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Management Control System In Hungry Jacks

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Question:

Discuss about the Management Control System in Hungry Jacks.
 
 

Answer:

Introduction

Management control system assists in gathering and utilizing information related with enterprises in order to evaluate how the company is performing and utilizing its varied resources like human and financial structure to create competitive edge among consumers (Coenders et al., 2003). Jamil and Mohamed (2013) claim management control mechanism to be widely applied by organisations as a conceptual framework that helps them to improve personnel decision-making and actions in accordance with organisational desired gaols. An enterprise in order to survive in the globalised environment must support a performance measurement system that apart from superior organisational performance ensures better stakeholder management (Ho, Huang and Wu, 2011; Daniels, 2007). The purpose of doing this assignment is to analyse how Hungry Jack’s, an Australian fast food chain, is managing its control system to improve its overall performance. In opinion of Armesh, Salarzehi and Kord (2010), in current complex business environment where activities are constantly changing with respect to government influence and external factors, firms requires implementing strategies that ensures sustainability in long-run. Therefore for analysing the performance of Hungry Jack’s various aspects related with vision, mission, structure, financial responsibility and personnel control will be analysed.

Vision, Mission and Strategic Objective of Hungry Jack’s

In 1971, Hungry Jack’s launched its first store in Innaloo, Australia where outlet’s initial success encouraged the company to expand its business further (Hungry Jack’s, 2016b). In its starting years, the enterprise worked under franchise of Burger King Corporation however in 1990 few changes in agreement were made by the company (Hungry Jack’s, 2016b). As per these changes, Competitive Foods was permitted to open Hungry Jack’s first independent outlet and later several stores were opened under the trademark of company’s own name (IBIS World, 2016). Currently the enterprise is having its presence in Australia throughout its every state with nearly 340 stores and has been successful in generating a strong brand image among its consumer (Hungry Jack’s, 2016b). Mission of any company explains the ultimate purpose for being in the market and what it desire to achieve through its business whereas vision provides direction to enterprises as what it want to become in coming years (Papulova, 2014). Phanuel and Darbi (2012) argue vision and mission of enterprise to play a significant role in strategic development where principles mentioned under these are helpful in managing the day-to-day activities and employees’ actions.

The mission of Hungry Jack’s has been to ensure that customers visiting at their place are offered with great food and is superior at quality, service and cleanliness in every hour or day of their arrival (Hungry Jack’s, 2016b). The company believes in promoting innovative vision among personnel by implementing four key values; giving maximum importance to visitors, ensuring their safety, enabling integrity and improving its performance consistently based on consumer requirements (Hungry Jack’s, 2016b). Being in service industry, Muogbo (2014) has pointed out that customer priority as the most influential strategy to survive, retain and compete strongly against other competitors. Hungry Jack’s is not only efficient in managing its customers’ requirements with the help of varied services like organising birthday events for kids but also involves maximum participation of community to make the society a better place for living. For instance, the entity entered into strategic partnership with Keep Australia Beautiful under which all its packaging consists the logo of “Bag it and Bin it” to persuade consumers to dispose the garbage responsively (Hungry Jack’s, 2016b). The strategic objective of the enterprise is to improve profitability and brand image through superior customer servicing and promoting sustainability in environment.

 

Organizational Structure

The organisational structure of the enterprise is formal (hierarchical) where activities and responsibilities of the entity are shared among different personnel under various levels (Groucutt and Hopkins, 2015). Figure 1 illustrates the organisational structure at Hungry Jack’s where CEO of the company have ultimate power over all other personnel placed below like General, Finance, Marketing, Sales, Customer Service and Sourcing Manager.

Organisational Structure at Hungry Jack's

Figure 1: Organisational Structure at Hungry Jack's

(Source: Hungry Jack’s Pty Ltd, 2012)

