The Background Information of the Organization
McDonald’s is an American fast food organization which founded in 1940 as a restaurant and operated by two brothers Richard and Maurice McDonald, in San Bernardino, California, United States. They started their business as a hamburger stand and later it is turned into a franchise business. In 1955, a businessman, Ray Kroc joined the company as a franchise agent and ensue the chain from the brothers. McDonald’s initial headquarter was located in Oak Brook, Illinois but in early 2018, their global headquarter moved to Chicago. Since the cooperation in 1955, McDonalds Corporation has become the world largest quick-serviced restaurant organization. McDonald’s started to expand into international markets by entering Canada and Puerto Rico in 1967. Nowadays, McDonald’s has more than 36,000 restaurants in 119 countries on six continents. About 9000 restaurants are under company’s own operation and management and the rest are run by franchisees from worldwide. McDonald’s nine major markets are the United States, the United Kingdom, Australia, Brazil, Canada, China, France, Germany and Japan. McDonald’s major well-known product is hamburger but they also sell cheeseburgers, chicken products, breakfast items, French fries, soft drinks, milk shakes and desserts and the company has recently added salad, fish, smoothies and fruits to its menu according to changing consumers’ taste and demands. The main competitor is KFC which is the second largest fast-food chain after McDonald’s and other competitors are Burger King, Subway, Starbucks, Pizza Hut, Domino, Dunkin’ Donuts and Taco Bell. McDonald’s is the world second largest private employer which has 1.9million employees and 1.5million of whom work for franchise.
Task – 1
McDonald’s key stakeholders and their influence and power over the organization
It is crucial to every organization to identify who their stakeholders and understand well their stakeholders’ nature, interest and power and then develop relevant stakeholders relationship management strategies since every organization cannot exist without their stakeholders. A stakeholder of a company is an individual or group that either is harmed by, or benefits from, the company or whose rights can be violated, or have to be respected by the company, Jobber and Ellis-Chadwick (2016). According to Johnson and Whittington (2017), stakeholders are people and groups that depend on the organization and upon which the organization itself depends. Professor Edward Freeman defined the stakeholder as any group or individual who can affect or is affected by the achievement of the organization’s objectives, in his influential book Strategic Management: A stakeholder approach., 1984.
An organization’s stakeholders are those who can affect or who are affected by the organization. Therefore, McDonald’s must explore their key stakeholders and understand well them in order to gain benefits from developing the right relationship with the right stakeholders at the right time. As a global organization, McDonald’s has various stakeholders. To give some structure for identification of multiple stakeholders, McDonald’s can categorize their stakeholders as internal, connected and external.
· International stakeholders – are organization’s members such as CEO, Directors, managers, employees.
· Connected stakeholders – are those who have an economic relationship with the organization such as consumers, distributors, suppliers, shareholders, competitors.
· External stakeholders – are those who have not direct connection but have an interest in the organization’s activities and affected in some ways.
Moreover, McDonald’s can use the stakeholders mapping in order to get to know more about them. Stakeholders mapping is simple and may help McDonald’s management enable to visualize their various stakeholders.
Among the various stakeholders, McDonald’s key stakeholders are employees, franchisees, customers, shareholders, local communities. For organizations, it is also important to understand the influence and power of the stakeholders that they can exert over the organization. Stakeholders’ interest and influence to the organization is very crucial to stakeholders’ management and also the power does because power is the ability of individuals or groups to persuade, induce or coerce into following certain courses of action, Johnson and Whittington (2017).
McDonald’s prioritizes its employees as their most important stakeholders. The employees are important assets and stakeholder since they have interest and can influence over an organization. Successful organizations can make skillful, motivated and committed employees’ greater contribution to organizations’ operations. The effective employees can provide the consistent performance that the organization can attract and retain the customers. The employees’ interests include career advancement and fair reimbursement. Motivating the employees, providing proper training and development, giving appropriate empowerment allow the organization with the better performance. McDonald’s knows the influence and power of their employees and therefore, the company maintains the Hamburger University, has a global mobility policy that supports effective leadership. However the company pays lower wages which are almost to the legal minimum wages. McDonald’s should consider this aspect and try to increase their top stakeholder, employees’ satisfaction level.
