McDonald bears multi-domestic strategy, as it uses existing domestic models globally. Segmentation. McDonalds business strategy utilizes a combination of cost leadership and international market expansion strategies. Although McDonald's has adopted localization strategy for several aspects of the business, the brand name and packaging is consistent in different markets. 1. February 8, 2016. While McDonald’s faces costs of expansion into new and within markets, it is able to assess the long-term prospects of different markets and it is on this basis that it would decide when to enter a new market. For the purpose of HRM strategies I am applying the best practice and best-fit model with McDonalds. Firstly, this essay would discuss the international operations of McDonald’s. McDonald’s has become the most famous and successful fast-food restaurants all over the world. Therefore, it is important for businesses to consider the local culture before expanding into a location (Zhao et al., 2016, p.230). In addition to the menu, the other adaptations that have been made by McDonald's in different culture include changes in the web layout. The glocalization strategy involves the integration of the global and local. It does not offer any pork items in deference to Muslim customs. The joint venture partnership between McDonald’s and the General Corporation of Beijing Agriculture, Industry, and Commerce had been working for five years to establish the network of local farmers, manufacturers, and other suppliers to support the restaurant. Secondly, it would give an in-depth on McDonalds cultural difference management. 117 Issue: 8, pp.1998-2016. In year 2005 McDonald’s adapted Wi-Fi with the changing times and consumer demand with Nintendo in selected locations. The beef was replaced with chicken, vegetables, and fish. When McDonald’s opens two outlets near each other, franchisees end up cannibalizing each other’s markets which might lead to resentment and unhealthy competition. The rapid internationalization of businesses has resulted in a high level of competition for businesses. The closest McDonald's is never far. For instance, in India, McDonald’s changed the recipe of hamburgers (Kelly, 2012, p.n.d). Menu was also modified to include the now highly popular “teriyaki burger”. However, in many cultures, the products have been adapted to meet the cultural requirements. The success of the international operations of McDonald’s reflects the successful internationalization strategy of McDonald’s (Continent and Ojala, 2012, p.496). Moreover, the slogan “i 'm lovin ' it” is an important element of McDonald 's promotion strategy to keep the connection and interaction with customers in highly relevant, culturally significant ways around the McDonald’s force standard operating procedures like make to order make to stock and just-in-time processes. 1 Issue: 2, pp.97-120. The cultural-distance theory has highlighted the need for considering local culture when expanding into a new market. Introduction: The term Strategy is always been defined as the ‘plan’ made by the top Management of the company to... 2. local customers and promotes ‘maximum local development’. McDonald's used to source a majority of its ingredients from the United States. In England, the layout of the webpage has a British theme. This has resulted in an increase in the acceptance of the brand in the foreign market. Moreover hiring locals would bring more acceptance of the company in local market by customers and company can gain easy access to bureaucracy associated with local government. It involves operating procedures and standards. McDonald's aim to provide the best food not in the town but across the globe that can fill the aromas of its taste to its customers. Therefore, significant investment has been made in the growth and development of employees. The political risk factor is quite important for McDonald’s since there can be several countries which might not allow FDI in fast food industry or disallow franchise kind of business model. Use of chicken instead of pork and beef in India. Ray Kroc realized company can achieve rapid expansion by franchise model. On the other side, in the United States, beef is the main ingredient. The good reputation of the company and the expectation of an excellent service no matter which branch people eat is a marketing strategy of McDonalds. The negotiation for this restaurant had begun since the Montreal Olympics, 1976 and is the largest joint venture agreement between the Soviet Union and a food company. They operate thirty two thousand restaurants serving more than sixty million customers daily. Cooking oil was converted into biodiesel fuel to power the restaurants. 