Apart from hiring different divisional head for departments like finance and customer service the company hires project committee officers to reduce complexities occurring while undertaking work (Hungry Jack’s Pty Ltd, 2012). In spite of having hierarchical structure at stores the CEO of company creates an innovative work environment where people are encouraged for continuous training and development for superior career progression. For instance, in 2009 College of Executive development (CED) was initiated by the enterprise as an internal platform that offers people with enhanced engagement and communication platform (Charlton Media Group, 2016). While dealing with changing requirements of people the business structure of company has experienced significant alternations like nutritional improvements in the menu that requires to be communicated instantly to staff to ensure strong presentation at front line (Charlton Media Group, 2016). Additionally, in order to encourage people to work hard for the organisation, the enterprise have introduced superior pay structure as compared to its other competitors like KFC (PayScale, 2016). The average salary per month of a fast food worker at Hungry Jack’s has been found to be AU $20,381-39,875 while Assistant Manager and Kitchen hand are offered nearly AU $35,263-51,250 and AU $32,833-48,288 respectively (PayScale, 2016). Moreover, it also provides people with bonus where in accordance with research average bonus given by company to retail store Assistant mangers has found to be AU $ 1,150 (PayScale, 2016).

Organisational structure of a company is highly influenced by the corporate culture it promotes within and among workers where they must be treated equally and encouraged to promote the overall vision of enterprise (Brettel et al., 2015). In case of Hungry Jack’s, the higher management has created a separate code of conduct where they ensure that people working at kitchen are wearing safe clothes along with a company’s logo (Hungry Jack’s, 2016b).  Leaders of the company ensure that employees are provided with better options for growth and personal benefits through efficient financial mechanism.  The organisational culture of Hungry can be related with transformational leadership where managers in order to achieve superior performance supports personal growth of people as well (McCleskey, 2014).

 

Financial Responsibility centres employed

In order to analyse the business performance of any enterprise it is essential to evaluate the financial position of company in terms of revenue, expenses and profit departments (Young, 2010). Going through different statements that disclose general information related with company earnings and expenses helps to evaluate the percentage of growth or increase in performance over previous years (Muogbo, 2014). For understanding the efficiency of Hungry Jack’s various facts and figures related with the company has been discussed below.

Revenue Centres: In 2013, the yearly revenue earned by the fast food franchise enterprise of Australia was estimated to be nearly $1.03 billion where the main contribution was made by Hungry Jack’s (franchisor) (Titus, 2014). The enterprise main source of earning revenue is through opening outlets of the company in different regions to expand its operations and serve larger number of consumer base. For instance, the company has 390 stores throughout different regions of Australia that is assisting the entity to reach out larger groups and earn maximum revenue (Hungry Jack’s, 2016b)

Expenses Centres: Food chains incurs highest expenses in acquiring raw materials and consumables required by companies to prepare the dishes where in 2013 the overall expense for the segment in Hungry Jack’s was found to be nearly $435.8 million (Titus, 2014). Moreover, the enterprise incur expenses in remunerating and training its employees where currently 900 managers and approximately 18,000 crew staff are present at Australian stores (Hungry Jack’s, 2016c). The company is involved in various marketing campaigns for improving the practices for packaging where it includes varied environmental code (ECoPP) for improving awareness among people for retaining greenery and eliminating waste (Hungry Jack’s, 2009).

Profit Centres: As per Competitive Foods Australia, the overall profit of franchise group operating its activities in fast food retail came to be $ 21.4 million till July 2013 (Titus, 2014). The profit for overall group increased three times in comparison to 2012 where the profit was $7.9 million (Titus, 2014). Apart from providing quality food items to its target consumers through outlets the company comes up with various schemes in menu to attract and retain visitors. For instance, the official website of the company includes two categories under Menu segment; Nutrition and Allergen Guide and Limited Time Offer Guide wherein people could choose their items based on ingredients and protein available.

Nutrition and Allergen Guide available till 26 August 2016

Figure 2: Nutrition and Allergen Guide available till 26 August 2016

(Source: Hungry Jack’s, 2016a)

Figure 2 illustrates the customised menu of the fast food chain that it offers to its guests detail knowledge regarding the items that they are ordering based on nutritious value. This helps the company to create awareness and competitive edge in the areas served and people re-visit the stores that help the firm to have additional profits.

Control Mechanism at Hungry Jack’s

A firm that ensure proper control mechanism for administering overheads while operating its daily activities is able to attain superior performance through improved profitability and waste reduction (Armesh, Salarzehi and Kord, 2010). Controlling the activities of processes, people and results is useful in reducing the overall expense of company and assists the firm to have better stakeholder management (Armesh, Salarzehi and Kord, 2010). Hungry Jack’s in order to have better control over actions, people and results implements different measures as discussed below:

Action Control: Being in service sector, the company has involved itself in several franchisee agreements, however, throughout the processes the firm ensures undertaking in-depth analysis of the aspirants applying for agreements (Hungry Jack’s, 2016b). Some of the important criteria that company fixes are: a strong background of the business, having accessibility to fund of $ 1,300,000 and borrowing amount of $1, 300,000, will promote only Hungry Jack’s business and having capability of working with young personnel above 15 years (Hungry Jack’s, 2016b).

