Assignment: (individual research essay)

Module: Managing Organisational Transformation

Module leader: Dr Cecile T Lowe

Student ID: 21049852

E-mail Address: 21049852@[Link]

Program me: MIBM

1
 Table of contents

Introduction and back ground of McDonald.............................................. 3

Vision statement of McDonald’s...................................................................4

SWOT analysis of McDonald’s……………………………………………………………….4.5

PESTEL analysis of McDonald’s……………………………………………………………….6

Analysis five Forces of McDonald’s.............................................................7.8

Organizational changes...............................................................................9

Stages for planned changes........................................................................10

Culture……………………………………………………………………………………………………..11

TRANSFORMATIONAL LEADERSHIP..............................................................12

Change champions.........................................................................................13.14

Conclusion…………………………………………………………………………………………………..15

Bibliography…………………………………………………………………………………………………16

2
 “Analysis of Change management of McDonald’s”

2. AIMS AND OBJECTIVES

The aims and objective has to understand, how strategies were planned, implemented,
performed and restructured to comply with organisational objectives.

The Focus on organisational changes that have occurred in Mc-Donald’s, in the last 5 years
in terms of, structure, strategic approach, leadership, culture, competence of effectiveness
change agent.

Methodology of research of McDonald’s:

In the data collection used the secondary approach like a different academic sources, text
book, journals, electronic journals, and website to collect the information. These sources the
depth information about the other writer works. Furthermore the research focussed on the
organization website links and journals.

Background of McDonalds:

The business began in 1940, with a restaurant opened by siblings Dick and Mac McDonald in
San Bernardino, California. Their introduction of the "Speedee Service System" in 1948
established the principles of the modern fast-food restaurant. The original mascot of
McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name
was "Speedee." Speedee was eventually replaced with Ronald McDonald in 1963.

The corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in
Des Plaines, Illinois on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later
purchased the McDonald brothers' equity in the company and led its worldwide expansion
and the company became listed on the public stock markets in 1965 [7]. Kroc was also noted
for aggressive business practices, compelling the McDonald's brothers to leave the fast food
industry. The McDonald's brothers and Kroc feuded over control of the business, as
documented in both Kroc's autobiography and in the McDonald brother’s autobiography.
The site of the McDonald brothers' original restaurant is now a monument.

With the expansion and changes of McDonald's into many international markets, the
company has become a symbol of globalization and the spread of the American way of life.
Its prominence has also made it a frequent topic of public debates about obesity, corporate
ethics and consumer responsibility.

3
McDonald’s is the world's largest chain of fast food restaurants, serving nearly 54 million
customers daily. McDonald’s, the world's leading food service retailer, has nearly 29,000
restaurants in 121 countries, serving 54million customers a day. The McDonald's System
employs more than 1.5 million individuals around the world.

The McDonald’s believe long-term, useful research on change should involve the continuous
interplay between ideas about the context of new strategic changes for organization growth
and new development. For this aspect of the professional facilitation of planned change
suggests several underlying historical reasons for the attention paid to facilitating
organizational change. And the emergence of socio technical system, McDonalds bring
valuable scheme for thinking about new changes to compete the market and became a top
brand leader in the world. [Link]
qid=20061127061917AAo0yoo and Google McDonald’s search

Vision statement of McDonald’s:

"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 we make
every customer in every restaurant smile." [Link]
statements/[Link]

McDonalds mission statement:

"Be our customers' favourite place and way to eat inspired people who delight each
customer with unmatched quality, service, cleanliness and value every time. We invite you
to be the part of this winning team and give yourself an opportunity to grow with the family
of people striving to create smiles on the faces of millions of people every day.”

MCDONALD’S VALUES and system

McDonald’s value to provide good quality products and services to customer and family
environment when customer enjoys their meal in restaurant. The value of good product and
service make every customer relax and happy.

All aspects of fast food business with honesty and integrity, Commitment has to exceed the
customer expectation in every restaurant and every time.

