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HR issuesHR IssuesHR RoleProblemsissues &SolutionConclusionVideoPoor Employee ManagementCustomer Service LevelSlow Service at Drive Through Windows Poor Order Accuracy Q&AHeavy working hoursEmployees do not want to work for longer periodLow Salary1WEAKNESSESCustomer ServiceMcDonalds received the lowest customer service rankings in the United States not only the lowest among all national fast food chains (since 1994), but also lower than any of the US domestic airlines. Slow Service at Drive-Through WindowsAlthough McDonalds generated 60% of its revenue from its drive-through operations, its service times are about 40.67 seconds behind its closest competitors such as Wendys. Every 6 seconds increment translates into a 1% loss in sales. Annually, based on this translation, McDonalds loses almost $97,000 in potential sales.Poor Order AccuracyNot only has McDonalds been criticized for its speed, it has performed poorly in terms of order accuracy. Compared to the fast-food chain Chick-Fil-As 97,3% accuracy rate, McDonalds only fulfills 84.41% of the orders accurately. In ranking against the other fast food restaurants, McDonalds takes the 19th position.Poor ManagementMcDonalds management has gone through as series of missteps. McDonalds poor management can be classified into two groups:Management at Corporate Level-Under Greenberg, the previous CEO, McDonalds had too many broad initiatives simultaneously which none of them were implemented properly under his leadership.Franchise Management-McDonalds have not been responsive to its franchisees needs.-Despite Ray Krocs vision of making every franchisee McDonalds business partner, McDonalds hunger for sales growth through aggressive domestic store expansion has led to cannibalization in existing franchisees. -To rid the franchisee tensions, previous CEO discontinued its QSVC evaluation system which led to lower customer service level.-Failed marketing effort Made for You, which produced undesired result, further deteriorated franchise relationships.-Series of franchise conflicts were left unattended resulting in poor franchise relationships.-With lack of effective franchise management, McDonalds have been perceived to have inconsistent quality and service.Poor MarketingMcDonalds has not been attentive to customers needs in the past, which is especially crucial at a time where several consumer trends are prevailing. In addition, McDonalds introductions of healthy menu or low-fat products to respond to needs of consumer have failed. Continuous Struggles in Offering Value-Priced Items and Expensive ItemsIn its international operations, McDonalds has struggled to offer value-priced items and expensive items. McDonalds wants to offer a series of menu at different price points to attract price sensitive consumers as well as those willing to pay premium. While some countries received value-menus well, others did not respond well to McDonalds attempt to sell its menu at discount prices. In addition, its lack of product innovation and unresponsiveness to local taste needs will cause the company to continuously struggle in product introductions abroad.High Employee Turnover RateSimilar to the other players in the industry, McDonalds has a high employee turnover rate. As far as the nature of the industry goes, the fast food industry employee turnover rate averages at 300% a year. McDonalds turnover rate, however, tended to be higher than its competitors. Furthermore, such high employee turnover can contribute to the poor service ranking of McDonalds.EMPLOYEE GRIEVANCEHR IssuesHR RoleProblemsIssues &SolutionConclusionVideoQ&AHR ISSUES RELATED TO SALARYHR Issues

HR RoleProblemsIssues &SolutionConclusionVideoIssuesUnderpaid and overworkerdMonotonous nature of jobCrew MembersIn House employeesThey tend to customers, prepare and serve ordersRecommendations HR must give a clearly outline the duties of its employeesIncentive based compensation Create a schedule with timely breaks alloted for employees

Q&A3HR ISSUES RELATED TO SALARYHR IssuesHR RoleProblemsIssues &SolutionConclusionVideoIssuesDemand higher salaries as they are employed on a short term basis Hence there is no scope for promotions and job development.Non Crew MembersAre hired from external agenciesThey include security personnel, delivery boys, party entertainersRecommendations HR should track performance and reward them with bonusesMake provisions to absorb performers into the organisation

Q&A4HR ISSUES RELATED TO SALARYHR IssuesHR RoleProblemsIssues &SolutionConclusionVideoIssuesDissatisfaction due to varying pay scalesResistance from the crew working at the restaurantSalaried ManagersEach restaurant has approx. 3 managersMay either be hired, or an existing employee of the restaurant may be promotedRecommendations HR should standardize the basic pay package for all the managerProvide performance based incentives, bonuses as a motivational factor for better resultsCreate programs for employee development

Q&A5AttritionHR IssuesHR RoleProblemsIssues & SolutionConclusionVideo

Mc job low pay, low prestige, insignificant breaks, high work hours Mc job no growth potential 41% youth today want to progress and grow faster in their jobs.

