ADMS1000 (1)

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Feb 20, 2024

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1 Mini case: McDonald’s need for speed 1. Environmental Factors Impacting McDonald's: A) When it comes to management and operations, McDonald's uses both traditional and behavioural approaches. The standardisation of work within their restaurants is a blatant illustration of the adoption of classical principles. As an illustration, the case explains how CEO Steve Easterbrook carefully watched the queue cooks as they made Egg McMuffins on a hot grill. This suggests that McDonald's adopts a functionalist strategy, similar to Henry Fayol's theories on the division of labour and Frederick Taylor's concepts of job standardisation. In order to ensure that clients consistently experience the same flavour and have a short wait time, consistency and efficiency are the goals here. The case demonstrates how McDonald's has adjusted to changing consumer demands for healthier and more diverse food offerings under CEO Steve Easterbrook. They added fashionable salads, artisanal bread sandwiches, and all-day breakfast to meet changing customer needs for healthier and more diverse menu options. This illustrates McDonald's need to adapt to shifting consumer tastes in order to remain competitive. In this situation, the two environmental elements that appear to be having the greatest impact on McDonald's are:

2 Consumer Preferences and the Competitive Landscape: The fast-food sector is highly competitive, and consumer preferences are continuously changing. McDonald's is up against a slew of fast-food competitors, including Starbucks and Tim Hortons in Canada, as well as fast-casual restaurants. As evidenced by the advent of salads with kale and brussels sprouts and the desire for all-day breakfast dishes, consumer preferences are evolving towards healthier and more variety menu options. This environmental aspect is significant since it necessitates McDonald's adaptation of its menu and operations in order to accommodate to changing consumer demands and remain competitive in the market. McDonald's operates in a global market, and some of its main markets, including the United States, Canada, France, Germany, the United Kingdom, and Australia, have reached market maturity. Market maturity implies that growth prospects may become restricted, and competition for market share may become more intense. In this setting, McDonald's must devise strategies for stealing market share from competitors while also adapting fast to changes in consumer demand. McDonald's choice to rearrange its organisational structure to promote the exchange of best practices and increase efficiency across markets is influenced by the environmental element of market maturity, particularly in its main countries. These two environmental issues have an impact on McDonald's because they require strategy changes to remain relevant and competitive in the fast-food market. As described in the case, McDonald's is focused on menu innovation, operational efficiency, and organisational restructuring to solve these difficulties. 2.Suitable Organisational Structure for McDonald's:

3 To identify the best organisational structure for McDonald's, we must evaluate To determine the most suitable organisational structure for McDonald's, we need to consider the five elements of structure (specialisation, hierarchy, formalisation, centralization, and professionalism) and the four contingencies of structure (strategy, size, technology, and environment). Specialisation: McDonald's benefits from a high degree of specialisation, especially in its kitchen operations. Tasks are highly standardised and specialised in order to ensure uniformity in food preparation across all sites. Hierarchy: Although McDonald's has traditionally had a hierarchical structure, CEO Steve Easterbrook's actions indicate a shift towards a more flexible and adaptive structure. He restructured the company's structure to integrate its top markets, demonstrating a desire to flatten the hierarchy and foster collaboration. While there is some formalisation in the form of standardised methods and recipes, Easterbrook's emphasis on menu simplicity shows a move away from excessive formalisation in order to streamline operations. Centralization: According to the instance, Easterbrook aimed to use the experience of market leaders in various locations. This implies a shift towards decentralisation, with more decision-making power in local markets. Professionalism: McDonald's is a highly professional organisation that focuses on customer service training and consistency.

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4 Considering structural contingencies: Under Easterbrook, McDonald's approach seems to be one of innovation and market adoption. The requirement for a more organic and adaptable structure that can react swiftly to shifting market circumstances is indicated by this. size: Although McDonald's is a big international organisation, Easterbrook's actions, such as the merging of top markets, show a readiness to modify the organisational structure to account for the company's changing scale. Technology: From order kiosks to smartphone apps for delivery, technology plays a big part in McDonald's operations. A flexible structure that effectively integrates and uses technology is therefore required. Environment: A more organic structure that enables quick responses to competition and shifting customer preferences is essential given the market's competitive and dynamic nature. Due to its size and standardised operations, McDonald's has historically had a mechanistic structure; however, the case study reveals a shift towards a more

5 organic structure. Speed, adaptability to shifting market demands, and an emphasis on intelligent, productive growth are the driving forces behind this transformation. McDonald's wants to improve its agility and competitiveness in the fast-food sector by reorganising its organisational structure, decentralising decision-making, and streamlining processes. McDonald’s need for speed: Inside CEO Steve Easterbrook’s bold strategy ... (n.d.). https://financialpost.com/news/retail-marketing/mcdonalds-need-for-speed-inside-ceo-steve- easterbrooks-bold-strategy-to-transform-the-fast-food-giant

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