ntroduction

McDonald’s is comprised of more than 30,000 local restaurants and serves 52 million people in more than
100 countries each day[1]. The company is the largest food retailer in the world and is part of the
American way of life. In order to remain competitive and an iconic American institution, McDonald’s has
developed programs and strategies for motivating employees and teaching leadership. As a result, our
group believes that McDonald’s presented an excellent opportunity to observe organizational behavior in
action.

In this observational study, we sought to discover what leadership techniques and group skills were actually
practiced by McDonald’s employees. Our field study entailed visiting four different McDonald’s stores in
the greater Rochester area during distinct shifts ranging from early morning to late night. During each visit,
a group member made a purchase and sat at a table where one could observe the behavior of managers and
employees and customer interactions, without interfering with normal operations. Due to the fact we were
restricted to a small sample of McDonald’s restaurants, we could not capture the complete spirit of the
corporation. However, we were able to relate our findings to leadership and organizational behavior
theories and some of McDonald’s corporate values. Through a series of observations and corporate
research we discovered that McDonald’s employees demonstrate quality leadership and that the
organization as a whole puts significant effort into motivating and working for its employees.

Corporate & Work Culture

When analyzing an organization’s leadership and teamwork skills, it is useful to first analyze the
organization’s work culture and how this culture is maintained. The work culture of McDonald’s seems
highly dependent upon the particular line manager in charge at any given point in time. One would imagine
that the manager would almost always use position power and would use a telling style of leadership since
the typical employee is young or inexperienced. Indeed, some managers were observed as running the
operations in a machine like manner, especially during peak business periods. However, in the majority of
cases the managers were relatively relaxed and sometimes were indistinguishable from the other
employees. One manager in particular used a selling approach, which indicates a higher readiness level of
her team (Daft, 2008, p. 73). She did not simply give orders, but accepted feedback and alternatives to her
decisions. While it was obvious she was the manager, her team was obviously in the later stages of
development and was comfortable outside of their predefined roles.

ntroduction

For our project we have decided to analyze McDonald’s. We propose to look at

how McDonald’s has attempted to change their image through marketing strategies over

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the years. They have done this in a variety of ways, not just with their products. For

example, they changed packaging on their products to become more environmentally

safe. They have also created new menu items in the past 10 years in order to offer some

“healthy” options to those watching their waistlines. This is an effort to appeal to

customers who might have disregarded McDonald’s in the past because of traditional

stereotypes. They have done this in a variety of ways using the four P’s and are

attempting to change society’s perceptions. Many people today are unhappy with

McDonald’s and their “unhealthy” food, and we were interested to see if the current

marketing strategy that McDonald’s is using is creating a positive change for the

company.

History

McDonald’s, now known world wide as one of the major powerhouse’s in the

fast food industry, began in San Bernardino on May 15, 1940. It originated as a barbeque

restaurant under the ownership of brothers Dick and Mac McDonald, and soon evolved

into a teen hangout generating 80% of its revenues from hamburgers alone. In 1948,

McDonald’s switched gears and increasingly targeted the young family market,

developing its operation concepts around speed, lower prices, and higher volume. They

ran under the slogan of “speedy service systems,” selling their hamburgers with fries for

an astonishing 25 cents. In 1954 Ray Kroc, a previous restaurant owner, saw potential for

growth in the company and capitalized on it convincing the McDonald brothers to

franchise the company with his financial support. In 1963 McDonald’s introduced

Ronald, a fun loving clown, to promote their restaurant as a family establishment, and he

became a huge success. In fact, Ronald is now an icon symbolizing the McDonald’s

firm.

As the restaurant continued on its upward spiral toward success, they decided to

go public for the first time in 1965 offering one hundred shares of stock for $2,250

dollars. In today’s market, that is equivalent to 74,360 shares worth over $1.8

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million (www.mcdonalds.com). In effort to give help to those who are in need,

McDonald’s collaborated with the Philadelphia Eagles’ Fred Hill and created the Ronald

McDonald House in 1974. At the house, families of critically ill children are given a

home away from home while their kids are treated. Today, McDonald’s is the leading

foodservice retailer with more than 30,000 locations in over 119 countries, and is a

symbol of American culture.

Historical Reputation

McDonald’s was the first fast food restaurant on the scene. There have been

many imitators over the years, but it has historically been number one. Since its first

opening in 1940, the business has boomed into an international craze. Historically,

McDonald’s has been viewed as the pinnacle and one of the defining features of the

American lifestyle. Burger, fries, and a Coke were the traditional meal. Once it spread

globally, it boomed into popularity because other countries wanted to be associated with

the successful image of the “American dream”. It was not until recently, within the last

15 years, that people began to question the health and safety of the fast food industry, and

have been focusing on McDonald’s because it is an easy target. When a company is that

large, it is a natural target for inner directed consumers, and those who wish to upset the

conformist lifestyle.

Reputation Today

Though all this talk about “poor health” and “risk” associated with McDonald’s

seems bad for the business, we set out to see if it was really hindering their success

today. McDonald’s is, after all, still the most prevalent and recognizable fast food

establishments in the world. The health aspect has actually spread out of the United

States and become a global issue.

According to All Headline News, McDonald’s saw a profit loss of 14 percent

last quarter. It was the biggest loss the company has had since 2002. This may seem like

an indication of their dropping popularity; however it was actually not related to their

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customers’ satisfaction (or lack thereof). According to the company, their loss reflected a

large tax benefit it received over a year ago, and that sales have actually been going up

over the last 35 months due to a series of successful new products, extended hours,

restaurant renovations and allowing customers to pay with credit and debit cards.

As stated before, McDonald’s is the worlds leading fast food restaurant and is

globally recognized. With over tens of thousands of stores spread across 119 countries,

McDonald’s serves an astounding 50 million customers

daily(www.mcdonalds.com). With such an extremely large consumer base, it is

crucial that they know and understand how their customers feel regarding the overall

satisfaction of the McDonald’s experience.

The type of experience McDonald’s offers to its loyal consumer is, on the

majority, rated high in overall satisfaction. The reasons McDonald’s consumers are

loyal to McDonald’s and not to its competitors are many. First, McDonald’s has

recognized the importance of diversity and its impact within company strategy. They

have done an excellent job in implementing a multidomestic strategy to ensure the loyalty

of its customers and their changing wants and needs. This is shown through their diverse

menu options around the globe. For example, McDonalds’ restaurants inIndia created a

vegetarian sandwich in order to cater to their need of not eating beef. By increasing the

number of segments they can market to, they are able to reach more people. This is only

one example of many on how McDonald’s has met the needs of its customers.

McDonald’s provides a positive and caring attitude towards the community of

which it serves. McDonalds’vision states that "We are not a hamburger company serving

people; we are a people company serving hamburgers".With a vision so clearly

committed to people, customers have responded by continuing to keep

McDonald’s number one.

Other aspects of the McDonald’s dining experience show why their customers

continue to hold their reputationhigh. They use things like the dollar menu, playgrounds,

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endorsements, and charities all add to create the overall satisfying experience. These

things overshadow the health risks that are a large issue in today’s American society.

Through the information we have found, McDonald’s is still popular because it is about

convenience and fast food. Until people are willing to wait longer to eat and pay more

for healthier food, it will still be one of the leading chains.

So, does it seem that they are repairing the damage done by the “health nuts”?

On the contrary, they may have maintained their customer base through smart advertising

and marketing but are still not popular with many people. They are such a large and

conspicuous company that many people find it easy to blame them for problems. Inside

theUS, they are the target for various causes such as anti-globalization groups and

environmentalists who believe their packaging is creating excess waste. It has also been

accused of being heavy-handed in its retaliations to these protests, giving it a

somewhat bully image. Outside of the US, McDonald’s is still widely pervasive in most

countries, all of which have local owners. Yet, it finds itself a symbol of American

domination of economic and natural resources. There are also many urban legends about

its food and company, and it is a target for unusual lawsuits.

Customer Base

This is not to say that all people hate McDonald’s. Their website claims to serve

over 50 million people per day. Who are McDonalds’ customers? Stereotypically they

are overweight, lazy, and unhealthy people (men, women, and children). This could be

adding to the social stigma surrounding McDonald’s and adding to their unhealthy

image. One crucial group is what they call the “heavy hitters”. These are men 18 – 34

years old, who eat at the restaurant three to five times a week. These men actually only

make up about 20 percent of the customer base, but account for nearly 70 percent of the

visits to the chain (Alexander, 2004)! However, McDonald’s decided to phase out the

“Supersize Option” on its meals in 2004, which could be alienating this group. It is

important to keep this group because they bring profits way up by increasing margins on

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sales. The change was implemented when McDonald’s began to focus more attention on

attracting moms and health-conscious adults.

Target Market

Traditionally, and still today, McDonalds’ focus in advertising, marketing, and

design has been children. This is obvious with their PlayPlace, Happy Meals, and

character Ronald McDonald. They actually introduced Ronald as a way to draw families

into the restaurant. In recent years, McDonald’s has also been increasing their marketing

toward mothers. This makes sense because they have to also draw the moms into the

restaurant, where the kids want to go. They are almost a small addition to the child

market. They use a variety of marketing strategies to attract children, moms, and families

in general.

Promotions and Current Marketing

McDonald’s is actively working to change their image to a healthier

one. Gone are the days where hamburgers are the key advertising attraction. People

already know McDonald’s; in fact the golden arches are the single most recognized

symbol around the world, even before the cross. They have completely saturated the

market to the point where you can now even order a Big Mac while shopping at Wal-

Mart. Their problem, however, is their battle with health critics and customers filing

lawsuits about their unhealthy products. This negative publicity is shaping some

stereotypes around the company which they want to change.

As we know, perception is reality. The American public sees McDonald’s as a

restaurant that is as unhealthy.Americans don’t go to McDonald’s with visions of healthy

food dancing in their heads. Some don’t even go to McDonald’s at all. So how does

McDonald’s get them back? This is an immense project that may also never be a

successful one.

it’s what i eat and what i do…i’m lovin’ it

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 The most recent way that McDonald’s has tried to create a healthy image is their

new marketing campaign titled “it’s what i eat and what i do…i’m lovin’ it.” The

campaign is meant to build upon their global marketing campaign, “i’m lovin’ it,” which

was launched in September 2003. It is designed to “tie all our balanced, active lifestyles

messages together,” said McDonald’s CEO Jim Skinner (Press Release, 3/08/05). The

theme highlights the “important interplay between eating right and staying active.”

Throughout all of the press releases and media material that we found on

McDonald’s corporate website there was one common phrase: “balanced, active

lifestyles.” It is their new platform and it consists of three pillar ideas: increasing menu

choice, promoting physical activity, and providing more accessible information. In the

next few paragraphs we will illustrate just exactly what McDonald’s is doing in their

marketing campaign to address these three pillars.

The most recent example of the first pillar, increasing menu choice, is the

introduction of the new Asian Chicken Salad. McDonald’s is both expanding their menu

and increasing the availability of “healthy” foods. Advertisements for this new salad are

everywhere. Signage is present outside the restaurants, on street banners, and even on the

windows and near the registers. One food bag also featured the new Asian Chicken Salad

as part of a GoActive! Happy Meal. We even saw a couple different versions of

advertisements on television for this salad as well as an ad in “InStyle” magazine. It is

their newest healthy item. Other recent menu additions were also “healthier” choices such

as Premium Chicken sandwiches and other premium salads.

