Category: McDonald’s

Introduction to the Study

McDonald’s Company is one of the largest businesses in the world, with branches in 119 countries. The company serves over 60 million people daily in over 24,000 operational business zones worldwide. The following report focuses on one of the branches and/or subsidiaries operating in the UAE.

It gives a brief history and background followed by a strategic analysis of the company. The company’s chain of restaurants in the UAE will be discussed, including an assessment of their operations, investigation of the industry in which the business operates, and the market as a whole.

The report also states the mission, vision, values, and goals of the organisation in terms of its delivery of services to customers in the region and beyond. The Porter’s five forces model that is applicable in the analysis of performance and competition will also be applied in the company’s analysis. This will be followed by the competition analysis from new entrants in the market as well as the existing competitors.

An analysis of the company in terms of strengths, weaknesses, opportunities, and threats will be done in the section on SWOT analysis. The entry strategies that were used in the creation of the international brand of McDonald’s will also be analysed, with the provision of appropriate recommendations to the same. A conclusion is also provided encompassing all the suggested recommendations.

Background and History of the Company

McDonald’s Company began as a small restaurant in California under the steer of two brothers, Maurice and Richard McDonald in 1949. One of the other individuals responsible for the international expansion of the company is Ray Croc who is the American businessperson with roots from the Czech Republic. Croc bought the two brother’s equity in the company, thus transforming it into a nationally and internationally renowned brand.

McDonald’s business was listed as a public company in 1965 where it continued with its international expansion to markets away from America including Asia. The UAE subsidiary of McDonald’s Company was established in 1994. It has since been involved in the delivery of services in the area and in the region as part of McDonald’s Arabia Company. The company currently has over 100 restaurants that are spread all over the Arabian region.

Industry Analysis

The restaurant industry in the United Arab Emirates is one of the fastest growing industries in the world, with this growth being related to the relatively good performance of the economy. Several restaurants are spread out across the region and in the ever-growing cities. These restaurants provide services related to those that McDonald’s offers.

The industry is also well performing. In 2008, it recorded a growth of about 12% from the previous year in the purchase of food and beverages from the restaurants (Williams, 2008). The value was expected to increase from that of $841 in 2008 to over $1.2 billion in 2012 (Williams, 2008). In 2008 alone, there were over 11000 restaurants in the UAE, with McDonald’s business being among these establishments (Williams, 2008).

Market Analysis

The restaurant market in the UAE is relatively developed, with people here having a culture that is related to that in the Western nations. McDonald’s commands a respectable market share. It currently lies third in the market share in the region that it operates in the UAE. Most of the cities are places of work and residence in the UAE. McDonald’s business has capitalised on this to ensure that it is located in regions where the best market is located.

Mission of the Company

The mission of any company provides the strategic objectives for its existence in the region and industry. The brief statement of an organisation’s mission provides a means of guaranteeing the best services to customers of the organisation, thus ensuring that the company lives to the fullest of its customers’ expectations.

Mission Statement

McDonald’s Company mission is to be the, ‘customers’ preferred base and the way to eat’.

Vision of the Company

The company’s vision is to be the desired food outlet restaurant in the UAE, providing services to customer satisfaction.

Values of the Company

Company values are important to the organisation, employees, and customers. In the UAE, the company aims to be the favourite dining place for the population. The company also aims to provide unmatched quality services. It also hopes to maintain the highest level of cleanliness in its operations to facilitate in its vision of providing the safest food in the region. The company also values time. Besides, it has the value of providing timely services to its customers.

Goals of the Company

The goals of McDonald’s include being the market leader in the restaurant industry in the UAE and the region (Walker, 2007). It also has the goal of being the preferred eating-place for the population by providing the best ethically approved services. The company also aims to give back to the community and/or to grow its business positively in profitability.

McDonald’s UAE, which is a part of the McDonald’s Arabia, is a well-established company, with the brand name being strong in the region and internationally. The company has used this characteristic to ensure that it grows on the international front, with operations in the UAE being based on the desire to establish a restaurant chain as successful as in the mother country.

The vision, mission, and goals of the company are related to those of the mother company. They are necessary in facilitating the success of the company and quality service delivery. Some of the recommendations include that the company should invest more in other aspects of the economy and/or diversify its services in the region by providing foods that are culturally general in the area.

External Analysis of the Company

A competitive analysis of McDonald’s Company in the UAE is possible although with reference to the mother company and the regional branches from which the company operates.

Porter’s Five Forces Model

An analysis of McDonald’s using Porter’s five forces model is necessary to show the competitiveness of the company both in the region and in the UAE specifically. Porter’s competitiveness model shows the attractiveness of a market based on the outcome of the negative and positive influences that this aspect has on the profitability of the organisation on focus.

