McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
|Department||Type of Structure||Structure Details||Advantages||Drawbacks|
|Corporate Leadership||Hierarchy||McDonald’s corporate leadership operates within a hierarchical structure. It includes the CEO, senior executives, and various departments like marketing, operations, and finance.||– Clear lines of authority and accountability. – Efficient decision-making process. – Well-defined roles and responsibilities.||Potential slow decision-making due to multiple levels of approval. Limited flexibility in responding to rapid changes in the fast-food industry.|
|Operations||Divisional Structure||McDonald’s has a divisional structure for its operations, with divisions based on geographic regions or markets. Each division has its own leadership team responsible for restaurant operations, supply chain, and local marketing.||– Tailored approach to different markets and regions. – Quick adaptation to local market conditions. – Specialization in restaurant operations.||Coordination challenges between divisions. May result in variations in menu offerings and marketing strategies across regions.|
|Supply Chain Management||Functional Structure||Supply chain management functions at McDonald’s follow a functional structure, with specialized teams for logistics, procurement, and inventory management. These teams manage the flow of products from suppliers to restaurants.||– Efficient management of the supply chain. – Specialized expertise in logistics and inventory management.||Potential challenges in cross-functional collaboration between supply chain and other business units. May not align with specific business divisions.|
|Marketing and Sales||Divisional Structure||McDonald’s marketing and sales operations follow a divisional structure, with divisions responsible for different regions or markets. Marketing teams develop strategies tailored to specific markets, and sales divisions oversee restaurant operations.||– Customized marketing and sales strategies for different regions and customer segments. – Quick adaptation to regional market conditions. – Specialization in restaurant marketing.||Coordination challenges between regional divisions. May lead to variations in marketing and sales strategies across regions.|
|Research and Development||Functional Structure||McDonald’s R&D department follows a functional structure, with specialized teams focused on menu development, product innovation, and quality assurance. These teams work on new menu items and improvements in food quality.||– Specialized expertise in menu development and quality assurance. – Efficient management of R&D activities.||Potential challenges in aligning R&D efforts with the broader business strategy.|
|Human Resources||Functional Structure||The Human Resources function at McDonald’s operates with a functional structure, focusing on HR-related functions such as talent acquisition, training, and employee relations. Teams handle HR matters across the organization.||– Efficient management of human resources and talent-related activities. – Specialized expertise in HR functions.||Potential challenges in cross-functional collaboration with business units. May not align with specific business divisions.|
Understanding the McDonald’s organizational structure
The current organizational structure of McDonald’s was implemented by incoming CEO Steve Easterbrook in 2015.
Easterbrook reorganized business units, cut costs, and sold more restaurants to franchisees to make the fast-food chain modern and progressive.
This structure was then refined to comprise of three divisions or business segments:
- United States (US) – headed by McDonald’s USA president Joe Erlinger. This is the most important division of McDonald’s since a significant portion of company revenue comes from this region.
- International operated markets (IOM) – a division encompassing wholly-owned markets and countries such as Australia, Russia, Spain, the United Kingdom, Canada, France, Germany, and Italy.
- International developmental licensed markets (IDL) – the IDL division covers all remaining McDonald’s markets and corporate activities. There are more than 80 different markets in which the company has licensed its franchise rights.
Note that the IOM and IDL divisions are headed by Ian Borden. Both Erlinger and Borden report to current President and CEO Chris Kempczinski under a hierarchical leadership structure which we will analyze in the next section.
McDonald’s leadership structure
McDonald’s hierarchical leadership structure means there are multiple levels of management between the managers of individual stores and the CEO Chris Kempczinski. In other words, directives are passed from the CEO down the hierarchy to vice presidents, regional managers, restaurant managers, franchise owners, and other personnel.
Under the corporate banner, there are various executive vice presidents, senior vice presidents, and other staff in the following disciplines:
- Global impact.
- Strategic alignment.
- Office of the CEO.
- Digital customer engagement.
- Restaurant development and solutions.
- Supply chains.
There are also senior vice presidents in the regional divisions we mentioned in the previous section. For the IOM division, there are two positions:
- Chief Marketing Officer and Corporate Vice President, and
- Corporate Senior Vice President.
There is also a Senior Vice President for IDL markets and a Senior Vice President and Chief People Officer for international markets more broadly.
McDonald’s also operates six functional groups, with each group headed by either a senior vice president or vice president. These groups are:
- Learning and Development.
- Diversity, Equity & Inclusion.
- McDonald’s has a predominant divisional organizational structure where each division is assigned operational responsibilities and strategic objectives. The current organizational structure of McDonald’s was implemented by CEO Steve Easterbrook in 2015.
- Primarily, this structure consists of three divisions based on geographical location: the United States, international operated markets (IOM), an international developmental licensed locations, which comprise licensed franchises in over 80 markets.
- McDonald’s also employs a hierarchical leadership structure where a raft of senior and executive vice presidents report to the CEO. In addition to leading regional divisions, these individuals also head various corporate and functional groups such as Global Impact, Strategic Alignment, and Diversity, Equity & Inclusion.
McDonald’s Organizational Structure Highlights:
- Divisional Structure: McDonald’s utilizes a divisional organizational structure based on geographical divisions. These divisions are the United States, International Operated Markets (IOM), and International Developmental Licensed Markets (IDL).
- Leadership Changes: The current organizational structure was introduced by CEO Steve Easterbrook in 2015 to modernize and improve the company’s operations.
- Importance of US Division: The US division holds significant importance as a major revenue contributor to McDonald’s.
- Geographical Divisions: The IOM division covers wholly-owned markets like Australia, Canada, UK, Germany, etc., while the IDL division includes licensed franchise markets across more than 80 countries.
- Leadership Structure: McDonald’s hierarchical leadership structure involves various levels of management between store managers and the CEO. Directives flow down from the CEO to various levels, including vice presidents, regional managers, and restaurant managers.
- Functional Groups: McDonald’s operates six functional groups, each headed by senior vice presidents or vice presidents. These groups cover areas such as Learning and Development, Compliance, Communications, Technology, Accounting, and Diversity, Equity & Inclusion.
- Regional Senior Vice Presidents: Within regional divisions like IOM, senior vice presidents hold positions such as Chief Marketing Officer and Corporate Vice President.
- CEO Reporting: Both the US division and the IOM and IDL divisions report to the CEO. The US division is led by the McDonald’s USA president, while the IOM and IDL divisions are led by the same individual.
- Overall Structure: McDonald’s organizational structure supports a divisional approach for operational efficiency and a hierarchical leadership structure for effective decision-making and communication.
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