The second pillar of this campaign, promoting physical activity, is also evident

on bags, cups and signage in each store. The bags that hold food orders no longer have

hamburger ads on the outside. They now feature images of people leading “balanced,

active” lives. On one bag, a woman is doing yoga with a caption saying “being good to

myself has never been easier…i’m lovin’ it.” This lady is sending a message that

she thinks it is easy to maintain her healthy lifestyle by eating at McDonald’s. Physical

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activity is also promoted through the introduction of four different 15 minute workout

DVDs that you can get when you buy the GoActive! Happy Meal that includes a salad

and a Dasani bottled water. During the Winter Olympics in Torino, many Olympic

athletes were also featured on McDonald’s bags with motivational messages about their

active lives. McDonald’s is doing everything they can to broadcast images of healthy

active people and associating them with McDonald’s.

The third and final pillar, more accessible information, is evident in McDonald’s

new packaging concept that will provide nutritional information on individual food

boxes. McDonald’s has a “30 year history of providing nutrition information to

customers,” but as recent lawsuits against McDonald’s and scenes from the movie “Super

Size Me” suggest, they have room for improvement (Press Release, 2/0706). The

lawsuits against McDonald’s claimed that the plaintiffs were obese because they were

unaware of the nutritional content of the McDonald’s food that they were eating.

Whether that is believable or not, McDonald’s was forced to make a move. They were

lucky that these lawsuits were thrown out due to the fact that the plaintiffs could not

prove that McDonald’s was at fault, but what if the next plaintiff had a better case?

McDonald’s has to be on the defensive.

Therefore, McDonald’s is moving nutrition facts straight to the box. Not only

does each box have the nutrition facts table, but McDonald’s also chose to highlight the

five most relevant indicators that customers can understand: calories, protein, fat,

carbohydrates, and salt. These five indicators are presented in a different color, while the

nutrition table is presented in plain text. The only packages that will not feature

nutritional information will be those used in short-term promotions and wrappers and

containers that are used for multiple products. In those cases, customers will be referred

to McDonald’s websites and in-restaurant brochures.

Marketing for Children

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 Another part of McDonald’s push toward “balanced, active lifestyles” also

includes their interaction with children. Kids are a huge market that McDonald’s caters

to and has done so for many years. Parents often take their kids to McDonald’s because

it is often the only indoor play area around, and also provides a quick, convenient, and

fairly cheap meal. In a country where everyone is busy with work and shuttling kids

back and forth to soccer practice, a quick meal is invaluable. The kids are fed and are

able to run around and play at the same time.

McDonald’s is finally aware of their hold on kids and how this hold is affecting

the health of American kids. Because of this, McDonald’s is now using Ronald

McDonald as an advocate for balanced, active lifestyles. The goal is to have him inform

both kids and families around the world about the importance of eating healthy and

staying active. In the fall McDonald’s plans to release the first two in a series of DVDs

featuring Ronald McDonald, these DVDs are meant to show kids “how much fun they

can have when they activate their bodies, their minds, and their imaginations”(Press

Release, 2/07/06).

New “Healthy” Products

Over the years, McDonald’s has also introduced a variety of new products to

combat the image of unhealthiness. These have worked to diversify their menu, but have

not made much of a difference in the perception of the restaurant. Some of the new items

include the Premium Salads, Premium Chicken Selects and Chicken Sandwiches, bottled

water as a substitute for soda, Low-Carb options for normal menu items, the Apple

Dippers and fruit bags, and the Fruit and Yogurt Parfait. Beside reminder

ads, McDonald’s is currently spending the majority of its advertising budget on these

new products, and still sell more double cheeseburgers than all of them

combined (Warner, 2006)! In fact, though they are marketed as healthy but a Chicken

Caesar Salad with dressing at McDonald’s actually has more calories from fat (270) and

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percentage of daily sodium (64%) than a Big Mac (270 calories from fat, 42% daily

sodium) (Nutrition, 2006).

The Olympics Partnership

The Olympics have a long lasting reputation for their presence and involvement

with sports and collaborations with corporations for sponsorship and advertising

opportunities. Because the Olympics have such a profound impact worldwide on

individuals, it is not surprising that the marketing element in the Olympic Games is so

prevalent. With the Olympics being a globally viewed event (over 2 billion) in over 200

countries, marketing throughout the duration of the games can generate mass publicity

leading to greater profits for the sponsors. Sports also play a role in millions

ofpeople’s lives around the world. It is one arena of life that the mass media also

finds significant; implicating the obvious reason that marketing through the Olympics is a

golden opportunity.

Other than being a company who markets their product via commercial or some

other media outlet, sponsors of the official Olympic Games contribute a great deal in

understanding the entirety of how corporations are involved with the Olympics. Sponsors

show their support to the Olympic Games by providing financial and other resources to

give their image a positive boost. McDonald’s has latched onto this sponsorship idea, and

began sponsoring the Olympics in 1976. It is important to understand how the Olympics

affect their sponsors and vise versa, which explains the in depth explanation of the

Olympics.

McDonald’s was in its rapid growth stage as America was embracing the

experience that McDonalds offered; inexpensive food and quick, friendly service. As

McDonald’s was becoming a familiar household name throughout the country, so

were the Olympics. When they became an official sponsor, it was most definitely the

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merging of two huge forces, and became a long lasting relationship. McDonald’s today

continues to show the Olympic Gamestheir committed support, and uses their

relationship to promote its new “healthy” image. McDonald’s CEO had this thought on

their involvement with the Olympics, “Our McDonald’s restaurant teams have always

shared many of the same ideals as the Olympic team. They include excellence, teamwork,

and being your best. For more than 30 years, we have been a proud sponsor of the

Olympic movement, a partnership that directly aligns with our ongoing commitment to

help people live more balanced, active lives”. Not only is McDonald’s a devoted and

veteran sponsor, they hold the position of being the top sponsor of the entire “Olympic

movement”. Although McDonald’s has had a long run as being the top sponsor to the

games, it will come to an end when the 2012 London games take place, for their

sponsorship will cease. We haven’t found the reason behind the decision which is

surprising because it is a significant one. McDonalds’sponsorship with the Olympics has

provided many positive outcomes for both parties. Having a close affiliation with the

Olympics altered the way that the public perceives McDonald’s, which was what they

were hoping for, especially in the last decade. The question is, has their sponsorship

changed the company or how the public perceives it?

The essence of the Olympics is about fitness and bringing together the best of

the best, two very important values. As McDonald’s became more and more aware of

their customers increasing interests in a more healthy diet, they began to change their

strategy fast. McDonald’s also realized that the affiliation with the Olympics alone could

help make their transition to a more health conscious restaurant more

visible. So, McDonald’s began promoting the sponsorship by adding it to their

packaging, voicing it in their commercials, and in other media outlets. By doing so,

people started to view McDonald’s in a healthier way, through a small halo effect. The

affiliation between the two also intertwined the values of health between both the

Olympics and McDonald’s. In other words, some people started to think of McDonald’s

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as being the best in the fast food industry, and also purchasing the “healthy”

items. Although this was only the first step McDonald’s took toward changing their

image, it was one that had a lasting impact.

Recently, McDonald’s has become aware of the increasing health conscious

public and has tried to adapt accordingly. They have incorporated many different

campaigns to capture and promote the essence of healthy living. As stated before, among

these include the sponsorship with the Olympics, offering a line of products which are

marketed to the health conscious customers, endorsements with super-fit

celebrities, collaboration with other health-oriented products such as bottled water, and

also the introduction and promotion of the GoActive! Campaign. This campaign is

headed by a famous celebrity fitness trainer, Bob Greene, and has been named “The

GoActive! American Challenge”.

GoActive! Campaign

The GoActive! Campaign is McDonalds’ most recent attempt to diversify their

options on the menu, and convince its customers to become more active. This is aimed

more toward the adult rather than the child market, which is a turn from traditional

marketing strategies. McDonald’s wants parents to be able to order healthful food while

still giving the kids what they really want: The Happy Meal. This change is successful

because the options are given to customers, rather than automatically getting fries and a

soda with the meal. Instead, customers are given the option of things like fruit salad,

apple slices with caramel sauce, cut veggies, juice, and bottled water. By doing this,

McDonald’s is taking a proactive, hands-on approach which shows customers they

care about and realize the significance of a healthy lifestyle. To promote this program,

McDonald’s and celebrity fitness trainer Bob Greene decided to challengeAmerica. Their

challenge was called “McDonald’s GoActive! American Challenge” and it encouraged

others to live a more balanced life by taking steps to reach a goal. To promote the new

campaign, Bob Greene walked and biked across America for a total of 36 days. To

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include people in this journey, McDonald’s distributed 10,000 to 15,000step-o-meters

along with brochures containing information about fitness and ways to start living a more

active life.

It is McDonalds’ hope that customers will see, from this challenge, that

McDonald’s is a place where they have a choice to consume either healthy or unhealthy

food. Also, the presence of Bob Greene adds advantage to McDonald’s marketing

techniques because of his status in the fitness world. If he is associated with the company,

then it must not be that unhealthy. It is critical to analyze what perception is and how it

plays a part in McDonald’s and their marketing strategy.

Interview with Bob Comisky

We also wanted to get the opinion and viewpoint of a person inside the

McDonald’s Corporation on this topic of healthy marketing. We talked to a franchise

owner, Bob Comisky, to see whether or not he thought the current actions and

advertisements were really working. According to Bob, customers are not coming to

McDonald’s to eat healthy. He said, “Overall we have increased a little in healthy

product sales but we have found that although there is a health craze right now people

come to McDonald’s for the burgers, not to eat healthy.” This mimics our research,

finding that the dollar menu sells much more than the healthy items. The marketing has

had little effect on the buying patterns on the restaurant patrons. He also said that

McDonald’s is hoping to increase their market share globally:

McDonald's as a company has vision to dominate the world-wide
foodservice industry. In order to do this they will set the performance standard
high for customer satisfaction in addition to increasing the market share and
profitability by fulfilling McDonald's mission of value execution strategies and
convenience.

What is the Point?

The basic issue for McDonald’s regarding perception is that the entire

establishment is based upon how they are perceived by the public. Are they perceived as

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a family restaurant by families? If so, the family segment will more likely visit the

restaurant for family dinners. Is McDonald’s perceived as a fun, inexpensive place for

the high school and college segments to eat at? If so, they are also more likely to eat

there. Therefore, the perception that consumers have about McDonald’s is the basis of

their decision to eat at the restaurant. Now that McDonald’s has tried to saturate the

market with the healthy, balanced lifestyles campaigns, they are trying to change

the public’s perception of them in terms of the health factor. While McDonald’s is trying

so hard to be the new and improved healthy dining experience, the perception of

McDonalds in many people’s minds is already set in stone. Trying to change this will

cost huge amounts of money and there is not any guarantee that McDonald’s will achieve

their goal.

Overall, we believe that McDonald’s is using these “healthy” products and

active lifestyle campaigns as a defense mechanism. They are trying to dispel the image

they have right now, and also prevent future lawsuits. All the lawsuits that have been

brought against them in regards to obesity have been thrown out, but it is still negative

publicity. The company had to do some major damage control after movies like Super

Size Me! and other negative movements. They are less concerned with changing people’s

perceptions of the chain, and more with the fact they need to be seen astrying to help the

situation. They have already saturated the market in the United States, and want to stay

at the topand expand globally. It is not so much about initially changing the company’s

image, though over time it may change in response to this extensive marketing strategy.

Though it may not change their image, we also think that this is a good direction

for McDonald’s to focus toward. They are a mature company, and the only way to bend

the arrow backward on their product life cycle is to innovate and create new products.

