Entrepreneurship; “The Founder” Movie Analysis – For Students

Entrepreneurship is a journey that begins with identifying an opportunity. The entrepreneur can create various forms of businesses, from a sole proprietorship, general partnership, or limited partnership, to a Limited Liability Company. Patents protects an idea from duplication or unauthorized. The creation and evolution of McDonald’s business is a perfect example of the entrepreneurship journey.

1. What type of business organization is shown in the movie? Explain your answer.

There are various forms of business depending on their ownership. Examples include sole proprietorship, general partnership, limited partnership, Limited Liability Company, and C Corporation. All these forms are different, but understanding the unique features is crucial for entrepreneurs.

The type of business in the movie falls under the partnership category. The McDonald’s brothers, Mac and Dick, were equally involved in the management, implying that this was a form of general partnership, as explained by Kane (2012). What started as a small restaurant became a big franchise with their contribution and the help of Ray Kroc later.

In partnership, two or more people share the proceeds and risks from a business equally or according to their contractual agreement. McDonald’s was a partnership between Dick and Mac, which eventually grew into a multinational company under the control of Kroc and other associates like Turner.

• Describe the organization (Section 3 of a Business Plan) Ray Kroc established.

Entrepreneurs need to have a business plan before launching their ideas. A plan gives a better picture of what the business would look like and how to implement it and achieve the best results. It describes the entity, its products and services, the mission, and partnerships.

Consider the following:

a. Company description.

McDonald’s is one of the world’s leading food service brands, with over 36,000 restaurants in more than 100 countries. The company was founded in 1954, and by 2020, it employed around 200,000 people globally. Additionally, more than 2 million people work at franchised McDonald’s restaurants.

b. Company history.

The McDonald brothers opened a restaurant in California that began as a drive-in. They realized that they could make their restaurant unique by providing customers with what other businesses were missing at the time; a “speedy system,” as Kroc called it. It became a big business, attracting more customers to the location. In April 1955, Kroc opened the first restaurant for McDonald’s System, Inc. in Des Plaines, Illinois, and later McDonald’s acquired the brothers’ rights to their company in 1961 for $2.7 million (McDonald’s, 2019). Since then, the company has opened more restaurants in the United States and expanded globally to over 100 countries.

c. Mission statement.

McDonald’s mission is to make delicious feel-good moments easy for everyone (McDonald’s, 2017).

d. Products and services.

McDonald’s sells cheeseburgers, hamburgers, French fries, chicken products, desserts, soft drinks, and breakfast items.

e. Current status.

With approximately 36,000 restaurants in over 100 countries, McDonald’s is one of the largest foodservice brands globally. The company has massive annual revenue and has attracted several rivals in the fast-food industry.

f. Legal status and ownership.

McDonald’s is a Limited Liability Company. McDonald’s relies on franchises to operate in various regions and expand internationally. According to the company, about 93% of its restaurants globally are owned and managed by independent local business owners. For instance, the Argentina-based company – Arcos Dorados Holdings Inc. – owns the master franchise of McDonald’s within Latin America and the Caribbean.

g. Key partnerships (if any).

The company’s main partners are its franchise holders and Coca-Cola.

In conclusion, McDonald’s has scaled its operations from a single drive-in restaurant to numerous restaurants in various locations locally and internationally. Currently, it is among the largest companies in the fast-food industry. The evolution provides insight on operating a business from idea inception to expansion stages.

• How important is a prototype and eventually work with the proprietary issues to register (patent) your product or service, considering Kroc’s story? Explain your answer.

A prototype is essential when seeking to establish a business. Without a prototype, it is hard to determine the flaws for improvement. As exemplified in the McDonald’s case, the prototype helps develop a unique value proposition and use it for competitive advantage.

The first McDonald’s prototype was successful but had some flaws. The brothers identified these flaws and sought to eliminate them through a series of modifications. Hence, a prototype helps furnish an idea and ensure it is perfect before implementation (Council, 2019). After having the final prototype, a patent can be applied to ensure it is not duplicated or used by unauthorized individuals. With no patent rights to protect Mcdonald’s, Kroc needed no permission to implement his version of the “Speedee” system. It is also crucial to note that not all patentable inventions are profitable (Farkas, n.d.). Kroc had struggled to sell his products, despite their novelity.

