Introduction
Business performance evaluation frameworks are widely utilized in modern organizational management by consultants and company executives alike. They allow firms to categorize their commercial tactics and strategies, summarizing the information on them. As a current worldwide leader in the fast food industry, Mcdonald’s still benefits from the existing performance categorization tools in outlining the firm’s future strategy. The ones examined in this paper are McKinsey’s 7S and the complementary Scorecard model.
McKinsey 7S
McKinsey is an internationally known consulting company, frequently recognized as the global leader in the field. It specializes in global management consulting, aiding large-scale companies in adaptation to the ever-evolving trends and norms of the business world. In addressing and assessing the companies’ current state of affairs, relevancy and efficiency, McKinsey consultants utilize the 7S model, designed by Thomas Peters and Robert Waterman in the late 1970-s (Shaqrah, 2018). Developed by the two former McKinsey consultants, this model focused on depicting the 7 main areas of organization management that are most influential to the company’s performance (Razmi, Mehrvar and Hassani, 2020). These areas are categorized into hard elements, namely strategy, structure and systems, and soft elements, namely shared values, skills, style and staff (Channon and Caldart, 2015). Hard elements of the 7S model are, as follows from the title, more tangible and easier to identify.
Hard Elements
Mcdonald’s strategy is clearly defined and communicated to a company’s stakeholders at all levels, ranging from employees to investors. As a leader in the fast-food industry, the firm has a clear history of profitability and success, largely achieved through the efficiency of its strategy. The strategy is, in this context, an overall long-term goal of the firm, and a managerial framework it designs and follows to advance its efficiency. Mcdonald’s strategy relies on cost leadership and active international market expansion (Ceil, 2017). Due to the economies of scale, the firm is able to produce its output at low production costs, allowing it to sell Mcdonald’s products for a very low average price. Affordability and franchising are the company’s greater selling points, and thus it is only natural for the McDonalds executives to plan the firm’s direction around them.
The structure element merges with the strategy element in its focus on the global market potential and prioritization of expansion strategies. As of 2015, Mcdonald’s structurally divided its market into four segments: the USA, high-growth markets, foundation markets, and leading international markets (Howse et al., 2019; Lawrence, 2020). In operating them, the company practices a mixed approach between centralization and decentralization. Local supervisors and managers of outlets and international divisions are granted significant degrees of corporate authority, yet the central executives ensure they maintain the brand vision in their actions (Srivastava, Manimoy and Bhanot, 2021). The coordination of activities is highly valued on a structural level in general, with inter-department communication and coordination developed constantly with workshops and team rotations.
Mcdonald’s relies on a complex organizational system of a departmental nature, which is logically factored into the company’s size and scale of operations. Some of the most prominent departments include Human Resources Management, PR, Operations, Sales, Supply Chain Management and Marketing (Opait, 2019). The allegiance is achieved through the combination of general and specific managerial practices and performance control indicators. Systemic efficiency is achieved by merging the general and the specific on the day-to-day task management level.
Soft Elements
Mcdonald’s values are well-known and successfully marketed to customers worldwide, despite the arguably depersonalized nature of the fast-food industry. The firm is known for its commitment to creativity, accountability, honesty, compassion, and trust. The values are upheld through internal and external channels alike and affect both the employees of the firm and its customers. From within, these values are practiced through the corporate culture, which promotes inclusivity and penalizes any expression of unwarranted bias. Meanwhile, outside stakeholders benefit from the wide range of Mcdonald’s charity initiatives that have been at the forefront of the firm’s social marketing for the last several decades.
Despite the aforementioned commitment to the best practice values and maintenance of trust with its consumer base, Mcdonald’s leadership style can be characterized as a mix of autocratic and participative. To uphold its status as a global industry leader, Mcdonald’s relies on the standardized mass production, with its output consistently meeting the firm’s rigid quality standards. Thus, the company’s leaders exercise high demands on a consistent basis and demand accountability and transparency in employee reports. At the same time, as the firm continues to invest in internal communication development, every member of the corporate team has the opportunity to provide feedback and raise a concern with their superior.
McDonalds notoriously has a large number of employees, who, according to some perspectives, perform low-skill labor producing and selling the firm’s products. Despite the low barriers to entry into the majority of the McDonalds jobs, however, it is evident that the staff are one of the key elements of the firm’s corporate efficiency (McDonalds, 2020). The speed and reliability of the service the food chain provides would not have been possible without the human factor (Opait, 2019). The management team recognizes this factor and ensures the employees are provided with internal training opportunities as well as additional benefits, such as future education access programs.
Finally, the skills of the majority of Mcdonald’s employees required to perform their jobs are not numerous but, most of the time, perfected. The standardized nature and high density of the tasks allow employees to quickly become proficient in a limited set of skills they practice daily. However, the Mcdonald’s general employee position is known for being perceived as a low-skill one, with consecutive psychological implications. The firm’s managerial teams are aware of the tendency and the demoralizing effect it has on the staff in the long term, and ensure a variety of training initiatives is available.
Scorecard
The scorecard framework was designed 10 years after the publication of the McKinsey 7S model, and in many ways, it is meant to complement the first tool. It aims to assess firms’ performance from a customer perspective, financial perspective, internal process perspective, and growth and learning perspective (Khiew, Chen, Shia and Pan, 2020). As a model, it complements 7S in its multidimensionality and segmentation of the firm’s performance.
For Mcdonald’s, the scorecard can be used to outline general developmental processes the company undergoes in its organizational management in the long term. Customer perspective focuses on the value proposition the company has for its current and potential customers. With Mcdonald’s, the main selling point lies in the reliable, standardized taste of its products and their affordability. Profitability-wise, it relies on similar cost leadership, actively benefiting from the large-scale production and its economies. Thus, from the financial perspective, cost structure and cultural value enhancement are achieved through the low-cost pricing strategy. The departmental organizational structure and effective risk management are the pillars of the internal process perspective of the firm, while the learning and growth factor reflects Mcdonald’s corporate values.
Conclusion
In conclusion, Mcdonald’s organizational management structure fits effectively in the frameworks of 7S and scorecard without any glaring outlier characteristics to be seen. It means the company is consistent with McKinsey’s performance evaluation values and can hypothetically benefit from its consultations if in need. Both frameworks overlap in their assessment of Mcdonald’s as an expansion-oriented company with a departmental structure, standardized production process and cost leadership pricing strategy.
Reference List
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