An applicant who is found eligible for the franchise in legal and financial terms is instructed for undertaking training for at least 13 months to open a new store of company (Hungry Jack’s, 2016b). Investment decisions are considered as the most influential factor to determine the survival of the business segment. In order to ensure that new franchisee store of Hungry Jack’s is attracting customers’ to visit the place and driving profitability the company implements strict eligibility criteria (action) through successful operations are ensured.

People Control: The mission with which the company came into existence was to ensure quality food items is delivered to people. In order to promote the vision, mission and value, the company ensures that employees are trained to serve customer requirements’ efficiently. For instance, Hungry Jack’s for supplying its visitors with quality food instructs the employees to obtain superior class ingredients from farmers (Hungry Jack’s, 2009). Additionally, the management team directs the attenders to serve food hot and fresh within minimum time duration of order placed (Hungry Jack’s, 2009). Employees are involved and trained to improve environmental sustainability throughout varied stores of region. For instance, the company introduced electronic payslips and supplied them to nearly 11,100 employees nationally to ensure environmental preservation (Hungry Jack’s, 2009). Moreover, Hungry Jack’s for implementing operational efficiency at its supply chain makes sure that suppliers are using electronic invoices for its transactions (Hungry Jack’s, 2009).

Results Control: The enterprise ensures various assessment plans to preserve energy usage for reduced overall cost and environmental degradation. For instance, the entity to save significant amount of maintenance budget is planning to replace 22 Watts and 14 Watt lights with LED which have longer life (Australian Government, 2012). This will assist the firm to save energy and cost of approximately 743 GJ and $25, 190 respectively within 4.4 years (Australian Government, 2012).

 

Personnel Control

Hungry Jack’s in order to improve the capability and knowledge of personnel implements significantly in training programs and encourages motivational level of people through flexibility schemes (Hungry Jack’s, 2016b). Some of the key factors through which company’s personnel control could be measured are as follows:

Selection and Placement: Hungry Jack’s currently have nearly 390 stores throughout different regions of Australia with 900 managers and approximately 18,000 crew staff to administer its day-to-day activities (Hungry Jack’s, 2016c). The company is expanding its activities further for which it requires capable and efficient employees due to which it invites people for employment in the company. It has created lateral techniques for encouraging teamwork, strategic leadership and communication through programs like Young Endeavour where employees are taught to work efficiently among groups (Hungry Jack’s, 2016c).

In order to recruit people externally, the company involves in advertising the vacant positions at the stores with designation and key knowledge or expertise required for the post through its official website (Hungry Jack’s, 2016c). For instance, the company currently has advertised the employment offer for the designation of Managers in Western Australia All Suburbs in over 55 locations (Hungry Jack’s, 2016c). Apart from external recruitment the enterprise also support internal placement where existing junior crew members for their superior performance are promoted to higher levels available in Store Management department (Hungry Jack’s, 2016c). In opinion of Hitt, Ireland and Hoskisson (2007) internal placement of employees assists enterprises in improving the motivational level as people are offered with better career advancement.

Training: New recruits of the company are offered with in-houses and management courses training to enhance their career progression. For instance, Registered Training Organisation of Hungry Jack’s offers its trainees with nationally recognized certificates in the segment of Retail and Hospitality sector with no personal charges (Hungry Jack’s, 2016c).  The company through its quality training programs helps the individual to serve the customer requirements superiorly and offers experience in retail/hospitality through which they could ensure better opportunities of advancement (Hungry Jack’s, 2016c).

Job Design and Provision of necessary resources: The entity in order to have better personnel management implements better flexibility options where employees can work in a 3 week rotating programs that avail them with a mixture of weekdays and weekends off (Hungry Jack’s, 2016c). Moreover, employees apart from their day-to-day work are taught to understand in-store marketing and better schedule purchasing and inventory control. The job design at restaurant are varying where in accordance with changing requirements of consumers menu are revised and added with nutritional items (Charlton Media Group, 2016). Moreover, changes in new marketing taglines and new-look for restaurant is common at company for which proper communication, training and involvement of workers must be ensured. In order to have superior performance the company initiates College of Executive Development (CED) where internal engagement among personnel belonging to varied departments is made sure (Charlton Media Group, 2016).

