McDonald’s Corporation's Decision Making Process
Decision Making Process
In a business organization, the management of a company is bound to a common goal of implementing strategic management which will enable the company to have competitive advantage. Strategic management can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enables any organization to attain its objectives. As mentioned, one of the most important factors to have a successful and functional strategic management system is to have the ability to make decisions strategically. Decision making is an integral part of the myriad factors that can affect the outcome of a common goal.
Traditionally, theorists have looked at decision making as the multiuse process by which a problem is identified, solution objectives are defined, a preadmission is made (that is, a decision about how to make a decision), alternatives are generated and evaluated, and an alternative is chosen, implemented, and then followed up. This type of rational model of decision making assumes that the decision maker is aware of the problem, is aware that the decision must be made, has a set of alternatives, and possesses a criterion for making the decision, but these are significant assumptions. Such an ideal model of decision making also assumes that the decision maker is aware of all possible alternatives and that he or she decides after examining them all. A contemporary approach recognizes that decisions are made in an automatic, intuitive fashion. Specifically, image theory claims that people will adopt a course of action that best fits their individual principles, current goals, and plans for the future (Sims, 1994).
Decision making process may include gathering information, setting common goals, uncovering management alternatives to choose a certain plan of action and executing the plan. With this process, the management of organization will be able to identify the most appropriate strategy to be used in order to make the company be more competitive. In addition, decision making process is also noted as a central factor in having successful strategic management because it enables the company to have an effective solution for a certain problem or issue.
The company must be able to have strategic decision making for the future to continuously sustain the strength of the company. Good decision making can be attributed as one of the vital factors that will help the business to achieve its core mission and objective. This alternative is helpful in a way that it can make the company more competitive and survive in the marketing environment (Campbell, Evans & Storehouse, 2002).
However, even if decision making are said to be the central factor of having strategic management, the process of making decisions is also considered as a difficult task to handle. Most of the time, decision makers of a company is having difficulties in deciding the solutions to a certain problem for a fear of not getting the expected results. The difficulty also lies on the fact that there are decision-makers who makes decision easily without strategically analyzing what is really needed in the situation. Hence, even if the intentions of the decision makers are good, the result may be contradicting.
McDonald’s has a rich history that started out in 1954. The company was put to the spotlight by Ray Kroc. Throughout the years, marketing ideas have poured through and helped the company become one of the most renowned fast food brands globally. The trademark design for the fast food was carefully studied and it came with a happy clown character known as Ronald MacDonald (McDonald, 2007). The Big Mac and the Egg Muffin have been some of McDonald’s most innovative products. In terms of marketing, the happy meal approach was also a creative as it entices children to eat at MacDonald’s because of the toys they can get. Today, McDonald’s is also on the Internet bandwagon, providing information to people all over the world with a click of a mouse (McDonald’s Corporation, 2007).
McDonald’s is among the most popular fast food brands in the world. Started out in the fifties, McDonald’s now boasts of operating, franchising, and serving a worldwide chain of around 30,000 fast food restaurants that prepare, package and sell a menu of ready to eat foods. Specifically, it has branches in Australia which is regarded as one of the most popular food chain in the country However, despite of the established brand of McDonald’s Corporation and contrary to its previous achievements; it seems that there is a need for the management to redefine its image.
The growing and bustling population of today is obviously different from the population of the previous decades in terms of health and nutritional attitudes and behaviors. People today are more concerned with their health and figures than ever before. Obviously, the reason for this increased awareness is because of the fact that information is everywhere and every reports and research about nutrition seem to link fast foods with the growing number of obesity. Furthermore, there is also a number of emerging diet programs that promote and encourage the public to be figure conscious.
This is a problem for McDonald’s because it has already gain the reputation of a fast food that continuously provides greasy unhealthy food; whereas competitors have already made measures to reduce fats in their products. The company needs to do something about and shift its positive image back. Hence, the issue or problem that should be solved by the management of McDonalds is to make a decision in terms of having a new marketing approach that will make the company be more appealing to the current customers. This approach should make the McDonald’s brand as something that is irresistible, then followed with the information that its products are already health friendly. In this approach, certain changes will be made.
