Growing need for drive through facilities: Drive through facilities is highly visible in South Africa. 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). McDonalds is the number one brand in the fast food industry. The golden arches of McDonald's are said to be the most recognisable symbol in the world. 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). McDonalds franchising process is that of a strategic network (Hitt, et.al 2007). In India, the menu is highly customized to suit the Indian tastes and this justifies the inclusion of aloo tikki and paneer burgers. 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. 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). 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 Corporation (NYSE: MCD) is the world's largest chain of fast food restaurants, serving around 68 million customers daily in 119 countries. In the spring next year, media giant Walt Disney will open one of its most ambitious international expansions – a Disneyland theme park in Shanghai. Meanwhile, the stock pays a 2.6% dividend yield, and could grow the dividend by at least 10% each year. First, you spread the risk of slowing demand across multiple countries. McDonald’s is an example of a company that gained tremendous benefits from globalization. • The original McDonald's mascot Speedee was a chef with a hamburger for a head. The McDonald's Corporation is one of the most successful global restaurant chains around the world. But they approached with a strategy by controlling standardized products, clean and green environments and American origin. 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. 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. The number of restaurants in 1. Yet, McDonald’s continued to grow and expand into international markets beginning in 1967 opening in Canada and Puerto Rico. Looking for a flexible role? Adaptability: It is one of the major strengths of McDonalds. 2. This is not an example of the work produced by our Essay Writing Service. Local people manage the operations in McDonalds in China, thereby reaching out in an easier way to the locals of the country. India: The approach to adapt locally to the country has been a highlight for McDonald’s success. It wasn't a happy separation. 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. 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. Saudi Arabia: Another example of adaptation to the local culture is the way McDonalds has managed the business in Saudi Arabia. McDonald’s does business in more than 100 markets around the world. 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. 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. This can cause difference in planned returns for McDonalds. McDonalds is the industry leader in terms of sales, market cap, employees, gross and net margins. Our academic experts are ready and waiting to assist with any writing project you may have. McDonald s has a presence in 120 countries. Today there are branches of the fast food chain in 119 countries selling 75 burgers every second. The company has had some marketing misses. Within six years the clown was familiar to 96 per cent of American children, far more than knew the name of the president. McDonald’s is one of the world’s best-known and iconic brands. 2. Corporate Social Responsibility: McDonalds has programmes for having a better society. Furthermore, McDonalds is currently using the vertical integration approach to improve its productivity with efficient software packages. 1. Sensing an opportunity he approached the brothers, who had opened for business in 1940 and were doing quite nicely, thank you. South Africa: A relatively unique strategy has been used by McDonalds to serve customers where they can enjoy their meal while shopping and playing. Inspite of the fast growth in Brazil, franchisees have difficulty in reducing costs ((McDonald’s Fact File 2007, 2007). At first growth was slow and the relationship between Kroc and the brothers was uneasy. McDonald’s ensures the correct sizes before exporting for international target markets. The brothers, still wary of over-expansion, agreed to sell the business to Kroc for $2.7million - a neat $1million each after tax. He was replaced by Ronald McDonald in 1967, originally introduced by a franchise holder in Washington DC. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Marketing The prime reason for the success of McDonalds in China is the involvement of McDonalds to adapt to Chinese Culture. As of now, McDonald’s onl y has around 22 outlets in the entire country. This particular facility gives McDonalds an upper hand in South Africa. Inspite of an American base, McDonalds respects the markets, cultures, beliefs and likings of other nations. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. VAT Registration No: 842417633. McDonald's Strategy When Selling Internationally Organisations are competing harder than ever to expand their businesses by increasingly penetrating new markets, winning new customers and developing new product lines. McDonald’s survived only due to keen understanding of the Indian economy. For example: In Australia, sales of fast food grew by 7% in terms of value in 2008 to reach A$ 10,921 Million. *You can also browse our support articles here >. 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. This takes care of blending with the local culture and values of the foreign country. Free resources to assist you with your university studies! 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. Around 85% of the restaurants are operated by franchisees. 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). Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. One of the accolades received by McDonalds in Brazil is the Hallmark of Quality. 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! • McDONALD'S restaurants serve 70 million customers every day - that's more than the population of the UK. With experience, localization started increasing and the entire model was redone to appeal the localites of the foreign country. CHINA: The strategy used by McDonalds in China is quite different from the way the restaurants are otherwise managed in the United States. 20th Jul 2017 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. Do you have a 2:1 degree or higher? The truth is, when building out international operations it’s a delicate balance of timing and understanding the cultural nuances. Locals in China responded positively to the fast food concept of McDonalds thereby making the investment in China a successful one. 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. Creating new menu products and developing a … Another reason was Kroc's attention to detail. 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). Today, on average, McDonald's opens a new restaurant every three hours. 2. Local people manage the operations in McDonalds in China, thereby reaching out in an easier way to the locals of the country. Please see our Privacy Notice for details of your data protection rights. Brazil: McDonalds opened its first branch in Brazil in 1979. No plagiarism, guaranteed! 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. 2. Serving Up Growth Overseas. McDonalds follows a standardized set of procedures across all its restaurants in terms of quality, service, cleanliness and value propositions. 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. The prime reason for the success of McDonalds in China is the involvement of McDonalds to adapt to Chinese Culture. Kroc kept the assembly-line operation the brothers had pioneered and McDonald's became the world's most profitable restaurant franchise operation. 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. For example in Germany, McDonalds has a tie up with T mobile for hot spots. 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. Marketing Strategy of McDonald's has evolved itself from using a product-based positioning to using Value-based positioning strategy. McDonalds closes five times in the day for prayers and they do not serve pork to respect the Islamic culture in Saudi Arabia. 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. Kroc suggested expanding nationwide using a franchise model but the brothers were dubious. 4. Express. … 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). McDonalds sets an exemplary example of a company which implements global strategy and a centralized organizational structure. They earned certificates in "hamburgerology with a minor in french fries". Customization of products to suit local needs is a key factor that should be considered in the global expansion plan. While understanding the organizational capabilities and the external environment, it is crucial to understand the organizational structure of McDonalds. Reference this. Ray Kroc, who married three times, never retired and took a keen interest in the first branch he opened until his death in 1984. The Big Mac index is used to gauge a nation's cost of living, with Norway topping the league. After initially selling a range of barbecued food they'd realised that hamburgers sold best. 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). 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. If you need assistance with writing your essay, our professional essay writing service is here to help! 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). 1974 - The first Ronald McDonald House opens. Kroc's first branch opened on April 15, 1955, in Des Plaines, Illinois. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. 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. 2. 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). The combination of the four points mentioned above and adaptability helped McDonalds become the global phenomenon it is today. Additionally, the drive-through approach works well in the South African region. Customization of activities and menu to suit local needs is the single most factor contributing to its success. The base of the approach is to provide comfort to the customers in shopping malls, towns and other areas. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. 3. 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 … How McDonald's, a beefburger company, penetrated and grew a business across India. • 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. Competition: With globalisation and increased number of companies looking to expand internationally, it is a challenge for McDonalds to keep up to or enhance its already existing powerful status in the market. 3. Different marketing strategies are used to attract people from different sections of the society. The organizational structure is in sync with the strategy used by McDonalds to be ahead of its competitors. 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). Therefore, there are superior number of drive-through as compared to Australia and United States. The returns for McDonalds in South Africa have surpassed the initial targets of turnover and profits. Study for free with our range of university lectures! 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