 

Purpose of Strategic planning and budgeting process

In opinion of Hitt, Ireland and Hoskisson (2007) strategic planning can be explained as an integrated activity under which enterprises in order to have superior performance, plans and frames overall priorities of the processes and ensures that teams are working together in unified direction. On the other hand, under budgeting process the managing teams confirms that proper segregation and estimation of overall budget is done in order to have improved revenue and profitability (Ho, Huang and Wu, 2011). Hungry Jack’s offers items at comparatively low prices than other players and make use of strong positioning statements in the mind of the consumers (Hungry Jack’s, 2016b). For instance, “The Burgers are better at Hungry Hack’s” and “Lowest Prices are just the beginning” helped the firm to have attention from people (Hungry Jack’s, 2016b). The firm for strategic positioning of enterprise has utilised value differentiation where it offers quality food within affordable price which has created competitive edge and loyalty among consumers. Budgeting process of Hungry Jack’s assists higher management to have better forecasting decisions and techniques and monitors the overall performance (Titus, 2014). The company involves in obtaining proper details regarding the investment decisions made by entity and the way it helps to have better returns which further motivates managers and employees for improving the performance. The company involves itself in regular review of activities undertaken by kitchen management and comes up with new opportunities for handling energy consumption to have low capital cost (Australian Government, 2012). Hungry Jack’s throughout the process sets goals and estimates the additional savings that it can make from identifying areas of improvement (Australian Government, 2012).

Conclusion

The primary intention of the report was to understand and analyse the management control system of Hungry Jack’s and the organisational variables included in it. The mission of the company is to ensure that customers visiting at their place are offered with quality food and cleanliness. Moreover, Hungry Jack’s in order to have better organisation culture implements four key values; giving maximum importance to visitors, ensuring their safety, enabling integrity and improving its performance consistently based on consumer requirements. The organisational structure has been found to be hierarchical where people responsibilities have been designed under departmental level; however, in order to support better communication among people an innovative work environment has been created through initiatives like College of Executive development (CED). Through responsibility centres section of the assignment it was identified that the yearly revenue earned by the fast food franchise enterprise of Australia was nearly $1.03 billion with maximum contribution made by Hungry Jack’s. It has 390 stores throughout different regions of Australia due to which entity could reach out larger consumer groups and earn greater profitability. The major overhead for expense includes raw materials and consumables where in 2013 the overall expense for the overhead was found to be nearly $435.8 million. While other expenses covers personnel remuneration, training and development and different marketing campaigns implemented by entity.  For better control mechanism, the company is involved in good investment decisions, improved supply chain and food management and setting targets for better results. Personnel control in Hungry Jack’s is managed through better recruitment, training and job designs. Company’s strategic planning and budgeting process have helped it to be competitive in the market and better cost control mechanism. In order to have sustainability and increased profitability the company must continue enhancing its management control systems through better decision-making ability and policies.

 

Reference list

Armesh, H., Salarzehi, H. and  Kord, B. (2010). Management Control System. Interdisciplinary Journal Of Contemporary Research In Business, 2(6), pp. 193-206.

Australian Food and Grocery Council. (2014). Annual Compliance Report. [Online] Ifalliance. Available at: https://ifballiance.org/documents/2015/07/2014-rcmi-qsri-annual-compliance-report.pdf [Accessed 21 Sept. 2016].

Australian Government. (2012). Public Report Template 2012. [online] Hungry Jack’s Available at: https://www.hungryjacks.com.au/media/14972/sustainability.pdf [Accessed 21 Sept. 2016].

Brettel, M., Chomik, C. and Flatten, T.C. (2015). How Organizational Culture Influences Innovativeness, Proactiveness, and Risk‐Taking: Fostering Entrepreneurial Orientation in SMEs. Journal of Small Business Management, 53(4), pp.868-885.

Charlton Media Group. (2016). Hungry Jack's launches their College of Executive Development. QSR Media. [online] Ap.1 Available at: https://qsrmedia.com.au/in-community/news/hungry-jacks-launches-their-college-executive-development [Accessed 21 Sept. 2016].

