Strategy of Ray Kroc Mcdonald's Term Paper

  • Length: 20 pages
  • Subject: Business
  • Type: Term Paper
  • Paper: #71794164

Excerpt from Term Paper :

Ray Kroc paying particular attention to leadership qualities. It has 6 sources.

Business strategy implemented in a particular market determines the success that an organization would have. In a highly competitive world, business strategy is vital to success and as demonstrated by some individuals an ordinary business can be converted into a massive chain of outlets on an international scale. An example of this kind of success is Ray Kroc's McDonald's, which developed from a relatively small fast-food company into a fast-food chain with outlets in nearly every corner of the world.

Ray Kroc's strategy is the key that changed the manner in which things were being conducted at the McDonald brothers' fast-food. At first he gained franchising rights from the owners, and then founded McDonald's Corporation in 1955. Six years later, Kroc bought the McDonald brothers for a sum of $2.7 million. From then on, Kroc implemented strategies of his own that changed the future of McDonald's.

If acquisitions added to existing kingdom: Similar or differing cultures or customs?

A a) Extinguished blood of old rulers?

A b) Planted colonies?

A c) Allowed to govern selves and pay tribute?

Once secure in acquisition:

Establish self as head and defender of the less powerful, weaken potential competitors?

Foresight-anticipate and deal with problems before they grow to crisis proportions?

Effectively limit power of those who assisted in rise to power?

The name that McDonald bears today is the same as it did before its owners were replaced. Ray Kroc at first worked for the McDonald brothers and it was from this business itself that he got an idea of what this business could become. Kroc had the ability not to just imagine but visualize and make that visualization a reality.

Though the McDonald brothers were one of the first to introduce and regularly sell hamburgers and French fries, it was Kroc who visualized something more that what they did. He maintained the idea of selling fast-food that was cheap and convenient for customers, but he also believed that he could create a lasting impression through innovation.

Kroc aimed at applying industry strategy to what the McDonald brothers were currently doing. This small business being conducted with few employees preparing hamburgers and French Fries, and a few operating the milkshake machines, could be converted into an industry. Kroc visualized utilizing the McDonald concept of the kitchen in a factory-like operation. Put in better words, Kroc wanted to apply industry techniques to the use of a fast-food kitchen. By this, he meant that he wished to use factory-like applications to producing food at McDonald's.

An example of applying factory strategy to a kitchen is exemplified in the manner in which Kroc boosted the output of shakes by installing 8 or 9 of them instead of having the usual number that other fast-food outlets had, which was usually around 3 or 4. Kroc's aspirations did not end here, as he envisioned installing the same number of shake machines at all outlets once the organization expanded. In addition to this, he also endeavored maintaining the same standards of services with time, and also considered maintaining standards throughout a network of fast-food outlets in the country. Right on to the mid 1970s, this is what Kroc achieved, and McDonald's came to be recognized as America's fast-food, leaving others trailing behind. (Mascola, 1989, p 10)

It must be asserted here at this point that Ray Kroc in no way extinguished what the original owners had established for the company. Kroc built on what foundation they had provided for him to build an enterprise. This is something that can be likened to the Coca Cola Company. This is because of the fact that the original idea was someone else's, and the owner of this establishment sold the idea to another individual who had the ability to envision Coca Cola as the soft-drink company that it is today.

Ray Kroc, through his endeavors managed to plant colonies of the organization he owned. This is exemplified in the manner in which opened many more outlets through the United States. However, most of these outlets are franchises that have been given the rights to sell the product that McDonald's had innovated. It must be realized that in order to this successfully the franchises had to attain standards that were original. (Mascola, 1989, p 10)

Kroc was particular about this, and this is the reason why, as chairman of McDonald's, he was so concerned about performance of the outlets. However, they were also allowed to govern themselves as long as they kept up to the standards that were expected of them. This is because of the fact that it would directly affect the business of the organization as a whole.

By establishing himself as Chairman in McDonalds's, Kroc put himself in a position where he was able to supervise the manner in which things were done at outlets. However, this also meant that he could so easily look after the interests of the organization. Along with him there were obviously other members of the company who aided him in his decisions.

Though, franchises were established and supposed to be relatively autonomous as compared to the outlets under Kroc's direct supervision, they were still under his protection. This is because of the fact that Kroc took a proactive role in making sure that things were up to the mark. In doing so, Kroc also managed to maintain steady control over the progress that McDonald's over the years. (Mascola, 1989, p 10)

With the manner in which Kroc asserted his authority on outlets under him, he was also criticized for the manner in which he dealt with some of his employees. Two particular accounts that have been remembered about his authoritative attitude include the time that he fired an employee for not wearing properly polished shoes. The second account that is remembered is the time that he nearly fired a manager for not having enough of what he called 'potential' (Kroc & Anderson, 1990). This authoritative attitude is one that can so easily be associated with cruelty and lack of consideration for employees. However, this action demonstrates the standards that Kroc expected to maintain without any exceptions being made.

Rose to power on the basis of own outstanding abilities: founded own organization, executive of major corporation.

A a) Own capabilities b) Fortune

1) Laid foundations and succeeded

2) Failed in difficult times owing to lack of foundations.

A c) Elevated by power of others -- succeeded or failed on basis of ability to lay foundations after rise to power.

A d) Cruelties well committed

Undoubtedly, a self-made successful man Kroc knows what he had been through to get where he reached in the world. In order to achieve recognition within the United States Kroc worked very hard, and suffered many hurdles in spite of gaining profits. This is was largely due to the fact that Kroc's right hand man, Harry Sonneborn, did not monitor a property developer who was assigned the job of locating sites and building stores. As a result of the mix up they were compelled to borrow $400,000 to bail themselves out (Kroc & Anderson, 1990). However, they roughed it through those hard days and managed to still keep themselves afloat.

In spite of the loss that Kroc suffered he persisted with what he had in mind, and with the passage of time this paid off. This determination was decidedly one of his keys to success in the business, leaving behind others who would have so easily given up. Perhaps it is true when people generally say that fortune favor those who are brave or those who venture will prosper. However, Kroc in his own words asserts, "Achievement must be made against the possibility of failure, against the risk of defeat. It is no achievement to walk a tightrope laid flat on the floor" (Kroc & Anderson, 1990). This is precisely what Kroc did when he decided to buy the fast-food restaurant from the McDonald brothers.

There was clearly an element of risk, as he had taken a loan on high interest rates to pay for the business he desired. It is apparent that Kroc really believed in his vision of a fast-food chain for him to have gone as far as purchasing a business that was actually worth $2.7 million originally, and then with all the interest rates added to the loans used to pay for it, was worth $14 million. This large loan reflects Kroc's belief in a joint effort, whether it is voluntary or involuntary. He said, "None of Us is as Good as All of Us," and this is reflected in other aspects of his business strategy as well (Kroc & Anderson, 1990). Here, it refers to the many sources that he used to put together such a large sum of money to buy the business form the McDonald brothers in the first place. Later, he emphasized on the importance of serving the customers well.…

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