McDonald's Corporate Strategy Analysis

This assignment analyzes McDonald's successful corporate strategies. It examines how the company prioritizes customer needs through product selection and pricing, fosters a motivated workforce, leverages technology for efficiency, and implements sustainable practices through corporate social responsibility initiatives.

Running head: CONTEMPORARY ISSUES IN MANAGEMENT
Contemporary Issues in Management
Name of Student:
Name of University:
Author’s Note:

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Abstract:
The aim of this report is to discuss the different issues at Mc Donald’s including the main
risks and opportunities associated with the innovation in the change. The latest model for
business and the managerial techniques are also mentioned. The driving forces for change in the
organisation are defined. The organisational structure analysis of the company is done and
clearly explained to understand the operations of the company. The principles of project
management are discussed. The corporate social responsibility and it appraisal is also discussed
in the report.

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Table of Contents
Introduction:....................................................................................................................................3
Main risks, opportunities and objectives associated with innovation:............................................4
Appraisal of the business models and managerial techniques applied by Mc Donald’s to manage
risks and responsibilities:.................................................................................................................6
Driving forces for change within Mc Donald’s:..............................................................................8
Responses from the employees to these changes:...........................................................................9
Proposition of the skills that the innovation managers can employ to maintain an innovative and
competitive business environment:................................................................................................10
Organizational Structures at Mc Donald’s:...................................................................................10
Undertaking a justified appraisal of the principles of Project Management:................................12
To undertake a justified and critical appraisal of CSR’s protocols to enhance the adopted
processes:.......................................................................................................................................12

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Introduction:
Mc Donald’s is a huge corporation which is an international fast food restaurant chain all
around the world. Richard and Maurice McDonald founded it in the year 1937 in California.
After 43 years, restaurant chain had arrived in Malaysia. The chain is the largest in United
Kingdom. The major food items which are usually sold there are French Fries, chicken,
hamburgers, soft drinks and other breakfast items as well. The chain operates in almost 200
countries in several locations. In the United Kingdom, majority of the Mc Donald’s operates on
franchise basis. The strategic focus and the organisational management is responsible for
positioning Mc Donald’s to compete effectively in an industry which is already competitive and
therefore attain a competitive base in the industrial environment. It also helps to enjoy a market
niche for its business.
There are customers who visit the outlets on a daily basis due to the capability of the Mc
Donald’s to create an image which is responsible for getting people accustomed to the fast food
culture and trusting its genuineness. Usually it is known that there is a certain segment or a
certain customer base which Mc Donald’s uses a market entry strategy. The customer base of the
company needs to be expanded with the help of advertisement. The company always has
strategies in mind in order to remain on the top in comparison to other markets and in order to
achieve its business objectives.
There are several social and ethical responsibilities of Mc Donald’s. The placement of the
customers with regard to their owned and franchised companies is important. Mc Donald’s has
remained successful because of the focus on the customer experience. The talent of the
employees is nurtured and their achievements are also rewarded.

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The risk management is also imperative to the success of Mc Donald’s. They also possess
a risk management tool in order to determine the country risk pertaining to the specific country
or region of location. These factors help the companies assess their risk management.
Main risks, opportunities and objectives associated with innovation:
Management innovation is the market departure from the traditional management
principles, procedures and practices or a departure from customary organisational forms. It is
responsible for the way in which the customary organisational forms are altered. In simple words
it can be said that the management innovation changes the way in which the managers do
whatever they actually do. The coordination and controlling activities in addition to the
allocation and the applying of knowledge is important (Stenberg, 2016).
The sole method to change how the management works or to make better sorts of
innovation is to reinvent the processes which govern such a sort of work. In order to introduce
innovation at work, there needs to be fresh thinking, novel principles or the thoughts that have
the power to bring about novel approaches, a proper deconstruction of the conventions and the
dogma that are usually constrain the thought processes of a creative nature and finally the
consideration of the examples and the analogies that help redefine what is actually possible
(Cameron & Green, 2015).
Mc Donald’s needs to look for new principles and those problems which are pervasive,
persistent or unprecedented is unlikely to be solved with any sort of existing techniques need to
be resolved.
The modern management practice is based on a set of principles which originates quite a
time back. The specialization, standardization, planning and control and the primacy of extrinsic

