McDonald's Corporation: The Organizing Process

• Organizing is the second function of management.

Introduction to McDonald's Corporation

• McDonald's Corporation operates as the world's largest chain of hamburger fast food restaurants.
• It serves approximately 68 million customers daily across 119 countries.
• The corporation is headquartered in the United States.
• McDonald's began in 1940 as a barbecue restaurant founded by Richard and Maurice McDonald.
• In 1948, the McDonald brothers reorganized their business into a hamburger stand using production line principles.
• Ray Kroc joined McDonald's as a franchise agent in 1955.
• Kroc purchased the chain from the brothers and led its worldwide expansion
• A McDonald's restaurant can be operated by a franchisee, an affiliate, or the corporation itself.

The Organizing Process

• Most organizations begin in one form and evolve as they grow, shrink, or change.
• The organizing process shapes the organization as it grows, shrinks, or changes

Organizing Defined

• Organizing involves breaking down a company's core business into smaller activity and resource units.
• It also includes grouping these activities and resources in a logical and appropriate manner.

Basic Organizing Concepts

• Designing jobs
• Grouping jobs
• Dealing with authority and responsibility
• Establishing the span of management
• Managing line and staff positions

Designing Jobs

• Job design determines procedures and operations to be performed by employees in each position.
• Job design is based on job specialization.
• Job specialization defines tasks that set one job apart from other jobs

Job Specialization

• Frederick W. Taylor advocated for high levels of specialization and standardization to increase efficiency.
• Advantages of job specialization include employees becoming experts, more efficient, and productive as well as managers have greater control.

Overspecialization

• Overspecialization can lead to boredom and dissatisfaction
• It can cause disruption of production in the absence of specialized workers
• It may cause difficulty in finding new jobs in different industries
• Alternatives include job rotation, job enlargement, and job enrichment
• Job specialization is a narrowly defined and standardized job.
• Job rotation means employees rotate across several narrowly defined standardized jobs
• Job enlargement changes the job to include more things within the same parameters
• Job enrichment changes the job to include more activities and discretion

Grouping Jobs

• After jobs are designed they are grouped into logical sets
• Proper grouping makes it easier to coordinate and integrate activities.
• Grouping jobs is called departmentalization.

Bases of Departmentalization

• Departmentalization can be by
  • function
  • product
  • location

Departmentalization by Function

• Employees involved in the same or similar functions are grouped together.
• Advantages of departmentalization by function include
  • departments staffed by experts
  • managers can easily coordinate and control activities
  • areas of responsibility are clearly defined.

Departmentalization by Product

• All activities associated with individual products or closely related product groups are grouped together.
• Benefits of departmentalization by product include
  • all activities associated with unique products are kept together
  • faster decision e making managers are closer to products
  • easier monitoring of individual product group performance

Disadvantages of Product Departmentalization

• Administrative costs are higher as each department has its own team for marketing, research, finance, etc.
• Conflicts or resentment may arise between departments over resources and attention.

Departmentalization by Location

• Jobs in the same or nearby locations are grouped in a single department.
• North America-production facilities, distribution systems, financial and marketing are grouped together.
• The same goes for European and Southeast Asian.

Merits and Demerits of Departmentalization by Location

• Merits enables managers to be close to their decision making responsibilities.
• Demerits results in a duplication of staff.
• Departmentalization by location is becoming more widely used by multinational organizations.

Other Considerations in Departmentalization

• Departmentalization by customer groups activities associated with individual customers or types of them.
• For example; a bank might have departments for consumer, business, and agricultural loans.

Authority and Responsibility

• Determining how authority and responsibility are managed is important.
• At the organizational level, this relates to decentralization. at the level of manager and subordinate this is the delegation process.

Delegation

• Delegation assigns a portion of a manager's task to subordinates.
• The manager assigns responsibility.
• The manager grants authority necessary to carry out said task
• The manager must create accountability.

Barriers to Delegation

• The manager might be too disorganized to delegate efficiently.
• The manager may fear the subordinate will perform better, reflecting poorly on them.
• The manager may be afraid the subordinate is incapable of performing correctly
• The subordinate may be unwilling or unable to accept the job.

Decentralization

• Decentralization is maximum delegation throughout an organization through the systematical use of
• Power and control delegated systematically to lower levels.
• Centralization means power and control are systematically kept at the top.

Span of Management

• Span of management is the number of subordinates reporting to a manager.
• Critical to group and organizational effectiveness
• Affects speed of communication flow
• Affects employee motivation, reporting relationships, and administrative overhead

Wide Versus Narrow Spans

• A wide span of control exists when a manager has a large number of subordinates.
• A narrow span of control exists when a manager has a small number of subordinates.
• Span of management affects the "height" of organizational structures.
• A wide span of management leads to a flat organization
• A narrow span of management leads to a tall organization

Flat Organizations

• Characterized by greater communication between upper and lower-level management
• Have an increased capacity to respond to changing environment
• Lower total managerial costs than tall organizations

Lines and Staff Positions

• Line positions entail direct chain of command with responsibility for accomplishing organization goals.
• Staff positions lie outside the direct chain of command and are advisory or supportive.

Explore the organizing process within McDonald's Corporation, the world's largest hamburger fast-food chain. From its humble beginnings as a barbecue restaurant to its global expansion, understand how McDonald's has evolved and adapted its organizational structure to serve millions daily.