McDonald’s organizational structure (company structure) is designed for effective management and efficient handling of the company’s global operations. The fast-food firm’s organizational or business structure defines the organizational design and system through which organizational components coordinate to achieve business objectives. McDonald’s corporate structure facilitates operations management in food and beverage markets. As the largest fast-food restaurant chain in the world, the company has a structural design that evolves to address current and emerging market issues. The organizational structure supports new product rollouts that satisfy and attract customers despite competition with other fast-food businesses, such as Burger King, Wendy’s, and Subway, as well as McCafé competitors, like Starbucks and Dunkin’. Strategies are implemented through McDonald’s business structure, which can adapt to a changing business environment. The company adjusts its structural components in response to market dynamics and external forces, such as the opportunities and threats explained in the SWOT analysis of McDonald’s Corporation. In this regard, the fast-food company’s organizational structure and its features enable operational effectiveness and fiscal stability.
McDonald’s business structure establishes the arrangement or pattern of interactions among the divisions of the business. Structural characteristics affect the implementation of McDonald’s generic competitive strategy and intensive growth strategies, including strategies for developing products, like hamburger meals, fries, and drinks. Also, McDonald’s marketing mix (4Ps) reflects how the organizational structure provides support for marketing strategies and tactics. Alignment is essential among the company’s organizational structure, business needs, and strategic efforts for competitive advantages in the foodservice industry. Through its company structure, McDonald’s successfully manages efficiency and performance in the global operations of its fast-food restaurant chain.
McDonald’s Structure Type and Features
McDonald’s has a divisional organizational structure. In this company structure type, the restaurant business is divided into components that are given responsibilities based on operational requirements. Each division handles an operational area and corresponding strategic objectives linked to McDonald’s mission statement and vision statement. One of the aims of the divisional business structure is to support efficiency and growth in different foodservice markets. McDonald’s organizational structure has the following characteristics:
- Global hierarchy
- Business Units
- Function-based groups
Global Hierarchy. McDonald’s Corporation has a global hierarchy for all its operations. This feature of the organizational structure emphasizes corporate control in the context of managerial control, authority, and direction of the restaurant chain. McDonald’s CEO directs and guides the activities of all business areas through this structural characteristic. For example, through the business structure, strategic directives and guidelines for menu innovation are passed down from the office of the CEO at the headquarters to middle managers in the organization, and to the restaurant managers and personnel in company-owned, franchised, and licensed locations. In this context, the structural design facilitates top-down corporate management. McDonald’s operations management accounts for this feature of the company structure, which is typical of many multinational business organizations.
Business Units. The business units of McDonald’s company structure are divisions based on the strategic goal of accelerating business growth and development. Before its reorganization in 2015, McDonald’s organizational structure had geographic divisions (U.S.; Europe; Asia/Pacific; Middle East and Africa; Other Countries). After the reorganization, McDonald’s business structure had performance-based divisions (U.S.; International Lead Markets; High-Growth Markets; Foundational Markets and Corporate). The fast-food company also announced further reorganization in 2023. Today, McDonald’s company structure has the following business units:
- Global Business Services
- McDonald’s USA
- International Operated Markets
- International Developmental Licensed Markets
The Global Business Services (GBS) unit provides support for higher efficiency and collaboration throughout McDonald’s structure. The U.S. market generates the biggest regional sales revenues for the fast-food restaurant chain. Based on this factor, operations in the U.S. market are considered a single division in McDonald’s organizational structure, separate from the rest of the company’s market operations. The other business units are based on franchising/licensing agreements outside the U.S. The International Developmental Licensed Markets unit manages the operations of developmental licensees in opening and developing restaurant locations in local or regional markets. Other international operations are managed under the International Operated Markets unit of McDonald’s company structure. Given the external business environment and market variations involving economic opportunities and related trends enumerated in the PESTLE/PESTEL analysis of McDonald’s Corporation, this organizational structure coordinates and integrates multinational operations through the Global Business Services unit, while the other three units focus on growing the fast-food restaurant chain.
Function-Based Groups. McDonald’s company structure maintains function-based groups or departments. For example, in corporate activities, the company has a People group for human resource management, a Supply Chain group for supply chain management, and a Global Impact team for endeavors that address McDonald’s stakeholders, sustainability, and goals for ESG, corporate social responsibility (CSR), and corporate citizenship. Each function-based group in the restaurant chain’s organizational structure is under the leadership of a corporate executive or senior manager. These groups enable addressing essential business functions, such as human resource management and the reinforcement of McDonald’s organizational culture (company culture). Thus, this feature of the company structure allows the organizational design to address basic activities in the restaurant business. In addition, groups may be added or changed to respond to business growth and target market trends, as well as the competitive dynamics discussed in the Five Forces analysis of McDonald’s Corporation, which outlines the effects of external factors on the fast-food business organization.
Advantages & Disadvantages of McDonald’s Organizational Structure
An advantage of the hierarchy in McDonald’s business structure is its support for monitoring and control of global operations. The restaurant chain’s size presents managerial challenges, which are addressed through such a hierarchy. Also, the business units of the organizational structure have the advantage of enabling the fast-food company’s implementation of strategies that account for market-focused and related business growth and efficiency indicators. For example, McDonald’s applies a set of strategies for the U.S. market, and a separate set of strategies for developmental licensed markets. In this regard, the corporate structure allows the foodservice business to succeed in strategic implementations despite issues linked to market diversity and organizational size.
A disadvantage of McDonald’s organizational structure is that it tends to generalize strategies for all markets and locations that belong to the same business unit or division. For example, in International Operated Markets, similar strategies are applied in Germany and Australia, despite the sociocultural differences influencing consumers or diners in these fast-food markets. This business structure issue may limit McDonald’s business flexibility in responding to market-specific variables. Nonetheless, the restaurant company can improve its organizational structure by adjusting how these business units or divisions are used in strategic management decision-making processes.
References
- Malenko, N. (2024). Information flows, organizational structure, and corporate governance. In Handbook of Corporate Finance (pp. 511-546). Edward Elgar Publishing.
- McDonald’s Corporation – Corporate Governance.
- McDonald’s Corporation – Form 10-K.
- McDonald’s Corporation – Where We Operate.
- The McDonald’s Leadership Team.
- Wyland, R., Hanson-Rasmussen, N., & Clark, F. (2024). The structure-culture alignment activity: Aligning organizational structure elements with diversity, equity, and inclusion cultural values. Journal of Management Education, 48(1), 141-167.
- Yang, K. (2024). Golden Arches across cultures: Understanding McDonald’s global and local consumer behavior. Advances in Economics, Management and Political Sciences, 68, 85-91.