Managerial Control Systems For Fast Food Industry - A Case Study Of Hungry Jack’s Essay.

Organisational Structure At Hungry Jack’s

Discuss about the Managerial Control Systems for Fast Food Industry.

Hungry Jack’s is part of the Australian fast-food industry.  This fast food giant is the master franchise of burger king and has positioned itself as a market leader in its chosen niche. A part of the consumer centric industry Hungry Jack’s job profile includes opening own stores, licensing new operators and performing a standards oversight of all locations on the franchise map (Hungry Jacks's, 2016). The fast-food industry is made up of tangible and intangible components and is thus an important part of both the product and service industry. At Hungry Jack’s the tangible component like the hamburger or fries are all items on the menu that can be purchased. The intangible element includes the expected quality of service from the staff, the general environment of the outlet and so on.  However, the success of the business depends on the level of trust between the franchisor and the franchise (Chiou and Droge 2013).

Unlike typical MNCs the master franchise model aims at reducing the large scale inefficiencies that are seen in larger multinational chains. In contrast they are subject to inefficiencies made on a much smaller scale. The master franchise typically exerts an additional layer into the operations of the outlet and this result in added experience, but a slower learning curve which gradually catches momentum as the sub franchise commences independent operations with only an oversight by the master franchise  and the relationship is based on the trust between the two(Chiou and Droge 2013). Mature organizations provide ample scope for the rapid expansion by using experienced and sophisticated operators as franchises (Fisher and Staplin 2013).

Interestingly several franchisors are increasing relying on multi-unit franchise based relationships to help maximize their market penetration and corner a large share of the market in a particular geographical location (Fisher and Staplin 2013).With over 390 locations across Australia, Hungry Jack's is the second largest franchise of Burger King in the world and may be held up as a great model of the master franchise approach. The plural forms of networking as envisaged by this model ha several advantages (Cliquet 2011) including easy availability of funds and flexibility due to the smaller size of individual units. Thus proving that standardization has a positive impact on sales and service (Chiou and Droge 2013).

Figure 1: Organisational Chart Of The Master Franchise Model

Financial Responsibility Centres

Each outlet is staffed as follows:

 Figure 2: Organizational Structure Of A Single Outlet

Franchises, both multi-unit and single unit have their distinct advantages in terms of performance (Bradach, 2008). The financial responsibility centers are further divided into revenue centers, experience centers and profit centers. While all organization are made of these three types of centers, the highly successful and profitable organizations tend to be able to maximize he profit caters and minimize he expense censer. Common expense centers are HR and networking personnel; while Revenue centers are sales personnel. When income exceeds expenses, such centers are called profit centers. While profit maximization is the goal of all businesses, it needs to be considered in tandem with new stores and franchise distribution systems. While some outlets may offer the advantage of location, others look at being spacious. 

There are several advantages of adopting a master franchise model as envisioned by Burger king and Hungry jack’s. Primarily, the economies of scale can be use to great advantage by the sub franchise or outlet. This includes centralized purchases; advertising and décor. The act ensures that there is an instant reorganization and brand value for the product carrying the Hungry jack’s tag as compared to stores that may consider working on their own (Chiou and Droge 2013). Centralized purchases help ensure a standardized product as well as lower prices and assurance of product availability even in low seasons. Centralized advertisement ensures that the sub franchises need not be concerned about individual advertising. This model contributes significantly to the strategic open development and budgeting within the Hungry jack’s operating model.

The you win- we win strategies helps ensure a win –win situation for the sub franchise, the master franchisee, the parent company and the end consumer (Pearce, 2016). All these factors are important to the fast-food market within Australia.  However some are more significant than other. The demographic factors and technological factors also contribute to the success of fast-food market.  While demographics help targeted advertising, technology helps monitor several macro and micro economical factors thus contributing to the overall growth of the organization.

Conclusion

The franchise business model regardless of its nature or orientation needs to be viewed from the concept of the economy rather than as an individual player in the field (Stanworth and Curran 1999).  After considering the optimal franchising model, the deviation from the e model must also be considered for presenting a balanced picture of the matter . In essence, the decision making process remains the same and the change are observed in the manner of performing.

References

Bradach, J.L. (2008), Chains Within Chains:The Role of Multi-Unit Franchisees ,  Journal of Marketinng channels, 4(1-2), pp 65-81

Chiou, J. and Droge, C. (2013). The Effects of Standardization and Trust on Franchisee's Performance and Satisfaction: A Study on Franchise Systems in the Growth Stage. Journal of Small Business Management, 53(1), pp.129-144.

Cliquet G. (2011), ,Plural forms in store networks: a model for store network evolution. The International Review of Retail, distribution and Consumer Reserch. 10(4), pp 369-387

de Harlez, Y. (n.d.). Do the Top-Level Managers Adapt the Use of Management Control Systems to the Strategic Priorities?. SSRN Electronic Journal.

Fisher, L., Staplin, M., (2013). Planning Ahead: Creating and Enforcing Mandatory Development Schedules in Area Development, Area Representative, and Master Franchise Relationship

Levy, O. (2005). The influence of top management team attention patterns on global strategic posture of firms. Journal of Organizational Behavior, 26(7), pp.797-819.

Lynn, J. and Shin, M. (2015). Strategic top-down control versus attentional bias by previous reward history. Atten Percept Psychophys, 77(7), pp.2207-2216.

Stanworth, J., and curran, J., (1999) Colas, burgers, shakes, and shirkers: Towards a sociological model of franchising in the market economy, Journal of Buisness venturing, 14(4), 323-344