McDonald's Organizational Structure
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Organizational Analysis Paper Assignment
For the final Organizational Analysis Paper, analyze an organization (your current one or another) as if
you were an Organizational Consultant hired by the firm. Think about the organization from an
Organizational Behavior approach. Plan to research and examine the organization with intent to
diagnose (identify conditions) and analyze (study the factors within the organization to determine
characteristics) in terms of:
1. Organizational Structure and Design: Structure of the Organization, Span-of-Control,
Management Approaches.
a. How does the structure and design of the organization contribute to its success
or lack of success?
b. How should the organization be structured differently and why would it make a
difference? Cite references supporting your ideas.
c. Does the organizational design support the organization's Mission Statement?
2. Organizational Processes: Leadership, Communication, and Decision Making.
a. How are decisions made in the organization?
b. Who makes the decisions? (position, not name)
c. How are decisions communicated to line workers, staff, and customers?
d. Describe the decision making process in relation to the structure and design of
the organization.
3. Group Behaviors and Interpersonal Influence: Work Teams, Group Conflict and
Negotiation, Ethics, Authority, Power, and Politics.
a. What types of authority and power are present in the organization?
b. Who are the power brokers?
c. How are conflicts resolved?
d. How are resources allocated?
e. Describe how negotiations are conducted across the organization.
4. Individual Behaviors: Individual Differences, Motivation, Performance and
Evaluation, and Job Design.
a. Within the organization, describe the linkage of employee motivation, an
environment for motivation, Job Performance, and Evaluation.
b. Relate individual behaviors within the organization to interpersonal influence,
reward systems, organizational processes, and organizational design.
5. Organizational Culture: Socialization Processes.
a. How are individuals socialized into the organization?
b. How does the organization support a diverse and creative workforce?
c. Relate the culture of the organization to individual behaviors, group
behaviors, organizational processes, and organizational structures.
McDonald’s organizational structure establishes the arrangement or pattern of interactions among various business areas. Through its corporate structure, McDonald’s succeeds in managing efficiency and performance in its operations in the global fast food restaurant industry.
Beginning July 1, 2015, McDonald’s started operating under a new organizational structure with the following four segments that combine markets with similar characteristics, challenges, and opportunities for growth:
U.S. Market
* The U.S. is the largest market in the McDonald's System in terms of number of restaurants, revenues and operating income
* We have a unique and powerful field organizational structure that, when optimized, gives us a significant competitive advantage.
International Lead Markets
* Includes some of the largest, best resourced and most established markets in the System with strong, developed economies and, in most cases, similar competitive dynamics and opportunities for growth
* Operating from a position of strength: largely reimaged asset base significant McCafé presence across most markets, and high average unit volumes and franchisee cash flows
* Track record of innovation and sustained investement, particularly around our menu, operations and Brand
High Growth Markets
* Relatively higher restaurant expansion and franchising potential
* 8 key markets across Asia and Europe (China, Korea, Russia, Poland, Italy, Spain, the Netherlands and Switzerland)
* All share a similar landscape of unpenetrated growth
Foundational Markets
* Largest and most diverse geographical segment spanning over 80 markets across parts of Asia, Europe, Middle East & Africa and Latin America
* Markets with potential to operate under a largely franchised model
* Contains almost all of our DL markets globally
* Home to about 60% of the world's population and represents about one third of global GDP growth
Features of McDonald’s Organizational Structure
McDonald’s has a divisional organizational structure. Each division handles a specific operational area. The aim of this organizational structure is to support autonomy and organizational flexibility. McDonald’s organizational structure has the following characteristics, arranged according to significance:
1 Global hierarchy
2 Performance-based divisions
3 Function-based groups
Global Hierarchy. McDonald’s has a global hierarchy to cover all its operations worldwide. This feature of the organizational structure emphasizes corporate control. For example, McDonald’s CEO directs the activities of all business areas. Mandates are passed from the CEO down to middle managers, and to the restaurant managers and personnel. This characteristic of McDonald’s organizational structure is typical of most global business organizations.
Performance-Based Divisions. The performance-based divisions are the most distinct feature of McDonald’s organizational structure. The company reorganized its structure on July 1, 2015. Before the reorganization, the geographic divisions in McDonald’s organizational structure were (a) U.S., (b) Europe, (c) Asia/Pacific, (d) Middle East and Africa (APMEA) and (e) Other Countries & Corporate (OCC) including Canada, Latin America and Corporate. After the reorganization, McDonald’s used performance as basis for the new divisions in its organizational structure: (a) U.S., (b) International Lead Markets, (c) High Growth Markets, and (d) Foundational Markets and Corporate. The U.S. accounts for more than 40% of McDonald’s revenues, and the lead markets for 40%. The high-growth markets account for 10% of revenues.
Function-Based Groups. McDonald’s maintains function-based groups in its organizational structure. For example, under corporate operations, the company has a human resource management group, a supply chain and franchising group, and a legal group. This characteristic of the organizational structure enables McDonald’s to address the basic functions in its business.
McDonald’s Organizational Structure Advantages & Disadvantages
An advantage of the hierarchy in McDonald’s organizational structure is its support for monitoring and control of global operations. Also, the performance-based divisions have the advantage of enabling McDonald’s to implement strategies based on market performance similarities. For example, the firm applies similar strategies for all lead markets. However, a disadvantage of McDonald’s organizational structure is that it tends to generalize strategies for the performance-based divisions. The company has limited flexibility because of this feature of the organizational structure.
Organizational behavior (OB) is the study of the way people interact within groups. Normally this study is applied in an attempt to create more efficient business organizations. The central idea of the study of organizational behavior is that a scientific approach can be applied to the management of workers. Organizational behavior theories are used for human resource purposes to maximize the output from individual group members.
Top Level Executives
Like every other big business organization in the world, McDonalds too has several top level or C-level executives who are responsible for decision making,goal setting, finances, operations and ensuring smooth functioning. The following are the top level job positions at McDonalds:
* CEO
* Chairman of board
* Directors
* CFO
* Chief restaurant officer
* COO
* Senior marketing manager
* Senior sales manager
Finance Department
The finance department of McDonalds is the department which handles the finance, accounting and money matters of the business. It is responsible for ensuring proper flow of money, right investment and proper handling of the funds. Each country and area has a separate set of finance and accounting managers to handle the finances of that division.
* Finance country head
* Finance city/state head
* Finance manager
* Accounts manager
Marketing Department
The marketing department takes care of the marketing and advertising needs and matters. It ensures that the business gets the right exposure and maintains its brand image effectively. Each country or area has a separate marketing department to handle the advertising and marketing of that area.
* Marketing country head
* Marketing city/state head
* Marketing manager
* Marketing executives
Sales Department
The sales department is set to ensure that all sales related duties and tasks are properly handled and run effectively. Every country has a separate sales head and other sales employees to ensure the smooth running of the sales departmentof that country.
* Sales country head
* Sales city ...