McDonalds Organizational Structure Analysis

McDonalds organizational structure was reformed in July 1, 2015 to improve the

companys handling of its global operations. A firms organizational structure defines the
system through which organizational components coordinate to achieve business
objectives. McDonalds organizational structure facilitates managing markets based on
performance levels. As the largest fast food restaurant chain in the world, McDonalds
keeps evolving to address current and emerging market issues. The firm rolls out new
products to maintain its performance in satisfying customers. These endeavors are
supported through McDonalds organizational structure, which is designed to adapt to
the changing business environment.
McDonalds organizational structure establishes the arrangement or pattern of
interactions among various business areas. Through its organizational structure,
McDonalds succeeds in managing efficiency and performance in its operations in the
global fast food restaurant industry.

Features of McDonalds Organizational Structure

McDonalds has a divisional organizational structure. Each division handles a specific
operational area. The aim of this organizational structure is to support autonomy and
organizational flexibility. McDonalds organizational structure has the following
characteristics, arranged according to significance:
1. Global hierarchy
2. Performance-based divisions
3. Function-based groups
Global Hierarchy
McDonalds has a global hierarchy to cover all its operations worldwide. This feature of
the organizational structure emphasizes corporate control. For example, McDonalds
CEO directs the activities of all business areas. Mandates are passed from the CEO
down to middle managers, and to the restaurant managers and personnel. This
characteristic of McDonalds organizational structure is typical of most global business
organizations.
Performance-Based Divisions
The performance-based divisions are the most distinct feature of McDonalds
organizational structure. The company reorganized its structure on July 1, 2015. Before
the reorganization, the geographic divisions in McDonalds organizational structure were
(a) U.S., (b) Europe, (c) Asia/Pacific, (d) Middle East and Africa (APMEA) and (e) Other
Countries & Corporate (OCC) including Canada, Latin America and Corporate. After the
reorganization, McDonalds used performance as basis for the new divisions in its

organizational structure: (a) U.S., (b) International Lead Markets, (c) High Growth
Markets, and (d) Foundational Markets and Corporate. The U.S. accounts for more than
40% of McDonalds revenues, and the lead markets for 40%. The high-growth markets
account for 10% of revenues.
Function-Based Groups
McDonalds maintains function-based groups in its organizational structure. For
example, under corporate operations, the company has a human resource management
group, a supply chain and franchising group, and a legal group. This characteristic of
the organizational structure enables McDonalds to address the basic functions in its
business.

McDonalds Organizational Structure Advantages & Disadvantages

An advantage of the hierarchy in McDonalds organizational structure is its support for
monitoring and control of global operations. Also, the performance-based divisions have
the advantage of enabling McDonalds to implement strategies based on market
performance similarities. For example, the firm applies similar strategies for all lead
markets. However, a disadvantage of McDonalds organizational structure is that it
tends to generalize strategies for the performance-based divisions. The company has
limited flexibility because of this feature of the organizational structure.

McDonalds Organizational Culture Analysis

McDonalds organizational culture supports the companys industry positioning
goals. As the biggest player in the global fast food restaurant market, McDonalds uses
its organizational culture to attract customers and qualified employees. A firms
organizational culture defines the traditions, habits and values that influence workers
behaviors. To ensure business efficiency in production and service, McDonalds
organizational culture encourages learning. In a way, the continuing evolution of the
organization reflects the firms effectiveness in applying its corporate culture to achieve
the desired levels of human resource capabilities. This condition highlights the
significance of organizational culture as a success factor in McDonalds international
business.
Features of McDonalds Organizational Culture
McDonalds organizational culture emphasizes human resource development and
efficiency. It supports business growth and success in the international fast food
restaurant market. This organizational culture has the following characteristics,
arranged according to McDonalds prioritization:
1. People-centricity
2. Individual learning
3. Organizational learning
4. Diversity and inclusion

People-Centricity
McDonalds organizational culture prioritizes employees needs and development. The
companys Core Values and Standards of Business Conduct emphasize the importance
of supporting people. This is understandable, considering that McDonalds is a service
business. To ensure support for people, the companys organizational culture
encourages employees to engage management to help improve processes and
procedures.
Individual Learning
McDonalds organizational culture highlights the importance of lifelong learning. The
belief is that individual learning promotes productivity, quality, and business
effectiveness. To facilitate individual learning, the company offers training and
development opportunities through Hamburger University, internships, global mobility,
and leadership development programs. These efforts ensure that McDonalds maintains
an organizational culture that motivates employees to keep learning.
Organizational Learning
McDonalds organizational culture also supports organizational learning. The firm aims
to use individual learning to develop organizational knowledge to push the business
forward to new heights of performance. McDonalds applies this feature of its
organizational culture through policies, programs and meetings that encourage
employee feedback and knowledge sharing.

Diversity and Inclusion

McDonalds official human resource management policy states that diversity and
inclusion are key factors in the firms organizational culture. McDonalds recognizes the
importance of diversity and inclusion in optimizing HR capabilities to deal with an
increasingly diverse market. To ensure support for diversity and inclusion, McDonalds
organizational culture encourages employees, suppliers, franchisees, and customers to
give their feedback and engage in meaningful conversations to improve the business.

McDonalds Organizational Culture Advantages & Disadvantages

McDonalds organizational culture has the advantage of enabling the company to
improve quality of service through people-centricity, individual learning, and
organizational learning. However, excellence and high quality are considerations not
effectively covered in the corporate culture. While McDonalds highlights learning and
support for people in the organizational culture, there is no emphasis on excellence in
individual performance. Thus, a possible improvement is for McDonalds to emphasize
excellence and high quality output in its organizational culture.

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