Ray Kroc's business strategy and transformation of McDonald's

¶ … 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. This is something that goes both ways because of the fact that it is the joint effort of all the employees as well as the patronization that the company received from customers that made McDonald's successful. (Mascola, 1989, p 10)

In all these efforts, it must be said that more than himself, Kroc had faith in other individual because of the fact that it was upon them that he depended to be successful. F one looks at the way that Kroc achieved success it can be seen that he used the people to provide them with services, and profited from it. However, it could be said that such a strategy was a risk, but it was a risk that Kroc was willing to take in order to gain control. Perhaps he estimated that he would at least be able to pay back the loans he had taken through the same restaurant he purchased in case he was not able to expand the business successfully. However, things worked out in his favor and he expanded across the country. (Mascola, 1989, p 15)

Later, in 1977 when according to data the organization was not doing as well as it used to Kroc's aspirations took him further. This may be said because of the fact that this was the time when Kroc decided to employ a newer strategy that would overshadow the previous one in which he decided to supply quality fast-food across the country with the same standard. Kroc decided to re-launch McDonald's on an international scale. (Ciulla, 1995, p 6) Though at first the process was slow, with the occurrence of globalization in years to come McDonald's outlets were seen across the globe. By mimicking his previous strategy of nationwide advertising programs Kroc also used a similar strategy which had international appeal. Again here, it can be seen that Kroc was determined to get the organization off the floor, and did so using the very people whom he wished to serve. By putting his customers first, he managed to gain immense support for the business. The advertisement for McDonald's was almost synonymous to American food, and people who were deprived of American culture in their regions were given the opportunity to experience it. This was a thundering success as several franchises opened. The reason for this immediate success was because of the fact that Kroc had already laid the foundations for an international success. All that was really needed was an introduction to the organization overseas. (Mascola, 1989, p 15)

Business leadership in the light of globalization today is a field that requires the best of skill in managing business practices. Indeed, leading a business is a responsible job, and in this highly competitive and globalized world quality leadership in an organization is of great importance. (Barnes, 1996, p 430)

Managing businesses today is a sensitive process that defines whether or not a business will be successful. Business Leadership today is a science that requires the best of skills that one should be equipped with to survive in places like the international market or as top producers in a single country. Competition is tough nowadays since there are many who are aware of all the tricks in managing business. With certain businesses emerging as the leaders in the market they also have to prove themselves and remain there. Becoming number one is easier than remaining number one. This is because of the fact that there will be other businesses that will mimic similar strategies in order to reach where any other has. (Avolio & Bass, 1999, p 450)

Observing the manner in which Kroc gained success so quickly overseas, it must be realized that this affect was a result of the manner in which he established and maintained the fast-food chain that he worked hard for. This again brings to mind the manner in which he treated some of his employees. But it must be realized that this was perhaps one of the side effects of sticking strictly to standards. In this argument it could be stated that by firing an employee fear is created and other employees automatically take care of what standards they have to stick to. By committing such cruelty it must be realized that an owner or a chairman puts his or her business first. Nothing comes in the way of a businessman and success. In particular, nothing came between Kroc and his work, as he said that when he was at work McDonald's came before God (Kroc & Anderson, 1990).

How important was change to this person's career, and how did he/she deal with it? Was ability to foresee and cope with change critical to success?

Since the beginning of McDonald's, Kroc appeared to be an individual ready to conform to change. In fact it could also be said that he thrived on change and was instrumental in bringing about change. This is something that is witnessed from the time that an idea clicked in Kroc's mind when he stared at a hamburger while he worked for McDonald brothers.

As exemplified in the account about the change that Kroc thought of when he working for the company, his career began with change and this was a major move. By buying the organization off the McDonald brothers, it can be seen Kroc was ever willing to confront change in his career. His approach to his career was one that was gutsy because of the fact that there is a large amount of risk that he accepted along with the possibility of momentous success.

Coping with change appears to be a strong point in Kroc, as he was responsible for the change that he induced to begin his career. Perhaps because of the fact that he was able to foresee situations that he induced change in his career. Clearly, this is what was seen when Kroc created the chain in America with standards being maintained equally across the country. His foresight was proved accurate as he achieved what he set out to do. Also, he managed to have these standards maintained for years to come, signifying the success he had in this part of his career.

