Question

4. Please compare the organizational structure of the two generations of McDonald in terms of similarities and differences considering the basic challenges of organizational design? (First generation is two founder brothers’ restaurant, the second generation is the one created by Roy Croc. The case for this question is the movie: The Founder)

Answer 1

"The Founder" a 2016 movie based on the times and lives of Ray Kroc and how he took the reins from two brothers Maurice James Mac Donald and Richard James who ran a successful drivein restaurant in San Bernardino.Being a travelling salesman it chronicles the story of how he changed Mc Donalds to what it is today

The 1st Generation i.e.of two brothers followed the centralized organizational design wherein the chain of command and the span of control was in their hands .They ensured that the high quality food and lightning fast delivery is maintained alongside strong work ethics.When Ray Kroc wants to set up a franchisee for them wherein the entire organizational design will be decentralized although it will ensure higher revenues they express their reservations since they had already burnt their hands with the same since quality control was not being maintained.He assures them that he would ensure the same quality and maintain same ethics and bring in greater name and revenue

The 2nd Generation i.e one led by Ray Kroc started off with few bumps wherein he realized that the upper class would not mantain quality but after encountering this roadblock he starts giving franchisee to middle class investors which makes him successful and the brand name grows.While there are other tenets to this story however the similarity in terms of organizational design was the same drive in restaurant (originally a theater) although now decentralized brought greater "Made in America" feel to the consumers and revenues kept increas.The challenges were aplenty as they followed a low cost model (right from straws to even the trays were disposable then) and Mr.Ray Kroc couldnt bring in sponsorship or increase prices or introduce new products.The brothers had point blank negated a new milk shake being introduced an idea which Mr.Kroc later implemented by providing real estate to the investors and eventually buying out the brothers and forming a new corporation altogether.For the initial customer satisfaction level to stay constant across and the word of mouth publicity to increase was a major challenge which as we find out eventually was overcome by finding new products.So it is ideally a centralized vs decentralized organizational design and how by using innovation and fine tuning his strategy according to the need(Mc Donald recently shifted to a healthy mix menu post Subway/Burger King/KFC their primary competitors doing the same.The changes can also be justified using the PESTEL analysis wherein their change of strategy and marketing to Integrated Marketing Communication (IMC) helped them in positioning themselves better than their competitors