Does McdonaldS Offer A Model Which Other Businesses

Should Follow?
Does McDonalds offer a model which other businesses should follow? At first, most
people must have laughed at the idea of a chain of restaurants selling identical
products all over the country, but little did they know that the genius idea that they
had mocked would go on to revolutionise the business environment of the future.
McDonalds is now the international market leader for fast food, and has been ever
since its pioneering first restaurant was launched in San Bernardino, California in
1948. Historical Background The original founders of McDonalds, and the fast-food
concept, were brothers Dick and Mac McDonald. In 1948, they modified their drivein restaurant, creating the standard for the contemporary fast-food restaurant of
modern times. From the introduction of a limited menu of just nine items, and by
focusing on efficient production and service, the brothers were able to halve the
price of their hamburgers to 15 cents. Ray Kroc, who, at this time was a 52-year-old
milkshake machine salesman, heard of the brothers generation of around $350,000
in annual revenues, and instantly became convinced that its concept could work in
other cities. Kroc became the first franchisee appointed by the McDonald brothers,
and opened his first restaurant the following year in Des Plaines, Illinois. In 1961,
Kroc bought all the rights to the McDonalds concept from the McDonald brothers for
$2.7 million. Kroc was somewhat of an obsessive individual, fixated with rules,
regulations, procedures, and obedience to his strict rules of discipline. Kroc was
especially concerned with maintaining McDonald's clean image, as well as that of
life in general, and could regularly be seen picking up litter outside of his
restaurants in order to maintain the high standard of cleanliness upon which many
of his principles were based. During the 1960s, McDonalds invested a great deal of
capital into advertising and marketing campaigns. In 1962, the golden arches were
adopted as its corporate logo, with the introduction of Ronald McDonald as its
mascot arriving the following year. In 1965, McDonalds Corporation went public,
and by 1966 was listed on the New York Stock Exchange. In 1967, its first
restaurants outside of the United States were opened in Canada and Puerto Rico.
1968 saw the introduction of the companys flagship product, the Big Mac.
Throughout the 1970s, McDonalds became involved with a lot of charity work,
establishing its own charity called the Ronald McDonald House, providing temporary
housing for the families of seriously ill children. Kroc had always believed in giving
something back to the community in order to make the world a better place. In
1973, McDonalds added breakfast items to its menu. The Quarter Pounder was
introduced in the subsequent year, as sales reached $1 billion. 1974 saw the
opening of the first restaurant in the UK, in Woolwich, South London. In 1975,
McDonalds introduced drive-thru window service, which allowed motorists to
order and receive food from their cars. Nowadays, this type of business accounts for

around half of all McDonalds sales in the United States. In 1983, Chicken
McNuggets were added to the menu, giving customers an alternative to beef.
Founder Ray Kroc died in 1984. Ronald McDonald Childrens Charities was founded
in his remembrance to raise funds in support of child welfare. In 1989, McDonald's
became listed on the Frankfurt, Munich, Paris, and Tokyo stock exchanges. Through
the 1990s smaller outlets known as Express stores were opened in hospitals,
zoos, airports, and even on ferries. These outlets served a limited menu and lacked
some of the amenities of larger stores. In 1996, McDonalds signed a 10-year
agreement with The Walt Disney Company. This agreement has led to the
introduction of restaurants at Disney theme parks, and the promotion of Disney
films through McDonald's. Packaging is the primary source of advertising, along with
the addition of limited edition products added to the menu. Examples include
Pocahontas and The Lion King. Franchises The McDonalds Corporation is the largest
worldwide franchised food service organisation. In the 1960s, Ray Kroc franchised
restaurants for the low sum of $950, demanding 1.9% of sales. As the success of
Kroc and his organisation depended on the prosperity of the franchisees, this
mutual interest was a key factor in McDonalds success. In the USA, 87% of
restaurants are owned and operated by franchisees. In the UK, this figure lies at just
over 20%, with 119 of the 577 restaurants being franchised. It is McDonalds
intention that by the end of this year, franchised restaurants will represent over
30% of the total UK business. McDonalds charge franchisees a levy on sales. This
levy consists of a service fee of 4%, and a rent charge of 7%. Clearly, an increase in
the number of franchised restaurants leads to the direct effect of an increase in
McDonalds revenues. McDonalds can also boast that it is the largest retail
property owner in the world. Quality, Service, Cleanliness McDonalds use the finest
available products and carefully developed formulae. They also encourage their
employees to check products that they prepare or serve. McDonalds believe that
cleanliness is a magnet drawing customers to their restaurants (McDonald's Crew
Handbook 1996), and therefore aim to ensure that their restaurants are spotless at
all times, both inside and out. Quality and cleanliness, however, are wasted without
fast, courteous service. McDonalds firmly believe that a smile does as much to
bring a customer back as does the best food in the world. McDonalds always
reminds its employees that the customer is the most important single factor in their
business. They also train their employees to treat everyone, especially the
customer, in the way that they would want to be treated themselves. Mystery
Diners, employed by the company, visit each store once a month checking that
overall customer service requirements are met. McDonalds believe that through
delivering great levels of QSC, (Quality, Service, Cleanliness), 100% customer
satisfaction can be achieved, enabling them to become the UKs favourite quick
service restaurant. Treatment of Workforce McDonalds state that they value people
most by being: Reliable In doing what they say theyll do. Safe In operating
practices which protect their customers, employees, and reputation. Responsible

