A Concise About Mcdonalds Business Essay

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The fast-food sector has seen great changes from the recent past. Fast-food points have become a part of the developing countries and the developed nations like New Zealand. The industry has grown largely and McDonalds is no doubt the top player. The word McDonalds has become a common name in each household as it has emerged as the largest player in the fast-food sector. But then times have changed and people mind set is changing too. Competition in the fast-food sector is sky rocketing. So there is a huge necessity for an organization like McDonalds to rely on SHRM to provide the best service to the customers addressing the changes in their approach and stand firm in this heavy competitive sector.

This report is presented by Narendra Inti, a student of Post Graduate Diploma in Business at UNITEC. This report includes an environmental scan used to assess its influence on the HR functioning at McDonalds, New Zealand. It evaluates the influence of the environmental factors and suggests solutions to the key issues encountered. The report also speaks about the implementation of CHRM as a part of strategic-management process. It finally speaks about the key functions involved in the process of SHRM and its implementation. It also suggests the areas where HR team at McDonalds needs to concentrate to continue its success.

A Concise about McDonald's:

McDonald's started its operations in New Zealand on the 7th of June 1976 in Porirua, located near Wellington, even though the McDonald's franchise was brought much earlier in 1974 by Wally Morris (The founder of the super market Shop Rite). The first venture was an instant success and there was no looking back for McDonald's in New Zealand. Currently it has about 160 restaurants all over New Zealand, super exceeding the initial estimates that New Zealand could only support up to 50 McDonald's restaurants. About 106 of the McDonald's Restaurants are franchised and the remaining is owned by the company. McDonald's restaurants are either operated by an affiliate, a franchise or the by the company itself. The products they sell range from burgers (made of ham, cheese, chicken), french fires, desserts to salads and smoothies. McDonald's employs more than 10,000 people in all its restaurants nationwide and it is one of the largest employers (especially youth) in New Zealand. Retail world awarded McDonalds with 'retail employer of the year'. McDonald's spent around $150 million in 2011, with the local suppliers. The New Zealand producers had exported around $300 million of food to worldwide McDonald's markets.


Environmental Analysis:

In the words of (Mercer, 1998), environmental scanning reveals the actual change because it exclusively focuses on those areas the organizations could have neglected previously.

The Fast Food Industry has created a stand in the world food market. People have cultured themselves to make fast food as a part and parcel of their lives. McDonalds is one of the leading giants in the fast food industry sector, it enjoys the prime position in the Fast food Market internationally (Bowery, 2006). The company owes its success to its employees; coz an organization can accomplish its targets or goals only with the help of its employees (Jewell, 2007). This is the "de-facto rule" and McDonalds' is no exception.



The policies framed by the government always affect the operations of fast food and that has been the case with the operations of McDonalds too. According to the New Zealand labor law, the employer should always strive to protect the interests of its employees by providing good training and the recently amended compensation standards. New Zealand government is very particular regarding the health and well being of its citizens. It performs constant quality checks and thoroughly examines before issuing the license; to protect the health interests of the people. It is mandatory for every fast-food unit to acquire the license from the NZ government. Moreover, the fast food sector must be well aware of the regulations in trade and socio- procedures (Rudman, 2011; Vettori, 2007)

STUDY: Since McDonald's inception in New Zealand, the firm did not face any considerable hiccups due to the influence of political factors. The HR group at McDonalds should constantly monitor the political moves in order avoid any troubles here after. The HR group should constantly strive to add more nutritional value to their menu by actively interacting with the people from the health industry. As the labor law states, the McDonalds HR group should develop the training programs that gives the employees a chance to grow not just in its organization alone, but an all-round development to succeed anywhere.


In any country, economical factors have a major influence on the firms because a business entity would face a lot of economical variables in a macro environment. The firm should be well aware of the tax policies which include several taxes like restaurant tax, service tax and entertainment taxes. Raw material rates differ from country to country. The difference in currencies will show a considerable impact on the purchase costs. The economic growth and the current condition in a country have a direct effect on the fast food industry progress. If the per-capita income goes down, the demand of the product would eventually fall. So, if the economy is good, that means people will be in a situation to spend on the food in an expensive fast-food restaurant (Sheehan and Holland, 2006).