Another key stakeholder, customers are the only revenue source for many organizations. Therefore organizations try to meet their needs as possible as much. McDonald’s put it customers into second important stakeholder group. The interests of this stakeholder are healthy food choices, affordable price and superior services. Because of the customers’ interest and power, McDonald’s makes ensure the product standardization and supply chain streamlining. However, McDonald’s has widely criticized about the health effects of its foods. Since McDonald’s main food-line is fast food, the company should carefully focus on the ingredients, FDA approved, change their some menu with special items.
McDonald’s identifies the investors as its major stakeholder group and strikes to fulfill their needs since they have major concern, influence and power over the organization’s actions. Their main interests are profitability and revenue growth. McDonald’s aware this aspect and try to satisfy the investors’ needs through the stable operation. McDonald’s also supports communities as their one of key stakeholders group. Communities have power to influence the organization’s working practices such as complaining. Today communities aware the environmental issues, health issues, ethical issues and eventually sustainability issues. They interest the organization’s activities are correct, ethical and sincere and also impact the community development. Therefore, McDonald’s developed CSR and sustainability programs for this stakeholder group. The Ronald McDonald House provides financial charities to families in need and McDonald’s sourcing policy prioritizes the sustainable production, especially in farms. Also, McDonald’s Global Best of Green program recognizes and gives awards the innovative environmental ideas and contributions in order to encourage the Green Economy.
McDonald’s try to be effective in addressing their stakeholders’ interests and they have ability to understand their stakeholders’ power over the organization so far. Therefore, McDonald’s can develop an effective CSR programs in order to satisfy their key stakeholders. A well-rounded approach of understanding of each stakeholder can improve the organizations both for short-term and long-term.
Task – 2
The key aspects of building the brand’s reputation and importance to stakeholders
A brand is a name, term, design, symbol, logo, or other features that would distinguish it from other organizations in the eyes of the customers. Brands can help consumers’ buying behavior and purchasing decision making process more easily and quickly. Branding is one of the most important aspects of any business in order to be successful. An effective branding strategy can give the organizations specific competitive advantages. Customers know well the brands’ position and they understand the brands’ standing and trust those brands. Therefore, organizations must develop the consistent and strong brands to lead to achieve the strong brand equity. Brand reputation is a primary source of high demand and lasting consumer attractiveness, the image of superior quality and service, added value and this can perceive the premium price. The reputable brand is the strong asset for the organization which leads to consumer loyalty and steady to future sales (Aperia T, 2004). According to Upshaw (1995), he agrees and claims that branding is the art of trust creation and therefore it is imperative for organizations to build a reputable identity in order to sustain the trust with their customers.
McDonald’s knows very well what their brand stands for and what their brand promise. And they communicate with every stakeholder groups and visible how they try to achieve them. For building a strong brand reputation, paying close attention to customer experiences is very important to organizations. McDonald’s sees this and try to meet their customers’ positive experiences through improving the services, quality and taste. McDonald’s says improvement in consumer perceptions of the brand helps to achieve McDonald’s best sale figures in six years. Different brands offering the same product can have different positions in a market place. Knowing own organization’s brand position helps organization to understand it situations, consumers’ perceptions and competitive situations and eventually can develop effective strategies. According to Jobber and Ellis-Chadwick (2016), successful brand positioning requires the following.
· Clarity – the positioning must be clear.
· Credibility – being trusted and believe in by all stakeholders.
· Consistency – try to maintain the trust in order to remain consistent.
· Competitiveness – try to achieve competitive advantages.
The major way to achieve the money to invest and run the business according to demanding is from investors and shareholders. Therefore, the stakeholders are needed to be convinced with the strong brand reputation which means the organization has a bright future. In return, having strong brand reputation can achieve the higher profit. The more valuable the brand, the higher customers’ trust subsists to the brand. The customers do not want to take risks in purchasing the products like quality failure and can reduce those risks when they buy the successful brands. The employees are major source in building the brand’s reputation since they make the brand. So they are the first stakeholders who should believe in the brands. The employees are getting more satisfy in their work, their performance are better and this will lead to create the more sufficient brand for the organization.