Magoosh GRE

Analysis of Globalisation Strategy in McDonalds

| December 22, 2012

 

Introduction

According to Drori S. et al (2006), the definition of globalisation is the all countries of the world became inter connected with the process of globalisation in which process main social factors like influence, philosophy, marketplaces, government, privileges, standards, customs, belief, individuality, nationality, harmony developed disembodied from their three dimensional framework because of the quickening, flexibility, dissemination and extension of international streams of societies, goods, economics, descriptions and statistics.

The United Nations Economics and Social Commission for Western Asia say globalization “is a widely-used term that can be defined in a number of different ways. When used in an economic context, it refers to the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, and services labour although considerable barriers remain to the flow of labour. Globalization is not a new phenomenon. It began towards the end of the nineteenth century, but it slowed down during the period from the start of the First World War until the third quarter of the twentieth century. This slowdown can be attributed to the inward looking policies pursued by a number of countries in order to protect their respective industries however, the pace of globalization picked up rapidly during the fourth quarter of the twentieth century

In other word, globalisation is a whole process. If we categorized as per the topic of orientation taken we can methodology ‘global’ as a geographical conception, characteristic it as of the narrow; equally an idea of ability and control, differentiating it as of regional independence; equally a traditional notion, differentiating it as of separation; and lastly, by way of a recognized idea, differentiating it as of nationwide.

All of us know that the international business is one of the most important parts of any nation’s economy, but at the world level or actual time this works as an individual unit but not as whole world’s economy. This provides a wonderful benefit to international companies; meanwhile they previously have the awareness obligatory to harvest plus to marketplace goods and facilities intercontinentally. Countries continue significant in establishing actions, however their structure of mention aimed at profitable strategies can no lengthier remain limited to the nationwide economy.

About McDonald’s:

In October 1947, there was first restaurant opened in UK while after 30 years in December 2004 it reached at 1330 restaurants in all over the United Kingdom. Among those about 60 % restaurants are managed by the company and rest of them are operated by franchisees.

The main story of the McDonald has started in 1940. McDonald has founded in 1940 as a simple fast food restaurant by two brothers. Maurice and Richard, two brothers had started McDonald’s in California, United States. The first name if the McDonald’s was “McDonald’s Hamburgers”. After few years, the total profit of the McDonald’s restaurant reached at $3, 50,000. The well-known distributor of Milk shake machine named Raymond Kroc, concerned in this business and deal with two brothers and got franchisee of McDonald’s and established McDonald’s system incorporation, the franchising company of McDonald’s. In 1955 he became a founder of the company by purchasing share of $2.7 million. He also changed name of the company as McDonald’s corporation and he demonstrated himself as the innovator who modernized restaurant industry of America. McDonald’s is one of the most valuable brands all over the world with the goodwill of $25 billion. McDonald has founded in US and it has roots in United States but now days it became a citizen of the whole world.

McDonald’s total Assets

The bar chart shows the McDonald’s total Assets, Equity, Revenue, Net Income and Operating Income till 2010.

McDonald’s World Wide Locations Map:

The McDonald’s strength almost all over the World

 

This Map Shows the McDonald’s strength almost all over the World.

Globalisation and McDonald’s:

Global expansion of the McDonald is known as McDonaldisation of the society. It succeeds in very low time and firstly in US, than after it introduced in Canada in June 1967. In July of 1971, McDonald has opened with the partnership of Den Fujita, the local company of the Tokyo, Japan. About 20 year later McDonald has introduced in Moscow, Russia in the year of 1990. At the time of opening around 40,000 people were waiting in queue. In Moscow restaurant is too huge with the 23,675 square foot. In Russia, McDonald has served approximately 45,000 to 55,000 customers every day. Because of huge demand, company established a modern food-treating factory close to Moscow.

Bigger restaurant than Russian McDonald has opened in Shenzhen city of China in 1990. This restaurant got success to attract more than 40,000 people on opening day. It also big restaurant as Moscow with an area of 28,000 square feet and about 30 cash counters. This Chinese McDonald’s was a joint venture of the McDonald’s Corporation and The General Corporation of Beijing Agriculture, Industry and Commerce.

After two years in 1992, McDonald has started in Poland. There was two outlets started and each separately overpassed the records of both Russia as well china in terms of opening transection of the first day. Moreover, it verified as the most prevalent in East European Countries. The chart below shows worldwide establishment of McDonald’s corporation.

This table expresses total revenue of the McDonald’s in different region.

Expresses total revenue of the McDonald's in different region.

Globalisation strategy of McDonald:

McDonald’s has developed their unique globalisation strategy. McDonald include their fore main characters to make perfect business strategy. Are shown as below

  1. Think globally but act locally
  2. Pricing
  3. Advertising strategies
  4. Social responsibility

1. Think Globally but Act Locally:

The main aim of the McDonald’s Corporation is to focus locally with the global strategy. It always performs and supply all the operation, systems as per the requirement of the local factors. It always try to be fit in local traditions, cultures, society and political. McDonald’s Corporation always keep special factors in mind while making their business strategy. It always performs as per the requirements of the different markets. Macdonald expenses lots of resources to develop and create its products as pre the local demands and traditions.