This is their attempt to return to the rapid growth stage. As stated before, McDonald’s is

widely known for its hamburgers and fries, but it has potential to grow into a new market

with healthy options. It also has enough money to fund this type of project, and there is

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no reason they should not continue on this road. The worst that could happen is that they

revert back to the same market and style they have always had, but thepositive side could

be expansion into an entirely new market and much more revenue for the company.

In general, the managers did not try to put any strong vertical barriers between themselves and their
employees. Managers usually seemed to display real concern and interest in the emotions and well being of
their employees, which was not expected in this environment. For example, one manager was observed
asking an employee cleaning the floors about her weekend and her kids. There seems to be legitimate
efforts in order to motivate employees even at the line worker level. Herzberg’s two-factor theory explains
that good working conditions only go so far, and that employees require higher level fulfillment such as
motivation and recognition in order to be satisfied with their position (Daft, 2008, p. 231). Even in a low-
skill position, low turnover is desired. In addition, happy employees lead to happy customers.

McDonald’s corporate management believes in training and leadership at all levels through Hamburger
University. On Hamburger University’s website[2], they quote McDonald’s founder Ray Kroc’s training
focused ideology: “If we are going to go anywhere, we’ve got to have talent. And, I’m going to put my
money in talent”. This ideology demonstrates that McDonald’s does not believe its restaurants’ crew
members are just gears in a machine that can be easily replaced. Because training is not just offered to
executives or managers, McDonald’s is able to spread and reinforce its culture and values in all directions,
not just downward. McDonald’s corporate values also have “people” as one of its pillars (McDonald's
Corporation, 2008). Corporate policy says that employees should be paid at or above the local market rate,
and should also value both their pay and their benefits. By addressing employees higher needs by providing
training they make employees feel important and valuable. Training also serves to reinforce the culture at
all levels through education and fostering a positive image of the employees’ importance to the company.

McDonald’s Motivating Factors

Of the McDonald’s restaurants we observed, the culture was generally inviting for new employees. In
addition, other factors make McDonald’s an ideal employer for many individuals. A primary motivation
for working in a McDonald’s restaurant is that it presents a laid back environment and the job itself is not
very stressful. Even during the observed lunch and dinner rushes, the employees never appeared
particularly stressed or anxious. When there was a lull in the restaurant the employees would clean their
stations, chat with other employees, or get a drink from the soda fountain. They were very relaxed and for
the most part did not seem to fear their managers or other bosses. As Daft explains, fear can weaken trust

15
and communication, and is usually impedes employees rather than motivates them (Daft, 2008, p. 152). For
a high school student who is busy with school work and other extra-curricular activities, it may be ideal to
work in a laid back environment like McDonald’s. A student’s life may be highly stressful, and a low-skill,
low-stress job offered by McDonald’s may provide a break from an otherwise stressful life. Also, for the
elderly employees, the low stress environment may also be desirable because they would not be
overwhelmed with responsibilities that might be new to them.

Another possible motivator is the social opportunity presented by such a job. As noted above, employees
tended to have a very casual environment where they could talk and socialize while they worked. For
example, many of the employees who work during the evening shifts are high school students. These
employees are often the same age and often share common cultural interests. They are also presented with
the opportunity to meet new people and develop friendships that can continue to develop outside of work.
They will also have a bond with these employees because they share a common experience, and are likely
from a similar background. Employment at McDonald’s also offers social opportunities for those
employees who are young but do not attend college and for the elderly. Many of these employees do not
have the opportunity to participate in clubs or other organizations, and interact with people of their own age
or anyone in general. It may even be possible to develop a romantic relationship with another employee, as
McDonald’s is not a work environment where this could be seen as a problem by management.

A third reason for working at McDonald’s is the flexible schedule. McDonald’s offers many different shift
schedules so they accommodate everyone. This can help employees find a healthy work-life balance. Some
individuals require fulltime work, which is available through the standard day shift, while part time workers
can pick up their hours after school ends, on weekends or around other social obligations. Since the
company requires in some levels a low skill job, another employee can easily take one’s shift over,
allowing the later to take on other obligations and not be completely tied to the workplace. Part time
employees can rotate their hours according to who has requested to have a certain day off. This gives
employees a sense of empowerment because they have same say in their schedule and are less likely to call
in sick to avoid work, which would lower team morale and the respect between the managers and the
employee (Daft, 2008, p. 242). Even though the average employee is unskilled or does not require skills,
empowering an employee helps him feel important and makes him feel better about his job. In addition to
the flexibility offered by a position at McDonald’s, the convenient location might serve as another
motivator. There is a McDonald’s store in most every town, and it may be relatively close to an employee
and the only available job which does not require a skill or advanced training. As a result, employees who
do not have cars can walk to work or take public transportation. In light of the recent economic downturn
and the high price of gas, having a job in your own neighborhood is a huge benefit, especially for a young
person or a person trying to earn their first paycheck.

16
Finally, an additional motivator is the numerous growth opportunities available. McDonald’s offers
training to employees at various levels. In addition, if any employee stays at McDonald’s for a long period
he could advance into an assistant manager or manager position. While typically a McDonald’s job is seen
as temporary for young people, it may be the only job available for an impoverished person, recent
immigrant, or someone with no learned skill. Since there is a high rate of turnover, employees have the
chance to advance within a few years of working at a restaurant. This opportunity could be very appealing
for those who cannot attend college for some reason. If during his high school years an employee was a
hard worker, he or she could easily move into a manager position and continue his career with the company
or gain experience to move into another job without a formal education.

Through our observations we were unable to determine the exact theories of motivation mangers used, but
it was clear that the theories were of a needs-based nature. In general, the average employee does not
commit to McDonald’s for a long term, and high turnover is expected. Thus, for the majority of the
employees the goal is to satisfy their lower needs. Using Maslow’s hierarchy, the main goal is to provide
the basic needs such as a safe environment where they can earn the money they needed to provide for their
physiological needs (Daft, 2008, p. 228). However, there are typically no real fringe benefits (besides free
food) associated with the job, and there is no contract or other guarantee of continued employment. In some
cases though, there was observed belongingness through friendships and team unity. In addition, the two-
factor theory of motivation seems to be employed (Daft, 2008, p. 231). McDonald’s seeks to reduce
dissatisfaction by having good hygiene factors - adequate pay and organizational policies. In many cases,
there does not appear to be a high focus on implementing motivators; employees did not seem unhappy, but
there seem to be very few opportunities for recognition and growth except for those who plan to be long
term employees.

The Best Employee

In continuation to what was observed in the visited McDonald’s stores, one cannot neglect to address the
leadership style displayed by the line managers in these restaurants. Conforming to the informal and
relaxed atmosphere emphasized by the manager’s calm attitude and the McDonald’s “100% customer
satisfaction” goal; one could expect a “middle-of-the-road” type of management in which the leaders
behave as compromisers (Northouse, 2007, p. 75), exhibiting both people and task oriented behavior.
Indeed, during this field study the line managers seemed to be very expedient, approaching a station
whenever there was a problem and giving directions to the subordinates. The managers appeared to be
moderately concerned with the people who did the tasks, yet they were focused on production and
ultimately product quality. There were no noticeable conflicts between leaders and followers and an
equilibrium state was achieved between them.

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The line managers’ leadership behavior reflects a task-oriented style for the crew members. The
commitment and positive attitude towards a given task are derived from the employees’ motivations and
leader behavior. According to the Path-Goal Theory, for tasks which are characterized as repetitive,
unchallenging, mundane and mechanical, the group members tend to be unsatisfied and in need of
affiliation and human touch (Northouse, 2007, p. 134). Therefore, the most suitable leader behavior for this
type of environment is the supportive leadership that provides nurturance and makes the work pleasant for
subordinates.

McDonald’s Corporate believes its success is attributed in part to the talented restaurant crew. Also,
Corporate claims to be engaged in talent management: attracting, developing and retaining talented people
from all levels[3]. The leader behavior observed in the McDonald’s stores corresponds to the employment
experience values promoted on their website. From the field study experience, one can surmise the
McDonald’s leader-follower relationship as the following:”The task is simple. We provide all necessary
tools for you to accomplish your job. Show commitment and perform your duties properly. I am here to
help if necessary. I will not trouble you”. For the McDonald’s case, a comfortable and friendly environment
reinforced by the line manager is paramount for the employee’s satisfaction.

Good customer service is one the most important aspects in the fast food industry. It is crucial for the
employees in this sector to display courtesy, genuine concern and diligent service towards the clients.
Unsurprisingly, this trend was commonly found in the visited McDonald’s stores. Most of the cashiers
there would greet the customer with a smile and a “how are you today, sir”, followed by a “thank you”
once the transaction was done. Behind the scenes, the workers cooking fries and flipping burgers made sure
their products were been delivered in a steady pace and in accordance to the company’s quality standards.
Finally, the line manager’s role was to make sure things were running smoothly, fill gaps whenever
necessary, assist crew members and perform other managerial duties such as inventory control, managing
budget and human resources.

As in any assembly line, the employee’s performance is heavily measured by his or her efficiency level. It
amounts to how many items the worker delivered in a given period, following a certain quality standard. Of
course, there are others important points to be considered in order to determine who the best employees are.
Initiative could be a means of distinguishing the workers in this sort of environment. This could be

18
exhibited by a cashier who cleans the counter if idle, a cook who starts cleaning the kitchen earlier, or even
a manager who presents to the company a new product or service concept. Also, cooperation plays a big
role, because McDonald’s relies on groups and teams. Each employee relies on another line worker in the
assembling process. In the end, any worker who demonstrates these qualities could have his/her picture
hung on the wall as the “employee of the month” – this is a classic example of how McDonald’s stores
motivate and reward their employees.

The best McDonald’s manager/leader is the one that promotes a pleasant atmosphere for his/her
subordinates to counter the limited job’s motivating factors. However, the manager should also focus on
maximizing production and delivering a good service to the customers. The ideal McDonald’s leader must
apply a coaching leadership style, showing both high directive and supportive behaviors. From what was
observed in some stores, the managers of the restaurants seemed to be in control of every aspect of the
entire food service process. At some instances when things went completely out of control; the same
managers exhibited a coaching style of leadership, directing the subordinate on how to achieve a specific
goal. Whenever they overheard or saw someone doing something wrong or partially correct, they would
step in giving directions to their subordinates and would never disrespect them.

Team Work at McDonald’s

While not all employees can be superstars, McDonald’s owes is success to its team functionality rather than
the efforts of one individual. McDonald’s does not have very highly integrated teamwork, but they would
be unable to deliver their products and service without sufficient team unity and cooperation. The team on
the floor of a McDonald’s restaurant is best described as a functional team(Daft, 2008, p. 297). Team
members have one area that they focus on during their shift. If they leave their post or are not productive,
other line members will not be able to accomplish their jobs and the production line will suffer. For
example, when a customer enters the restaurant places an order with the cashier, the later inputs the order
into the computer and the information is displayed in the kitchen at the sandwich and grill stations. The
grill worker prepares the meat and then places the burger on a bun. The sandwich maker then assembles
the sandwich according to the type of sandwich and any additional requests the customer has. If the
sandwich maker leaves his post, another worker has to cover for him or the entire product delivery process
shuts down. As a result, a McDonald’s restaurant team is sequentially interdependent (Daft, 2008, p. 301).
Without everyone working together and having sufficient motivation to provide good and quick quality
service, all members of the team fail. As a result of one person losing motivation or failing to adequately
perform his duties, customers may complain and business can be lost. Even though most employees are

19
trained to perform multiple tasks at various stations, they are not usually able to perform all of these tasks
simultaneously.