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rewards need to be considered by the organisation. However, there are several risks which are
associated with innovation. These risks need to be kept in mind in order to ensure that the
innovations as planned by the company are successfully implemented (Stenberg, 2016).
One of the greatest risks associated with innovation is that of competition. The patents
always provide some sort of legal protection, the reality is that many innovative products and
processes are very difficult to protect in majority of cases.
There are also issues of uncertain commercial returns in connection to the risks or the
innovations. The longer the timescale of development, the more it poses a risk of being taken up
by the competitors.
Financial concerns are also a serious issue which need to be analysed before a company
considers innovating on any service or facility. There needs to be a high required rate of return in
order to cover up the financial issues.
However there are several positives of innovation as well. It accounts for the improved
productivity and reduced costs which might be achieved by improving the production capacity or
the flexibility of the business in order to exploit sale economies. In addition to this better quality
services and food items are bound to meet customer needs and lead to customer satisfaction.
There is more added value to the effective innovation by which a business can differentiate itself
from its competitors. In case a company prospers and acquires the trust of the customers, it is
also bound to lead to improved condition of staff retention, motivation and easier ways of
recruitment.
The decision of Mc Donald’s which was to be considered to be the greatest risk in history
is the decision of making fresh beef patties available at the Mc Donald’s restaurants nation-wide.

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There had been mixed reactions to this new innovation which involve several positives as well as
negatives. The frozen patties are considered to be much ahead of time and held in warming
dishes until they are served. It is crucial that the company brings several new innovations in
order to better their business and always remain a customer favourite.
Appraisal of the business models and managerial techniques applied by Mc Donald’s to
manage risks and responsibilities:
The Mc Donald’s Business model is shown by the three legged stool. This comprises the
operators, suppliers and also the company employees. The balance of the employees is crucial to
the success of the organisation. The company has around 2 million employees and several
franchises. The major strength of the alignment in case of the company, its suppliers as well as
the employees is the major reason for the success of the company. This sort of business model
allows the Mc Donald’s to perform and provide the required restaurant experiences to the
customers and also becomes an indispensible part of the community which the organisation
caters to. It also facilitates the ability of Mc Donald’s for the identification, implementation and
scaling of the innovative ideas that meet customers’ changing needs and preferences.
Mc Donald’s possesses a successful franchise business model where the restaurants
operate either by the company or the franchises including the conventional franchises under the
franchise engagements and developmental licences and those markets which are affiliated to the
foreign markets and under license agreements. The operations of the company are designed to
assure the consistency as also the high quality at every restaurant. At the time of franchises or
licenses, the company is measured and usually doe s not franchise the restaurants has been
extremely profitable for the investors.

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Mc Donald’s in general is famous for its value proposition. The food delivered in the
restaurant is that of a constant quality which is served quickly and consistently across the globe.
The major customer segments are the youngsters, teenagers, elderly and the business people. In
general the combination of owned and franchised restaurants has been very profitable for the
investors over the past several years.
The main strategic partners of Mc Donald’s are its franchise holders. Together with its
suppliers the company’s model is based on suppliers and franchisees. The key activities are
involved with the marketing as well as selling of the food and beverages. The key resources are
the employees of the company and its restaurant in several locations. The Mc Donald’s
distributes all the products throughout the restaurants. The cost structure of the organisation
comprises the employee salaries, facility construction costs, raw materials procurement and the
marketing costs. The revenues at the company are generated by the restaurants owned by the
company and are owned by its franchise holders (Gamble & Thompson, 2014).
It needs to be understood that the operations of the companies are dependent on the
segment of the people they cater to. It also needs to be understood that the business model should
also be designed in such a way that the interests of all the people are catered to. The model used
by the organisation is competitive and caters to the needs of the segment and the people who are
the sole customers.
Driving forces for change within Mc Donald’s:
There are several driving forces for change within Mc Donald’s. The first and most
significant change is that of intense competition. There is a need for Mc Donald’s for
maintaining a pace with its competitors and also develop new products that are out of the reach

