McDonalds

A Comprehensive Management Study

McDonald's

Topic:

McDonalDs

Submitted to:

Miss Sonya Omer

Submitted by:

Syed Mohammad Hassan

Noukhaiz Aslam
Abuzar Khan
Tashfeen Ahmad Khan

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Table of contents

Overview

History

Mission and mission statement

Products or services offered

Organization structure

Departmentalization

Horizontal and vertical coordination

Mega environment

Task environment

HRM

Change and Innovation

Conclusions

Recommendations

References

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ACKNOWLEDGEMENT

Words will never be able to express enough my fervent gratitude to almighty Allah, the most
compassionate and merciful, for giving us the courage and fortitude to accomplish this
gargantuan task. We are the Holy Prophets (PBUH) Ummah and we acknowledge that the Holy
Prophets (PBUH) moral and spiritual teachings have enlightened our heart and mind and have
guided our thoughts towards new horizons enriched with great ideas of life.
We are undoubtedly indebted to Miss Sonya Omer who has been our mentor and thanks for her
kind supervision, valuable suggestions and moral support throughout our project. We are highly
impressed by her intellectual activities and inexhaustible energies used in steering forth the
students.
We must take this opportunity to appreciate efforts and co-operation of our fellow students and
friends whose constructive suggestions made it possible for us to conduct this project. We extend
our thanks to all of them for their helping hand whenever needed. Once again words fail in
expressing our thanks to our families, whose hands are always raised in prayers for our success.

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Company Profile

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History

Ray Kroc became the first franchisee appointed by Mac and Dick McDonald in San Bernardino,
California. Ray Kroc opened his first restaurant in Des Plaines, Illinois (near Chicago), and the
McDonald's Corporation was created. Quality, Service, Cleanliness and Value (Q.S.C. & V.)
became the company motto. McDonald's is the leading global foodservice retailer with
more than 30,000 local restaurants serving nearly 50 million people in more than 119
countries each day. McDonalds is one of the world's most well-known and valuable
brands and holds a leading share in the globally branded quick service restaurant
segment of the informal eating-out market in virtually every country in which we do
business. McDonalds serves the world some of its favorite foods - World Famous
French Fries, Big Mac and Chicken McNuggets.

McDonald's has 2-joint ventures in Pakistan:

First for the territory including the provinces of:

Sindh

Baluchistan

Second for the territory including provinces of:

Punjab

N.W.F.P.

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For second venture (for the territory of Punjab and NWFP), McDonald's has made franchisecontract with "Ghouse Akbar", who is now the president of McDonald's -Lahore.

Until now there are six stores of McDonald's, operating in Lahore. Currently McDonald's-Lahore
is planning to expand its business to other cities by following preferences:

Sialkot

Faisalabad

Gujranwala

Peshawar

Multan.

McDonald's Lahore is a joint venture between McDonald's Corporation U.S.A and GAM Corp
(Pvt.) Ltd. McDonald's made its debut in Pakistan on 19th September 1998 when its Grand
Country Opening was held in the provincial metropolis of Lahore. This made Pakistan the 113th
country on the globe where the world renowned Golden Arches were unfolded. After Lahore,
McDonald's made Golden Arches glitter in other cities of Pakistan, Faisalabad is already open,
soon to be followed by other cities.
McDonalds has set the ball rolling in Pakistan with two modern, state-of-the-art restaurants, one
in Lahore and Karachi each. The McDonald's Lahore Restaurant is located on Gulbergs Main
Boulevard while the one in Karachi is situated on the Main North Nazimabad Road. The Lahore
McDonald's has scored another first in Pakistan with its Drive-Thru a modern customer service
concept in quick service restaurants that has been introduced for the first time in Pakistan. The
customer simply drives into McDonald's, places the order and pays at one window and collects
the food within a minute at the next all without leaving the car.

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Our Vision
McDonald's vision is to be the world's best quick service restaurant experience. Being the
best means providing outstanding quality, service, cleanliness and value, so that they make
every customer in every restaurant smile. To achieve their vision, they are focused on three
worldwide strategies:

1-Be the Best Employer:

Be the best employer for their people in each community around the world.

