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McDonald International Strategy

INTRODUCTION:

 

These days, International markets are highly competitive because of the freedom of world trade and investment environment. Any firm which gets involved in the international business has to choose an international strategy to face international competition. There are four strategies to enter and compete in international markets naming multi-domestic, international, transitional and global strategy. Each strategy differs from other on the bases of cost pressure and local responsiveness.

Cost reduction pressure can be benefited by primary activities like R & D production, marketing and sales and services. Other activities can include location of economies by instituting the firm’s production in an area where the cost is at lowest. Meanwhile, cost of transportation should be considered before initiation of production. Cost can also be reduced by learning effects and economies of scale.

McDonald peruses the international strategy attempting to create value by transferring core competencies from home to foreign courtiers. It derails in the franchisee system and maintains a very strong culture by keeping all the major decisions in the centralized control of head office. Physical structure, most of the brands, outlook, self-service system, and environment are almost the same in all the franchisees around the world. Therefore, it has a very common organizational culture. Almost all the operating decisions are decentralized to the regional offices and franchisees to some extent. There is a relatively low level of independence to the franchisees.

 

 

International Strategy by McDonald

International Strategy:

McDonald's Corporation is the largest chain of fast food restaurants around the world. It serves about 47 million customers daily and sells hamburgers, cheeseburgers, chicken products, French fries, salads, breakfast items, soft drinks, desserts and milkshakes and fast-food is the core competency of McDonald. In this report studies that how McDonald manages such a large of restaurants around the highly competitive world markets of fast-food restaurants. It sales almost homogenous products but the fast-food differs as per area like and testes. It is just like a worldwide product division structure.

Core Competencies:

McDonald peruses the international strategy attempting to create value by transferring core competencies from home to foreign courtiers. It derails in the franchisee system and maintains a very strong culture by keeping all the major decisions in the centralized control of head office. Physical structure, most of the brands, outlook, self-service system, and environment are almost the same in all the franchisees around the world. Therefore, it has a very common organizational culture. Almost all the operating decisions are decentralized to the regional offices and franchisees to some extent. There is a relatively low level of independence to the franchisees.

 

Pressure for Local Responsiveness

Taste and references vary in the different countries around the world. It is because of cultural, weather and historic differences among the countries. Therefore, McDonald restaurants maintain and make their own policies and procedure concerning Operational and business practices. These decisions are related to an advertisement which is done according to the country specific culture, traditions and languages. In the operational levels, there are different brands, which are made according to the traditional foods of every region.

There is also a difference in the host govt. demands like taxes, excise duties, import duties, cultural restrictions other restrictions imposed by the govt. These differences are also settled in the regional offices of each country of business operation. This is because there is a difference of products like difference in Halal meet, vegetarians in India, small size of burgers in Japan etc.

Other Homogeneities:

It is discussed before that there is a strong culture in the organization. So, keep the homogeneity in the products, most of the products like chicken, beef and potatoes are imported from the same area around the world. In this way taste of almost all the product remains same around the globe.

Leveraging Skills

McDonald also is benefited by the learning effects when a product of one region is promoted are taken to the other regions of the world. Such as, many of the Arabian dishes of fast food have become famous in other region franchisees around the world. As McDonald core competency is in the burger. Therefore, to get involved in the other food businesses McDonald holds major shares in PRET A MANGER (a UK-based sandwich retailer) and owns CHIPOTLE MEXICAN GRILL and a restaurant chain naming BOSTON MARKET. In this way company has been able to gain a lot of management and marketing skills by leveraging these McDonald subsidiaries and also have become able to reduce cost. 

 

CONCLUSION:

McDonald has adopted the international strategy to do global business. It is the best strategy which fits in the structure of McDonald international structure because McDonald doesn’t have a heavy cost reduction pressure or even high local responsive pressure. It also needs to keep a strong international culture to keep the homogeneity in its worldwide franchisees. This is because it keeps almost all the decision about core competencies to the head office and let the franchisees operate according to their local laws, rules regulations, culture, traditions to attract customer, do business and keep the products according to the regional needs tastes and demands.  

 

REFRENCES:

 

1.  By Alan M. Rugman (2008),The Oxford Handbook of International Business‎PP:352-380

2.  Charles WL Hill, (2007) International Business PP: 410-490

3.  About McDonald's 2009 www.aboutmcdonalds.com/mcd/our_company/mcd_history.html Accessed on May 25, 2009

4.  by Robin John, Grazia Ietto-Gillies, Howard Cox, Nigel Grimwade Global Business Strategy‎ - PP: 237 -256

 

You can also visit our Ansoff Matrix of McDonald.

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