McDonald’s business model structure depicted foundations among these three groups
owner, operators, suppliers and company employees.

SWOT analysis of McDonald’s:

Strength:

McDonald’s detailed market research to create right changes in organization.

4
“McDonald’s product value is also its greatest strengths. Customers know what to expect
when they walk into a McDonalds store. It gives great emphasis to human resources by
satisfying both the customer and the employees. Next is the innovation aspect wherein new
products line up to catch up with the new trends and tastes of the people. Its diversity into
other new business ventures can also be considered as its strengths.”

Provide a rigorous food quality and assurance of standards.

Strong brand image, financial position and good reputation in market. High quality, low
prices, nutrition information and provide a high skill specialized training for manager in
Hamburger University.

Weakness

Fat and unhealthy food image in market

High employee’s turnover, low width and depth of products

McDonald’s has been around for a long time.

Opportunities:

Expansion market into china and other Asia market

Joint ventures with super and retailer market

The new health fitness change approach, playing place for children attract customer.

Respond to social changes by innovation within healthier lifestyle foods. Its move into hot
baguettes’ and healthier snacks has supported to new opportunity.

Low product cost menu and response in a quick and friendly way.

Threat:

High competition with KFC and anti American sentiments in international level

The Global recession and fluctuation of foreign currency has a high threat for McDonald’s.
(Roy McLennan, 1988)

[Link]

5
PESTEL analysis of McDonald’s

Political & Legal:

Political ideology bring new requirement of the behavior s. The international operations of
McDonald’s are highly influenced by the individual government policy, and law enforced by
individual government rules and regulations.

Terrorism activity affects the business operations, and political stability.

Any changes in regulations, the imposition of additional regulations, like change laws of
food packing, or environmental issue could have an adverse impact on McDonald’s financial
condition and result of operations. (Barbara senior, 2002)

Economic factor:

McDonald’s has the tendency to compete the competitor, where the economy of respective
state hit by the rise of oil and food has led high inflation and changes the exchange rate. The
inflation and currency instability determines the purchasing power of the customers in that
country. (Barbara senior, 2002)

Social factor:

The government polices laws and action affect organization operating result by requiring a
safe, quality and recycling of products.

The social attitudes of new life style affect the company financial position and sales forecast

Like avoid junkie food, Halal food (for Muslim) and outdoor eating, for this McDonald’s
change their social attitude for growth.

Changes in family structure where female stay and eat in home to look after children effect
the McDonald’s sales.

The McDonald’s bring a social change in 2004 to provide a family diet cautions instruction
for customer satisfaction and for their health factor. (Barbara senior, 2002)

Technological factors:

The short products life McDonalds upgrade new technology in 2004, using new production
technology and techniques to prepare fast and nice foods. Continual improvement in
production performance and new design require the research to know the customer taste.

McDonald’s change machine technology in their store, this new change increase the level of
production, speed and increase the level of quality of standard.

Environmental factors:

6
McDonalds are using worldwide recycling of their products to reduce the environmental
pollution.

Using local manufacture and foreign supplies to produce a quality packing and reduced the
harmful and toxic substance materials as McDonald’s aims. . (Barbara senior, 2002)
[Link]

Five Forces Analysis of McDonald’s

Five forces competitive model framework porters

Potential

Entrants

Bargaining power of suppliers bargaining power

of buyers

Suppliers Food industry Buyers

competitor
rivalry

Threat of substitute product or

Substitutes
Services

Adapted from: Johnson et al. (2008, p. 60)

7
Competition
Fast- food restaurant industry is highly competitive industry throughout the world. There
are thousands of fast-food industry that they are fighting with each other to catch customer
and improve their sale. Science its establishment in 1940 the McDonald’s has an excellent
service in fast-food sector. The McDonald’s to stay in competition start new change within
organization start new Mc café and breakfast within the organization to improve the sale
and meet the customer expectation.

