Business Dynamics of Mc Donalds - Case Study Example

?Mgt 501 management theory and practice Table of Contents Mgt 501 management theory and practice 1 Table of Contents 2 Introduction 3 Analysis of Organization Culture 4 Conclusion 12 References 14 Introduction The era of free trade and globalization has changed the face of business dynamics in the present business environment. Business organizations are leaving no stones unturned towards moving in to new markets and gaining market share. The success of these strategies is very much dependent upon the aspect of organizational excellence. This includes having a good culture that is very essential in achievement and fulfillment of the goals of the organization. The present study would analyze the business dynamics of Mc Donald’s with regards to the aspect of organizational culture and the constituting aspects of internal and external factors that affect organizational culture. The choice of the organization assumes significance considering the fact that the company is one of the best known brands and has operations across diverse geographical regions making the aspect of culture as an extremely vital aspect in determining the company’s business prospects. McDonalds was established in the year 1955 by the legendary personality Ray Croc in the United States of America. The company since then has grown a long way to emerge as one of the most popular restaurant chains having a dedicated presence in almost every region of the world (McDonalds, 2011). The company at its present date has a dedicated presence in about 119 different nations and employing a large number of individuals. The stocks of the company are listed on the bourses of the New York Stock Exchange. The company has been adding new products in its menu list consistently over the years and has also developed an impressive franchising strategy to spread its footprint across the globe. The company has also developed at attractive work culture that has helped in retaining and attracting a talented pool of human resources to meet the challenges of the highly turbulent and fluctuating business environment (McDonalds-a, 2011). Analysis of Organization Culture Organizational culture is an important facet of business organizations in the present business environment. Organizational culture is influenced by both internal as well as external factors. The importance of culture as highlighted by Lussier (2008) who stated that organizational culture is largely an implication of the personality and the work environment in an organization. The author also highlighted some of the internal factors such as organization mission, resources available with a company, structure and attitude of the management as the factors that largely influence the culture in an organization (Lussier, 2008, p.46-48). Keyton (2010) identified communication as another strategic factor that determines the aspect of organization culture in a particular company. The author also pinned out the importance of organizational culture towards generating positive and negative values in a company. The author highlighted that positive culture generates greater value while negative culture creates a negative set of values that ultimately helps in generating a favorable working condition. Internal communication has a key role to play in this regard as a smooth flow of information helps in generating positive sentiments in an organization that helps generate long term advantage for a company (Keyton, 2010, p.166). Figure 1: Elements influencing Organizational Culture (Source: Cameron & Quinn, 2011) The figure shown above reflects some of the factors that affect organization culture. These include assumptions, official norms and contractual obligations of the company, the artifacts and the behavioral patterns of the individuals in an organization. The figure clearly identifies that behaviors and other artifacts associated with an organization are largely observable and can be monitored and hence influenced by an organization through its policies. Therefore the role of evaluation and monitoring acts as a crucial internal factor that can help influence the culture prevailing in an organization. Organizations therefore prefer to have a transparent and effective monitoring and appraisal policy that can help generate organizational efficiency by inducing a congenial culture at the organization. Artifacts normally include the place of work. In case of McDonalds its includes the stores and its layouts that are designed in a manner that promotes fun and also generates a feeling of faster and efficient service. An explicit behavior includes rules and office guidelines. McDonalds has a policy of a uniform dress code for all its employees and also has a policy of naming best employees and rewarding them with batches and other rewards. This creates a positive attitude and develops a good culture in the organization (Cameron & Quinn, 2011). The mission statement of McDonalds is to be a customer’s favourite place for eating and making it’s a fun event. The mission statement is generally an indication that the company proposes a fun filled work culture at the organization. The mission statement of an organization is essentially a reflection of the mindset of the organization and all its strategies are based out of the objectives of the company. Mission is a very critical internal factor that determines the organization culture and