The typical team was not self-reliant and required constant, direct input from the manager. We observed
that often times when morale began to wane, the manager was able to reinvigorate the team and increase
efficiency. However, we also noticed that if the manager grew tired and lost motivation the rest of the team
quickly followed suit. Managers were also instrumental in helping out struggling team members by
motivating them. This attitude kept the production line moving adequately. The team effectiveness is
directly related to the manager’s leadership efforts (Daft, 2008, p. 303). In order to ensure both efficiency
and quality in the team’s work, the managers had to make some efforts to satisfying employees’ needs. This
manifested as direct help, words of encouragement, not punishing undesired behavior every time, or
awarding a break and taking over a worker’s responsibilities temporarily. Nevertheless, employee seemed
well trained and autonomous as long as morale was at a sufficient level. The team operated mostly without
speaking. Sometimes team members would yell an order to another member, but generally everyone knew
what they had to do without much discussion. Because the team did not need constant retraining or
correction, it is a sign that the employees are well trained and have been given the tools to adequately
perform their roles.

The Overall Leader & Corporate Values Reflected

While McDonald’s is a large multinational organization, the CEO is often seen as a leader and symbolic
driver of the corporate initiatives and ideals. McDonald’s current Chief Executive Office is Jim Skinner.
Mr. Skinner has been with McDonald’s for over thirty-five years, and has held many positions from
“restaurant manager trainee” to many corporate positions throughout his tenure, before being elected as
CEO (McDonald's Corporation, 2008). Truly a charismatic and transformational leader, many attribute
McDonald’s turn-around in the past few years to the efforts of Skinner; not only did he revitalize the
organization, but he “reinvented the fast food business” with a new vision and direction(Hume, 2007).
Early in the turn-around, he was one of the architects of the “Plan to Win” initiative which renewed
McDonald’s core focus of store operations. His election to the CEO post provided some stability and faith
for the organization. Hume notes that one of the key elements to his success was his vast experience with
overseas markets that gave him great diversity exposure which was crucial for the global corporation. This
diversity has definitely helped giving McDonald’s a competitive advantage, and was paramount in the
global communication between employees and customers (Daft, 2008, p. 334). One of his noted
achievements during his tenure in regards to leadership was fighting the “McJob” stigma; he made
employees feel important and began to promote the various positions in a brighter light through advertising
campaigns (Hume, 2007).

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In terms of Mr. Skinner’s philosophy, he is primarily focused on customer satisfaction. He believes that is
necessary to first meet customer expectations and then focus on the restaurants themselves. The philosophy
also includes keeping things simple and manageable for each store while making sure that “everyone is
aligned around that one idea”. The idea is directed towards making a good appearance, caring about how
the restaurant looks and how you present yourself. Another important aspect of his philosophy is the fear of
complacency. Therefore, he encourages creativity, but also wants to make sure that people do not lose track
of the chain’s primary objectives (Hume, 2007). Thus, there is a strong focus on coming up with good,
creative strategies, and then putting the full effort into successful execution. For Mr. Skinner, a
companywide initiative is always a must, and never a maybe. Skinner is also a man of values and ethics:
When McDonald’s was blamed for the obesity problem, he helped direct the company to take responsibility
and help create a solution rather than pass the blame. Thus, Skinner can be seen as a moral leader and
symbol of doing the right thing for McDonald’s (Daft, 2008, p. 169). Finally, one of Skinner’s continuing
main goals is “talent management and leadership development” (Hume, 2007). This involves critical tasks
such as reorganizing individuals into different roles and identifying potential leaders to be awarded
additional responsibility.

While many of the Mr. Skinners values are not easily discernable on surface, his leadership was seen at the
restaurants observed. The care regarding customer satisfaction was most obvious, employees were always
polite and the restaurant was very clean. During some observations, employees were seen talking with
regular customers beyond the normal service interactions, demonstrating some level of intimacy between
them. In addition, almost all employees seemed well mannered and presented themselves well. There
seemed to be a high level of morale, even with the more menial and custodial positions, which was
unexpected in a fast food restaurant. In many of the locations visited, there were employee recruitment
signs on the door that listed benefits; however, the application process was online. While more efficient,
perhaps a stronger focus on in-person recruitment would help improving morale and result in more
applications.

Improving Employee Effectiveness

One may initially believe that there is not really much that can or even needs to be done in order to improve
efficiency in McDonald’s restaurants; however, good leadership involves constantly reinforcing a brighter
vision of the future and increasing value for both customers and employees. An employee should not think
that just because they cook fries or flip burgers, that they cannot make a difference. Rather, by encouraging
creativity and leadership even at this lowest level, the next great executive may emerge. It is important to
turn each restaurant’s employee into a productive team member. In order to increase productivity and
employee commitment, we propose several measures. The first measure would be to create a program to

21
encourage creativity among restaurant managers, owners, and operators. In fact, the iconic Ronald
McDonald was not developed by Ray Kroc or anyone at corporate, but by the owner of a local
franchise (Walker & Scott). Rewards should be available for coming up with new ideas at the restaurant
level. As owners and managers are the ones who are actively involved with the day-to-day operations, they
have a greater vantage point for implementing successful changes. In order for such a program to be
successful, there must first be some educational programs like workshops. At the regional level, managers
and owners can be brought together and taught about creative ideas. This will encourage thinking “outside
of the box”, and furthermore can introduce individuals to the practice of “creative swiping”, which is a
process of copying the best ideas whether they be from within your industry or from completely unrelated
fields (Peters, 1987). After properly motivating the owners and managers, there should be a trickledown
effect to the restaurant’s employees.

In addition to the trickledown effect of targeting the managers, we would take steps to directly motivate
individual employees as well. On this front, one of the first steps is to truly understand each and every
employee. Some employees may only be working at McDonald’s temporarily, but for others this may be
the only available job opportunity. For such individuals, they want to maximize their job satisfaction. We
would implement a program similar to those in large corporations where employees are able to set specific
goals and explain their rationale for working at McDonald’s and what they expect from their employment.
This process would show employees that they can do more than flip burgers, for example develop
leadership and management skills which can be invaluable regardless of future career plans. Managers
and/or owners would apply Vroom’s Expectancy Theory in this case; the attention and treatment of each
employee should be personalized (Daft, 2008, p. 235). Managers would therefore develop a plan with each
employee to increase his intrinsic satisfaction, while at the same time increasing that employee’s
productivity.

Building on our focus on individuals, we would also implement a scholarship and education program. We
want our employees to represent us well within our restaurants and throughout the world. We would offer
high school and college aged employees a greater number of college scholarship opportunities in return for
quality work and demonstration of leadership potential. Younger workers are often harder to motivate
directly, but the opportunity to have someone else paying for your education is always a great motivator.
The program would reward quality work such as customer service and punctuality, as well as creativity and
the ability to dream like a leader. Employees must be sponsored by a manager or owner and would have to
write an essay answering a question that instigates them to think creatively about how we as a corporation
could improve. This would motivate even the youngest and most inexperienced ones. In fact, this could
create an upstream effect on the whole restaurant or corporation, increase team cohesiveness and help
encouraging those who are older or in higher positions to also think about making the entire organization

22
better (Daft, 2008, p. 239). The winners would make a positive impact on the organization and earn the
extrinsic reward of a scholarship. In subsequent years, this would encourage other young employees to also
pursue this opportunity, be a first-class worker and think creatively about the organization.

Conclusion
McDonald’s is a multinational corporation, which is perceived as many different things to different people.
Some people see McDonald’s as a decent, fast and inexpensive meal. Others may view the company chain
as a low quality restaurant that employs uneducated and unskilled people. Nevertheless, McDonald’s has a
cheery corporate image that prides itself on quality and cleanliness, as well as good food and good service.
The company employs state-of-art technology to help its workers in their tasks and makes the production
process faster, attending to the customers in a prompt manner. In terms of leadership, McDonald’s makes a
strong corporate effort to develop leaders. There are growth opportunities within the corporation for those
who are willing to work hard and develop their leadership skills. There is a great upward mobility for
Macdonald’s employees. From what we observed in our field study, the work culture displayed in the
McDonald’s stores is aligned with the firm’s corporate values.

References
Daft, R. L. (2008). The Leadership Experience. Mason, OH: Thomson South-Western.
Hume, S. (2007, December 1). McDonald's CEO Jim Skinner - R&I's 2007 Executive of the Year.
Retrieved November 1, 2008, from Restaurants & Institutions:
http://www.rimag.com/article/CA6553963.html
McDonald's Corporation. (2008). Corporate. Retrieved October 21, 2008, from McDonalds.com:
http://www.mcdonalds.com/corp.html
Northouse, P. (2007). Leadership: Theory and Practice. Thousdand Oaks, CA: Sage Publications,
Inc.
Peters, T. J. (1987). Thriving on Chaos: Handbook for a Management Revolution. New York:
Knopf/Random House.
Walker, E., & Scott, W. (n.d.). Willard Scott as Ronald McDonald. Retrieved October 2008,
2008, from The Joy Boys : http://www.thejoyboys.com/ronald.htm

[1] McDonald’s Corporation website: http://mcdonalds.com/corp/about.html

[2] Hamburger University website:
http://www.mcdonalds.com/corp/career/hamburger_university.html
[3] McDonald’s Employment Experience Values Website:
http://www.crmcdonalds.com/publish/csr/home/about/Employment_Experience.html

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Mcdonalds vision
"McDonald's vision is to be the world's best quick service restaurant
experience. Being the best means providing outstanding quality, service,
cleanliness, and value, so that we make every customer in every restaurant
smile."
McDonald's Missions

• Be the best employer for our people in each community around the world
• Deliver operational excellence to our customers in each of our restaurants; and
• Achieve enduring profitable growth by expanding the brand and leveraging the
strengths of the McDonald's system through innovation and technology.

Executive Summary
The purpose of this project to know that how Operation Management Strategies & Total
Quality Management Strategies are made, implemented and how they impacts on the
organization. For this purpose we selected McDonalds to obtain necessary data and its
analysis.

With the completion of this project we have learned that how Operations Management
Strategies & TQM Strategies are implementing and its impacts on the organization.

Operations Management Strategies plays very important role in achieving an

organizational goals. By using these strategies an organization controls and maintains all
its operations. So these should make after a comprehensive marketing analysis, according
to capabilities and resources of an organization.
Total Quality Management enables an organization to have improved products, high and
competitive product environment and customer satisfaction

Operations Management Strategies in McDonalds are being made by top management.

These strategies are implements in all branches under instructions of top management,
which are distributed to all branches in written form. So there are operations mangers in

24
all branches that control all operational activities. These strategies impacts positively and
helps to achieve the goals.

25
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Introduction to Project
The purpose of this project is to know how the Operation Management Strategies and
Quality Management Strategies occur in Fast-food sector, especially in McDonalds,
and how these strategies are implemented.
The basic Operations Management Strategies are:-

1. Design of goods and services

2. Managing quality
3. Process strategy
4. Location strategy
5. Layout
6. Human resource
7. Supply chain management
8. Inventory management
9. Scheduling
10. Maintenance

Some features of quality management strategies are:

1. Product Quality
2. Training
3. Continuous Improvement
4. Customer Satisfaction
So we will analyze how these strategies are being implemented in McDonalds.

Methodology
In this project we studied all the above mentioned operational strategies and tried to get
the theme of these strategies. Also got some information from internet and then by
analyzing the base of these strategies we implemented our knowledge in practical
working environment of the organization i.e. McDonalds.