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of the competitors. For having an edge over its competitors needs to manufacture certain
products which not only possess quality but are also affordable. There being a severe
competition, the products have to be launched by the company market which makes the company
on the top with major amount of the incurred profit (Brown & Osborne, 2012).
Another important driving force for the change is that of the customers. It is imperative
for Mc Donald’s to keep the preferences of the customers in mind before deciding on the items
or the innovations to be introduced in the company. It needs to be ensured that the changes
should be implemented by the company in such a way that the customers do not leave and go to
another company. There should be new changes which should be introduced in the product so
that the customers do not get bored having the same meals or the same type of items repeatedly.
The customers are the market head and therefore their requirements need to be looked after in the
manner which the best possible. This helps the organisation bring a major number of the
customers towards the company.
Another important aspect of the technology is its role in a fast food restaurant. The latest
and the most innovative tools need to be implemented by Mc Donald’s in order to be able to give
suitable products to the customers. The products which are obsolete will not hamper the growth
of the organisation but there is the possibility of losing the customers in the long run. The
machines which are out of time will make the workforce disturbed and problematic. This can
lead the workers to be disinterested to do the work and there will be the loss of any sort of
enthusiasm to do the work (Saunders & Lewis, 2012).
The health and consciousness towards it is an important factor that needs to be kept in
mind as they always want to consume food which is healthy and provide them with energy.

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There should also be the release from any sort of suffering related to the health. The company
should focus on manufacturing products which are not detrimental to the health of the people
who consume them. It should be the responsibility of the company to take care of the loyal
customers in fact all the customers in a responsible manner.
Responses from the employees to these changes:
The employees of any organisation are bound to respond to the changes which occur in
the company with respect to their own personal perspective. It also needs to be understood that
the employees are a crucial aspect of any company or organisation and the changes implemented
by the company are bound to affect the employees as well. In case the employees find that the
company innovations are not fulfilling their requirements they can even cause harm to the
proceedings of the company. There are certain cases in which the company’s valuable
information is shared with the employees and certain reliable employees have access to such
confidential information. In case the employees want they can either divulge or misuse such
information and this is bound to lead to severe issues which might be faced by the company.
Proposition of the skills that the innovation managers can employ to maintain an
innovative and competitive business environment:
There are limited customers existent in the market. Therefore to build long term
businesses it is crucial to retain people after they become customers of the organisation as
customers are valued. However all the customers are not the same as every customer has
different reasons to come to Mc Donald’s. It is necessary that the innovation managers employ
several changes in order to maintain an innovative and competitive business environment.

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Organizational Structures at Mc Donald’s:
The organizational structure at Mc Donald’s was reformed recently. This was for the
betterment of the company’s handling of the global operations. The organizational structure of a
firm helps in defining a system through which the organizational components coordinate to
achieve objectives of the business. The organizational structure at Mc Donald’s facilitates the
management of the markets depending on the performance levels. Being the largest fast food
restaurant in the world Mc Donald’s keeps on evolving and looks into the matters of current and
emerging market issues. There are new products which are looked into in order to keep a parity
in the performance of satisfying customers. These endeavors are supported by the organizational
structure at Mc Donald’s which is designed to adapt to the constantly changing business
environment (Van Der Aalst, 2013).
The organizational structure at Mc Donald’s is divisional. The responsibility of handling
a particular divisional area is given to a specific division. The aim of the structure is in
supporting the autonomy. The utility of organizational flexibility is also important. The
characteristics of the organizational structure of the company are discussed as follows according
to significance.
The first feature is that of the global hierarchy. This feature is considered as this is an
important factor of the company to maintain all its operations worldwide. The particular aspect
of the organizational structure emphasizes on the corporate control. This feature is typical of
most business organizations.
Another feature is that of the performance based divisions. This in itself is a very
distinctive feature. The geographical divisions in the organizational structure of the company

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were reorganized and it is a known fact that the high growth market account for a certain
percentage of the revenues which is approximately 10 percent.
Function based groups are maintained by the company within its organizational structure.
The organization owns a human resource management group, a supply chain, a legal and also a
franchising group. This helps the company to address certain basic business functions (Gamble
& Thompson, 2014).
The most advantageous aspect of the hierarchy at Mc Donald’s in the organizational
structure of the company is the support for the monitoring and the global operations control. The
performance based divisions have the advantage of enabling Mc Donald’s for the
implementation of strategies based on the similarities in market performance. There are similar
market strategies applied by the firm in all the lead markets. A disadvantage which can be
considered is that there is a tendency to generalize strategies for the performance based divisions.
There is limited amount of flexibility possessed within the company due to this feature of
organizational structure (Valax, 2012).
Undertaking a justified appraisal of the principles of Project Management:
The most important principle of project management is that of the success principle. This
comprises the goal of creating a successful product. The concept of on time and within budget
needs to be done.
Another is that of the commitment principle. This means that there should be certain
promises which need to be kept between the sponsor of a project and the actual team working on
it. It needs to be ensured that the commitments are maintained at all times. There are several

