434226169-Pom.docx

SCHOOLOF LAW
Project Report on Types of Plans and Henri Fayol’s Principles of
Management with reference to McDonald’s
SESSION:2018-2019
Submitted to: Submitted by:
Faculty: Suman Dahiya Name: Vaibhav Gupta
Roll Number: 180BBALLB019
Course: BBALLB
Year/Sem: 1st Semester

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TABLE OF CONTENTS
Serial No. Topic Page No.
1 Project Overview 3
2 About the Company 4
3 Henri Fayol 5
4
Fayol’s Principles of
Management
7
5 14 Principles of Management 8
6 Questionnaire 37
7 Observation 39
8 Classification of Plans 41
9 Types of Plans 43
10 Company Analysis 46
11 Conclusion 50
12 Reference 51

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PROJECT OVERVIEW
About the Topic: The title of the project is, “Project Report on Types of Plans and Henry
Fayol’s Principles of Management with reference to Mc Donald’s.”
According to Koontz & O’Donnell, “Management Principles are fundamental truth of
general validity which has value in predicting the results of management action.”
These days business has assumed wider dimensions as a result of which numerous problems
arise in day to day activities and the manager of the organization has to solve these problems. A
manager needs guidelines to grapple with problems and run the organization efficiently. The
principles of management guide the managers. That is why the study of principles of
management is important.
According to Koontz & O’Donnell, “Planning is deciding in advance what is to be done.
When a manager plans, he projects a course of action and basing of decisions on purpose,
knowledge and considered estimates.”
Planning is the first and the most important function of management. In the absence of planning
all the business activities of the organization will become meaningless. The importance of
planning has increased all the more in view of the increasing size of the organization and their
complexities. Planning has gained importance because of uncertain and constantly changing
business environment. In the absence of planning, it may not be impossible but difficult to guess
the uncertain events in future.
Objective of the Project: The chief purpose of the project is to see the implementation of the
principles of management in real life and how the organizations uses various types of plans that
we came across in the book. Also we are analyzing that these management tools helps the
organization in efficient management.
Selection of the Company: In order to achieve the objective of this project we needed a
company where business is carried on a large scale and various activities are performed. So
keeping in mind the two criteria Mc Donald’s was selected. The following were the main reasons
for selecting this company:
i. This company is capable of fulfilling the objectives of the project.
ii. It is also situated nearby and visiting the company would be easy.

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ABOUT THE COMPANY
Name: Mc Donald’s
Logo:
Tag Line: I’m lovin’ it
Type: Public Company
Industry: Restaurants
Genre: Fast Food Restaurants
Founded: Mc Donald’s: May15, 1940, San Bernardino, California
Mc Donald’s Corporation: April 15, 1955, Des Plaines, Illinois
Founders: Mc Donald’s: Richard and Maurice McDonald
Mc Donald’s Corporation: Ray Kroc
Headquarters: Chicago, Illinois, USA
No. of Locations: 37,241 restaurants (2017)
Area Served: Worldwide
Revenue: US$ 22.820 billion (2017)
Operating Income: US$ 9.553 billion (2017)
Net Income: US$ 5.192 billion (2017)
Total Assets: US$ 33.804 billion (2017)
Total Equity: US$ 3.268 billion (2017)
No. of Employees: 235,000 (2017)

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HENRI FAYOL
Birth: July 29, 1841
Death: November 19, 1925
Profession: Mining Engineer and Management Theorist
Nationality:French
Education:Graduated from Mining Academy at St. Etienne in 1880
Known For: Fayolism, Fayol's work was one of the first comprehensive statements of a
general theory of management. He proposed that there were five primary functions of
management and fourteen principles of management.
Positions Held: Founded the mining company “Compagine de Commentary-
Fourchambault- Decazeville” and became its Managing Director in 188. At that time the
company was nearly bankrupt. By the time of his retirement after 30 years in 1918, the company
grew into a large coal steel company with strong financial position and a long record of profits
and dividends.

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Writings: Administration industrielle et generale. It was published in English as General and
Industrial Management in 1949 and is widely considered a foundational work in classical
management theory.
Contributions: Mainly 14 management principles, which are referred to as administrative in
nature that they have Top to Down approach concerning top management and other’s conduct.
Fayol became famous as “Father of Managerial Thought” because of three contributions:
i. He classified all activities of an industrial undertaking into Technical, Commercial,
Financial, Security, Accounting and Managerial.
ii. He also suggested that a manager must possess these qualities: Physical, Moral,
Education and Knowledge.
iii. He was the first to identify four functions of management: Planning, Organising,
Staffing and Directing. Although his version was a bit different: Planning, Organising,
Staffing, Directing and Controlling.

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FAYOL’S PRINCIPLES OF MANAGEMENT
Henri Fayol has developed 14 principles of general management which
provide guidelines for managerial decision making and action.
i. Division of Work
ii. Authority and Responsibility
iii. Discipline
iv. Unity of Command
v. Unity of Direction
vi. Subordination of Individual Interest to General Interest
vii. Remuneration of Employees
viii. Centralisation & Decentralisation
ix. Scalar Chain
x. Order
xi. Equity
xii. Stability of Tenure
xiii. Initiative
xiv. Espirit De Corps

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14 PRINCIPLES OF MANAGEMENT
1. Division of Work: The principle of ‘Division of Work’ means to divide a given
activity or work into small pieces or parts so that each part is handled with great ease and
efficiency.
This principle states that every work should be divided into the smallest possible part and
each such part is to be performed by an individual person (labourer). Instead of assigning
the whole work to an individual, it’s better to assign one task to one person. Before
assigning the task to anyone it must be assured that he possess the required knowledge,
skill, capability and will to perform the task effectively and efficiently. If the same task is
performed by a person again and again he gains specialization in that task and can
perform with greater ease and minimizes wastage of resources and time. This ensures
proper utilization of labour and keeps them focused and productive.
Fayol has emphasized on this issue because specialization and minimization of wastage is
a key to success for each and every organization. He was of the view that every work
should be divided into the smallest possible part and then is to be assigned to an
individual to gain success and specialization. This principle also guarantees
specialization, efficiency and maximum production with minimum time and least efforts.
In the long term, this same targeted division of work helps the labour in specializing in
the work they are doing, thereby ensuring there are far fewer mistakes.
Positive impacts of this principle:
 Specialization,
 Minimization of wastage,
 Improved efficiency.
Consequences of violation of this principle:
 Overburden on a single employee,
 Conflicting situations,
 Wastage of time and resources,
 Chaos and confusion.