Potential entry:

It is hard to enter in the fast-food restaurant business, and establish a brand name in the
market. McDonald’s do make it more effort to enter in food restaurant market and gain a
potential market place. McDonald’s faced a price competition from existing chain of
restaurants. But McDonald’s bring changes in fast food market and made a great potential
in fast-food sector.

Substitutes:

There are many substitutes in fast-food industry. And more option available for customer to
choose the substitute products instead of McDonald’s products. The curry, chine’s food, etc,
restaurant effecting McDonald’s products and services, they are using the other restaurant
meals which effecting the sales of McDonald’s products.

Power of seller
Relatively strength of seller is low in fast-food industry, because the recipe of products is not
commonly available in the market. Therefore the seller received high profits for these
resources.

Power of buyer:
Power of buyer within the fast food industry is very low because the ingredient of products
is not readily available. Therefore the industry allowed buyers to have a high level of
bargaining power. Also the high competition is switching them towards other curry
restaurants. (Johnson et al. 2008)

Strategic approach:

“Strategic management is concerned with determining the future direction of an

organization and implementing decisions aimed at achieving the organization objectives.”
(Kevin Moore, 1994)

8
Miles & Snow (1984)

The McDonald’s initiate a management system and strategy that could maintain and analyze
new the defender to improve the market research and bring new technology in production,
structure and skill to adopt new changes in internal and external environment. The
McDonald’s bring changes in products line; and improve the quality and marketing
communication. The McDonald’s in defender analyze to recruit and provide the high
training and development to improve the effectiveness of leader and employees and bring
new changes in training to develop the employee skill building programs, to improve the
customer services and quality.

The integrated communication brings new health conscious strategy to attract customer,
new products promotion strategies, and cultural and environmental changes, and bring
leading changes to become the leader of organization. (Johan story, 1991)
[Link]
%[Link]

Organizational changes:

Change as a continuous process: That organisation transform on an ongoing basis to keep

pace with changing environment (Balugon et al (2004)

The McDonalds have continually to achieve external adaption and internal integration
through strong strategy, structure and process operation within the organization. In last five
years the McDonald’s change their strategies and system operation because they face some
operation challenges. In the McDonald’s expansion as it does the margin are dropping from
20.5% in 2004, international earnings growth falling short of 10% per year after accounting
for currency fluctuations. For this all situation the McDonald’s did some fundamental
changes in their strategies, system operation to recover the market business, and its
focussing of the quality food, more variety, and fast service for customer satisfaction and
system brings some changes to target the kid provide a plying environment within the
restaurant and diet guideline for customer to keep maintain their health.

McDonald’s thrive on incremental on improvements in process to respond to external

changes. In early in 2002 for example the company found that the company shifting the

9
demographic and consumer habits were reducing the profitability many of the large
restaurant that were the core of its business. In end of 2002 the McDonald’s average per
restaurant revenue fell from the first time ever. Although the productivity and earning
remain high the McDonald’s growth rate still slowed and the pressure of margin increased.
For this the McDonalds respond by interviewing new mid size and small restaurants
developing new franchising agreements and operating procedure appropriate to them the
strategy has to been successful. McDonald’s development of new process occurred in the
context of successful incremental change and ongoing continuous improvement of their
strategies. (Peter G W keen, 1997, Pettigrew lorna, 1994)

Stages for planned changes:

Unfreeze Change Refreeze

Lewin’s (1951) model

Unfreeze the heighten awareness of need for change, like a McDonald’s implemented the
new changes within the organization because the existing situation is not adequate for
further improvement for that purpose McDonald’s planed to uses its powerful brand to
figure out a way to grow in its own background. The new kitchen production system allows
executives to think more broadly about add high quality menu additions, and additional
focused the international market growth to add to it. And the balance in the system must
be disrupted or broken in order to permit conditions for change to develop. Even some top
management implement the training for employees to improve the quality and operation of
fast-food in restaurant to unfreeze the existing situation and develop the small kind of
restaurant has to compete the market and gain the maximum share from market.

