Bow Valley College: McDonald's Strategic and Operational Analysis

This report provides a comprehensive analysis of McDonald's management strategies, organizational structure, and external environment. It includes a SWOT analysis, PESTEL analysis, and stakeholder analysis to evaluate McDonald's competitive position and identify key challenges and opportunities. The report also examines McDonald's organizational design, motivational strategies, and control mechanisms, offering recommendations for improvement. The analysis highlights the importance of adapting to environmental constraints, prioritizing employee motivation, and maintaining high standards of health and hygiene. This document is available on Desklib, where students can find a wide range of solved assignments and past papers.

Running head: MANAGEMENT
Introduction of Management
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Summary:.........................................................................................................................................3
SWOT..............................................................................................................................................4
Environmental constraints...............................................................................................................4
Analysis of stakeholders..................................................................................................................5
Structure and design of the organization.........................................................................................6
Motivating employees.....................................................................................................................7
Recommendations............................................................................................................................8
Controls and recommendations.......................................................................................................8
References........................................................................................................................................9

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Summary:
McDonald's is a leading fast-food company established in America in 1940. This organization is
operating domestically and globally successfully. Statistical data shows that McDonald’s
Restaurants serve foods more than 47 million customers each day and its annual return is approx
$15 billion. The first of store of this organization opened in Canada in 1970, which has been
expanding day by day successfully. Due to its high quality and tasty fast foods this organization
becomes popular in the customer domain. They are popular in serving burgers, French fries,
pizza and various types of soft drinks (McDonald's, 2018). McDonald’s focuses on developing
unique business strategies that lead this organization to develop a strong brand image in the
global market. However, McDonald’s is considered as the worlds’ largest restaurant chain for its
high revenue. This food zone is best known for its hamburgers and chicken products.
Studies show that McDonald’s has been increased its share through last 25 years. McDonald’s
makes its business flexible by adapting globalization that maximizes their revenue along with
increasing the brand recognition (Leidner, 2015). This current study will analyze the internal and
external environment in the context of McDonald's along with finding the organizational design
and structure. It can be said McDonald's is leading in the fast-food chain successfully. Their
business strategy as well as the corporate strategy makes this brand famous among the customer
domain. In this current report, the various prospects of McDonald's operation will be evaluated
effectively to understand the current business growth of this company.

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SWOT
From the analysis of part one, it has been received McDonald's has high brand value and strong
brand recognition. Such strong brand recognition allows McDonald's to grab a large number of
customers from the different geographical region. Therefore, by utilizing this brand recognition
such organization can gain advantages in the competitive market. On the other hand, the strong
human resource and worldwide distribution network of McDonald's allow this organization to
improve their supply chain policy along with maximizing their brand value. The service area of
McDonald's in a few stores is poor, therefore, the customization and standardization differences
lead this organization to face legal challenges (Gassmann, Frankenberger & Sauer, 2017).
These can be mitigated by developing an appropriate strategy along with improving the company
policy. By using their diversification strategy McDonald’s will be able to compete in the food
and beverage industry successfully. On the other hand, the low bargaining power of supplier and
buyers adds value to the pricing strategy of McDonald’s that allows them to increase their sales
volume (Pradhan, 2018). By marinating food safety policy McDonald’s can minimize the threat
of growing concern among people towards health and hygiene. According to the popular
viewpoints it can be said that McDonald’s can utilize their situation analysis in a proper way to
overcome their current barrier and grab the present opportunities.
Environmental constraints
From the PESTEL analysis of McDonald's, it has been received that political environment and
government action leave a great impact on the economy of and business operation of McDonald's
in US market. Increasing international trade agreement and government guideline can affect

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operation process of this organization. Based on the economic factor it has been found that in
developing country and USA the economy is stable that brings opportunity for McDonald’s. On
the other hand, the slowdown of Chinese economy may create a big challenge for McDonald's in
this country (Dey, 2016). Social factor highlights the busy lifestyle of urban areas and increasing
cultural diversity, which influences the operation process of McDonald’s effectively.
Technological factors show the emerging chances for McDonald’s due to moderate R&D
activity and increasing business automation.
Environmental factors show an urge for McDonald's to generate a sustainable business strategy
to grab the opportunity in the market. Finally, the legal factor highlights health regulation act
and minimum wages that should be maintained by McDonald's to carry out a fair business. At
present McDonald’s is facing legal challenges due to poor service in its few stores. Increasing
concern of customers towards health and hygiene leads this organization face threat in their
business (Pradhan, 2018). McDonald's has identified this challenge by analyzing their customer
feedback. These legal factors create a big challenge for this organization. However, emerging
technology brings opportunity for McDonald's as they can utilize the automation technology and
digitalization to boost their operation. According to me, it can be said that McDonald's has both
opportunity and challenges in domestic and global environment, which they need to analyze
properly to get the best outcome.
Analysis of stakeholders
The major stakeholders of McDonald's are employee, customers, investors, and communities.
Employees are the base of McDonald's that carry out both in-house and out-house work by
utilizing their skills. Customers are the major external stakeholders of McDonald’s increasing the

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business profit and allowing the business to sustain in a competitive environment. Investors
fulfill the crisis of financial resources in this organization, which is important to create a
successful business (Ayling et al., 2015). On the other hand, the community contributes more to
achieving environmental sustainability in the context of McDonald's. Among the various
stakeholders, McDonalds needs to prioritize their employees as they are assets of an
organization. This organization should protect the employee interest by arranging training
development program, which can lead the employees to perform effectively in the market.

