SUBMITTED TO:

Dr. Fanar Shwedeh

SUBMITTED BY:

ASSIGNMENT 1
International Management [BUS 101]
Task 1. (6 marks) [CLO 1]

Choose any business that you know (for KFC, Toyota, Samsung, etc. and define the Organizational Structure of the

chosen organization. (1 marks)

For the chosen organization, determine the Determinants of Organizational Structure:

 Mission (1 mark)

 Strategy (1 mark)

 Size (1 mark)

 Internal Environment (1 mark)

 External Environment (1 mark)

Answer:

Organizational structure of McDonald’s:

Organizational structure of any organization is essential to determine the interaction between

business processes and its people. Similarly, organizational structure itself is determined by its

products, services, geographical presence and its competitors. Same is the case with

McDonald’s. McDonald’s having presence in 120 countries and territories, is one of the largest

fast food chains in the world. Therefore, organizational structure of McDonald’s is categorized

on Divisional Organizational Structure. In this type of organizational structure, different

components of organization are given responsibilities regarding different operational areas based

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on different strategic needs. McDonald’s organizational structure is clustered along the lines of

following characteristics:

1. Global Hierarchy

2. Performance Based Divisions

3. Function Based Groups

1. Global Hierarchy:

Global hierarchy is one of the key features of many multinational corporations. This type of

organizational structure is established to maintain managerial control in a company. In

McDonald’s, the CEO issues directives and seeks report from specific business areas in the

middle management present in different geographical locations. These directives travel along the

hierarchy from top management to the individual restaurant manager. Similarly, the information

critical to managerial decisions travels backward to the top management along the same lines.

2. Performance Based Divisions:

Before July 1, 2015, organizational structure was divided based upon geographical locations

such as (a) U.S., (b) Europe, (c) Asia/Pacific, (d) Middle East and Africa, and (e) Other

Countries & Corporate (OCC) including Canada, Latin America and Corporate. After

reorganization, organizational structure was divided on the lines of performance such as (a) U.S.,

(b) International Lead Markets, (c) High Growth Markets, and (d) Foundational Markets and

Corporate. The US and international lead markets contain the major chunk of McDonald’s

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business pie. Whereas, high Growth Market, though small in size, gives handsome growth

opportunities.

3. Function Based Groups:

Like any typical organizational structure in a traditional company, McDonald’s also maintains

function based organizational structure. For example, matters related to people are managed by

Human Resource Management Department. Similarly, Finance, Marketing, Sales and Supply

Chain management functions are separated and managed under the leadership of corporate

executives or senior managers.

Determinants of Organizational Structure:

1. Mission Statement of McDonald’s:

McDonald’s corporate mission is “to be our customers’ favorite place and way to eat and

drink.” McDonald’s corporate mission statement emphasizes its focus on customer needs and

satisfaction. Along with customer satisfaction, mission statement maintain focus on food and

beverages industry. Moreover, mission statement also puts importance on the customer

experience and feel when it talks about favorite place and way.

2. Strategy of McDonald’s:

Company’s organizational structure is always aligned with its business strategy. Same is the case

with McDonald’s. McDonald’s has adopted two pronged business strategy. On one hand, it goes

for cost leadership strategy to maintain market competitive pricing. On the other hand, it has

adopted international business expansion strategy in order to remain leading fast food chain.

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3. Size of McDonald’s:

Being one of the leading fast food chains in the world, McDonald’s has presence in 120

countries and territories with more than 38,000 restaurants. Company owned restaurants have

more than 200,000 employees. If all restaurants are considered, McDonald’s has employed

around 1.9 million workers. Apart from that, company has 22% of the market share

internationally. Total assets of the company exceed $36 billion.

4. Internal Environment of McDonald’s:

In company’s internal environment, most important factor is its wide spread business presence

across the world. Massive market share gives the company advantage of producing economies of

scale and reduce cost to become cost leader in the industry. Secondly McDonald’s has strong

global brand positioning in the world. It gives another competitive edge over its competitors.

