An Assignment on Ryan McDonald Founder of Ray Kroc

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IFY-BUSINESS BUSINESS ASSIGNMENT CQ-14-0002

Ryan

McDonald founder Ray Kroc

"" “If I had a brick for every time I’ve repeated the phraseQuality, Service, Cleanliness and Value, I think I’d probably be able to bridge the Atlantic Ocean with them.” —Ray Kroc (McDonald, 2015). This is a saying from a legendary business man who enabled McDonald major leap forward in the fast food business. Some of his motivation methods are still used by plenty of companies.

Ray Kroc (1902-1984), the founder of McDonald who was born on October 5, 1902 inOak Park, nearChicago, to parents ofCzechorigin. As same as other famous entrepreneurs, Kroc’s business career was unsmooth and tough. According to his history written by the official website of McDonald (McDonald, 2015), in 1917, Kroc lied about his age and became an ambulance driver during The Second War. However, war ended before Kroc finished training, then due to lack of patience for school, he left there and began his career as early as other successful entrepreneurs. Before his 50th birthday, he had been working as a piano player, paper cup salesman and multi-mixer salesman. To be detailed, multi-mixer salesman was his most successful job before the age of 50, but actually was neither good nor bad. He spent a decade and a half crisscrossing the country peddling the multi-mixer to drugstore soda fountain and restaurant owners. During the early 1950s, many neighborhood soda fountains were forced to close in terms of the loosing number of people that were leaving cities for the suburbs. This condition could be nightmare years for Kroc as a multi-mixer salesman, yet, that was his first time to meet with two brothers, Dick and Mac McDonald and the first step to guide him for success.

An order which includes eight machines from a small restaurant in San Bernardino addressed Kroc’s attention. Kroc wonder what sort of small restaurant was able and needed to chum out 40 milk shakes at a time. Therefore, Kroc left for California to see that restaurant with curiosity. After arriving in California, Kroc was shocked by what he had ever seen in his life. “The McDonald brothers' restaurant was unlike any Ray had ever seen. In contrast to the popular drive-in restaurants of the time, it was self-service, had no indoor seating, and the menu was limited to cheeseburgers, hamburgers, fries, drinks and milk shakes, all of which were produced in an assembly-line fashion that enabled customers to place their orders and receive their meals in less than a minute”. (Baron, 2015) Kroc suddenly negotiated with the brothers and got the exclusive rights to sell the McDonald’s method.

After acquiring exclusive rights, in the first year, He used the cautious clean and efficient restaurant as a showcase for selling McDonald's franchises to the rest of the country and he would collect 1.9 percent of gross sales from them. But Kroc was upset to see that, he was hardly making profits after expenses. Then Kroc met a financial genius called Harry Sonnenborne who gave him a bright idea that how to make money by selling real estate instead of selling hamburgers. Kroc eventually accepted the idea and started to finish his goal-opening 1,000 McDonald’s from coast to coast.

In this period, a serious penitential problem finally appeared. There was an argument between Kroc and the McDonald brothers over their original formula. In order to solve this problem, Kroc decided to own McDonald’s all to himself. He bought our McDonalds for $2.7 million. Although he thought the deal covered the original restaurant in San Bernardino, the brothers said it didn’t which leaded to Kroc’s fury. “Without the rights to their own name, the McDonalds were forced to rename their restaurant The Big M. So Kroc opened a brand-new McDonald's one block away and put The Big M out of business” (Baron, 2015).

In terms of the research, Kroc is true to the father of McDonald’s name. Under his managing, McDonald is always the top of fast-food business. His leadership style is close to paternalistic leadership style which means a leadership style where the leader makes decisions, but takes into account the welfare of employees. “He was one of the best listeners I’ve ever known, and if someone, no matter who it was, had what he considered a good idea, he’d allow them to go with it. But he was strictly one-dimensional when it came to the restaurants. They had to be run right—no argument” (Carlino, 1996). To be more specific, he would accept reasonable suggestions from employees but still needed to run by him first. Kroc needed to make sure McDonald is run as he expected, and he would give order at any time and ant places, in this sense, employees can hardly affected Kroc decision making.

Kroc motivated employees effectively and even the methods were still used until now. The first method is awarded every employee even the smallest of positions the title of “Management Trainee”. Not only in the resumes of employees but also on badge which employee worn every day. By carrying out this motivate method, employees are felt like a value member in management team, it improved McDonald productivity. Second one which is critical is that, Kroc also made a suggestion box for employees. It not only enable employees regarded themselves as a value member of management team, but also amended McDonald. Employees felt their opinions were heard also encourage them to give more good ideas to amend McDonald. Thirdly, in financial aspect, Kroc also proved employees’ health insurance which makes them felt safe. In conclusion, this method matured McDonald and proved to be successful for both the workers and McDonald.

The increasing popularity of McDonald in America, gradually raised the attention from many other aspects. “New York Magazine'sMimi Sheraton proclaimed:‘McDonald's food is irredeemably horrible, with no saving graces whatever.’ Nor did the nutritionists take kindly to McDonald's offerings. As Dr. Jean Mayer, a Harvard professor, wrote: ‘The typical McDonald's meal -- hamburgers, french fries, and a malted -- doesn't give you much nutrition. It's typical of the diet that raises the cholesterol count and leads to heart disease.’ ” (WILEY, 1996)

Comparing with other entrepreneurs, Kroc actually acted more ethically than others. He committed to sustainable relationships with franchise owners. Kroc committed to having deep relationships with owners and directing and guiding them. In addition, he always focus on goal instead of profits. Kroc said, "If you love what you do and put the customer first, success will be yours” (McDonald, 2015). He actually put his word on his behavior, like the motivated method I mentioned above, Kroc always struggle for making employees feel they are part of the team. Moreover, in 1961, Kroc launched Hamburger University which is a training program to give suggestion and instruction to franchisees and operators about how to run a successful McDonald’s restaurant. Until now, there have been more than 80,000 people graduated from this program. In conclusion, Kroc is able to prevent the lure of money, and his justice ethics is admirable. Hamburger University could generate external benefit, people who graduated from this university would probably absorb the thought from Kroc which could benefit company and consumers as well, that’s the reason I willing to work with him.

Without the McDonald brothers’ distraction, Kroc was gradually on the right track. In 1965, he had opened more than 700 restaurants in 44 states. Apart from that, he eventually enable McDonald to become the first fast-food business for the public which made Kroc become a rich man. In 1970s, McDonald’s even became the largest food supplier in USA and would remain approximately two decades. After ten months he died, McDonald had sold 50 billion burgers. Today, the current worth of McDonald is 96.249 billion (YAHOO, 2015), and there is no doubt that McDonald couldn’t be so successful without Ray Kroc.

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