Fast-food, restaurant, hotel, and tourist chains used to be an American specialty. No longer. Even in Italy, a traditional redoubt of shopkeepers, chain stores are growing exponentially. The endless replication of chain stores is but a striking aspect of a larger phenomenon. In fact, replication of similar selling units is a tested business formula allowing firms to reap what George Ritzer calls the benefits of McDonaldization: predictability, efficiency, calculability, and control.
Looking at it from the consumer’s side, a retail chain is guarantee of standardized quality and predictable level of service: we look for a hotel chain, when we don’t want any surprises. Brands get strengthened by being associated with familiar sites and signs (and also familiarly uniformed personnel?).
For the firm, replication looks like a highly efficient model, a successful business formula that can be reiterated countless times. Economies of scale and experience can be easily appropriated by serial franchising and own-store expansion. of the chain. Also, work practices can be easily codified in procedure manuals handed out to the entire workforce. And it’s easier to verify when and by how much peripheral points of sale are deviating from the standard set by the center.
But the organizational costs of chainification need to be assessed more carefully. Replication requires a very centralized organization. The center designs and develops the business model to be replicated and implemented by the periphery. But if center is all-smart, and the periphery is all-dumb, the model can be very costly to manage.
In particular, labor gets easily alienated in over-standardized work environments, and opportunism and shirking can become rampant among employees. This in turn requires increasingly costly supervision of labor, which can get so stifling that it induces exactly those kinds of worker behavior that stronger supervision meant to address.
The only remedy is to chainify without McDonaldizing, i.e. the center must leave the peripheral outlets sufficient autonomy in the replication process. People can learn easily how to copy from a retail template, but they fast become dissatisfied with mere copying. A longer learning process can better implant a business formula in people’s minds, by enabling them to tinker with it, so to make those improvements that are vital for the various contexts and for the longer-term success of the business model.
by Rossella Cappetta,
Director, Organization and Personnel Division, SDA Bocconi School of Management