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The following image depicts the example of division of work:
Application in McDonald’s: McDonald’s certainly practices this principle of
management as it’s employees are divided into departments that match their capabilities
and expertise in order to produce effectively and efficiently. It is important that people
who have an ability or special talent are placed at the correct department in order to
maximize that ability or specialization. It has a number of departments:
 Human Resource Department
 Payroll Department
 Property Department
 Complaint Department
 Marketing Department etc.

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2. Authority and Responsibility: A leader who balances authority and responsibility
throughout the organization will experience great satisfaction. Authority is the power to
decide and act; as well as to direct the decisions and actions of others. The scope and
impact of a leader’s organizational decisions and actions profoundly impact every
stakeholder. There are four levels of authority in an organization, and ideally, individuals
in every position are offered the opportunity to progress to the next level:
 Act from instruction: At this level the individual implements decisions made by
others. There is no choice.
 Act after approval: The person weighs factors and acts only after their manager
approves.
 Decide, inform and act: Power to decide is added, but people remain accountable to
someone else.
 Decide and act: Provides complete authority.
Responsibility means accepting the consequences for your own decisions and actions,
and for those to whom you have delegated. Responsibility requires transparency about
decisions, actions, execution and results. It demands fair assessment of successes and
shortfalls. Monthly reports to the leadership team represent a powerful tool for ensuring
responsibility in an organization.
Keep authority and responsibility in B.A.L.A.N.C.E.
Balance the welfare of all stakeholders. Treat employees, suppliers and society as you do
customers.
Assure everyone acts with confidence in their work environment. Give them the training
they need to meet increasing responsibility. Recognize that everyone makes mistakes,
and attribute shortfalls accurately to actions and to outside circumstances.
Let everyone know the decisions they can make, with what level of authority, and to
whom results are to be reported.
Act quickly to correct situations where people either bear consequences without
equivalent power or have power without being responsible to anyone. When individuals
feel they bear consequence without power, they tend to hide negative results. Power
without consequences can lead to unethical decisions for personal gain.

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Never let anyone, especially yourself, hide behind lack of transparency or too much data.
Celebrate successes and come clean with mistakes. Celebrate the success of others first
and admit your mistakes first.
Expect the best from everyone and give them the tools they need to deliver, so that they
will expect the best from themselves. Humans tend to meet the expectations of those they
respect.
Hence authority and responsibility go hand in hand and form an important part of Henri
Fayol’s 14 principles of management.
 No misuse of authority.
 Systematized and effective achievement of organizational objectives.
 Misuse of authority.
 Responsibility can’t be discharged effectively.
 Conflicts between management and employees.
Application in McDonald’s: Fayol’s principle of AUTHORITY AND
RESPONSIBILITY is practiced in McDonald’s. All subordinates in the organization are
given adequate authority to perform their respective tasks along with the responsibility to
complete it on time. For example, the cook is given a standard time to prepare a certain
dish and is given requisition of what all things he/she requires for this purpose.
Therefore, the employees are given authority and responsibility in balance ,which is
required by the principle.

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3. Discipline:
Discipline means obedience, respect for authority, and observance of established rules.
Fayol has emphasized that a sense of discipline should be present in all employees of the
organization at all level so that the organization can perform and achieve its objectives in
the best possible way.
For maintaining discipline in the organization managers should consider:
 Clear explanation of the rules;
 Effective supervision;
 Reward system on better obedience;
 Possible provision for penalty on non obedience.
A sense of discipline is needed in all employees at all level in the organization for the
smooth functioning of the organization as well as the achievement of the organizational
objectives. Some employees inherently possess this quality but some employees need to
be induced with the sense of discipline, and the manager must give proper attention to
this type of individuals to maintain and improve discipline in the organization.
Top level managers and officers are greatly responsible for maintaining discipline in the
organization and for this first of all they have to strictly accept the rules of the
organization and follow them so that other employees get encouraged to accept and
follow the rules.
It goes without saying, that management is responsible for the way discipline is
maintained in an organization. All this discipline percolates down the line, to the end of
the employee chain as well.

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A best example will be advertisement agencies, who encourage informal meetings and
conversations so as to build better relationships with the customers. However, even these
advertisements agencies are known to maintain discipline in the way the advertisement
executives interacts with the customers or the way they carry out their work. Discipline is
a part of the mission and values of the organization itself.
 Helpful in achieving organizational objectives.
 Improved efficiency.
 Cordial relation between management and employees.
 Better working environment in the organization.
 Minimization of wastage.
 Height of disorders.
 Confusion and chaos.
 Wastage of time and resources.
 Conflicting situations
Application in McDonald’s: McDonald’s unquestionably, applies this principle of
management because the reputation of McDonald’s and the variety of meals it provides
are enough to prove it. A fast food outlet cannot achieve the position in the hearts of
people which McDonald’s has.
So, good discipline is quite essential in any organization. The interview with manager of
McDonald’s and the survey that I conducted for the employees helped me realise that
there are clear and fair agreements regarding the working hours and criterion for leave
taking, which is an essential attribute of the principle DISCIPLINE.

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4. Unity of Command: Unity of Command means getting orders/ command from only
one supervisor.
Fayol has stated “As soon as two superiors impose their authority over the same person
or department, uneasiness makes itself felt. Dual command is a perpetual source of
conflict.”
This principle states that an individual should get orders from a single superior so that he
does not get confused and can discharge his duties effectively.
This principle advocates that only one boss should give order to an individual so that he
can understand what to do and can perform systematically with greater efficiency. If
more than one boss will instruct an individual, he will certainly get confused about his
responsibility and will not be able to perform even a single activity because he faces the
dilemma of “whom should he follow?”
In case of more than one boss, problem of ego clash between the bosses arises because
every superior wants his orders to be executed by his subordinate. This problem of ego
clash also causes conflicting situation in the organization, which hampers the
organization growth.

