The Management of Change in McDonalds - Case Study Example

A Study to Evaluate the Management of Change in McDonald's INTRODUCTION ' McDonald's has a global reach and boasts around 28,700 outlets in 120 countries. The company's food joints are very popular amongst young children, teenagers and young adults. The company offers a safe environment for families where they can enjoy inexpensive food in a clean facility. This food chain offers people a familiar environment as it has its own clown and similar interiors worldwide (Debres, 2005). McDonald's also makes efforts to build relationships with its franchises and suppliers. The company treats them like their partners and helps improve their operations by timely capital and managerial aid. This brings loyalty from franchises and suppliers and they become more committed for the company's growth (Aswathappa, 2006). The company is however challenged by the need to continuously innovate to grow while operating flawlessly (Gubman and Russell, 2006). This report will find out how McDonald's is managing change to survive in the competitive business environment. AIMS AND OBJECTIVES ' The aim of this report is to present a consolidated change portfolio for McDonald's. The objective of this study is to find out the drivers of change for this fast food joint and this will be achieved by P.E.S.T and. Force-field analysis. The objective of the study is also to identify and justify the type of change McDonald's is facing. In addition, the report will present the process of managing change within McDonald's by using relevant change models. A number of books, journals and magazines have been used to collect information for preparing this report. The report will be divided into several sections and will also include a summary of findings and recommendations as well as conclusion. GATHERING AND INTERPRETING THE NEED FOR CHANGE This report will now conduct a PEST and Force Field Analysis to identify the reasons for change in McDonald's. Political McDonald's has been asked by the US government to ensure the health of its customers. The company acknowledged that some of their suppliers were heavily using growth-stimulating antibiotics on chicken, beef and pork. These chemicals were proven to be injurious to human health and the authorities asked the food giant to help curb this practice. McDonald's has asked the suppliers from the meat industry to phase out the practice or lose business. The company is also working with People for the Ethical Treatment of Animals to improve the ways in which animals are raised and slaughtered (Greider, 2003). Economic The number of children also increased due to the rise in per capita income in the 1950s. This good economic period saw an increase in the number of suburbs in America and this encouraged the proliferation of chain restaurants such as McDonald's. The company opened restaurants in convenient locations where families in their cars could eat quickly the very affordable food (Debres, 2005). McDonald's restaurants were present in a large number of American suburbs by 1965 and the company avoided inner city locations until the 1970s. The company stepped outside US in 1967 and entered Canada and Puerto Rico. It then forayed into Europe and found out that it will not be successful if it continued to operate in the suburbs. There was no commercial development in the suburbs of Europe and the main markets were in the central cities (Debres, 2005). Social McDonald's popularity soared during the 1950s and 1960s when the Americans changed their lifestyle and began to enjoy the post-war period. More number of Americans decided to have more children and it became a common sight to see families with three or more children. McDonald's was oriented towards the family market and focussed on attracting small children, teenagers and young adults (Debres, 2005). Today, the customers visiting these food joints appreciate a sense of freedom they feel once they step into the facility. The young adults are very happy about the self-service concept and the minimal adult contact they have in these restaurants. Customers also enjoyed the noise, casual atmosphere and the bright colors of McDonald's restaurants'(Debres, 2005). Technological McDonald's had to face bad times during the late 1900s and the early 2000s. This drove the company to focus on innovation of their product and the services. The company had to bring all these changes to beat the competition and sustain in the market. McDonald's increased its focus on the customer and invited new ideas from people. These ideas were turned into new products and processes and the company began to act on a new mantra: think big, start small, and scale quickly (Gubman and Russell, 2006). The company has set up a warehouse with a number of model kitchens in it. The experts test the new product and process and try the innovation at few partner restaurants. This helps them to test the menu before launching a new product in the market (Gubman and Russell, 2006 Force Field Analysis Lewin's Force Field Analysis helps identifying the problems and in deploying planned change efforts in organizations. This analysis recognizes both the driving forces behind the change and the resistance to change (Harwell, 2000). Force Field Analysis The driving forces Resistance to change a. Certain communities did not accept standard McDonald's food (Debres, 2005). b. McDonald's had to face a business downturn in the late 1990s that lasted till the early 2000s. The profits were dipping, and the competition was increasing (Gubman and Russell, 2006). a. McDonald's management resisted to change their product until they were faced with a very persistent opposition (Debres, 2005). b. McDonald's leaders were not able to find out a way to overcome the problems resulting due to business downturn in the late 1990s. The company only focussed on operations, distribution, and cost and did not pay much attention on the customers' needs. The company must not dilute its brand but should allow some degree of regional variation to attract local customers (Gubman and Russell, 2006). McDonald's restaurants are known for changing local cultures to meet their own needs. The company prefers not to modify its way of doing business and doesn't adapt to foreign cultures (Debres, 2005). THE TYPE OF ORGANISATIONAL'CHANGE ' Nadler et al (1995) has described four types of organisational change model: tuning, re-orientation, adaption or re-creation (Jain, 2005). This report will now describe these models and identify the model that is being used by McDonald's. Tuning- The authors have described tuning as the most common type of change model. Tuning is also the least intense, and least risky. Companies following this kind of model must learn to anticipate and avoid problems. They must not indulge in