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ĐẠI HỌC HUẾ FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS
FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS -🙣🙣🙣 - PRESENTATION SCRIPT ANALYSIS OF MCDONALD'S ORGANIZATIONAL STRUCTURE IN MALAYSIA Class: KDOE307.1 Guide Teacher: PhD Nguyen Hong Tra My Group: Hanoi, September 2022 Table of contents I Overview of McDonald's corporation II Analysis of McDonald's organizational structure in Malaysia III Advantages and Disadvantages of McDonald's structure I Overview of McDonald's corporation A History of McDonald's • The McDonald Brothers McDonald's was first established in 1940, by brothers Richard and Maurice ("Mick & Mack") McDonald as founders The foundation of today's successful business was acquired by Ray Kroc from the McDonald brothers and developed into one of the world's most successful fast food ventures • Going Global McDonald’s continued to grow and expand into international markets beginning in 1967 opening in Canada and Puerto Rico Today, the company has over 36,000 restaurants in over 100 nations Every day, McDonald's is estimated to serve nearly 70 million customers in more than 100 countries With its influence, McDonald's has expanded to many countries and began to license development in 65 markets around the world B McDonald’s entered Malaysia Not many people know that the person responsible for bringing McDonald’s to Malaysia is none other than Tan Sri Vincent Tan, the founder of Berjaya Group, one of the largest and most successful companies in Malaysia It first arrived in Malaysia in 1980 when Tan’s Golden Arches Restaurants obtained the franchise license from McDonald’s Corporation, USA and in 1982, the first outlet was opened in Jalan Bukit Bintang, which is still operational until today McDonald’s Malaysia has one of the largest and most well-managed staff forces in the country II Analysis of McDonald's organizational structure in Malaysia A Vertical differentiation With a wide view of the world, McDonald’s has a decentralized organizational structure It is when lower levels of a business hold the decision power It is usually present when the business has many locations and therefore the head office is reasonably unable to control or make decisions of all the locations McDonald’s operates in over 100 countries in the world which makes it impossible for the CEO to control all the operations in every country Instead, each country has its own head, manager, and other staff members who take care of operations in specific departments The organizational structure of McDonald's in Malaysia In a country and specifically Malaysia, McDonald's will apply centralization to domestic businesses Centralization is said to be a process where the concentration of decision-making is in a few hands All the important decisions and actions at the lower level, all subjects, and actions at the lower level are subject to the approval of top management At the top management level, decision-making is centralized It is a setup in which major decisions are made by a few directors at the top of the organizational structure and communicated to lower-level managers for implementation Specifically here can be seen in the graph, the important issues will be decided by the chairman of the board (11 directors) The implementations will be communicated from these directors to the CEO, then to smaller departments like the chief operating officer, corporate affairs, marketing, human resources, national operations, regional managers, finance, and strategic planning In a centralized organization, various advantages make the office work of McDonald’s organized and create an easy flow Every company has a vision and when a centralized power works, then focusing on the goal is easy and effective This goal will also help the employees of McDonald’s better understand their work, purpose, and policies Furthermore, some basic methods and processes help the organization reduce McDonald’s administrative and office costs The headquarters of the company have all the necessary equipment required to run the office It doesn’t hire extra specialists for making critical and special decisions In McDonald’s organizational structure in Malaysia, the decisions made by a small group of people are easy to communicate with Since there are only a few people involved in decision-making, it becomes easier to avoid conflicts and agree to a conclusion quickly Despite a number of benefits, McDonald’s centralization organizational structure may involve some limitations in the working environment The lack of implementation of employees’ work in McDonald's is not understood by the management, thus lowering their motivation and performance level And of course, when employees not have their say in company decisions, they automatically lose interest in what they Also, the rules’ implementation takes time and is often hard for the employees as the head office makes the decision and has to abide by the authorities It is a tedious task to implement the executives’ decisions, and they end up making poor decisions that the employees often ignore B Horizontal Differentiation McDonald’s Corporation has a divisional organizational structure In this company structure type, the restaurant business is divided into components that are given responsibilities based on operational requirements Each division handles an operational area and corresponding strategic objectives linked to McDonald’s corporate mission statement and corporate vision statement One of the aims of the divisional corporate structure is to support autonomy and organizational flexibility in satisfying business needs in different food service markets McDonald’s organizational structure has the following characteristics, which influence the operations of the fast-food restaurant chain business: Performance-based divisions (Global market) Function-based groups (Corporate itself - in Malaysia) Performance-Based Divisions Performance-based divisions are among the most distinct features of corporate structure Currently, these divisions represent markets that according to the fast-food company’s business performance reorganization in 2015, the following geographic divisions were in organizational structure: McDonald’s