several entrants into the country over the past few years.
Each of the established food chains and the ones entering the market pose a threat to each other.
In the food market each restaurant faces competition from 1000 other restaurants, it could be a
5-star restaurant or a roadside dhaba. In order to prove itself, the restaurant has to have a well-
defined marketing strategy and famous brand recognition to survive in the market.

The operative philosophy of the McDonald's system is based on the Quality, Service, Cleaning
and Value for 44 years. The company offers a standard menu, although it develops in each
culture special products that are adjusted to the pleasure of the community. McDonald's is
successful because it has a system of corporate norms and individual opportunities, to all the
Franchises they are integrated in the same philosophy of values and clear expectations.
McDonald's guides all the actions according:

• to organizational values as working in team,

• to feel passion for the work always offering the best of themselves,

• to be committed with the partners and with the mission of the company,

• to be entire in each one of the actions, to be leaders