Waseem Sayegh

Relaunching “Kellogg’s Breakfast Mates” was the topic for our final Marketing presentation. The presentation describes how:

“Kellogg’s has an opportunity to capture and increase its breakfast market share by introducing a breakfast offering that is both healthy and convenient. This offering will target consumers that are looking to reduce the time they spend having breakfast and consumers that could not have breakfast due to time constraints. Within three years Kellogg’s will net $8 million.”

Breakfast mates is a small box of Kellogg’s cereal packaged with a container of milk and a spoon. The product was deemed a failure and was pulled off the market as it did not make a significant impact on the market. Our presentation describes how Kellogg’s can relaunch its Breakfast Mates to capture this opportunity.

Click here for the full presentation.

Click here for the full report

The sample page that was released by Google to demonstrate Knol is far too advanced for most Internet readers. Knol should not target the knowledge market niche advanced segment. Instead Knol should position itself to target the intermediate segment of the market. We would like Knol to contain articles that are as readable as Times Magazine. Furthermore, Knol should include tools to enable programmers to access Knol’s knowledge directly. These tools will not only create a buzz with bloggers and techno geeks to viral market Knol, but will also position Knol at the center of knowledge on the Internet.

By: Wasim AlSayegh, Aleksander Apostolov and Martin Lapointe

What does “love”, “smile”, “magic”, “fun” and “good times” have in common? Here is a hint: “I’m lovin’ it.” Here is another: “Do you believe in Magic?” What about: “We love to see you smile.” Still not sure? These are all words that McDonald’s typically use in its slogans. McDonald’s surely sells burgers and fries, but we believe that its biggest product is the fun experience that its customers associate with the name McDonald’s.

McDonald’s is not a mom-and-pop shop, but a huge corporation with a global footprint that spans more than 100 countries. McDonald’s corporate website boasts that it serves more than 52 million people each day. With access to this many people on a daily basis, McDonald’s is an empire whose decisions impacts not only people that it serves but also their families and loved ones. In other words, McDonald’s has the power to influence and affect societies across the world.

This paper will discuss McDonald’s power and political behavior, its social influence and communication, its professional image construction, and its ethics and decision-making. We will not stop there, as we will also provide recommendation for how we think McDonald’s should proceed to get on a better track.

How McDonald’s Portrays Itself

We did a 360 degrees study of McDonald’s culture and values. We first looked at how it communicated its ideas and strategy from the inside out to its customers, investors and employees. This was done by studying McDonald’s 2006 annual report, several news articles and a book extract. We then looked at McDonald’s from the outside in to learn about how its customers and the public viewed it.

Ray Kroc, the founder of McDonald’s once said: “We have found that we cannot trust some people who are nonconformists. We will make conformists out of them in a hurry. The organization cannot trust the individual; the individual must trust the organization (Hawken, 2002).” This quote is the cornerstone of McDonald’s culture. When a McDonald’s employee gets ready for work by putting on his uniform, he is not only changing into his work clothes, but he is also putting his individuality aside. McDonald’s formal rules and guidelines are spelled with great details in its Operation and Training manual which is referred to as the ‘Bible’ by managers. The manual covers everything from the correct placement for ketchup and mustard in the preferred five-point ‘flower’ pattern to determining the correct size of pickles to be placed on each type of hamburgers (Royle, 2001). Simply put, McDonald’s uses rules defined in its ‘Bible’ as a mean of social control.

On one hand McDonald’s communicates a tightly regulated culture to its employees. On the other hand McDonald’s communicates a theme of smiles and happiness to its investors and customers. This is nowhere more apparent than its 2006 annual report, where this artificial positively charged atmosphere is underscored on almost every page. McDonald’s does not stop there, instead it goes further. McDonald’s markets itself directly to children, and positions its brand as an important part of a healthy lifestyle. It uses creative marketing ploys to appeal to children. The so called “Happy Meals” are served to kids with a toy to entice then to come back for more. “Ja Ja Mundo” which translates to “Haha World” in English is an example of a McDonald’s program that brings Ronald McDonald’s appearances to create an atmosphere that attracts kids. Furthermore, McDonald’s associates its name with healthy eating. McDonald’s does so by sponsoring sporting events such as the Olympic Games and the FIFA World Cup. During these events viewers are bombarded with images of McDonald’s unhealthy food alongside active and healthy athletes.