Entrepreneurs invest in idea generation and market research to ensure the businesses they develop are profitable and possibly unique in the market. Sometimes other business people can copy the idea, diluting the uniqueness of the original invention. Patents seek to minimize this by ensuring only the inventor behind a novel idea gets to implement and use it.

• How did the McDonald’s brothers and Mr. Kroc become creative people? Explain your answer.

Creativity is a vital trait for entrepreneurs. As a business person, it is essential to have the ability to develop a unique idea by getting inspiration from varied sources, including the existing businesses. Entrepreneurs create their ideas through experience and by analyzing market gaps.

McDonald’s brothers became creative by analyzing the inefficiency present in the fast-food market. They realized that customers’ wait time was unnecessarily long, prompting them to design a “speedy system” and self-service. It saved time between ordering and delivery, making the restaurant’s service exceedingly superior to others. Kroc was amused by the service at McDonald’s when he first visited. The idea of spreading this uniqueness to the entire nation spurred Kroc’s creativity. He thought about creating franchises that would match McDonald’s quality standards. Then, he identified the dwindling revenue, making him to create a company that would purchase lands and leases them to McDonald’s franchises.

In “The Founder” film, creativity came from challenges and gaps identified by Kroc and the McDonald brothers. They wanted to create a superior business, unique from the rest of their rivals. In the process, the company became one of the largest in the industry.

• What conflicts arose as part of those creative ideas and how were they addressed or resolved? Explain your answer. Mention and explain at least three creative ideas that are identified in the film.

Conflicts are common in entities, especially those that involve two or more partners. In McDonald’s, there were conflicts between the brothers and Kroc. They had different ambitions and ideas that conflicted with each other’s, eventually causing disagreements that could have affected business operations.

First, there was the idea of a speedy system. Initially, the restaurant arrangement hindered workers’ free movement. The brothers had to design a new layout by asking the workers to imitate their daily tasks in the design and perfect it. After hours, the final layout was suited for the operations. The second creative idea was self-service, and the conflict was with the customers. Many customers were unfamiliar with the design. The need to get out of their cars and receive their orders from the counter. The third idea was franchising. The brothers had tried franchises and realized it was presenting low-quality issues. Kroc, however, persuaded them to try his ideas, which eventually was a success. Still, there were disagreements as Kroc sought to minimize cost and increase revenue from the franchises.

While developing a business, conflicts can ensue with the customers or even between partners. However, it is necessary to understand the root cause of any disagreement and solve it amicably. As exemplified by McDonald’s evolution, it is critical to have regulations that guide operations when two or more partners are involved.

Conclusion

The film “The Founders” offer vital insight into the entrepreneurial journey. It is essential to understand the various forms of businesses because their ownership, management, and operations are distinct. McDonald’s, a Limited Liability Company, grew from humble beginnings to the new global business entity operating in over 100 countries. Through the creativity of the McDonald’s brothers and Kroc, the company has become a pioneer in the fast-food industry.

References

Council, Y. E. (2019). Council Post: Five Reasons Why You Should Prototype Your Idea Before Developing It. Forbes. https://www.forbes.com/sites/theyec/2019/05/08/five-reasons-why-you-should-prototype-your-idea-before-developing-it/

Farkas, B. (n.d.). I’ve Invented Something! How Do I Make Money Off It? Www.nolo.com. Retrieved May 7, 2022, from https://www.nolo.com/legal-encyclopedia/ive-invented-something-how-do-i-make-money-off-it.html

Kane, C. B. (2012). Limited Partners Limit the Availability of Federal Diversity Jurisdiction: Stouffer Corp. v. Breckenridge. St. John’s Law Review, 63(3), 6.

McDonald’s. (2017). Our Mission and Values. Corporate.mcdonalds.com. https://corporate.mcdonalds.com/corpmcd/our-company/who-we-are/our-values.html

McDonald’s. (2019). Our History. Corporate.mcdonalds.com. https://corporate.mcdonalds.com/corpmcd/our-company/who-we-are/our-history.html