Classify the business according to its ownership †McDonalds Essay

The business I have decided to choose for this assignment is McDonald’s. McDonald’s ownership is a franchise. McDonald is a large business with more than 30,000 restaurants in over 100 countries, serving more than 38 million people each day. * Overseas comparisons indicate that franchising is the fastest growing form of retailing and McDonald has grown quickly by granting franchises. The term franchising has been used to describe many different forms of business relationships. This form of business ownership was first introduced in the U.K. It is a form of business organisation that is becoming increasingly popular in the United Kingdom. * A franchise is an agreement between two parties. An entrepreneur (franchisor) and franchisee. The franchise agreement grants to the franchisee the right and authorisation to operate a specific McDonald’s restaurant, at a single address. The franchise term is usually for a period of 20 years. These franchise rights include the use of McDonald’s trademarks, restaurant dà ¯Ã‚ ¿Ã‚ ½cor designs, signage and equipment layout, the formula and specifications for menu items, use of McDonald’s method of operation, inventory control, book-keeping, accounting and marketing. * A separate franchise lease covers the right to occupy the restaurant premises. In returns, the franchisee agrees to operate the business in accordance with McDonald’s standards of quality service, cleanliness food safety and restaurant safety. The franchisee is expected to take a ‘hands on’ role in operating the business, and to be involved in local civic and charitable activities. * Throughout the franchise term, the franchisee’s sole business interest should be McDonald’s. Franchising is really the ‘hiring out’ or licensing of the use of ‘good ideas’ to other companies. A franchise grants permission to sell a product and trade under a certain name in a particular area. For example if I have a good idea, I can sell you a licence to trade and carry out a business using my idea in your area. McDonald’s is a big example of brand franchising. McDonald’s has grown its business in the United Kingdom through franchising outlets. Explain the benefits and constraints of the type of ownership. In order to succeed it is necessary to consider the benefits and constraints involvement in franchise. There are clear benefits to this: * You don’t have to come up with a new idea. Someone else had it and tested too! * Large, well-established franchise operations will often have national advertising campaigns and a reputable, well established trading name. * Good franchisors (BFA) will offer comprehensive training programmes in sales and indeed all business skills. * Good franchisor can also help secure funding for your investment as well as e.g. discounted bulk-buy supplies for outlets when you are in operation. * If you are aware that you are running a franchise customers will also understand that you will be offering the possible value for money and service – although you run your ‘own show’ as a part of a much larger organisation. Benefits for franchisor: * Low capital expenditure — franchising is an excellent method of expanding your business with a limited amount of ready capital. Franchisor takes a share of profit without taking risk. Low risk route to expansion. * Personal commitment and motivation from franchisees is greater than from employees, the reason being that they have more accountability and responsibility than an ordinary employee. * Reduced daily involvement — it is a method of obtaining conscientious and dedicated personal who work hard to a safeguard their investment. Benefits for franchisee: Some of the advantages of franchising to the franchisee are that it gives them the opportunity of sharing some of the benefits of a large business such as: * An established reputation * A known brand name and image * Skilled management * Large scale advertising programmes which are usually paid for by an advertising levy * Economies of scale, producing on a large scale is termed economies of scale. McDonald’s does this by trying to keep low cost through economies of scale. They try to select suppliers, which will give the company value for money. * Franchising also offer much of the independence of a sole proprietor In this way a small business benefits from the economies of scale That comes from being part of a large company organisation. Constraints of franchising * Limits on product price – they can’t change their product price up to wherever they want. They have limits for price. * Limits on variety of product – they can’t have variety of products. Customers get confused if they’ll keep variety of product they have to keep certain products. * Limits on freedom- they can’t do whatever they want. They have to follow owner’s instructions to run their business. Franchisees have not much freedom. * Limits on the title of their business- they can’t even change the colour of their title. As you can see they have same colour and title style wherever their branches are. Task 2: A Clear description and explanation of the objectives of the business. The objectives of businesses can vary enormously. Companies may have a number of objectives. In general, the objectives pursued by a business tend to vary according to its size, ownership and legal structure. Small businesses are more likely to focus on survival as an objective as they tend to lack the financial resources to cope with adverse trading conditions. Larger businesses may aim to maximise profits. As being one of the larger businesses McDonald has the following objectives: * Profit maximisation * Survival * Market share * Growth * Providing exceptional customers care * Remaining an efficient and quality producer offering high value