1.0 Introduction
This essay investigates one of the largest multinational corporations, McDonald’s, and its approaches to HRM strategy concerning its organizational strategy. This essay will first begin by providing brief background information about the organization. The essay proceeds by assessing how the organization’s HRM strategy is adapted to fit its business strategy. This review will include an analysis of how HRM practitioners can respond to national and international forces and the impact of various trends concerning the HRM strategy. This essay will further consider current and future trends for HRM at McDonald’s.
1.2 Background information about the organization
McDonald’s is one of the world’s largest and most successful fast-food corporations, with over 40,031 locations in over 100 countries (Kroc, 2022) (see Figure 1). According to Kroc (2022), the firm was formed in 1940 by brothers Maurice and Richard McDonald as a bar-b-que restaurant in San Bernardino, California. McDonald’s introduced the Speedee Service System, a more efficient technique of preparing and serving meals to customers, in 1954. The concept was a huge success, and by 1959, the brothers had sold their barbeque business and reopened it as a hamburger franchise. Since then, the corporation has grown into a worldwide behemoth, servicing roughly 69 million people daily.
Figure 1: Countries where McDonald’s operates; source: (The McDonalds Monopoly [Photograph]. (n.d.)
McDonald’s has developed over time in terms of business strategy and product offers. Kroc (2022) mentions that the firm is one of the world’s top franchisees, with franchise and license agreements in various countries. CEO Chris Kempczinski steers the successful brand with a focus on offering customers excellent products and value while incorporating social responsibility into corporate operations. McDonald’s business model is built on selling burgers, sandwiches, and other culinary items. The company’s value meals and seasonal offerings are McRib sandwiches, Happy Meals, and McFlurry desserts. According to Statista (2022), in a 2022 ranking of brands based on their worth, McDonald’s ranked sixth, at approximately 197 billion US dollars, with a 27 % rise in value over the previous year (see Figure 2). The brand remains a leader in the fast-food industry, renowned for its products, convenience, and value (Kroc, 2022). The brand is committed to daily excellence and innovation as it strives to offer consumers the highest quality and most enjoyable experience.
Figure 2: The value of McDonald’s brand worldwide in billion US dollars for the period between 2006 and 2022; source: (Statista, 2022)
2.0 Evaluation of McDonald’s Human Resource Management Strategy
According to Tanwar (2013), Porter’s generic strategy entails various strategies that organizations may pursue to gain a competitive advantage and enable them to stand out in their field. These generic strategies include cost leadership, differentiation, and focus. McDonald’s is an example of a successful business that has adopted a combination of these strategies.
Porter’s cost leadership strategy implies offering products or services of high quality at a relatively low cost. This strategy allows McDonald’s to compete on price and keep their profit margins high. Through its efforts to cut costs and keep prices low, the organization can set itself apart from its fast-food competitors. Weebly (2023) notes that McDonald’s attempts to control costs for their operators to provide customers with affordable products. They do this through supplier economies of scale, which continues to benefit their franchisees. Gregory (2022) identifies additional ways the organization reduces costs such as using cheaper ingredients, avoiding too much customization, and utilizing technology to court customers. Moreover, Dudovskiy (2022) demonstrates how the organization can establish multiple restaurants without experiencing any major capital costs. For example, McDonald’s franchisees can choose to obtain financing from a wide variety of sources, including banks, and through a lease agreement with McDonald’s.
Additionally, McDonald’s focuses on differentiation to increase the demand for their products. Dudovskiy (2022) states that McDonald’s implements the differentiation strategy by offering Services such as Drive-thru, McDelivery, and McDonald’s mobile app. Moreover, McDonald’s has been introducing a series of value-based products at various price points such as McPick 2 and Happy Meal bundles. Weebly (2023) explains how the organization caters to its customers by offering various meal combinations, side orders, salads, and desserts to its customers allowing them to customize according to their preferences. For example, in the UK customers can choose to purchase a meal that is sufficient for two people. Furthermore, her work also reveals how McDonald’s ensures that their customers receive their orders quickly despite the long queues. This is possible through digital ordering systems where customers can make their orders online or through an app for collection.