No quality employees want to apply, hence company suffers

Q&A Kitchen floor, rudeness of customers, unfit for educated people6Solution HR IssuesHR RoleProblemsIssues &SolutionConclusionVideo Crew employees promoted to managerial levels. ensure part of senior management employees who joined at crew level Increase progress potential - Provide training, sponsor education, develop mindset.

Future promotions managerial levels recruits at par with those who worked their way up. Employee birthday scheme shares award money with a lucky customer.

Q&A7Growth in Global Food-Service IndustryBetween the year 2002 to the year 2006, the global food-service industry is expected to grow by more than $200 billion. And thus, international expansion is an important opportunity that McDonalds will need to capitalize. It has been anticipated that growth in other countries, other than the domestic market will be one of the few sources of sales growth in the near future.Initial Public Offerings in Other CountriesMcDonalds has an opportunity to raise more funds by launching initial public offerings in other countries, especially in those that they are performing well in. Currently, McDonalds stocks are active in the US market and its recent IPO launches in the Japanese market proved a success. In evaluating the potential of each market, McDonalds has a choice of 120 countries to choose from where it can raise more funds for its operations.Acquisition of Other RestaurantsIn reacting the slow growth of the sandwich segment, McDonalds has had, in the past, tried to diversify its portfolio by acquiring other restaurant brands (namely the Boston Market, Chipotle, Donators Pizzeria, Pret a Manger, and Fazolis). But the companys poor performance in 2001-2002 has prompted the new CEO, Cantaloupo to refocus McDonalds operations on its core operation where he divested many of the brands in its portfolio. Nonetheless, acquisition of other restaurants will be an opportunity for McDonalds to add to its revenue stream and can also pose as a strategy for diversification.Retail Sales of MerchandisesMcDonalds has an opportunity to generate revenue stream from the retail sales of its merchandises. Its well-established Ronald McDonald and Friends characters and agreements with companys such as Disneys allows McDonalds to develop merchandises for sale with its menus, most notably, its Happy Meal sets targeted at kids.Solution HR IssuesHR RoleProblemsIssues &SolutionConclusionVideo Image creation of quality employees Company recruits only those individuals with the right attitude and potential to grow, even at the crew level.

This should be put into practice also

Higher social image of the crew employees

Change perception of the Mc job through

benefit based advertisements strengthening employer brand Someone with the right attitude and skills, who understands the companys culture, has potential to be the future that runs the org. This will get quality employees to apply and increase job satisfaction of those in employment.

Q&A8Increased Competition from Various IndustriesNot only is McDonalds to face increased competition in the quick-service restaurants industry, it is beginning to face non-traditional outlets that provide re-heatable prepared foods (substitutes for fast food). These non-traditional outlets include grocery and convenience stores.Health Conscious Consumer TrendOne of the many consumer trends currently impacting the fast-food industry is the increasing health consciousness of consumers. This has resulted in the decreased consumption of fried food, junk food, and red meat. Such consumer trend can also extend to hurt how consumers perceive the McDonalds brand negatively simply as a junk food restaurant. Value-Conscious Consumer TrendNot only are a large portion of consumers becoming more health conscious about their diet, consumers are also becoming extremely value conscious. Consumers are demanding quality, as well as good value for price. Saturation of US fast-food marketAfter years of aggressive domestic expansion efforts, the US fast food market has reached saturation. Growth opportunities will come from international expansion while domestic expansion will likely result in cannibalization of McDonalds own stores. With so many competitors in the industry competing for this saturated piece of the market, McDonalds will need to realize domestic operational efficiencies and capitalize opportunities from markets abroad.Slow Growth in the Sandwich SegmentIn addition to the saturation of the US fast food market in general, the sandwich segment McDonalds is competing fiercely in is also experiencing slow growth.Price War Business PracticesIn the recent years, to respond to the value conscious consumers needs, the industry engaged in price war business practices. Competition was intense and at a time when the economy was on the decline, price cuts were a major part of the industrys focus. If industry continues to engage the price war, McDonalds will suffer a drop in sales and may hinder future intentions to improve product quality.Burn-out & stress HR IssuesHR roleProblemsIssues & solutionsconclusionvideoQ & A Constantly introducing new products, new technology and innovating Employee expected to perform greater responsibilities, cant adapt to change, hence under pressure