to customers (according to company’s policy) Profit maximisation: Profit maximisation is likely to be an important objective for most companies which shareholder including McDonald’s owns. Profit refers to the extent to which revenues exceed costs, so profit maximisation occurs when the difference between sales revenue and total costs is greatest. Companies such as McDonald’s seek to maximise profit to cover up their costs and to provide high returns for their shareholders. McDonald’s does this by trying to keep cost low through economies of scale. They try to select suppliers which will give the company value for money. In order to maximise sales they have various sales promotion throughout the year. The basis for their profit is low cost rather than high price. Survival: Survival is an important objective for many businesses. According to the business writer Peter Drucker: It is the first duty of a business to survive. The guiding principle of business economics, in the other words, is not the maximisation of profits; it is the avoidance of loss. Business enterprise must produce the premium to cover the risk inevitably involved in its operation. And there is only one source for this risk premium: profits. Most recently established businesses like McDonald’s have survival as objectives. This is because often they have intense competition in the market so they have to spend heavily on their advertising to attract customers. They have to ensure that they remain the Market leader in their industry. Growth: Growth occurs for the company when there is an ongoing increase in an economy’s production of goods and services. McDonald’s pursues growth through selling more franchises all over the world in order to have a presence in most countries in the world. They can achieve this by increasing the overall size of the business by merging or joining other firms of buying them out through a take-over. McDonald’s recently went into a joint venture with prà ¯Ã‚ ¿Ã‚ ½t a manager in order to enter another segment of the U.S market and gain a greater share of the market Increasing sale or market share: Growth occurs when there is an ongoing increase in an economy’s production of goods and services. Many businesses pursue growth strategies because their managers believe that this essential for survival. If the firm grows, it grows with more customers, earn higher profits and begin to establish itself in the market. Growth offers: * Increased returns for the owners of the business * Competitive salaries ( and more job security ) for employees of the business * A wider range of products for the business exists and potential customers it is increasingly common for mangers’ pay packages to successful managers can earn substantial incomes if that is reflected in the company’s share price. Increasing market share is an important objective for McDonald’s. It is likely to be a key objective any business operating in a market which is not growing. For example, the market for traditional beers in the U.K is not growing – indeed there are signs that it may be declining. As the market is not increasing the size, brewers of traditional ales can only increase sales by taking market share from competitors. Market share is also important for McDonald’s because that considerably from producing on a large scale. They use expensive equipment and the financial advantages of producing on a large scale are termed economies of scale. Where these economies exist, firm will attempt to take a greater share of the market. This allows them to sell their product at lower price, increasing their competitiveness. Task Three: Every organisation will need to acquire, use and change factors of production in order to produce goods and provide services. McDonald’s has several functional areas that exist in the business to help the business meet its objectives and to provide goods and services as well. And each of which is supported by a particular administrative office. The administration of each function is based on its offices. There are many administrative offices each with a specialist responsibility and function. The functional areas McDonald’s has are as follow: * Finance * Production * Human resources * Marketing * Research and development * 1) Finance Function: The finance director George Mackay is responsible for finance department. The main activities of finance function are: * To keep record of all business transactions, keeping of cost and revenues and setting target through budgeting. * To provide information about services. * To develop new product that satisfy customer’s expectations. * Quality assurance * Supply chain * Measure the financial performance of the business. * Increase market share so they can make profit and give money to their shareholders. * Control the finances and cash flow so the business stays solvent, i.e. does go bankrupt. * Take timely decisions by comparing the predicted performance with actual performance. This chart shows the structure of finance department. Finance Director Finance Information services New product development Quality assurance Supply chain According to McDonald’s finance director accurate financial information allows them to achieve their most important goals to increase profits by expanding, sustained growth and charitable objectives. McDonald’s not only invests much of its profit in extending its own business but also set aside millions of dollars each year to fund charitable activities. Not only this, McDonald’s also provides different type of support to other organisations and schools. * McDonald’s has invested considerable sums in restoring old buildings, often putting back architectural details that have been lost. * McDonald’s supports the Groundwork Trust, an environmental urban regeneration programme. * McDonald’s is a major sponsor of international football. * McDonald’s donates million of pounds towards community, educational and charity programme. * McDonald’s also provides salary and benefits to its employees and reviewed on regular basis. As for most of the time McDonald’s made consistently high profits around $3,633 million and have grown successfully by making good profit and still planning to grow more further (according to the McDonald’s book). 