Later, when sales went down in the late to mid 1970s, Kroc was faced with new challenges. At this point in his career he had to face changes and cope with them to continue the success of his business. In an attempt to ameliorate the condition of the business, as it had depreciated, Kroc designed another strategy. This strategy was one that overshadowed what he designed and implemented in the past. It was one that would gain him worldwide recognition in addition to covering the losses that McDonald's had faced in recent years. This wider approach that targeted the international market exemplifies Kroc's thinking. Such a strategy was a total knockout in response to the losses he faced within the U.S. (Mascola, 1989, p 15)

It must be said here that facing change in business and coping with it effectively certainly does determine the extent of success in business, as demonstrated by Kroc. This ability to face change effectively is a result of possessing particular traits that are necessary for survival in the market. Foresight is the trait that Kroc has demonstrated most effectively in the light of change, and had used it effectively to rejuvenate the organization.

How did he/she maintain the aura and impression of a strong, effective leader? (How a prince should organize his militia)

There were several elements that contributed to defining the image that Kroc had carved for himself though his work. Little about his personal life needs to be included in this description as it is concerned with an image of his professionalism. Kroc, a man of strong will and desire to conquer proved himself as a businessman through the ideas that he developed over a period.

As pioneer of the chain of fast-food outlets in the U.S. he maintained control by placing himself in a vital position that determined the success of the organization. This is because of the fact that he endured many long and hard days to make sure that standards were being maintained throughout the chain. Franchises also had to come up to par and prove that they could serve customers the way that Kroc expected them to.

Kroc always put the customers first and expected all staff members at all outlets to conform to certain standards and not to compromise on them. Indeed, in his own words, Kroc says, "If you work just for money, you'll never make it, but if you love what you're doing and you always put the customer first, success will be yours" (McDonald's Corporation, 1996).

As a leader, Kroc organized himself extremely well by placing himself in a position among others to keep a bird's eye view on the business. He was not an individual who ruled through slyness. In fact his strategy was one that was very open because all employees knew that he would check them on the spot if he saw something amiss.

Was he/she loved or feared, or both?

Ray Kroc had a reputation that was controversial, as there were certain points of his work pattern that people did not understand. These were ones that included his authoritarian manner of dealing with his employees. Like all conventional businessman, Kroc was one who put his customers first. In contrast to this, he would not tolerate any short coming of any of his employees. He was of course pretty much alright with those that served the business well, but was easily disgruntled with employees whom did not aid the organization in meeting its standards. This is something that is naturally expected of individuals who put their businesses before God. When they are at work business becomes the most important thing to them in the world. This is because of the fact that it becomes an obsession and they believe that they must succeed at any cost. This is precisely the attitude that leads an individual to be successful in the field of business. There are no exceptions to individuals such as these, and they often appear to be very hard-hearted as it has been exemplified earlier. Errors on the part of employees are often not tolerated, and this is the reason why people generally do not approve of the way that business leaders retort to slackness.

Individual employees who were appreciated for their hard work and didn't have the misfortune of being caught at a bad time on the job felt fine with him. Others who came under the axe from Kroc would not have felt comfortable having him around them while they were at work, as they would naturally feel subconscious. Indeed, there might have been several individuals who felt this way, as Kroc was an individual who wanted standards maintained at all costs, and there could not possibly be any exceptions.

It must also be realized that this is a strategy that leaders employ in business so that no one takes it easy on the job, as relaxing at work is not ideal in the eyes of many business leaders. They believe that by adding pressure to a good staff the best can be achieved from them. This is because of the fact that their cautiousness is increased through fear. As a result of this, there are some individuals who cannot take the pressure and automatically drop out of the competitive organizations. Others who wish to stay on have to cope with the environment. Some individuals appreciate their employers for this attitude as they believe that it exposes the best qualities in them, while others might not share the same feeling for their employer because it disturbs their confidence. (Mascola, 1989, p 12)

Leaders are in charge of ensuring the smooth running of an organization, and so, for this they have to do their utmost to ensure it. Though most people might have the impression that being in the position of a manager might mean that it is a kind of position that demands dictatorship. This is because this position demands a person to be in charge of situation, but professionally speaking there is a way of obtaining maximum output avoiding a dictatorial atmosphere.

People also sometimes feel that managers are the people who should be feared in an organization. But this is not true because it comes nowhere near the borderline of sensibly running an organization. However, the most prevalent though minor problem in managers or management is their dictatorial attitude towards subordinates.