Risk of entry by Potential Competitors

The entry of potential competitors into a market is an important factor in the model. It is assumed that markets with a high performance index and with high returns will lead to attraction of new member of the market. There are a number of determinants to the entry of new members in a specific market.

They include the barriers that exist, as imposed by the existing market participants, or the nature of the industry in which they operate. For McDonald’s, the brand name is a very important factor in the prevention of entry of other competitors, as these are deemed to be afraid of competing with the well-established brand that the company has created.

Rivalry among established Companies

In any industry, competition is driven by the rivalry between the major industry players who determine the course of the competition. Several factors influence the competition, with different forms of competition being driven by the rivalry between the companies. The main determinant of the intensity of competition in the market that McDonald’s operates in the UAE is the use of advertising and majoring on innovation to attain competitive advantage.

The company has a number of recognised advertising campaigns that it has run in the region. These campaigns have ensured that it is ahead of the pack in competition. The rivalry in the industry is between the company and the major players who originally dominated the market before McDonald’s entry.

The Bargaining Power of Buyers

The bargaining power of buyers, also known as the market of outputs, is also a pillar in the Porter’s five forces model. Consumers have the power to determine the performance of any organisation.

One of the major ways that firms reduce customers’ bargaining power is using loyalty programs that ensure that customers are faithful to the organisation. Another component of this pillar is the number of customers in relation to the number of outlets that the organisation runs. McDonald’s in the UAE has a significantly better ratio, having a number of branches distributed throughout the UAE.

The Bargaining Power of Suppliers

Suppliers are also a significant factor in determining the performance of any organisation. McDonald’s is not an exception of this fact. As opposed to the bargaining power of customers, bargaining power of supplier, also known as market of inputs, affects the availability of raw materials for use on the organisation. If an organisation secures a good supply chain with trusted suppliers, the output also improves.

There is the availability of goods and services to the convenience of its customers. McDonald’s UAE has ensured that suppliers are available for the main utilities in the organisation. These utilities are sourced locally and internationally as per the requirements. Suppliers have also contributed to the quality services that the organisation provides.

Substitute Products

There are several restaurants in the UAE that offer competition to McDonald’s. While these restaurants offer direct competition, the hotel and catering industries around offer an indirect competition through the provision of related products. McDonald’s ensures that the competition that is provided by these substitute products is reduced through the pricing of its own products. When the prices of a product are lower than that of another related product, the customer often makes the choice of buying the cheaper product.

External Threats to the Company

Despite the company performing well both internationally and on the local front, there are a number of threats that it faces. These are likely to affect the future operations and profitability of the business. The main threat is the heath campaign against the company that is evident in many avenues. There has been concern about the prevalence of obesity in other areas of the world where the company operates. This situation is likely to emerge in the UAE. The negative publicity that the campaign creates for the company is likely to affect its performance.

External Opportunities for the Company

Despite the threat above, the company has a potential opportunity on the international front. With the improved performance of most of the economies in the region and the development of major infrastructure projects, the population will increase in the region (Robison, & Goodman, 1996). This provides an opportunity to the company to use its well-established brand name to improve its presence and performance in the region.

Internal Analysis of the Company

Resources and Capabilities of the Company

The company has a number of resources that it can attribute to its success in the country and the region in general. One of the major resources is the strong brand name that it has created over the years. The company also has a large number of experienced personnel to ensure that the services provided are adequate.

The company prides itself in having an experienced human resource. Some of the future resources that the company may invest in are cleaner and efficient way of producing the goods that it sells. This will be a likely source of future better performance.

Competencies of the Company

The company has a number of competencies that it is known for in the industry. As a restaurant with a powerful brand name, McDonald’s provides some of the tastiest fast foods available, with the best known of these foods being the burgers and chips. The organisation has used them as the marketing strategy to ensure that customers can relate the company with the sweetest foods.

The company also offers delivery services for some of the foods that it produces. It often has promotions where these foods are provided at a reduced cost. The main competence of the company is the efficiency with which it is able to provide quality foods. Some of these foods also include sandwiches and coffee, fruits and vegetables, and beef products.

Competitive Advantages of the Company

The company has a competitive advantage in a number of ways that it has managed to add value to its customers. One of the ways that the company adds value to customers is saving them time and money. Through the availability of cheap foods, customers can work comfortably in any city where there is a McDonald’s business. The organisation also ensures that families can save time and money through providing them with cheaper food options as opposed to travelling to their home places to look for food.

Strengths of the Company

The company has a number of strengths that are a source of its dominance in the region and on the international arena. One of the major strengths that have been mentioned is the strong brand name that it has created internationally. This continues to influence its performance even in the UAE.

Another source of strength is the location of the branches at the most convenient places where customers can access them. A large market and consumer base is another of the strengths that the company has. Many people in the UAE have at least dined, or wanted to dine, in the restaurant. The ownership of the restaurant is also by the locals. This makes them tailor their services according to market needs.

