MBS568: McDonald's Media Release on Organizational Change

This report analyzes McDonald's media release concerning its organizational restructuring and turnaround strategy. The release, aimed at internal stakeholders, details a shift from a regional to a field-centric approach, streamlining teams to reduce bureaucracy and G&A spending by $500 million. The restructuring involves new market segments (United States, International Lead Markets, Foundational Markets, and High Growth Markets) and aims to improve communication between restaurant and corporate staff. Led by CEO Steve Easterbrook, the plan focuses on operational growth, brand excitement, and financial value, with an anticipated pre-tax charge of $80-$90 million for severance packages. The report highlights the company's commitment to customer focus, financial discipline, and innovation, with the goal of becoming a modern, progressive burger company. References include QSR magazine and SMH articles that provide further context to the changes.

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Author Note

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Communication Plan:
McDonald’s has planned for a turnover which has the potential to change the way they
conduct the business. The restructuring is expected to help the company in improving their
sales as the restructuring of the new market segments is conducted with a precise focus
towards the sales characteristics of the company across the globe. With the new plan, we
want to assure our internal stakeholders that we are also in an appropriate position to achieve
our financial objective and the General and Administrative cost controlling is expected to
play a major role in the same. The organization is determined to conduct their business with
new market segments which are United States, International Lead Markets, Foundational
Markets and High Growth Markets. Along with that, the company is dedicated in
restructuring their regional structure of business where some of the large offices in a
particular area were responsible for the management of the entire business actions in that
region. With the new plan, the organization has planned to concentrate on the field offices
which has the potential of improving the communication between the restaurant staffs and the
corporate staffs. In order to execute the new plan, the organization planned to streamline their
functional teams to achieve reduced bureaucracy and fewer number of layers. The plan has
allowed the organization to reduce the General and Administrative costing of the company by
500 million US dollars which is significant for the enhancement of the financial sustain
ability of the company. Having said that, the organization also expected a pre- tax change of
80 to 90 million US dollars for the severance package to the employees as a result of the
restructuring.

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Media Release:
McDonald’s Turnaround towards a “Modern Progressive Burger Company”:
McDonald's under the leadership of a highly enthusiastic individual is on the verge of a
turnaround towards a comparatively more progressive and modern burger company. The
organization led by the CEO and President, Steve Easterbrook is focused on a global
restructuring where the company is determined to shift from its current regional structure to a
more field centric approach.
The CEO and President of McDonald's, Steve Easterbrook made a substantial announcement
of a change to the company’s approach towards the business management. The company has
shifted to new market segments with a polished and restructured organizational structure
which is prominent with the market segments such as the United States, International Lead
Markets, Foundational Markets and High Growth Markets. From now onwards, the company
is dedicated in changing their regional structure of business where a few large offices were
responsible for managing the business actions of all the chains in the region. The company is
now more inclined towards developing the field offices for the desired enhancement of the
quality of the communication restaurant employees and the corporate. In order to successfully
accomplish the restructuring the organization is dedicated to streamline the teams in such a
manner that it results to fewer bureaucracy and reduced layers. As a result, the company is
expected to reduce their net amount of General and Administrative Spending by 500 million
US dollars and that certainly contributes to the success of the company in enhancing their
financial sustainability and in achieving the desired financial objective of the company.
The restructured new United States segment is the largest segment accounting 40% of the
operating income that the company achieved in the year 2014. The international Lead Market
includes established markets such Australia, Germany, United Kingdom, Canada and France.

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The selection of the countries for the segment is conducted on the basis of the similar growth
offerings, similar economic dynamics and a same sort of competitive dynamics along with
their collective contribution towards 40% of the company’s total operating income generated
in the year 2014.
With High growth market segment, the company is dedicated towards growing in the markets
with relatively higher restaurant expansion and franchising potential and the market includes
China, Switzerland, Netherlands, Italy, South Korea, Poland, Spain and Russia which
collectively contributes to 10% of the operating income that the company achieved in the
year 2014. Other than this, the company is determined in continuation of their franchised
business model in the foundational markets. As a result, the new market segments along with
a new organizational structure is expected to deliver larger revenue and opportunity of rapid
growth for the company.
The company is expected to face an amount of 80 to 90 billion US dollars in the form of pre-
tax charge following the restructuring owing to the costing associated with the severance
packages.
The Chief Executive Officer and President of McDonald's, Steve Easterbrook stated,
“Today we are announcing the initial steps to reset and turn around our business. As we look
to shape McDonald's future as a modern, progressive burger company, our priorities are
threefold: driving operational growth, returning excitement to our brand, and unlocking
financial value. The immediate priority for our business is restoring growth under a new
organizational structure and ownership mix designed to provide greater focus on the
customer, improve our operating fundamentals, and drive a recommitment to running great
restaurants. As we turn around our business, we will look to create more excitement around
the brand and ensure that we build on our rich heritage of positively impacting the

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communities we serve. The first critical step of our operational growth-led plan is to
strengthen our effectiveness and efficiency to drive faster and more customer-led decisions.
We will restructure our business into four new segments that combine markets with similar
needs, challenges, and opportunities for growth. Our new structure will be supported by
streamlined teams with fewer layers and less bureaucracy, and our markets will be better
organized around their growth drivers, resource needs, and contributions to the company's
overall profitability. McDonald's new structure will more closely align similar markets so
they can better leverage their collective insights, energy, and expertise to deliver a stronger
menu, service, and overall experience for our customers. Our new organization creates a
structure under which leadership of McDonald's new segments will be able to more
effectively address the common needs of their markets and customers. It is critical that we
position our management talent within our new structure in a way that capitalizes on their
skill sets. As such, I am pleased to announce the leadership team for our new segments,
effective July 1, 2015.”
The chief administrative officer of McDonald's, Pete Bensen stated,
“As we restructure our organization and instil greater customer focus, McDonald's
turnaround will be governed by stronger financial discipline, faster decision making, and
clear management accountability. This new organization structure will unleash more
entrepreneurial spirit and more innovation across our system while bolstering what makes
McDonald's a formidable leader in the industry: our incredible network of dedicated
franchisees.”
For any further information, please connect to:
Name of the Student

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Senior Director of Global Executive & Internal Communications.
Official Email Address.

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References:
Qsrmagazine.com (2020). McDonald's CEO Easterbrook Unveils Turnaround Plan | QSR
magazine. Retrieved 18 April 2020, from https://www.qsrmagazine.com/news/mcdonalds-
ceo-easterbrook-unveils-turnaround-plan
Smh.com.au (2020). McDonald's CEO Steve Easterbrook to change structure, cut costs, boost
franchises. Retrieved 18 April 2020, from https://www.smh.com.au/business/mcdonalds-ceo-
steve-easterbrook-to-change-structure-cut-costs-boost-franchises-20150505-ggu3fv.html