Organizational Behavior Analysis of McDonald's Failure and Responses

This report provides a comprehensive analysis of McDonald's organizational failure, focusing on the "Made for You" initiative. The executive summary highlights the failure stemming from a lack of understanding of the organization's capabilities, leading to increased costs and customer dissatisfaction. The report delves into the organizational behavior factors contributing to the failure, including insufficient knowledge of core competencies at the individual level, organizational culture and processes, and the policies of the management board. It examines how these factors impacted stakeholders such as employees, investors, and customers. The report also analyzes McDonald's post-failure responses, including changes in offerings and recipe classifications. The analysis draws on academic research, official reports, and media articles to provide a well-rounded perspective on the causes, impacts, and responses to the failure. The report concludes with recommendations for organizational change based on the analysis of the failures, emphasizing the need for agile changes and a better understanding of organizational capabilities.

Running head: ORGANIZATIONAL BEHAVIOR
ORGANIZATIONAL BEHAVIOR
Name of the student
Name of the university
Author note

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Executive summary
The report aims at understanding the factors that caused the failure of the processes that was
planned by McDonald’s. The different aspects of change in the organizational processes were
based on the objective of attracting the attention of the customers and supporting their
satisfaction through customized recipes. However, lack of proper analysis of the competencies
and capabilities of the organization resulted to the failure of the business. The report investigates
the different other reasons for the failure and thereby identify the recommended actions for
organizational change.

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Table of Contents
1. Introduction..................................................................................................................................3
2. Organizational failure..................................................................................................................3
3. Organizational behavior that contributed to the failure...............................................................5
3.1 Lack of sufficient knowledge of the core capabilities and competencies at the individual
level..............................................................................................................................................5
3.2 Organizational culture and processes....................................................................................5
3.3 Policies of the management Board........................................................................................6
4. Post-Failure Responses................................................................................................................8
5. Conclusion...................................................................................................................................9
References......................................................................................................................................11

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1. Introduction
Organizational behavior and culture plays a major role in the understanding the different
capabilities and competencies of the business while operating on diverse international markets.
The key changes in the organizational operations are based on the identification of the
capabilities of organization while undertaking the change in the processes. The report will
discuss the chief elements that resulted to the failure in the innovative processes planned by
McDonald’s. On the other hand, the report will also focus on the agile changes that were
undertaken by the organization to maintain its sustainability.
2. Organizational failure
McDonald’s is an American fast food company, which was established in the year 1940.
The organization undertook different innovative strategies since then in order to maintain their
efficacy of the functions while operating as per the preferences of the customers. However, the
management of the organization implemented the fundamentals of flexible leadership in the
processes in order to enhance the chances of innovation in the business processes. The
innovative approach that the management aimed at implementing on the processes was not
backed by the understanding of the capabilities of the organization related to the recipes that are
created by the business. Decker et al. (2012) stated that the proper functioning of the business
operations depended on the identification of the capabilities of the businesses while operating in
diverse markets. The management of the organization believed that they would be able to attract
the attention of the customers more viably through proposition of customized burgers as per the
preferences of the customers. The head of the fast food chains in the US division introduced the
“Made for You.” in order to comply with the preferences of the customers (CANEDY 1998).

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However, the innovative approach required the organization to undertake expensive equipment
upgrades that maximized the costs that were encountered by the organization. On the other hand,
the customers had to wait for long hours during the preparation process, which affected the
customer reviews for the organization. The costly ingredients that were utilized by the
organization have resulted to the maximization of the costs that were incurred by the business
(Le Mens, Hannan and Pólos 2014).
The maximization of the costs and the increased needs of supplies of the organization
with new ingredients have affected the smooth functioning chain that was followed by the
business stakeholders. The investors had to invest mode capital; for the investments that were
made by the organization. The major stakeholders of the organization were the employees, the
management body, suppliers, customers and the investors. The failure of the organization to
adhere to the rising costs during the innovation process has affected the investors, suppliers and
the employees largely. On the other hand, it affected the management body drastically while
operating on the innovative perceptions of the business operations. The investments that were
made by the stakeholders mostly the investors and the suppliers are affected through the failure
of the processes. The failure of the processes affected the smooth functioning of the business due
to the lack of agility in the functions and the failure to plan the processes as per the capabilities
of the business. The failure affected the organizational operations while operating in diverse
economies. Antonacopoulou and Sheaffer (2014) stated that the innovative processes of the
business was required to be backed by the analysis of the capabilities of the organization relating
to financial and man power abilities. Lack of suitable analysis of the capabilities has affected the
organizational operations while implementing the change in the processes.

