Ray gets to the drive-in finding that people walk over to the diner and get their order within seconds along with the disposable packaging. He sees how people come in and are served with high quality meals in unbelievable serving times. Amazed as he is, he decides to meet the brothers behind this amazing service. When Kroc takes them to dinner, the brothers (Richard and Maurice McDonald) tell Ray where and how the McDonalds came into existence. Ray asks them why they don’t franchise, and the brothers tell him of their failed efforts to do so, mentioning how they could not uphold the standards that were set (high quality food and fast service). As stubborn as the brothers were, Ray convinced them for him to lead the franchising of McDonalds as long as he reported any changes that he wanted to make (according to a contract).Ray then starts off with opening one up in his state, he is saddened by the fact that the investors that managed the different branches were not managing their branches according to the standards. He then looks for middle-class investors as they are more involved in the process of the fast food diner like the Bible salesman that he encountered. While he had been franchising the business, his finances were drowning and his profits weren’t sufficient, another financial consultant (Harry Sonneborn) overhead and he asks to review Roy’s books. Sonneborn finds out that the real profit is in real estate and that would give Roy more income and more leverage over the brothers. Ray begins a new company called Franchise Realty Corporation which brings in more investors. He starts providing powdered milkshakes made by Joan (the woman he was attracted to) and divorces Ethel and she gets all his assets except the shares in his business.
Kroc makes big changes by naming the business, McDonalds Corporation. He offers the brothers a blank cheque to hand over their business and the brothers agree and a sum of $2.7 million was payed but unfortunately Roy didn’t pay the annual 1% royalty but rather made a handshake deal. Roy explains to Dick how the business had value in the name McDonalds and it was purely American and for that reason he had to take the business. The movie is just basically a representation of the history of McDonalds showing how the original founders were robbed of their success.
Management competencies are basically the skills needed to become a manager in any environment relevant to the parties involved. McDonalds as a business should be aware of global changes that directly and indirectly affect their business, sometimes the information that the business receives may become a competitive advantage or a potential threat. Internally in the business, there are certain standards and controls put in place for all businesses and McDonalds have their own set which they wish to uphold for the rest of their existence. Firstly the owners need to look at the strengths that the business has, such as the brand being powerful with the large “M” sign which can be seen from far and is different from any other business. Another competitive advantage is the efficiency of their service, the fact that they produced a burger within minutes made the customers come back for more; retaining customers while getting new customers which bring in bigger sales.
Their service is the same line concept from Henry Ford and by doing this they were beating the status quo of restaurants being inefficient and slow. The fast service has made the McDonald brothers innovators as they have brought something new into the market at that time, the service did also bring an element of teamwork into the scenario because you would see all the employees working together in the kitchen. Another strength later in the movie was the franchising of the business which brought about more customers and bigger profits for the business and grew the business to heights it has never reached.
A weakness that the business had was the lack of locations and the lack of customers knowing about the actual fast food. This was the downside to this successful business which held them back financially although the two McDonalds brothers were okay with it. Another problem that was faced by Ray was the investors that were franchisees, not keeping up to the standards of McDonalds and they did not care because they were wealthy businessmen who only looked at the financial gain and not being passionate or having pride for the branch they held. Externally the business, specifically the brothers, need to look for more opportunities and should be open minded to some part of risk. Having one dependable location is undesirable because once it fails it is gonna be over. The brothers had a threat which could have been copied and made global, which I personally feel like they gave away easily considering the value of the service. Externally there weren’t too many political events that happened.
A business does analysis of events that take place or may take place, this would force a business to become proactive. Being proactive means taking necessary steps in order to prevent an unexpected event to affect the individual. McDonalds was being proactive by bringing in contracts I which they signed between Ray Krock and the brothers which binds them together stating restrictions for Ray as they did not want Krock to take over their business and this was a good move. The brothers were however not being proactive in growing the business for them to face any financial problems with no problems but unfortunately later in the movie Ray does come to bring about it a change of ownership which is what the brothers have been trying to prevent. The brothers were more of democratic leaders as they would discuss amongst themselves before making a decision, making it desirable for everyone involved in the decision making, making that a proactive move.
