The Challenges Facing McDonalds
Discuss about the Contemporary Issues in Management for McDonalds.
Today, every company makes several efforts to interact with maximum population all over the world. The companies are going through different innovative practices that have altered the living styles of people. The firms require making changes in the systems and processes with the consideration of changes in environment and preferences and demands of consumers. Changes in environment and customer preferences are the major threats for a firm to achieve growth in present and success in future. The given case study states that McDonalds is facing some problems, as there is change in customer demands and environment. For managing the above-mentioned issues, company is attempting to adopt various approaches and making changes in its systems and policies.
There are some risks and opportunities for McDonalds, which are included in the below report. These risks and opportunities are associated with the innovative practices and process of change at organization. Furthermore, it includes many driving forces for the making changes at McDonalds. Under change implementation process, there may be two situations, i.e. change acceptance or resistance by the employees. The report suggests some specific skills and abilities, which should be employed by change agents and managers to maintain the innovative business environment. In addition, it includes some approaches and principles of CSR protocols and project management that can be processed by the case study organization to improve its processes and systems.
McDonalds is an American restaurant chain, which offers hamburgers and other fast food products. Founded in 1940 by Maurice and Richard McDonalds, the company is now known as one of the biggest fast food outlets in the world. Currently, McDonalds is the largest food chain that is catering more than 70 million people regularly in over 100 countries. The major food products of the organization are, such as; burgers, soft drinks, milkshakes, French fries, chicken etc. As of 2016, it owns around 36900 outlets, where it has employed more than 1.5 million employees, who are working for the franchises of McDonalds. At the end of 2016, the revenues of company are US$24.622 billion, which are generated from royalties, rent, fees paid by franchises and sales, which are produced by its fast food outlets (McDonalds, 2010). Under its promotion process, the organization is going through various advertising and promotional activities, which assist it in attracting maximum customers towards its food products, for example McDonalds is providing some specific food products and combo-pack offers.
Risks and Opportunities Associated with Change
This is true that changes in the environment can be either a challenge or opportunity for the company and its employees. The organization should be continuously aware about not only the internal factors but also external factors, which are impacting its business operations and growth. If an organization implements changes in its systems, then there will always be some associated risks and opportunities. The firm may confront some conflicts in the ways of changes before and after implementation process. It can adopt the changes and innovative practices for carrying growth in its revenues and profits (Armstrong & Taylor, 2014). These conflicts can cause issues to the organization, so it needs to make efforts to resolve these issues to overcome the barriers in adopting new organizational structure and management process.
The given case study states that the Board of Directors at McDonalds is making changes and adopting some innovative practices to handle the changes in the environment and demands and preferences of customers. The case includes that preferences and taste of the people are altering for fast food because they are becoming more health conscious and prefer to eat quality and healthy food (Barclay & Osei-Bryson, 2015). Due to this, the customers are switching to the competitors, who are able to serve their demands and these players are covering a significant market share over McDonalds. To deal with these changes, the company is planning to make changes and executing innovations in organizational processes. These new practices may cause both risks and opportunities for McDonalds, which are given below;
As per the given case study, McDonalds is making changes in its existing processes and operations (Bartunek, 2014). Before change implementation, it needs to take the opinions and consent of its external and internal stakeholders, like; shareholders, employees, customers, suppliers etc. If it will not involve them in the process, it can cause risks and challenges for McDonalds. The organization will face the risks associated to change resistance from stakeholders as they will not accept the changes easily. When McDonalds will implement the changes, there will be two kinds of employees, i.e. employees will accept the changes and others will not accept and agree with the executed changes. This type of employees would not accept new innovation and changes in organizational and management structure. This situation may worsen the change implementation process in the company (Bhasin, 2016). In addition, there may be a situation that staff will not understand the reason behind changes and they may not trust the senior management that is actively engaged in change implementation process.
Driving Forces for Change at McDonalds
Moreover, there may be a risk in getting an appropriate staff for bringing change in the processes and systems that will be responsible for making required changes in allied divisions. Along with this, the company may confront the risk related to strategic implementation of change that can be daunting for entire team of McDonalds Management. Operational interference is one of the major challenges, under which its existing business operations and activities will be influenced by the change adoption. Apart from these risks, another risk is that the new systems and processes will not work in the benefits of the organization and take it to the worst situation than prior (Beketi, Epstein & Yuthas, 2008).