When it comes to profits, no matter if the income domestically slums. It can earn its profits other

markets. On the other hand, one of the weaknesses the company faces is the employee turnover

because of the low wages it pays to its employees. Another problem McDonald’s faces is

negative propaganda from health conscious members of society about salty and full of

carbohydrate diets.

5. External Environment of McDonald’s:

PESTEL analysis tells about the external threats and opportunities to an organization. Therefore,

to assess the external environment of McDonald’s, it is pertinent to make PESTEL analysis. On

political front, changing international trade dynamics and internal government economic and

health policies presents threats as well as opportunities for McDonald’s. On economic side,

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slowdown of certain economies and growth trend in developing countries pose threat and

opportunities for McDonald’s. Similarly, demographic shifts such as culture, income patterns etc

also raise concern about the organization. Moreover, scientific development paves way for

technological innovation in business that create threat as well opportunities for McDonald’s like

any other company. like other factors, growing ecological concerns raise eyebrows of top

management at McDonald’s any oblige them to devise policies to cater to the environment

question in their operations. Lastly, legal bindings regarding animal rights etc. also put

companies in troubled waters.

Task 2 (4 marks) [CLO 2]

Apply at least two operational processes that are provided by the chosen organization. (4 mark)

Answer:

Operational Processes at McDonald’s:

1. Marketing Strategy or Marketing Mix (4Ps):

a. Product Mix: Product Mix of McDonald’s mainly consists of food and beverages.

Following are the various organizational outputs that company offers to its targeted customers

and markets.

 Hamburgers and sandwiches

 Chicken and fish

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  Salads

 Snacks and sides

 Beverages

 Desserts and shakes

 Breakfast/All-day breakfast

 McCafé

b. Placement/Distribution: Placement strategy at McDonald’s is diversified keeping in

view the customer needs and location. Following are the venues and ways McDonald’s serves its

customers:

 Restaurants

 Kiosks

 McDonald’s mobile apps

 Postmates website and app, and others

c. McDonald’s Promotional Strategy: these are the tactics companies use to

communicate and persuade targeted customers. Similarly, McDonalds adopts certain

promotional mix which is as follows:

 Advertising (most significant)

 Sales promotions

 Public relations

 Direct marketing

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 d. McDonald’s Pricing Strategy: Pricing strategy is the most important element in

attracting customers as well as making profits. McDonald’s use following pricing mix strategies

for the purpose:

 Bundle pricing strategy

 Psychological pricing strategy

2. Human Resource Management at MacDonald’s:

Human resource management function at McDonald’s is the rigorous process at McDonald’s. It

is the end to end process. It starts with HR planning and runs through all the stages such as job

analysis, recruitment, selection, training, educating, appraising and finally rewarding.

Widespread presence of the organization necessitates the adoption of strategic human resource

management from head office to the individual restaurant. SHRM aligns its people with the

organization’s long term business planning because it is the human resource that has to put all its

efforts to achieve the objectives set by the organization.

Job analysis is made through questionnaires and direct observation. On the basis of job analysis,

job description and job specification is designed. There is separate job specification for Crew

members and Trainee Business Managers. When it comes to recruitment, McDonald’s makes

internal recruitment from its staff as well as external recruitment through advertisements and

internships. After selection, the company runs training programs such as on the job, direct

training, training abroad and computer based training. There are two types of pay plans at

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McDonald’s one is retained pay which is paid to permanent employees and other is hourly paid

employees. Both are paid on the bases of performance. Other financial benefits include crew of

the year award, crew of the month reward etc. keeping in view above HR practices, it is clear

that renowned HR practices are followed at McDonald’s.

Task 3 (5 marks) [CLO 3]

Discuss Business and Managerial Ethics and how they are important in Business. (3 marks)

Give an example of ethical and social responsibility activities in the chosen organization. (2 marks)

Answer:

Importance of Managerial Ethics:

Managerial ethics is the system of values and beliefs that guides the actions and behaviors of

individuals as well as organizations. When the actions and behaviors are guided by these

principles that facilitate the general good. These values are codified by laws, environmental

regulations and labor laws etc.