Decision Making Approaches
Generally, most organizational management systems is said to be set-up to permit decision making at the lowest plausible level. The management must make it sure that decisions making are distributed evenly to different departments and levels of organization to avoid conflicts. In order to do this, the management must be able to choose the most appropriate decision making approach. In this regard, there are various decision making approaches that can be used in business organizations. These decision making approaches include administration approach, political approach, classical approach or incremental approach.
The administrative decision making approach is an approach in which the decision makers includes managers, executives and other stakeholders who holds higher positions in the company. In this decision making approach, the manager or the leader of the company has the right to do the decision making without asking the opinion of the employees. In this, all actions are being made by the manager or the corporate leaders (Huffman and Piggery, 2003). The decision making approach can be used in the problem and issue of McDonalds by giving the opportunities to marketing managers to decide for a new approach that can be used to solve the issue.
The next decision making approach is the political decision making approach. Unlike in the administrative decision making approach, political decision making approach have decision makers who are politically inclined and have deep knowledge in different laws. The political decision making approach is said to be opinionated and supportive. The elite political groups have the opportunity to make decisions by intensely arguing on both the positive and negative sides of the decision to be made. In political decision making, it is said that some politicians may not be concerned with the substantive outcomes of the decisions; they are interested merely in their individual power and perhaps in the maintenance of their organizations.
The last decision making approach is the incremental or classical decision making approach. The incremental or classical type of decision making approach tends to look at a specific decision as a small step within the process and consequently perpetuate to a series of other similar decision. This means that the management makes decision in a step by step process (Borden, 1995). The classical decision making approach seems to be more scientific and rational. The process involved in a classical decision making approach are deeply taken into considerations and the management are trying to make the decision as appropriate as possible to avoid further conflicts.
Key Limitations of Decision Making Models
The decision making approaches (administrative, political and incremental) are said to be a helpful approach for the problems and issues of McDonalds. However, these approaches have their own limitations. For the administrative decision making approach, it can be said that its key limitations includes the rationality and the decision making style. In administrative model of decision making, the manager has a sole responsibility in the decision making process. In this regard, the rational sense is being bound by the rationality of the manager who will make the decisions. Hence, other opinions and suggestions may not be given a chance and this may affect the decision process as a whole.
Aside from bounded rationality, administrative decision is also restricted to a specific decision making style. Since the manager or for this case the marketing manager is the only one who will make the decision, the decision making style will be limited on the manager’s knowledge. This limitation may result in ineffective and inappropriate decisions which may worsen the problem or issue of the company.
On the other hand, the political decision making approach may be affected by the following key limitations: group think, group shift, decision making style and cultural differences. This approach is composed of peoples or decision makers with different perspectives and decision making style and thinking. In this regard, the decision making process will be affected because of the clashing arguments and ideas of the different political groups. In addition, the group shift for making decisions may affects the whole activity or process of the decision making. Instead of having solid decisions, various ideas will appear which makes it difficult for the team to decide comprehensively.
In line with group think, it is said that in successful groups, individuals learn to work together. They become a cohesive group as they work on specific tasks or projects. However, cohesive groups may develop and implement strategies that are inappropriate. This behavior is attributed to changes in the group's reaction to new or conflicting information. Cohesive groups tend to close themselves off to unsettling information, whether from inside or outside the group. This behavior was labeled groupthink by Janis (1982).
The last approach is the incremental approach. Herein, incremental approach may be restricted in terms of decision making style. The classical approach follows the conventional process of making decision. With this, the decision maker’s decision making style may be bounded by what has been used in traditional way. In a way, this may create a problem in terms of having an innovative decision for the problems raised in McDonald Company.