Change:

The top management bring new changes in the specific technology system to improve the
quality and provide training to their manager’s to inspecting and certifying all the products
quality and conducted the survey about customer satisfaction and services. And brought the
new change introduced the small size of restaurant in busy area to competed the market
improve the sales in the area. ( Lewin’s, 1951)

Refreeze:

McDonald’s designed and implemented, the new way of behaving to attract the customer
for healthy food. McDonald’s were providing training to all employees, which follows the
rule and regulation of new pattern of habit of working to improve the quality of services and

10
operation. The all information were passing to top manager to judge and implement relative
stability about new changing process, procedure and behaviour of the organization like
health conscious information, healthy foods, expanding fast-food and new technology in
restaurant operations. [Link]

Culture:

“Culture consists of patterns, explicit & implicit of and for behaviour acquired & transmitted
by symbols, constituting the distinctive achievement of human groups, including their
embodiment in artefacts; the essential core of culture consists of traditional ideas and
especially their attached values; culture systems may, on the one hand, be considered as
products of action, on the other as conditioning elements of future action.” (Kluckhohn
(1951)

Johnson & Scholes & Whittington (2005)

The culture of McDonalds:

The “McDonald’s culture is informal norms and value, that foster responsive behavior to
coordinate uses forces and task. The McDonald’s educative or cultural pedagogical aspect
involves its capacity to produce and transmit knowledge, shape values, influence identity
and construct consciousness.” The McDonald’s is a subculture and dominance fast-food has
its own culture representing the system of subculture throughout the world.

Organizational structures of McDonalds are top US fast food power culture restaurant.
According to William Gould (1996) before the introduction of McDonald’s overseas, the fast
food before the McDonald’s was known, the McDonald’s is the first company who changed
the habit a eating of people of other nations. The McDonald’s around 120 countries over the
world they spread their standardization of the franchise is affecting culture, attitudes and
environment. The McDonald’s implemented friendly and local culture taste, value, local

11
employees and their regional food menus to confirm a local taste in fast-food operation in
their franchise. For example the types of product values is different in different countries,
the type of product is a symbolic to particular region, like Muslims do not eat the pork meat,
and Hindu nation do not eat the cow meat, Although like UK number of religions exist in this
country which influence the cooking and food habits in different culture manner’s. For these
different rituals the management adopts local custom of people within the organization like
provide a Halal food for Muslims, throughout the McDonald’s operation.
[Link]

TRANSFORMATIONAL LEADERSHIP

The issue of leading change links strongly to everything, management thought of as a

function that a part of an organization’s formal structure. The McDonald’s management
used best efforts that the efforts of members of the organisation are co-ordinated, directed
and guided towards the achievement of organizational goals. The leadership Change
management literature emphasizes the importance of the leader in enacting change. In
organizations where change occurs frequently, the leadership style that will produce the
best results is one that can motivate followers to identify with the leader’s vision of the
future and to sacrifice self-interests for the benefit of the organization as a whole. Known as
transformational leadership, the leader may also be charismatic and somebody whom the
workforce trusts and whom it emotionally identifies.

The transformational leader engage in a process of creative thinking to recognizing new

innovation to bring in organization for change and improvement, and creating a vision and
follow the organization goals and objective to achieved. The creative leader can change the
fundamental aspects of organization and the manner of followers, and provide a best
performance to the organizations.

When applied the new rules and regulation in the organization of continuous change, then
the leader ability to provide support using a best effort to successful the new vision of idea.
It is believed that organizations will be more receptive to transformational leadership
approaches when adaptation as opposed to efficiency is the goal. (Barbara senior, 2002)

Competence of McDonald’s changes Agent:

The change agent expertise according consists of knowledge and skill in tapping into the
enterprise’s interaction process. The McDonald’s changes agent (CEO of McDonald’s)
discover what member of it do, feel, think, and experience, the change agent develop their
ability to promote planned change, team building skill, communication skill, stimulating
motivation and commitment and break existing mindset for a new changes.

