One fast food chain that can be considered as very successful in terms of doing business globally is McDonald’s. It operates in 119 countries with more than 34,000 locations worldwide and serving approximately 69 million customers each day..
The organizational structure of McDonald’s is designed to complement its worldwide operations. The operations of the company are divided into five geographical divisions namely United States, Europe, Asia/Pacific/Middle East/Africa, Latin America and Canada.
One of the strategies being used by McDonald’s to increase its presence internationally is through franchising. Although McDonald’s grants franchises, they see to it that these stores follow the “core McDonald’s principles of quality, service, cleanliness and value” (McDonald's, 2013, par 7). McDonald’s franchising policies make sure that they have standardized equipment, store designs, manpower training, pricing and major menu offerings. But a unique feature of the franchise program which makes McDonald’s a market leader internationally is that they allot a portion of the marketing budget to be controlled by the local franchisee. In this way, the local franchisee is able to create promotions which are attractive to the local target markets, ensuring more sales for the company.
The McDonald’s franchise is very attractive worldwide because of the popularity of the brand name and its proven success internationally. The franchisee realizes the importance of the support that McDonald’s gives which includes training and advertising.
With regards to its product offerings, McDonald’s modus operandi is to adapt their products to the country where it operates. An example of this is when McDonald’s introduced the Chicken Maharaja Mac in India because their Big Mac is unacceptable to Indians since it is beef-based and cows are considered sacred in India. In Canada, McDonald’s introduced the McLobster because lobster is readily available in the area. Another product introduced by McDonalds is the McLuks salmon burger which is more popular in Finland than the beef burgers. Clearly, although McDonald’s have standard food offerings in its stores worldwide, to gain market acceptance and ensure profitability in the different countries that they serve, they tailor their products to the local food preferences and adjust their menu to the availability of local ingredients.
Aside from catering to local taste and introducing local menu variations, McDonald’s adjusts their strategies to conform with local laws and regulations. While beer is offered in the McDonald’s Spain menu, it cannot be included in McDonald’s UK because it is against government rules. Another example of McDonald’s complying with local regulations is in Russia where McDonald’s purchases their meat through a very specific process because local regulations do not comply with their standards.
Another plus factor that works for McDonald’s international operations is that 80% of its restaurants worldwide are owned and operated by local individuals. Having local people at the helm of operations makes the business more “in touch” with the local market because they understand the market better, which is to the advantage of McDonald’s. To check on the local operations of McDonald’s stores, constant monitoring of the quality of local products and services are done. McDonald’s head office also provide for extensive local rule books .
The success of McDonald’s international operations can also be attributed to its ability to position itself against local competitors. Through the local competitors, McDonald’s learn about the food preferences of the people in the region. McDonald’s has learned to develop strategies that make them different from their local competitors, or in some instances they compete directly with the homegrown restaurants. In India for example, McDonald’s had to introduce vegetarian meals because their local competitors offer them as they are preferred by Indians, more than meats.
Despite McDonald’s past and current success, there are some factors that they must consider to retain their market leadership. Foremost among these is that they should develop new product offerings which cater to the growing number of individuals who are becoming more health conscious. In the same manner that they are catering to local tastes, they should also cater to customers who prefer less cholesterol in their food and more nutritious ingredients in it. Another important recommendation that McDonald’s should pursue to ensure its continued success internationally is to implement innovations which are environmentally-friendly and those which promote sustainability. McDonald’s should continue to use packaging materials which are recyclable, design eco restaurants which uses recycled building materials, high efficiency appliances and heating/ cooling systems, and natural lighting to save on electricity consumption.
One other area where McDonald’s can look into is developing lower priced products without sacrificing the quality. Since several countries are experiencing financial and economic crisis, people in these regions want value for their money. In order for McDonald’s not to lose customers, the company can try to introduce smaller packaged meals or value meals which are priced lower.
The success of McDonald’s internationally may be summarized in the famous phrase, “think global, act local”. McDonald’s definitely has the resources to compete internationally. But resources alone do not make a company successful globally. However, in the case of McDonald’s their resources are efficiently used to create marketing strategies that adheres to their core principles yet, are able to adapt to the local community which it serves. McDonald’s has strong local strategies which work effectively with their global strategies.
Lynch, R. (2011, December 8). Global strategy: McDonald's.
Marketwire. (2013, January 17). McDonald's launches new global packaging designs. Retrieved from aboutmcdonalds.com: http://www.aboutmcdonalds.com/mcd/newsroom/press_releases/corporate_news_archive/McDonalds_Launches_New_Global_Packaging_Designs.html
McDonald's. (2013). The Ray Kroc story. Retrieved from mcdonalds.com: http://www.mcdonalds.com/us/en/our_story/our_history/the_ray_kroc_story.html
Personal.psu.edu. (n.d.). McDonald's Corporation. Retrieved from personal.psu.edu: http://www.personal.psu.edu/lyd5003/blogs/portfolio/McDonald'sCorporateReport.pdf