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 Prevents dual subordination;
 Easy to fix responsibility to an individual;
 Harmonious and cordial relation among the management and the employees; and
 Performance of the employees will increase.
 Reduces efficiency of subordinates;
 Creates confused situation for the subordinates;
 Subordinates can easily escape from their responsibility and duties;
 Ego clash between managers;
 Overlapping of orders and instructions; and
 Hard to maintain discipline in the organization.
Application in McDonald’s: UNITY OF COMMAND, principle of management is
unquestionably, being practiced in McDonald’s. As per the organizational structure of
McDonald’s, there is a clear superior figure for each and every subordinate working
there.
For example, for employees of a branch, their superior is the branch manager and the
branch manager on the other hand is accountable to other top level authorities.
Therefore, it is evident that each subordinate has to take orders from one and only one
superior. Thus, this principle ensures that there is no confusion on the part of the
employees, regarding whose tasks are to be done. This, subsequently, helps in avoiding
conflicts between superiors and subordinates and leads to smooth functioning of the
organization.

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5. Unity of Direction:
Once unity of command is achieved and you have a complete hierarchy, where everyone
knows who they are reporting to, and they are ready to do the leaders bidding, then it is
time to implement unity of direction.
It is like the famous saying “United we stand, divided we fall.”
This principle states ‘One Head One Plan’. It means that all the employees having same
objective must be directed towards the achievement of the common goal and thus must
have one head and one plan. This principle makes it necessary that there should be unity
of action.
There are different divisions in the organization for different activities and thus the
efforts of the employees of one division having the common objective must be directed
towards the achievement of these objectives, taking into account the threats, opportunities
for that division.
The application of this principle helps in establishing co-ordination and uniformity in the
activities as well as in the organization. It also reduces the duplication of activities in the
organization and thus helps in minimizing the wastage of resources.
This principle is often confused with the principle of ‘Unity of Command’ as both sound
the same. But the difference between them is quite clear as ‘Unity of command’ is
concerned with taking command from one boss whereas the principle of ‘Unity of
Direction’ is concerned with the direction of the efforts of the employees of one division
towards the achievement of the objectives of that division.
The company from the CEO level to the executive level should be moving towards one
direction. If growth is the direction one is moving to, then a single executive to the CEO
of the company should be performing in a manner which brings growth for the company.
All these executive should be trained and managed accordingly by his managers.

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 Efficient achievement of organizational objective;
 Better coordination among the employees;
 Efforts of employees are directed in a better way; and
 Systematic working environment is developed in the organization.
 Decrease in organizational efficiency;
 Lack of coordination;
 Wastage of resources;
 Difficulty in achievement of organizational objective; and
 Duplication of activities.
Application in McDonald’s: This principle is definitely practiced in McDonald’s.
Although the overall objective of the organization is to maintain its position as No. 1, it
specializes in the market, but people under different departments believe in achieving the
targets sales and production as per the respective departments. This enables the
employees of any organization to stay on track and perform at their best if they are aimed
at one specific objective.

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Difference Between Unity of Command & Unity of Direction

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6. Subordination of Individual Interest to General Interest:
To control people, you have to understand their interest first. And in the end, you have to
ensure that the interest on the company lies above the interest of the individual. Many a
time, a person is removed from the company when he is doing his own sideline jobs. This
because the company wants to ensure, that the person who is working in the company is
giving his 100%to the company.
This principle states that general interest is superior to the individual interest. And the
manager must try to integrate the individual goal with the organizational goal in such a
manner so that both the objectives are accomplished with efficiency and effectiveness.
The manager directs the employees in such a manner that they work for their objective
and ultimately the organizational objective is achieved.
Each and every individual joins the organization with certain expectations and objective.
And everyone works to achieve his objective. If the objectives of the individual employee
is in the direction of the achievement of the overall organizational objective then there is
no problem, but where the employee has an objective which drives him in the opposite
direction from that of the organizational objective, the manager must try to reconcile the
goals of both, the individual with the organization so as to achieve the objectives. The
manager must try to achieve the organizational objective in such a manner that the
individual objectives are also achieved.

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All this leads to satisfaction among the employees which helps to maintain a cordial
relation among the employees and the management. This also facilitates to increase the
efficiency of the employees, and leads to harmony in the organization.
The focus of the organization is on individuals who are giving their all to the company.
The interest of the company should be placed above the interest of the individual.
 Achievement of organizational objective;
 Coordination between individual and organizational goal;
 Harmony in the organization;
 Increases employee’s respect for the organization.
 Difficulty in achievement of organizational goal;
 Conflicting situations in the organization;
 Wastage of efforts, time and resources; and
 Delay in work.
Application in McDonald’s: The principle SUBORDINATION OF INDIVIDUAL
INTERESRT TO GENERAL INTEREST is unquestionably followed in McDonald’s.
Employees are required to follow and implement the same plans and policies which are
laid down by the apex level in the hierarchy i.e. the top level management. The interest of
employees are not given priority over the interest of the organization, which are
accountable to a large number of stake-holders, society, customers, owners etc. So, their
interest cannot be ignored but are well take care of. The employees who want to exert
pressure on the organization or want to pursue their interest at the cost of organization are
counseled.

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7. Remuneration of Employees:
Every individual joins the organization with the main aim of earning his bread and butter.
The wages or salary which he earns for his work helps him to fulfill the basic and other
needs of life. The wages or salary must be in equality with the work done by him so that
he gets satisfied and can perform better.
As per Henri Fayol’s 14 principle of management, employees should be remunerated
fairly to keep their motivation levels high. This remuneration may be monetary and non-
monetary. The monetary compensation includes incentives, bonus, or other financial
compensation. The non-monetary compensation includes rewards or recognition.
A fair wage system is one that guarantees equality between the work done and the
payment received. Such a system satisfies the owner in terms of the work completed by
an individual employee and satisfies the employee in terms of payment received by him.
This creates a healthy organizational environment and relation between the management
and the employees.

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 It creates good relation between workers and management;
 Employees get motivated;
 It declines the labor turnover rate;
 Employees feel satisfied with their wages and thus contribute their best effort;
 It raises the standard of living of the employees; and
 It develops the society indirectly.
 Employee’s efficiency decreases;
 Conflict between management and employees;
 Labor turnover rate will be more;
 The immediate result is incomplete work; and
 Hard to achieve organizational objective.
Application in McDonald’s: The interview I conducted with the branch manager of
McDonald’s helped me realize that the principle of REMUNERATION OF
EMPLOYEES is prevailing there. According to him, the salary they provide to their
employees is adequate in relation to the tasks they perform. It may not give them a
reasonable standard of living but the salary is fair, just and reasonable.