Coenders, G., Bisbe, J., Saris, W.E. and Batista-Foguet, J.M. (2003). Moderating Effects of Management Control Systems and Innovation on Performance. Simple Methods for Correcting the Effects of Measurement Error for Interaction Effects in Small Samples. [online] Available at: https://www3.udg.edu/fcee/professors/gcoenders/n7.pdf [Accessed 21 Sept. 2016].

Daft, R.L. (2011). Management. London: Cengage Learning.

Daniels, J. (2007). International Business: Environments and Operations. Reading, Mass.: Addison-Wesley.

Groucutt, J. and Hopkins, C. (2015). Marketing. UK: Palgrave Macmillan.

Hitt, M., Ireland, R.D. and Hoskisson, R. (2007).  Strategic Management: Concepts and Cases. 7 th Edition. London: Cengage Learning.

Ho, J.L., Huang, C. and Wu, A. (2011). The Impact of Management Control Systems on Efficiency and Quality Performance- An Empirical Study of Taiwanese Correctional Institutions. Asia-Pacific Journals of Accounting and Economics, 18, pp.77-94.

Hungry Jack’s Pty Ltd. (2012). Privacy Policy Manual. [online] HR National Privacy Compliance. Available at: https://www.hungryjacksshakeandwin.com.au/images/pdf/privacy-policy.pdf [Accessed 21 Sept. 2016].

Hungry Jack’s. (2009). Hungry Jack’s Australia Pty Ltd National Packaging Covenant 2008-2009 Annual Report. [online] Certivsem. Available at: https://certivsem2.wikispaces.com/file/view/Hungry+Jacks+Pty+Ltd+AR_08_09.pdf [Accessed 21 Sept. 2016].

Hungry Jack’s. (2016a) Our Menu.[online] Hungry Jack’s Available at:  https://www.hungryjacks.com.au/menu [Accessed 21 Sept. 2016].

Hungry Jack’s. (2016b). About Us. [online] Hungry Jacks. Available at: https://www.hungryjacksshakeandwin.com/about-us/ [Accessed 21 Sept. 2016].

Hungry Jack’s. (2016c). Working with us. [online] Hungry Jacks Available at: https://www.hungryjacks.com.au/careers/traineeship [Accessed 21 Sept. 2016].

IBIS World. (2016). Competitive Foods Australia Pty Ltd - Premium Company Report Australia. [online] IBIS World. Available at : https://www.ibisworld.com.au/car/default.aspx?entid=728 [Accessed 21 Sept. 2016].

Jamil, C.Z.M. and Mohamed, R. (2013). The Effect of Management Control System on Performance Measurement System at Small Medium Hotel in Malaysia. International Journal of Trade, Economics and Finance, 4(4), pp. 202-208.

McCleskey, J.A. (2014). Situational, Transformational, and Transactional Leadership and Leadership Development. Journal of Business Studies Quarterly, 5(4), pp. 117-130.

Muogbo, U.S. (2014). The Impact of Strategic Management on Organisational Growth and Development (A Study of Selected Manufacturing Firms in Anambra State). Journal of Business and Management, 7(1), pp. 24-32.

Papulova, Z. (2014). The Significance of Vision and Mission Development for Enterprises in Slovak Republic. Journal of Economics, Business and Management, 2(1), pp.12-16.

PayScale, Inc. (2016). Average Salary for Hungry Jack's Pty Ltd Employees. [online] PayScale. Available at: https://www.payscale.com/research/AU/Employer=Hungry_Jack's_Pty_Ltd/Salary [Accessed 21 Sept. 2016].

Phanuel, W. and Darbi, K. (2012). Of Mission and Vision Statements and Their Potential Impact on Employee Behaviour andAttitudes: The Case of A Public But Profit-Oriented Tertiary Institution. International Journal of Business and Social Science, 3(14), pp. 95-109.

Titus, T. (2014). Hungry Jack’s Owner tops $1bn Revenue. Business News. [online] Ap.1. Available at: https://www.businessnews.com.au/article/Hungry-Jacks-owner-tops-1bn-revenue [Accessed 21 Sept. 2016].

Young, S.T. (2010). Essentials of Operations Management. London: Sage.

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