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From day one, McDonald’s believed in forging new opportunities. The
same holds true today, and it’s this kind of philosophy that will launch
your career. For starters, Ray Kroc, our founder and inspiration,
parlayed exclusive distribution rights of an innovative milkshake
maker into the first-ever franchise in Des Plaines, Illinois.

Later, Ronald McDonald proved another huge idea from a set of

wonderful folks. Introduced in his first TV appearance, Ronald
became recognized as “the smile known around the world.” Today,
he is as recognized as Santa Claus.

In yet another example of empowered big-thinking,

franchisee Jim Delligatti invented the Big Mac and changed
hamburgers forever. As you can see, broad vision, big
ideas, and a family of great people fuel our success. It’s
true, new employees today are our leaders tomorrow.

McDonald's a Global Phenomenon

Formed in 1954, McDonald's brand is the leading global foodservice retailer with more
than 30,000 local restaurants serving nearly 50 million people in more than 120 countries
each day. The rich history began with founder Ray Kroc's strong foundation. McDonald's
vision and commitment of our talented executives is to keep the shine on McDonald's
arches for years to come.

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McDonald's in Pakistan
Aiming to be the world's best quick service restaurant experience, McDonald's started its
operations in Pakistan in September 1998 and is a leading fast food service retailer for its
valued customers. With a strong belief in the phrase when it's green it's growing.
McDonald's Pakistan is growing with the focus to provide friendly and quick service
experience to our customers.
Today millions of Pakistanis place their trust in McDonald’s everyday to provide them
with food of a very high standard as well as good service. In the past five years, the
response to McDonalds coming to Pakistan has been overwhelming. Today Lakson
Group Companies has taken over McDonalds Corporation, USA and a local partner
making it a 100% owned and operated Pakistani company. McDonalds located in
Pakistan are currently employing about 3,000 Pakistanis and each store is managed by
Pakistani managers. They have also contributed in other ways than food service.
McDonalds has investment of over Rs. 30 billion in the country and payment of taxes and
duties amounting to more than Rs 10 billion Since McDonalds is doing so well in
Pakistan they will continue to grow and add more stores in more cities in the future.

The Team
To realize the McDonald's service vision, we believe in strengthening our team and
ensure to deliver the right skills and knowledge to the right person for getting the right
job. Our strength for making our strong team players to shine under the Golden Arches
lies in the People Promises, we focus to deliver:

McDonald's 5 People Promises

1. Resources Recognition
2. Values Leadership Behaviors
3. Competitive Pay Benefits
4. Learning Development Personal Growth
5. Resources to get the Job Done

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McDonald's Mission
McDonald's mission is to be our customers' favorite place and way to eat with inspired
people who delight each customer with unmatched quality, service, cleanliness and value
every time ...we invite you to be the part of this winning team and give yourself an
opportunity to grow with the family of people striving to create smiles on the faces of
millions of people everyday.

Management Development Program

McDonald's Management Development Program provides with an opportunity to develop
your knowledge base with hands on practical exposure to turn into a diversified business
entrepreneur. And with the recent job openings McDonald's welcome you to the world of
opportunities under the golden arches!!!

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Operations Management in McDonalds

From our research we came up with the following operation management strategies being
implemented by McDonalds:
• Goods & Service Design
• Quality
• Location Selection
• Layout Design
• Human Resource
• Supply Chain Management
• Maintenance
The McDonald has the above stated strategies out of the 10 OM strategies. These are
explained as under:

Goods & Service Design

The tangible goods and intangible services are provided by McDonalds and the
homogeneity is maintained globally. The goods and services are provided on in a package
that’s why the company lies in 50% in goods production side and 50% in service
providers. In Pakistan the same level of services is offered by McDonalds, compared to
international level.

Strategies

a) Advertisement: McDonalds implements this strategy by making aware people

about their products and services through advertising on TV, newspapers,
brochure.
b) Customers Relationship: The personals of customer relationship department
convince the people and customers about services.

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 Results

1. Inside the McDonalds:

a) Achieving Objectives: By implementing this strategy McDonalds is achieving

its objectives, i.e. it’s earns profit, customers are satisfying, and the services
offered to customers sharing in revenue growth of the country. So it helps to
make further plans, strategies, making strengths, expansion of franchises etc.
b) Business Development: As customers become attractive therefore McDonalds
opens new branches. So it helps in expansion of business.

2. Outside the Organization:

Improving social life: These strategies are improving quality of life as well as
the social and environmental awareness in general public.

Quality
The company really maintains its product quality. A lot of expenditure is made in the
quality maintenance and improvement researches. McDonalds maintains the following
quality rules:
• Maintaining strict standards of quality and safety, so that the customers can
feel comfortable fitting any of the food products into their personal eating
styles.
• Serving a variety of nutritious, high-quality food products and portion sizes,
including new salad, fruit, and vegetable offerings and Happy Meal choices.
• Providing nutrition information to help customers make smart choices that
address their individual lifestyle needs.
• Informing the customers about energy balance and fun, practical ways to
incorporate physical activity into their everyday lives.
• Motivating kids to be active by engaging Ronald McDonald as ambassador
for play and activity.

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 • Sponsoring major sports competitions, including the Olympics and the FIFA
World Cup soccer matches.

Location Selection
Generally it has been observed that McDonald follows the different locations and outlets
according to the specific area.

Strategies

McDonalds makes and implement its location strategy in following way: -

a) Business Areas: They open their branches in business areas where they target the
corporate people and the working class to dine in and have their timeout for
breakfast and lunch.
b) Play Lands and Shopping Areas: They try to introduce their services according
to target customers, i.e. capture the customers in the amusement parks and in
markets such as the branch in Fortress Stadium, Model Town link road etc.

Results

a) Convenience: Customers feel comfort ability when a branch is in near vicinity to

their work place.
b) Customer Gaining: Due to the good environment the company has an ability to
gain their customers to their locations.

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Layout Design

This strategy refers to the overall working and general environment offered by
McDonalds. It includes the personnel level, service and product layout, interiors and
exteriors etc.

Strategies

a) Exterior: McDonalds sets its premises in proper manner to handle any number of
customers easily. The building design is standard world wide but it may be have
some difference in size or in exterior according to the location. It enables them to
save time, satisfy their customers, comfortable environment for both employees
and customers.
b) Interior: McDonalds uses the same interior pattern as it’s used internationally. It
may vary according to the premises size.

Results

a) Brand Recognition: Homogeneity in layout design and franchise settings strikes a

clear brand image in the minds of the customers. The efficiency level of personnel
also leaves a good impression on the minds.
b) Customer Satisfaction: Through a universal image, layout design and the brand
image in the minds of customers results in customer satisfaction.

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Human Resource

Being partially in pure services and goods production sector, McDonalds exercises a
good strategy for its human resources e.g.

Right Person on Right Job: McDonalds allocates its human resource in different
areas according to the abilities, qualifications and experiences of employees. They
appoint a marketing expert for marketing, accountant for accounts etc.

Trainings: McDonalds provide training opportunities for its employees who need
training in a particular area. So it enables the organization to achieve its goals
efficiently.

Separate Departments for Different Functions: McDonalds has different

departments for different functions. Marketing department consists of marketing
experts who perform marketing analysis and finance department consists of finance
experts who arrange and manage finance etc.

Proper Utilization of Resources: As there are many experts in different areas, so they
use all available resources and opportunities properly. They provide services to their
customers efficiently, which satisfies customers and they achieve their goals
successfully.

Employee’s Job Satisfaction: McDonalds provides training opportunities to its

employees to improve their skills. So it results in enhanced employee performance
and they become more interested to work in good manner, which gives a good
reputation to the organization.

Competency: McDonalds trains it’s employees of all departments to enhance their

capabilities and to improve their skills and therefore employees provide right product

37
 to right customers on right time. So it enables the organization to compete in the
market.

Supply Chain Management

These strategies determine what is to be made and what is to be purchased. So

McDonalds follow these strategies and have a just-in-time inventory system. Which
means that the orders are placed as the raw material comes to near finish. McDonalds
maintain no inventory levels for perishable goods.

Suppliers

The major suppliers of McDonald’s in Pakistan are as follows:

• Dawn Breads for Buns

• Choudhry Dairy Limited for dairy products
• Walls Ice Cream
• Coca-Cola Ltd. for drinks
• Pakages for packing

Maintenance

The overall maintenance process of McDonalds is that they emphasize on the

maintenance of the product quality, the human resources used within the organization, its
location and layout designs.

They train their employees of all department6s regarding their job, so they can handle
their customer and work as well which helps to maintain their status quotas. McDonalds
is among the companies which are partially involved in the production of goods and

38
services, so a proper maintenance system within the organization strengthens the
goodwill and reputation.

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Total Quality Management
Management of an entire organization so that it excels in all aspects of products and
services that is important to the customer. In simple words we can narrate total quality
management as a continuous quality improvement process.
So McDonalds also practice the strategy of total quality management and tries to enhance
its efficiency & affectivity level by working in different areas such as continuous
improvement, quality of goods and services, training, and customer satisfaction.
Product Quality
The ability of a product or service to meet customer’s needs is termed as quality.
Therefore McDonalds works a lot in the quality improvement of its goods by improving
ingredients and nutrients of the food stuff.
Some recent nutrient’s quality improvement information is as under:
• For people concerned about food allergies, we have consolidated all allergen
information into the ingredient statement for each menu item so that you have
one current source of information. Please check these listings regularly as
ingredients in menu items may change.

Popular kid’s meal choices:

• Happy Meals
• Mighty Kids Meals

The nutrition information is derived from testing conducted in accredited laboratories,

published resources, or from information provided from McDonald’s suppliers. The
nutrition information is based on standard product formulations and serving sizes. All
nutrition information is based on average values for ingredients from McDonald’s
suppliers throughout the world. Variation in serving sizes, preparation techniques,
product testing and sources of supply, as well as regional and seasonal differences may
affect the nutrition values for each product. None of our products are certified as
vegetarian. This information is correct as of January 2007.

41
Training
In the next step of TQM, McDonalds puts it attention on its human resources. The
objective of training their human resources is to create a balance in the overall working of
employees. Thus they try to create a connection between the quality of a product and the
ability of the employees. In McDonalds nearly every employee is given training for its
work. e.g. the cashier is trained for all the cash handling, floor manager is polished
against his degree in hotel management. And all the other staff is trained accordingly.

Continuous Improvement
The quality management strategies of McDonalds for product quality improvement and
employee training and development put the company on the road of continuous
improvement in all its functions. Continuous improvements fulfill the needs of the
customers according to their desires or requirements and also make its products more
competitive. This continuous improvement also includes some other factors like
employee empowerment, benchmarking a quality standard & maintaining just in time
inventory system etc.

Customer Satisfaction
McDonalds pays a lot of attention on the satisfaction level of its customers. The
improved quality standards, well trained employees and a continuous learning desire of
McDonalds results in increased level of satisfaction of the customers. Like when the
quality is improved and the personnel attending the customers is well trained and the
overall service environment is improved then there is no room left for customer dis-
satisfaction.

42
43
After the analysis of our project regarding the application of Ten OM Decision and TQM
we have concluded our report as under:
• McDonalds is maintaining its product quality according to the international
standards
• The customization of the product and services according to the culture of
Pakistan has resulted in customer satisfaction
• McDonalds has properly covered the business areas with in cities e.g. Lahore
• McDonalds maintains a good environment in every premise.
• McDonalds has a learning environment for employee development and
customer satisfaction.