Fast food is the USP- employees to complete a range of tasks in a limited amount of time. Senior management under pressure to get results for such a global company Hard working, driven employee emotionally, physically exhausted. Cant afford to lose such employees star performers. Some employees work overtime 24 hrs model

Changing requirements Death due to burnout straits times case9Solution HR IssuesHR RoleProblemsIssues &Solutions

Job rotation

Reward crunch time

For specific amount of hours logged in reward with benefitsMembership to gyms or facilities for physical exercise in the organization.

Align work with capability

Work in sync with employee goals, Increase shifts & Social interaction like retreats.

Better health benefits.

10Growth in Global Food-Service IndustryBetween the year 2002 to the year 2006, the global food-service industry is expected to grow by more than $200 billion. And thus, international expansion is an important opportunity that McDonalds will need to capitalize. It has been anticipated that growth in other countries, other than the domestic market will be one of the few sources of sales growth in the near future.Initial Public Offerings in Other CountriesMcDonalds has an opportunity to raise more funds by launching initial public offerings in other countries, especially in those that they are performing well in. Currently, McDonalds stocks are active in the US market and its recent IPO launches in the Japanese market proved a success. In evaluating the potential of each market, McDonalds has a choice of 120 countries to choose from where it can raise more funds for its operations.Acquisition of Other RestaurantsIn reacting the slow growth of the sandwich segment, McDonalds has had, in the past, tried to diversify its portfolio by acquiring other restaurant brands (namely the Boston Market, Chipotle, Donators Pizzeria, Pret a Manger, and Fazolis). But the companys poor performance in 2001-2002 has prompted the new CEO, Cantaloupo to refocus McDonalds operations on its core operation where he divested many of the brands in its portfolio. Nonetheless, acquisition of other restaurants will be an opportunity for McDonalds to add to its revenue stream and can also pose as a strategy for diversification.Retail Sales of MerchandisesMcDonalds has an opportunity to generate revenue stream from the retail sales of its merchandises. Its well-established Ronald McDonald and Friends characters and agreements with companys such as Disneys allows McDonalds to develop merchandises for sale with its menus, most notably, its Happy Meal sets targeted at kids.Improved Customer Interaction

Low customer satisfactionStaff is slow(in terms of service)Inefficient at Value Added Services.Absence of Senior StaffHarsh in their approachLanguage BarrierEmployment of old people- slow and inefficient services

