Recommendation Paper

McDonald Analysis

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University affiliation

McDonald Analysis

To: The CEO

From: McDonald’s

Date:

Re: McDonalds Analysis

This memo aims at offering an analysis of the situation that McDonald is facing and the resources that it has to assist the CEO in making his final decision on whether he should bring Jack Harris and his firm, Crisis Consulting, on board. The analysis consist of the business environment as a result of the government action, sustainability, internal resources that are available for responding to the available opportunities and threats, communication to the various stakeholders, how the situation will affect the image of the company, potential course of action of responding to the situation, impact of the course of action on the business and lastly the external resources. I hope that the analysis will assist the CEO to a great extent in making a viable decision.

A. Business Environment

Governments usually establish many rules and regulations which possess both threats and opportunities to the businesses that are operating in the industries affected. When government imposes changes on the rules and regulations, businesses are forced to change the way they do things, and this has an impact on the competitiveness as well as the profitability of the business. Based on the analysis of the government action, one of the actions that the government has taken is to raise the minimum wage. This is likely to have an impact on the financial situation as well as the operations of the organization in that, raising the minimum wage will force the company to increase the money that it pays the employees in the form of salaries and the remuneration. Businesses are required by the law to ensure that they act in line with all the set laws and regulations at the federal, state and the local levels of government. McDonald’s will thus be forced to increase its minimum wage so that it can be in line with the set minimum wages law in the countries that it operates in. From this perspective, the raising of the minimum wage will be a threat to the organization since it will lead to an increase in its expenses and hence a reduction in their level of profitability. On the other hand, the raising of the minimum wage will be an opportunity to the organization in that the employees will be more satisfied if their salaries and wages are increased. This will lead to an increase in the level of productivity and hence will have a positive effect on the operations of the organization as a result of increased effectiveness (Worthington, & Britton, 2009).

The other that the government has put in place is the ban on the sale of some foods and meals that are presumed to be unhealthy. Issuing of a ban on some of the products that the company offers is likely to have a negative effect on the financial situation of the company because; when the government bans one of the product, the company will have to change the menu of the product to remove some of the unhealthy products in the foods and replace them with healthy products such as fruits and vegetables to ensure that the products have a low-calorie balance and hence healthy. The company will thus be required to invest more in the product so that they can make the necessary adjustments to make the food healthier. However, this will have a positive impact on the financial situation of the organization in the long-term because it will be in a position to attract more customers to purchase the product especially the people who have adjusted to a healthier lifestyle. This will lead to an increase in the level of sales in the organization and hence increased the level of profitability.

B. Sustainability

The action by the government of banning some of the products that the company offers will have a negative impact on the sustainability of the business in the short-term but will have a positive impact on the sustainability of the company in the long term. In this, the company will experience a decline in the sales volume in the short term due to the lifting of these products from the menu because they are unhealthy and thus have a negative impact on the health of the consumers as they cause diseases such as obesity as a result of the high-calorie content. However, in the long-term, the ban of the unhealthy products will have a positive impact on the sustainability of the company because many of the people in the society are changing and are moving towards the consumption of more healthy foods. Banning of the unhealthy food will thus force the company to charge its menu by replacing the unhealthy meals with more healthy ones that are characterized by low-calorie content through the elimination of the French fries and replacing them with fruits such as apples and vegetables. This will assist the company to remain relevant in the market for a long time due to the capability of meeting the needs of the people who are sensitive to health issues and are moving towards the adoption of a healthy lifestyle.

The raising of the minimum wage will also have a negative impact on the sustainability of the business in the short term but a positive impact on the sustainability of the business in the long-term. In this, the raising of the minimum wages will impose a financial strain on the company because it will be forced to increase its expenses in the form of salaries and wages that are paid to the employees. This will thus reduce the level of profitability of the organization. On the other hand, the raise of the minimum wage will have a positive impact on the business in the long-term because it will increase the level of satisfaction among the employees which will motivate them to work extra hard and hence the company will enjoy an increase in the level of productivity and efficiency. This will lead to an increase in the level of sales and profit for the business,, and it will thus be in a position to maintain a desirable level of growth (Dunphy, Benn, & Griffiths, 2014).

C. Internal Resources

McDonald's has an estimate of more than 375,000 employees, and as a result of this, there is a need for the business to have effective management skills to make it easy to supervise and manage all the employees. One of the internal resources that the company has is its organization and the teams which reveals that the business is adequately organized to effectively address the various opportunities and threats that are likely to arise. The business usually has a divisional organizational structure and all the divisions are bestowed with the responsibility of handling specific operations. The different divisions are considered to be independent which promotes the organizational flexibility.

One of the features that reveal that the business is adequately organized to handle its threats and opportunities is its global hierarchy. This is aimed at covering the actions of the organization globally and emphasizes on the global control. The CEO is the head of the hierarchy, and he thus gives directions to the middle managers who then disseminate the mandates to the restaurant managers and the workers. This makes it easy to carry out the control function in the organization, and the different levels of government can operate independently. The other support feature is the performance-based divisions where the organizational structure of the company was restructured in the year 2015 so that the company can be in a position to use performance as the basis for innovative segments. The last feature that reveals that the company is adequately organized to handle the threats and opportunities is its function-based groups. This is imperative in that it assists the business to handle its important functions through franchising, its supply chain group, legal group and the human resource management (Facella, & Genn, 2009).