2) Production Function: The function of the production department is to change inputs into outputs, which means produce goods and services are to be brought by the customers. McDonald’s is committed to maintaining and developing the best food products in the quick service restaurant market. And this is what production department is responsible for. In order to deliver on this, the company has made commitments: to food safety, food quality and to nutrition. Company systems and procedures must be continuously updated to ensure the highest standards of hygiene and safety. All staff receives proper training in food safety. McDonald’s food is made from the basic commodities: red and white meat, fish, eggs, milk, grain and vegetables. All raw ingredients are produced to exacting specifications and the highest possible standards and quality and safety. McDonald’s highly trained workers work with suppliers to maintain and develop product quality. McDonald’s recognises the importance of a balanced diet, lifestyle and health therefore provides hot, less fat and fresh food to their customers. McDonald’s invest a lot of money in new technology. Thus, improving the quality food preparation and helps achieving company’s aim of growth in the fast food market. * Controlling production methods and planning the scale of production * Controlling costs and working efficiently * Meeting the specific needs of customers McDonald’s is working hard to develop their products and provide their customers a variety of differentiated products, which helps to meet another important objective satisfying customer needs because increasingly customers expect to buy the product that meet their exact needs. Developing efficient methods of production to reduce cost is helps to make profit and growth because a fall in the cost of production resulting form an increase in the size of a business, which is called economy of scale in the language of business. When outputs rises, the cost of production per item-the unit cost-falls, and the business can reduce the price of its goods. With the lower price, it will get more customers and so benefit from the even lower unit costs. This will make it more competitive and can easily increase market share. McDonald’s has raised standard through out the food processing industry. 3) Human resources: Human resources department deals with staff recruitment, training and development. Human resources is a very important function for the business because it selects the workforce (the right people for right job), provides training and development of staff, which improve their skills, performance and relates to the aim of McDonald’s, which is the best service for its customers. Efficiency helps a business run more smoothly, effectively and profitability. Efficiency begins with developing ways of working that are easy to understand and do not waste time or energy. Division of labour, in which each workers carries out a specific job, increase speed and the more people you serve each day the more profit you make so it helps to maximize profit as well as expand the business. McDonald’s have their employment policies. McDonald’s employs some of the best, most ambitious people on the job market. Whether they join as hourly paid staff or management trainees through gradua te or a high standard recruitment, they have the opportunity to develop a career, which can take them to the very top. Above all, McDonald’s values people with a positive attitude towards customers, themselves and other employees, and strive towards delivering the highest standards of quality, service and cleanliness. The ability to understand and adopt McDonald’s customer-led culture is as worth as the more usual career entry requirements of GCSE and university degree. The company is an equal opportunity employer and 1992 set up an equal opportunities group to help foster a diverse workplace and highlight equal opportunities as an important part of the company’ s ethos. McDonald’s commitment to equal opportunity extends beyond race, gender, ethnic origin, marital status, colour, nationality or disability, to compass people with very different backgrounds and experience. Whether university graduates and those without formal qualifications, first jobbers or those who have worked for decades, what binds employees is the knowledge that the opportunities are as great as an individual’s ambition and ability allow. And if employees are happy with the opportunities they are getting form the company they work hard for the company and try to provide best service in the world. It is important to retain talented staff and staff who have become skilled through training. By recruiting quality staff who are committed to the business, thus reducing recruitment costs by not having to recruit too often. McDonald’s also provide benefits with salary to its staff. Hourly paid staff benefits: * Free meal allowance * Paid holidays (4 weeks per annum) * Free life assurance (value dependent upon service) * Private health care (for employees aged 19+with 3 years service) * Sponsorship Programme * Stock purchase scheme * Employees discount card * Service awards (at 3, 5, 10, 15, 20 and 25 years service) * Stakeholder pension Apart from good rates of pay, McDonald’s try to provide good working conditions and incentives. This also helps McDonald’s to meets its objective of expanding and providing best service to the community. 