They earned certificates in "hamburgerology with a minor in french fries". While understanding the organizational capabilities and the external environment, it is crucial to understand the organizational structure of McDonalds. The franchise model has been successfully used in Brazil and the management team has been praised for consistent performance and high standards of quality. This is not an example of the work produced by our Essay Writing Service. McDonald’s is an example of a company that gained tremendous benefits from globalization. It doesn't matter if you're visiting a McDonald's in California or Connecticut, America or Australia—you're going to have a similar experience wherever you are.This highlights Ray Kroc's vision for McDonald's from the beginning. You can view samples of our professional work here. 2. Creating new menu products and developing a … Kroc suggested expanding nationwide using a franchise model but the brothers were dubious. See today's front and back pages, download the newspaper, It wasn't a happy separation. He insisted every burger in every restaurant was of the same quality and that packaging was consistent. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Study for free with our range of university lectures! He was an aggressive businessman with a good grasp of the importance of marketing and advertising. Basically, the central control is in its headquarters where different financial and strategic controls are used to create value for the entire network (Hitt, et.al 2007). How McDonald's, a beefburger company, penetrated and grew a business across India. They can look at expanding these facilities in other parts of the world with dense populations. 3. The status of franchising in the markets where we currently do business is described on the specific pages identified by market below. It also means the structure is relatively a mix of formal and informal forms which is quite a challenge to manage successfully. order back issues and use the historic Daily Express After initially selling a range of barbecued food they'd realised that hamburgers sold best. The massive and aggressive expansion strategies that McDonald’s took up in India was with the sole objective of establishing its presence indelibly in the sub continent and to prove to the world that if … This can cause difference in planned returns for McDonalds. With experience, localization started increasing and the entire model was redone to appeal the localites of the foreign country. Locals in China responded positively to the fast food concept of McDonalds thereby making the investment in China a successful one. Entrepreneur Ray Kroc extended the McDonald's empire Much later his company became a symbol of rampant globalisation and got caught up in the obesity debate. Please see our Privacy Notice for details of your data protection rights. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. McDonalds closes five times in the day for prayers and they do not serve pork to respect the Islamic culture in Saudi Arabia. The decision making takes place centrally in the United States (Hebert, 2011). Marketing All these factors contribute to the high revenues and with advanced software systems; the aim is to enhance “bottom line” as well ((McDonald’s Fact File 2007, 2007). Customization of activities and menu to suit local needs is the single most factor contributing to its success. 20th Jul 2017 Standardization strategy He was replaced by Ronald McDonald in 1967, originally introduced by a franchise holder in Washington DC. One of the accolades received by McDonalds in Brazil is the Hallmark of Quality. Corporate Social Responsibility: McDonalds has programmes for having a better society. • The £16billion annual revenue of McDonald's makes it the 90th largest economy in the world, outstripping many entire nations. If one market never gains or loses interest in your offerings, you can pick up the slack with success in other countries. BURGER OUTLET THAT BECAME A GLOBAL PHENOMENON. Different marketing strategies are used to attract people from different sections of the society. McDonald s has a presence in 120 countries. Additionally, it is important to understand the opportunities and threats that potentially exist for McDonalds to consolidate its global position in the fast food industry. We're here to answer any questions you have about our services. The road ahead for McDonalds should be to increase the nutritive value of the burgers and look at certain health aspects to control the increasing waistlines among children because of high consumption of fast foods especially burgers (Consumer lifestyles- Australia, 2009). Innovation: With wide variety of options available from snack wraps to coffee to burgers to McCafe, McDonalds is very innovative with reference to its products. Kroc, who was born to parents of Czech origin, once quipped: "I was an overnight success all right but 30 years is a long, long night.". This approach is used in highly populated areas with busy lifestyles of South Africa. Franchisees Challenges: There is an increase in the fee that franchisees have to pay to McDonalds thus resulting in selling of the businesses and dissatisfied franchisees. The company has a global brand value