2-Deliver Operational Excellence:

Deliver operational excellence to their customers in each of their restaurants.

3-Achieve Enduring Profitable Growth:

Achieve enduring profitable growth by expanding the brand and leveraging the strengths of
the McDonald's system through innovation and technology.

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Mission Statement
Mc Donald's is the largest and best known global food service retailer entertaining 1.6million
customers everyday in 121 countries. McDonalds is the market leader with outstanding brand
recognition, experience management, high quality food, site development expertise,
advanced operational systems and unique global infrastructure which ensures a position that
enables us to capitalize on global opportunities. We plan to help in the development of the
social infrastructure of the country where we work in. We want to be the best employer for
our people in each community around the world. We plan to expand our leadership position
through great testing food, superior services, everyday value and convenience.

Evaluation of Mission Statement

Customers:

The aspect of customers is used in this mission statement in the words,

.. Entertaining 1.6million customers everyday .

Product or Services:

The aspect of products is mentioned here as they are basically a food manufacturing company, so
they have mentioned them in these word

Mc Donald's is the largest and best known global

food service high quality food

Markets:

McDonalds have mentioned about the markets in which they operate in words:
entertaining 1.6million customers everyday in 121 countries

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Technology:
McDonalds is technologically very sound as they have mentioned:
advanced operational systems.

Concern for survival, growth and profitability:

This aspect has been used in the mission statement of McDonalds in the following words:

We plan to expand our leadership position through great testing food, superior services,
everyday value and convenience.

Philosophy:
Philosophy is included in the mission statement of McDonalds in words:
We want to be the best employer for our people in each community around the world.

Concern for employees:

McDonalds is concerned about their employees for better management of the

organization. They have mentioned:

We want to be the best employer for our people

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Product and Services Offered

McDonald's original restaurant served only hamburgers, cheeseburgers, milkshakes, and French
fries. Today's menu includes numerous other items that have been added through the years.
Below are listed the basic items sold by the company.

Breakfast

Chicken Sausage McMuffin with Egg

Egg McMuffin
Chicken Sausage McMuffin
Egg & Cheese McMuffin
Big Breakfast
Chicken Sausage McMuffin with Egg + Hash Browns + Small Cappuccino
Egg McMuffin + Hash Browns + Small Cappuccino
Chicken Sausage McMuffin + Hash Browns + Small Cappuccino

Burgers

Beef Burger
Cheese Burger
Spicy Chicken Burger
Double Cheese Burger
Big Mac
Chicken Big Mac
McRoyale
McArabia
Spicy McCrispy Chicken Deluxe
Cheese Burgers

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Drinks

Regular - 12 oz cup
Medium - 16 oz cup
Large - 21 oz cup

Hot Drinks

Cappuccino
Latte
Mocha
Hot Chocolate
Long Black
Tea

Shakes

Regular Chocolate Shake

Regular Vanilla Shake
Regular Strawberry Shake
Medium Chocolate Shake
Medium Vanilla Shake
Medium Strawberry Shake
Large Chocolate Shake
Large Vanilla Shake
Large Strawberry Shake

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Organizational Structure

CEO

Director
Operations

Country
HR
Manager
Manager
Operations
Lahore

GM
Development

GM
Finance

& Marketing

Manger
Marketing

Manager
Finance

Asst mang
real estate

Manager
Import &
Export

Senior
Executive
marketing
Marketing
Executive
Admin
Office

Manager
Operations
Karachi
Country
Training
Consultants

Purchase

Assistant
Accountants

HR
Coordinator
Lahore
HR
Coordinator
Karachi

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In Pakistan, there are two setups. First is for Punjab and NWFP, and this are headed by
Mr.Ghous Akbar (CEO), while the second region

Are Sindh and Baluchistan and CEO for this region

Is Mr. Amin Muhammad Lakhani. Below them are the directors and the general managers. Every
department has its own director like director finance, marketing, management etc. Every outlet
has its own has its own operation managers. They use several levels of supervisors who then
direct the workers. There is a high need to be familiar with the work which now they are
managing

Finance department is headed by GM finance; all the financial activities of each and every outlet
are under his command. The import and exports of ingredients and other necessity objects of the
company are also made under the command of GM finance.