4) Marketing: According to the research about McDonald’s marketing is the whole process by which goods get from producers to buyers. More people work in Marketing than in production. Marketing involves marketing research, distribution, pricing and promotion. As last week McDonald’s was offering 2 normal fries, hamburger, drink for only à ¯Ã‚ ¿Ã‚ ½2 and that offer was only for limited period. Marketing department deals with advertising, promotion and improving the image of the product and services to attract more customers. The fast food industry is in which many companies compete for customers. McDonald’s provide a better product, give better value for money, provide a superior service, better at distributing and selling its good and services and making them known through advertising and publicity. There is no doubt that McDonald’s do a lot of advertising and promotion activities. One of them is mentioned above. Recently McDonald’s announced that Kay Napier, Procter & Gamble marketing veteran, vice President/General manger, has been hired as a senior Vice President of marketing. McDonald’s marketing director said, â€Å"I am delighted to add this kind of marketing talent to our team at McDonald’s. This is another step in elevating one of the world’s great brands to an even higher level of marketing strength and value. This will also help them to achieve their objective, which is growth. Customer can be attracted through good eye-catching advertisement, advertisement has this tremendous ability to shift demand curve to the right. As customer increase income rises which helps achieving company’s aim of making profit so that they can cover their cost more easily. McDonald’s also meets its objective which is satisfying customer need by knowing what customer want and how much they are willing to spend on their food. To achieve this objective marketing department employees special research team for the test products do surveys with customers to taste new product and answer questionnaire about them. According to McDonald’s policy McDonald’s will not work with any supplier who does not adhere to the standards required by UK and EU legislation regarding animal welfare, transportation, husbandry, inspection, and quality & hygiene. This policy helps McDonald’s to meet its o bjective of Providing best food, beat competition and improve the company’ image. 5) Research and development: The purpose of R & D is to enable business to compete successfully and achieve permanently sustainable competition over its competitors by becoming more efficient and/or profitable and giving customers’ added value. To achieve this McDonald’s always and will continue to develop new products that satisfy customer’s expectations for great taste and great value. The company’s new product and development team works with suppliers to expand the menu with new core and promotional food items. The team helps to ensure that all new food items meet McDonald’s high quality and safety standards. As with the existing product range, McDonald’s solicits and carefully listens to customers’ view on any new or promotional products. * McDonald’s offer more and more choices for breakfast by developing new products as more and more customers eat breakfast out rather than at home. * Changing existing products McDonald’s uses conventional food chemicals or additives that add flavour and colour that helps to maintain freshness and make changing in existing products by listening to customers’ views. * Collecting data from worldwide research McDonald’s has special research team to find out what customers want and how much they can spend. McDonald’s also has restaurant development policy: When McDonald’s has local knowledge which is a key to choosing new locations, McDonald’s on discussion with local managers who are closely involved at roots level with their local communities. By keeping customers convenience McDonald’s develop new restaurants. Company is committed to responsible and works closely with local planning and community groups when developing new restaurants. Every bullet point and information is written there helps McDonald’s to achieve its objective of providing good service to the community by attracting more customers and making profit. There are advantages and disadvantages with every functional areas but each functional area helps McDonald’s in one way or another to meet its objectives. Task Four: There are three types of management style and they are: * Democratic * Autocratic * Consultative Management style will describe the different ways that the managers treat their employees and also the way the in charge of the employees. Democratic management style: This type of style involves empowerment. Individuals and team are given responsibility to make decisions, usually with a given frame. The team is then responsible for the decisions that it makes. A manager with this style will feel comfortable allowing others t make decisions. Autocratic management style: This style is where manager gives out instructions, telling people what to do rather than asking employees. The manager is the only person who contributes to decision making. Consultative management style: Consultative mangers are ones who seek to consult other to implement decisions. This type of style wants to draw on more sources of opinion than just her or himself. The purpose of management style is to remember where we started. Business exists to satisfy demand for particular goods and services and in order to do this they need resources; the factor of production. Being the fast food company McDonald’s exists to provide catering service to the community. Management is concerned with planning, controlling and co-ordinating the acquisition and use of these resources. In