and worldwide recognition. Some of the programmes they have are the greener than ever programme; recycle, renew programme; animal welfare program to name a few. The prime reason behind the fast and successful international expansion of Mc Donald's is the franchise mode of entry in international markets which allows shareholders to share the rewards and risks of pursuing and exploring of new opportunities globally. The first McDonald's franchise, right, in Illinois, and left, the iconic golden arches, Entrepreneur Ray Kroc extended the McDonald's empire, Not loving it: McDonald's customer left vomiting 'after being sold RAW Quarter Pounder', Young mum quits £450 McDonalds habit to shed five stone. … One of the challenges that exist for McDonalds in Brazil is bankruptcy because of which it is difficult to meet the expenses on a monthly basis. McDonald's Corporation (NYSE: MCD) is the world's largest chain of fast food restaurants, serving around 68 million customers daily in 119 countries. There are many reasons for companies to go global or expand overseas. *You can also browse our support articles here >. Ray Kroc, who married three times, never retired and took a keen interest in the first branch he opened until his death in 1984. An example of a company which looked to expand beyond its borders is McDonalds, one of the most successful companies in terms of implying international strategies successfully. The famous golden arches logo was introduced the following year and the explosion of the car industry was a key factor in the success of McDonald's. This demand is increasing due to stressful lifestyles and constant time pressures (Consumer lifestyles- Australia, 2009). But to fulfill the ever changing customer demands and customization strategies in every country, the structure needs to be a combination of centralized and decentralized forms. Additionally, the management’s ability in Europe slowly changed the taste of the Asian consumers towards fast food whi… It shows the uniformity of a branch in United States and India. However, the company was also responsible for driving up standards in the fast food industry. Growing need for drive through facilities: Drive through facilities is highly visible in South Africa. The base of the approach is to provide comfort to the customers in shopping malls, towns and other areas. This particular facility gives McDonalds an upper hand in South Africa. • The first McDonald's restaurant in the UK opened in 1974 in Woolwich, south-east London. Growth was so swift in the 1990s that it was said a new McDonald’s opened somewhere in the world every five hours. The prime reason for the success of McDonalds in China is the involvement of McDonalds to adapt to Chinese Culture. BA 654 Lesson #1, Assignment #2: Chapter 1 Case Study Review Case 1-1 on pages 35-38 of your text and address the following questions in a brief essay of 250-300 words: CASE 1-1: McDonald’s Expands Globally While Adjusting Its Local Recipe Today, McDonald’s golden arches are one of the most recognized symbols in the world, just behind the Olympic rings. Company Registration No: 4964706. CHINA:The strategy used by McDonalds in China is quite different from the way the restaurants are otherwise managed in the United States. In some countries it is still a status symbol to go and have a meal at McDonald's. If workers considered taking a break when business slowed, Kroc told them: "If you've got time to lean, you've got time to clean.". Expansion: Even though it serves over 60 Million people on a daily basis that accounts for just about 1% of the world’s total population. They have successfully implemented international strategies where in they have used localization and customization processes to adapt to the foreign countries along with maintaining its American origin by having centralized procedures as well. 4. The chain continued to expand domestically and internationally, extending to Canada in 1967, reaching a total of 10,000 restaurants by 1988, and operating more than 35,000 outlets in more than 100 countries in the early 21st century. 1. For example: In Australia, sales of fast food grew by 7% in terms of value in 2008 to reach A$ 10,921 Million. Starbucks is a true empire. Organizational capabilities look at a firm’s ability to manage resources in order to gain sustainable competitive advantage (Hitt, et.al 2007). Meanwhile, McDonald's opens its first international restaurant in Canada. • The original McDonald's mascot Speedee was a chef with a hamburger for a head. 1974 - The first Ronald McDonald House opens. 3. 2. It is challenging for managers to consistently keep in pace with the right balance of centralizing and decentralizing the operations. Marketing Strategy of McDonald's has evolved itself from using a product-based positioning to using Value-based positioning strategy. The restaurant was efficiently serving a la… Studies have shown that a combined effect of a heavily saturated domestic market, and high market potential for foreign markets, prompts many businesses to expand internationally (Hackett 69). 