The Power and Ethics of McDonald’s

In December 2007, McDonald’s was approached by the Seminole County School Board to help ‘‘reward students for good grades and attendance during the 2007-8 school year with Happy Meals. The ‘report card incentive’ is published on the jackets in which the children receive their report card (Elliott, 2007).’’ Is the decision of McDonald’s to go with this program ethical or not, especially since childhood obesity is a growing concern in the United States (Barnes, 2007)?

We learned that ‘‘power is the ability to influence someone else. Influence is the process of affecting the thoughts, behavior and feelings of another person (Nelson & Quick, 2006).’’ We will see how McDonald’s uses its power to influence children in the ‘report card incentive’ program.

The Program’s Forms of Power

There are several players in this program: McDonald’s, the school board, students and parents. At first glance we notice that the school board, the agent in this part of the relationship, uses “reward power” to influence the children to do better in school. The school board makes the connection clear between the behavior and the reward by printing the cartoon of Ronald McDonald’s, McDonald’s Golden Arches logo, and photographs of Happy Meal items on the sleeves of the students’ report card (Elliott, 2007). Students are reminded on regular bases that they can be rewarded with a Happy Meal if they get an A or a B, especially since they have to get their report cards signed by their parents.

In this relationship McDonald’s power is mysterious. We can argue that McDonald’s, the agent in this part of the relationship, uses a form of “referent power” to attract the children to its establishment. Nelson & Quick describe referent power as that of a charismatic individual. Even though McDonald’s is not an individual it surely has this mystique that captures and allures children. One can only back this point up by empirical evidence. A study published by CBC News showed that “any food packaged by McDonald’s tastes better to most preschoolers (CBC News, 2007).” This study demonstrates the mysterious referent power McDonald’s has over children.

Though, behind this program is yet another subtle form of power. “Coercive power” is used by the children, the agents in this part of the relationship, to force their parents to take them to McDonald’s to redeem their reward. After all, parents are guaranteed an unpleasant experience filled with nagging if they do not cooperate with their children. This “coercive power” is known in the advertising industry as “pester power.” Barbara A. Martino, a vice-president in Grey Advertising Inc.’s 18 & Under division, described this power when she said: “we’re relying on the kid to pester the mom to buy the product, rather than going straight to the mom (Wechsler, 1997).”

Is this Power Relationship Ethical?

We put this complex multifaceted power relationship to the test developed by Nelson & Quick to see if it is ethical. One question out of three raised a red flag. Does the Behavior Respect the Rights of All Parties? No! “Parents” were the only party to this relationship that was never identified as an agent. Tables have turned, instead of parents being agents that decide what their kids owe to eat, McDonald’s and the school board intervened and striped them from this right. Susan Linn, director of Campaign for a Commercial-Free Childhood, put it best when she said: “Turning report cards into ads for McDonald’s undermines parents’ efforts to encourage healthy eating (Elliot, 2007).” Since this power-related behavior did not pass all three questions, we can confidently conclude that this program is not ethical.

McDonald’s Another Smile Factory

There are a lot of similarities between Disneyland and McDonald’s. From having 500 pound manuals that spell everything out for its workers to having their employees greet their customers with a smile. Such corporations are looked at in a different light. These corporations on one had use rules and restrictions to influence its employees while using referent power to attract its customers (typically a young audience that does not know about what goes on behind the scenes). These are the corporations whose extrinsic values do not agree with their intrinsic management systems.

McDonald’s the King has No Clothes

From the New York Times article we learn that the program was previously run by a Pizza Hut for 10 years. Furthermore, no complaints were received during that period. Complaints started rolling in after McDonald’s took over the program from the Pizza Hut. This begs the question: Why did complaints start rolling in after McDonald’s took over the program?

We learned from our “When Company Values Backfire” reading that “When employees sense that a leader’s decision are at odds with company values – even when they’re not – they are quick to conclude that the leader lacks personal commitment to the values. He’s seen as a hypocrite (Edmondson, 2002).” We believe that this logic is not limited to company leaders. Instead it extends to any agent that attempts to use referent power. To rephrase: when targets sense that an agent’s decision are at odds with the values portrayed through his referent power, they are quick to conclude that the agent lacks personal commitment to the values. He’s seen as a hypocrite.