Marketing department is headed by GM marketing and development. Marketing managers work

under him and under them are associates and marketing executives. GM is directly related with
the managers who then forward his instructions to the executives. The marketing executives and
associates are directly answerable to the managers.

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The person responsible for Customer Services and Training is the Head of Human Resources but
it is the responsibility of all employees, particularly managers and area management, to
challenge questionable behavior and practices. The Human Resources Department monitors the
effectiveness of the policy at regular intervals and takes corrective action as necessary to ensure
that

it

is

being

complied

with

the

policies

of

the

company.

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DEPARTMENTALIZATION:
Departmentalization is the process of grouping activities by the work performed.
Departmentalization is typically done by function or by division. Functional departmentalization
is when activities are grouped by function, such as marketing, accounting, or human resources.
Divisional departmentalization is when activities are grouped by products, services, or
geographical location.
Functional departmentalization is more effective when a company does not have a lot of different
products or services and is operating in a stable environment.
Divisional departmentalization is more effective a company has a diverse product line and when
it is operating in a turbulent environment.
McDonalds follows divisional departmentalization because there are a lot of diversity its
products, services and its geographical location. Each department has its own responsibility and
its own values. The overall performance is evaluated by the headquarters working in the country,
like in Karachi in Pakistan case.
McDonalds has a lot of products ranging from burgers to shakes to breakfast. They ensure high
quality in their products, keeping in mind the demand of the customers. Their main efforts are in
a direction of maintenance of their unique firm power, and creation of the additional added cost
through experience to keep and develop their product quality.

R&D conducts surveys to gather the data about the choices of the customers like what kind of
change they want in their product line. Then the entire concerned department work closely
together to ensure the customers choices are met.
The sizes of McDonalds franchises are enormous and it has an advantage of economies of scale,
which is crucial for every business. McDonalds carefully observe the area in which it wants to
open its franchise like the overall demographics of that area.

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Horizontal and vertical coordination

McDonalds follows both vertical and horizontal coordination. Vertical coordination is used in
hierarchal system from top to the lower management a horizontal coordination is used among
peers to communicate their ideas etc.

Vertical coordination
Vertical coordination is done in McDonalds when the management conveys their ideas and
solves their ambiguities in any case the coordination of the lower management is always
involved, suppose McDonalds is about id to launch their new product like burger, breakfast etc,
then the top management i.e. is the executives receive feedback from lower management about
what does the consumer wants. Then the top management considers this fact and evaluates the
effectiveness of the launch of that product and transfers their final judgment to the lower
authority. Thus a new product is launched by the coordination of senior executive sand the lower
management. Vertical coordination is also very helpful in the case when the lower employees
need to seek assistance thus the executives those employees the needed assistance.

Horizontal coordination
In horizontal coordination the same level employees coordinate with each other to solve the
management or companys conflicts. For example a situation arises in which sales promotion of
the new product is involves then all the managers cooperate with each other to ensure the
promotions effectiveness and its good results. Similarly if they want to solve an issue regarding
companys inner management, then they coordinate with each other to solve the issue without
concerning the higher authorities.

