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. Additionally, the drive-through approach works well in the South African region. By reaching saturation levels in the United States, McDonalds looked to expand internationally amidst increasing regulations. The combination of the four points mentioned above and adaptability helped McDonalds become the global phenomenon it is today. Looking for a flexible role? There are a lot of emerging markets particularly in the BRIC countries such as Brazil, Russia, India and China. Additionally, the management’s ability in Europe slowly changed the taste of the Asian consumers towards fast food whi… 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. While you may be a success in your local market, selling internationally is fraught with danger. Customization of activities and menu to suit local needs is the single most factor contributing to its success. I was an overnight success all right but 30 years is a long, long night. The truth is, when building out international operations it’s a delicate balance of timing and understanding the cultural nuances. McDonalds sets an exemplary example of a company which implements global strategy and a centralized organizational structure. The prime reason for the success of McDonalds in China is the involvement of McDonalds to adapt to Chinese Culture. newspaper archive. With experience, localization started increasing and the entire model was redone to appeal the localites of the foreign country. Customization of products to suit local needs is a key factor that should be considered in the global expansion plan. Kroc's first branch opened on April 15, 1955, in Des Plaines, Illinois. The franchise model has been successfully used in Brazil and the management team has been praised for consistent performance and high standards of quality. Therefore, there are superior number of drive-through as compared to Australia and United States. Actress Sharon Stone and fellow celebrities Jay Leno, Shania Twain, Rachel McAdams and Pink have all been on the payroll. Around 85% of the restaurants are operated by franchisees. The golden arches of McDonald's are said to be the most recognisable symbol in the world. 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. You can view samples of our professional work here. 2. If you need assistance with writing your essay, our professional essay writing service is here to help! He offered refunds to customers who were kept waiting for more than five minutes or whose orders were incorrect. 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. In 1961, amid ongoing feuding, there was an inevitable parting of the ways. So that day he had another motive. This takes care of blending with the local culture and values of the foreign country. Kroc earned an estimated personal fortune of more than £300million but gave much of it away. Managers look at different strategies that can be used to expand internationally (Deresky, 2006). 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. Registered Data Controller No: Z1821391. Meanwhile, the stock pays a 2.6% dividend yield, and could grow the dividend by at least 10% each year. All work is written to order. We will use your email address only for sending you newsletters. 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. They should look at improving their customer services at the counters by avoiding long queues and providing high levels of customer satisfaction. Let’s take a look at why the company stagnated and failed to expand in Vietnam. It was also the date of the foundation of the McDonald's Corporation, beginning the global march of the company. The restaurant was efficiently serving a la… Growth was so swift in the 1990s that it was said a new McDonald’s opened somewhere in the world every five hours. CHINA: The strategy used by McDonalds in China is quite different from the way the restaurants are otherwise managed in the United States. McDonald’s survived only due to keen understanding of the Indian economy. Home of the Daily and Sunday Express. As of now, McDonald’s onl y has around 22 outlets in the entire country. International expansion has been the focus of Burger King for the past several years. 3. Adaptability: It is one of the major strengths of McDonalds. 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. Inspite of the fast growth in Brazil, franchisees have difficulty in reducing costs ((McDonald’s Fact File 2007, 2007). McDonald’s acquired the rights to the brother’s company in 1961 for $2.7 million. Saudi Arabia: Another example of adaptation to the local culture is the way McDonalds has managed the business in Saudi Arabia. This is not an example of the work produced by our Essay Writing Service. Locals in China responded positively to the fast food concept of McDonalds thereby making the investment in China a successful one. McDonald's traces its origins to a 1940 restaurant in San Bernardino, California.After expanding within the United States, McDonald's became an international corporation in 1967, when it opened a location in Richmond, British Columbia, Canada. This approach is used in highly populated areas with busy lifestyles of South Africa. • McDONALD'S restaurants serve 70 million customers every day - that's more than the population of the UK. However, the company was also responsible for driving up standards in the fast food industry. This can cause difference in planned returns for McDonalds. That’s where their greatest strength came in because McDonalds became adaptable by researching and altering their menu subtly for other countries and cultures. • Generally the cooperation is at pains to offer a selection of standardized core 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. It shows the uniformity of a branch in United States and India. 4. How McDonald's, a beefburger company, penetrated and grew a business across India. 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. Kroc had sold five of his Multimixer devices to founders Richard and Maurice McDonald but was down on his luck following the launch of a cheaper rival model. Brazil: McDonalds opened its first branch in Brazil in 1979. Do you have a 2:1 degree or higher? The prime reason for the success of McDonalds in China is the involvement of McDonalds to adapt to Chinese Culture. Sensing an opportunity he approached the brothers, who had opened for business in 1940 and were doing quite nicely, thank you. McDonald's Corporation (NYSE: MCD) is the world's largest chain of fast food restaurants, serving around 68 million customers daily in 119 countries. 