large concerns like McDonald’s, managers run the business by using people and information. The term ‘managing’ comes from the Latin word for hand, as does the word ‘manual’. It originally meant ‘handling’ things’ but did not originally apply to people. McDonald’s Management is responsible for the preparation, integrity and fair presentation of the consolidated financial statements and financial comments. The financial statement has been audited by independent auditors, Ernst & Young LLP, who was given unrestricted access to all financial records and related data. The audit report of Ernst & Young LLP is presented herein. The Board of Directors, operating through its Audit Committee composed entirely of independent Directors, provides oversight to the financial reporting process. Ernst & Young LLP has unrestricted access to the Audit Committee and regularly meets with the Committee to discuss accounting, auditing and financial reporting matters. McDonald’s has an autocratic management style. A manger takes entire responsibility for decisions and, having set objectives and allocated tasks to employees, expect them to be carried out exactly as specified. Employees are told exactly what, how and when work must be started and finished. It is the kind of management style associated with a corporate culture centred almost exclusively on production. Power is focused at the top, and the centralised decision making is geared to getting the goods out of the company and to customers. The culture of a business can be widely affected by its attitudes, values and beliefs. There are different types of culture McDonald’s is very close to customer driven culture by keeping this culture in its mind McDonald’s works and as it is described before that McDonald’s first priority is its customers. Attention is focused on improving all aspects of the production process down to the minutes detail for the customers’ benefits. Technological culture is focused as well. To improve its technology and develop new products they listen to its customers as well as to their staff. An autocratic style does have some advantages and advantages for McDonald’s. Disadvantages are: * Workers may want some flexibility, freedom, little contact workers therefore little teamwork, can be demotivating. * Disadvantage of having a hierarchical structure is that messages can get distorted or lost from one manager to the next. * There is also poor communication between the different functions. Advantages are: * Need quick decisions, health and safety, clear and consistent approach helps employees * Advantages of the hierarchical structure are that every one knows whom they are responsible to and whom they are responsible for. * This can also shows where specialists are needed in their divisional groups The organisation structure McDonald’s has is hierarchical structure, which you can see on next page. The benefits McDonald’s gets are clear management structure, clear lines of responsibility and control and functions are clear and distinct. Of course where there are advantages there are disadvantages as well. The disadvantages McDonald’s has are many layers of communication and many layers of authority and decision-making. The relationship between structure, management style and culture Structure Management style Culture Hierarchical, many levels Autocratic Based on routine procedures of management, e.g. in and job roles, decisions are large business like McDonald’s centralised. Being a huge company McDonald’s has an Operations Director (Peter Sullivan), Development Director (Peter Richards), Finance Director (George Director), Marketing Director (Matthew Howe), HR & Training Director (Carmel Flatley) and chairman and chief executive (Andrew Taylor) are the most important people in the company. Together with the other directors, they oversee the work of the company’s five vast departments: Operational, technical, real estate, financial and marketing. There are also regional manager senior supervisor and superior supervisor, restaurant manager and assistant manager. The board of directors have senior jobs in the company, overseeing different divisions. These are the executive directors. The board also includes non executive directors, who do not work for the company. They help the board make decisions and look after the interests of the shareholders. McDonald’s also have training and careers or its employers. McDonald’s employs local people in their own community. It is an equal opportunity employer, and women and people from ethnic minorities are represented at all levels. Young people accepted for a position on McDonald’s career programme can quickly climb the promotional ladder. Trainee managers go through a series of training courses at centres set up in their own community. They receive even more important on-the-job training at a McDonald’s restaurant. McDonald’s has an open door policy, which allows staff access to managers from the chairman down. Everyone is welcome to make suggestions or complaints. McDonald’s also holds a frequent meetings called rap sessions where staff can voice their complaints to someone from headquarters or air grievances to a member of management from another restaurant. McDonald’s now has a bureaucracy; senior staff is not even treated with the awe they command in some companies. Even the chairman is approachable. The staff and the public have open access to him through the company’s open door policy. There is a McDonald’s management structure on next page. Task 5: A description of the use of ICT for internal and external communications of the business. Businesses need to communicate with a range of individuals and other organisations including their customers, their suppliers, as well as their own employees. Every organisation will need to be able