Suggestions
In the end of our report we have following suggestions:
• McDonalds should revise its product prices.
• Company should work on all of its products
• There is still a lot of opportunities for McDonalds to increase number of
outlets
• McDonalds in Pakistan should follow its international trend of sponsoring
mega events e.g. Domestic Cricket Tournaments.

44
References:
www.mcdonalds.com
www.mcdonalds.com.pk
www.answers.com/what_is_TQM
Bibliography
Operations Management by Jay Heizer & Barry Render 7th Edition

ACKNOWLEDGEMENT
We would like to thanks Mr. Haroon Ahmad for assigning such an interesting
project which has really explored our real talent and it helped us to make projects for our
professional life.
It has been really knowledge sharing experience to make this project. We would
also like to thanks Mr. Sufiyan Malik (Assistant Manager) and Miss Javeria (Customer
Representative) .This project helped us to make better known what basically research and
survey is.

Table of Content

45
 1. Action Plan:
Project Assigned by Sir Haroon Ahm
Planning for organizing the project
Selection of the organization
Issuance of letter by university
Prepare Questionnairefor manager
Visit McDonald Satiana Road branch
Meeting with Ass. Manager of Satiana road branch
Collect Information
Prepare Questionnaire for customers
Select sample(Kotwali Road)
Filled forms from cusotmers
Compiling Information
Ready for writing report

46
 Final Report
Presented to Sir haroon ahmad

2.Objective of this project

This project is an outcome of survey that why the mcDonald’s (choniot bazaar
branch) had been closed. The main purpose of the project is to find what reasons behind
its closing and to learn how survey, interviews and group discussions are conducted. The
objective is also to become skilled at the preparation of the survey questionnaires. This
project enhanced our communication skills and gave us great exposure and learning of
the market.

3.Methodology of this project:

For accessibility and availability of information we have chosen to work on the
Most of the information used in this project is from primary Sources. The main source of
information was the, survey, in depth interviews and focus group discussion. In addition
information was also collected from websites and collected through the Mcdonald’s
satiana road branch .

47
 4.Introduction of Mcdonald’s in Pakistan:
Aiming to be the world's best quick service restaurant, McDonald's Pakistan
opened its doors in September 1998 at Lahore and presently operating in seven major
cities with a network of 20 restaurants. With a strong belief in the Ray Krock phrase
when you are green you are growing, McDonald's Pakistan has an aggressive plan to
expand in all other cities of Pakistan and is rapidly growing with the focus to provide
friendly and quick service We provide our customers with the quality of our great tasting
food; our fast, friendly service; our clean restaurants and facilities; the value of our food
and the McDonald's experience. restaurant experience to our customers.

5.Vision Statement:
The world’s best quick service restaurant experience.
6.Mission statement :
Some people wait for the future.Some push it along .we do not have waiters.
7.Brand Mantra of McDonalds :
“I’m lovein’ it”
8.competitors of Mcdondals
• Pizza hut

• KFC

• AFC

• Domino

9. Introduction of the current scenario:

McDonald’s was situated in chiniot bazar at Faisalabad .The property which was
acquired by McDonalds was private whose owner was MR .Liaqat .its target market was

48
the eight bazaars of faisalabad .its owner was amin likhani who lives in Karachi .its
location was almost perfect but management was used to pay 300000Rs for its electricity
bill and 150000 charges for telephone .Its monthly rent was 160000 rs.It was very
expensive decision made by the financial management of McDonalds.

10. SWOT Analysis of McDonald’s (chiniot Bazar

Branch)

Strengths
• Huge target market

• Commercial area

• Perfect location

• Quality foods

• Friendly services

Weakness
• Wrong financial decision regarding rent

• Less awareness of fast food

• Less number of customers

Opportunities:
• Young generation (GC University)

• Residential Areas (people’s colony)

• Scope for expansion

49
 Threats
• Strong competitors

• Less purchasing power

• Less demand

10. Formulating the research question:

As a research team we have followed the following pattern to extract research
question:
Management dilemma

Define management question

Exploration

Define research question

Management dilemma:
Our management dilemma is “why McDonald’s
restaurant was closed?”

Management questions:
• Whether the sales were decreasing?

• Whether there was less number of customers?

• Whether the place was on leasing?

• Whether their expenses were more than their income?

• Whether their services were not good?

• Whether food quality was poor?

50
 • Whether there was less awareness among the people regarding fast food
restaurants?

• Whether the purchasing power of the customers was less in that area?

• Whether there were any conflicts between the owners of branches?

Research questions:
Among the number of hypothesis we have selected the following questions as a
research study:

• Sales were decreasing

• It was the private property

• Owner conflicts regarding restaurant

11. Research processes for McDonalds

our research question is why McDonald’s is
closed .To find the reasons behind it we have to make research .so I have made the
research plan for this in this way .
• Designing the study
• Sampling design

51
 • Resource allocation and budget
• Valuing research information
• Pilot testing
• Data collection
• Analysis and interpretation
• Reporting the results
Designing the study:
The objective of our research is to find the reason behind the disclosure of
McDonalds. We have also planned for survey that is street ethnography, telephonic
survey with the manger, in-depth interview which will be conducted for two hours at
least. Interviews will be conducted on the basis of structured questionnaires so that
anything may not be missed. These techniques will be used due to the following benefits:
• It is the best way of data collection.
• Observation can be made
• Analysis of written and recorded material
• Behavioral observation.
• Knowledge can be gained.
• Opinion can be taken.

And our source will be people and organization. Survey questionnaires will be simple
.it will be the mixture of open ended, close ended, forced, unforced and rating scale.
Simple wording should be employed .survey will be evaluated on the basis of following
factors:
• Cost
• Sample accessibility
• Time constraints
• Topic coverage
• Anonymity

52
Sampling design:
Sample will be selected as kotwali road for survey
and face to face discussion. So that accurate results can be attained

Resource allocation:
For conducting research we have allocated Rs 1400 or this project .Estimation is
as under:
Telephone charges for interview---------------150 Rs
Printing of survey questionnaires--------------100 Rs
Transportation charges -----------------------600 Rs
Final printing of report ------------------------400 Rs
Valuing research information:
Without information our work will be on imagination based that may be wrong
and can bring high cost of loss for us .We can make wrong hypothesis which will be not
consistent .our result may be wrong much.

So with information our observation will be more .our results will be real and our
research will be authenticated so real data will be used through different techniques of
research. Our experience will be high for future plans. Our exposure will be high.
Data collection:
Data will be collected through survey by using street ethnography technique, in
depth interview will be conducted for detailed information to know much about the
subject .Telephonic survey will be employed .primary sources will be employed for this
Analysis and interpretation:
Analysis of the data will be managed carefully by taking percentages of favorable
and unfavorable results. Then summary of data will be presented by using statistical
techniques. Than the result will be made after interpretation and can check whether the
results are consistent with hypothesis or not.
Pilot testing:
Pilot testing will be employed to check the weaknesses in design and
instrumentations. We will see whether the questionnaire is simple or complicated?
Whether the questions are the mixture of forced or unforced? Whether all the questions
are based on structured or not? Whether the objective is clear or not? Whether hypothesis

53
is clearly chosen? In case of the failure of null hypothesis, what alternative hypothesis
will be selected?
Reporting the results:
At the end report will be prepared in which we provide all
the information in this pattern:
• An executive summary
• An overview of the research
• Implementation strategies
• A technical appendix
• Attachment of survey questionnaires

12. Results of survey:

54
13. Reasons of closing themcdonlads(chiniot bazar
branch):
“Every mistake is an opportunity to learn something
new in future and an additional step towards success”.
There were number of reasons for its disclosure. They are as under

55
1.The sales was decreasing with the passage of time ,because people had less awareness
of fast food .There is no doubt, demand depends on two factors.
• Will to purchase

• Power to purchase

These two factors contributed equally to decrease its sales because its prices were
high and cannot afforded by every person .because mostly retailers in that area
were small. They wanted to avail this opportunity but they had not capacity
.According to our survey result, mostly customers have disclosed their statement
in this way :

There were no customers

Some said no more 15 to 30

To create a customer is the dream of every marketer, but the management of

McDonalds failed to do it because there was no customer satisfaction whereas
customer retention is always customer satisfaction.

2. The second reason, According to in-depth interview with the assistant manager (sufyan
malik sityana road branch) and customer representative (miss Javaria) there was the
conflicts between the mangers of two branches .Its owner was amin likhani karachi so the
branch of satiana road was kept on fire and rebuilt in six days.
3. Third reason was that this place was not on lease it was the private property of
Mr.liaqat .so he sold his property to Allied bank pakistan.Because the sales were not
satisfactory and its monthly rent was 160000 so there is no matching between the expense
and income .It was much difficult to pay wages to 65 employees, so it was closed.

14. Hindrances faced by research team:

There are a number of hurdles faced by the research team:

56
 • Video, audios and photographs were not allowed to us .because according
to the manger it is not the policy of McDonald’s.

• There was the difference between the information provided by assistant

manager and customer representative.

• During survey we came to know some customer visited the McDonald’s

but they were unqualified and not able to fill the forms.

• Some do not co operated with us especially in banks due to the shortage of

time.

• Despite of the issuance of letter manger felt hesitation to give answers of

some questions.

• Some customers took a lot of time to fill the survey forms and sometime
passed to next person for filling.

15. Suggestions:
As a researcher our suggestion are as under:

57
 • We will select the right target market after proper
research, there is no doubt it was the commercial
area but the little participation of young generation
was there.

• To create more customers we will push an artificial

demand through promotions schemes.

• To boost up the sales we will deposition regarding

our competitors.

• We will invest less capital at the start, after receiving

response by customers we gradually increase our
capital.

• We will do rational decision regarding rent of the

premises after a long bargaining.

16. Conclusions:
To conclude the research on one point is not an easy task because future plans
exists on the present research because future dividends are created in the factories of
present investments. It is concluded that McDonalds closed due to the sales problem and
owners conflicts between them.

17. Bibliography:
For the successful completion of this report, we have utilized different available
recourses, from which we have obtained required data. Most of information is collected

58
through survey,indepth interviews , questionaires observation and internet, while a visit
to Mcdonald’s satiana road branch is also made to get further information .we are
thankful to the management who had welcomed and cooperate with us .Recourses which

WELCOME TO MCDONALDS

This wonderful phrase echoes around the world 50 millions times a day, in 30,000 locations, in
multitude of languages, in more than 120 countries around the globe.
And this simple thought sums up the reason McDonald's has become the best known and most
popular quick service restaurant around the world, quite a tribute to Ray Kroc, who founded
this company nearly 50 years ago with the simple vision expressed by his phrase 'Take good
care of those who work for you, and you will float to greatness on their achievements' We
provide our customers with the quality of our great tasting food; our fast, friendly service; our
clean restaurants and facilities; the value of our food and the McDonald's experience. Working
at McDonald's open up a world of opportunities for people. At McDonald's a job is never just a
job it's a wealth of experience and skills, strongly accepted by the employees' world over.
We strongly suggest that before you apply for any position in McDonald's Pakistan, you should
seek maximum useful information. Not only it will help you to choose the right career but also
help you to get through the hiring process successfully. We, at McDonald's Pakistan feel proud
to guide you and provide any information you may required.

are consulted discussed below:

www.google.com
www. mcdonald's.com
Kotiwali road
Telephony conversation with Sufian Malik (Assist. Manager)

59
 EXECUTIVE SUMMARY

This project is about Mc Donald’s Pakistan, which is one of the largest and the best-
known global food service retailer with more than 30,000 restaurants in 121 countries
serving 47 million customers each day. First we have studied a brief history of the
company worldwide. Then we have introduced McDonalds Pakistan, the organizations
strategies and its structure.