120 Issue: 9, pp.2166-2181. McDonald’s also engage themselves in CSR activity like sustainable supply chain management, healthy and nutritious food products etc. We're here to answer any questions you have about our services. McDonald’s international operations are playing an increasingly important role in our company’s result, as in 1995 its 7,030 restaurants across 89 countries produced sales of $14 billion. To achieve success in the international market, it is important for McDonald’s to expand into the other two segments including semi-global and local. The international segment overall attracted higher customer traffic to more than offset another slight decline in the U.S. Executives credited successful promotions, digital ordering and delivery, and the move to never-frozen beef for supporting the gains. The strategy enables the fast food chain to have a wider reach worldwide. To export a reference to this article please select a referencing stye below: If you are the original writer of this report and no longer wish to have your work published on the UKDiss.com website then please: Our academic writing and marking services can help you! The physical features of products offered in different markets are the same (Chen et al., 2013, p.97). From extremely modest beginning, they could able to scale their business by selling a high quality product cheaply and quickly. There are many companies that tend to focus only on major economies of the world. The marketing strategy of McDonald’s is based on uniformity, no matter what McDonald’s you are in in the world, you will always have the most iconic items. Rent – A monthly base rent or percentage rent that is a % of monthly sales. The value chain of McDonald’s has been built by considering local culture, political environment, and legal factors (Crick and Crick, James 2014, p.421). In the modern business environment, it is a challenge for businesses that adopt an international strategy that can be applied in different parts of the world. McDonald’s finally settled for 10 million pounds. The example includes McAlooo Tikki. The success of the franchising mode of expansion depends on three factors: McDonald’s ensures that it standardizes operations across its franchises to ensure a standard McDonald’s experience anywhere in the world. Through franchise model McDonald’s are able to reduce the cost of setting up new businesses in different region. Political risk is that political decisions, events or conditions which may affect country’s business environment in ways that may affect the investments badly or may have to accept lower returns. At the end of 1993, McDonald’s was Japan’s most successful restaurant chain, with some 1,400 restaurants enjoying nearly double the annual sales of its nearest competitor. Its examples include McDonald, the body shop and hard rock café. This was followed by entry in Saudi Arabia, Oman, Kuwait, Egypt, Bahrain, United Arab Emirates, and Qatar. In order to reduce risk of overseas expansion, KFC encouraged franchising in complicated markets but faced challenges in aligning corporate planning with franchisee’s short term profitability. For a successful business in host countries McDonald’s had to customize its business strategy to the local needs. The marketing strategies of McDonald’s differ on the basis of culture and country. To implement the localization strategy on a large scale, it is recommended that McDonald’s improve the flexibility of its menu. The glocalization strategy has not only resulted in changes in the menu of McDonald’s but also in its marketing strategies (Ziko et al., 2017, p.674). 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! The first element involves the difference between the brand and the products. This theory has discussed three types of institutions including cognitive, normative, and regulative (Bharucha, 2018, p.639). Coke has a transnational strategy, as it moves people, material and the ideas of the people across national boundaries, economies of scale and cross-culture learning. It is a collection of the local, semi-global, and global market. In this market, McDonald’s has invested in newspaper and magazines advertisements (Kim, Christodoulidou, and Choo, 2013, p.40). Franchises give companies such as McDonalds a cheaper way of expanding to other countries while also giving the control over the usage of their brand and operations. The localization strategy of McDonald’s is based on culture (Bharucha, 2018, p.639). McDonald's (NYSE:MCD) growth strategy involves applying what's working in international arenas like France and the U.K. to its home market, which … McDonald’s usually owns the property and also acts as the landlord. Activists sued the company for exploiting children in advertisements, producing misleading advertisements, cruelty to animals and antipathetic to unionization. This strategy involved the adaptation into the menu of McDonald’s. The brand sells across more than 100 countries through its franchised and company owned restaurants. There are several elements of the internationalization strategy of McDonald’s that have resulted in the success of the brand. McDonald’s global system is comprised of both Company-owned and franchised restaurants. Asian consumers were allowed to change company culture for their own purpose. Our academic experts are ready and waiting to assist with any writing project you may have. McDonalds has the planned and focused mission. The level of investment that McDonald’s commits to these markets differs across these different modes but in all cases McDonald’s exerts significant control over the number of outlets and the growth in the number of outlets in each market. In busy places like malls, airports McDonald’s installed quick service kiosks rather than its standard free-standing units. No plagiarism, guaranteed! In international business, there are many businesses that make the mistake of underestimating the potential of small and emerging markets. In East Asia, McDonald's has targeted the younger generation that is the core market of the brand. There are various internationalization theories that have helped in understanding the theoretical background