McDonald's - Leadership Priorities and Practice - Case Study Example

Company Overview

It is safe to say that McDonald'd is the most popular and well-recognized fast food chain in the whole world. The company was established more than fifty years ago back in 1964, and rather fast it has managed to become the biggest chain within its industry. The company serves locally-relevant sets of dishes that are sold at different prices in more than 100 countries. The scale of the company is so significant that it includes around 36,525 fast food restaurants located in more than 120 countries. Among them, approximately 30,080 restaurants are franchised, while more than 6,444 restaurants are owned and operated by the company itself (Reuters, 2016). Proceeding from this, we can say that the company is mostly a franchisor since more than 80 percent of its restaurants are operated by franchisees. It should also be pointed out that the company uses different structures and types of franchises including such as conventional franchise, affiliate franchise, and developmental license.

Speaking of the company, it should be pointed out that it has its stakeholders that hold a power to influence the business, but they can also be influenced by the business in turn. In a case of McDonald's, the company's top stakeholders are customers and employees. Apart from it, the group of the company's stakeholders includes investors and communities. It should be pointed out that McDonald's considers employees as its major stakeholder group, which is why it is focused on programs related to fair compensation rates and career development. As for the customers of McDonald's, they are viewed as the stakeholder group of the second priority. Predominantly, the interests of this group of stakeholders include healthy food options and affordable prices. Apart from it, the company's minor stakeholders are investors and communities. The interest of investors is predominantly in profitability and growing revenues, while the interest of communities usually includes community development and support of different environmental programs (Smithson, 2015).

Mission and Vision Statements

Just like any other international company, McDonald's has its own mission and vision statements. They serve for the company as so-called leadership guides within the diversified and fast growing fast food industry. As can be found on the official website of the company, its vision statement says the following: 'Our overall vision is for McDonald's to become a modern, progressive burger company delivering a contemporary customer experience'(Meyer, 2015). It should also be pointed out that according to the opinion of the company, modern means moving the brand forward towards its goals while progressive means doing something that can help the brand meet the expectations of the customers in the future. In order to realize this commitment, the company tries to 'deliver great tasting, high-quality food to the customers and providing a world-class experience that makes them feel welcome and valued'(Meyer, 2015). Speaking of the vision statement of McDonald's, it is necessary to say that the covers a variety of different business aspects. When McDonald's says about 'contemporary customer experience', it says about innovations that can be used in order to satisfy the needs of the current market. Apart from it, the company characterizes its products as high-quality food and great tasting, which is one more component of its vision statement.

As for the mission statement of McDonald's, the company states that its mission is to be the customers' 'favorite place and way to eat and drink'(Mayer, 2015). It is also stated that the company is 'dedicated to being a great place to work; to be a strong, positive presence in your community; and to delivering the quality, service, cleanliness and value' (Mayer, 2015). As we can see, the company's mission statement covers different aspects including its market position, its approach to human resource management, corporate social responsibility position, as well as its global brand development and brand image. It is safe to say that the company has a strong and well-thought-out mission statement.

The Company's Code of Ethics

As any other international corporation, McDonald's has its own code of ethics. The company calls it 'Standard of Business Conduct' or 'The Promise of the Golden Arches'. Generally speaking, the company's entire business is built on three branches including ethics, truthfulness, and dependency'. The code of ethics proposed and followed by McDonald's is rather long and detailed, but it is possible to outline a list of the most important statements, which can be considered the ethical fundament of the company.

First of all, the company promises to place the experience of customers at the core of everything it does. Second of all, the company is committed to its people and believes in a so-called McDonald's System. Third of all, the company states that it operates its business ethically and is focused on giving something back to the community. The last but not least points are that the company strives to increase the profitability of the business and improve it on a regular basis(McDonald's Official Website, 2015). Proceeding from all stated above, there are reasonable grounds to assume that to a great extent the company's success can be explained by its strong ethical commitment.

The Challenge of McDonald's

For many years, the company has been doing great in terms of popularity, profitability, and international expansion. It is safe to say that in the minds of the most people in the world the golden arches of McDonald's are associated with the most successful and profitable chain of fast food restaurants ever. However, the time changes and so do people. As a result, the preferences and demands of customers go through different transformations, which appear to be a threat to a success of such companies as McDonald's.

Speaking of the challenge, the company appeared to face, it should be pointed out that at the beginning of the new century, the revenue of the largest restaurant company in the world demonstrated the first signs of instability. To be more specific, in 2003, the company was forced to report its most significant monthly decline in terms of globals sales. Some experts called this situation a 'Millennial Challenge' of McDonald's (Jargon, 2014) . The challenge appeared to be so significant that in most of the locations worldwide the sales were either flat or even falling during the most of the fiscal year. Obviously, such a dramatic fall in sales could not be left without the attention of both external experts and internal experts of the company. McDonald's adjusted its problem, while the world perceived it to be the first significant challenge in the history of the company.

Obviously, there are many factors that might have contributed to a decrease in sales of the restaurant company. However, there are reasonable grounds to assume that to a great extent the challenge should be associated with a lack of leadership used to promote the values, mission and vision of the company in the international arena. Hence, this part of the paper is going to be dedicated to a detailed analysis of reasons that might have contributed to the global challenge of McDonald's.