In making decisions which balance short, medium, and long term aspirations.
Consistent In their delivery of quality, service, cleanliness, and value. Trustworthy
In their dealings with each other, their customers and their business partners. The
Leader In advancing their position by being innovative, flexible and goal
orientated. Customer driven In listening and responding to their customer needs.
Ethical In their internal and external policies and practices. Well Run Through
visionary leadership and focused management. A Good Employer In recognising
that their employees are the key to customer satisfaction. Source: McDonald's Crew
Handbook 1996. Training It is the aim of McDonalds to create a learning
environment, which facilitates the development of the highest level of skill among
all employees. Their training programmes have been designed to enable all
employees to achieve the companys goals of 100% customer satisfaction,
increased market share, and increased profitability. An ongoing programme of
training evaluation enables McDonalds to keep training procedures up to date, and
relevant to the needs of the business. McDonalds believe that training is the
foundation of their success, and that it is an ongoing process that belongs to all of
their employees. The uniform is an example of standardisation, as there is little
variation throughout the world. Different colours are used in certain countries due to
religious circumstances. Rules and Regulations About 4 times each year, each
restaurant (excluding franchises) is checked rigorously by Area Managers, who
make sure the crew and managers are carrying out operations correctly, as well as
other general checks. Once a year, a restaurant experiences what is known as a full
field, where area managers, other restaurant managers, and trainee managers
perform a comprehensive check on the whole operation. The results of these
inspections are put into tables, and there is always fierce competition between
stores with regard to scores received. Employee Relations It is McDonalds policy to
actively promote from within. Promotion is offered to employees who show initiative
and a desire to advance. Many of McDonalds finest managers and senior company
personnel have been promoted from crew. This way, skills are kept in the firm, with
training costs minimised. McDonalds believe that people are their most important
asset. Loyalty and dedication are the foundation of every successful business, and
McDonalds feel that they are especially fortunate in having so many highly skilled
and motivated people. Loyalty points are awarded to employees who reach certain
service milestones. There is a catalogue called Maritz from which employees can
redeem their accrued points in exchange for goods. This scheme gives employees
an incentive to remain loyal to McDonalds, reducing training costs, and also
improving efficiency. Crew meetings are held about once a month to discuss policy,
procedures, products, and problems in the restaurant. Smaller sessions are also
held a few times each year for the purpose of discussing ideas, suggestions and
problems. These sessions give employees the opportunity to make their views
known to the company. Private medical care is provided to employees who have
worked in the company for 3 continuous years. Life Assurance is provided to