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examples where the commitments have been maintained by the company successfully (Burke,
2013).
There is the suitability principle which is involved in providing a helpful cultural
environment in order to enable the project team to produce the best wok. A supportive cultural
environment is present at Mc Donald’s.
There needs to be a proper maintenance of the principles of project management at Mc
Donald’s in order to ensure that the company reaches the goals it has set to achieve.
To undertake a justified and critical appraisal of CSR’s protocols to enhance the adopted
processes:
The stakeholders of Mc Donald’s affect the firm especially due to the perception of the
customers. The company also has a variety of corporate social responsibility programs to address
the interests of its stakeholders. It is understood commonly that the CSR has a major impact on
the organization. The stakeholders affect as well are affected by the business. This condition
points to the importance of the corporate social responsibility of Mc Donald’s which has
maintained strategies to minimize negative aspects of the stakeholders and also satisfying their
own interests. The top stakeholders of the company are the employees and the customers.
However, the firm’s corporate social responsibility is also subject to the influence of other
stakeholders. The stakeholders of the company are arranged according to the significance as
employees, customers, investors and the communities (Carroll, 2015).
The segment which is mostly prioritized by the company are the employees which is the
top stakeholder group. The interests of this particular segment of the stakeholders include the
career development and the fair compensation. These interests are addressed by the company

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through several training and development programs. There is a global mobility policy in Mc
Donald’s which is helpful in supporting the leadership development. The company however pays
low ways to the level of the legal minimum wage even when the employees demand higher
wages which needs to be rectified as much as possible. The existing corporate social
responsibility of Mc Donald’s only partly satisfies the interests of the employees as stakeholder
group (Tai & Chuang, 2014).
The Mc Donald’s views customers as the second important in their priority group of the
stakeholders. The interests of these stakeholders include affordable and healthy food choices.
The efforts of the company ensure that the products remain affordable and also ensure the
standardization and streamlining. The health hazards which are to be faced by the people are the
reason the food of Mc Donald’s is highly criticized. In this particular regard the CSR efforts of
the company only partly satisfy the interests of the customers as a major stakeholder group
(Burke, 2013).
Investors are another significant business stakeholder group. These stakeholder interests
comprise of the profitability and growing revenues among other causes. These issues are
addressed by Mc Donald’s through stable business operations. The present growth rate of the
company is low but stable. Thus the corporate social responsibility efforts effectively satisfy the
interests of the investors as a stakeholder group which is significant.
Communities are also supported by Mc Donald’s, as one of the main stakeholder groups.
The prime lookouts of these stakeholders’ include the community and also certain environmental
programs. The stakeholders have sustainability and support programs for these groups. The
charities also provide economic support for the families who require it. The sourcing policy of

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the firm also supports sustainable production, in case of farms. There are several variety of
corporate social responsibility programs to support these stakeholders. The effectiveness of the
interests of the communities as a stakeholder group are satisfied by Mc Donald’s (Peppard &
Ward, 2016).
The corporate social responsibility initiatives are something worth consideration. They
are effective in addressing stakeholder interests and customers’ issues. However the Mc
Donald’s only partially satisfies the interests of the employees and the customers as the major
stakeholders in connection to the business of the company. Therefore it can be said that it is
better for the company to improve the efforts of the corporate social responsibility efforts. This
the compensation strategy needs to be improved by Mc Donald’s in order to satisfy the concerns
of the employees regarding their wages. The innovation of the products for more healthy foods
can also help satisfy the concerns of the customers at Mc Donald’s.
The company also aims to maintain the concept of home away from home which it helps
in advocating. The company also provides companies with the chance to volunteer and also helps
those individuals in need. The company also looks for ways to reduce, reuse and also recycle in
their restaurants as well as in their entire business.
Conclusion:
The company continues their path towards success and achievement as the top fast food
restaurants. This is achieved solely by keeping the customers in mind, based on their selection of
the products and also the prices. The company encourages its employees to do a good job,
usually there is an encouragement from within. The company searches for methods to increase
the productivity of technological products as also the service and sales. It is therefore not a

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matter of astonishment that Mc Donald’s will be around in the years to come. It is believed that
the executive compensation program is consistent with the Company’s pay for performance
policy and is also quite effective in serving the interests of both the company as well as its
shareholders. The compensation is based on the individualistic performance as well as the
standing of the company. Our programs are designed to motivate and retain an executive tea of
higher caliber. Thus it can be confidently said that the programs of the company motivate their
executives to achieve long term sustainable growth for the organization.

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