However, once McDonald’s corporation failed to do this, while establishment in Germany and Netherlands, consumers did not accept their local menu in the year 1970 because they wanted American food rather than their local menu. After this experience company realised that every restaurant’s local menu should incorporate some local tests as well but at a minimal level.At the time of establishing in India, McDonald has considered that Hindu community does not eat beef as per their Hindu belief. Therefore, they specially introduced new vegetarian series of the product in their menu. Also taking Muslim community in focus that Muslims did nit consume poke. Therefore, they only sell chicken and lamb. It had done separate preparation for Vegetarian and non-vegetarian.

2. Pricing:

The other most important feature is their price differentiates than their competitor. This pricing strategy of McDonald’s corporation is very reliable and unique. While fixing the price McDonald’s takes some factors in consideration like local life style, income of the family, location etc.  The time of fixing price for the products, they also focus on the primary target group of the company, lower and power level. McDonald’s enters in most of metropolitan city of the country in which it enters.Sometime during period of lean time company offers discounted price to boost their sell in short McDonald’s corporation believes that to stay longer life in the market we should have unique pricing policy.

3. Advertising/Promotional strategies:

Advertising is the other platform to the company by the help of which company introduce their product, boost to the customers etc. every organization have their unique and own promotional strategies. Here McDonald’s arranges their promotional strategy as a part of advertisement. The worldwide promotional activities of the McDonald’s corporation is organised by “DDB Needhamand Leo Burnettas” well their local collaborates in different countries. It sometimes organised by the local advertising company also.

Other than advertisement, McDonald’s corporation uses more promotional tools to promote their product. Company offers their product at law price; it gives toys to the children etc. most successful promotional strategies became very popular now days.McDonald’s has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games and makes coolers of The Orange with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company’s advertising strategy. In January and February 2008 there was an offer of buy one get one free by McDonald’s UK particular for the Big Mac. Company introduced press coupons and those coupons can be exchanged at the McDonald’s restaurant to get benefit of the product.

To date, McDonald’s has used 23 different slogans in United States advertising as well as a few other slogans for select countries and regions. At times, it has run into trouble with its campaigns.

4. Social responsibility:

The other most thing of the Morden business is care of society. Social responsibility creates positive image in the mind of customer. McDonald’s corporation also believe in betterment of the society. It took part in social events, sponsored lots of charity shows, monetary aid etc.McDonald’s corporation creates huge amount of local opportunity. McDonald’s recruit local people too, McDonald’s gives equal opportunity to the all employers. It gives chance to local employer at management position.

McDonald’s purchases their raw material from the local farmers. In addition, it gives information about the real formula of the quality of the raw material. For example in Indonesia and Russia, more than 80 % of the raw material purchased from the Local farmers. In 1990, there was a problem. Because of this particular problem, farmers cannot supply real required quality of the meat. Than after McDonald’s corporation called experts from the other country to give knowledge about the agriculture.

Challenges for McDonald:

McDonald’s corporation faced many problems in their life. In some of countries in which it entered, McDonald’s corporation faced opposition from the anti-WTO organisation, anti-America, anti-capitalism, anti-globalisation activities etc.

World Health Organisation also argued to the McDonald’s corporation. It claimed whatever fast foods selling by McDonald’s are harmful to teenager and youngster. It increases their obesity and fat. In the year 1994 McDonald’s corporation prosecuted by two groups’, activities allotting leaflets with the heading of “What’s wrong with the McDonald’s which against the company.

On the other hand, McDonald’s corporation faces high competition from the competitors in US market. There are many brands, which can beat McDonald’s at any time. Some of them are Starbucks, Burger King, Subway, Yum, KFC, and Pizza Hut etc.

Alternative Strategy of McDonald:

McDonald’s has very effective and efficiencies globalisation strategy. The McDonald’s corporation proves it. The company very effectively operates it. Nevertheless, to make more and more market share company needs to change.

Because of the objection of WHO and much other non-government organization McDonald’s corporation should rebrand their company. According to WHO the fast food products of the McDonald’s corporation is to harmful to the teenagers and youngsters because it increase obesity and fat in the human body. To clean up this image from the consumers mind McDonald’s should be reformation of their selves. It can create new image in the mind of customers by introducing new name, symbol, logo, dress code, outlook of the restaurant etc. it will help in the new formulation of the McDonald’s corporation.

 

Conclusion:

In this report, we saw that one of the key of successful business is globalisation. In the local market there may be large numbers of competitor but if you want to serve something new with the new way to your new customers for having something new in the future, than you must go to the way of globalisation. McDonald’s had done this and we can see the position of the McDonald’s now days. It is the biggest fast food restaurant chain of the world. In short to make your business in queue of the globalisation than and then you can get your desired results.

Moreover, McDonald’s needs to change itself to get better image in the teenager and youngsters mind. Because of it will continue to face problems from their competitors, NGOs and any other factors, to survive in the market will be very tough for the McDonald’s corporation. Because of this main reason and to become market leader, McDonald’s corporation should change their identity.

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