employees who have completed one years continuous service. To try and improve
team-working skills and reduce the 60% staff turnover, McDonalds organise regular
nights out and activities for its employees. McDonalds supports its employees
through university, giving grants of up to 1500 per year depending on the type of
course. It also runs its own Junior Business Management Programme for 18-21 year
olds, with a starting salary of 16,500 per year. It also offers its employees the
opportunity to become part of the corporation through buying McDirect shares.
Standardisation A key feature of the McDonald's model is the manner in which all of
their operations are standardised. Production line techniques are implemented in
restaurants to achieve the fast preparation of uniform quality products. With a
limited menu and patented formulas, the corporation ensures that products remain
homogenous over distance and time. The fixtures and fittings of restaurants are
largely identical throughout the world, with minor variations to account for cultural
differences. The McDonalds model exerts an enormous amount of control over its
franchisees and customers, forming the fundamental basis of the business.
Employees respond to customers requests with scripted questions, ensuring the
fast delivery of service, and same experience time and time again. Control over
employees has been increased over the last decade due to technological
advancements, such as EPOS (Electronic Point of Sale) systems, which eliminates
the need for the operator to use arithmetic, or remember prices. Customers are
subtly controlled by the uncomfortable seating and standardised menus. This
reflects the quantitative aspects of the quick-service food industry, increasing the
number of customers by reducing idle time. Standardisation within the McDonalds
model is apparent in both the restaurants and their suppliers. Contractors are
required to share knowledge of food processing techniques, allowing the corporation
to retain consistency and control of all aspects of the business. The Influence of
McDonalds McDonald's objective is to become the UKs favourite Quick Service
Restaurant To do this, the company has set the following objectives: 1. To provide
total customer satisfaction 2. To increase market share 3. To increase profitability
Every day, McDonalds supplies food and drink to over 28 million people worldwide,
of which 1.2 million are Britons. Despite the limited choice 7% of Americans choose
to eat there every day. The Golden Arches have become the best-known logo in the
world. Nowadays, few children fail to notice the flamboyant red and yellow
frontages that are located in most shopping centres and high streets throughout the
country. McDonalds have realised that most people succumb to this convenient way
of keeping children happy. McDonalds target the young. As their 750 page
Operations Manual states, Children are often the key decision-makers concerning
where a family goes to eat. And, of McDonalds chief PR strategy, the clown Ronald
McDonald, it said, Ronald loves McDonalds and McDonalds food. And so do
children, because they love Ronald. Children exert a phenomenal influence when it
comes to restaurant selection. McDonalds advised their marketing and advertising
department to do everything they can to appeal to childrens love for Ronald and

McDonalds. McDonald's have very close relationships with their suppliers, even
making sure that their different suppliers communicate with one another regarding
procedures, and the introduction of new technology, in order for the McDonald's
corporation to maximise its profits through efficient operations. Only the largest
corporations can exert this amount of power over its suppliers, and therefore most
companies could not adopt the McDonald's model regarding its relationship with
suppliers. Culture One of McDonalds major achievements was breaking through the
food culture barrier. Most countries are eager to preserve their own specific culinary
culture, however through successful global advertising, McDonalds operates 24,800
outlets in 115 countries. Egypt, Kuwait, Russia, and China have all been developed
with the worlds largest restaurant situated in Beijing, which has over 700 seats and
1200 staff. McDonalds has worked extensively on establishing franchises on a
multinational scale. In both Moscow and Yugoslavia, the corporation had to set up
the infrastructure in conjunction with governments to provide the consistent
standard of restaurants found around the world. McDonalds is fully committed to
becoming the global leader paying for the processing plants needed to supply these
outlets. McDonalds has worked closely with franchisees around the world to allow
them to customize outlets to cater for specific cultural needs. Variations in menu are
a key characteristic of cultural variety. In much of Europe beer is served, and in
America yoghurt, salads and pizza are on the menu. Stores are also varied with
restaurants ranging from small express outlets in Tokyo, where high retail costs put
pressure on space, to the larger restaurants such as the 700 seat outlet in Moscow,
which attracted queues of over a thousand people on its first day of operation.
McDonald's Influence on Society Different businesses and services have adopted a
McDonalds style nickname. For example, in the USA, drive in dentists, which deal
with minor problems, are known as McDentists. This shows that McDonalds has a
reputation for speed, though it also gives evidence that McDonalds is thought of as
a basic, simple service, which admittedly isnt too far from the truth. This is an
example of the McDonaldisation of society. The success of McDonalds can be
attributed to efficiency, calculability, predictability, and control. McDonalds uses
optimum methods of production, and also has an effective body of rules and
regulations, which ensure highly efficient work. McDonalds also states it provides
the best available way to get from hungry to full. (G. Ritzer.2000. The
McDonaldization of Society. Pg 36). Calculability can be measured by McDonalds
emphasis on the quantitative aspects of the products sold. As a culture, we tend to
believe that bigger is better (George.Ritzer.2000. The McDonaldization of Society.
Pg.9). Customers are made to feel that they are getting a bargain, are therefore can
justify spending their money on a particular item. Predictability is a fundamental
aspect of McDonalds success. It gives the public assurance that products and
services will be the same over time and in all vicinities. McDonalds have discovered
that people have come to prefer a world of no surprises, and therefore try to make
the McDonalds experience as similar as possible, in terms of service and food.