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Organizational External Environment

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Mega environment

Political factors
The international operations of McDonalds are extreme under influence of a policy of
the separate state put into practice by each government. For example, there are certain groups in
Pakistan which demand the acts of governmental power concerning medical values of meal of
fast food. They have specified that harmful elements as cholesterol and negative influences as
fatness are concerning consumption of products of fast food.
On the other hand, the company operates the separate policy and instructions of
operations. The certain markets concentrate on various areas of anxiety, such as various area of
health, protection of the worker, and environment. All these elements are noticed in the state
control of licensing of restaurants in the corresponding states. There are also other researches
which specifies in infringement of McDonald's Stores concerning existing laws on employment
in the target market. As any business enterprise, these McDonald's stores should argue with
problems of procedures of employment just as their tax obligations to succeed in the foreign
market.
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Economic factors
The organizations in the fast food industry aren't excused from any disputes and
problems. Definitely, they really have the separate problems involving business factors.
Branches and privileges of networks of the enterprises of fast service as McDonalds has a
tendency to experience difficulty in cases where the economy of the corresponding states is
amazed by inflation and changes in exchange rates. Clients hence face a survey stalemate
through their separate budgets, whether they should spend more on these foreign networks of the
enterprises of fast food. Hence, to these chains, possibly, it is necessary to take out problems of
effects of economic environment. Especially, their problem depends on the answer of consumers
to these main principles and how it could influence their general sales. In an estimation of
operations of the company, food chains as McDonalds tend to import the biggest part of the raw
materials to certain territory if there is a delivery lack. Exchange rate fluctuations will also play
an essential role in companys operations.

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As it is declared in the paragraph above, stores of McDonald should take a big reason
concerning their microenvironment. The companys international supply as well as the existing
exchange rates is merely a part of the overall components needed to guarantee success for the
foreign operations of McDonalds. It is besides obligatory, that the company has been informed
on the existing tax requirements needed by the separate governments on which they operate. It
basically guarantees smooth operations of McDonalds privileges. In the same relation the
company should consider also a state economic situation on which they influence on. Level at
which the economy of special state grows, defines purchasing capacity of consumers in that
country. Hence, if the privilege works in the especially economically weak state, then their
products should cost above than other existing products in the market, these privileges should
take certain regulators to support economy at the expense of manufacture growth.
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Socio-Cultural factors
Articles about the international strategy of McDonalds, apparently, function on several
areas to guarantee profitable returns for the organization. To illustrate, the organization changes
to the best an establishment of positive thinking from their basic consumers. McDonalds
indulges a special variety of consumers with certain types of persons.
Many-sided character of business is reflected now in sharp value of the information about
the existing market. This procedure is essentially identified in area as market research.
Information concerning the reference and potential areas of the market would double as a barrier
to success of the company if this area of operations neglected. In case of McDonalds they
establish good system in determining of requirements of the market. The company uses concept
of consumer individuality of a product of behaviour and decisions on purchase to its advantage.
It is said, to have the main influence on understanding of prospective result of the organization in
the particular market.
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Technological factors
McDonalds makes a demand for their own products. The key tool of the company for
marketing is by means of TV advertisings. There are some requirements that McDonalds is
inclined to interest the younger population more. Existence of game stains also toys in the meal
offered by the company shows this validity. Other demonstration of such marketing strategy is
obvious in advertising they use. They use recovered descriptions of the characters as Grimace
and Hamburger. Other advertising operations employ popular celebrities to promote their

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products. Similar became endorsees for McDonalds all over the world loving it campaign.
Besides, operations of McDonalds have considerably been infused with new technology.
Elements as the system of stock and management of the value chain of companys creation
consider easy payments for the suppliers and other sellers with which the person supplies in the
corresponding agreement on the markets. Technology integration into operations of McDonalds
tends to increase cost of their products. Basically it is shown in improvements on its chain of
creation of value. Improvement of stock system just as its systems of deliveries allows the
company to work in the international context.
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Legal factors
There was a current roar against the fast food industry. It has forced McDonalds to apply
more close examination on their corporate social responsibility. As a whole it has addressed to
requirement of the company to generate its corporate reputation to more positive and the more
socially responsible company. The reputation of McDonalds is obviously a huge question.
Noticed on companys web site, seems, that they have got steps to take in hand the key social
condemnation that they abused them in the last decades. The company gave to their clients the
corresponding data in which they need the relation of food essence of their products. This is to
attend to the arguments of obesity charged against the products of the company. In the same way
consumers have provided freedom in a choice, whether they want to buy the meal.
It is connected with socio-cultural market signs which they influence. For example,
operations in predominantly Muslim countries demand, that their meat corresponded
to Halal requirements of the law. Other legal concepts as tax obligations, employment standards,
and requirements to a degree of quality are only a few of important elements on which the
company should consider. Otherwise, smooth operations should be difficult to reach.
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Environmental factor
Social responsibility of McDonalds on the state influences to company operations. They
involve charges of harm to environment. Among the reasons why they are accused of such
requirements, is that the work of substances is not decomposed by microorganisms for their
drinks glasses and treasury of expanded polystyrene for meals

