Paper 1, MBA 713-01, By Waqas Sher Zaman, Prof. SK Pemmaraju, March 23rd, 2014, pg. 1
To: Professor Sk Pemmaraju
From: Waqas Sher Zaman
Subject: McDonald’s Corporation
Date: 23/03/2014
McDonald’s Corporation:
McDonald’s Corporation is the world’s largest chain of hamburger fast food restaurants which
serves approximately 68 million customers on daily around 119 different countries and haves
30,000 restaurants worldwide. McDonald’s headquarter is in Oak Brook, Illinois, USA and
company was started as a barbecue restaurant in 1940 by Richard and Maurice McDonald. In
1948, owners of the company reorganized the business to a hamburger stand and thereafter in
1955 businessman Ray Kroc joined the company as the first franchise agent. Ray Kroc
purchased the chain from the McDonald brother and made it grow worldwide. (McDonald
Corporation)
The corporation itself either operates a McDonald‘s restaurant or by a franchisee. McDonald’s
Corporation revenues are obtained from the rent, fees paid by the franchisees, royalties and the
sales from the restaurants operated by McDonald’s Corporation. McDonald’s Corporation had
annual revenues of $28.15 billion in the year 2013 whereas their profits were $5.6 billion.
(Yahoo finance)
McDonald’s product line includes selling hamburgers, cheeseburgers, french fries, chicken
items, breakfast items, desserts, milkshakes and soft drinks. Due to changing consumer taste and
to survive in this competitive and ever changing environment McDonald’s Corporation has
added salads, wraps, fish, fruit and smoothies to its menu list. (McDonald Corporation)
Purpose of McDonald’s Corporation:
The main purpose of McDonald’s Corporation is to serve fast food and to do everything that can
be done to respect the customer and to have customer trust in their brand.
Why I Chose McDonald’s Corporation:
Following are the reasons why I choose McDonald’s Corporation
1. McDonald’s Corporation is one the world largest and leading fast food chain
2. McDonald’s Corporation employs 1.8 billion people worldwide and they have one of the best
HR practices
3. McDonald sells almost 75 hamburgers every second which attracts any HRM student to study
their HR practices
Paper 1, MBA 713-01, By Waqas Sher Zaman, Prof. SK Pemmaraju, March 23rd, 2014, pg. 2
Business Model of McDonald’s Corporation:
McDonald earns its revenues from investing in properties, as a franchiser of a restaurant and as
an operator of restaurants. Almost 80% of the company restaurants are operated by franchisees,
which are bound to pay 4% of their revenue to McDonald, as well as the rent. In most of the
cases, McDonald owns both the building and land which results in a stable flow of income
making the franchisees bear most part of the risks. The remaining 15% of restaurants are owned
and directly operated by McDonald.
Considering the business model of other fast-food chains the business model of McDonald is
different. Other than franchisee fee and the marketing fees that are calculated as sales, McDonald
do sometimes collect rents that are also considered as sales. Other than revenues generated from
the franchise agreement, McDonald may also own or they can lease the property where
McDonald’s franchises are located.
According to the policy of McDonald, the business does not involve itself in making any direct
sale of food or any other material to its franchisees but it organizes the food and materials
required for the franchises through an approved third approved logistic operators.
McDonald’s is also involved in identifying the locations, developing new products and quality.
Human Resource Management:
Human resource management is an approach by which company’s most valued assets (people)
are managed. For any company to achieve success its human resource has to individually and
collectively contribute and this can only be achieved through proper management. Proper
management of company human resource not only help the company to achieve its objective, but
they achieve it with greater efficiency.
Human Resource Management helps the organization to achieve its desired goals and success by
the help of its people. Human Resource Management, therefore, is utilized in the creation of
decision on the plans of the organization. These plans are linked with employee relationships,
recruitment, training and development, performance management and rewards for employees.
Therefore, human resource strategies developed are to be in line with organization business plan
to help the business to be successful.
McDonald’s Human Resource Management:
McDonald’s Corporation in order to achieve success and competitive advantage developed it
human resource management strategy focused on four areas
a) Strategic Human Resources Management: McDonald’s human resource strategies and
practices were synchronized to the company business strategy and thereafter the HR department
Paper 1, MBA 713-01, By Waqas Sher Zaman, Prof. SK Pemmaraju, March 23rd, 2014, pg. 3
helped to realized the business plan or strategy by forming it into company HR practices in
relation of personal development and hiring.
b) Management Transformation and Change: One of the way HR function of McDonald
helped organization to achieve competitive advantage is by identifying the changes required and
thereafter implementing it. This strategy served as a catalyst for company successful growth.
c) Employee Management: HR department tried to understand the problem which employees
face daily and what are their needs and thereafter making an effort that their problems are solved
and their needs were met.
d) Management of Organization Administration: It was made sure by HR department that the
process of employees hiring, training, evaluating, rewarding and promotion were designed in
such a way that they were in line with the strategies of McDonald.
In order to align these four focus area following things were done by McDonald
1. Personnel Structure:
As the business model of McDonald shows that it generates most of it revenues from franchising,
therefore, there are three categories in their structure which are corporate staff, restaurant
