Academic Session 2023 First Semester

January 2023

Final Assessment

BMG319/03 Organisational Management

Instructions:

1. Final Assessment contains TWO (2) questions and you are required to answer

ALL questions.

2. Final Assessment carries 30% of your final total marks.

3. The final assessment should be typed using Arial, font size 12 and double

spaced, approximately 2000-3000 words and in essay format.

4. The deadline for the submission of Final Assessment is 2nd April 2023,

11.59pm. A softcopy should be submitted via OAS.

McDonald’s

Owning a franchise is a dream come true for many entrepreneurs. A franchise store such as McDonald's can help business owners to achieve financial independence by getting on board with an international powerhouse that can almost guarantee a certain degree of success. The McDonald's brand began in 1940 when two entrepreneurs in San Bernardino, California, open the doors of “McDonald's Bar-B- Que.” In 1948, the pair eliminated the barbeque options, slimming the menu down to focus on hamburgers, soft drinks and potato chips. Over time, McDonald's has grown to be one the world's largest corporations, with outlets in at least 119 countries.

Franchise organizations eliminate a great deal of the risk that most small business owners face, since franchises come with financing options, building and training assistance, marketing assistance and detailed methodologies that have been proven successful on the front line for years. Franchisees are required to meet stringent up- front requirements for capital contributions and management experience, improving the chances of success even further.

A wide range of business types operate under the franchising model. Fast-food franchises, in particular, may not always be the best choice for a franchise agreement. Fast-food companies such as McDonald's have been targeted in a battle against what has been termed the obesity epidemic, casting McDonald's outlets — along with their owners — in a highly negative light in the media and their communities. McDonalds and its peers respond to this negativity by attempting to add healthy options to their menu, but the stigma is likely to linger. The process of opening a McDonald's franchise can be challenging, but McDonald's will assign you a franchise representative who will walk you through the process step by step. Begin the franchising process by reviewing the information on their website under “Franchising” at AboutMcDonalds.com and setting up an appointment with a representative. The representative will walk you through the process of making sure you meet all of the requirements, selecting a site, building or purchasing a store, setting up your store and hiring your first employees, as well as helping you to obtain any necessary licenses and permits for your state and community.

A new entrepreneur often struggles with the decision between following the tried- and-true formula offered by a franchise or following her dreams and creating something unique. Beyond the realm of fantasy, initial franchise fees add a significant percentage to the already substantial costs of opening a new business. At the time of publication, McDonald's initial franchise fee amounts to $45,000. This is in addition to the start-up expenses incurred by any new business owner and does not include tangible expenses such as equipment, supplies or rent. It does, however, provide the new owner with several intangible benefits that significantly reduce the risks associated with opening a restaurant

Not only does your initial franchise fee buy you access to all of McDonald's recipes, but it gives you access to the company's successful business plan. Think of your franchise fee as insurance. Instead of worrying about how much garlic to use, you can relax knowing that your burgers will be exactly what your customers are looking for. In addition, McDonald's corporate takes the guesswork out of your location, your

decor and image and your procedures. Instead of paying a team of consultants to help you plan and design a start-up, your franchise fee pays for a package with proven results.

If you were to open a restaurant on your own, without the support of a franchise, more than half of your initial battle would be reaching customers and creating a name for yourself. Your burgers might be a thousand times better than those served by McDonald's, but if no one tastes them you cannot make a profit. Your initial franchise fee helps you circumvent that challenge by including your restaurant in a chain with the advantage of instant name recognition. It gives you a legal right to use the McDonald's logo and branding materials and the benefits of years of successful advertising that guarantees customers will recognize your business as they drive past.

A McDonald's franchise offers its owner more security than many other new business ventures because of its long-standing successful track record and the company's scrupulously strict standards. Customers know that if they drive through a McDonald's while on vacation across the country, they will receive an identical burger to the one they would have been served in their local restaurant. This kind of consistency requires substantial corporate supervision, which is paid for by your franchise fees and dues. A substantial portion the training provided to franchise owners is devoted to the recipes and standard business practices that ensure high levels of consistency across the chain. Franchise fees pay for the team of people that not only support and train new owners but also supervise their efforts.

A study reported in Small Business Trends found that a significant portion of small businesses fail because their owners lack the experience and knowledge to create something that can compete with existing businesses. McDonald's enhances the competitiveness of its franchisees by providing extensive training. Each potential franchise owner attends an intensive nine-month training program, the cost of which is partially offset by your initial franchise fee. None of your living or travel expenses come out of your fees, but some of the actual costs of training do. Your fees also pay for ongoing corporate support.

https://smallbusiness.chron.com/advantages-disadvantages-mcdonalds-franchise-

3898.html

Question 1

(a) Discuss the factors which a franchisee needs to observe.

(30 marks)

(b)Discuss the advantages and disadvantages of franchising for McDonald based on the case study

(40 marks)

Question 2

Describe the three trends that will affect Information Management Systems.

(30 marks)

CLO 2: Perform industry analysis using the necessary analytical tools CLO3: Propose ideas for new product or services and managing the creative

process in an organisational context.

End of Final Assessment Questions

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