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3. Organizational behavior that contributed to the failure
3.1 Lack of sufficient knowledge of the core capabilities and competencies at the individual
level
The innovative culture that was induced by the organization in order to maintain the
sustainability of the same has helped in the development of the business through a competitive
edge over the other fast food manufacturing organizations. The organization aimed at
maintaining their propositions as per the needs of the customers. It has helped the business in
maintaining the efficacy of the same while operating in diverse economies. Grady and Grady III
(2013) stated that the key changes in the organizational operations are backed through the
understanding of the capabilities of the same to undertake the change in the processes.
McKinley, Latham and Braun (2014) stated that the identification of the capabilities and
competencies of organizations helps the same in allocating the required resources as pr the needs
of the business undertakings. In this case, McDonald’s failed to understand the costs that might
be incurred by the same while customizing the recipes as per the needs of the customers due to
the utilization of expensive ingredients. On the other hand, the organization could not raise the
price of the customized propositions, as it would be affecting the customer buying behavior in a
market where the competitors offer food at a lower price. It affected the revenues of the
organization drastically which resulted to the failure of the attempt that was planned by the
business to offer customized burgers as per the preferences of the customers (Rerup and
Levinthal 2014).
3.2 Organizational culture and processes
The innovative culture of the organization has helped the same in growing in the
competitive market structures. However, lack of proper analysis of the capabilities and

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competencies affected the innovation process relating to the “Made for You.” campaign. The
customization of the food recipes required the organization to make huge financial investments
for the costly ingredients. It affected the change process of the business, which resulted to its
drastic failure. On the other hand, the key changes in the organizational operations are based on
the resource planning and allocation activities of the management. Howlett (2012) stated that
maximization of costs affects the quality of the propositions that are provided by the business. In
this case, the maximization of the costs has affected the quality of the recipes that were proposed
by McDonald’s as per the needs of the customers. The innovative nature of the organization is
affected through the lack of collaborative approach among the line of stakeholders of the
business. Lack of knowledge affected the capabilities of the stakeholders to analyze the pros and
cons of the investment decision that was undertaken by the business. The authoritative nature of
management affected the proper functioning and integration of the employees in order to achieve
the common goal of the business. The induction of safety in the workplace has helped the
business in enhancing the operations of the workforce. However, the rigid communication
policies of the organization affected the collaborative performance of the same while operating
in diverse economies. Besson and Rowe (2012) stated that the communication with the
employees helps organizations in enhancing the operations of the workforce through
collaboration and integration. It also helps in enhancing the group functioning of the same while
operating on a particular objective of organizational sustainability.
3.3 Policies of the management Board
The organization holds an independent management board, which takes decisions in an
independent basis, which is without the consultation with the stakeholders of the business. The
management structure followed by McDonald’s is a Flexible Leadership Model, which has

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helped the organization in facilitating different changes as per the analysis of the situations that
are faced by the organization while operating in diverse international markets
(Corporate.mcdonalds.com 2018). The organizational management undertook different steps in
order to enhance the operations as per the identification of the needs of the customers by
customizing their offerings. However, lack of proper understanding of the capabilities and
competencies that might be faced by the organization while implementing the change affected
the change process. The management model that is followed by the business has restricted the
involvement of the stakeholders in the process while undertaking different decision. The lack of
suitable involvement and consultation of the stakeholders with the management’s decisions have
affected the capabilities of the same in understanding different risks that might be associated
with the implementation of change in the processes. Carmeli, Tishler and Edmondson (2012)
stated that the independent nature of the management board helps the business in avoiding
situations of interventions from different stakeholders, which might hinder the change initiatives.
However, Oertel, Thommes and Walgenbach (2016) argued that the organizational
policies of an independent management might affect the active participation of the stakeholders
in the processes of the business. Therefore, lack of stakeholder engagement in the business
processes due to the enhancement in the costs affected the organizational operations was noticed
for the case of McDonald’s. The key changes that were undertaken by the organization affected
the involvement of the stakeholders like the investors and the suppliers in the processes. Lack of
trust among the stakeholders on the processes and the profitability of the same through the
implementation of the process resulted to the process failure of the organization. Beheshtifar and
Zare (2013) stated that the active involvement of the stake4holders in the innovation processes