Along with these risks and opportunities, this organization may have several opportunities by implementation of innovative practices and changes in its business operations. For this process, the company needs to develop an advertising and marketing plan, which will assist the organization in establishing its brand image and reputation among people and their society. It will help McDonalds in launching this new segment of healthy and quality food items that is primary reason behind its innovative practices (Benn, Dunphy & Griffiths, 2014). It will have the opportunity to diversify its products in dietary and healthy food division. Under this new section, it will produce the products by adopting a process, which will focus on the people, who are dealing with different health issues, such as; obesity, stomach problems in youth and make them aware about healthy intakes.
Implementation of change process will enable McDonalds to advertise its fast food and new healthy products, which are cooked with low fat and healthier ingredients for entire population. This can assist the firm in establishing string brand image among its customers and making them aware about its healthier food products than currently offering fast food. In addition, it will include introduction of healthy drinks and fruit shakes with breakfast (Cummings & Worley, 2014). These products will be sold at all the stores of McDonalds. Furthermore, these innovations and changes will offer a major opportunity to the organization to get a maximum customer base and considerable market share in the fast food industry. By these changes, McDonalds will be able to introduce new franchises of food worldwide (Dunlap & Brulle, 2015).
Adopting new business model and managerial techniques will assist McDonalds in managing above-written opportunities and challenges. This new business model o organization will include various innovative processes and practices. Under this process, the company can implement the innovation by processing two types of factors, one is innovation on the basis of technology and another is innovation on the basis of demand (Godsmark, Garvey & Dismore, 2011). The major innovations at McDonalds will be executed by understanding the demand based method than technology based method. To drive the changes at organization, the company needs to go under a research and development process, which will be implemented by the organization and make emphasis on managing the research and development procedure.
Managing Change and Risks at McDonalds
Managerial techniques are the techniques, which are used to motivate the employees and establish productive workplace. At McDonalds, these managerial techniques will assist the company in implementing innovative practices and creating balance between opportunities and risks, related to change process. In addition to R&D, it can combine the knowledge and work, which will assist in introducing new products and services and execute new systems in an effective manner (Jaulus, 2017). To overcome the employee change resistance, the top management will make the employees engaged in change process and establish a training program. This training program will enable the employees and staff to comprehend these innovative practices and new progressions in organizational environment. In this way, these managerial techniques and model will help the entity in the management of related risks.
When an organization plans to implement the change in its processes and systems, there will always be some forces, which drive these changes. These driving forces are the major factors behind change implementation process at McDonalds. Increasing social and cultural issues and altering attitudes and lifestyles are most powerful forces, which are driving changes at this organization (Jones & George, 2015). The major issue is that the customers are becoming more conscious towards their health; it is working as a major force to the need for change. There are some issues because of changes in the external environment and are faced by McDonalds. It is one of the well-established fast food restaurants and it is usually regarded as unhealthy food and increasing fat and obesity.
In addition to these forces, competition is one of the major factors that direct the firm to implement new and innovative practices in the organization (Kerzner, 2013). McDonalds has various competitors, who have already introduced the healthier food and product category of low fat and healthy food. These competitors are meeting with the demands and needs of their potential customers. Thus, the demographic and market trends are the major reasons, which are forcing the organization to implement the change at McDonalds.
In change implementation process, this company may face different kinds of responses from its employees (Kotler, et al, 2016). At McDonalds, it is very important to consider the responses from employees. The management team at McDonalds will experience that some of its employees will accept the changes and they will support the management in the implementation of this healthy food segment.
Apart from these positive responses, McDonalds may face some adverse responses from its people because the change execution process can be resisted by them. These people will fight against these changes as they have insecurity and fear that their company is going in wrong direction and against them. At McDonalds, it may be possible that organizational culture and structure will not aid the innovation. In addition, it may have the employees, who will not react towards the change and they will stay neutral (Leach, 2014).
In change implementation process, change agents play an important role, as they transform the business processes by enhancing its current practices. The change agents should possess some skills and abilities to maintain competitive environment. McDonalds is executing changes in its operations, so that it should appoint the change agents, who have some specific and required skills (Mariana, Daniela & Nadina, 2013). There are some specific skills and abilities, which should be possessed by change agents at McDonalds, like; skills to develop interpersonal communication, team skills and effective communication skills.
These change managers must be able to establish an effective communication among the team, which is created for change implementation process. These people should be able to manage the state of resistance to change. Moreover, change agents should have skills to work under pressure and operate the change process with instability and uncertainty. Employee engagement plays a significant role in change implementation process, so these change managers should employ the abilities to make the employees engaged (McKay, Kuntz & Näswall, 2013). It will enhance their motivation and take them to higher morale. According to given case study, McDonalds is launching a new product category of dietary and healthy food products, so these people should have the skills to create a well-organized and well-disciplined procedure. It is introducing the products to become healthy, so change managers can explain the employees by stating their instances.