has critical influence on the aspect of organizational efficiency (McDonalds-b, 2011). However a study conducted by Kramer (2007) reveals that there is a considerable gap between the identity and the highlighted corporate image of McDonalds. The author conducted a primary study across various stores in USA to analyze this aspect and found that there exists a significant gap between the corporate image and identity of the company. The aspect of corporate identity is another vital internal aspect that determines the organizational culture. This aspect must be seriously considered by the organization in order to have an efficient organization culture. Lack of synergy between these vital internal aspects can have undesirable consequences on the organization culture and can lead to confusion among the internal resources as well as external stakeholders like suppliers, franchisors as well as customers (Kramer, 2007, p.4-8). Kono & Clegg (1998) identified a set of internal factors that affects organizational culture and this includes values, information, evaluation and finally idea generation. The authors also stated that in the development of organizational culture the role of internal factors assumes greater importance as compared to the external factors. They attributed the reason behind this to the fact that internal factors are generally in the control of an organization and a company or business organization can undertake policy changes to modify these aspects and include their influences in a manner that can benefit the organization. This is quite in contrast with the external factors because of the fact that the external factors are beyond the control of an organization. Hence the role of internal factors assumes greater importance for an organization. The author also highlighted the influence of training and development as a vital internal factor that influences organizational culture. According to the author training helps in the development of personality that largely helps in the formation of organizational culture in an organization (Kono & Clegg, 1998, p.115). Ashkanasy, Wilderom & Peterson (2010) conducted a research into the aspect of organizational culture and stated that organizational communication is an important internal factor governing organizational culture. The authors stated the importance of manuals and other publications made by the companies as an important aspect that defines organization culture. The authors were of the view that transfer of culture normally takes place through such documents and thence they play a crucial role in the formation of management culture (Ashkanasy, Wilderom & Peterson, 2010, p.551). McDonalds has a very strong internal communications strategy that includes having a flat organization hierarchy that helps in smooth transfer of information from the top to the bottom levels in an organization. A flat organization structure also helps employees to voice their opinions freely to the management. McDonalds by virtue of its fewer hierarchy levels also ensures reduction of grapevine communication that often leads to misinformation being spread across the ranks in the company. This has helped foster a spirit of good culture and understanding among the employees and the top management that has helped in the generation of a good culture at the organization. Another notable point in the internal aspects of McDonalds is that the company also has a good communication strategy with its suppliers as well as franchisors. These stakeholders assume significance considering the fact that most of the stores of the company and run and managed using a franchisee system and having a good relationship with these individuals helps in generation of greater organizational efficiency. McDonalds also has a good performance appraisal system that helps in ensuring fairness among the employees. The same transparent system of appraisal and monitoring is also done for suppliers as well as franchisors that again help in fostering greater trust and confidence among the members of the organization. The appraisal system at the organization is such that it engages the employees and their supervisors in a state of discussion that not only helps an employee to understand his strengths and weaknesses but also provide the top management with valuable inputs regarding the development of the organization. This leads to the development of a good bonding that ultimately helps in creating a good culture at the organization. Ensuring such a culture not only helps generate employee retention and bring down attrition levels but also helps the organization attract good talents and precious human resources that are the ultimate drivers for an organization towards development of organizational efficiency that helps generate benefits for the organization in the long run (Facella & Genn, 2008, p.165-167). In addition to internal factors there are certain external factors that are comparatively in lesser control by the organization. Hawkins (1998) indentified a set of factors that are critical of their powers towards influencing organizational culture in an organization. These external factors include ‘filmographics’, activities and objectives and finally the location of an organization. Filmographics includes aspects like the size of an organization and distribution of employees across the organization. According to the author size of a company is also an important external