Basically, this project aims to have an overview of the McDonalds human resource
management. The different functions at the disposal of HR include provision of different
laws for the protection of employee’s rights. Strategies for the development of the
organization, job analysis for the hiring of new employees, personnel recruiting,
employee testing and selection, performance appraisal are also integral parts of HR.

These all functions are described in context of McDonalds Pakistan. This will help better
understanding the different processes involved in HR functionality.

60
Topic no

1. History and int

61
History and McDonald's has come a long way since Ray Kroc laid down the
foundation of the Company in 1954. Story goes that Ray Kroc mortgaged
introduction
his home and invested his entire life savings to become the exclusive
of distributor of a five-spindled milk shake maker called the Multimixer.

McDonald’s: Hearing about the McDonald's hamburger stand in California running

eight Multimixers at a time, he packed up his car and headed West. Ray
Kroc pitched the idea of opening up several restaurants to the brothers
Dick and Mac McDonald (hence the name), convinced that he could sell
eight of his Multimixers to each and every one.

McDonald's today is one of the largest and the best known global food
service retailer with more than 30,000 restaurants in 121 countries serving
47 million customers each day. McDonald’s serves less than one percent
of the world’s population. McDonald’s outstanding brand recognition,
experienced management, high quality food, advanced operational
systems and unique global infrastructure ensure a position that enables
them to capitalize on global opportunities.

62
McDonald's McDonald’s is part of the Lakson group of companies, a leading business in
Pakistan. McDonald’s first restaurant has opened its door to the people of
Pakistan:
Pakistan in September 1998 in Lahore. Karachi opened its first restaurant
after one week. There are now 18 restaurants in four major cities of
Pakistan: 7 in Karachi, I in Hyderabad, 9 in Lahore and 1 in Faisalabad
since the company first opened its doors to the people of Pakistan.
This launch was met with unprecedented enthusiasm form the citizens of
Lahore who are known for their liveliness, vigor and penchant for quality
food. Today millions of Pakistanis place their trust in McDonald’s to
provide them best quality food, quick service and value for money. World
famous French fries, Big Mac, Quarter Pounder, Chicken McNuggets and
egg McMuffin are not only kids' favorites but also lure in the customers of
all ages. McDonald’s is firmly committed to give back to the community
where it operates. They are happy to become involved because they
recognize that organizations have a role to play in helping communities to
work successfully.

World 1. Be the best employer for people in each community around the world.
2. Deliver optional excellence to customers in each restaurant.
Wide
3. Achieve enduring profitable growth by expanding the brand and
Strategies: leveraging the strengths of McDonald’s system through innovation and
technology.

63
Mission “Don't worry about making money Love what you are doing and always put
the customer first…And success will be yours!”
Statement:

VISION: “Being the best means providing outstanding quality service and cleanliness
so that the company makes every customer in every restaurant happy.” To
achieve this mission Macdonald's is focused on three worldwide strategies:

1 Be the best employer for the people in each community around the
world.
2. Deliver optional excellence to the customers in each of the restaurants.
3. Achieve enduring profitable growth by expanding the brand and
leveraging the strengths of McDonald’s system through innovation and
technology.

Objective: “To satisfy the internal customers because they are the window to the
external customers.”

Structure: McDonald's are structured along functional lines. Their Chief Executive
oversees five major areas of activity:

1. Operations (equipment and franchising)

2. Development (property and construction)
3. Finance (supply chain and new product development)
4. Marketing (sales marketing)
5. Human Resources (customer services, personnel, hygiene and
safety).

64
McDonald’s
The structural hierarchy of McDonalds Pakistan is as follows
Structure:

• Trainee Business Manager:

The trainee business manager should have the right skills and
qualities, in order to operate Mc Donald’s.

• 2nd Assistant:
At this level the second assistant really begins to develop his/her
management skills and learns what goes into running a shift.

• 1st Assistant:
At this level the first assistant brings together operations and
management skills and gets grip with finance, human resource and
training.

• Restaurant Manager:
The restaurant manager has all responsibility for people, profitability
and every other aspect of running the restraint.

• Area Supervisor:
A team of restaurant managers looks to the area supervisor for
advice and guidance for everything from the recruitment of staff to
local marketing initiatives.

• Operations consultant:
As operations consultant is an experienced manager, he will be
involved in the long term planning for the restaurants.

• Operations manager:
Acting as a business consultant, the input of an operations manager
plays a major part in the performance of as many as 10 restaurants.

65
HRM in McDonald’s is divided in to five regions in the world, which are further
divided into sub regions. As this organization is internationally owned,
McDonald’s:
so all its decision is taken from the head office, but they are somehow
changed to suit the different cultural backgrounds of the region.
As an organization is known by its well groomed and intelligent staff at
to support and maintain its best quality at every level, So McDonald is
also very careful when hiring for an employee. For that reason, its HR
department is very efficiently working to make sure the best is hired.
Here 95%of the workforce is restaurant based while 5%of it is in the
official running of the organization.

Equal McDonalds is a responsible company, who believes on EEO laws and is

an equal opportunity employer committed to a diverse work
Employment
force. McDonalds might be a global business but it is made up
Opportunity of individuals, everyone of whom brings their own unique
Laws skills and qualities to the team. There is no limit to how far
you can progress here without gender discrimination.

Job Analysis: As HR activities grow in scope and complexity, many duties, such as
recruitment and selection, performance appraisals, training, discovering
unassigned duties are delegating to the HR department. But HR
specialist does not know the details of job as well as operating managers
do. Knowledge about job and their requirement must be collected
through a process known as job analysis.

66
Job Position : Assistant Manager - Marketing
Descriptio Vacancy Location: Mumbai
n
Candidate Profile:
MBA / PGDBA with specialization in Marketing must be willing to
travel. Must have 2-4 years of experience in the areas mentioned below
preferably from the retail industry.

Job description:
Identify priority restaurants, develop sales building plans and evaluate
results for priority restaurants, map business opportunities and
challenges for restaurant, event marketing, assist with the development
of mini-market marketing plans, provide input on marketing needs from
customer viewpoint, monitors the proper execution and impact of all
marketing activities.

Job Analysis
As job analysis is the process to understand the responsibilities of the
in job and in McDonald’s it is done in these different ways:
McDo Questionnaire
nald’s Employees fill questionnaires in every 2nd month to know the
performance of the restaurant so that information about duties,
:
responsibilities and activities of a job can be gathered.
Observation
Observation is also a way to gather the information about a job and to
achieve different satisfaction levels.

Once the firm has determined its staffing needs, it takes every possible
step to hire the best employees so as to fill the available positions.
The Hiring The hiring process has two components:

Process: • Recruitment.
• Selection

67
Levels of
At McDonald, Hiring is done at two levels:
Hiring:
• Trainee Managers.
• Crew Members.
The difference between both of these is that the training managers are
required to learn to smoothly manage the working of the outlet, so they
are trained accordingly.
Whereas the crewmembers have shifts for cleaning, counter service and
other restaurant jobs.

Recruitment is the process of generating a pool of qualified candidates

for a particular job. The firm announces the job’s availability to the
market and attracts qualified candidates to apply.

Recruitment: There are two types of recruitment. McDonald’s corporation fills its
positions by.

• Internal sources
• External sources
Types of
recruitment: Internal sources
Filling open positions with current employees are often best source of
candidates. At Macdonald’s job posting technique is used which means
it publicizes an open job to employees (often by literally posting it on
intranets and bulletin boards) and listing the job’ attributes like
qualification, work schedule and pay rates

68
 External sources
Eternal sources used by McDonald’s are

Advertisement in Newspapers

Advertisements are done in all the leading papers so that every eligible
candidate can apply for the job.

Advertisement on Web Site

Sometimes advertisement is also done on website so that the opportunity
can’t be missed by anyone.
Internships
Sometimes students get jobs while doing internship in McDonald.

Selection:
At McDonald’s, people are the most important factor. They seek only
those people, who can think, feel, express themselves, learn, teach and
hence grow. Their growth is the company’s growth

Fresh People
McDonald’s provides thorough In-house training to fresh people
relatively inexperience people. Hiring people having no previous work
experience also helps them greatly in adjusting to the distinct culture of
the organization.

Justified Selection
The selection is entirely based on merit, which conform the selection
criteria without any bias towards gender, religion, race, color,
nationality, age.

69
Selection After advertising for the job in the papers or in any other way when

Process: applications are received, these steps are followed:

Screening of Applicants

After building a pool of candidate’s applications, short listing of selective

applications is done by the HR manager.

Written Test
The reason for the written test is to assess that whether the recruits are able
enough to fulfill the general practical requirements of the job. The HR
department designs and conducts the tests as and when hiring needs arises.

Initial Interview
The ONE to ONE structured interviews are conducted by Restaurant
Manager after the written test.

Aptitude Tests
These are those tests, which are done for the training managers.

Reference Checks
They are to make sure that references provided by the candidates are valid so
that no confusion remains.

Final Interview
Candidates who give the best results are called for the final interview. A
panel of five or six interviewers does interview.

70
What is the company structure?
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)

71
 Relocation

After final interview, it is decided which candidates to select for which

job to make sure who is the best so that the standard of
McDonald’s is maintained.

Training in
Training and development activities are supplemented with more
McDonald’s: traditional education and training courses by HR department,
universities and private trainers. As more companies expand their
international involvement, experience abroad will becomes an even
more important development activity. These are concerned with
assisting employees to develop up-to-date skills, knowledge and
abilities.
The employees in McDonald’, are provided with training to achieve.
high standards in the organization.
The training period for a crewmember is three months and for others it
is one month or 10-15 days.
Training involves :

Direct Training
This is that training which is given directly after the selection so that an
employee can understand the position he will be working for and its
responsibilities.

Training Abroad
Different programs are arranged so that other qualified people can train
employees at different levels abroad so that they can understand
different standards and can improve their own capabilities.

72
Methods of
The different methods of Training used by McDonald’s are :
Training
Orientation
This is a way of direct training which provides new employees with
basic background information they need to perform their job
satisfactorily.
New employees get a handbook:-
- Working hours
- Performance reviews
- Vacations
- Employee benefits
- Personnel policies
- Safety measures and regulations

The orientation is performed by the HRD Manager and the employees

are introduced to their supervisors. There is a different orientation
process for every type of employee. But the common orientation for all
the employees is McDonald's People Promise:
“We value you, your growth and your contributions.”

• On-the-Job Training
On-the-job training is to train a person to learn a job by actually doing it.
Every day, around the world; restaurant members receive on-the-job
training and coaching in skills and procedures essential to their work.

• Classroom Training
Classroom courses, developed and led by training experts, prepare
outstanding restaurant employees for advancement.

73
 • Computer-Based Training:
A new computer-based training system is bringing interactive learning
experiences to crew members and managers right in the restaurants.

Levels of
Training: There are two levels of training at McDonald’s:

• Crew Member’s Training:

At McDonald's, training never stops. Crew members are trained
extensively on all food safety and food handling processes. Trainees
work while they learn the operational skills necessary for running each
of the 25 positions in restaurant - from front counter to the grill area.

• Manager’s Training:
McDonald's is dedicated to professional training and development. The
average McDonald's restaurant manager spends more than 2,000 hours
over four years in training of one kind or another. This is about the same
amount of time that a typical four-year college student spends in the
classroom.

