Introduction
Geopolitical and demographic changes together with changes in technology and even intense pressure on the physical environment of an organisation drive the need for organisational modification to meet the corresponding emerging needs. Such changes also need to be combined with various security concerns together with governance issues that help to generate pressures that drive organisational change (Bruch and Gerber 87).
Development of awareness for technological needs, political, sociological, and economic characteristics of the external operational environment of organisations is crucial in the effort to drive strategic initiatives for organisational success. Therefore, it is important for an organisation to develop theoretical models for analysis of the operations of organisations. This paper proposes Nadler and Tushman’s model as one of such theoretical models.
To highlight how Nadler and Tushman’s model can be applied in the analysis of organisations, McDonald’s business is used as the organisation whose operations environment coupled with strategies of success can be analysed from the perspective of this model.
However, before this analysis, a consideration is given to lay a background of both McDonald’s business and Nadler and Tushman’s model. The report then categorises the key components of the environment, strategy, tasks, formal system, and the key individuals to determine what outputs are desired, and whether they are achieved by the chosen organisation.
Secondly, an attempt is made to determine whether the strategies for McDonald’s business are in line with organisation’s environmental inputs and/or whether the transformation process (the key tasks, the formal organisation, the informal organisation, and the key individuals) all align well with McDonald’s business strategies. The intention is to evaluate how these elements interact to produce the outputs.
Thirdly, the report responds to the query of whether evaluating McDonald’s business outputs at the organisational, group, and individual levels, yields anything that might help in identifying issues that the organisation should address. In the last section, the report considers the query of whether some aspects of how McDonald’s company works create difficulty in understanding the operation of the organisation. If this query yields a positive response, the study will select the materials for use to aid the investigation.
Background to McDonald’s Company
McDonald’s company stands out as one of the biggest global fast food retailers offering fast foods in more than 119 countries all over the globe. McDonald’s restaurants and franchises, which stand at about 33, 500, continue to grow as the organisation penetrates new markets in Asia (Wilhelm Para. 1).
This immense success of McDonald’s business is attributed to a number of factors among them being the incredible emphasis on engagement of consumers, an appropriate leadership that fits well with the business of the organisation, and the exceptional investments of the organisational resources in brand management. The franchise business model of the company has managed to ensure that the products and services offered at the franchises are consistent with the services offered at the company-owned restaurants.
McDonald’s business principally focuses on development of a business model, which pays attention to the concerns of employees. The organisation uses employees to deliver organisational values through delivery of healthy, safe, and hygienic foods (Gogoi and Arndt 18).
The main strategy for McDonald’s business is to use its people to deliver services at outstanding high-service rates so that customers do not waste their time waiting for services as such a move undermines the purpose for which fast food restaurants are established. To achieve this goal, the organisation advocates for a bureaucratic formal management structure. In fact, formal organisational structure is one of the essential subsystems considered in the Nadler and Tushman’s model.
McDonald’s company pays inconceivable attention to people as the most important resource it can utilise to enhance its success both in the long-term and in the short-term. For this reason, the company’s brand inventories highlight the brand elements of the company, which drive the image that consumers have in their mind in relation to the company’s products and services.
The company also conducts brand exploratory to determine how customers perceive its products. New products are innovated and designed to meet the emerging needs of consumers based on the information derived from brand exploratory studies.
This means that McDonald’s company pays attention to all factors that may help to enhance its performance. It deploys such factors in the development of products and means of delivering its services thought the company-owned stores and franchises. The goal of this paper is to evaluate how Nadler and Tushman’s model can be applied in the analysis of various strategic decisions made by McDonald’s company.
Background to Nadler and Tushman’s Model
Source: (Bruch and Gerber)
Nadler and Tushman’s congruence model for organisational analysis (shown above) presents an organisation as a system, which draws various inputs from both external and internal sources. Its then transforms all the inputs into outputs via four chief components, alternatively called subsystems.
Based on this model, these components are work, people, formal organisations, and the informal organisation (Burke 20). The foundation of this plan is to perceive a company as an open arrangement whose functions are powered by the outside and in-house surroundings in the extent that inputs are drawn from them and then changed into outputs such as performance and/or organisational behaviour.
According to the Nadler and Tushman’s model for organisational analysis, transforming inputs into outputs is executed through the interaction of the organisational subsystems. Work refers to all daily chores executed by all individuals who work for any organisation (Bruch and Gerber 64).
People constitute the abilities and skills possessed by the staff in charge of running the daily affairs of an organisation. These organisational subsystems also focus on emotive backgrounds coupled with the expectations of any organisation (Burke 24). The official company’s aspects include the arrangement, guiding principles, and even the values that are deployed by the organisation to execute its business.