aspect that defines the element of organizational culture. Larger multinational and transnational companies generally have a large size that makes it very complicated for the management to maintain a consistent culture across the organization. The nature of business and the activities performed by it are also certain other external factors that influence organizational culture in a big way. The activities of different categories of firms like nonprofit and profit making organizations generally differ in a big way and that leads to significant differences between the cultures of different categories of organizations. Finally location is another important facet that helps determine organizational culture at any organization. Location includes the places in which the organization has its business units. In case of multinational organizations like McDonalds this factor plays a key role in the development of organizational culture as the company has its business units spread across diverse areas of the globe with each location having its own set of unique customs and values that helps in the development of organizational culture. This factor plays a very important role in the development of organizational culture because of the fact that local culture and beliefs have a crucial impact on the development of the overall culture in an organization and hence it is very important to include this as an important facet or diver of organizational culture (Hawkins et.al, 1998, p.764-765). McDonalds is a global organization with a presence in more than one hundred different nations across the globe with varying culture and traditions. The company has a strategy of thinking globally and acting locally with regards to its international expansion plans. Under this strategy the company includes the aspect of local culture and prevailing sentiments of the local population in all aspects and devices its strategies and marketing plans based on those feeling and sentiments by taking care to respect these aspects. An example in this regard can be seen from the marketing plan of the company in India. McDonalds made a very successful market foray in the nation because of this strategy. India is a land where consumption of beef is against the local culture and traditions, in this regard the company essentially framed a marketing mix and a market plan that included removal of all beef based products from the menu list of the company’s restaurants. In a very first time the company also launched vegetarian products in the market that was perhaps not seen any time or anywhere in the history. This has helped the company to build a positive image for all its external stakeholders including the customers. It has also induced a positive and accommodative culture in the organization that has helped the company to make a successful market foray in one of the most lucrative market segments of the world. The strategy provides considerable applauses on the company considering the fact that most of its items on the menu list including the most popular ones globally are beef based products. This is an example of how a good strategy can help take care and leverage upon the external aspects affecting organizational culture to create a favorable and positive organizational culture in the company (Dash, 2005, p.1-12). A research study carried out by Blasio (2008) states the importance of an effective cooperate social responsibility as a strategic initiative by the company to control the external factors and help develop a positive culture within the organization. Society and its needs are another significant aspect that helps shape up the culture within an organization. Organizations by means of effective corporate social responsibility can largely help in generating a positive image among all its stakeholders that in turn can help the company to use this external aspect affecting organizational culture to its benefit. McDonald’s in this regard has a fairly good strategy in which the company has taken up many social initiatives to take care of the broader needs of the society at large. The company’s animal policies have made it being recognized as one of the most ethical companies in the globe for its best practices in animal welfare programs. The company has undertaken numerous welfare measures that have helped generate a socially responsible image of the company allowing it to take strategic advantage over its competitors in the market. This has also helped the company to use another external factor affecting organizational culture to its benefit for improving the image and positioning of the company among the various stakeholders of the organization. The company also uses renewable and non polluting goods that helps promote environmental sustainability on one hand and leverage upon society and its needs as a crucial external factor influencing organizational culture to its advantage to create a good and congenial culture at the organization and generate organizational efficiency (Blasio, 2008, p.5-6). However McDonalds faces certain issues in cultural aspects that mainly arise due to the aspect of being present in diverse locations. Research has shown that the company faces criticisms on cultural aspects due to its over emphasis on its strong American culture (Schnaubelt, n.d., p.52-53). Lower wages of the employees in the company also leads to the development of a bad culture that again leads to considerable