of the process. This strategy has allowed McDonald’s to deal with bureaucracy present in a new market. Check the App to find out what’s free (with $1 minimum App purchase). This product contained an extra layer of beef to cater to the needs of customers in the South African market (Kontinen and Ojala, 2012, p.469). The image below shows how international McDonald’s has grown over the years: Fig1: McDonald’s across the world(En.wikipedia.org, 2018). With the film “Supersize Me” still fresh in the mind of the public, Mcdonald’s decided to do away all the supersize meals and switch to popular healthy meals like the Fruit & Maple Oatmeal, Egg McMuffin, Southwest Grilled … According to this theory, businesses are required to deal with differences in culture. Identify the key elements in McDonald’s global marketing strategy (GMS). The international strategy of McDonald’s is often referred to as the glocalization strategy. The key to such a rapid and successful international expansion is the business model pioneered by McDonald’s. McDonald's entry into these markets with the local menu, which was not accepted by the customers. A Mission Statement. After this they start targeting lower middle class citizens. 120 Issue: 3, pp.639-649. McDonald’s initially opened outlets in higher-income countries like UK, Japan, Canada and then move into lower-income countries like India etc. With this strategy, McDonald’s adapts to the needs of the consumers as required by the cultures of specific countries. Global Franchising McDonald’s does business in more than 100 markets around the world. The fast food concept and the overall operational efficiency observed in different branches have attracted the attention of investors and the restaurant industry. Companies entering into different countries for business have to evaluate their pricing of products based on income distribution of citizens, local inflation and other factors like currency exchange rate. The company used photographs of the British farmers who supply McDonald’s, which appeared on the sheets of paper put on customers’ trays. On January 31, 1990, about 30,000 people gathered in Moscow to visit the new, 23,680-square foot McDonald’s. Registered Data Controller No: Z1821391. It is important for brands to understand that if they have a certain position in a market, the perception of customers will be the same in other markets (Abby and Nicholas, 2014, 87). The institutions are structured that affect the economic outcome, operations, products, and other aspects of a business. One of the internationalization theory is the Eclectic Paradigm. Restaurants were more akin to coffee houses where people meet rather fast food joints. It also needs to keep a strong international culture to keep the homogeneity in its worldwide franchisees. It has also been discussed in this theory that the advantages in the domestic market allow businesses to achieve success in the foreign market. One-third of their new restaurants are built outside of the U.S. to gain a greater scale advantage (22) McDonald's Sustains Their Competitive Advantage with their Brand. The reasons for internationalization differ among businesses. This brings up the culture of innovation, accountability, and better customer responsiveness. No plagiarism, guaranteed! Study for free with our range of university lectures! McDonald's standout markets included the U.K., Japan, China, and France, which set another all-time high in market share. This model has allowed the brand to practice standard operations while adapting to the local and global culture. They recognized that overseas market required an extremely high degree of local responsiveness and since their business has grown too big they also need to manage business spread across different regions effectively and efficiently which would not be achieved through any of the other strategies. This initiative is an important part of the localization strategy of the business (Ziko et al., 2017, p.674). Adaptation works very well for McDonald’s. A Mission Statement. VAT Registration No: 842417633. Do you have a 2:1 degree or higher? Hence McDonald’s internalizes the cost of expansion to a large extent depending on kind of governance within each market and sets the expansion path within as well as across other markets. E.g. : Evidence from an emerging market", British Food Journal, Vol. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. They tried to replicate their US operations China without any modification to local population and their tastes. This burger consists of mashed potato, katsu sauce, and cabbage. The cultural-distance theory has studied the impact of culture on the international operations of a business. The ‘trans- national’ strategy of McDonald’s overseas provides high degree of local responsiveness (Griffioen, 2011). The value chain was constructed taking into consideration of local culture, legal-political and economic environments in mind. One of the key factors that have allowed McDonald's to achieve success in the international market includes the hiring of locals. The high level of competition has created the need for localizing other aspects of the business in addition to the menu. McDonald bears multi-domestic strategy, as it uses existing domestic models globally. The report has discussed the internationalization strategy of McDonald’s and its success in different markets. 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