Leadership and Entrepreneurship
Leadership is the state or action of bringing together a team and guiding or taking them in a particular direction in order to complete a task or objective. Leadership can be seen in the movie by Ray Krock bringing in more franchisees which made him some sort of autocratic leader due to him taking decisions on his own, like the time when he decided to change the company name to the McDonalds Corporation. Another scene is when he decided to use the powdered milkshake even though the McDonald brothers had said he cannot do such a thing. The brothers show more of a democratic leadership since they are interdependent and will discuss before making a decision. The brothers were showing more of management skills once the business was up and running by maintaining systems, relying on control and focusing on structure. The two brothers generally follow the POLC system to keep their management tasks simple. An example is when they were on the call with Ray regarding a new franchisee being available and they were pressured to make a decision, they still discussed it briefly amongst themselves making them more democratic.
Entrepreneurs see an opportunity, a gap in the market and use the three factors of production in order to fill that gap in the market. Ray Krock showed more leadership qualities like focusing on people, inspiring trust between the different businessmen he worked with and challenging the status quo by being in the powdered milkshake. Ray Krock mainly identified the opportunity of franchising the business and tries to persuade the owners in order to follow this venture and take that risk (This is what an entrepreneur would do). Another scene was when he drove to the McDonalds restaurant to see why they ordered a large batch for milkshakes, when he put the phone down and decided to drive to the restaurant, that was when he saw an opportunity and took the chance even though it was a risk. He saw another opportunity when he got approached by the financial consultant and saw how he could merge into property in order to get more leverage into the decision making and eventually take over the business.
Current challenges facing McDonalds and the QSR Industry
Currently they are having problems with the health in their foods, there have been millions of complains about the party specifically and this is an example of not keeping up to standards of the McDonalds brand and would cost the company dearly. McDonalds have been blamed for making people fat and some have tried to sue the company. There have been articles made about the visual representation on adverts and the actual burger which has caused some damage to their image. There have been challenges which we see in the movie and some have brought about positive outcomes and others negative. When we see how the brothers drop on Ray, while on a call that was considered as dysfunctional conflict. Dysfunctional conflict is when a disagreement comes along but in the most negative and unhealthy way possible, functional conflict is a constructive and healthy way of going about a disagreement. In the movie there were a few situations where functional conflict had occurred. One example of functional conflict is when Ray was among his “friends” at the club and the other rich friends turned down his idea of building an empire with McDonalds.
The brand is a mark or image that a company or business is embodied with and associated with. McDonalds has its distinctive brand in which another company cannot copy. Their brand includes the values and beliefs of the business and brings about that specialty about a business. McDonalds has created a good brand with their fast service bring the main attraction to customers. Even when franchising the business, the company just became bigger and bigger. McDonald’s trademark is famous and their slogan of “I’m loving it” has been on every advert and is instilled within the minds of customers. McDonalds has built a good brand because of the innovation that they have created with their fast service, their clear identity with the yellow “M”, trust between customers by giving the high quality food and their distinct voice.
Franchising is a contract or agreement between a Franchise and a franchisee. In the founder we can see how Ray Kroc heavily franchises McDonalds although he lied about the business being his, he did bring about large numbers of people attracted to McDonalds and seeing it as the next big company. We as the audience see the franchising of McDonalds as a positive factor in terms of finance and a negative in terms of Ray having those investors which bring about problems in terms of upholding standards of the business.
These are the principles that will outline the behaviour that an individual has to follow in any activity. In the movie, the McDonalds brothers could be seen as a conflict of interest since they are brothers and might rather do things according to their benefit in some decision making processes. In the movie they seem to use the Utilitarian theory since they bring about the idea of making things better for the better of everyone involved in the business. It seems as if McDonalds did not have a written code of ethics since they see as all the individuals involved in the business would follow accordingly to what is required by the owners.
We can see how there is a huge character of entrepreneurship within Ray as he finds an opportunity and takes risks accordingly and that is exactly what an entrepreneur would do. This gives us the insight of a true story and will show the brutality of the business environment, showing how it is I never easy to get what you really want. It highlights how most entrepreneurs are thirsty to succeed in whatever venter they endure, that it brings about challenges that they will face and there is no such thing as a simple or easy business start up. This movie goes into depth of how McDonalds was formed from a small business which just started growing at the right time and the right place. This could give a learner knowledge that it is never easy to be an entrepreneur and that the modern day practices in the business world is very important to follow considering the number of laws, rules and procedures that need to be followed when building up your empire.