Allow us to explain. We previously argued that McDonald’s uses referent power to lure children to its restaurants. McDonald’s has created, similarly to Disneyland, very high expectations and values amongst its clients. Any action that goes against these high expectations and values causes consumers to yell: “foul… the king has no clothes.”

McDonald’s was one of the companies that “agreed to stop advertising to children under 12 products that do not meet certain nutritional standards (Barnes, 2007).” This ‘report card incentive’ program goes against the spirit of this agreement. Furthermore, McDonald’s culture that promotes happiness, smiles and good time with family members surely is at odds with serving unhealthy happy meals to children. McDonald’s attempts to associate itself with healthy eating, yet promotes less nutritious happy meals directly to children. These two faces of McDonald’s seem to popup everywhere and we believe that they are ingrained in its culture. Thus, McDonald’s culture played a big part of attracting complaints from customers. One can only imagine that no complains would have been filed if McDonald’s had the slogan “You know that our food is unhealthy.”

How McDonald’s Can Get its Act Together

McDonald’s needs to fix its public image. To do so it should follow what Edmondson suggests in “When Company Values Backfire.” McDonald’s should play a more proactive role in getting feedback from their customers. McDonald’s should also open the floor to genuine dialogue with its biggest critics. This should not be limited to publishing a toll free number for customers to call with complaints. Instead, McDonald’s should involve their customers and consumer protection groups in its decision making process. McDonald’s can leverage its nationwide presence to its advantage. Town hall meetings can be setup at different local McDonald’s restaurants to allow its customers to voice any concerns to high ranking officials at McDonald’s. These town hall meetings should not serve as another venue for McDonald’s to push its agenda. Instead, McDonald’s should use these town hall meetings to listen to what their customers have to say. We are confident that these meetings will bring about positive changes McDonald’s could have never dreamt up.

Chatman argues in “Using Organizational Culture as a Leadership Tool” that “formal rules, policies, and procedures will enable your organization to perform at an average level but not to reach the level of outstanding performance on your strategic objectives (Chatman, 2004).” From this quote we can deduce that McDonald’s ‘Bible’ might be more of a curse than a blessing. The ‘Bible’ that is filled with formal rules, policies, and procedures limits McDonald’s performance level to average. McDonald’s employees should have more ownership over their actions rather than feel like robots that follow McDonald’s guidelines. McDonald’s should allow more room for their workers to express their individuality and creativity. Simple things such as allowing employees to decorate their restaurants can bring about this sense of ownership.

Implementing direct feedback channels with its customers and a work environment free of rules will enhance McDonald’s public image. With these changes McDonald’s will no longer be seen as two-faced. As for the ‘report card incentive’ program, we feel that McDonald’s panicked and pulled out of the program too quickly. Had McDonald’s reached out to the parents and asked for their input McDonald’s might have been able to improve and continue with the program.

Works Cited

Hawken, P. (2002, June 2). A Ronald McDonald fantasy. San Francisco Chronicle , (pp. D-5).

Royle, T. (2001). Labour Relations in the Global Fast-Food Industry. New York: Routledge.

Elliott, S. (2007, Dec 6). Straight A’s, With a Burger as a Prize. The New York Times.

Elliott, S. (2008, Jan 18). McDonald’s Ending Promotion on Jackets of Children’s Report Cards.

Barnes, B. (2007, Jul 18). Limiting Ads of Junk Food to Children. The New York Times.

Nelson, D. L., & Quick, J. C. (2006). Power and political behavior. In Organizational behavior : Foundations, realities, and challenges (5th ed.) (pp. 355-379)

Edmondson, A. C., & Cha, S. E. (2002). When company values backfire. Harvard Business Review, 80(11), 1-3.

Wechsler, P. (1997a), “Hey, kid, buy this!”, Business Week, No.June 30, pp.62-7.

CBC News. (2007, August 7). Kids think food in McDonald’s wrapper tastes better: study. Retrieved February 2, 2008, from CBC News: http://www.cbc.ca/consumer/story/2007/08/07/mcdonalds-advertising.html

Chatman, J. A., & Cha, S. E. (2004). Using organizational culture as a leadership tool. In S. Chowdhury (Ed.), Next generation business handbook: New strategies from tomorrow’s thought leaders (pp. 22-38). Hoboken, NJ: John Wiley & Sons