To facilitate their objectives, McDonald’s Human Resource Management (HRM) Strategy is infused with the generic strategies discussed above. To achieve competitive advantage through cost leadership, McDonald’s focuses on reducing labor costs and ensuring maximum productivity (UK Essays, 2023). For example, the organization implements a position-based pay structure to compensate their workers while ensuring they aren’t overpaying them. Moreover, they also use on-the-job training to bring employees up to speed quickly (123 Help Me, 2021). Furthermore, Malik (2022) not that the organization ensures rigorous recruitment and selection process where the right people are chosen to undertake the right job thus they receive the best ROI on their labor.
In their attempt to differentiate their products and services, McDonald’s strives to promote an atmosphere of innovation and progress which leads to social and technological advancement (Brewster, 1999). To incentivize employees, McDonald’s embraces a reward system that is integrated into their employees and designed for each individual (UK Essays, 2023). Additionally, according to Malik (2023), the organization aims to create a highly motivated and skilled workforce that can deliver quality service to its customers. To achieve this, McDonald’s provides on-the-job training, lifelong learning opportunities, and retraining to ensure their employees are up to date on the latest trends and innovations.
Furthermore, to promote progress and innovation, McDonald’s has adopted an organizational culture that is innovative and facilitates learning and development. Johnson et al., (2020) state that this strategy emphasizes the reality that Mcdonald’s requires a workforce that can handle new tasks and roles as needed but to do so there must be a ‘right’ culture and suitable systems in place. Specifically, this requires the company to design its HR systems and policy features in a way that allows for creativity, innovation, and teamwork; elements that primarily contribute to the organization’s competitive advantage.
3.0 Analysis of How HRM Practitioners at McDonald’s Respond to National and International Factors at Both Operational and Strategic Levels
3.1 National and International Factors Affecting McDonald’s (STEEPLE Analysis)
Starting with the Social aspect, in recent years, the demand for fast food has been rising in developing countries due to the changing lifestyle of people (MBA SkoolTeam, 2022). MBA Skool Team (2022) notes that in response, McDonald’s introduced different menus and products in different regions to accommodate local tastes. For example, in India, McDonald’s offered McVeggie burgers and McAloo Tikki as well as green tea ice cream, rice burgers, teriyaki burgers, and shrimp burgers in Japan.
Technological Factors: According to MBA Skool Team (2022), due to the ongoing technological transformation in the world, McDonald’s is introducing new technologies and upgrades to enhance the customer experience in their restaurants globally. For instance, the introduction of self-order kiosks at restaurants has decreased customer wait times at the counters. The company has also acquired a tech company ‘Dynamic Yield’ to make the menu more personalized. McDonald’s also has an app where people can order food from the comfort of their own time. The introduction of these technologies has vastly improved its customer engagement and brand image.
The Economic aspect: At the macro level, economic trends have significantly impacted McDonald’s fortunes. In 2011, rising gas prices caused a rise in the cost of raw materials required for McDonald’s products, leading to declining sales (Baertlein & Wahba, 2011). These trends were exacerbated in 2020 when rising petrol prices and a worldwide recession brought on by the COVID-19 pandemic left McDonald’s with a double whammy of rising expenses and diminishing earnings (The Guardian, 2022). Nevertheless, McDonald’s stands to gain from the low-cost levels associated with a worldwide recession due to a drop in oil prices, particularly in the long run. Overall, the economic environment is a double-edged sword for McDonald’s. Overall, McDonald’s is facing a double-edged economic sword. The increasing cost of raw materials due to high gas prices, along with the global crisis, has caused its earnings to fall in the short term. However, the long-term advantage of higher affordability may boost its recovery in the future. As a result, to survive and prosper in an unpredictable economic situation, McDonald’s must proactively manage its cost structure.