The quality of many organizational decisions also may be limited by political "face saving" pressure. In other words, decision makers may make decisions that help them save face at work, although the resulting decisions might not be in the best interest of their organizations. Imagine, for example, how an employee might distort the available information needed to make a decision if the correct decision would jeopardize his or her job. Unfortunately, such misuses of information to support desired decisions are common. One study on this topic reported that a group of businessmen working on a group decision-making problem opted for an adequate -- although less than optimal -- decision rather than risk generating serous conflicts with their fellow group members (Johnson, 1984). In an actual case, a proponent of medical inoculation for the flu was reported as having decided to go ahead with the inoculation program on the basis of only a 2 percent chance of an epidemic (Nested & Feinberg, 1978). Apparently, people may make the decisions they want to make even though these may not be the optimal ones for the organizations involved.
Besides the time constraints and political pressures that limit quality of organizational decisions, note also the limitations imposed by moral and ethical constraints -- what is known as bounded discretion. According to this idea, decision makers limit their actions to those that fall within the bounds of current moral and ethical standards. So, although engaging in illegal activities such as stealing may optimize an organization's profits (at least in the short run), ethical considerations may discourage such actions. Obviously, decision makers do not always act in an ethical manner. Sometimes, unethical decisions are made because of the inherent tendency of some individuals to be unethical, and other times, unethical decisions result from the tendency of the organization to encourage, or fail to discourage, unethical behavior.
Proposed Decision Making Model
Making-decision can be difficult for a number of reasons such as the organizational structure, human behavioral, organizational culture, uncertainties, incomplete information, multiple objectives, complexity of the problem and anxiety, which directly influence the decision making process. Regardless of the constraints, managers have to make decisions. Under any circumstances, decisions made cannot and must not be wrong because decisions are the mechanisms by which decision-makers try to accomplish the goals of the organization; they are the means to an end.
In this particular unit, the decision making approach that can be used is the decision making model which is concerned with the development and application of standard decision rules based on formal logic derived from data, which is called the programmed decision. The utmost concern of the manager the decision making process is to ensure that the decision yields optimal results and the same is expected for all the decisions made. In addition, the multiple objectives model can also be used through the use of multiple criteria decision making (MECUM).
The multiple objectives model tends to underline a normative view of decision making. According to Robbins (2002, p.74), multiple criteria decision making (MECUM). involves (a) defining the problem; (b) identifying the decision criteria; (c) weigh the criteria; (d) generate alternatives; (e) rate each alternative on each criterion; and (f) compute the optimal decision. Based on the steps, the decision-maker identifies the problems or organizational goals and then defines alternatives in terms of the potential outcomes for each of the alternatives.
As mentioned, the problem is about having a new marketing approach that will make the company more appealing with the target market. In this regard, the three criteria can be considered include nutritional quality, service quality and customer satisfaction. For this decision making process, the major stakeholders are marketing managers and the customers. After the survey process, it has been decided that the company should adhere to the criteria of having nutritional quality.
Strategic management is guiding an organization relative to challenges and opportunities appearing in the contingent environment. This environment is composed of those external elements that most directly affect organizational goal achievement and new goal development. Thus, organization system design and management should complement strategic actions taken for productive subsystems, as well as those providing output delivery and other support functions for the organization. To the extent possible, the organization bases its actions on strategic decision making that, rather than a one-time effort, is an ongoing process of adaptation of original conceptions of mission, goals, structure, roles, and so forth relative to environmental dynamics.
Accordingly, decision making process is a knowledge-intensive process which can be considered as an important part of having successful strategic management. It is a fact that companies must make decisions in its everyday operations; hence, in order to make sure that the decisions are made successfully, decision making process is important. In addition, it is considered as a central factor for having successful strategic management because it provides the company the assurance that each and every operations and activities made by the organizations adheres to a common goal which is set in the decision making plans.
In strategic decision makings there are barriers and enablers which are attributed as the main factors for the success of the decisions made. Barriers may include different factors which may negatively affect the decision making team and as well as the decision making process. Decision making is a difficult process because of different factors. Such factors may include, environmental, cultural and the cognitive thinking of the one who will make the decision.
All in all, it can be concluded that even if decisions may come from different proposals, the result is still objective because of the decision making process and approaches which has been developed to make decision making become objective rather than subjective. The decision makers may use a specific decision making model to make sure that the decisions made are neutral.
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