For successfully adoption of innovation and changes at this organization, it needs to modify or improve its organizational structure that will be effective for McDonalds. New organizational structure of company will help it in launching new products and services. When McDonalds will implement this new organizational structure, it will manage the environment by considering the performance levels and status. It will be reformed by looking at different issues, which are faced by this company, i.e. changes in the consumer preferences and environment. It will launch new product line of healthy foods for maintaining its performance, so that it can satisfy the needs and demands of customers (MacKinnon & Fiala, 2014). Under this process, McDonalds will process a divisional structure. Under this organizational structure, one specific department will manage a specific area of business operations. The major goal of this organizational structure is to support the independence and flexibility of the company. This structure will be divided in different levels, like; top management, functional based and performance based teams. In the first level of management, CEO will lead all the processes and activities for decision making related to new segment. CEO will give the orders to middle and lower level managers and other team members in change process.
The second level of organizational structure is performance based department, under which McDonalds will utilize the performance as a basis for new divisions in its organizational structure. At performance based level, it will reflect on the development of company in current business environment (Memon, Shah & Shah, 2017). Under functional based groups, the organization will create the teams as per their tasks and responsibilities, like; operations, supply chain, marketing, human resources etc. The company will consider some specific factors in the process of reforming its organizational structure. Some of these factors are given below;
At McDonalds, its culture improves learning for determining the effectiveness of business operations. Cultural factors of a company include values and traditions that may impact employee behavior. The consistent improvement of cultural factors enhances efficiency of company in executing its culture for achieving the abilities of human resources. These factors will have a vital role for this organization and implementation of change process (Mills, Dye & Mills, 2008).
In change implementation process, it is very important to emphasize on the process structure and process flow. Under this organizational structure, the commands and orders are running in a hierarchy. Senior management of the organization will give the orders for lower level managers. All the human resources in the company will comply with all the regulations and policies, ordered by senior managers at McDonalds. If it will develop the structural factors effectively, then the organizational process will work in an effective manner. It will reduce the situation of conflicts in the workplace (New, 2015).
The development and success of this organization relies on innovative techniques and other innovative applications. Under this process, McDonalds will conduct a research and development process, which will assist it in understanding the trends and demands of customers. When the company will launch its healthy food segment, then it will execute a communication plan for promotion and advertising of products. This marketing communication plan will assist the organization in promoting the healthy food to health concerned population. It can advertise its healthy products, including healthy breakfast, shakes, drinks to target audience. By emphasizing on advertising efforts, it will increase its sales and revenues via mobile devices and online media. Technology factors play an important role for approaching a large segment of people (Shen & Xiao, 2014).
Human resources play a significant role in the case of restaurant chain, so it is important to manage the human resources effectively. In the implementation of innovative practices and changes at McDonalds, it will conduct a training program for the staff, which will help them in understanding development of new products and product segment. The people at organization can be managed by holding meetings and they will feel motivated and engaged. It will make them understand the reasons and needs for implementing the change. By this, the employees will be able to know why their firm is planning to introduce the healthy food segment (Sharif, & Scandura, 2014).
Thus, it can be stated that the above-mentioned factors can assist McDonalds in operating its business operations by reforming its organizational structure. These factors will help the organization in stay innovative and competitive in the business environment. Divisional structure will enable the McDonalds in implementing innovation and changes in the systems.
For implementing the changes and innovation successfully, McDonalds requires considering different principles of project management. Employing these principles of project management will assist in balancing the conflicts of improving innovations but evaluating and controlling the risks and costs that production and manufacturing process for new and innovative practices involved in cannot be real in context of marketability and commercially as well. There are different principles of project management, which McDonalds can use for initiating and implementing the innovation in its business operations. To apply change and innovation, McDonalds may pursue the below-mentioned principles of project management. It will assist the organization in completing the process by managing the risks and associated costs (Shirey, 2013).
For implementing changes and innovations at McDonalds, the organization will begin this process by setting the vision in their mind. At McDonalds, management team will create mission and vision for launching its new food segment for the people, who are very concerned about their health. The objective behind this project will be clear and obvious to all the people of organization. This principle of project management will help the company and its team to attain forecasted outcomes through these innovative practices.
