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a comprehensive management review of Mcdonald in Pakistan

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Mc donald's project final

  1. 1. McDonald’s A Comprehensive Management Study
  2. 2. McDonald's 2 Topic: McDonalD’s Submitted to: Miss Sonya Omer Submitted by: Syed Mohammad Hassan Noukhaiz Aslam Abuzar Khan Tashfeen Ahmad Khan
  3. 3. McDonald's 3 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
  4. 4. McDonald's 4 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 Prophet‟s (PBUH) Ummah and we acknowledge that the Holy Prophet‟s (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.
  5. 5. McDonald's 5 Company Profile
  6. 6. McDonald's 6 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.
  7. 7. McDonald's 7 For second venture (for the territory of Punjab and NWFP), McDonald's has made franchise- contract 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 it‟s 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. McDonald‟s 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 Gulberg‟s 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.
  8. 8. McDonald's 8 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.
  9. 9. McDonald's 9 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”
  10. 10. McDonald's 10 • 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……”
  11. 11. McDonald's 11 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
  12. 12. McDonald's 12 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
  13. 13. McDonald's 13
  14. 14. McDonald's 14 Organizational Structure CEO Director Operations GM Finance GM Development & Marketing Purchase Manger MarketingManager Finance Manager Operations Lahore Admin OfficeManager Operations Karachi Assistant Accountants Marketing Executive Manager Import & Export Senior Executive marketing Asst mang real estate Country HR Manager Country Training Consultants HR Coordinator Lahore HR Coordinator Karachi
  15. 15. McDonald's 15 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.
  16. 16. McDonald's 16 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.
  17. 17. McDonald's 17 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. McDonald‟s 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 customer‟s choices are met. The sizes of McDonald‟s 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.
  18. 18. McDonald's 18 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 company‟s 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 promotion‟s effectiveness and its good results. Similarly if they want to solve an issue regarding company‟s inner management, then they coordinate with each other to solve the issue without concerning the higher authorities.
  19. 19. McDonald's 19
  20. 20. McDonald's 20 Organizational External Environment
  21. 21. McDonald's 21 Mega environment Political factors The international operations of McDonald‟s 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.18 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 McDonald‟s 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 McDonald‟s 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 company‟s operations.
  22. 22. McDonald's 22 As it is declared in the paragraph above, stores of McDonald should take a big reason concerning their microenvironment. The company‟s 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 McDonald‟s. 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 McDonald‟s 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.19 Socio-Cultural factors Articles about the international strategy of McDonald‟s, 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. McDonald‟s 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 McDonald‟s 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.20 Technological factors McDonald‟s 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 McDonald‟s 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
  23. 23. McDonald's 23 products. Similar became endorsees for McDonald‟s all over the world “loving‟ it” campaign. Besides, operations of McDonald‟s have considerably been infused with new technology. Elements as the system of stock and management of the value chain of company‟s 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 McDonald‟s 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.21 Legal factors There was a current roar against the fast food industry. It has forced McDonald‟s 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 McDonald‟s is obviously a huge question. Noticed on company‟s 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.22 Environmental factor Social responsibility of McDonald‟s 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 meal‟s
  24. 24. McDonald's 24 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.
  25. 25. McDonald's 25 Competitive Analysis
  26. 26. McDonald's 26 BCG Matrix: According to BCG Matrix McDonald‟s 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. McDonald‟s. Another direct competitor of McDonald‟s 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.
  27. 27. McDonald's 27 BCG matrix for the products of McDonalds is as follows;
  28. 28. McDonald's 28 Potter’s 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.
  29. 29. McDonald's 29 • 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.
  30. 30. McDonald's 30 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.
  31. 31. McDonald's 31 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:
  32. 32. McDonald's 32 STRENGTHS McDonald‟s 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.
  33. 33. McDonald's 33  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 McDonald‟s suffers:  Management of McDonald‟s 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 McDonald‟s 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 McDonald‟s or at least middle-class cannot enjoy McDonald‟s 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.
  34. 34. McDonald's 34 OPPORTUNITIES The marvelous growth in # of stores outlets all over the world in the result of great opportunities granted to McDonalds.  McDonald‟s 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  McDonald‟s 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 McDonald‟s.  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.
  35. 35. McDonald's 35 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 McDonald‟s fall into three groups‟ restaurant workers, corporate staff, and franchise owners. The fast group is the biggest –a local McDonald‟s 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.
  36. 36. McDonald's 36 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.
  37. 37. McDonald's 37 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 McDonald‟s 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 company‟s 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.
  38. 38. McDonald's 38 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.
  39. 39. McDonald's 39 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.
  40. 40. McDonald's 40 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.
  41. 41. McDonald's 41 Change and Innovation McDonald‟s 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 company‟s orientations now is the development of a strong company-wide environmental policy declaring that McDonald‟s 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 McDonald‟s 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.
  42. 42. McDonald's 42 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 McDonald‟s 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 McDonald‟s food effect customers‟ health and all the nature about them.
  43. 43. McDonald's 43 2. Advantage of human health problems (improvement of products) McDonald‟s 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, McDonald‟s 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 McDonald‟s 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.
  44. 44. McDonald's 44 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 Pakistan’s 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.
  45. 45. McDonald's 45 REFERENCES 1. Analyzing resources and capabilities [online], Available from the Internet: 2. Issues of McDonald‟s [online], Available from the Internet 3. Key Ingredients of the McDonald's Experience [online], Available from the Internet:'s-Experience/ 4. Our company [online]. Available from the Internet:> 5. PESTEL analysis of the macro-environment [online]. Available from the Internet: <> 6. PESTLE analysis to explain company‟s international strategy of McDonalds [online].Available from the Internet: mcdonalds.html> 7. Manager [online]. Available from the Internet:
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