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TASK ENVIRONMENT:
The summary of the task environment which is by definition a specific organizations or groups
that affect the organization, which includes competitors, suppliers, customers, strategic allies and
regulators. The work force at McDonald's also have some say in their working hours, such as if
they prefer the morning, mid-day, or evening shifts in the restaurant. Direct competitors refer to
firms producing the same products or services as McDonald's does.

McDonald's has thousands of competitors, each seeking a share of the market. McDonald's
recognizes that it is up against not only other large burger and chicken chains but also
independently owned fish and chips shops and other eat-in or take-out establishments. A
company like McDonald's therefore, has to develop competitive strategies that differentiate it
from its rivals.

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Competitive Analysis

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BCG Matrix:

According to BCG Matrix McDonalds is a star. The reason for this is its high market growth
and high market share in the Pakistani market. On the other hand KFC and Pizza Hut are the
cash cows because of their low growth rate and high market share. During past some years KFC
and Pizza Hut have lost their market growth because of the fact that they lost their standard war
to their competitor i.e. McDonalds. Another direct competitor of McDonalds is Subway.
According to BCG Matrix it is a dog. Some of the reasons that are responsible for its low market
share and low market growth are the less expansion strategies being followed by the company.
Secondly they are not focusing at all on all the major cities, rather they are only focused on the
target segments of Lahore and Karachi.

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BCG matrix for the products of McDonalds is as follows;

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Potters Five Forces Model

Rivalry among competing firms

There is price competition among McDonalds and its direct competitors like Kfc and
indirect competitors like Pizza Hut.

McDonalds is engaged in an intense advertising battle with its competitors who include
both advertisement promotion and price competition.

McDonalds is in an intense product competition with its competitors as all are striving to
introduce innovative products at any time period possible.

Above all these, they are trying to improve their service and operations efficiency in
order to attract more customers.

The competition is still not very intense as the industry is still in the growth stage as
McDonalds has a upper hand in few areas whereas as its competitors has in others.

Currently fixed costs for each competitor in the industry is high which the only entry
barrier is for any new comer.

Potential entry of new competitors

The capital requirement to enter into the middle class segment of the industry is very
large as the industry is already penetrated by giants as McDonalds.

In the fast food industry there is no or very less product differentiation. So new
competitors can come up with innovative products into the market which may pose a
threat to McDonalds.

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The most important factor that constitutes a barrier of any potential entry into the market
is the economies of scale that McDonalds currently have.

There is lack of adequate distribution channels for new entrants as no new entrants would
have enough funds to either join a distribution channel or create their own whereas
McDonalds has an adequate distribution channel.

Potential development of Substitute Products

Threat of substitute products is always present in the industry as all the competitors of
McDonalds have more or less same products in terms of burgers and other junk food they
offer.

But this threat is currently present only in some specific burgers and products which have
a result on the prices on these products with limited differentiation.

Burgers have the highest substitutability so there are price ceilings on this specific
product.

Bargaining Power of Suppliers:

The bargaining power of suppliers in the fast food industry for McDonalds is very low as
there are a number of local suppliers from whom McDonalds buy few ingredients
whereas their major ingredients come from foreign suppliers.

There are a number of foreign and local companies who would at any time be willing to
supply McDonalds the ingredients.

Also the fast food industry importance to the suppliers is much more as it is very
profitable and also McDonalds always has the option to switch suppliers.

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Bargaining Power of Customers:

The bargaining power of customers in the fast food industry is growing with the
availability of substitute products and the increasing number of competitors.