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that are planned by the business helps in enhancing the operations of the same while operating on
diverse objectives.
Lack of consultation with the stakeholders also affected the proper functioning of the
business operations, as it affected the planning phase. The organizational management board is
restricted to consult with the stakeholders through the independent nature of the same. On the
other hand, restricted “important information” to the responsible persons making an investment
decision for the organization has affected the consultation phase with the stakeholders. The
organizational policy relating to restriction in the information provided has affected the
knowledge of the stakeholders. The lack of proper knowledge of the organizational decisions of
making investments on different changes has affected the innovation that was planned by the
same.
4. Post-Failure Responses
The organization brought about changes in the offerings of the business through
segregating and classifying the recipes as per the identification of the preferences of customers in
clusters. McDonald’s classified the different recipes as per the preferences of the customers and
thereby finalizing their propositions through descending the option of customization of the
burgers. Milojević, Mihajlović and Cvijanović (2012) stated that the uniformity that is
maintained by the organization in the offerings has helped the same in overcoming the failure
that was encountered by the same through availing the customization option. The change that
was implemented by the organization has helped the same in enhancing the operations of the
same while attracting the attention of the customers towards the innovative offerings. The key
area of change that was undertaken by the organization was based on the segregation of the

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recipes in different combos that helps in ensuring the preferences of the customers. The combos
consisted of a mixture of recipes to suit the taste buds of the customers. It also helped the
organization in maximizing the sales in order to boost their depreciating revenues. The
organization will be benefitted through the changes in the proposition as the modifications are
less costly over the previous propositions. On the other hand, segregation of the recipes as per
the needs of the customers has helped the organization in attracting the attention of the customers
at ease. It has helped in developing a positive brand image of the business with stability in the
processes. Stability in the business processes helped the stakeholders of the business in
undertaking decisions of making investments on the organizational operations with the hope of
achieving fair returns.
The organization could have induced modifications in the management board and
policies relating to their independent nature. The management must take steps to consult with the
relevant stakeholders, which would help the business in strengthening the decision making
functions. On the other hand, the organizational management should have established a smooth
functioning R&D department in order to understand the market prospects that are faced by the
same while building on the change that is planned by the same.
5. Conclusion
Therefore, it can be concluded from the report that identification of the capabilities and
competencies that are faced by companies helps in backing the innovative mindset developed by
the same. As per the case of McDonald’s, lack of understanding of the different outcomes that
might be faced by the organization while implementing the innovation affected the functioning

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of the same. On the other hand, the lack of suitable consultation with the stakeholders has
affected the capability of the organization to adhere to the innovation process.

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References
Antonacopoulou, E.P. and Sheaffer, Z., 2014. Learning in crisis: Rethinking the relationship
between organizational learning and crisis management. Journal of Management Inquiry, 23(1),
pp.5-21.
Beheshtifar, M. and Zare, E., 2013. Interpersonal conflict: A substantial factor to organizational
failure. International Journal of Academic Research in Business and Social Sciences, 3(5),
p.400.
Besson, P. and Rowe, F., 2012. Strategizing information systems-enabled organizational
transformation: A transdisciplinary review and new directions. The Journal of Strategic
Information Systems, 21(2), pp.103-124.
CANEDY, D., 1998. McDonald's Burger War Salvo; Is 'Made for You' the Way Folks Want to
Have It?. [online] www.nytimes.com. Available at:
https://www.nytimes.com/1998/06/20/business/mcdonald-s-burger-war-salvo-is-made-for-you-
the-way-folks-want-to-have-it.html [Accessed 1 Nov. 2018].
Carmeli, A., Tishler, A. and Edmondson, A.C., 2012. CEO relational leadership and strategic
decision quality in top management teams: The role of team trust and learning from
failure. Strategic Organization, 10(1), pp.31-54.
Corporate.mcdonalds.com, 2018. Standards of Business Conduct. [online]
Corporate.mcdonalds.com. Available at:
https://corporate.mcdonalds.com/content/dam/gwscorp/corporate-governance-content/codes-of-
conduct/US_English_SBC.pdf [Accessed 1 Nov. 2018].