Environmental Factors: As the world grows more environment-conscious, companies like McDonald’s are shifting towards sustainable practices to reduce their carbon footprint. To achieve this, MBA Skool Team (2022) notes that the company has set a goal of having 100% of its packaging materials come from renewable or recycled sources and recycling to be conducted in all its restaurants by 2025. McDonald’s is also focused on using energy-efficient kitchen equipment and LED lighting in all its restaurants to save energy. The goal of environmental sustainability should be pursued with urgency to maintain quality standards.
Political Factors: As McDonald’s is a world leader in fast food, it needs to comply with intensive health and safety regulations issued by the government, or else it will be shut down (MBA Skool Team, 2022). Furthermore, according to MBA Skool Team (2022), the increasing concern that fast food items contain large amounts of sugar and sodium has resulted in governments directing them to add healthier options to their menus. An example of this is the tax imposed on sugary beverages by governments in various countries. Due to some animosity with America, countries like Iran and Bermuda have completely banned McDonald’s within their borders.
Legal Factors: According to MBA Skool Team (2022), McDonald’s is facing lawsuits in various parts of the world such as India and Quebec due for various reasons. In India, the company is in a joint venture with entrepreneur Vikram Bakshi who has filed a legal suit against McDonald’s for mismanagement. In Quebec, McDonald’s has been sued for selling toys to children below the age of 13 years, a practice that is banned in Quebec. Such lawsuits have affected the market image of McDonald’s and allowed competitors to take advantage of this situation.
Finally, the Ethical aspect, according to MBA Skool Team (2022), entails McDonald’s providing healthy options in its menu due to the growing concern from environmentalists that its food contains high sodium and sugar, which may lead to health issues.
3.2 How HRM Practitioners at McDonald’s Respond to the Internal and International Factors
3.2.1 National level
Operational Level
According to the STEEPLE analysis, one of the national variables impacting the firm is the rising demand for fast food. FZE (2023) observes that McDonald’s HRM practitioners have adopted Recruitment and onboarding techniques to guarantee they employ enough personnel to satisfy the increasing demand. They have also increased the frequency of employee evaluations, leave requests, remuneration, and maternity benefits to ensure that their employees are adequately cared for and that their workload does not exceed the necessary boundaries. Moreover, HRM practitioners used a variety of programs and rewards to engage employees, such as employee appreciation programs and employee counseling.
Strategic Level
At a strategic level, 123helpme.com (2021) emphasizes that McDonald’s HRM practitioners are proactively managing the company’s cost structure to ensure that it effectively navigates the double-edged economic sword it is confronting. To do this, the strategic HRM team is also strongly focused on E-enabling their HR processes, which means using Artificial Intelligence (AI) to automate the fundamental HR activities. This enables better decision-making and forecasts for better job matching, as well as increased recruiting efficiency. Furthermore, the strategic HRM team has introduced the usage of ERP software to store data while integrating multiple business operations such as hiring, payroll, and analytics.
Moreover, according to Essay Sauce (2023), to assess their performance and assure the value of their human resources, the strategic HRM team uses the well-known Balanced Scorecard as an alternative to traditional performance evaluation techniques. This strategy entails strategic performance management, which presents four viewpoints for measuring performance: financial, customer, internal process, and learning and growth. McDonald’s may use this technique to assess the performance of their HR initiatives, allowing them to optimize its efforts.
3.2.2 International Level
Operational Level
To combat international factors such as differences in national legislation, Essay Sauce (2023) notes that the company has implemented policies such as providing flexi-hours to workers in Europe and has developed ethical sourcing policies that comply with local government regulations in Asia-Pacific. McDonald’s has also adopted workplace safety regulations in all of its locations to safeguard the health and safety of its employees.
Strategic Level
On a strategic level, Essay Sauce (2023) emphasizes that McDonald’s acknowledges the importance of talent acquisition in strengthening their global competitive edge. To that end, the firm has implemented global hiring procedures that seek out diverse and qualified workers from all around the world. Additionally, McDonald’s has adopted a global HR strategy that covers wide multiple dimensions, including employee mobility, talent management, knowledge exchange, labor legislation, and data management (Essay Sauce, 2023). According to Essay Sauce (2023), the HR team has built a framework for global labor standards that is separated into seven components, including labor rights and contracts, working hours and salaries, health and safety, and discipline, to assure compliance with international labor regulations.