Lastly, the informal organisation subsystems of Nadler and Tushman’s model imply the moral codes of ethics, power, norms, and even the political behaviours that are deployed by an organisation in matters involving the running of the business of an organisation especially subjective matters that may alter the operation of an organisation with time. Using Nadler and Tushman’s model, effective change within an organisation occurs when all these four subsystems are integrated.
Analysis of McDonald’s Environment from the context of Nadler and Tushman’s Model
Key components of the environment, strategy, tasks, formal system, and key individuals
McDonald’s environment is composed of people (employees and customers), and other parties, which have stakes in the operations of the company. They include shareholders and the community within which the organisation is established. McDonald’s company has a duty to deliver value to shareholders through engaging in activities that increase the shareholders’ returns on investments. The organisation has the noble duty of ensuring that it acts in a socially corporate responsible manner.
While operating in the above environment that comprises the aforementioned players, McDonald’s business pursues various strategies. In its mission statement, McDonald’s business states that it focuses on people as its most important resources that are available to enhance the success of its business objectives and goals.
Other strategies pursued by McDonald’s business are focusing on developing healthy meals. This strategy is driven by health professionals’ increased concerns that emphasise that fast foods are associated with obesity and its associated ailments including hypertension and diabetes.
To realise its strategies, the organisation engages in various tasks aiming at winning the position of the company in the fast food industry. McDonald’s business continues to implement its global business strategy, which is driven by the business slogan ‘play to win’.
This strategy is formulated to ensure that the organisation creates a customer experience that is consistent across all franchises and the company-owned stores. The company has created a formal system that guides its operations under the guidance of five main facets: products, price, people, promotion, and place.
McDonald’s business examines its situation in the effort to guide the course of drawing conclusions that would make the organisation adjust its merchandise due to situational alterations. For instance, in 2008 to 2009, the company encountered immense challenges accruing from the global financial crisis.
However, through its environmental response mechanism, the company responded by developing new products. Such a move was effective in ensuring that it maintained its profitability levels amid the challenging financial operational environment. Additionally, as a mechanism of responding to the global environmental criticisms brought forth by green movements, McDonald’s business has responded by seeking to enhance sustainable supply chains.
Alignment of Organisational Strategies
Upon analysing McDonald’s company from the basis of congruence model, it is arguable that its strategies of success such as the establishment of happy meals among other growth strategic decisions are poorly aligned. The company continued to utilise past success ingredients such as the ones deployed between 2000 and 2004. Consequently, it failed to respond fully to the emerging needs of customers and decisive measures to deal with the increasing competition in the fast food industry. Rather, the organisation endeavoured to boost its sales volumes by opening more franchises and company-owned stores. This measure was done while failing to emphasise the aspects of cleanliness, grading, and inspection. The company realised in 2009 that such strategies were major business movers.
In the era of dietary concerns relating to fast foods, McDonald’s business risked being sued for making ‘fat for people’. This means that the commodities offered by McDonald’s business, the background, and its arrangement were speedily being skewed based on the latest market demands. In this context, Rao, Bergen, and Davis reveal that organisations, which establish a good fit with the environment in which they operate, are able to operate effectively (107). For instance, amid the difficulties faced by McDonald’s business between 2000 to 2003, Cantalupo made strategic moves, which were pivotal in helping to turn around the sales and hence profit margins made by the company.
For McDonald’s business, environmental inputs include people and the various products, which the organisation offers as finished products to its existing and potential customers, after undergoing transformational process. These inputs are perhaps well aligned with the strategy of the company to focus on people as the most important resource for delivering the company’s value. Indeed, at McDonald’s company, people are involved directly in the transformation process of raw materials.
Without full participation of people in fulfilling the organisational goals, objectives, and aims, it is possible that McDonald’s business cannot maintain its market share in the fast food industry. Inputs such as endeavours to motivate employees are also an important aspect of a strategy that is well aligned with the need to maintain a competitive advantage.
Issues that McDonald’s Company should address
Upon analysing McDonald’s outputs as a group and at an individual level, it is important to note that McDonald’s business deserves to address a number of things. Firstly, currently, it operates through bureaucratic systems of management.
This means that the main concern of the management is to make employees comply with the established procedure of work rather than influencing them (Gogoi and Arndt 19). Such an approach hinders innovation and creativity as they have been experienced in the past. For instance, as argued before, pursuing the strategic approach of opening more franchises and company-owned stores resulted in the negation of cleanliness and service quality in the early 2000s.
When these two aspects were not pursued rigorously, the performance of franchises dwindled incredibly. In the same time, some franchises attempted to develop new products, namely Egg Mcfffin and Big Mac. These products became some of the best selling outputs of the company despite the fact that bureaucratic formal systems ended up discouraging innovation at the company. Consequently, various corporate initiatives also failed to work.