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Structure and design of the organization
Figure 1: Organizational Chart of McDonald’s
(Source: Ayling et al., 2015)
McDonald’s follows mechanistic structure as the tasks performed in this company is highly
repetitive in every shop of McDonald’s. McDonald's has the divisional organizational structure
including global hierarchy, function-based group and performance-based group. The different
elements of McDonald's structure and design includes worth on its own. Their work

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specialization method and departmentalization process are done based on the working nature of
each employee. The chain of command in this organization includes processing objects each of
these contains logic (Stanko & Zeller, 2014). In McDonald’s the span of control of the manager
is narrow that means many subordinates are working under the supervisor. However, the
centralization decision-making is carried out by the top level individuals in McDonald’s. On the
other hand, centralization is done by the lower level of staffs in this organization. From this
analysis, it can be said that the use of organic structure would be beneficial for McDonald's to
bring unique feature in their operation.
Motivating employees
Among the various motivational theories, Maslow's hierarchy of needs would be effective for
McDonald's to motivate their employees effectively. This five stage theory includes
physiological needs, security needs, belongingness, esteem needs, and self-actualization. For an
organization, it is crucial to meet the physiological needs of their employees to increase their
self-esteem (Olsen, Popovich & Thompson, 2016). McDonald’s needs to provide a better salary
structure and job security to the employees that can easily motivate them towards the work by
meeting their basic needs (Pernkopf & Mayrhofer, 2017). Application of this theory allows this
organization to meet the basic needs of employees that can highly motivate them.
Recommendations
Compliance with the health and hygiene policy: From the entire analysis it has been identified
that increasing concern of people towards health and hygiene leads McDonald’s to face
challenges. By following the environmental law and food and safety policy this organization
would be able to avoid the legal obligation while operating in a country.

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Improve the service quality through establishing effective communication
McDonald’s needs to improve service quality in their stores while delivering products. This can
be done by establishing and effective communication between the stakeholders. This enables the
stakeholders to share crucial information among them to meet the business objectives.
Controls and recommendations
Application of benchmarking system would be effective for McDonald's to monitor their
business progress as this process provides an overview of the performance of each department in
this organization. However, application of feedback control would be effective in the context of
McDonald’s as it provides customer and employees feedback about the service that enables the
organization to understand the stakeholder perspectives. McDonald’s should implement specific
feedback and concurrent control through employee training and employee involvement
(Ramadhan et al., 2018). McDonalds needs to identify whether their goal is accomplished or not
by analyzing their previous performance result and current performance standard. According to
me, use of KPI would be a better approach for McDonald's to monitor their performance
effectively as this tool includes logical activities to measure the progress of an organization.

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References
Ayling, C., Chan, C., Driver, E., Fletcher, S., Haugen, J., & Livingston, K. (2015). McDonald’s
Canada’s 50th Anniversary Campaign.
Dey, K. (2016). The fast food industry in the UK. Analysis of McDonalds with PESTEL, VRIN
and Porter's Five Forces.
Gassmann, O., Frankenberger, K., & Sauer, R. (2017). A Primer on Theoretically Exploring the
Field of Business Model Innovation.
Leidner, R. (2015). Over the counter: McDonald’s. In Working in America (pp. 55-65).
Routledge.
McDonald's. (2018). McDonald's annual Reports. Retrieved from
https://corporate.mcdonalds.com/content/corpmcd/investors-relations/financial-
information/annual-reports.html
Olsen, P. E., Popovich, K., & Thompson, T. (2016). WTF? McDonald's Minion Unhappy
Meal. Journal of Critical Incidents, 9, 115.
Pernkopf, K., & Mayrhofer, W. (2017). Austria: Talent Development at McDonald's Austria: A
Compromise Between Local Demands and Global Standards. In The Global Human
Resource Management Casebook (pp. 3-12). Routledge.
Pradhan, S. (2018). McDonald’s India–plotting a winning strategy. Emerald Emerging Markets
Case Studies, 8(2), 1-25.

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Ramadhan, T., Sumarjaya, I. W., Asih, N. I. M., & Kencana, I. P. E. N. (2018). Application of
discriminant analysis in determining the purchase decision of McCafe products (case
study: McDonald's Jimbaran Bali). E-Jurnal Matematika, 7(1), 50-55.
Stanko, B., & Zeller, T. (2014). BUSINESS & ACCOUNTING ESSENTIALS: A McDonald’s
E-Learning Project 2013 Annual Report.