Operates Globally Assignment Help

Organization
McDonald’s is a fast food chain that operates
globally and is most famous for its range of
hamburgers. McDonald’s was founded in 1940 as a
single restaurant in California, USA by brothers,
Richard McDonald and Maurice McDonald. After 15
years of operation and being a success, a
businessman named Ray Kroc, joined McDonald’s in
1955 and initiated the seemingly unending
expansion of McDonald’s. Ray Kroc eventually
bought out the company from its founders. The
expanding trend continues till date as new outlets of
McDonald’s are being opened throughout the world
in large numbers. As of December 31, 2016,
McDonald’s has its global presence through 36,900 outlets in 120 countries (US
Securities and Exchange Commission, 2016). McDonald’s serves over 69 million
customers daily and serves them with a wide range of options from hamburgers,
cheeseburgers, chicken products, French fries, breakfast items, soft drinks, milkshakes,
wraps and desserts. At present, the number of McDonald’s employees sums to over 1.5
million workers throughout the world which are employed by the company’s franchisee
setups and entities, either in individual capacity as or business organizations. The number of
employees, including corporate office employees and those working at company owned
restaurants is 375,000 (US Securities and Exchange Commission, 2016). Of all the
outlets of McDonald’s, 5,669 are owned by the company and the remaining are
franchised to various franchisees of both private as well as government roots in
different countries.

Main activities
Richard and Maurice McDonald started the first McDonald’s restaurant which was
different from restaurants of other burger chains and fast food outlets in terms of its
design. The brothers had planned the layout of the building in a manner similar to
production line of a factory where work stations were present for different tasks of the
entire process. This smartly designed system reduced time for preparation of meals and
was vital in the initial success of the company. To date, McDonald’s outlets are operated
on a similar system; only bettered with experience gained over 70 years of the
company and with the aid of technological advancements. Originally a company selling
hamburgers, McDonald’s diversified its range of products with time as well as owing to
the requirements arising from the expansion of the company into new areas where cultural
needs and eating habits differed from the US. McDonald’s is the largest private operator
of playgrounds in the US, of which several are linked to the outlets and remains the
single largest buyer of beef, pork, potatoes and apples. McDonald’s is run by a board of
directors which is headed by Steve Easterbrook, a British corporate executive (Flixens,
2017).

Business strategy
Founders of McDonald’s, the brothers Richard and Maurice were not in favor of
expansion of the company to a large extent and wanted to keep the business confined
to few locations. This was contrary to the vision of Ray Kroc, who joined the company
later on and was bent upon expanding the company without limits into several
countries and all continents. This difference led to a fight for control of the company
which was won eventually by Ray Kroc and thus began the expansion spree.
McDonald’s owns all the land on which its outlets are operating. The revenues of
McDonald’s are comprised primarily of the rental payment of the property from
franchisees, franchising fees and royalties on the products. Further, the total income of
the outlets that are owned by the company goes to the McDonald’s Corporation. Due to
the large base of its operations, strong techniques of marketing, presence in the industry since
long and popularity among the masses, McDonald’s has outdone its rivals for a long
time. The company manages and operates its outlets in joint venture with different
local entities and governments (McDonald’s, 2017). More than 80 percent of the
revenue of McDonald’s comes from Japan, Korea, Australia, France, Germany and the
US. Among the reasons vital for expansion as well as acceptance of McDonald’s in
different countries was excellence of customer services. The company provides the
customers with quick and accurate service with several options and has the ability to
cater to the needs of hundreds of customers at a given time (Gargasas, 2012). The
impact of cleanliness was also a reason for high desirability of the company’s
restaurants. Especially in East Asian countries which are sources of high revenues for
the company, McDonald’s was the first company to provide its customers with clean
restrooms. In order to compete with McDonald’s other restaurants and businesses
followed the same practices. In China, McDonald’s has entered deals with the Chinese
leading oil company Sinopec, which benefits both the companies. This is based on the
surge in trends of the Chinese public to visit McDonald’s for their Drive-Thru
meals(Mcdonald, 2007). The company’s main strategies include adaptation of the
culture of the locality where it is being run which results in the modification of products
accordingly as well as the reflection of this adaptation in its services. The expansive
strategy is a success and stems from the worldwide recognition and likeability of
McDonald’s, its Golden Arches symbol and the clown figure Ronald McDonald’s; all of
which are great marketing successes (Han, 2008).