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8. Centralization & and Decentralisation:
When the power to take decision rests with the top management it is called as
‘Centralisation’.
When the power to take decision is given to the person performing the job it is called as
‘Decentralisation’.
According to this principle, the superiors should adopt effective centralization instead of
complete centralization and complete decentralization. By effective centralization, Fayol
does not mean that authority should be completely centralized. He feels that the superiors
should keep the authority of taking important decisions in their own hands, while the
authority to take daily decisions and decisions of less importance should be delegated to
the subordination.
This will facilitate the proper and timely functioning in the organization. And the top
management will be free from extra burden of taking and handling each and every affair of the
organization. All the lower level problems will be handled at that level only, this also gives a
feeling of superiority to the lower level employees which motivates them to perform better.
The ratio of centralization and decentralization can differ in different situations. For
example, it is advantageous to have more centralization in a small business unit and more
decentralization in a big business unit.

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 Facilitates proper functioning of the organization;
 Timely completion of work;
 No extra burden on the top management;
 Motivates the lower level employees; and
 Decisions will be taken at the level of action.
 Over burden on the top management;
 Difficulty in the achievement of organizational objective;
 Delay in action, because the decisions of top management are to be waited.
 Sometimes it creates conflict between the management and the employees; and
 Ego clashes in case of different decision by lower level and top level
management.
Application in McDonald’s: McDonald’s uses a predominantly centralized structure
to ensure that centralization is maintained over their thousands of outlets.
It makes it easier for them to implement common policies and practices for the business
as a whole and makes it easier for McDonald’s to coordinate and control from the centre,
for example, in case of deciding budgets for a year.

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9. Scalar Chain: According to Fayol, “Organisation should have a chain of authority
and communication that runs from top to bottom and should be followed by
managers and the subordinates.”
Thus, scalar chain refers to the formal lines of authority from highest rank to the lowest
rank. The principle of scalar chain suggests that there should be a clear line of authority
from top to bottom, linking superiors and subordinates at all levels. The scalar chain
serves as the chain of command as well as communication. In normal circumstances, the
formal communication is required to be made by following this chain.
Fayol emphasized that every information in the organization must flow according to this
chain to facilitate clear communication of orders of the superiors and feelings of the
subordinates. This chain must be strictly followed in the organization. Fayol also stated
that there should be no overlapping of steps during the communication process.
Fayol’s Ladder: This principle was explained by Fayol with the help of a
ladder diagram which showed the flow of information.
For example, in an organization there are employees A, B, C, D, E, F, G,
H, I, at various posts. If employee ‘C’ has to communicate with employee
‘G’ using the scalar chain, the route should be like CBAFG. Thus
there will be four steps for the information to reach from employee ‘C’ to
the employee ‘G’.
Due to more clear system of authority and communication, problems can be solved
easily, also the accountable person can be held quickly without any confusion and delay.
Though this principle is very effective and clear, but it consumes a lot of time. In case of
emergency, information will take a lot of time to reach the desired position which may
delay the action as well as decision.

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Gang plank:
For overcoming this limitation of scalar chain, Fayol introduced the concept of ‘Gang
Plank’. According to this concept, two executives of the organization of different
department at the same level can communicate directly in case of emergency, so that
speedy decisions and actions could be taken. In case of the above example, if employee
‘C’ has to contact employee ‘G’, he can easily and directly communicate the information
to ‘G’ using this Gang plank (‘C’4‘G’). This reduces a lot of time and helps in effective
performance.
 Clear communication of information;
 Better relation among employees;
 Systematic communication in the organization; and
 Faster solution to organizational problems.
 Bitterness in the relation of employees because of ignoring the
close supervisors.
 Improper communication of information;
 Difficulty in finding the responsible person.
Application in McDonald’s: The principle of SCALAR CHAIN propounded by
Fayol is not followed in McDonald’s. Within each branch there is one and only one
superior/boss- The branch manager to whom all the employees of the respective branch
are accountable. He is the only superior to be consulted and to seek advice from. Thus,
the chain of superior and subordinates become invalid in this case. Be it to emergency or
a casual message, the general manager is to be told about the same.

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10. Order: According to this principle, in an organization there should be a suitable place
for everything and everyone, and everything and everyone should be at its right place. In
other words, we can say that there must be order liners in the organization.
According to Fayol, “People and material must be in suitable places at appropriate
time for maximum efficiency.” The principle of order is concerned with proper
arrangement of things and placement of people.
The order can be of following types
 Material order: This order specifies that there should be a proper place for all
physical resources. It states “A proper place for everything and everything at its
proper place”. This will eliminate any kind of confusion regarding the search of
material as the place of materials is already fixed and thus reduces wastage of
material, time and efforts.
 Social order: This order specifies that there should be a proper place for all
human resources in accordance with their designations. It states “An appointed
place for every employee and each employee at his/her appointed place”. This
order is based on the basic assumption of “Right man for the right job”
This principle is very important for any organization as an effective order decides the
overall working, efficiency and effectiveness of the organization. If an order is
maintained for each and every resource then there will be no confusion and delay in
working and thus this also helps in eliminating the wastage of time, resource and efforts.
Consequently it also helps in controlling the use of financial resources.

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 No wastage of time and energy.
 Better handling of resources.
 Smooth and systematic working in the organization.
 Increased productivity.
 Efficiency in work.
 Proper use of financial resources.
 Delayed operations.
 Scattered physical and human resources.
 Wastage of time and energy.
 Wastage of financial resources.
 No proper accountability.
 Reduction in efficiency of controlling process.
 Reduced operational efficiency.
Application in McDonald’s: The principle of order is unquestionably practiced in
McDonald’s. Within each branch there is a fixed and a suitable place for every material
and man in the branch. All the raw materials, tools etc. are placed appropriately, this
increases the efficiency. Also the employees are suitably placed on the working stations.
This ensures that there is no wastage of time, money, effort, raw materials etc.