There are also the small vendors and indirect competitors in the local fast food industry
which increase the bargaining power of customers.

McDonalds is also facing the same problem of relatively high bargaining power of
customers for which they have to rely on aggressive marketing, lower price and products
schemes and well trained and efficient operational staff.

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SWOT Analysis
On the basis of environmental analysis of McDonald's, the structural analysis of fast food
industry, and the assessment of internal resources of the company, following strengths,
weaknesses, opportunities and threats are there for McDonald's:

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STRENGTHS
McDonalds in Pakistan is inherited by a lot of strengths which includes:
A strong image well reputes organization.
No compromise on quality of products.
Self-service criteria save a lot of cost.
Different incentives and packages for children.
Quality raw material (ingredients) in all the products.
McDonald's strong financial position, growing cash flow, solid international presence
makes McDonald's one of the consumer products with a high growth rate.
Working environment in McDonald's is very friendly and all the employees of the
company are treated as members of McDonald's family.
McDonald's has menu, which has more breadth and depth than any other fast food
franchisee in Pakistan.
Well documented fair and strict criteria for recruitment of employees.
Updated training programs of employees.
Flexible workforce, which can work on more than one job at a time.
Skied and motivated workforce.
Sufficient funds to invest in marketing efforts.
Excellent relations between management employees.

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Secured jobs.
Good working conditions.
Career opportunities for employees.
Care for the thoughts and moods of customers.
Celebrations of main events e.g. independence day etc

WEAKNESSES
Along with a lot of strengths there are some weaknesses also by which McDonalds suffers:
Management of McDonalds does not consider other fast-food chains or outlets in Lahore
as its competitor e.g. KFC Pizza Hut & local burger market which are their competitors
in real sense.
With the passage of time the expenses of McDonalds are increasing. The reason is the
big part of fixed costs e.g. fixed overheads & fixed salaries of all the employees, which
increases directly with the decrease in production.
Dominant class in Pakistan is middle- income class for which it is difficult to afford the
menu items of McDonalds or at least middle-class cannot enjoy McDonalds product
more frequently.
McDonald's has product portfolio (menu) of greater width and depth; this broad array of
products allows attacks from niche players.
Some of the products of the company are not competitively priced.
All the raw materials are imported from different countries; this increases their cost of
production.

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OPPORTUNITIES
The marvelous growth in # of stores outlets all over the world in the result of great opportunities
granted to McDonalds.
McDonalds is the single international quality- burger chain operating in Pakistan, so it
has more profit potential in Pakistan uptil now.
By Increasing consciousness about low fatty foods which are being provided McDonald's
(using vegetable oil).
Increasing disposable income in upper and upper-middle social classes of urban areas,
which are target market of McDonald's.
By strengthening the marketing efforts, company can have more sales as compared to
existing sales.

THREATS
McDonalds people say that there is no threat for them and it can also be a big threat for
them.
Threat of new entrants is also working there because industry is growing at a rapid speed
and a lot of attraction is there for new- comers. Entry barriers are also low in Pakistan so
this threat really works for McDonalds.
Double digit inflation prevailing in the country, which in turn increases the cost of
production.
Continuous devaluation of rupee that has increased the import bill of raw materials.
Imposition of heavy taxes on fast food industry including Sales Tax and Entertainment
Tax.
Complex rules and regulations imposed by government.

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Human Resource Management

HRM is aimed at recruiting capable, flexible and committed people, managing and
rewarding their performance and developing key competencies.
The HRM model emphasizes:
The need to search for new ways of working.
The central role of managers in promoting change.
The treatment of workers as individuals rather than pan of a Collective work force.
The encouragement of workers to consider management as "priers" rather than as
opponents --'us and us', rather than 'us and them'.

