I. Organizational Background
Overview of McDonald's Corporation
McDonald's Corporation's history began in California, USA in the year 1953 with their founder Mr. Raymond Albert Croc. It is currently the leading global fast food retailer operating more than 30,000 local restaurants, serving approximately 50 million people everyday in more than 119 countries worldwide. Some of McDonald's products are the world famous French Fries, Chicken McNuggets, Egg McMuffins, Sundaes and Quarter Pounder. It is one of the world's most well known and valuable brands and holds a major share in the fast-food business in almost every country they operate. (McDonald's corporation, 2006). The famous company operates other restaurant brands like Aroma Café and Boston Market and has a minority stake in Pret a Manager. (Hoover's, Inc., 2007) McDonald's acquires Boston market for $173.5 million in the year 2000. (About, Inc., 2007). The company also had a majority stake in Chipotle Mexican Grill. Until December, 2003 it also owned Donatos Pizza. It also has a subsidiary, Redbox, which started in the year 2003 as 5.5 meter wide automated convenience stores. McDonald's Corporation's business model is slightly different from that of most other fast food chains. In addition to the normal franchise fees, supplies and percentage of sales, the company also collects rent, partially linked to sales. According to the condition of the franchise agreement, the Corporation owns the properties on which McDonald's franchises are located. (Biz/ed, 1996-2007)
Market Place and Competitors
Quick Service Restaurant industry sales in USA are expected to reach a record $537 billion in 2007a solid 5.0 percent increase over 2006 salesannounced by the National Restaurant Association's 2007 Restaurant Industry Forecast. (National Restaurant Association, 2007)
The fast food industry witnesses intense competition in USA. McDonald's key competitors are Burger King, Wendy's and YUM!. These competitors have a similar strategy and are based on self-service, drive through, burger recipes and so on.
Structure of McDonald's Corporation
McDonald's corporate structure has become a model often cited by management gurus. The company's highly decentralized management runs its franchises with an unusual mixture of strict regimentation and entrepreneurial freedom, a style handed down by the late company founder, Ray Kroc. On one hand, McDonald's is a stickler for uniformity, indoctrinating its future managers at Hamburger University and on the other hand McDonald's also realizes that corporate headquarters is not always the best place to come up with market-sensitive ideas. (Time Inc, 2007). McDonald's are structured along functional lines. Their Chief Executive oversees five major areas of activity:
Operations (equipment and franchising)
Development (property and construction)
Finance (supply chain and new product development)
Marketing (sales marketing)
Human Resources (customer services, personnel, hygiene and safety) (Biz/ed, 1996-2007)
The Board consisting of the Board of Directors itself determines its size within the range of 11 to 24 members required by the Company's Certificate of Incorporation. As on 23rd August, 2006 the board of directors consists of 13 people including the CEO. The only management member of the board is the CEO. The CEO shall resign from the board at the time that his or her service in that capacity terminates.
The Executive Management team comprising of 16 people have different roles and responsibilities and the team consists of Executive Vice President and COO and President of Central Division, USA. The company divided the Northern American market into 5 divisions and under each division there are 6-9 regions. (McDonald's Corporation, 2006)
Image and Positioning of McDonald's Corporation
Brand image is nothing but a perception of a particular product or a particular brand by the consumer....
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