2. Looking for a flexible role? 2. McDonalds is the number one brand in the fast food industry. Today there are branches of the fast food chain in 119 countries selling 75 burgers every second. What is the secret to the company’s international success? The combination of the four points mentioned above and adaptability helped McDonalds become the global phenomenon it is today. This strategy has been a turnaround point for McDonalds but it has thed potential of losing brand equity in the future (McDonald’s Fact File 2007, 2007). Four years later, the company heralded the expansion into its 100th nation, Belarus, and claimed to be opening a new restaurant somewhere in the world every three hours. Ray Kroc’s vision was that there would be 1,000 McDonald’s restaurants solely in the United States. 2. Increased global competition, customer needs, potential opportunities, declining foreign trade barriers, increasing expenses in domestic markets are some of the reactive reasons for companies going global. McDonalds sets an exemplary example of a company which implements global strategy and a centralized organizational structure. McDonald’s does business in more than 100 markets around the world. Sensing an opportunity he approached the brothers, who had opened for business in 1940 and were doing quite nicely, thank you. Porter’s five force analysis approach to the industry plays a very crucial role, according to him international business has lot of competition in the international arena (Porter, 1986). 1. I was an overnight success all right but 30 years is a long, long night. Yet it would have been an entirely different story had Ray Kroc not stopped off for a bite to eat at the first restaurant in San Bernardino, California, 60 years ago. The McDonald's Corporation is one of the most successful global restaurant chains around the world. CHINA: The strategy used by McDonalds in China is quite different from the way the restaurants are otherwise managed in the United States. All work is written to order. By 1955 the McDonalds had built up a successful but modest chain of eight restaurants featuring a simple self-service menu which allowed speedy service. Also, the processes or the way every country operations are managed are innovative in a way that they are suited to fulfill the local needs. McDonalds franchising process is that of a strategic network (Hitt, et.al 2007). Customers identify with the brand name and “the Golden Arches” are recognized not only in America but in foreign countries as well (McDonald’s Fact File 2007, 2007). As these cities are the centre of research and growth opportunities, McDonalds should focus their internationalization in these areas much more than they are currently doing. Increase in fast food category: Based on statistics from Euromonitor, there is a growing demand for fast food. It was also the date of the foundation of the McDonald's Corporation, beginning the global march of the company. By 1958 there were still only 34 McDonald's restaurants but the figure trebled the following year as the dynamic Kroc extended the burger empire. McDonalds follows a standardized set of procedures across all its restaurants in terms of quality, service, cleanliness and value propositions. Meanwhile, the stock pays a 2.6% dividend yield, and could grow the dividend by at least 10% each year. 3. • In 1993 the company celebrated selling 100 billion hamburgers. Even though weaknesses and threats exist, the strengths and opportunities make it a strong player in the market in the fast food industry. … But they approached with a strategy by controlling standardized products, clean and green environments and American origin. So that day he had another motive. It is one of the most widely recognized icons of the world in the fast food restaurant industry. McDonalds should work on increasing these facilities in a lot of high profile, metropolitan cities across the world. Serving Up Growth Overseas. India: The approach to adapt locally to the country has been a highlight for McDonald’s success. Today, on average, McDonald's opens a new restaurant every three hours. The golden arches of McDonald's are said to be the most recognisable symbol in the world. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Customization of products to suit local needs is a key factor that should be considered in the global expansion plan. The truth is, when building out international operations it’s a delicate balance of timing and understanding the cultural nuances. No plagiarism, guaranteed! Currency fluctuations: When companies go global, there is always a risk associated with currencies as they keep fluctuating based on the markets. For example in Germany, McDonalds has a tie up with T mobile for hot spots. McDonald's first began to expand internationally in 1967 with the opening of restaurants in Canada (Country no.2) and Puerto Rico (Country no.3). Within six years the clown was familiar to 96 per cent of American children, far more than knew the name of the president. The returns for McDonalds in South Africa have surpassed the initial targets of turnover and profits. A long history of expanding into new territories has given McDonald s the ability to mold its menu according to the tastes of the local population. McDonalds believes in having sustainable supply chain consisting of 3 E’S: Ethical Responsibility, Environmental Responsibility and Economic Responsibility (Sustainable Supply Chain, 2010-2011). South Africa: A relatively unique strategy has been used by McDonalds to serve customers where they can enjoy their meal while shopping and playing. This compliments the marketing efforts which are carried out through market analysis thereby giving positive returns to McDonalds. McDonald’s acquired the rights to the brother’s company in 1961 for $2.7 million. McDonald’s survived only due to keen understanding of the Indian economy. Yet, McDonald’s continued to grow and expand into international markets beginning in 1967 opening in Canada and Puerto Rico. While you may be a success in your local market, selling internationally is fraught with danger. Kroc played a significant role in revolutionizing the fast food industry in America and currently Mc Donald’s is serving over 60 million customers in over 117 countries on a daily basis (McDonalds : The Ray Kroc Story, 2010-2011). McDonalds is the industry leader in terms of sales, market cap, employees, gross and net margins. newspaper archive. With operations in over 120 countries and a huge number of 31,000 restaurants, McDonalds procures its food and packaging from the same set of suppliers. Franchise owners went through a training course at "Hamburger University" in Illinois. Local people manage the operations in McDonalds in China, thereby reaching out in an easier way to the locals of the country. In 1961, amid ongoing feuding, there was an inevitable parting of the ways. 1. However Kroc, 53, persisted, securing a deal with a plan that involved him taking responsibility for setting up restaurants throughout most of the country while Maurice and Richard focused on California and Arizona. Get it wrong, and it may cost you more than a little humiliation and a pile of cash. Another reason was Kroc's attention to detail. McDonald's expects to open at least 2,500 restaurants this year - about 2/3 of those will be located outside the U.S. 3. McDonald’s has set its sights on Asia, with the plan of adding over 1,500 new restaurants in China, Hong Kong and South Korea within the next 5 years. There are some exclusive outlets of McDonalds in the Holy City of Makkah which serve to Muslim customers only with only Muslim staff in every department ((McDonald’s Fact File 2007, 2007). McDonald’s is one of the world’s best-known and iconic brands. He offered refunds to customers who were kept waiting for more than five minutes or whose orders were incorrect. The number of restaurants in In times of great uncertainty, our Franchisees work with a business model that has successfully been delivering year-on … If you need assistance with writing your essay, our professional essay writing service is here to help! 5) Tailoring the right menu. 1. As described in the above sections, McDonalds has huge potential in global markets to venture out in different areas specially the BRIC countries. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. McDonald's is synonymous with fast-food in many parts of the world, but there is one country where it's failed to capture national attention. 1. To achieve economies of scale, expanding base for growth and profits, cost savings, access to different resources are some of the proactive reasons for companies going global (Deresky, 2006). McDonald's reached its sixth (and, barring a sub-Arctic drive-thru, final) continent in 1992, with the opening of a restaurant in Casablanca, Morocco. 2. Its Glo-cal strategy to serve the customers in a better way & enriching their experience with local menus is the smartest step that proved critical to McDonald’s … 3. Our academic experts are ready and waiting to assist with any writing project you may have. Additionally, the drive-through approach works well in the South African region. McDonalds is an example of a company which is centralized in its core but still customizes the menu and the operational activities for local needs. • Generally the cooperation is at pains to offer a selection of standardized core VAT Registration No: 842417633. International expansion has been the focus of Burger King for the past several years. Do you have a 2:1 degree or higher? The organizational structure is in sync with the strategy used by McDonalds to be ahead of its competitors. Kroc was a salesman from Illinois who ventured to San Bernardino, California in 1954 after receiving a larger than normal order for the milkshake multi-mixers he was selling. They should look at improving their customer services at the counters by avoiding long queues and providing high levels of customer satisfaction. McDonald's Strategy When Selling Internationally Organisations are competing harder than ever to expand their businesses by increasingly penetrating new markets, winning new customers and developing new product lines. The Big Mac becomes Maharaja Mac in India and another highlight of the menu is having separate vegetarian kitchens with separate utensils and cooks. McDonald’s is expanding in India’s prosperous south and west region, where its other Indian partner, Hardcastle Restaurants, was converted from a joint venture into a master franchisee in 2010. Free resources to assist you with your university studies! 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