In this context, seeking an alternative model for management of the business of McDonald’s company is a magnificent issue that McDonald’s business should consider addressing. However, it is crucial to note that, in making this change, the company will sacrifice the benefits of bureaucracy especially before employees learn how to make decisions in an accountable manner. This challenge is significant particularly when the decisions made have an impact on the productivity of the company.
At McDonald’s company, everyone knows what he or she ought to do or not. The hierarchy of power in the organisation also reflects the remuneration differences. People who have the highest salaries at McDonald’s business are also the people who have more power to make organisational decisions. People making decisions at McDonald’s business, mainly the directors, relay the decisions to the associates.
In turn, the associates relay the decisions to managers who relay them to supervisors and finally to workers. The chain of commands is incredible at McDonald’s business since they set a particular ladder, which allows swift and efficient flow of information coupled with crucial decisions. The danger in these forms of the internal structure of decision-making is that it fails to recognise the need to reward the efforts for organisational success.
The possession of a high power within an organisation does not directly translate into having the capability to enhance the productivity of the organisation. Consequently, although some subordinate staff may have good ideas that may lead to the creation of competitive products, failure to give them an opportunity to participate in the decision-making process hinders the cognition of the organisational potential.
This case has the effect of making McDonald’s business shun away from innovative and creative strategies of success such as development of new products and or mechanisms of improving service delivery. Hence, while it is important for McDonald’s company to consider people as the most important assets for its success, it is equally important for it to consider their innovative ideas as additional benefits available to the company, which while well harnessed, may give the organisation even a higher competitive advantage.
Upon scrutinising the operations of McDonald’s company, people, environmental outputs, group, and at individual levels, it is evident that customer service is central to the success of the organisation. Unfortunately, the process of delivering services is centrally arranged and monitored.
At McDonald’s company, customer service is organised such that all administrative personnel aid in enhancing compliance to the strategic plan of introducing people to the fast food culture as one of the mechanisms of increasing the organisation’s clientele.
In the customer service, particular desired outcomes of employees in the section are laid out. Non-compliance is not an option at McDonald’s company (Wilhelm Para.2). Some of the functions of the customer service section, which require total compliance, include customer care, cleanliness, and speed in the delivery of services.
Efficiency in the speed of delivery of services to customers implies that the bureaucracy at McDonald’s business facilitates in ensuring that all aspects of administration of customer service structures are aimed to enhance reduction of customer attendance time. Through the human resource, which is the employees’ compliance enforcing arm of McDonald’s business, every person who is charged with addressing human relation issues must ensure that both employees and customers are satisfied.
In this context, the change that is desired is the alteration of the belief that employees have to deliver quality services besides offering products in a manner that is hygienic to satisfy the demand placed by those occupying higher positions in the bureaucratic management ladder. Rather, employees should develop the culture that they are offering service and products to satisfy customer’s utilities, which constitute the noble reason why McDonald’s business is able to keep them employed.
McDonald’s operation structure is so well developed that no facet of how the business operates presents any complications in understanding. As argued before, the formal management structure is bureaucratic. The hierarchical portfolio is well defined such that every level of management has a clear set of written rules that define the function of the person occupying it.
Conclusion
Based on the discussion of the paper using McDonald’s company as a case example of how Tushman’s model can be utilised to analyse an organisation, it is found that the model can be used to explain the fit between the various elements that make up McDonald’s business. These elements include people, environment, formal, and informal systems.
Through an appropriate combination of all these elements, inputs are converted into outputs. From this argument, the paper holds that Nadler and Tushman’s model can be utilised to offer a relatively complex analysis of an organisation while still ensuring that an action plan is maintained.
The paper also finds that several challenges are encountered following the failure to establish appropriate fits between various elements that make up an organisation, which may hinder collective success of any organisation in question. In particular, the paper advocates for a formal structure of management for McDonald’s business, which fosters the inclusion of employees in innovation and creation of new products. This way, it possible for all employees to remain motivated and oriented to the organisational goals, aims, and objectives.
Works Cited
Bruch, Heike, and Peter Gerber. “Strategic change decisions: Doing the right change right.” Journal of Change Management 11.5(2005): 1-99. Print.
Burke, Warner. Organisation change: Theory and practice. Thousand Oaks, CA: Sage, 2002. Print.
Gogoi, Pallavi, and Michael Arndt. “McDonald’s hamburger hell.” Business Week 1.1(2003): 18-19. Print.
Rao, Akshay, Mark Bergen, and Scott Davis. “How to fight a price war.” Harvard Business Review 78.2(2006): 107–116. Print.
Wilhelm, Rachel. McDonald Formal Business Structure, 2010. Web.