to communicate effectively with staff at all levels for it to function smoothly and efficiently. These are the reason why communication is important for a business or an organisation whether it is internal or external. The business I have chosen for this assignment is McDonald’s. McDonald’s also has internal and external communication to run its business effectively. McDonald’s has an IT strategy. Information technology is important where it enables a business to achieve its goals. However cost is always important and evidence seems to show that IT is more expensive than firms realise. According to Management Consultants, support cost can be five times the amount estimated. This includes help from other staff and time spent on security and back-up procedures. Other costs can include: * Staff training * Introducing health and safety measures * The need to maintain efficient security Two recent trends in keeping down IT costs are: Downsizing: when we look at human resources management then downsizing means is lying off employees. However in IT it simply means using smaller systems, such as a mini-computer instead of a mainframe, or a PC instead of a mini. This is possible because hardware is becoming more powerful. The other recent trend is outsourcing. Outsourcing: This again is a term used in human resources management Internal and external communications: Internal communication: Internal communication is communication that takes place within the organisation. The three main ways of communicating information inside McDonald’s are intranet, McNews and MDUK and High levels. Methods of keeping In touch with staff: * Intranet Launched in the year 2000, McDonald’s UK intranet provides a fast and up-to-the-minute source of information for McDonald’s restaurant management and office staff. It is a single point of reference administrative requirements, news and marketing materials. * McNEWS AND MDUK McNews was the award-winning magazine published bi-monthly for all restaurant staff. In 2002, McNews was re-launched as MDUK – a lively people-focused magazine, it covers news, activities and events from restaurants around the country. * High levels Published bi-monthly for all management and office staff it is a showcase for best practice, recognising individual’s outstanding practices and achievements, as well as highlighting internal and external awards. * An email system operates in all offices and company-owned restaurants. * Regular staff communication sessions are held in the offices. * Employee satisfaction surveys for both office and restaurant staff are held annually. This is how McDonald’s communicate with its staff. The purpose of internal communication is to communicate with its internal customers, which are employees to run business effectively and smoothly. Provide them information they need time to time. External communication: External communication takes place between the organisation and the outside world. McDonald’s needs to communicate with a range of stakeholders including shareholders, customers, government, suppliers and the community. Communicating with suppliers and customers: * Telephone: The most frequently used form of external verbal communication is telephone. McDonald’s uses this form of external communication to contact with their suppliers. Apart from this McDonald’s has answering machines to keep in touch with customers. Phone answering machines tape callers’ messages, which can be played back from a distance by calling the number and typing in a code. * Business letter: McDonald’s has its address available on it’s every website for their customers and also to obtain your copy of the pack you can contact them by sending a letter. * Website: Most companies have an internet website including McDonald’s. McDonald’s uses this for all external communications purposes and for public relations activities. I also used McDonald’s website to do research for my assignment. * Fax: Fax is a form of external communication. Fax machine is used to transmit and receive suppliers to communicate. The purpose of external communication is to communicate with its customers, suppliers and community. Provide them information about the business they want. Benefits: The benefits of using internal communication are: * The benefit of using intranet to business is that it provides a fast and up-to-minute source of information for McDonald’s restaurant management and staff. * McNews magazine covers news, activities and events from restaurant around the country. * E-mail system is faster and efficient. Information and reports are confidential. The same message can be sent immediately to many people. * Employee surveys helps to get employee views. The benefits of using external communication are: * Telephone is fast and its great benefit is that it allows people who would find it difficult to meet to converse. And a person who can’t read or write can talk over the phone to get information. * The use of business letter saves time for the person whom you are writing to and you can explain in detail. Not everyone has access to internet so if somebody who needs information about the organisation can write a letter to them. * Fax does the same thing its transmitting speed is fast and saves time. Again if somebody need information about the organisation can contact them through fax if has no access to internet. * Website provides a lot of information about the organisation and in detail with pictures and graphs make easier for you to understand. It saves time of both who wants information and the one who is giving. For example if you asking the manager of McDonald about the company but he hasn’t got enough time to give you information in detail so when you have time you can go on to McDonald’s website and look for the information you need in detail. In