are grouped Before its McDonald’s U.S • Europe • Asia/Pacific • Middle East and Africa • Other Countries & Corporate (OCC) including Canada, Latin America, and Corporate After the 2015 reorganization, McDonald’s now uses performance as basis for the new divisions in its corporate structure: • • • • • U.S International Lead Markets High-Growth Markets Foundational Markets and Corporate The United States division generates the biggest regional sales revenues for McDonald’s As such, operations in the U.S market are considered a single division in the organizational structure, separate from the rest of the restaurant chain’s operations The International Lead Markets division includes the highestperforming groups of restaurant locations outside the United States This part of McDonald’s corporate structure also represents a major chunk of total global revenues The High-Growth Markets division accounts for a small minority of the fast-food company’s revenues However, this part of the organizational structure addresses markets that have potential for business growth based on rapid food service market development and economic opportunities and related trends, such as the “better burger” movement and others enumerated in the PESTEL/PESTLE analysis of McDonald’s Corporation and its external business environment To be more specific, the top-manager level of McDonald’s is based on geographical features, too Presidents are provided autonomy in decision making to a great extent to increase sales in their respective markets The autonomy refers to adjusting the content and delivering McDonald’s marketing message to their respective markets taking into account cross-cultural differences Moreover, Presidents are free to introduce new items in the menu reflecting tastes and preferences of local markets Function-Based Groups This is the type applied in the Malaysian market McDonald’s corporate structure maintains function-based groups McDonald's has several top-level executives These include the chief executive officer and the other directors They are responsible for making decisions, setting objectives, finances, operations and the overall supervision and functioning of the company After the top-level executives, there are five departments that have specific responsibilities: • The marketing department is responsible for marketing and advertising It takes care of maintaining the right exposure and brand image of the company It consists of a country head, a marketing manager and an advertisement manager Each country has its own marketing department to maintain marketing and advertising in the area • The sales department is responsible for sales-related duties and tasks It makes sure they are run properly and effectively It consists of a country head and a regional sales manager Each country has its own sales department taking care of sales in the region • The finance department is responsible for finance, accounting and anything related to money It ensures the right money flow, investment and fund handling It consists of a country head, finance manager and account manager Each country has its own finance department taking care of money matters in the area • The restaurant department is responsible for ensuring that restaurants are run properly It consists of a country head, restaurant manager, staff training and crew members such as cooks, servers and cleaners Each country has its own restaurant department taking care of restaurants in the region • The supply department is responsible for ensuring that the company is supplied with all the necessary resources such as food items and packaging materials for restaurants It consists of a country head, procurement, logistics and storehouse Each country has its own supply department taking care of supplies in the area Although there are some main departments operating in every geographical area, each country can have some additional departments according to its needs When it comes to Malaysia, below the chief executive officer and board of directors, departments are broken into chief operating officer, corporate affairs, marketing, human resource, national operations, regional managers, finance and strategic planning Therefore, I would say that McDonald’s structure design in Malaysia at organizational level is functional Functional structures are used normally by such big companies like McDonald’s We can see from the chart that most of the work is done by different departments, and then gathered by the CEO For example, the human resource department’s specialized task is training and recruiting in addition to assigning the right qualified person to the right position “Functional structure activities are grouped together by common function from the bottom to the top of the organization” (Daft, 2013) The functional structure is known by its large degree of formalization, and its standardized ways of operation Usually the communication is done in a vertical way However, McDonald’s uses horizontal communication among different departments “Using horizontal linkages overcomes some of the disadvantages of the functional structure” (Daft, 2013) In this type of structures, functional structure, decision making is mostly centralized and made at the top level of the hierarchy that is the CEO In this case, it is done by Don Thompson, current McDonald’s CEO C Integrated Mechanism McDonald's restaurants follow a rigid structure In mechanistic organizations, collaboration is uncommon, and written communication is preferred—something that McDonald's does not frequently People frequently exchange tasks and work together via oral communication, so it appears that the restaurants have an organic organizational structure The job descriptions for the various classes of managers at McDonald's restaurants share a lot of characteristics, making them frequently interchangeable Additionally, managers are frequently expected to fill in for absent workers, suggesting that they frequently perform crew member duties This kind of organization aids McDonald's restaurants in fostering an environment where everyone has the same rights and obligations McDonald's has a collaborative management strategy that unites all of its international franchisees under a common corporate identity