mcdonald-organizational-structure

What Is The Organizational Structure of McDonald’s? McDonald’s Organizational Structure

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.

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.
  • Marketing.
  • Finance.
  • IT.
  • Restaurant development and solutions.
  • Customers.
  • Supply chains.

Regional

There are also senior vice presidents in the regional divisions we mentioned in the previous section. For the IOM division, there are two positions: 

  1. Chief Marketing Officer and Corporate Vice President, and
  2. 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.

Functional

McDonald’s also operates six functional groups, with each group headed by either a senior vice president or vice president. These groups are:

  1. Learning and Development.
  2. Compliance.
  3. Communications.
  4. Technology.
  5. Accounting.
  6. Diversity, Equity & Inclusion.

Key takeaways:

  • 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.

Related To McDonald’s

Franchising Business Model

franchising
Franchising is a business model where the owner (franchisor) of a product, service, or method utilizes the distribution services of an affiliated dealer (franchisee). Usually, the franchisee pays a royalty to the franchisor to be using the brand, process, and product. And the franchisor instead supports the franchisee in starting up the activity and providing a set of services as part of the franchising agreement. Franchising models can be heavy-franchised, heavy-chained, or hybrid (franchained).

McDonald’s Heavy Franchised Business Model

mcdonalds-business-model
McDonald’s is a heavy-franchised business model. In 2021, over 56% of the total revenues came from franchised restaurants. The long-term goal of the company is to transition toward 95% of franchised restaurants (in 2020 franchised restaurants were 93% of the total). The company generated over $23 billion in revenues in 2021, of which $9.78 billion from owned restaurants and $13 billion from franchised restaurants. 

McDonald’s PESTEL Analysis

mcdonalds-pestel-analysis

McDonald’s SWOT Analysis

mcdonalds-swot-analysis

Starbucks Competitors

starbucks-competitors
Starbucks is a multinational coffee chain headquartered in Seattle, Washington. It was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker in 1971. From a single and very humble bean roasting store in Pike Place Market, the company is now a global giant operating almost 33,000 stores around the world. This large global footprint obviously increases the competition for Starbucks in many different markets. The coffee industry itself is also highly competitive, with established players including McDonald’s and Dunkin’ Donuts.

Read Next: Organizational Structure.

Read Also: McDonald’s Heavy Franchised Business Model, Who Owns McDonald’s?, McDonald’s PESTEL Analysis, McDonald’s SWOT analysis, What Is A Franchising Business Model?, McDonald’s Speedee System, History Of McDonald’s.

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McDonald’s Organizational Structure

mcdonald-organizational-structure
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.

Walmart Organizational Structure

walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

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