order to achieve business objectives McDonald’s has created communication channels which all allows the company to communicate effectively both internally and externally. Due to successful communication when looking at the McDonald’s UK financial profile form 1998 to 2001. One can clearly see a substation increase in profit during this period. By using effective communication McDonald’s meets a range of organisational objectives which are crucial for the business such ads being a market leader, no 1 fast food retailer in the world which is due to the excellent reputation built throughout the year by maintain strong relationships with customers, adapting to new environment investing in new technologies and continuously up-grading systems and improving staff training. All this reflected in McDonald’s ability to maximise sales profit and revenues. ICT has an enormous impact on McDonald’s business internally and externally. E-mails replaced the old fashioned methods of communication such as letters and phone calls. The company has a very sophisticated network database which replaced the traditional systems of filing, storing information. Computers are used every where in the business to replace a range of standard operations such as maintaining stock levels, organising deliveries, preparing invoices and recording payments etc. The use of the internet website enables McDonald’s to reach any place in the world and is a very latest link with the global market for example every body can obtain the information from the website in a matter of minutes. The global net exchange enables McDonald’s through electronic data interchange (EDI) system to arrange financials transfer dramatically reducing time, paper work and costs. Poor communication results in mistakes, anxiety, low morale, inadequate control and aggression. Not surprisingly there is concern to improve the quality of communications. First this means improving the communication skills of people within the organisation. Second, it means developing systems of communication. We can identify the skills required by individuals as: o Patience o Discretion o Understanding o Assertiveness —— where necessary. A clear explanation of how the production process and quality assurance / control system employed by the business help it to add value to its product or service. McDonald’s production is a very important process in McDonald’s business activities and it involves: o Processing o Manufacturing o Assembly o Craft-based production Processing: Most of the McDonald’s products are created by processing which includes food and drinks. Processing involves treatment such as washing, cutting, salting, weighting, heating, grilling and frying etc. The raw materials such as meat, chicken, fish and vegetables etc are passed through a series of processes until the desire form product is produced for example chicken fillet is processed into chicken burgers, grilled and then assorted with salad cream. Manufacturing: Manufacturing involves making boxes, cups, sticks and different children’s toys which McDonald’s has special facility to produce techniques include for example producing plastic toys from plastic granules called â€Å"Polietilen† which is put into a machine which is heated and under pressure different shapes are made for toys. The same thing applies for the plastic cups for hot and soft drinks. Assembly: A typical assembly operation for example putting together big Mac and French fries with a cup of soft drink in a paper bag to serve the so-called big meal for à ¯Ã‚ ¿Ã‚ ½4.99. Another example for an assembly is when staff is in the workshop assemble kid’s toys, which go together with the kid’s happy meal. Craft-based production: Craft based production involves making individual products by hand for example a birthday cake for McDonald’s birthday parties where the parent can request a special shape and decoration for the child’s birthday cake. So McDonald’s takes individual offers for special cakes. Especially trained staff has the ability and skill to create imaginative and attractive design that suits the individual needs of customers. Craft production in McDonald’s for example involves working with material such as icing, chocolate, cream, coco powder and baking powder. Quality assurance: McDonald’s is committed to maintaining and developing the best food products in the quick service restaurant market. In order to deliver on this, the company has made a number of other commitments: to food safety, food quality and nutrition. McDonald’s first is always the health and safety of customers. The company believes that the food safety standards required by law are only a minimum and the company continually seeks to go beyond this. Because of this belief, McDonald’s has developed a food safety policy to help keep the focus of the company’s absolute commitment to food safety and quality. – All raw materials delivered to McDonald’s restaurant must be consistently produced to the highest standards of hygiene and safety. – Company systems and procedures must be continuously updated to ensure the highest standards of food hygiene for all customers at all time. – All staff receives proper supervision and training in food and safety. – The equipment used must be the appropriate for the needs of each restaurant, and must be carefully maintained and carefully calibrated. Following its launch in early 1998, McDonald’s continues its programme of sponsoring research grants in food safety. The grants are particularly aimed at supporting the work of researchers in the early stage of their independent research careers, who are working in established UK-based departments and institutions. McDonald’s is committed to serving hot, fresh, great tasting, great value food to all customers, every time that they visit a