Employees of McDonalds fall into three groups restaurant workers, corporate staff, and
franchise owners. The fast group is the biggest a local McDonalds restaurant usually
employs between 25 and 35 people.
Control at McDonald's is not merely achieved by direct supervision, machines, the
physical layout of the restaurant and the detailed prescription of rules and procedures but
also through recruitment.
When asked how they motivated employees, managers at McDonalds and senior
management level stressed the importance of good communication. This may take the
form of 'employee of the month' awards, day trips and cash bonuses or of encouraging
workers to strive for promotion and take on responsibility.

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Incentives and Rewards:

Pay for Performance:

McDonalds has a pay for performance policy. Every new employee

is first given the lowest job and then scrutinized in that job for the quality of his work and
his dedication towards work. If he comes out to above expectations then he is given either
a pay raise or some incentives.
Promotion on Performance:
McDonalds follow a promotion on performance too. Every
employee in McDonalds has to start from the lowest job offered. He has to remain there
and his performance is being scrutinized. If he is found to possess certain necessary skills
for a higher job, he is promoted.
Employee of the Month:
There is a system of employee of the month in McDonalds where
each month one employee is given the honor of becoming the employee of the month. He
receives a cash bonus for it.

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Leadership Roles
The leadership role in McDonalds is Transformational.

As already told every employee at McDonalds has to start from the lowest job and

then gradually progresses. The only reason is to create awareness in him about the
conflicts, problems and point of views of the staff at all levels. So until he becomes a
leader, he gains all the information about all the employees working at all levels. So he is
more able to help his employees then when he is in the management.

Also as McDonalds motto is that they give more preference to their employees

rather than anyone else. So the management is bound to give more attention towards the
employees.

Another instance is the presence of complaint and suggestion boxes for

employees where they can directly intervene into the companys plans and give
suggestions.

So it is all about the transformational role of the leadership that encourages rather

than control employees to get involved in the company.

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Strategies being followed by McDonalds

Intensive Strategies

Market Penetration:

McDonalds is planning to expand further in Pakistani markets so as to capture more

market share in the Pakistani market.

Product Development:

i). McDonalds is planning to intensify its marketing efforts as well as product

development to reinforce McDonalds brand in the minds of people.
ii). McDonalds is also trying to introduce new products which include the latest Big
Mac and the Mc Arabia.

Diversification Strategies

Concentric diversification:
McDonalds is introducing new deals which would attract more price sensitive

customers to them too.

Horizontal diversification:
McDonalds has introduced the new Mc Arabia and the new Arabian rice for its

present customers.

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Defensive Strategies

Retrenchment:
McDonalds has a strategy of closing down all the non-profitable branches in

Pakistan which they think are not up to the mark in terms of quality, objectives and sales.

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Conflicts

Top management level conflicts:

McDonalds Pakistan is owned by two separate companies namely Sizza foods and
Gamco. Corp. Sizza operates McDonalds in Karachi and Hyderabad whereas; Gamco
Corp. operates in Lahore and Faisalabad. These two are always engaged in a conflict
about the distribution of resources that they receive from their parent company of the
region Lacson and also in their own respective territories.

Business Level Conflicts:

As the structure of McDonalds is centralized, so all the functional area managers
can intervene into the tasks of their subordinate managers which create conflicts as well
as inter functional conflicts also arise between the functional areas.

Operational Level Conflicts:

There are also operational level conflicts arising in McDonalds like any other
company. Some of these are,
Conflicts amongst staff employees.
Conflicts arising due to harassment of women staff.
Conflicts due to customer complaints about any employee.
Conflicts arising due to insubordination of crew leader.
The crew leader is the one who is responsible for the behavior of the staff and he is
responsible for solving all the conflicts that arise at this level. Also the HR manager and
the branch manager may help him.

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Change and Innovation

McDonalds is all the time trying to be on time with new trends, demand or technology, even
while striving to achieve consistency in the operation of its many outlets. The breakfast menu,
salads, Chicken McNuggets, and the McLean Deluxe sandwich were all examples of how the
company tried to appeal to a wider range of consumers.
One of the main companys orientations now is the development of a strong company-wide
environmental policy declaring that McDonalds is committed to protecting the environment for
future generations, and that it believes that business leaders must also be environmental leaders.
In order to maintain the highest quality of their products McDonalds standardized the
production methods and processes. The company just adjusts to different culinary differences in
different countries. For example in Pakistan they have offered Halal food.