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11.Equity:
“EQUITY” is the condition or quality of being equal. It means the applicability of same rules
and regulations for all employees in the organization irrespective of their religion, sex, caste,
colour, creed, language, nationality, grade, position etc. This principle is based on the basic
thought that “all employees of the organization are equal”. This principle states that each and
every employee in the organization should be treated with equality and in a just and fair manner.
There should not be any discrimination on any ground with any employee of the organization.
The Executive Officer must be fair and unbiased while dealing with his subordinates.
This equal treatment will motivate the employees to give their whole hearted and maximum
contribution towards the achievement of the organizational objective. When the officers are
unbiased in their dealing with the employees, the employees will get satisfied and will contribute
to their fullest capacity. This will also ensure loyalty and devotion of employees towards the
organization, and will enhance the employee-management relationship.
“The Principle of Equality” does not mean that all employees of the organization are equal and
must be treated and paid equal salary. It only means equal rules and regulations for every
employee without any discrimination.
 Employees feel satisfied.
 Ensures just and fair treatment to all.
 Motivate employees.
 Ensures loyalty of employees towards organization.
 Ensures cordial relationship among employees and management.

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 Dissatisfaction among employees.
 Delay in the achievement of organizational objective.
 Lack of respect towards superiors and work.
 Lack of team spirit.
 Hinders employee-management relationship
Application in McDonald’s: The principle of EQUITY is undoubtedly followed in
McDonald’s. All the employees and the branch manager in the branch are all treated equally.
There is no class differentiation among the employees themselves.

[31]
12.Stabilityof Tenure:
'STABILITY' means no frequent change, termination and transfer etc. It means that, in
an organisation whenever an employee is appointed for a job, he/she shouldn't be
removed from that position frequently. The management of the organisation should
ensure that there must be stability in the job and frequent changes and shuffling of
position should be avoided.
From the point of view of management it is absolutely harmful to change the employees
frequently as it is a reflection of intelligent management. Therefore, according to this
principle there should be stability of tenure of the employees so that the work continues
efficiently.
When one feels secure at his job, he/she contributes maximum of his capability towards
the organisational objectives. Stability also helps the employee to know each and every
aspect of the job with the passage of time which consequently helps in performing the job
with greater efficiency and minimum wastage. It creates a sense of belonging-ness
towards the job and the organisation.
Frequent transfers of the employees lowers the prestige of the organization and creates a
feeling of insecurity among the employees which keeps them busy in finding out new
avenues of work. Consequently, the sense of dedication cannot be created among them.

[32]
An organisation following the principle of stability achieves its objectives effectively and
efficiently with the maximum contribution from their employees. The employees of such
organisation always feel satisfied and thus are the productive factor for the organisation.
But if this principle is violated i.e. if the employees are frequently transferred from one
position to another or employee turnover, they will feel dissatisfied and will not perform
with their full potential leading to non-achievement of the organisational objectives or
under utilisation of resources as well as wastage.
For example, it is true that if the workers in a company are not treated well and the
atmosphere in the company is also unhealthy, the employees will not stay for a long time.
In other words, they will leave the company at the first opportunity available.
 Develops sense of belonging-ness towards the organisation.
 Improves the efficiency level of employees.
 Minimises the wastage of resources.
 Employees satisfaction.
 Better accountability.
 Saves time.
 Non-achievement of the organisational objectives
 Lack of employees participation.
 Wastage of resources and time.
 Dissatisfaction
 Adds to cost.
Application in McDonald’s: The organisational structure of McDonald’s being
centralized does not give flexibility to employees regarding initiative. Moreover, most of
the employees work in this organization as a part time. There are only handful of
employees who work as full time. Although, employees are given a reasonable time to
show results, yet they love to face frequent transfers, which consequently has an adverse
effect on the productivity and efficiency of employees. So some of them would find it
inconvenient, tend to leave and the cycle for the search of new employee thereby begins.

[33]
13. Initiative:
Initiative is the eagerness to start actions without being told to start them.
For example, when you were a young child, your mom and dad probably had to
constantly tell you to clean your room. As you continue to grow you probably started
cleaning your room without being told to do it. You obtained the initiative to clean your
room.
Management must welcome the employees for taking initiatives in forwarding valuable
suggestions before the plans are set up for them. When the plans are set up in
consultation with the employees they will feel as if it is their own plan and they have to
complete it, which will stimulate them to work whole heartedly. This will reduce
wastage, absenteeism and maintain a cordial relation between employees and
management.
According to Fayol, under this principle, successful management provides an initiative to
its employees to suggest new ideas, experiences and more convenient methods of work.
Fayol believed that employees should be encouraged to take the initiative in the work
assigned to them. Workers can be encouraged with the help of monetary or non-monetary
incentives. In other words Fayol believed that you should encourage employees to ‘think
outside the box’ by rewarding them with more money or a perk, such as leaving the
office early on Fridays.
This principle helps the management to know more ways of executing the predetermined
plan as the employees give various suggestions. When the employees are involved in
such a way in the management they feel satisfied and take each and every necessary step
to accomplish the plan. This will make the working environment more interesting, more
cooperative and more effective.

[34]
 Timely achievement of objectives when they are set in consultation
with employees.
 Develops sense of belongingness in employees.
 Ensure maximum participation of employees.
 Employees will feel that the plans and goals are not for their
benefit and thus will not work with full potential.
 Lacks maximum participation from employees.
 Conflict between the management and employees.
Application in McDonald’s: The organizational structure of McDonald’s being
centralized does not give flexibility to employees regarding initiative. Before a certain
decision is actually made on the execution of the ideas the central authority’s permission
is essential. However, violation of this principle has certain disadvantages as well-
Frustration among the employees. Employees will not work to the best of the abilities if
they are not consulted while making plans etc.

[35]
14.Espirit De Corps:
Espirit de Corps is a French phrase that translates into GROUP SPIRIT. Espirit de corps
is one of the Fayol’s 14 principles. The principle states that an organization must make
every effort to maintain group cohesion in the organization. It notes that dividing your
competition is a clever tactic but dividing your own team is a serious error.
ESPIRIT DE CORPS' here means team spirit and team work. This principle emphasizes
on team work. 'UNITY IS STRENGTH' is the essence of this principle. Fayol
suggested that there should be a team spirit in the organisation and all the employees
must consider themselves as member of the organisation.
The organisation should be considered as a team and all the employees as its member.
When the employees are considered as member, it develops a feeling of belongingness
among them and thus each of them contributes to the achievement of the organisational
goal. This sense of togetherness helps the employees to perform with greater efficiency
and positive attitude towards the work.
This principle is based on two theories - “Unity is strength” and “Unity of staff is the
foundation of success in any organisation”. Thus, this principle states that both the
workers and management should work together to accomplish the objectives. The reason
behind this principle is that, team contribution is always better then individual
contribution.
This principle is very helpful in the organisation as well as in our daily life because this
brings a sense of belongingness and association wherever human beings are involved.