The first and foremost reason for the leadership challenge of McDonald's stems from it's countless operational and organizational mishaps on the international level. A telling example of such mishaps can be found in China, which makes approximately one-quarter of the company's global revenues. In this country, a number of health-related issues occurred in the last years. For example, the sales of McDonald's appeared to fall significantly as a result of just one issue with suppliers. It is stated that one of the company's suppliers of products was discovered to be using contaminated and expired meat. Obviously, as soon as this information went public, sales started to fall significantly, and the company's global revenue decreased as well. Yet another example of leadership problems on the international level occurred in Japan. This country is known for being immensely serious and strict in regards to standards and quality, that is why the situation that happened could not be left without attention. Press states that a number of customers reported coming across tiny bits of plastic and even one's tooth in their food purchased from McDonald's (The Economist, 2015). In this situation, we can observe how the interests of community and customers as stakeholders had been violated. There is no need to explain that such a situation stems from a lack of organizational leadership in McDonald's.

Apart from problems related to quality and service that appear to take place mostly abroad, the company also faces a number of organizational and leadership problems at home. While international challenges of McDonald's are more related to a quality of products and services, domestic problems of the company seem to be associated with a growing number of smaller fast food chains and an escalating popularity of the company's major competitor Burger King. It is stated that in order to win the attention of customers, some newly emerged fast food companies decided to offer food of a little bit better quality and accompany it by a minor table service and an option of choosing ingredients for burgers, sandwiches, and burritos.

To sum up everything mentioned in this section of the paper, it is necessary to point out that although McDonald's seems to have a number of different problems and challenges, in fact, the company is dealing with only one problem, which is a lack of organizational leadership and organizational culture. As a result of this shortage, the company appears to loose its sales as well as its leading position within the industry. Hence, the company needs to come up with a number of tactics and approaches in order to solve the problem and get its leading position back. The following part of the paper is to be dedicated to the strategy suggested for McDonald's considering its current challenge.

The Strategy of Overcoming the Challenge

As it has been stated in the previous part of this paper, the core of the current challenge of McDonald's is in the company's lack of organizational culture and organizational leadership. In other words, there are reasonable grounds to assume that at this moment the largest fast food chains is facing a challenge in this sphere, and all other problems such as a gradual loose of customers and a dramatic decrease of profitability are nothing but a result of this challenge. Hence, this part of the paper is going to be dedicated to the creation of a strategy aimed to help the company overcome this challenge.

As far as I can see, in order to overcome its challenge, the company needs to focus on four major aspects including a need for change, mentoring and training of employees, creating a tool for constructive feedback as well as leading organizational change. The following part of the text is to be dedicated to the consideration of each of these aspects in detail.

At the outset, there is a need to point out that the company's executive board should realize the need for change in terms of organizational culture and leadership performance. As soon as this need is acknowledged, the need for the change needs to be delivered to each and every employee of the company regardless of his or her position. It is necessary for local managers and supervisors to conduct informational meetings with their employees and inform them about the current situation of the company.

The next step to be undertaken needs to involve mentoring and training of employees. As soon as the need for organizational change is acknowledged by employees, they are to be provided with guidelines and advice on how they can help the company to overcome the current challenge. Needless to say that any guidelines and pieces of advice are followed properly only in a case when employees' behavior and actions are supervised and evaluated on a regular basis. That is why it is necessary for the company to ask its managers and supervisors to develop special programs for monitoring and assessment of employees. It is possible to use either individual or group assessment but it is advised to use a unified system for the whole international corporation to make it easier for the executive board to tamp the results and evaluate the effectiveness of the implemented changes in terms of organizational processes.

Apart from the steps described above, McDonald’s should focus on a creation of an efficient tool for getting constructive feedback from both employees and customers. This step will help the company to keep itself up-to-date regarding all problems and issues that might take place in some locations of the corporation. Apart from it, this tool is likely to help the company accumulate a number of interesting ideas and proposals for further development and improvements of its organizational process. Moreover, it is necessary to take into account that a well thought-out system of feedback will encourage customers and employees of McDonald’s to share their negative opinions directly with the company instead of referring to press and providing the company with a negative PR which is always considerably hard to deal with.

The last but not least thing that needs to be taken into account by the executives and top management of McDonald’s is a need for a long-term focus on organizational change. By this statement, it needs to be understood that in the following years the international corporation should align each and every aspect of its business with its long-term goal, which is to overcome the challenge of organizational culture and leadership and reestablish its position of the industry leader in terms of profitability, popularity, and reputation.

Conclusion

In order to make a conclusion to everything stated above, it is necessary to point out that just like any other company, McDonald’s can face certain challenges from time to time. At this moment, the company is facing a financial challenge, which is believed to be a result of a lack of organizational culture and organizational leadership. The company seems to lose its position of the leader of the fast food industry, and it needs to follow a number of steps in order to gain this position back.

It is possible to suggest many different approaches for McDonald’s to focus on in order to achieve the goal, but, in my opinion, there are certain steps that are most likely to help the company do so. As far as I can see, it is necessary for the company to acknowledge the need for change and make sure that every single employee of the company regardless of his or her salary and position understands this need and does one’s best to align his or her work with this need. Second of all, it is immensely important for the company to conduct training in order to educate its employees regarding the tools and methods they are expected to implement in order to help the company overcome its current challenge. Third of all, it is critically important for McDonald’s to design a system of constructive feedback that will enable the customers and employees of McDonald’s to share their views and opinions on the future of the company and suggests ideas for further improvement, development, and growth. Apart from it, the company is expected to align its short-term strategies and ideas with its long-term goal, which is to overcome the current financial challenge and regain its position of the industry leader in terms of quality of product and service offered.