Functions of Leadership Are Described

¶ … functions of leadership are described as planning, organizing, leading/directing and controlling (No author, 2012). McDonalds has been able to successfully adapt to changing business environments and to uncover new opportunities in its markets through strong leadership at the corporate level over many years. This paper will highlight some of the ways that McDonald's has utilized the different elements of leadership in order to build its track record of success.

Planning

The first function is planning. McDonald's has excellent planning systems, built to identify opportunities on the market. Arndt (2007) notes that the company had identified that it saw a downturn in sales away from the key mealtimes. The company then built its strategy around improving traffic flow and income during these hours. On another initiative, the company responded to demographic trends by adding cuisines influenced by those trends, such as a Fiesta Menu. Ultimately, these projects outperformed with the mainline audience, which was not the intended audience.

These two initiatives are the result of one of the basic components of the planning process, environmental scanning. The company took stock of its current situation, evaluated the external environment, and from this process was able to identify opportunities. Once the opportunity is identified, the plan must be put into place. With the former, the company needed to develop a few different strategies to reach the audience of people who are seeking food at off-hours. This meant that hours of restaurants needed to be extended, something that requires unit-level planning for hiring and scheduling. At the corporate level, the planning function would have included working with franchisees and designing a marketing strategy to promote the changes to the company's operations. With the latter, the company needed to develop new menu items and then promote them. The planning function was based at either the regional or national level. Having that kind of market penetration allowed for things like the Fiesta Menu to appear in predominantly white areas, where it enjoyed the unexpected success.

Organizing

The second function is organizing. McDonald's has designed its organization around geographic units, so that decisions can be made at the corporate level, the national level, the regional level and then down to the level of individual franchisors or stores. A menu change like the Fiesta Meal would likely have been a national strategy, but could be regional as well. The success of "ethnic" menu items has convinced McDonald's that there are opportunities in selling such food in areas that do not appear to have strong demographic support for those types of foods. The company begins by designing the menu at the test kitchen at corporate headquarters outside Chicago (Berman, 2010). The company then rolls out national marketing, but also must coordinate with the franchises, because they must do the ordering for the menu items and the training to ensure that their staff can cook the new items.

Leading/Directing

The third function is leading/directing. At McDonald's Europe, leadership was key to transforming the company's European operations. The leadership function is based on motivation and communication. The company had decided on using major renovations as part of its turnaround plan. The plan was communicated throughout the continent in order to bring all of the local managers on board with the strategy. There was a sense of urgency about the plans, and this allowed the President of McDonald's Europe, was able to ensure that his plans were implemented quickly, despite the upheaval that those plans caused. McDonald's has built communication and motivation into its systems. Communication is built in with a hierarchical structure that allows senior managers to easily implement their visions for the company. Motivation is built into the McDonald's culture, which has the firm constantly re-inventing itself with new slogans, restaurant upgrades, menu changes and ongoing operational improvements.

One of the key functions of directing is problem solving. McDonalds excels both at identifying problems and finding creative solutions to those problems. The company was struggling in Europe compared with the U.S. In part because the service offering was not aligned with European tastes. The company responded to this problem by identifying how better to meet the needs of the European market and adapting the restaurants to meet that market need. By doing so, the European stores not only stopped underperforming, but overtook U.S. stores in per-store sales.

Controlling

The final key function of management is control. There are two aspects to control. The first is to establish performance objectives and methods of measure performance. Each initiative that the company undertakes has objectives that, if hit, will have allowed the initiative to improve the profitability of the company. The second aspect of control is using the results of the measures to correct performance. An example of this can be found with the Fiesta Menu. This menu had moderate performance among its target market, but performed very well with the broad market. While this was unexpected for McDonald's, that the company was able to identify this quickly allowed for two responses. The first is that the company was able to keep the Fiesta Menu longer, because it knew that it was a success overall. However, the company was also able to identify that it still had not found a product that resonated as strongly with the Hispanic market. Thus, McDonald's was able to separate out the results of its new product to identify that it had a hit product, but that it did not achieve its original results. That likely led to a much different policy response, and this was made possible only because the company had very specific performance measures that were able to convey this information.