4.0 HRM Trends for The Organisations
4.1 Current HRM Issues
McDonald’s current HR technology trends include the use of digital technologies like virtual reality (VR) and e-learning platforms for recruiting, onboarding, and employee training. The organization also uses analytics to evaluate employee performance and make data-driven judgments about promotions and career advancement (Greenspan, 2022). Additionally, according to Greenspan (2022), McDonald’s is leveraging technology to boost staff connection and engagement, such as through mobile applications and social media platforms. The corporation is constantly looking for innovative ways to use technology to improve the employee experience and promote commercial success.
4.2 Future HRM Practices
Technological advances are anticipated to affect future HRM trends at McDonald’s. With the growth of digital technology, McDonald’s will rely significantly on data analytics and automation to improve its HR procedures. For example, the organization may utilize machine learning algorithms to estimate labor demands, streamline recruiting procedures, and improve personnel scheduling. Additionally, McDonald’s may use mobile applications and internet platforms to give staff training and development opportunities, as well as real-time feedback and coaching. While technology may help speed HR operations and enhance the employee experience, it raises ethical questions about data privacy, job displacement, and algorithmic prejudice. To solve these concerns, McDonald’s must guarantee that its human resource policies align with ethical standards and regulatory obligations. Furthermore, the organization must give proper training and assistance to staff for them to adapt to digital tools and procedures. To secure a sustainable and inclusive future for its workforce, McDonald’s must balance technology innovation, ethical concerns, and human-centric methods as it navigates the shifting landscape of HRM.
5.0 Conclusion
In conclusion, McDonald’s has successfully adopted a combination of Porter’s generic strategies to gain a competitive advantage in the fast-food industry. The organization’s HRM strategy is infused with the generic strategies of cost leadership and differentiation to achieve its corporate goals. In particular, the organization strives to reduce labor costs and increase productivity while promoting an atmosphere of innovation and progress to differentiate its products and services.
McDonald’s HRM practitioners have implemented various strategies at both operational and strategic levels to respond to internal and international factors. These include recruitment and onboarding techniques, employee engagement programs, e-enabling HR processes, ethical sourcing policies, and global HR strategies. The company’s HR technology trends include the use of digital technologies such as VR and analytics for employee training and evaluation, as well as mobile applications and social media platforms for staff connection and engagement. Technological advances are expected to shape future HRM practices at McDonald’s, but the company must ensure that its human resource policies align with ethical standards and regulatory obligations while balancing innovation and human-centric methods.
References
123helpme.com (2021) A critical analysis of Mcdonald’s Human Resource Management Strategy, A Critical Analysis Of Mcdonald’s Human Resource… | 123 Help Me. Available at: https://www.123helpme.com/essay/A-Critical-Analysis-Of-Mcdonalds-Human-Resource-639113 (Accessed: March 22, 2023).
Baertlein, L. and Wahba, P. (2011) Gas prices, the economy hit McDonald’s may sales, Reuters. Thomson Reuters. Available at: https://www.reuters.com/article/us-mcdonalds-idINTRE7572CZ20110608 (Accessed: March 22, 2023).
Bernardin, H.J. and Russell, J.E., 2006. Human resource management (p. 736). New York: Tata McGraw-Hill. https://www.inhni.com/sites/default/files/webform/formation_contact/_sid_/pdf-human-resource-management-h-john-bernardin-pdf-download-free-book-496a152.pdf
Brewster, C., 1999. Strategic human resource management: the value of different paradigms. Management International Review: Strategic Issues in International Human Resource Management, pp.45-64. [Online] Available at: https://link.springer.com/chapter/10.1007/978-3-322-90993-0_5
Dudovskiy, J. (2022) McDonalds Business Strategy and competitive advantage – research-methodology, research. Available at: https://research-methodology.net/mcdonalds-business-strategy/ (Accessed: March 22, 2023).