cultural issues in an organization that is dubbed as over American in its culture. Use of American organizational policies has not been perceived in a positive manner by the employees and customers alike in many regions internationally leading to cultural issues for the company. These issues can have serious cultural impacts that can largely affect the positioning of the brand as well as the organizational efficiency. The key lies in identifying aspects that can help ensure greater confidence among the various stakeholders so as to develop a positive and motivating culture at the organization (Gibison, n.d., p.1-3). McDonalds also faced certain issues with regards to organizational culture during its market expansion in China. The company’s advertisement showed a Chinese individual bending on his knees before a McDonald’s vendor. This caused a furor in the market as it hurt the cultural aspects of the customers. This is a classic in which a company used its internal factors namely promotional strategy in a manner that negatively influenced its culture (Yunker, 2006). Another aspect of a challenge in organizational culture in McDonalds arises from the culture of the company is the resistance among the employees for undertaking a change management. The employees are largely unsure about the objectives and feel threatened due to this aspect. This clearly highlights an instance when the company has faced a challenge in its cultural aspects due to strategic planning in organizational communication that is another internal factor that influences culture in an organization. Even in France McDonalds also faced the issue of excessive Americanization of the organizational culture at McDonalds clearly highlighting another external factor i.e., work culture that was not properly handled by the company (Ritzer, 2004, p.241). Conclusion The analysis of the internal and external aspects including organizational culture reveals considerable factors that can be leveraged upon by companies like McDonalds to gain competitive advantage in the market. McDonalds also has an overall positive strategy formulation with regards to the management of its internal resources and taking leverage of the external factors affecting organizational culture to generate a formidable organization culture at the organization. However certain aspects like corporate identity mismatch and the aspect of maintaining a consistency of strategies across the organization are the key factors that must be analyzed and monitored by the company so that the negative aspects are not allowed to make a negative impact on the culture prevailing at the organization. Use of a judicious strategic initiatives can help generate a wonderful culture at the organization that would not only have a positive impact in the motivation of the employees but would also help generate considerable advantages for the company in the form of long term sustainable competitive advantage in the turbulent business environment. References Ashkanasy, N.M., Wilderom, C.P.M. & Peterson, M.F. (2010). The Handbook of Organizational Culture and Climate. SAGE. Blasio, G.G.D. (2008). Understanding McDonald’s Among the “World’s Most Ethical Companies“. Retrieved October 10, 2011 from http://ejbo.jyu.fi/pdf/ejbo_vol13_no1_pages_5-12.pdf. Electronic Journal of Business Ethics and Organization Studies Vol. 13, No. 1 (2008). Cameron, K.S. & Quinn, R.E. (2011). Diagnosing and Changing Organizational Culture: Based on the Competing Values Framework. John Wiley & Sons. Dash, K. (2005). McDonalds in India. Retrieved October 10, 2011 from http://csumba.org/mba602/McDonald%27s%20in%20India.pdf. Facella, P. & Genn, A. (2008). Everything I know about business I learned at McDonald's: the 7 leadership principles that drive break out success. McGraw-Hill Professional. Gibison, A. (No date). McDonald’s: A Good Image with Bad Ethics. Retrieved October 10, 2011 from http://www.neumann.edu/academics/divisions/business/journal/review_08/Gibison.pdf. Hawkins et.al. (1998). Consumer Behviour. Tata McGraw-Hill Education. Keyton, J. (2010). Communication and Organizational Culture: A Key to Understanding Work Experiences. SAGE. Kono, T. & Clegg, S. (1998). Transformations of corporate culture: experiences of Japanese enterprises. Walter de Gruyter. Kramer, E.S. (2007). The gap between McDonalds’ corporate identity and corporate image. Retrieved October 7, 2011 from http://writingskills.uvt.nl/images/Research%20Report%20Schrijfsite.pdf. Lussier, R.N. (2008). Management Fundamentals: Concepts, Applications, Skill Development. Cengage Learning. McDonalds. (2011). Our History. Retrieved October 7, 2011 from http://www.mcdonalds.com/us/en/our_story/our_history.html. McDonalds-a. (2011). Our Company. Retrieved October 7, 2011 from http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html. McDonalds-b. (2011). Student Research - About McDonald's. Retrieved October 7, 2011 from http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html. Ritzer, G. (2004). Handbook of social problems: a comparative international perspective. SAGE. Schnaubelt, C. Global Arches: A Cultural Look at McDonald’s Franchises in Central Europe. Retrieved October 7, 2011 from http://murphylibrary.uwlax.edu/digital/jur/2002/schnaubelt.pdf. Yunker, J. (2006). Going Global. Retrieved October 7, 2011 from http://goingglobal.corante.com/archives/2006/06/20/mcdonalds_in_china_elle_in_the_middle_east.php. Read More