Management Accounting-Performance Evaluation: "McDonaldisation" Is the Term Used to Describe How Other Sectors Are Adopting Ingredients of the Fast-Food Firm's Business Model. Are They Doing the Right Thing?

Article excerpt

In 1939 the brothers Maurice and Richard McDonald, who'd suffered a string of failed retail ventures up to that point, noticed that the only businesses that were consistently profitable during the US depression were hot dog stands. In the light of this discovery, they set up a roadside store selling fast food. It made a profit of $40,000 in its first year of operation.

The brothers conducted a detailed study of the enterprise to determine it was doing so well and what could be done to reinforce that success. They decided to reorganise their store along the following lines:

* Waiter service was ended and diners had to come to the counter to order food ("putting the customer to work").

* The menu was cut down from 25 items to nine.

* Plates were replaced with cardboard containers, removing the need for a dish washer and aiding takeaway sales.

One of the brothers' suppliers was so impressed by the store that he offered to take over the franchise of its operation (see Jobs & careers, page 57). This individual, one Ray Kroc, defined the business model and went on to drive its expansion from seven outlets in 1955 to more than 30,000 in 119 countries today.

The main thrust behind the McDonald's business model is the delivery of homogeneous products to market in large volumes. This has a number of dimensions, which may be grouped under the following headings:

* Efficiency. Such products are usually cheap to produce, quick to deliver and efficient in their consumption of resources.

* Calculability. The operation places a lot of emphasis on quantitative considerations such as weight, size, waiting time and price. These are easy to manage and franchise.

* Predictability. Buyers can confidently purchase a product anywhere without having to give too much thought to the matter. You can buy a Big Mac in Manchester or Beijing without any fear of disappointment, since you know exactly what you'll be getting.

* Control. The delivery of such products involves the use of a known set of materials and a simple, predetermined sequence of tasks. It is therefore easy and meaningful to evaluate performance through the comparison of actual inputs with standard inputs.

Of course, what this represents is traditional scientific management of the kind developed by Frederick Taylor and Henry Ford. McDonaldisation represents the continuation of old ideas that have become outdated in some sectors.

Much of the discussion about management accounting today revolves around the way in which shorter product life cycles, increased product customisation and a bigger service element marginalise the whole concept of the standard cost. Furthermore, it has been claimed that the traditional "static optimisation" approach to performance evaluation through the comparison of actual and standard costs tends to avoid the whole thrust of modern thinking in areas such as total quality management, value engineering and continuous improvement. The McDonald's business model flies in the face of this theory.

In 1993 a US sociologist, George Ritzer, published a seminal book called The McDonaldization of Society. This introduced McDonaldisation as a disparaging term, identifying the following negative aspects:

* The fast food promised by McDonald's is rarely fast. Customers often have to stand in long queues to obtain their meal and then have to find somewhere where they can sit and eat it. Quantity and quality may be predictable, but the latter is never more than moderate. The use of disposable packaging externalises costs by requiring the community to pay for the collection and disposal of dumped packaging. …