The HR group at McDonalds should change the pricing pattern depending upon the market trends. The market fluctuations can affect the organization financially and so the HR group should have focus on maintaining the equilibrium between the buyer and the supplier.


Though people of New Zealand are financially well able to eat frequently at the food outlets like McDonalds, yet they have very high expectations when it comes to quality of food. They demand quality services and high conveniences that actually differentiate a restaurant from the other one. They especially look for a cozy and relax-able ambient place because of their attraction for hanging out and eating. New Zealand is very rich in livestock and so people prefer the products from New Zealand as a part of their food rather than the imported ones.


No doubt McDonalds has shown very good efforts so far, in localizing its menu to meet and suit the local taste of the people. Yet the HR group at McDonalds should constantly conduct survey to learn about the local culture and design the products for them according to the findings learned from the research. McDonalds HR group should always aim for constant innovation to meet the changing tastes of the people.


The current situation in New Zealand demands a fast food restaurant to be technology oriented. The younger generation wants technology in the daily life and facilities like credit card payment is a must. Firms should be looking at the competitor's innovation and should improve itself in the terms of integrating technology to manage its daily operations (Huub and van, 2007). For example, technology should be integrated with "supply chain management" in order to manage its supply system, easy paying methods and ordering systems to facilitate the customers (favalgi, whiple, gosh and young, 2005).

So implementation of technology makes the management to function more effectively and thereby it is a great cost saving factor in the long term. This cost effective management can help the firm to go on an aggressive promotional campaign providing discounts to the customers, which makes the customer a happy camper.


The HR group at McDonalds should focus on providing wireless internet to its customers all over even though they are providing it in few places. It also needs to implement the "Drive thru service" where ever required.



Strategic human-resource management ( SHRM ) is a process by which the organizations goals are achieved by the people involved through the HR strategy which is integrated with the HR polices and the practice (Armstrong,2008;Dessler,2012). SHRM is a process that involves the human resource linking with the strategic objectives mainly to improve the performance. So the "Strategic Human-Resource Management" includes the setting of good employment standard procedures and policies that helps in developing the corporate culture that fits in the firm's operating environment and the objectives (Little, 2003). The "Effective SHRM" is the understanding of both internal and the external requirements (operational) of a business and its behavioral and social requirements. It is obvious that "Strategic Human-Resource Management" integrates dual ideas. Firstly the notion of an organization, which makes it clear that people are the most important factor both in the strategy formulation and its implementation. Secondly, that the HR practices of an organization are very important in developing the human-oriented capital pool for the future strategic formulation process (Charmaine E. J and Hartel, 2010).

Models of Strategic Human-Resource Management:

Charmaine and Hartel (2010) states that "Planning is needed to get the right number of the right people in the right jobs at the right time". So the anticipation of HR future needs is the required element for the strategic decisions to be effective. There are numerous SHRM models; few commonly implemented and accepted ones in SHRM are "Jackson & Schuler (1995), Kochan & Barocci (1985), Klatt, Murdick & Schuster (1978), Tsui's Multiple Constituency Model (1990), Lundy & cowling (1996) and Butler, Ferries & Napier (1991)".One of the widely used HRM model, "Jackson & Schuler (1995)"suggest that there are lot variety of environmental characteristics of macro level which influence an organization adoption to HRM practices-policies &philosophies and thereby organizational performance. The model clearly states that the main parameters an HR practitioner needs to consider are "laws & regulations, culture and politics, labor and firm partners (such as trade unions, market and industry dynamics). Further the model illustrates that data interpretation, decision making, communication system with the people largely depends on a firm's technology adaption, structure, strategy and size (Fujimoto and Hartel, 2010).

Implementation of the CHRM framework for decision-making by the HR department at McDonalds:

The Continuous Human-Resource Management (CHRM) framework gives a platform for analysing an organisation's environment and the issues it has to deal, with the help of a human cantered decision making. This framework provides six steps involved in the effective decision-making of the SHRM. The framework also emphasises on the continuous need for monitoring, regular evaluation and proactive action (Charmaine E. J and Hartel, 2010)..