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Recommendations

1. Reduction of employee training spending (lowering employee turnover).

In order to reduce of employee training spending and to lower turnover, we would like to
suggest:

To give the job just for highly motivated people. It means, that they are going to be loyal
and not to leave job so fast;
New employees would be trained by employees, who are working longer. In this way,
company reduces training spending, new employees are trained by the people, who are
working inside the company and do the same things every day.
To motivate employees and always take care about their expectations. It can be money
premiums for good working in the end of the month (or year), some employees parties,
Employee of the week (month) competition.

To make a line of organic food in their menu and take a look what is more popular and
healthy for their customers. If it is going more popular than usual menu food, it is more
worth to make all food in organic way, even it is more expensive. First of all, people like
what is natural, and then they are interested in the price.

To make big advertisement companies declaring organic food pluses and make it more
popular in such way. Many people loves McDonalds food, so it has an authority and can
show good example of necessity of organic food in people life and compare how organic
and usual McDonalds food effect customers health and all the nature about them.

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2. Advantage of human health problems (improvement of products)
McDonalds is big food supplying company, and all of us know, how food affects our
health. It is one of the main factors, what built our body and strength our brains. Knowing
that, McDonalds should:

Suggest just high quality, improved products, which is full of vitamins and minerals. So,
it means that the company must improve their products, all the food must be certificated
and fit for all healthy food standards.
Be in a contact with suppliers, who supply products for McDonalds food and always
check if the products is natural, high standard and healthy for all of age customers.
Contact with doctors, scientist and improve their products to fit for all of age customers,
even they have some problems with their stomach. It means to make measures and find
what the best is for all possible customers.

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CONCLUSIONS

McDonalds is operating in Pakistan as very profitable organization. In this project we struggled

to study the management behaviour of McDonalds starting from its history to its vision and
mission statements in which explained the historical of McDonalds of how it entered Pakistans
market and the expansion of its business in various cities. Moreover we also explained about its
and services which are offered in Pakistan by McDonalds as their revenue generating products
and services. I addition to that we researched all their product line.
We also explained the organizational structure of McDonalds. In that we explained the
hierarchal structure of McDonalds. As a gigantic organization of the world need to build their
strong organizational structure so does McDonalds. Its works on the basis of vertical and
horizontal coordination. All the executives from up to the lower management on making it a
successful organization.

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REFERENCES

1. Analyzing

resources

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capabilities

[online],

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http://www.blackwellpublishing.com/grant/files/CSAC05.pdf

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http://www.mcspotlight.org/issues/intro.html

3. Key Ingredients of the McDonald's Experience [online], Available from the Internet:
http://www.meettheboss.tv/Article/11/Key-Ingredients-of-the-McDonald's-Experience/

4. Our company [online]. Available from the Internet:

http://www.aboutmcdonalds.com/mcd/our_company/bios.html>
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<http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm>
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7. Manager

[online].

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http://management.about.com/od/policiesandprocedures/g/manager1.htm

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8. McDonalds
FAQ
[online].
Available
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the
Internet:
http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html

9. MC. DONALDS SWOT ANALYSIS [online] . Available from the Internet:

http://www.scribd.com/doc/3972375/MC-DONALDS-SWOT

10. McDonalds
website [online].
Available
http://www.mcdonalds.com/us/en/home.html

from

the

Internet:

11. Resource of organizations history, managers, mission, vision, values, main products and
markets [online].
Available
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Internet:
http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html?DCSext.destinati
on=http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html

12. Social Analysis In Macro Environment: 2009 [online]. Available from the Internet:
< http://www.koellay.com/2009/05/social-analysis-in-macro-environment.html>
13. SWOT Analysis McDonald's [online]. Available from the Internet:
<http://www.marketingteacher.com/swot/mcdonalds-swot.html>

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