Management promotes the practice of helping each other's franchisees work together to provide the finest service possible to their clients by overcoming external hurdles and exhibiting a collaborative, responsible culture All franchises must adhere to the same criteria in order to guarantee a high level of quality McDonald's has a rigorous organizational structure that divides the company into departments, and each employee is well-versed in their duties In McDonald’s, they are using matrix organization The CEO will be in charge of a team of line managers that are in charge of various areas of the business Every organization has a leader that oversees and controls all operations in order to rapidly address any issues that may arise The strength of the alignment among the many has been a key to McDonald’s success The top managers will establish the goals, which will then be communicated to the middle and lower level managers so that they may fully comprehend their responsibilities and fulfill the goals A hierarchy of employees, including area supervisors, is in charge of managing the 25% of McDonald's assistants who are not franchisees Each area manager is in charge of the operation of a set of stores in a particular region The McDonald's Corporation practices effective communication The majority of McDonald's locations in Malaysia run as franchises Information flows from higher level to lower level In this organization, communication with stakeholders is primarily handled by the restaurant manager and senior assistant manager Companies like McDonalds are essential in this process because they must constantly be prepared to provide their customers with better service and avoid running out of items that are used internally Customers, suppliers, and staff are McDonald's primary stakeholders These stakeholders can both affect and have an impact on how the restaurant operates McDonald's regularly communicates with its stakeholders Employees are internal stakeholders since they work for the firm, have a stake in it, and have a say in how it is operated Consequently, every employee at McDonalds is a stakeholder This could come from the department's chief or a part-time team member As long as they are employed by the corporation, it is irrelevant Employees at McDonald's frequently attend staff meetings with supervisors where they can discuss whether they believe things are going well or not III Advantages and Disadvantages of McDonald's structure A Advantages • Close communication with local customer and strong collaborative teams at each location By giving managers the autonomy to make business decisions within their scope, they can quickly change direction in response to localized changes This means McDonald’s can give customers in Malaysia what they want by developing products and marketing strategies to best appeal to them The geographical structure makes McDonald’s easier for it to reach the Malaysian market Across Malaysia, McDonald's has set up many unique outdoor billboards, using dishes such as fries, hamburgers, ice cream, etc to create images of iconic landmarks such as Kuala Lumpur Capital, Penang Bridge, Petronas Twin Towers McDonald's has invested around $71,276 on 54 billboards in various areas of Malaysia, demonstrating the fast food company's efforts to "localize" the brand to attract customers' love • High productivity level and decreased cost of operation 10 The functional organizational structure helps McDonald's save money in many ways By organizing or categorizing employees by area of expertise, departments have distinct missions, all of which contribute towards the larger goals of the company McDonald's employees all have unique skills that allow them to be more productive, which can lead to increased productivity The high level of reliability allows them to complete the task accurately without much supervision Due to the fast pace and accuracy of the works, the cost and time would also be reduced • Create more accountability and transparency Because McDonald's divisions have their own management teams to lead them, it is easier to hold individuals accountable for their actions In Malaysia, each department works in their own best interests, which also means more transparency about who deserves credit for positive results Thanks to the abovementioned positive aspects, McDonald’s in Malaysia achieved its highest overall performance in its 36-year history in Malaysia, by recording a 19 percent year-on-year sales growth in 2018 B Disadvantages • Narrow scope Without experienced guidance and extra information from managers, McDonald’s employees in departments may possess little knowledge of how their roles relate to the firm's objectives They may also have a limited understanding of how their work affects the other departments Therefore, McDonald’s handles this by ensuring they take steps to communicate to all departments and teams about how the company is working together as a whole Group emails and company-wide meetings are effective ways to achieve this • Encourages rivalries Separate divisions of McDonald’s may feel encouraged to treat each other as competitive rivals instead of part of the same company Having independent goals can lead to increased office politics and management groups attempting to gain advantages Sometimes senior leadership distributes the company budget based on performance, which can also cause gaps between divisions To prevent this, 11 McDonald’s should consider establishing quarterly corporate events or monthly company-wide meetings as ways to provide them a shared vision of responsibilities and inspire cooperation among all divisions 12 ...Table of contents I Overview of McDonald's corporation II Analysis of McDonald's organizational structure in Malaysia III Advantages and Disadvantages of McDonald's structure I Overview of McDonald's... and developed into one of the world's most successful fast food ventures • Going Global McDonald’s continued to grow and expand into international markets beginning in 1967 opening in Canada and... hierarchy of employees, including area supervisors, is in charge of managing the 25% of McDonald's assistants who are not franchisees Each area manager is in charge of the operation of a set of stores