Specific
Training • Floor Management Course (FMC):
The FMC is geared towards improving the trainee's ability to deliver
Courses
Q,S,C & V as a Floor Manager.

• Management Development Program (MDP):

The MDP series is designed to help you become the most effective
manager that you can be.

• Operations Consultant Course (OCC)

• Training Consultant Course (TCC)
74
Performanc
It is a process by which the performance of an employee is evaluated.
e McDonald’s conducts performance review semi-annually. Some

Appraisals: standards are made and defined according to which the employees have
to perform. Then after 6 months all the employees are evaluated that
whether they come up to our standards or not. An OJE (on- job-
evaluation) is performed in order to evaluate the employees. If an
employee does not perform well then feedback is provided to them so
they can improve.

The appraisal process in McDonald’s includes PA forms for every

particular job which involves:
- International McDonald‘s standards.
- Assessing the employees’ actual performance relative to these
standards.
Providing feedback to the employees.

Levels of
There are four levels to evaluate the performance of employees:
Performanc
e • Out Standing
• Excellent
Appraisals:
• Good
• Need Improvement
After giving the total grade to the employee the appraiser writes down
about the strength and the areas needing improvement of the employee.

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 Performance-based pay approach that is designed to increase output,
Incentives
based on the performance of individuals or groups. Incentives in
McDonald’s are given to employees on basis of performance.
Types of
Incentives
1. Cash Based
2. Non Cash Based

Cash Based Incentives

• Attendance Allowance
• Annual Allowance
• Medical Allowance
• Hard Soft Furnishing [HSF]:
Once in every year certain categories of
employees can furnish their houses with the
carpet, furniture, curtains etc at the McDonald’s
expense.
• Leave Fair Assistance [LFA]:
Once in two year managerial level employees are
allowed to choose any area for tourism in
Pakistan with family for 10 days.

Non Cash Based Incentives

• Crew of the Year
• Crew of the Month
• Branch of the Year
• Access to gift certificates
• Merchandise
• Free food

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Benefits When employee joins the McDonald's management team, he will
receive the following:
Profit Sharing:
Fully funded by McDonald's. Share in the profits of the most successful
quick service restaurant in the world.
Vacation:
Increased vacation time per years of service.
Leaves:
McDonald's employees can also apply and obtain a leave of up to two
months for personal reasons or to study for examinations or school
projects.
Company Car:
Restaurant managers are eligible for a company vehicle after only three
years of service.
Educational Assistance:
McDonald's offers an educational assistance program for its employees.
Social Activities:
Enjoy a variety of activities with his team which could include an
annual Convention, summer picnic or outing, Eid Party etc.
Uniform:
All the employees accept those working in the offices are given
uniforms.
Flexible hours:
The restaurant opens for business 18 hours a day and that means work at
McDonald's can fit into anyone's schedule. Schoolwork, family or
personal activities can be scheduled around working hours.

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Conclusion: The operative philosophy of the McDonald's system is based on the Quality,
Service, Cleaning and Value for 44 years. The company offers a standard
menu, although it develops in each culture special products that are adjusted
to the pleasure of the community. McDonald's is successful because it has a
system of corporate norms and individual opportunities, to all the Franchises
they are integrated in the same philosophy of values and clear expectations.
McDonald's guides all the actions according :
• to organizational values as working in team,
• to feel passion for the work always offering the best of themselves,

• to be committed with the partners and with the mission of the

company,
• to be entire in each one of the actions, to be leaders.

Recommenda
No doubt McDonald's is a huge giant size organization but it also need some
tions:
improvements which are

• McDonald's must start its services for customers as well as product.

• Job enlargement and job enrichment should be applied for retention
of employees.
• There should be more than one feedback session for improvement of
performance of employees.
• Recruitment must be conducted for higher posts also to select more
skilled persons.
• There should be proper and flexible arrangements for training of
managerial level employees.
• Job enlargement and job enrichment should be applied for retention
of employees.
• There should be more than one feedback session for improvement of
performance of employees.

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Diversity at McDonald's

Diversity, the difference among people and cultures With more than 31,000 restaurants in 118
countries, McDonald’s brings a commitment to inclusion and diversity to every
community we serve.

Around the world, inclusion and diversity at McDonald’s means providing equal
opportunities for everyone to succeed and contribute. We accomplish this in a
number of ways, such as the integration of diversity initiatives into our daily business
practices, a strong diversity education curriculum, employee business networks and
external partnerships with minority organizations.

Today, more than 60 percent of our home office and U.S. company workforce are of
a racial or ethnic minority, or are women. Inclusion and Diversity also plays an
important role as we identify the McDonald’s leaders of tomorrow. Our management
team provides regular updates to the Board of Directors on our progress in this area
and we are constantly evaluating our performance to make sure we have strong
representation across all dimensions of diversity, including gender, ethnicity and
nationality.

In addition, we’re proud of the fact that we have the largest number of minority and
women franchise owners in the quick-service industry. Our National Black
McDonald’s Owner/Operator Association is one of the most successful African
American business organizations in the nation, and our Hispanic franchisees fund the
largest U.S. scholarship program for Hispanic high school students entering college.

Our suppliers are equally diverse. On average, we spend $4 billion per year on food,
paper packaging, restaurant operating supplies, uniforms and toys from U.S.
minority and women-owned businesses.

So whether it’s our franchisees, suppliers, or employees, our commitment to

inclusion and diversity has helped make us the company we are today. Most
importantly, this commitment allows us to ensure that our restaurants and our
business reflect you -- our customers.

STRATEGIC PALNNING AT MCDONALDS

. Important strategic decisions are a key factor to their success with consideration for both internal and
external factors. When considering the foreign market, companies need to consider there are risks. There
must be local marketing to appeal to the local consumers and also to build relationships and trust .
Therefore, the strategic planning for marketing has to be effective. McDonald’s caters its menu in other
countries to the cultures of the regions. For example, in India, the non-vegetarian menu includes chicken
and fish items only . Beef is not on the menu in India because are considered sacred. Global marketing
decisions are no different than those made domestically but the decisions are unique to each country
furthermore, operating on a global scale allows a company’s employees to experience working in different
cultural environments. This is a good marketing strategy for recruiting employees. This business strategy
speaks to their commitment to a diverse workforce. McDonald’s commitment to diversity is established on
the foundational belief that diversity is not just a moral and ethical issue, but also a business issue . Due to
the global expanse of McDonald’s business, diversity has become an integral part of the internal company
culture. McDonald’s has over 30,000 restaurants around the world, which means franchise owner/operators,

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employees, and customers represent just about every culture, religion or ethnicity on earth. In addition,
McDonald’s promotes the use of local suppliers and based on their policies of diversity, expects and retains
suppliers that have a similar diversity culture. Knowing and understanding the local customs and traditions of
the communities where McDonald’s has established businesses, integrating people from these communities
into the company, and adapting locally to the tastes and cuisines of the community, has made McDonald’s
the leader in their industry. McDonald’s realizes that having diversity as an asset greatly enhances the
profitability of the company. Diversity is a direct reflection of a company’s interpersonal relationships. These
relationships, if positive, result in a rewarding venture. Conversely, if the relationships are negative, the
company’s morale declines and if not addressed, leads to the deterioration of the company. This
deterioration directly impacts the company’s income and the community’s acceptance of the business.
However, McDonald’s leadership encourages diversity through their policies and programs. McDonald’s
proven success with leveraging the advantages of diversity can be attributed to their core value of ethics.
McDonald’s success is built on the foundation of personal and professional integrity (www.mcdonalds). From
the beginning, McDonald’s has based its reputation on trust and dependability, and their commitment to the
community made them a household name. In addition to their community involvement, McDonald's has a
long-standing commitment to environmental protection. Restaurants around the world have innovative
programs for recycling, resource conservation, and waste reduction.

McDonald’s Internal and External Environment:

Employees currently working for the McDonald’s corporation know that they are working for a socially responsible

company. Everyday, they are playing a very important role in the community and McDonald’s feels very strongly

about their role in peoples’ lives and the community. After all, everyone who visits a McDonald’s is part of the

community in which it is located. This corporate vision extends all the way up to the management level. Many

managers are trained at a world wide management facility called Hamburger University. The curriculum is the perfect

foundation for a profitable career in McDonald’s and important role in the community. In fact, a number of courses

offered by Hamburger University are eligible for college credit. Hamburger University not only promotes social

responsibility, but it also promotes diversity within the workforce and offers 28 different language classes. McDonald’s

has the largest number of minority workers in the fast food service industry.

Celebrating this diversity and social responsibility within the walls of the McDonald’s corporation makes it easier to

practice this throughout the world. Many of their social responsibilities include neighborhood beautification projects

that they promote around the world each year. The Ronald McDonald House, which was created in 1974, provides

housing for families of severely ill children receiving treatment at nearby hospitals. McDonald’s is a strong advocate in

protecting the environment by considering environmental impact with all the products and packages they currently

distribute. They play a helping hand in anything that will help benefit others, like providing free food last year to the

firefighters battling the blazing California wildfires.

McDonald’s is a trusted name in the food industry and they continue to modify their menu, stores, and employees to

stay that way. As noted in an earlier post, McDonald’s has to compete with chains such as Burger King and Wendy’s

while at the same time compete with healthier establishments such as Subway and Panera Bread. With the large

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amounts of competition in the fast food industry, McDonald’s faces many more challenges. By staying proactive on

being a positive face for social awareness, community involvement and promoting diversity McDonald’s will be a

fierce competitor in the fast food industry and beyond.

Values and Principles of McDonald’s

The core values McDonald live by
• Dedication to provide customers unparalleled levels of Quality, Service,
Cleanliness and Value.

• Commitment with the people, because it knows that a diverse team of well-
trained individuals, working together, is the key to its continued success.

• To approach all aspects of business with honesty and integrity.

• It backs to the system that provides success.

• Celebrating the achievements, yet we always strive to achieve new heights.

The principles that guide McDonald

• Commitment to exceed the customers' expectations in every restaurant every
time.

• McDonald believes its success is dependent upon our three-legged stool -

Corporate, Franchisee Partners, and Supplier Partners.

• McDonald is committed to franchising, maintaining a highly collaborative

relationship with its franchisees and making franchising decisions based on
what's best for its customers.

our pay and rewards program follows a "pay for performance" philosophy: The better
your results, the greater your pay opportunities.
Base Pay

Because employees' base pay is the most significant portion of their compensation,
McDonald's maintains the competitiveness of our base pay through an annual review of
both external market data and internal peer data. In our corporate, division and region
offices, McDonald's has a broad banding compensation system. Broad banding allows for
flexibility in terms of pay, movement and growth.

Incentive Pay
Incentive pay provides our employees with the opportunity to earn competitive total
compensation when performance meets and exceeds goals. For our corporate, division

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and region offices, the Target Incentive Plan (TIP) links employee performance with the
performance of the business they support. TIP pays a bonus on top of employees' base
salaries based on business performance and their individual performance.

Long Term Incentives

Long term incentives are granted to eligible employees to both reward and retain key
employees who have shown sustained performance and can impact long-term value
creation at McDonald's.

Recognition Programs
Our recognition programs are designed to reward and recognize strong performers. For
our corporate, division and region offices, these include the Presidents' Award (given to
the top 1% of individual performers worldwide) and the Circle of Excellence Award
(given to top teams worldwide to recognize their contributions for advancing our vision).

Company Car Program

Our company car program provides eligible employees with a company car for both
business and personal use. If eligible, employees can choose from a variety of vehicles,
depending on their level within the company. The program covers the cost of insurance,
maintenance and repair.

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