Organizational failure
Organizational behavior and culture plays a major role in the understanding the different capabilities and competencies of the business while operating on diverse international markets. The key changes in the organizational operations are based on the identification of the capabilities of organization while undertaking the change in the processes. The report will discuss the chief elements that resulted to the failure in the innovative processes planned by McDonald’s. On the other hand, the report will also focus on the agile changes that were undertaken by the organization to maintain its sustainability.
McDonald’s is an American fast food company, which was established in the year 1940. The organization undertook different innovative strategies since then in order to maintain their efficacy of the functions while operating as per the preferences of the customers. However, the management of the organization implemented the fundamentals of flexible leadership in the processes in order to enhance the chances of innovation in the business processes. The innovative approach that the management aimed at implementing on the processes was not backed by the understanding of the capabilities of the organization related to the recipes that are created by the business. Decker et al. (2012) stated that the proper functioning of the business operations depended on the identification of the capabilities of the businesses while operating in diverse markets. The management of the organization believed that they would be able to attract the attention of the customers more viably through proposition of customized burgers as per the preferences of the customers. The head of the fast food chains in the US division introduced the “Made for You.” in order to comply with the preferences of the customers (CANEDY 1998). However, the innovative approach required the organization to undertake expensive equipment upgrades that maximized the costs that were encountered by the organization. On the other hand, the customers had to wait for long hours during the preparation process, which affected the customer reviews for the organization. The costly ingredients that were utilized by the organization have resulted to the maximization of the costs that were incurred by the business (Le Mens, Hannan and Pólos 2014).
The maximization of the costs and the increased needs of supplies of the organization with new ingredients have affected the smooth functioning chain that was followed by the business stakeholders. The investors had to invest mode capital; for the investments that were made by the organization. The major stakeholders of the organization were the employees, the management body, suppliers, customers and the investors. The failure of the organization to adhere to the rising costs during the innovation process has affected the investors, suppliers and the employees largely. On the other hand, it affected the management body drastically while operating on the innovative perceptions of the business operations. The investments that were made by the stakeholders mostly the investors and the suppliers are affected through the failure of the processes. The failure of the processes affected the smooth functioning of the business due to the lack of agility in the functions and the failure to plan the processes as per the capabilities of the business. The failure affected the organizational operations while operating in diverse economies. Antonacopoulou and Sheaffer (2014) stated that the innovative processes of the business was required to be backed by the analysis of the capabilities of the organization relating to financial and man power abilities. Lack of suitable analysis of the capabilities has affected the organizational operations while implementing the change in the processes.
Organizational behavior that contributed to the failure
The innovative culture that was induced by the organization in order to maintain the sustainability of the same has helped in the development of the business through a competitive edge over the other fast food manufacturing organizations. The organization aimed at maintaining their propositions as per the needs of the customers. It has helped the business in maintaining the efficacy of the same while operating in diverse economies. Grady and Grady III (2013) stated that the key changes in the organizational operations are backed through the understanding of the capabilities of the same to undertake the change in the processes. McKinley, Latham and Braun (2014) stated that the identification of the capabilities and competencies of organizations helps the same in allocating the required resources as pr the needs of the business undertakings. In this case, McDonald’s failed to understand the costs that might be incurred by the same while customizing the recipes as per the needs of the customers due to the utilization of expensive ingredients. On the other hand, the organization could not raise the price of the customized propositions, as it would be affecting the customer buying behavior in a market where the competitors offer food at a lower price. It affected the revenues of the organization drastically which resulted to the failure of the attempt that was planned by the business to offer customized burgers as per the preferences of the customers (Rerup and Levinthal 2014).
The innovative culture of the organization has helped the same in growing in the competitive market structures. However, lack of proper analysis of the capabilities and competencies affected the innovation process relating to the “Made for You.” campaign. The customization of the food recipes required the organization to make huge financial investments for the costly ingredients. It affected the change process of the business, which resulted to its drastic failure. On the other hand, the key changes in the organizational operations are based on the resource planning and allocation activities of the management. Howlett (2012) stated that maximization of costs affects the quality of the propositions that are provided by the business. In this case, the maximization of the costs has affected the quality of the recipes that were proposed by McDonald’s as per the needs of the customers. The innovative nature of the organization is affected through the lack of collaborative approach among the line of stakeholders of the business. Lack of knowledge affected the capabilities of the stakeholders to analyze the pros and cons of the investment decision that was undertaken by the business. The authoritative nature of management affected the proper functioning and integration of the employees in order to achieve the common goal of the business. The induction of safety in the workplace has helped the business in enhancing the operations of the workforce. However, the rigid communication policies of the organization affected the collaborative performance of the same while operating in diverse economies. Besson and Rowe (2012) stated that the communication with the employees helps organizations in enhancing the operations of the workforce through collaboration and integration. It also helps in enhancing the group functioning of the same while operating on a particular objective of organizational sustainability.