simply waiting for things to go wrong before they decide to take some suitable action. For instance, DuPont adopted a customer program to boost its marketing efforts. Under this program, the company asked their blue collar workers to visit their customer once a month. During this visit, the employees were supposed to discuss the customers' needs and then act as their representative in the DuPont factory. This approach is very different from the traditional model where the companies typically wait for customers' complaints, and attempt to fix them only when they receive the complaints (Jain, 2005). Adaptation- This model is somewhat similar to the tuning model of organisational change. But, in this model the companies introduce changes in their organization in response to the external problems, or pressures. For instance, General Motors and Chrysler were under great pressure to change their strategy after Ford experienced tremendous success with aerodynamic styling. This success drove both the companies to broaden their product lines to effectively compete with Chrysler (Jain, 2005). Reorientation- This kind of change involves certain anticipation and change in the business strategy. Researchers also refer to this type of model as the frame bending model as organizations have to be significantly redirected. But, the companies don't have to completely break from their past and only introduce some relevant changes. This approach is quite popular amongst the fast food companies that have to come up with some creativity to reach out to their customers (Jain, 2005). Re-creation- This model has been identified to bring the most intense and risky type of organizational change. These changes are typically introduced due to the extreme competitive pressures. For example, Mercedes is trying very hard to expand its footprint into two fast growing segments in the US. The company wants to have a market share of the lucrative light trucks market and want to introduce minivans and four wheel drive sports utility vehicles (Jain, 2005). This discussion indicates that McDonald's is using the Reorientation change model. The food giant doesn't change its entire business strategy but makes few reforms to ensure the success of its business in the new markets (Debres, 2005). MANAGING THE CHANGE PROCESS ' Although researchers know that change is a constant, they have only recently begun to understand the change dynamics. The theories to manage change are still emerging and currently companies are using a number of trial-and-error processes to deal with the change (Mclagan, 2002). One of the popular change models is Lewin's three stages of change: Unfreeze, Transition and Refreeze. The first stage involves making the employees more open to change and reduce their anxiety levels. In this stage the employees begin to become more ready to listen about the new changes. The second stage involves introduction of new concepts to the employees, which can be put forward by the HR professionals or the managers of the department. The last stage includes making employees finally accept to bring changes in their behaviour and in the organization (Weick and Quinn, 1999). The management of McDonald's can use this model to introduce relevant changes in the organization. The company can first describe the benefits of changes to the employees, gradually introduce changes in the facilities and then convince the employees to use the new policies and practices. By doing so, the company will be able to adapt quickly to the local culture of new regions. Also, the company will be then be better equipped to compete with other players in the market. The company can use its HR department for the purpose who can counsel the employees to adapt the changes in the organizations. SUMMARY OF FINDINGS AND RECOMMENDATIONS The research clearly shows that despite the tremendous popularity enjoyed by McDonald's, it still need to continuously change to grow (Gubman and Russell, 2006). The PEST analysis indicates the political pressure on the organization that keeps a tab on the companies operations. McDonald's must ensure it uses healthy food policies to procure raw material and change its suppliers when required (Greider, 2003). The company has enjoyed economic success in the US but it has to operate differently in the Europeans market (Debres, 2005). Thus the management must recognize that the same business model can't be applicable in all regions in the world. The company doesn't have to change its ambience which is much appreciated by the customers (Debres, 2005) but has to continuously innovate their products and services to sustain and survive (Gubman and Russell, 2006). The Force Field Analysis also shows the resistance to change as McDonald's management introduce change only when faced by persistent opposition. The company must be quick to adapt to foreign cultures and focus more on the needs of the customers (Debres, 2005). As discussed above the company is using the reorientation type of organisational change model and must use Lewin's three stages of change process to bring relevant changes in the organization (Weick and Quinn, 1999). CONCLUSION McDonald's has to continuously change its products and services to stay ahead of competition (Gubman and Russell, 2006). The company has to quickly adapt to the local market so that it can attract local customers and is more easily accepted in the region. Lewin's three stage model can be used to bring change in the stereotypical thinking of the old McDonald's management (Weick and Quinn, 1999). Their ideas can be replaced with contemporary theories but they may resist and prefer sticking with their old ways of operations. But, this change will greatly benefit the organization in the long run as globalization has introduced more players in the market and unwillingness to change may prove fatal to the company's growth in the market. ' References Aswathappa, A (2006): International Business: Tata McGraw-Hill: p, 226 Greider, W (2003): Victory at McDonald's: The Nation: 277 (5): p, 8. Gubman, E and Russell, S (2006): "Think Big, Start Small, Scale Fast": Growing Customer Innovation at McDonald's: Human Resource Planning: 29 (3): p, 21 Debres, K (2005): Burgers for Britain: A Cultural Geography of McDonald's UK: Journal of Cultural Geography: 22 (2): p, 115 Harwell, S.H (2000): Impediments to Change: An Application of Force-Field Analysis to Leader Master Teacher Training in an Elementary Level Science Systemic Reform Initiative: Journal of Elementary Science Education: 12 (2): p, 7 Jain, N.K (2005): Organisational Behaviour Vol. 1: Atlantic Publishers & Distributors: p, 361 Mclagan, P. A (2002): Success with Change: T&D: 56 (12): p, 44 Weick, K.E and Quinn, R.E (1999): Organizational Change and Development: Annual Review of Psychology: p, 361. Read More