1. This particular facility gives McDonalds an upper hand in South Africa. Creating new menu products and developing a … For example in Germany, McDonalds has a tie up with T mobile for hot spots. McDonald’s is one of the world’s best-known and iconic brands. The international expansion allows a company to diversify its business in a couple of key ways. Much later his company became a symbol of rampant globalisation and got caught up in the obesity debate. Meanwhile, McDonald's opens its first international restaurant in Canada. Joint ventures can be taken up with established companies in foreign countries with inclusions of coffee shops, bakery, internet access add-ons in all high profile metropolitan cities McDonalds currently have restaurants. 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. McDonalds closes five times in the day for prayers and they do not serve pork to respect the Islamic culture in Saudi Arabia. He was replaced by Ronald McDonald in 1967, originally introduced by a franchise holder in Washington DC. In India, the menu is highly customized to suit the Indian tastes and this justifies the inclusion of aloo tikki and paneer burgers. McDonald’s does business in more than 100 markets around the world. Porter’s Five Forces is utilized to critically evaluate the international strategy adopted by Coca-Cola. First, you spread the risk of slowing demand across multiple countries. 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. It also means the structure is relatively a mix of formal and informal forms which is quite a challenge to manage successfully. Corporate Social Responsibility: McDonalds has programmes for having a better society. Customer Service: Long queues, insufficient employees at the counters are frustrating for customers and many times the employees are rude in terms of their behaviour with customers. Companies all over the globe are looking for expansion and ways of entering new markets which are profitable through different entry modes (Deresky, 2006). When he arrived in Southern California, he was intrigued with what he witnessed. Standardization strategy The company has high growth potential in the years ahead, thanks to aggressive international expansion. The organizational structure is in sync with the strategy used by McDonalds to be ahead of its competitors. The status of franchising in the markets where we currently do business is described on the specific pages identified by market below. Marketing: The McDonalds logo is a popular one amongst children and adults all across the globe. • In 1993 the company celebrated selling 100 billion hamburgers. Today there are branches of the fast food chain in 119 countries selling 75 burgers every second. McDonald’s ensures the correct sizes before exporting for international target markets. Even though weaknesses and threats exist, the strengths and opportunities make it a strong player in the market in the fast food industry. 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. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! 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 … Some of the other ways the approach in China was different as compared to the United States was that McDonalds customized the menu by adding teriyaki burger which gave locals the flavour of their native food taste (McDonald’s Fact File 2007, 2007). 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). The number of restaurants in McDonalds should focus on high and low areas of population, reaching out to more and more sections of the society. 2. • The original McDonald's mascot Speedee was a chef with a hamburger for a head. They doubted the popularity of McDonald's could be replicated in colder US states and were reluctant to risk the business they'd toiled so hard to establish. 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). Kroc suggested expanding nationwide using a franchise model but the brothers were dubious. 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. Disclaimer: This work has been submitted by a university student. Different marketing strategies are used to attract people from different sections of the society. BURGER OUTLET THAT BECAME A GLOBAL PHENOMENON. In some countries it is still a status symbol to go and have a meal at McDonald's. 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. 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. 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. Currency fluctuations: When companies go global, there is always a risk associated with currencies as they keep fluctuating based on the markets. Increase in fast food category: Based on statistics from Euromonitor, there is a growing demand for fast food. 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. There are many reasons for companies to go global or expand overseas. We're here to answer any questions you have about our services. 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. *You can also browse our support articles here >. Additionally, the management’s ability in Europe slowly changed the taste of the Asian consumers towards fast food which is an unusual aspect of the Chinese culture. 1. Some of the programmes they have are the greener than ever programme; recycle, renew programme; animal welfare program to name a few. The internal analysis of the firm are carried out to understand its strengths and weaknesses either which are existing or are potentially going to exist in the future as compared to its competitors (Deresky, 2006). 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. See today's front and back pages, download the newspaper, 1974 - The first Ronald McDonald House opens. Of course, it is largely due to the dual marketing plan of the company: 1. Serving Up Growth Overseas. 5. The company has a global brand value and worldwide recognition. He insisted every burger in every restaurant was of the same quality and that packaging was consistent. 1. 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). 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.". It is challenging for managers to consistently keep in pace with the right balance of centralizing and decentralizing the operations. Get it wrong, and it may cost you more than a little humiliation and a pile of cash. But they approached with a strategy by controlling standardized products, clean and green environments and American origin. 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. • The £16billion annual revenue of McDonald's makes it the 90th largest economy in the world, outstripping many entire nations. Study for free with our range of university lectures! Local people manage the operations in McDonalds in China, thereby reaching out in an easier way to the locals of the country. McDonald's menu has grown 42.4% in the past seven years, from 85 items in 2007 to 121 items today, according to The Wall Street Journal. 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 … 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. 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). Another reason was Kroc's attention to detail. 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. • The first McDonald's restaurant in the UK opened in 1974 in Woolwich, south-east London. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. 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. Express. order back issues and use the historic Daily Express 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). 2. 1. • It's estimated that one in every eight Americans has worked at McDonald's at some stage in their lives. 1. The Big Mac becomes Maharaja Mac in India and another highlight of the menu is having separate vegetarian kitchens with separate utensils and cooks. India: The approach to adapt locally to the country has been a highlight for McDonald’s success. Yet, McDonald’s continued to grow and expand into international markets beginning in 1967 opening in Canada and Puerto Rico. Free resources to assist you with your university studies! What is the secret to the company’s international success? CHINA:The strategy used by McDonalds in China is quite different from the way the restaurants are otherwise managed in the United States. McDonald’s is an example of a company that gained tremendous benefits from globalization. 4. Marketing Strategy of McDonald's has evolved itself from using a product-based positioning to using Value-based positioning strategy. The returns for McDonalds in South Africa have surpassed the initial targets of turnover and profits. McDonalds follows a standardized set of procedures across all its restaurants in terms of quality, service, cleanliness and value propositions. 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. Reference this. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Today, on average, McDonald's opens a new restaurant every three hours. McDonalds franchising process is that of a strategic network (Hitt, et.al 2007). Franchise owners went through a training course at "Hamburger University" in Illinois. 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. The McDonald's Corporation is one of the most successful global restaurant chains around the world. Ray Kroc, who married three times, never retired and took a keen interest in the first branch he opened until his death in 1984. 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. The brothers, still wary of over-expansion, agreed to sell the business to Kroc for $2.7million - a neat $1million each after tax. 20th Jul 2017 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). In … They earned certificates in "hamburgerology with a minor in french fries". … Ray Kroc’s vision was that there would be 1,000 McDonald’s restaurants solely in the United States. This compliments the marketing efforts which are carried out through market analysis thereby giving positive returns to McDonalds. Kroc kept the assembly-line operation the brothers had pioneered and McDonald's became the world's most profitable restaurant franchise operation. It is one of the most widely recognized icons of the world in the fast food restaurant industry. 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). McDonald’s, which makes up 0.64% of the iShares Core S&P 500 ETF (IVV), is planning to add 1,500 new units across China, Hong Kong, and Korea in the next five years. In times of great uncertainty, our Franchisees work with a business model that has successfully been delivering year-on … No plagiarism, guaranteed! 3. The base of the approach is to provide comfort to the customers in shopping malls, towns and other areas. 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). The company has had some marketing misses. This demand is increasing due to stressful lifestyles and constant time pressures (Consumer lifestyles- Australia, 2009). 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. Growing need for drive through facilities: Drive through facilities is highly visible in South Africa. In return for allowing Kroc on board the pair would receive half a per cent of all gross sales. 1984 - Kroc dies. 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. It wasn't a happy separation. One of the accolades received by McDonalds in Brazil is the Hallmark of Quality. This feature has been particularly taken care off for making sure that the needs and requirements of the vegetarian population are fulfilled ((McDonald’s Fact File 2007, 2007). McDonalds should work on increasing these facilities in a lot of high profile, metropolitan cities across the world. Kroc got to keep the McDonald's name while the brothers rebranded their original branch in California, calling it the Big M. Kroc responded by opening a restaurant in the same neighbourhood. Marketing There are reactive and proactive reasons for the same. 5. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Within six years the clown was familiar to 96 per cent of American children, far more than knew the name of the president. VAT Registration No: 842417633. 3. • McDonald's is seen as the number one representative of the all American lifestyle, which at the time when the expansion began was very popular. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. Company Registration No: 4964706. If one market never gains or loses interest in your offerings, you can pick up the slack with success in other countries. The decision making takes place centrally in the United States (Hebert, 2011). 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. Furthermore, McDonalds is currently using the vertical integration approach to improve its productivity with efficient software packages. 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). 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.". … In the spring next year, media giant Walt Disney will open one of its most ambitious international expansions – a Disneyland theme park in Shanghai. 3. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. He was an aggressive businessman with a good grasp of the importance of marketing and advertising. Going Global. Unexpected circumstances: Uncertainties such as natural calamities, unexpected diseases can affect the smooth flow of activities for McDonalds in terms of procurement of goods and food contents which can decline the sales drastically. They can look at expanding these facilities in other parts of the world with dense populations. Kroc had heard that his milkshake machines ran continuously to cope with demand at the restaurant and was anxious to see what all the fuss was about. Reaching saturation levels in the world ’ s vision was that there would be McDonald! For McDonald ’ s onl y has around 22 outlets in the United States works well why did mcdonald's expand internationally the opened! Should focus on high and low areas of population, reaching out different... Balance of centralizing and decentralizing the operations in McDonalds in Brazil in 1979 is a! Huge potential in the South African region takes place centrally in the United States world s! 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