Primary Role of HR team at McDonalds:

The HR team at McDonalds starting point of action is setting the "Organizational Objectives", the end results that a firm strives for which is often termed as mission, values, purpose, objectives & goals. Even though these terms are often interchangeably used, all these denote the end results (DeCieri and Holland, 2005).

Organizational Philosophy:

Philosophy is a guiding force of an organization that helps to establish values and beliefs of an organization. It guides an organization on how to do conduct business, role in the society and view about humanity. The philosophy of an organization is responsible in establishing relationship between firm and the stakeholders, shareholders, customers, suppliers, employees, public and the government. In the bigger firms, the founder establishes the firm's philosophy which is maintained and followed throughout the firm's existence (Baird, coffey, Compton and Nankervis, 2010).

McDonalds Philosophy:

McDonalds Philosophy is to have a collaborative approach and commitment for sharing the best practice with its suppliers and mutually benefit from this commitment which helps to improve the quality and value.

Mission Statement:

Mission statement clearly defines an organizations primary objectives and its purpose. Its important function is to define the prime measures of the organizational success. The prime audience here is the leadership-team and the stockholders. So it is the starting point of the strategic planning and the process of goal setting of an organization (Favalgi, Gosh, Whiple, and Young, 2005).

McDonalds Mission:

"McDonald's brand mission is to be our customers' favorite place and way to eat." 


Vision Statement:

A "Vision Statement" reveals the ideal picture of an organization's future. Mostly the vision statements are projected for long term periods and it is used for creation of focal point that leads to strategic planning. "Vision Statement" illustrates both the values and purpose of an organization. It helps an employee know his expected behavior and motivates him to give his best (Becker and Ulrich, 2001).

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" (http://www.scribd.com/doc/51108681/15/McDonald-Vision-Statement).

Value Statements:

Organizations' philosophy, ideals and the principles are defined by "Value Statement". They provide an ethical tone to the organization. The statements which define organizational process of achieving its mission and the vision are the evidence of organization's values(Becker and Ulrich, 2001).

McDonalds Value Statements:

"We place the customer experience at the core of all we do.

We are committed to our people.

We believe in the McDonald's System." (http://www.aboutmcdonalds.com/mcd/our_company/mission_and_values.html)

"Strategic formulation" includes setting the "mission, vision, strategy, goals and values", which are coupled with the consideration of an external environment like "opportunity and threat" and internal environment like "strengths and weakness" of an organization, using the "SWOT analysis" (the analysis of strengths and weakness, opportunities and threats)

Firstly, the role of SHRM team at McDonalds is to study the current market situation in order to train and support their staff that is responsible for providing best services to its customers in this era of competitive market in the field of fast food, thereby helping to achieve its organizational goals in New Zealand. So, the SHRM team should go for a SWOT analysis and a regular industrial analysis with the help of "Porters Five Frame-work Analysis". This is a framework which was developed by Michael.E.Porter, a professor from Harvard Business School. These five forces help to analyze the environment in the competitive market. (Michael, Duane and Robert, 2005).

An SWOT analysis by the SHRM department at McDonalds can reveal the following:

Strengths of McDonalds:

McDonalds is a global giant in the fast food sector and that makes it a very easy choice for the people.

McDonalds has got a standard procedure of operation that helps the firm to finish the order very fluently. This helps them to retain their customers.

Every McDonalds franchise or branch spends almost a year at market survey and that is the main reason for their success in the long term management.

McDonalds are the leaders when it comes to adopting new technologies in the field of fast-food sector. Their service which facilitates the customers to order while driving, known as "Drive thru" is one best example to show their implementation of technology.

They have a sense of "Giving Back" to the society and it is seen in most of the initiatives by them, like helping the families with children that need extensive hospital care. Their sense of social responsibility is also helping them to build their brand image.

Last but not the least; it has got a very loyal staff and efficient SHRM team.

Weakness of McDonalds:

There are few quality issues among the franchise networks.