1. Role of managerial ethics at workplace: With business ethics, employees make

better decision which in turn increases productivity and employee morale. Moreover, if the best

ethical practices are followed at workplace, better relations between employees and management

is established. These better relations help achieve higher performance standards.

2. Society and role of managerial ethics: Businesses and organizations operate in social

settings/environment and utilize resources owned by the members of society. Therefore, it

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becomes ethically obligatory that organizations give back to society. This process is called

fulfilling corporate social responsibility.

3. Image of the Organization: When a company follows managerial ethics, it improves

company’s image in front of customers and other members of society which gives company edge

over its competitors.

4. Government intervention and managerial ethics: In most of the countries, there are

strict consumer protection laws and labor laws which compel companies to uphold best practices.

When companies follow best managerial ethical practices, they can avoid unnecessary

government intervention.

Corporate Social Responsibility at McDonald’s:

1. McHappy Day: McHappy Day is an annual event. On this day, certain percentage of

sale goes to charity. It is a fund raising event to donate some amount out of sales to Ronald

McDonald House Charity.

2. McRefugee: Poor people in Hong Kong, Japan and China use McDonald’s 24 hour

restaurant as the hostel.

Task 4 (5 marks) [CLO 4]

Explain what are global external environments that might influence business activities. (1 mark)

Analyze at lease 4 external environments that have an impact on the chosen company. (4 marks)

Answer:
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Global External Environment:

Globalization has reduced the distances on one hand and on the other hand, it has provided

opportunities to businesses to expand their operations beyond national boundaries. Rather it has

made the world as global village. Now the business operate internationally. This is the reason

that companies are exposed to the international environment. International environment consists

of political, economic, social, technological, environmental and legal factors. When the business

operates in territories other than its origin, they are affected by changes in political situation,

economic conditions, demographic shifts and technological innovations. Brexit is one of the

glaring examples of political changes that have affected business operating in European Union.

Similarly, post covid-19 economic conditions have posed challenges to the business operating

internationally. Likewise, technological changes significantly affect global businesses. This is

how the global external environment affects the business.

External Environment Affecting McDonald’s:

1. Political factors impacting McDonald’s: this factor refers to the government policies

and actions that affect businesses. It becomes more important in international arena. Similar

logic can be applied to McDonald’s. Having origin in the US, it operates in more than 120

countries. Change in government policies in any country affects its business there. Government’s

public health policy, country’s labor laws, environmental policies and international trade

agreements and conflicts are the major determinants of international political environment that

can affect McDonald’s.

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 2. Economic factors impacting McDonald’s: Businesses are established to earn profits

and expand operations to increase business size. Major factor that affect business profitability

and performance is economic factor. Like political environment, economic factor becomes more

important when business expands internationally. Economic changes like expanding and

shrinking economies affect businesses. Same is the case with McDonald’s. McDonald’s is

having growth opportunities in Asian economies while it is struggling in China. Similarly,

Covid-19 and lockdowns across the globe has severely impacted McDonald’s sales. Therefore, it

can be said that economic conditions have significant impact on McDonald’s.

3. Sociocultural factors impacting McDonald’s: Businesses are established to serve

certain targeted customers. Therefore, demographic or social factors heavily impact businesses.

Like other businesses, sociocultural factors are important for McDonald’s. Since it is operating

in host of countries other than the US. Demographic conditions in those countries are significant

for business operations. Purchasing power of people, their wage rate, taste, social orientation

dining pattern, all differ in different countries. McDonald’s while making business strategies, has

to keep these factors in perspective. Social conditions in Asia are totally different from the US or

other western countries. Therefore, it is challenge for McDonald’s to build business accordingly.

4. Technological factors impacting McDonald’s: Technological innovation has been

one of the biggest challenges in the modern times. Fast changing technology has created

opportunities as well as threats for the businesses. McDonald’s has to adapt to the changing

technological trends to keep pace with the competitors. Business automation, introduction of

Artificial Intelligence and business through mobile devices have changed the business dynamics.

Therefore, McDonald’s has to adapt to these trends.

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