Business environment
In order to understand the business environment of McDonald’s encompassing its large base
of operations and the complex markets of which the company is a part, a SWOT
analysis is presented here in brief:
Strengths
 2nd largest restaurant network in the world after Subway
 Works and operates with humungous quantities of food and paraphernalia, thereby achieving economy of
scale
 Implements best practices throughout its operations
 Exercises high power over suppliers and competitors owing to its large size
 Has a very large fan base and is the most recognizable brand in the food industry throughout the world
Weaknesses
 McDonald’s has been associated with news that their food is unhealthy, since long
 Jobs at McDonald’s franchises are low skilled and hence low paying and despite the fact that 1 in 8
workers in the US has worked at McDonald’s at some time, the tenure of the average worker at
McDonald’s is quite short(Schlosser, 2001)
Opportunities
 The strong image of the company and its highly famous brand name are catalysts for the global expansion
of McDonald’s and in spite of 70 years having passed, the trend of expansion is still seen progressing
  McDonald’s runs its operation in all continents, while in Africa it is present in only four countries,
hinting at an opportunity to expand in the region by virtue of modification of its menus in accordance
with the respective localities
Threats
 McDonald’s faces severe competition from all sorts of restaurants of local, international and regional
nature
 The company has had to face a number of campaigns from activists regarding the presumed low quality
of food and unhealthy food options

Employees at McDonald’s
McDonald’s directly employs 375,000 people worldwide for its corporate operations as
well as for outlets that are run by the company itself. Further, the total number of
workers of McDonald’s is over 1.9 million when the employees of its franchisees are
accounted for. This is second only to Wal-Mart, the world over, in terms of number of
employees (Ruth Alexander, 2012). Workers at McDonald’s have an age profile of under
25 and the company has a 1:1 gender balance (Crawford, 2015). For the purpose of
better training, McDonald’s has its training facility in Oak Brook, Illinois, known as
Hamburger University which trains its employees in various aspects of restaurant
management and since its inception in 1961, over 80,000 restaurant managers, mid
managers and owners and operators have graduated (Walters, 2015).

Basic characteristics of existing reward

management system
The company offers are number of benefits and compensation packages to its
employees based on their skill levels and on the length of service. The benefits cover
needs of employees such as medical, dental, life insurance, 401k retirement funds,
vacations, sabbatical program and cultural programs, recognition programs and paid
time off. Highlights of the existing reward management system (HRM, 2016)are as
follows:

 Base Pay refers to the fixed rates of per hour rates for employees that is based on their skill level and
upon the performance of the company
 Incentive Pay is given to employees based on their ability to achieve certain targets in a given period of
time
 Recognition Program such as ‘Employee of the Month’, ‘President’s Award’ and ‘Circle of Excellence
Award’
 Company Car Program lets employees use a company maintained car which is paid for by the company
in lieu of fuel, maintenance, insurance and repair
 Vision health coverage
 Dentalhealth coverage
 Short term and long term disability coverage
 Employee and dependent life insurance
 Accidental death and dismemberment insurance
 Travel and business travel accident insurance
 Profit sharing and savings plan 401(k)
 McSave Fund which is a priming fund for employees where they can invest money
 McDirect Shares is a program that lets employees buy shares in the company and dividends are
reinvested in the company
 Credit Union lets employees use a wide range of credit payment services
 Ameriprise Financial gives Financial Planning services to employees of McDonald’s
  Vacation and holidays as per company rules
 Anniversary Splash lets employees have a paid week off on their 5th, 15th, 25th (and so on) anniversaries
 Employees who have worked a certain amount of time are able to have eight weeks of paid time off every
10 years of full time continuous service with the company as per the Sabbatical Program
 Short Fridays allow employees compressed working hours in summers
 Adoption Assistance program
 Child care program
 Educational Assistance program
 Matching Gift Program is where the company doubles the donations of employees to selected charities
 International Fitness Club Network give employees discounted memberships on selected fitness facilities
and gyms
 Auto and Home Insurance Program
 Free food from McDonald’s which is recorded by the company
 Gratuity fund payment for employees who have worked over 5 years
In addition to these benefits, employees are provided facilities at work such as crew
rooms, breaks for prayers and cleanliness and locker facilities(Emerson & Prang, 2015).

Challenges with respect to reward

management
The existing reward management system is deemed very favorable for employees.
However, McDonald’s has faced criticism for the design of this system since it benefits
employees who have worked for a long time with the company, especially on full time
basis. The largest number of employees of the company on the contrary is people who
work part time and these are mostly paid near to the minimum wages of the respective
company. It leads indirectly to a divide among the employees which eventually results
in loss of work efficiency(Spraggins, 2015).

Changes to reward management system

Despite the fact that McDonald’s enjoys a booming business with its current system,
the divide between full time and part time employees is not in the best interest of the
company. McDonald’s therefore needs to revise its reward management system in a
manner that takes care of its short term employees. Long term benefits and incentives
are naturally reserved for long term employees hence the benefits that can be offered to
others include paid time off. This is because most workers at McDonald’s are working in
part time capacities and come from walks of life such as students and people working
two jobs or more. Paid time off for them would mean they can concentrate on their
family life and outside of work life in a better manner.

Conclusion
For long, McDonald’s has been considered as a company that employs workers with low
skills and pays them the minimum wage. The company has done a makeover for this
image in order to be renowned as a good employer. Better pays are among the main
actions taken for this recourse along with training of employees imparting better
management and operational skills. There is still much need for the development of
remuneration of short termed and part time employees which are a backbone for the
progress of the company. With better offers, an increase in their working capacity and
work efficiency will be seen which is eventually in the benefit of the company.
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