[36]
Probably the strongest and the most powerful example of Espirit de Corps is found in
closed military units that have seen combat. These soldiers often form a tightly knit group
they work together well to achieve objectives and are often fiercely loyal to each other
and their unit. Managers applying the principle of espirit de corps attempt to replicate this
sense of cohesion, team work and loyalty with the organization and its employees.
 Achievement of group goals.
 Development of team spirit.
 High morale of employees.
 Cooperation and coordination in the organisation.
 Non-achievement of the organisational objectives.
 Conflicting environment in the organisation.
 Lacks maximum participation from employees.
Application in McDonald’s: This principle is undoubtedly being followed in
McDonald’s. As per the information provided by the branch manager, the reason why it
is such a huge success today is because of the harmony and unity within the organization
itself. Though it has clear lines of authority, it still promotes unity and harmony among
its staff. It is, indeed, necessary in any organization because being too rigid, would not
bring the best out of the members of an organization.
McDonald’s has grown into such a success today because of the contribution of each and
every employee and when an organization works enthusiastically and is built like a
family, I personally feel it would reach heights and that is exactly what McDonald’s has
accomplished. Promoting espirit de corps by superiors in an organization is a key to
strong foundation and future growth for the organization.

[37]
QUESTIONNARE
Name:
Gender:
Designation:
Note: Tick the correct choice and answer the question in a line or two.
I. How many shifts do you have to work in a day?
o One
o Two
o More than two
II. For how many hours you work a day?
o 8 hours
o Less than 8 hours
o More than 8 hours
III. What is your level of satisfaction for the salary paid?
o Satisfied
o Not satisfied
o Highly satisfied
IV. What is your level of satisfaction for the working environment?
o Satisfied
o Not satisfied
o Highly satisfied
V. Does your manager provide you with the flexibility of transferring your job
to another employee, in case of inconvenience?
o Yes
o No

[38]
VI. What is the criteria for taking a leave?
VII. Is job rotation applicable? If yes then specify.
VIII. How many maximum leaves are you allowed to take in a month? Is it
satisfactory?

[39]
OBSERVATION
According to the survey that I conducted for the employees of McDonald’s, I came to
know about various aspects from an employee’s point of view.
Foremostly, the level of satisfaction of employees is ranging from satisfied to dissatisfied
i.e. they are provided with suitable environment to work, which enhances their
productivity and efficiency over a period of time but at the same time some employees
are not happy with it.
Level of Satisfaction No. of Employees
Highly satisfied 0
Satisfied 5
Dissatisfied 1
Secondly, I enquired about the hours of working for the employees. It ranged from 8
hours to less than 8 hours, most of the workers were working for 8 hours because they
were fixed employees.
Hours of work No. of employees
8 hours 5
More than 8 hours 0
Less than 8 hours 1
Thirdly, I asked them about the number of shifts they work for so as to know the division
of work and administrative efficiency.
No. of Shifts No. of employees
One shift 4
Two shifts 2
More than two shifts 0
Afterward, I enquired about flexibility they have been provided with regarding the
transfer of jobs to some other employees, in case of any problem or inconvenience so as
to know the application of Fayol’s principle-“Unity of Direction” and “Espirit de
Corps.”
Options No. of employees
Yes 3
No 3

[40]
This clearly shows the application of above principles.
Level of satisfaction in respect of salary is a very important aspect to study the
application of the principle of ‘Remuneration’ and in some way ‘Stability of
Personnel’
Level of satisfaction No. of employees
Highly satisfied 1
Satisfied 4
Dissatisfied 1
This clearly reflects the application of above mentioned principles
Then I asked the employees about the rotation of jobs and I realized that the job of waiter,
manager, chef and waitress can be rotated. Criteria for taking a leave in McDonald’s is
pre-notifying the manager about it, mentioning it in the end and giving an application for
grant of leave to the shift manager. The maximum no. of leaves granted to the employees
ranges from 3-5 days depending on the type of job they are employed for.

[41]
CLASSIFICATION OF PLANS
Various plans may be classified into:
(i) Standing plans and
(ii) Single-use plans.
1 Standing Plans: Standing plans are made to be used time and again. These plans are
formulated to guide managerial decisions and actions on problems which are recurring in nature.
Standing plans are also called ‘repeated use’ plans because these provide guidelines for actions
to be taken in future. These plans provide unity and uniformity of efforts in meeting repetitive
situations arising at various levels of the enterprise. These plans provide ready guidelines for
tackling situations of recurring nature. These plans not only help in co-ordination but in effective
management also. Standing plans include objectives policies, procedures, methods, rules and
strategies.
Standing plans help an enterprise in the following ways:
i) Standing plans help in achieving co-ordination in the enterprise. These plans bring
consistency, uniformity and unity in efforts.
(ii) Senior executives are able to delegate their work to subordinates since procedures, rules,
regulations etc. have been laid down for taking necessary decisions.
(iii) These plans help in achieving goals even if these are vague, complex or multi-dimensional.
The policies, methods, rules, procedures etc. provide ready frames of reference whenever some
difficulty arises in taking decisions.

[42]
(iv) Standing plans are formed after a lot of thinking, discussions and arguments. Whenever
decisions are needed to be taken, these plans help in quick decision making. These plans are
great labour saving devices as they provide frames of references for tackling recurring situations.
(v) These plans help in better administrative control. They provide rational bases for evaluating
the results of various efforts put by different persons working at various levels of the enterprise.
2 Single- used Plans: A single-use plan in a business environment refers to plans developed
for a one-time project or event that has one specific goal or objective. The length of a single-use
plan differs greatly depending on the project in question, as a single event plan may only last one
day while a single project may last weeks or months. Single-use plans consist of budgets,
programs and a description of the employees who will be contributing to the single-use plan in
question.
It can also be defined a set of activities aimed at achieving a specific goal within a particular
budget and time period that is unlikely to be repeated in future. Examples of a single use plan
that could be employed by a business might be an advertising campaign for a new product launch
or an integration plan for a recent acquisition. The examples of these plans are: projects, budgets,
programmes.