Essay Sauce, E. (2023) Human Resource Management, planning and development, and performance of McDonald’s Restaurant: Free Essay examples, ESSAY SAUCE. Available at: https://www.essaysauce.com/business-essays/human-resources-macdonalds/ (Accessed: April 15, 2023).
FZE, BB (2023) Human Resource Management: Strategic human resources at McDonalds, UKEssays. UK Essays. Available at: https://www.ukessays.com/essays/business/hrm-strategic-human-resources-at-mcdonalds-business-essay.php#:~:text=Human%20resource%20strategy%20in%20McDonalds,on%20the%20job%20rather%20quickly. (Accessed: March 22, 2023).
Greenspan, R. (2022) McDonald’s Pestel/Pestle Analysis & Recommendations, Panmore Institute. Available at: https://panmore.com/mcdonalds-pestel-pestle-analysis-recommendations (Accessed: March 22, 2023).
Gregory, L. (2022) McDonald’s Generic Strategy & Intensive Growth Strategies, Panmore Institute. Available at: https://panmore.com/mcdonalds-generic-strategy-intensive-growth-strategies#:~:text=McDonald’s%20generic%20strategy%20is%20cost,use%20of%20competitive%20selling%20prices. (Accessed: March 22, 2023).
Kroc, R. (2022) McDonald’s Corporation – company Profile, information, business description, history, background information on McDonald’s Corporation, Reference for Business. Available at: https://www.referenceforbusiness.com/history2/56/McDonald-s-Corporation.html (Accessed: March 22, 2023).
Malik, A., 2022. Strategic HRM and ER: Best Practice Versus Best Fit. In Strategic human resource management and employment relations: An international perspective (pp. 25-37). Cham: Springer International Publishing. [Online] Available at: https://link.springer.com/chapter/10.1007/978-3-030-90955-0_3
MBA SkoolTeam, M.B.A.S. (2022) McDonald’s pestle analysis, MBA Skool. MBA Skool. Available at: https://www.mbaskool.com/pestle-analysis/companies/17958-mcdonalds.html (Accessed: April 15, 2023).
Statista (2022) Topic: McDonald’s, Statista. Available at: https://www.statista.com/topics/1444/mcdonalds/ (Accessed: March 22, 2023).
Tanwar, R., 2013. Porter’s generic competitive strategies. Journal of business and management, 15(1), pp.11-17. https://www.researchgate.net/profile/John-Yanney/post/What-is-best-research-instrument-to-measure-porters-strategy-of-differentiation-cost/attachment/59d6438579197b807799ef67/AS%3A443993927491586%401482867809983/download/PGS+2.pdf
The Guardian (2022) Cost of living: McDonald’s, Kraft Heinz and Reckitt raise prices, as gas soars – as it happened, The Guardian. Guardian News and Media. Available at: https://www.theguardian.com/business/live/2022/jul/27/dettol-nurofen-reckitt-prices-us-formula-gas-inflation-markets-business-live (Accessed: March 22, 2023).
The McDonalds Monopoly [Photograph]. (n.d.). Retrieved on September 9, 2015 from https://www.google.com/search?q=global+markets&biw=1920&bih=912&source=lnms&tbm=isch&sa=X&ved=0CAcQ_AUoAmoVChMI_7GaocPqxwIVRCweCh23FgTr#tbm=isch&q=global+mcdonalds&imgrc=-SDOiBBSKl8MpM%3A
Weebly (2023) Corporate & Business Strategy, Analysis of McDonald’s. Available at: https://mcdonalds600.weebly.com/corporate–business-strategy.html (Accessed: March 22, 2023).
Zainal, N.A., Misbah, N.E.A., Nordin, N.S., Razali, N.A.M. and Nawi, N.M.M., 2020. Acceptance of Customers in Self-Order Technology Service at McDonald’s Kota Bharu, Kelantan. [Online] Available at: http://myscholar.umk.edu.my/handle/123456789/1220
write