D. Communication

The information about the situation has been communicated to the various stakeholders using various approaches. One of the approaches that have been used is the memo addressing the employees. A memo has been written to the employees informing the current situation, and they have also been given a chance to air their views in their departmental meetings which should be presented by the heads of the departments to the CEO. The other way in which the situation has been communicated is that the social media has been used by the organization, the radio and the newspapers to inform the customers and also the investors in the organization on the current situation in the company. These approaches have been adopted to ensure that all the stakeholders in the organization right from the employees, the clients, and the investors can be in a position to receive the intended information.

E. Company Image

The situation has affected the public image of the company both positively and negatively. One of the ways in which the image of the public will be affected negatively is that most of the employees are likely to have stress due to the uncertainty that they may lose their jobs. In this, the employees are likely to have a negative perception of the company and also their families and the community at large especially if they are downsized hence resulting in the loss of their jobs.

In this, most of the customers feel that the company is falling, and they can consider shifting to its competitors while the investors think that they will lose their capital invested in the company. The other way in which the public image of the company may be affected is that the investors are likely to lose interest in the company. This is due to the fear of their capital when the company is taken over by Jack Harris and his firm, Crisis Consulting. One of the positive aspects that the company image will enjoy is increased competitiveness. This is because, will benefit financially from Crisis Consulting and it will also learn the strategies that it will need in the market to increase its competitiveness, increase effectiveness and efficiency, reduce the costs and also increase profitability

F. Response

One of the options that the business has, in this case, is to consider investing in more healthy products. In this, the company should start replacing its products that have high-calorie content with other healthy products because most of the consumers have become sensitive to the health issue and thus it will lose its consumers of the junk foods and fast foods which will lead to the loss of revenue. Investing in healthy products will assist the company in attracting more customers and retaining their existing ones due to the capability of meeting their diverse needs.

The other potential course of action that the company can take in response to the current macroeconomic environment is reducing its number of the employees. Raising the minimum wage will increase the higher costs and the prices in the company. To curb these costs, the company should consider reducing the number employees and making use of the automation machines to replace the cashiers. This will greatly aid in the reduction of the costs that the company is expected to incur as a result of the legal requirement to increase the minimum wages.

G. Impact

One of the ways in which investing in more healthy products as one of the courses of action will impact the business in the short-term, and the long-term respectively is that financially, the sales volume of the organization will decline and increase in the long-term after the company has stabilized in the sale of healthy foods. Operationally, the operational costs of the company will increase in the short-term and decline in the long-term as a result of the economies of scale. In the long-term, the company will be in a position to attract a wide scope of consumers, and this will result in an increase in demand for the health products, and the company will thus be in a position to enjoy economies of scale due to purchasing in bulk. Ethically, the course of action will impact the business positively because the business will be in a position to work hand in hand with the other stakeholders and the government to fight against unhealthy foods due to the negative effects on the health of the population such as obesity.

The other way in which reducing the number of employees in the organization by replacing the cashiers with automation machines will impact the business is that in the short-term, the organization will incur huge financial costs in the purchase of the required machines. However, in the long term, the company will be in a position to save on costs that it would have incurred to be paying the cashiers after the raising of the minimum wage (Kew, & Stredwick, 2005). Operationally, the ways of doing things in the business will be affected in the short-term because most of the consumers will not have the knowledge to use the machines, but in the long-run, after the consumers have been taught on using the automation machines, the effectiveness in running the business operations will increase. The ethical implications of replacing the employees in the organization with automation machines is that the downsized employees will lose their source of income thus making it hard for them to cater for their families before getting another job. On the other hand, the business will be in a position to abide by the federal laws and regulations by meeting the minimum wage that is required to pay its employees.

H. External Resources

Activists will be involved in this situation in that they will support the government move to increase the pay of the employees. This is because some of the companies in the various industries usually pay low wages thus making it hard for their employees to live above the poverty line. Most of the low paid employees find it difficult to meet their basic needs and thus the lobbyists will support this move to ensure that these employees receive fair wages that are comparable to the amount of work done and the working hours. Public professionals will also argue in support of the government on the issue of checking on the nutritional content of the products that are offered by the company. This is because many of the professionals especially in the health sector are reporting an increase in health issues such as obesity among the population due to the intake of unhealthy food. They will thus support the move for the company to replace their unhealthy foods with food that has a low-calorie content to avoid the negative impact on the health of the consumers (Davidson, & Forsythe, 2017).

References

Davidson, D. & Forsythe, L. (2017). Business in the contemporary legal environment. New York: Wolters Kluwer.

Dunphy, D., Benn, S. & Griffiths, A. (2014). Organizational change for corporate sustainability. Abingdon, Oxon: Routledge.

Facella, P. & Genn, A. (2009). Everything I know about business I learned at McDonald's : the 7 leadership principles that drive break out success. New York: McGraw-Hill.

Kew, J. & Stredwick, J. (2005). Business environment : managing in a strategic context. London: Chartered Institute of Personnel and Development.

Worthington, I. & Britton, C. (2009). The business environment. Harlow, England New York: FT Prentice Hall.