[43]
TYPES OF PLANS
i. Purpose or Mission: The mission or purpose identifies the basic function or task of
an enterprise. Every organization has or should have a purpose so that its working
becomes meaningful. The purpose or mission is assigned to every organization by the
society. The purpose of a business is to produce and distribute goods or services, the
purpose of public works department is to construct and maintain roads, the purpose of
courts is to interpret and apply laws and so on. The purpose is a standing plan in a
business organization which defines its basic purpose in the light of which other actions
are designed.
ii. Objectives : Objectives or goals are the ends towards which every activity is aimed-
they are the results to be achieved. Objectives are a prerequisite for planning. No
planning is possible without setting up of objectives. While enterprise objectives are the
basic plan of the firm, a department may also have its own objectives. Though
departmental objectives will contribute to the attainment of enterprise objectives but the
two sets of goals may entirely be different. For example, the objective of the enterprise
may be to earn a certain amount of profit, while selling its products.
Enterprise objectives influence the management philosophy and practice. Objectives have
greater influence on the working of an organization. All other types of plans such as
policies, strategies, procedures, rules, budgets etc. assist in the attainment of stated
enterprise objectives in an economical and efficient manner. Objectives are related to the
future and are an essential part of the planning process.
iii. Policies: Policies are general statements or understandings which provide guidance in
decision-making to various managers. These are standing plans providing guidance to
management in the conduct of managerial operations. Policies define boundaries within
which decisions can be made and decisions are directed towards the achievement of
objectives. Policies also help in deciding issues before they become problems and making
it unnecessary to analyze the same situation every time it comes up. Managers can
delegate authority within the given parameters and can still retain control over what their
subordinates do. In the words of Koontz and Weihrich. “Policy is a means of encouraging
discretion and initiative, but within limits.”

[44]
iv. Strategies: The word ‘strategy’ has long been used in the content of military action
plans. It was used to state the grand plans made in the light of what it is believed an
adversely might or might not do. Managers now use strategies in the broader areas of
business operations. A strategy is a comprehensive and integrated plan designed to assure
that business objectives are accomplished. The long term objectives of the enterprise are
determined and requisite resources are allocated and deployed to achieve the desired
results. The purpose of strategies is to determine a picture of the kind of enterprise that is
envisaged. Strategies do not attempt to outline the programmes for achieving objectives
but they furnish a framework for guiding thinking and action.
v. Procedures: Procedures are details of action or the guidelines for the achievement of
business objectives. Procedures give details of how things are to be done. No room is left
for judgment. These should help in implementation of policies. Procedures also
determine the policy of responsibility and accountability. According to Terry, “A
procedure is a series of related tasks that make up the chronological sequence and the
established way of performing the work to be accomplished.”
Procedures should be distinguished from policies. A procedure is a guide to action
whereas a policy is a guide to thinking. Policies are guidelines for taking decisions and
procedures consist of various methods to accomplish each phase of work. Policies offer
scope for interpretation in order to see that they fit in a particular situation whereas
procedures are tailor-made and do not offer any scope for interpretation.
vi. Rules: A rule is a plan that lays down a required course of action with regard to a
situation. A rule is in the nature of a decision made by management regarding what is to
be done and what is not to be done in a particular situation. A rule is definite and rigid
and allows no deviation or discretion to the subordinates. Like procedures, rules do not
prescribe a chronological sequence of steps to be taken to achieve a given objective. A
rule may or may not be a part of the procedure. A rule such as ‘No smoking in the
factory’ will not form a part of the procedure. On the other, a rule to make payment
within 21 days will be the part of a procedure.
“Rules prescribe the limits of acceptable behaviour of the members of the organization.
Rules will enable managers to predict the behaviour of their subordinates, how will they
act in a given situation. Rules channel the behaviour of workers in a desired direction.”

[45]
vii. Programmes: A programme is a sequence of activities designed to implement policies
and accomplish objectives. It is devised to meet a particular situation. Programme may be
taken as a combination of policies, procedures, rules, budgets, task assignments, etc.
developed for the specific purpose of carrying out a particular course of action. Separate
programmes are prepared for accomplishing different tasks. The same programme may
not be used for achieving other goals. It is a single use plan laid down for new and non-
repetitive activities.
In the words of Koontz and O’Donnell, “Programmes are complexes of goals, policies,
procedures, rules, task assignment, steps to be taken, resources to be employed and other
elements necessary to carry out a given course of action.” To quote George Terry, “A
programme can be defined as a comprehensive plan that includes future use of different
resources in an integrated pattern and establishes a sequence of required actions and time
schedules for each in order to achieve the standard objectives.”
viii. Budgets: A budget is the monetary or/and quantitative expression of business plans and
policies to be pursued in the future period of time. The term budgeting is used for
preparing budgets and other procedures for planning, co-ordination and control of
business enterprise.
According to Institute of Cost and Works Accountants, London, “A budget is a financial
statement and /or quantitative statement prepared prior to a defined period of time, of the
policy to be pursued during that period for the purpose of attaining a given objective.” In
the words of George R. Terry, “A budget is an estimate of future needs, arranged
according to an orderly bases, covering some or all of the activities of an enterprise for a
definite period of time.” In the words of Crown and Howard a budget has been defined
as, “A pre-determined statement of management policy during a given period which
provides a standard for comparison with the results actually achieved.”