As McDonalds is introducing a new initiative to deal with the issues, so there will be requirement that all the employees understand their role in the change process. This is an important principle of project management that defines that every employee should know about for each person is accountable. It will assist the company in engaging the staff in the process of change and it will have the ability to avoid the change resistance situation (Thornton, et al, 2013). At the organization, all the departments should have clear understanding about their roles and responsibilities under the process of innovation. By this, the company will be able to handle the situations of risks and challenges. It will decrease the situation of conflicts among organizational people, which are related to their jobs and roles in innovation and change project.
Following this principle is very essential in any project of organization. This project management principle consists of creating an appropriate strategy to handle the issues that are faced by McDonalds and for which it is trying to resolve. This business corporation is confronting the issues associated with the changes in customer preferences and environment. In addition, there is a competitive pressure also because its competitors are offering the products according to needs and expectations of customers, i.e. healthy foods. During this implementation process, the company can adopt some aspects of quality management to manage the given issues. By doing this, it will be able to control and manage the associated costs (Writer, 2015). This major principle of project management will recognize all the related aspects of innovation project, for example; who will execute different activities and processes, why, when and how.
For a company, it is significant that it thinks about its primary products that they are planning to provide to its target audiences. Under this process, it is very important to look at the current market trends and changes in customers’ tastes. Before initiating the project, McDonalds needs to emphasize on the needs for introducing this new food segment with healthy and quality food products. Determining the needs and trends will help the company in knowing about the requirements of changes in its current systems (McDonalds, 2012). This principle will make them able to create more realistic and attainable objectives. Furthermore, it will help the company in the management of innovative processes easily. In the given case, the primary emphasis of this organization is on launching a product line with healthy and dietary food products. Complying with this principle of project management will assist the firm in gaining competitive advantage over its competitors in the industry.
In the project management process, organization arrangement principle plays an important role. For determining the success and growth of change implementation, everything, which will impact should be taken into consideration. To achieve this, there will be a need of continuous and effective communication by conducting group meetings, via sending e-mails and messages and training program.
At McDonalds, this training plan will consist of a message for every level of management. This should be applied through McDonalds in any other case it could confront the problem associated with the situation of conflicts (Writer, 2015). Maximum of the stakeholders will not be involved and inquisitive about both change and innovation implementation as well. In this situation, it will be better for this entity to pursue this principle of project management for handling the advertising and marketability of the given firm.
Once the company will implement all the activities of innovation project, then it will work on the development and success of its products and services. Under the process of measurement and evaluation, McDonalds will develop some cards that will include some scores (Xu, 2014). This principle is a good way to motivate the people and engage them. Under this process, the company should execute the performance appraisal system. After evaluating the processes, the company should reward the best employees.
Using these project management principles will support the company in implementing change and innovative practices by managing the costs and different risks, which are related to the company’s processes.
Nowadays, Corporate Social Responsibility is a significant and well-known phenomenon that can be pursued by any organization to entice the people. So, the organizations are actively engaged in utilizing CSR practices to attract the people towards organizational products. By considering its issues of changes in customer demands and environmental changes, McDonalds should go through some CSR protocols to improve its existing systems.
In its CSR protocols, the primary emphasis of this organization will be on the management of human resources and internal and external stakeholders. McDonalds will treat their customers as the reason behind their existence and provide them better quality services and products (McDonalds, 2012). By looking at the changing preferences and demands of people, it will prepare the food by including dietary and healthy ingredients. Moreover, it will make investment in the eco-friendly initiatives and campaigns. With this, it will invest money for the development of society, community and environment. It is planning to work with supplier, who are offering safe and ethically managed products worldwide. When McDonalds will introduce this new segment, it will be known as responsible company and offer them responsible food products. Employing these CSR protocols will help in setting better image in the eyes of population in the country. It will enhance its customer base and then sales of organization (Xu, 2014).
Thus, it can be concluded that McDonalds is facing the problems, which are linked with the changes in external environment and customer preferences. The above given report includes different concepts of management for McDonalds, so that it can handle the above given issues. To manage these issues, McDonalds is adopting some changes in processes and innovation to overcome the barriers. In this process, company is having some opportunities and challenges that are related to the implementation of change and innovative processes. Furthermore, the company is developing an expert team of change managers, who will employ some specific abilities and skills. These people will help the corporation in change implementation effectively and successfully. Moreover, the company will modify its organization structure in this change process. For managing and controlling the costs of innovation, the company will adopt some principles of project management. In the last section of report, there is the discussion about the CSR protocols that will support McDonalds in improving the existing process and increasing its brand image among a large population.
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