Organizational culture and processes
The organization holds an independent management board, which takes decisions in an independent basis, which is without the consultation with the stakeholders of the business. The management structure followed by McDonald’s is a Flexible Leadership Model, which has helped the organization in facilitating different changes as per the analysis of the situations that are faced by the organization while operating in diverse international markets (Corporate.mcdonalds.com 2018). The organizational management undertook different steps in order to enhance the operations as per the identification of the needs of the customers by customizing their offerings. However, lack of proper understanding of the capabilities and competencies that might be faced by the organization while implementing the change affected the change process. The management model that is followed by the business has restricted the involvement of the stakeholders in the process while undertaking different decision. The lack of suitable involvement and consultation of the stakeholders with the management’s decisions have affected the capabilities of the same in understanding different risks that might be associated with the implementation of change in the processes. Carmeli, Tishler and Edmondson (2012) stated that the independent nature of the management board helps the business in avoiding situations of interventions from different stakeholders, which might hinder the change initiatives.
However, Oertel, Thommes and Walgenbach (2016) argued that the organizational policies of an independent management might affect the active participation of the stakeholders in the processes of the business. Therefore, lack of stakeholder engagement in the business processes due to the enhancement in the costs affected the organizational operations was noticed for the case of McDonald’s. The key changes that were undertaken by the organization affected the involvement of the stakeholders like the investors and the suppliers in the processes. Lack of trust among the stakeholders on the processes and the profitability of the same through the implementation of the process resulted to the process failure of the organization. Beheshtifar and Zare (2013) stated that the active involvement of the stake4holders in the innovation processes that are planned by the business helps in enhancing the operations of the same while operating on diverse objectives.
Lack of consultation with the stakeholders also affected the proper functioning of the business operations, as it affected the planning phase. The organizational management board is restricted to consult with the stakeholders through the independent nature of the same. On the other hand, restricted “important information” to the responsible persons making an investment decision for the organization has affected the consultation phase with the stakeholders. The organizational policy relating to restriction in the information provided has affected the knowledge of the stakeholders. The lack of proper knowledge of the organizational decisions of making investments on different changes has affected the innovation that was planned by the same.
The organization brought about changes in the offerings of the business through segregating and classifying the recipes as per the identification of the preferences of customers in clusters. McDonald’s classified the different recipes as per the preferences of the customers and thereby finalizing their propositions through descending the option of customization of the burgers. Milojevi?, Mihajlovi? and Cvijanovi? (2012) stated that the uniformity that is maintained by the organization in the offerings has helped the same in overcoming the failure that was encountered by the same through availing the customization option. The change that was implemented by the organization has helped the same in enhancing the operations of the same while attracting the attention of the customers towards the innovative offerings. The key area of change that was undertaken by the organization was based on the segregation of the recipes in different combos that helps in ensuring the preferences of the customers. The combos consisted of a mixture of recipes to suit the taste buds of the customers. It also helped the organization in maximizing the sales in order to boost their depreciating revenues. The organization will be benefitted through the changes in the proposition as the modifications are less costly over the previous propositions. On the other hand, segregation of the recipes as per the needs of the customers has helped the organization in attracting the attention of the customers at ease. It has helped in developing a positive brand image of the business with stability in the processes. Stability in the business processes helped the stakeholders of the business in undertaking decisions of making investments on the organizational operations with the hope of achieving fair returns.
The organization could have induced modifications in the management board and policies relating to their independent nature. The management must take steps to consult with the relevant stakeholders, which would help the business in strengthening the decision making functions. On the other hand, the organizational management should have established a smooth functioning R&D department in order to understand the market prospects that are faced by the same while building on the change that is planned by the same.
Conclusion
Therefore, it can be concluded from the report that identification of the capabilities and competencies that are faced by companies helps in backing the innovative mindset developed by the same. As per the case of McDonald’s, lack of understanding of the different outcomes that might be faced by the organization while implementing the innovation affected the functioning of the same. On the other hand, the lack of suitable consultation with the stakeholders has affected the capability of the organization to adhere to the innovation process.
References
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Beheshtifar, M. and Zare, E., 2013. Interpersonal conflict: A substantial factor to organizational failure. International Journal of Academic Research in Business and Social Sciences, 3(5), p.400.
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CANEDY, D., 1998. McDonald’s Burger War Salvo; Is ‘Made for You’ the Way Folks Want to Have It?. [online] www.nytimes.com. Available at: https://www.nytimes.com/1998/06/20/business/mcdonald-s-burger-war-salvo-is-made-for-you-the-way-folks-want-to-have-it.html [Accessed 1 Nov. 2018].
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Rerup, C. and Levinthal, D.A., 2014. Situating the concept of organizational mindfulness: the multiple dimensions of organizational learning. In Mindful change in times of permanent reorganization (pp. 33-48). Springer, Berlin, Heidelberg.
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