[46]
COMPANY ANALYSIS
McDonald’s Corporation adjusts its corporate mission and vision statements to respond to
changes in the global food service industry environment. As the biggest fast food restaurant
chain in the world, the company considers its corporate vision and mission statements as
essential policy and strategic management tools to ensure continuous growth. A firm’s corporate
mission statement sets the purpose and related activities of the business. In this case,
McDonald’s mission statement establishes the company as an influential favorite food service
destination. In contrast, a firm’s corporate vision statement sets the long-term aims of the
business. McDonald’s vision statement pushes the company to achieve growth and improvement.
Considering major international competitors like Burger King, Wendy’s, Subway, Starbucks, and
Dunkin’ Donuts, as well as smaller regional or local firms, it is essential that McDonald’s
develop competencies to strategically manage the effects of competition and to achieve business
goals based on the company’s mission and vision.
 McDonald’s Corporate Mission Statement
McDonald’s corporate mission is “to be our customers’ favorite place and way to eat and
drink.” This mission statement highlights the significance of customers as the business focus,
while maintaining the company as a major influence on their food and beverage purchase
decisions. McDonald’s corporate mission statement has the following main components:
1. Customers’ favorite place to eat and drink
2. Customers’ favorite way to eat and drink
In its mission statement, McDonald’s Corporation emphasizes becoming the favorite of target
customers. Based on this aspect, the company considers customers’ preferences as a major
determinant of its business. For example, to become such a favorite place, McDonald’s develops
its menu and recipes to satisfy consumers’ preferences with regard to fast food products like
burgers and fries. The components of the corporate mission statement focuses on two points:
becoming the favorite place and becoming the favorite way. As a fast food service business, the
company develops restaurant designs and layouts to optimize productivity and customer
experience. This factor, along with menu development, helps make the company’s restaurants
and franchised locations the favorite place to eat and drink. The “favorite way” component of the
corporate mission statement shows that the company aims to influence how people eat and drink.
This point presents challenges to the business in terms of effectively influencing people’s
behavior. McDonald’s marketing mix or 4P helps in reaching this corporate mission, especially
by promoting the company, its brand, and its products, to influence consumers.
 McDonald’s Corporate Vision Statement

[47]
McDonald’s corporate vision is “to move with velocity to drive profitable growth and become
an even better McDonald’s serving more customers delicious food each day around the
world.” This statement is included in the growth plan that the company introduced in 2017. The
company’s previous vision statement was “Our overall vision is for McDonald’s to become a
modern, progressive burger company delivering a contemporary customer experience.” The
following are the main components of the company’s new corporate vision statement:
1. Move with velocity to drive profitable growth
2. Become an even better McDonald’s
3. Serve more customers delicious food each day around the world
The first and third components of McDonald’s vision statement show that the business aims to
grow and expand its operations. This aim entails opening more locations and improving
operational efficiency to improve profit margins. McDonald’s generic competitive strategy and
intensive growth strategies support the growth and expansion objective embodied in this
corporate vision statement. The second component focuses on improving the business. The
company does not specify the type of improvement stated in the corporate vision. However, it is
realistic that McDonald’s aims to implement comprehensive improvements of its business to
include various aspects, such as product development, marketing, franchising, and human
resource development. In following this corporate vision statement, the company expects growth
and an overall enhancement of the various areas of the fast food restaurant chain business.
McDonald’s vision statement is strong in satisfying the criteria for developing ideal vision
statements. For example, the company’s corporate vision is clear and concise. It is also focused
on the future. Such focus makes the statement stable in terms of suitability for future business
situations. Also, the emphasis on becoming an even better McDonald’s makes the corporate
vision statement challenging and inspiring. These characteristics make the company’s corporate
vision satisfactory. However, a suitable improvement would be to include information about how
the company can make itself better.
 Goals and Objectives

[48]
The main aim and objective of McDonald's is to serve quality food that consumers can rely
on. McDonald's strives to continually improve the customer experience.
McDonald's focuses on employees, franchisees and suppliers working together. They strive to
provide quality food in a clean and welcoming environment, while McDonald's global initiative
is to provide an exceptional customer experience. Owners and operators, suppliers and
employees are the areas of interest that McDonald's strives to balance. According to
aboutMcDonalds.com, their "Plan To Win" strategy focuses on people, products, place, price and
promotion, and they are dedicated to always improving their business operations.
McDonald's offers opportunities in local communities by offering employment and contributing
to charitable organizations. The McDonald's employee experience fosters engagement, safety
and respect. The company strives to help employees reach their full potential. The company's
main charitable organization is The Ronald McDonald House, which assists families with
children undergoing medical treatment. The first Ronald McDonald House opened in 1974 in
Philadelphia, Pennsylvania.

[49]
 Strategic Model of McDonald’s
The above figure is representing the strategic model of McDonald’s Organization. The first step
of the strategic management of McDonald’s is defining the Mission and policies of the
organization. After defining the mission of the organization, McDonald’s uses the McKinsey
matrix and PLC concept to define the current situation of the organization. Then it uses the
analysis of the internal and external environment of the organization (Vignali, 2001). These
factors help the organization to take the clear view of the organization and create the base for the
strategy of the organization. SWOT analysis of the organization provides the strength,
weaknesses, opportunities present in the current market (Han, 2008). Then the objectives for the
strategy are being defined by the organization. Fundamental strategies are used to define the
current objectives and the effectiveness of the objectives created for marketing tactics. Finally,
the implementation and evaluation of the whole campaign is performed. Thus, McDonald’s uses
the above model for strategic management (Schröder & McEachem, 2005).

[50]
CONCLUSION
According to the survey that I conducted for the employees and the customers of McDonald’s
and the interview with the manager, it can be concluded that the mission statement, vision
statement, goals & objectives and the strategic model devised by McDonald’s is devised
according to the current market scenario but there are various changes that can be made in the
strategic model to enhance the performance of the organization in the market. Also the 14
principles propounded by Henri Fayol regarding management are mostly applicable in
McDonald’s.
McDonald’s follows Division of work, Authority and Responsibility, Equity, Discipline,
Remuneration, Subordination of Individual Interest to General Interest, Unity of
Command, Unity of Direction and Espirit de Corps. It particularly follows “Initiative
Principle” and does not follow Scalar Chain, Centralization & Decentralisation and
Stability of Tenure principle.
According to me, McDonald’s become more stringent towards the application of these principles
in its general administration because it has been rightly said-“Management is the life giving
element of every business, without it, the resources of production remain resources and
shall never become production.”

[51]
REFERENCE
 https://mgtdiary.blogspot.com/2012/08/principle-authority-and-
responsibility.html
 https://www.mcdonaldsindia.com/
 https://www.toolshero.com/management/14-principles-of-management
 https://www.managementstudyguide.com/management_principles.htm
 https://prezi.com/6sk4-72vb5kk/mcdonalds-strategic-management-plan/

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