Organizational Paper
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Organization Paper
University of Phoenix Online
Organization Paper
Many companies would not be here today if not for the way they organized themselves. Organization is a very important function in the business world. Without organization companies cant do all that they would like, because total chaos would set in ranging from top brass to the front lines. There would be no structure and nobody to hold accountable. Lets take a look at some resources that make companies successful like the McDonalds Corporation when the management function of organization is implemented.
Physical Assets
The McDonalds Corporation has come a long way when you start discussing innovation. Not only are they the front runners in the fast food business, they are also one of the biggest prime real estate holders in the industry. Lets jump back into time and see what the founder of the company was thinking when he put together the company structure including the organizational aspects. Ray Kroc was a salesman who sold Florida real estate to milk shake mixing machines. He came across two brothers who had placed a large order for milk shake machines. In 1954 after observing the success that was going on with the McDonald bros hamburger shop Ray was convincing enough to the brothers that he contracted with the brothers into becoming the franchiser of their name and system. The first franchise sold for around $950 were as today you need more than $250,000 to even be considered. Under the contract the McDonald brothers would make .5% of the sales from the franchises and Ray would get 1%. By 1960 McDonalds had opened 228 stores bringing the company net worth to $16 million from $24,000 in 1958. Ray understood that there was more to making the system work, while making money from sales he also put resources into training the owners, and improving product which would lay the foundation for the company. In 1961 Ray paid the McDonalds brothers $2.7 million dollars to buy their portion of the company thus allowing Ray total control of the organization. In 1965 McDonalds went public and became McDonalds Corporation. The funny thing was that Ray had a silent partner who showed him that McDonalds could make even more money by buying the land that the physical plant sat on then charging the franchisee a fee (rent fee) on the land. This was promising to Ray and to this day is one of the basic operating functions that have made McDonalds successful. Franchisees pay today a rent and service fee of 4% to the McDonalds Corporation for use of the McDonalds logo, rent for the property, and corporate training resources. It has been said that McDonalds is one of the biggest real estate companies around owning closes to 40% of the land that the 30,000 plus store reside on. Most of the restaurants reside on prime commercial property which in the real estate market is known as “A” properties. The company has a corporate department that focuses on just that resource but ranges more than just in the United States. The McDonalds Corporation in the early 1990s became the biggest corporate land owner in Russia. As of March 2005 the McDonalds Corporation was estimated to be worth by real estate analysts and industry experts with all the 127 restaurant, plus its land storage warehouses, and distribution centers around $115 million dollars plus it had in 2004 revenues that totaled $310 million dollars. This is just one of many organizational functions of physical assets that McDonalds has in place and working to make the company strong. One of the other traits that McDonalds holds strong today would be the organizational resources based upon Knowledge.
Organizational resource-Knowledge
As was mention earlier Ray Kroc decided that he was going to position all his corporate
resources to assist the franchisees in order to help the business grow, which became reality in
1961.
In the basement of a McDonalds restaurant located in Illinois, Ray Kroc and his
former grillman Fred Turner, who later became Senior chairman, founded Hamburger
University. It was on February 24, 1961 that 14 students were the first to graduate from
Hamburger University. Since its beginning more than 5000 students attend Hamburger
University each year and since that first class in 1961 more than 80,000 restaurant managers,
mid-managers and owner/operators have graduated. Ray and Fred wanted to make sure that the
concepts and procedures taught were the same across the board. This would allow them to have
structure and organizational flow no matter were in the world you find yourself working or
eating at McDonalds. The concept behind this was to emphasize consistent restaurant operations
procedures, service, quality and cleanliness. It became McDonalds global center of excellence
in operations training and leadership development. The organizational structure goes beyond
Hamburger University training, it reaches into 22 regional training teams with cross functional
Business consultants and Training consultants. Taken for the corporate web site, here is what the
Training mission is all about; (McDonalds