restaurant. McDonald’s food has made from the basic commodities: red and white meat, fish, eggs, milk, grain and vegetables. All raw materials are produce to exacting specifications and the highest possible standards of quality and safety, The Company will not use any ingredients unless it is clear exactly where it has come from and that it compiles with all relevant regulations and McDonald’s own high standards. Additives are only used to ensure that high quality standards are maintained. Additives are removed or replaced wherever possible, as long as this does not compromise food safety or quality. McDonald’s has a highly trained team of quality assurance whose job includes verifying the company’s supply chain through audits and site visit. These employees also work with suppliers to maintain and develop product quality and to ensure that restaurants consistently serve hot, fresh food. Independent food safety auditors re also used to assess their key suppliers partners. In 1984 McDonald’s became the first UK restaurant company to publish detailed nutritional information on all core menu items. McDonald’s highest priority is for the safety of its customers. The company will not any product or ingredient that does not meet their high standards of quality and safety, or has not received the necessary approval by the relevant UK authorities. McDonald’s will not work with any supplier who does not adhere to the standard required by UK and EU legislation regarding animal welfare, transportation, husbandry, inspection, and quality & hygiene. McDonald’s always and will continue to develop new products that satisfy customers’ expectations for great taste and great value. Around the country, thousands of people form a network of dedicated suppliers involved in the day-to-day operation of McDonald’s business. The responsibility of serving more than 2.5 million customers each day makes quality a consistent goal. McDonald’s work with leading suppliers across the UK – from potato farmers in Lincolnshire and Norfolk to dairies in the south and midlands-to bring the customers the tasty products they expect from McDonald’s. It is McDonald’s policy worldwide to purchase supplies from local producers wherever possible, providing that they can meet exacting product and hygiene regulations, operate responsibly and humanely and are competitive. McDonald’s strives to ensure quality from crop to counter. To that end, McDonald’s requires the highest standards and specifications, not just product ingredients every detail of production, transport, delivery, preparation and service is also exhaustively monitored. McDonald’s also recognises the importance of a balanced diet and lifestyle and continues quality new products, which satisfy customers’ expectations for taste and value. A focus on quality permeates every aspect of the business. McDonald’s standards lead the industry, and will continue to work with government and health officials to investigate improvements. Quality control: Quality control in McDonald’s involves all kinds of inspection system for checking the raw materials, the food processing, customer service and management. The company carries out different types of testing the raw materials as well as the ready made meal and drinks for example the cooking oil in which the French fries are cooked is changed twice a day. Each restaurant manger and supervisor inspects daily the premises, the safety of the equipment and the expiry date on stored product such as milk, cream etc and general hygiene on the premises including McDonald’s car park and the neighbouring areas. In the company mission statement different policies are allocated such as health and safety, food hygiene, manual handling, customer service, litter control, recycling and environmental policy for example McDonald’s is a member of the environment council, the corporate responsibility group of Earth watch Europe, the industry council for packaging and the environment (INCPEN), and greeting the high street, a group of retailers who have come together to develop recycling in the high street. Another example is that McDonald’s takes a sensitive approach to its built environment, working closely with planning and conservation officers to preserve buildings of architectural merit and to improve the townscape. In many towns, McDonald’s has invested considerable sums in restoring old buildings, often putting back architectural details that have been lost. York, Chester and Stratford-upon-Avon are prime examples. McDonald’s has supported the tidy Britain Group’s annual ‘National clean’ activities. Since 1988 and support its campaign ‘just Bin it’. In addition to corporate funding, restaurant throughout the UK organise and support activities to clean up their local environment in conjunction with local youth groups. o McDonald’s is one of the country’s leading sponsors of council litterbins. o All packaging carries the Tidy Britain Group’s ‘Tidy Man’ symbol. o Many McDonald’s restaurant organise litter-related competitions with local schools and youth groups. o McDonald’s was a founding sponsor of ‘Going of Green’, a nationwide awareness campaign for sustainable growth. In 1997 at the TIDY Britain Group’s Queen Mother’s birthday Awards for environmental improvement, McDonald’s received the top award, the Queen Mother’s Birthday Trophy. o 100% recycled used for happy meal boxes, take away bags, take away trays, napkins, kitchen rolls and toilets. o All McDonald’s tray liners are made from 100% fully recyclable and biodegradable materials. o All McDonald’s suppliers have to use minimum recycled content of 50% in their corrugated containers. o All McDonald’s offices recycle waste paper and also use recycled paper. o The majority of McDonald’s restaurants recycle their cardboard and used cooking oil.