It is limited to fast food industry.

Unable to restrict the competitors who have copied the McDonalds strategy.

Opportunities for McDonalds:

Could expand by joint ventures with retailers like supermarkets etc., due to its "great brand-image & value".

Can make use of the CRM, (database -marketing) to reach and market itself with the target groups.

Can focus on the corporate social-responsibility.

Threats for McDonalds:

It is facing a heavy competition from other giants like Burger King, KFC, subway, etc.

It is very hard to survive during the "economic down-turns" or the period of recessions.

Increased health conscious by the customers is not motivating them to frequently have fat-oriented food.

At this stage the HR group at McDonalds is required to approach for solving the issues detected from the previous analysis. After verifying the issue, a cross study to evaluate the alternatives and develop an action plan is carried out. Alternatives that sound to be realistic are evaluated and cross-checked if they can address the issue. The HR team should focus on "Suitability - feasibility - acceptability".

At this stage the HR group at McDonalds is required to approach for solving the issues detected from the previous analysis. After verifying the issue, a cross study to evaluate the alternatives and develop an action plan is carried out. Alternatives that sound to be realistic are evaluated and cross-checked if they can address the issue. The HR team should focus on "Suitability - feasibility - acceptability".

Strategic-funtions of Human-Resource Department at McDonalds:

Human-resource Planning (HRP) at McDonalds:

HRP is a continuous process of planning systematically for achieving organization objectives, through its valuable asset, human resources. The main objective of HR at McDonalds is to make sure there is fit between the jobs and employees and at the same time avoiding shortages or surplus of man power. They must concentrate on three important process of HR planning viz. forecasting (demand of labor), analyzing (the current the labor market and supply) and maintaining an equilibrium between demand and supply of labor (Guthridge,komm and lawson, 2008).

Human Resources Recruitment at McDonalds:

The importance of attracting/retaining the best quality of employees is clearly illustrated by the truth that HRM is being represented at the highest level in the companies. The company's strength depends on the quality of employees it has (Stone, 2008). HR team at McDonalds need to recruit best talent available and at the same time they need to assess whether the employee has a short term intentions of sticking to the firm or whether the employee has long term intentions. The HR team at McDonalds should provide better growth perspectives to the employee or else there are high chances of losing the talent, as employee has got many options in the current highly competitive market.


The HR group at McDonalds should carry the process performance management all through the year even though they do conduct a formal appraisal interview annually. By doing so, they could express their expectations, constructive feedback can be provided, current performance could be compared to the expectations and thus collectively formulate the plans for performance development (Nel and Little, 2009). This would help McDonalds deal with any quality issues they encounter with in them in this highly competitive fast-food sector.

HR Strategic-Rewarding System:

The HR group at McDonalds should follow a strategic-rewarding system that addresses the key four areas: compensation and benefits, appreciation and the recognition of the employee (Grinstein, 2008). Normally, in this current business world one or the other elements mentioned are missing in most of the business and goes same with McDonalds too. HR team at McDonalds, address all the four key elements of strategic-rewarding system and align them with its corporate strategies.

Human-Resource Development (HRD):

The framework used for helping the employees to develop their organizational and personal skills, abilities and the knowledge is Human-Resource Development (Guthridge,komm and lawson, 2008). HRD implementation facilitates the employee training, career development, performance management, mentoring, tuition assistance, succession planning and organization development. The HR team at McDonalds should focus on all aspects of HRD in order to develop the superior workforce and thereby helping the organization and the employees to accomplish their goals in providing better service to its customers. HR team at healthy organizations like McDonalds should believe and rely on HRD.


Strategic Human-Resource management (SHRM) is a continual process as the organizational environment changes too continuously. It is all about applying the key and best principles and so thereby developing the best practices in an organization. The primary goal of the ER and HR at McDonalds should be the main focus on those elements to achieve the "organizational-efficiency & effectiveness" (Härtel,Fujimoto, Strybosch, Fitzpatrick, 2007). Providing training of ER is very important for achieving effective activities of ER where the influence by the employer is very high in "Tripartite-Relationship" (Du Plessis, 2007).