12
Change champions:

Transformational leader can successfully change how things are done in an organization by
displaying appropriate manners at each stage along the way. Here we examine the how the
Ronald (CEO OF McDonald’s) manage their leadership and bring a new changes to the
organization. He breaks the assumed relationship between fast food and poor health.
Ronald unique leadership comes from his capacity for flesh and blood leaders, his function
inspire the worker and customer through advertisement and provide a good leadership a
new appealing a healthier green image of the future. The McDonald’s transformation
Leaders may provide a vision of the future that is attractive and engaging rather than simply
disagreeing with what has been done in the past (for example, Steve Jobs’ vision of the
Apple Mac PC).

The strong leader must be a “change champion” who can assemble and motivate a group in
order to “pull” followers towards a new vision. Once the vision is developed, the
implementation of change can be done by the setting of challenging goals for employees.
There is no doubt that the Ronald bring an especial changes that save the organizational
context. And provide the standardization and efficiency, brings especial changes in health
cautions, dieting planning program, new brand image, Quick response to customer
demands, motivation for employees, for customer. And reduced the system uncertainty,
reduced political threats, Ronald commitment to values and shared leadership used for
growth of the organization succession. (Roy McLennan, 1989)
[Link]

13
Conclusion:

McDonald’s is well established, well marketed and real brand name. In fast food the
McDonald’s is large and recognized brands in the world in which itself tell about its image
and reputation. But it is fact that changes of management is not bad just need to enhance
the competitiveness and strength of an organization. Its need an effective and strong
research and evaluation to made the organization performance. If the suggest any change
suggestion for change, that the time for McDonald’s to brings changes, Because the change
system of management is very sensitive and critical if wrong decision move the organization
then might faced its biggest downturn.

The McDonald’s has work more in establishing itself in fast-food which are fast growing
business and has potential demand for fast food taste. In more work has to compete with
KFC which are well established in fast food market.

Recommendation:

McDonald’s history of innovation is still uncertain in a transferring the attitude of small

children about healthy fast food meals can be difficult. But the new marketing campaign’s
strong encourage way of effective and innovate characteristics of McDonald’s that it will be
successful.
The new approach of advertisement and innovation of new ideas about products, and
healthy fast food and health caution program will be successful.

Changes or innovation with much attention concluded a research and development through
effective exchange of ideas and experience. And more radical the revolutionary changes
from research and development and incremental change from practice.

The McDonald’s will be carefully plan for new innovation and implement the strategic and
effective tools of research, marketing, HRD, R&D, then there is greater possibility to achieve
the vision of organization. The McDonald’s the recent vision of food to provide health
conscious information, for today and for future.

14
 Bibliography

Barbara senior (2002), “Organisational change”, 2 nd edition, Prentice Hall imported by

Pearson education, page 173,”

Kevin Moore (194), “Strategic management,” 4th edition, G Press, Padstow, page 47,”

Johan story (1991), “New prospective human resource management”, printed by Thomas
business press, page 29,”

Peter G Wkeen (1997), “Process adage of management”, 4 th edition, printed by national

standard, page 128,”

Lewin’s (1995) “organizational change management” printed by prentice hall,”

Pettigrew lorna(1994) “Strategic change”, 1st edition, printed by sage, page 224-261,”

Roy McLennan (1989) “Managing organizational change” printed in America by Prentice

Hall,”

Johnson et al (2008) “Strategic management” 4th edition, printed by Prentice Hall, page 60,”

[Link]
{Accessed on 02.01.2010}

[Link] {Accessed on
02.01.2010}

[Link] {Accessed on
03.01.2010}

[Link] {Accessed on 05.01.2010}

[Link]
%[Link] {Accessed on 07.01.2010}

[Link] {Accessed on 09.01.2010}

[Link] {Accessed on
09.01.2010}

[Link] {Accessed on
16.01.2010}

15
16