While satisfying customers, as the organization has succeeded in doing over the years, there is clear indication that leadership of an organization has done its best to compete with the most competitive organizations around. And this indicates that the employees have been treated well.

If management is successful in creating an environment that is suitable to its employees and has managed to improve productivity, then it may be said that it has worked itself into a position where it can compete at a high level as McDonald's has done. Since it is an international organization, then it may be said that such an establishment has a firm foundation to achieve more success in the future. This is because of the fact that it has to focus mainly on the external environment more than anything else. An example of this is the setting up of outlets in different regions, which requires a thorough understanding of influencing factors like culture, market situation, etc. In particular regions. These are also situations that encompass the strength of leadership in an organization, and will affect all individuals. (Mascola, 1989, p 13)

Was this person a fox or a lion? Did he/she change positions when necessary regardless of his/her word given previously?

Quite obviously, Kroc was an individual who stuck to his guns, and was rigid in his thinking and planning. He however also possessed the ability to improvise according to situations he was confronted with, but his basic plans remained the same. This is exemplified in the manner in which he kept the business moving even when he experienced financial difficulty. He was level-headed and new exactly where his priorities were along with calculating the risks he was willing to take. These were cunning features that he displayed, and it also must be asserted that these are the features that made McDonald's what it is today. In addition to this fox-like attitude that Kroc adopted he also was like lion in a manner of speaking. This is because of the fact that Kroc was open in his plans and had clear-cut routes to what he wanted to choose. This is exemplified in the way that he went about brazenly establishing outlets while suffering financially at the same time. However, he was also brave enough like a lion to borrow cash that would ameliorate the situation of his organization. He was not afraid to take risks, and had great confidence that the organization in the long run would gain and cover all debt incurred.

Did he/she avoid contempt by not being considered changeable, light, timid, and irresolute?

Kroc was not timid or light, but was a businessman who as changeable if situations demanded it. But these changes were not really changes, as he only improvised and did not change is plans at all. This improvisation was an integral component of Kroc's strategy, as it was through this kind of strategy that the plan was fulfilled. In following this strategy, Kroc was not at all intimidated by any one. He knew where his priorities lay, and followed what he knew was best for his organization. It appears that Kroc cut out his strategy that had improvisation as an important element in times of unexpected changes.

Kroc did not need to prove anything to anyone, and so relied on his own armory and ventured forth taking calculated risks. His ability to foresight things was an advantage to his business as this is what helped Kroc throughout his career. Right from the beginning of his career, he envisioned expansion of the fast-food business, which he achieved after purchasing the business from the McDonald brothers.

Kroc can in no way be termed irresolute or timid as his actions throughout his career have demonstrated his courage in being willing enough to take risks, and these risks were ones that were taken after visualizing the success that he would attain.

Conclusion:

Ray Kroc, the founder of McDonald's Corporation was undoubtedly a business leader with exceptional qualities that were demonstrated in the way that he succeeded in achieving what he set out to do. Through his ability to foresee what he was capable of with an organization, Kroc managed to expand an ordinary fast-food restaurant into a fast-food chain across the country.

In addition to achieving what he did, Kroc managed to set standards against which other upcoming fast-food producers were measured. He also reinforced the importance of maintaining standards, as he wanted to create uniformity in the products his organizations supplied throughout the country.

The same uniformity that Ray Kroc managed to achieve in all the McDonald's outlets throughout U.S. was also seen in the outlets that were set up worldwide after he decided to market his fast-food product on an international scale. This was a result of the drop in profits that Kroc experienced in the late 1970s. It was on account of this that he managed to formulate an even better strategy than before and launched his products in the international market. As a result of this, the drop in sales that wee being experienced in the U.S. were overshadowed by the effect tat McDonald's had on the international market.

As far as treating his employees was concerned, there are mixed feelings, and this is because of the fact that there have been cases in which Kroc had taken stiff action. He did this in order to ensure standards would be maintained. While some say he was harsh, from a business perspective a business leader is at times compelled to take actions that don't seem right but yet are necessary to ensure employee compliance.

Throughout his career, Kroc was an individual who strove for excellence, and this was demonstrated in the way that he worked hard, and even went as far as expressing what his business meant to him by comparing God with it.

With his foresight and strategy of managing McDonald's, Ray Kroc succeeded in making this fat-food chain a roaring success in the U.S. And then eventually in the international market, setting standards that were used as a measure for other growing fast-food organizations.