There are numerous advantages of adopting the McDonalds model. Nowadays,

there is a wider availability of goods and services, which have a greater sphere of
influence. It is far more convenient for the public to obtain products and services,
due to the increased number of outlets, and uniform quality of goods and services.
The McDonalds model has also brought about the availability to more economic
alternatives to high priced customised goods. The introduction of quantification now
enables comparison to be made between goods and services, in terms of size. This
society has adopted a bigger is better attitude. Finally, this new model has helped
the establishment of equal treatment, regardless of race, class, or gender. Naturally,
there are disadvantages to this rational system employed by McDonalds. The first
oversight being that this type of system constantly generates irrational
consequences. The environment is becoming affected by chemicals, which are
essential in order for the standardisation, uniform shape, size and quality of the
products desired in this modern society. Developing countries are also being put at
risk by the effects of deforestation and defoliation. Disasters in Sudan and Ethiopia
can be attributed at least partly by the uncontrolled deforestation that is taking
place. It is also quite ironic that some less developed countries, where most children
are undernourished, are actually exporting their staple crops as animal feed. This
feed is then used to fatten cattle for the production of burgers for sale in developed
countries. Millions of acres of the best farmland in underprivileged, developing
countries are being used for developed countries benefit. McDonald's has a direct
involvement in this economic imperialism, which keeps most indigenous people
deprived and hungry, while many whites become overweight. Thirty-six out of forty
of the worlds poorest countries export food to the USA, the most prosperous
country. McDonald's has also been condemned concerning misuse of resources.
McDonald's South American Cattle consume 10 times the amount of grain and soy
that humans do. Of the 145 million tons of grain and soy that is fed to livestock,
only 21 million tons of meat and by-products are used. The waste is therefore 124
million tons per year, which has a monetary value of $20 billion. This amount of
money could be better used to feed, clothe, and house the entire world population
for one year. Conclusion This essay has explained how the McDonald's model has
become a characteristic of the contemporary international economy, and has
helped create thousands of jobs and improve many economies. However, each
benefit has brought with it a drawback. People in developing countries are starving,
purely so that our developed society can be provided with excess food. Chemicals,
necessary for the uniformity of its products, are destroying the environment and
putting lives at risk due to increased nitrate levels. McDonald's have also
brainwashed a great number of people, including vulnerable young children, into
believing that the McDonald's experience is pain-free. I feel that if other businesses
decide to follow this model, the world could become too standardised, causing
losses in national identities and cultural differences. The finest element of the
McDonald's model lies in its rationality, and I strongly feel that this aspect should be

considered by businesses looking for a model to follow. However, as stated earlier,

rational systems tend to generate irrational consequences, and it is the impact on
society as a whole that a business must consider before adopting a similar code of
practice. I feel that if too many businesses follow this model, it wouldnt make the
world a better place, but simply a bigger breeding ground for exploitation, pollution,
and
concealment.
Bibliography
Shook, C. / Shook, R. (1993) Franchising: the business strategy that changed the
world. London. Prentice Hall. Ritzer, G. (1996) The McDonaldisation of Society.
California: Pineforge Press. Daniels, J. L. (1993) McDonaldisation revisited. Critical
essays on consumer culture. Westport: Praeger Publishers. McDonald's Corporation
(1996) Crew Handbook. London. Microsoft Encarta (1999). Microsoft
Corporation.
www.mcspotlight.org
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