11Leader in the Quick Service Sandwich IndustryMcDonalds is the leader in the quick service sandwich industry both in terms of coverage and sales. McDonalds is currently the worlds largest burger chain with over 30,000 stores worldwide serving up to 46 million customers a day and $41 billion in sales. While its closest competitor, Burger King only had $1.72 billion in revenue, McDonalds revenues in 2002 were significantly higher at $15.4 billion.Brand RecognitionWith presence in 120 countries worldwide, the McDonalds brand (with its golden arches) is one of the worlds best known brands.Strongest International Presence and Highest Worldwide Sales The company has had the strongest international presence and achieved the highest worldwide sales since the beginning of its overseas expansion. It had a first-mover advantage in expanding overseas, utilizing its well-reputed franchising business model.Real-Estate HoldingsMcDonalds owns most of the real-estate its restaurants are built on. This gives them more control over what they can do with the land. McDonalds restaurants were usually located on prime time high-traffic real estates. This gives it high visibility and accessibility. McDonalds also derives a revenue stream from its real estate holdings by collecting rent from its franchisees operating on the land. When it is not rented out or utilized, McDonalds also can market its excess land, property and buildings.Easily Recognizable ProductThis fast food company has its own easily recognizable product McDonalds BigMac as its trademark.Variety of Sources of IncomeMcDonalds derives its income from several sources. Firstly, with its franchise business model, its franchisees are to pay to McDonalds (a) a monthly service fee charged which is determined as a percentage-of-sales and (b) a rent fee charged by McDonalds for operating on its real estate holdings. Franchised restaurants account for 60% of its sales. McDonalds also generates revenue from its company-owned restaurants, which currently accounts form less than 30% of its sales. Lastly, it also gets revenue from affiliated restaurant outlets (McDonalds has a few other restaurant brands in its brand portfolio).Franchise Business ModelOne of McDonalds strengths is its franchise business model, which was initiated by Ray Kroc who believed that in selling the franchises, each franchisee is treated as a business partner. The intention of this model was for every McDonalds franchise to offer the same food experience with uniform operations. This business model has allowed McDonalds to expand quickly domestically and internationally and deliver consistency across franchises such standardization has been one of the key success elements of McDonalds.Solution - TrainingIncreasing Commitment level of Employee. Flexible workers assume Varied responsibilities.Improves interpersonal skillsProductivity to achieve desired goalsHealthy Work EnvironmentImproves the image of the company

12WEAKNESSESCustomer ServiceMcDonalds received the lowest customer service rankings in the United States not only the lowest among all national fast food chains (since 1994), but also lower than any of the US domestic airlines. Slow Service at Drive-Through WindowsAlthough McDonalds generated 60% of its revenue from its drive-through operations, its service times are about 40.67 seconds behind its closest competitors such as Wendys. Every 6 seconds increment translates into a 1% loss in sales. Annually, based on this translation, McDonalds loses almost $97,000 in potential sales.Poor Order AccuracyNot only has McDonalds been criticized for its speed, it has performed poorly in terms of order accuracy. Compared to the fast-food chain Chick-Fil-As 97,3% accuracy rate, McDonalds only fulfills 84.41% of the orders accurately. In ranking against the other fast food restaurants, McDonalds takes the 19th position.Poor ManagementMcDonalds management has gone through as series of missteps. McDonalds poor management can be classified into two groups:Management at Corporate Level-Under Greenberg, the previous CEO, McDonalds had too many broad initiatives simultaneously which none of them were implemented properly under his leadership.Franchise Management-McDonalds have not been responsive to its franchisees needs.-Despite Ray Krocs vision of making every franchisee McDonalds business partner, McDonalds hunger for sales growth through aggressive domestic store expansion has led to cannibalization in existing franchisees. -To rid the franchisee tensions, previous CEO discontinued its QSVC evaluation system which led to lower customer service level.-Failed marketing effort Made for You, which produced undesired result, further deteriorated franchise relationships.-Series of franchise conflicts were left unattended resulting in poor franchise relationships.-With lack of effective franchise management, McDonalds have been perceived to have inconsistent quality and service.Poor MarketingMcDonalds has not been attentive to customers needs in the past, which is especially crucial at a time where several consumer trends are prevailing. In addition, McDonalds introductions of healthy menu or low-fat products to respond to needs of consumer have failed. Continuous Struggles in Offering Value-Priced Items and Expensive ItemsIn its international operations, McDonalds has struggled to offer value-priced items and expensive items. McDonalds wants to offer a series of menu at different price points to attract price sensitive consumers as well as those willing to pay premium. While some countries received value-menus well, others did not respond well to McDonalds attempt to sell its menu at discount prices. In addition, its lack of product innovation and unresponsiveness to local taste needs will cause the company to continuously struggle in product introductions abroad.High Employee Turnover RateSimilar to the other players in the industry, McDonalds has a high employee turnover rate. As far as the nature of the industry goes, the fast food industry employee turnover rate averages at 300% a year. McDonalds turnover rate, however, tended to be higher than its competitors. Furthermore, such high employee turnover can contribute to the poor service ranking of McDonalds.