Global Insights - McDonald's Essay example

Submitted By AmandaJames10
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Global Insights: McDonald’s
Since the founding of the first McDonald’s in 1937 by Richard and Maurice McDonald, the empire has a strong global presence that continues to grow year over year. The brothers opened the tiny drive in and created a food processing and assembly line technique in the first restaurant in California. The success of this model led to Ray Kroc negotiating the first franchise deal in 1954. This deal gave him exclusive rights to McDonald’s in the USA and the ability to control the growth of the company. In 1967, the first McDonald’s was opened in Canada which was the first international venture for the company. Shortly thereafter George Cohon bought the license for McDonald’s in Canada and went on to build a network of 640 restaurants across the country. With the success of McDonald’s in Canada and the USA, the company has grown to over 20,000 restaurants in over 100 countries (Vignali, 2001). According to the 2013 statistics, the chain serves 69 million customers, at 34,000 stores, in 118 countries daily and this number continues to grow daily (McDonalds, 2013).
The success of McDonald’s in the international market is due to the use of franchising. By franchising, the products and service are focused on the ideals and practices of the different countries but maintain the brand and recognition of the US Company. Branding and marketing of McDonald’s worldwide has also been a huge factor of the success of McDonald’s with the ‘Golden Arches’ sign and “I’m loving’ it” slogan at the forefront. McDonald’s has built up the advertising branch of the corporation and has created ads and promotions that appeal to everyone – from children their happy meals to senior citizens with free coffees. By combining franchising, branding, marketing and advertising, McDonald’s has had a great deal of success in the 118 countries it currently has stores in (Vignali, 2001).

Franchising McDonald’s was built on franchises and has continued to be successful due to 80% of the stores being a franchise. According to Daley (2012), a franchise is a business that is created based on the successful business model of another business. A business owner will pay a fee for the rights of the company’s business model and build a company using the brand of the company. In the case of McDonald’s, a franchisee pays McDonald’s to build a restaurant, sell their product and benefit from the success of the company. Daley (2012) claims that the success of the franchisor depends heavily on the success of the franchisees which is why many franchisors have strict processes that a franchisee must pass prior to being able to buy the rights to the business model. Each city, state, and country has different law regarding franchises that often times can hinder an individual from buying and running and franchise. According to Anttonen (2005), in Russia it is illegal for franchisor’s to set standard prices or limits on the prices of the goods. This creates an issue since companies have their products priced according to what is best for the company and the consumer – this law allows franchisees in Russia to price the product as he/she wants. On the contrary, franchises like McDonald’s have popped up in China and India which has given citizens the opportunity to own companies while maintaining the culture (Venkatesan, 2013). According to Venkatesan (2013), McDonald’s offers a completely Indian and vegetarian menu with items at a median price of $.50 in order to successful in India. A company needs to be flexible when moving into new markets because of the cultural and economic differences.

McDonald’s has adopted a very flexible attitude when opening stores in different countries. As McDonald’s grows and enters into new countries, the need to adapt to the culture and values of that country is what will lead to the success of the stores (Venkatesan, 2013). Based on the customs and laws of each country, McDonald’s has to adapt to each situation