Weaknesses of the Company

Despite the strengths discussed above, the company also had its share of flaws. The major weakness of the company is the absence of varieties in the provision of services. The company has embarked on the preservation of its brand name. This has involved the restriction of services to the food and restaurant industry. The company is also located in the large urban areas, thus locking other markets that have a potential to develop.

SWOT Analysis

Global Strategy

The company has adopted an efficient global strategy that is run by the mother company. This involves spreading to all corners of the world. Now, the company has subsidiaries and branches in over 110 countries. The ownership of these branches is purely by the local investors in each of the countries. The company controls the activities of these subsidiaries. The main achievement that the company has had is the establishment of branches in all the major continents and the provision of services related to the mother company.

Entry Strategy

The company used a number of strategies in its entry into the global markets. One of the strategies that it used was the acquisition of other international companies and organisations offering the same services elsewhere where they wanted to enter the markets. The company bought the smaller chain of restaurants where its operations were to run in the countries.

Another strategy that the company used was to contact investors in the different parts of the world. These investors were contracted to provide services on behalf of the organisation using its strong brand name to provide these services. The company used this entry strategy in most of the restaurants that are run in the UAE.

Entry Strategy Recommendation

The Arabian region is one of the regions that McDonald’s may expand into with a large presence. A number of branches are already available in one of the UAE neighbours. In order to expand to countries such as Iran and Iraq, the company needs to invest through the local investors.

It should build its own restaurants and contract locals to run the outlets. This method will be an effective strategy to ensure a widespread acceptance in the new places in terms of determining the entry strategy that should be used when the company enters a market in the future.

Conclusions

Based on the expositions made in the paper, McDonald’s qualifies to be one of the largest restaurants chain in the world. One of the international branches is the McDonald’s UAE. The company, as discussed, is locally owned by different investors, with the brand name being the most significant of its strengths in the operations. Some of the characteristics of the organisation have been discussed in brief.

Some suggestions are possible for this international organisation. One of the recommendations is that it should consider diversification of its services to other industries apart from the restaurant chain. This move would be important in guaranteeing performance even with the threats in the restaurant industry.

Reference List

Robison, R., & Goodman, S. (1996). The New rich in Asia: mobile phones, McDonald’s and middle-class revolution. London: Routledge.

Walker, J. (2007). Oman, UAE & Arabian Peninsula. Footscray, Vic.: Lonely Planet.

Williams, D. (2008). United Arab Emirates FAIRS Subject Report—UAE Establishes Arabic Labeling Requirements for Food Products 2008. USDA Foreign Agriculture Service. Retrieved from https://www.fas.usda.gov/

Executive Summary

The study explores international business although it specifically deals with expansion. In fact, the research report focuses on the entry strategies and the success of franchising in spite of the stiff global competition particularly in the fast-food industry. The report examines McDonald’s international expansion and the concept of franchising.

However, the mode of entry into the international market and growth by the company examined in this study disagree with the idea that the company’s expansion was due to saturation in the existing markets. The study reveals that the expansion of the company was largely due to the desire to increase profitability as well as the emergence of opportunities to expand its market.

The study examines the hurdles faced by the company when trying to internationalize its operations and the strategies used to overcome such hurdles. The study concludes with recommendations for the company to increase its market presence and profitability internationally.

Introduction

Different bodies of literature explore the international businesses in the context of company expansion beyond the domestic borders. The subject of timing and style of entry have also been at the center of these discussions. Theories suggest that companies ought to follow constructive and worthy projects wherever and whenever they arise (Lafontaine & Leibsohn 2004, p.1).

For most organizations, this involves the development and adoption of new technologies or diversification of the product collections. With reference to diversification, geography presents companies with one of the most essential basis for expansion and diversification.

Economic theory asserts that by assuming that risk is impartial, a company with foreign opportunities ought to follow all of them assertively and quickly (Geringer & Hebert 1989, p.237).

In case the company faces limitations such as capital inaccessibility to warrant the management ability, economic theory suggests that such a company will capitalize on profits by initially following the first and the highest prospective profit opportunity.

International theory proposes that companies diminish the uncertainty related to going global by going slowly into such markets. At first, a company begins with entry styles that involve minimal commitment and increase the dedication in markets where success has been achieved (Johanson & Vahlne 1990, p.12). This theory perfectly suits organizations such as the manufacturing companies.

For retail companies, the theory does not explicitly hold. For instance, in companies such as McDonald’s, there is no option but to go foreign at once to reach the consumer if the corporation has to make any sales. The companies ought to increase the foreign units to attain a substantial customer base.

McDonald’s was founded in 1954 in California. Over the years, it has become one of the most renowned and esteemed brands globally. The initial international business undertaking by the company was when it opened a franchise in Canada. Now, the company has opened more than 34,000 outlets globally.

It employs more than 1.8 million workers in more than 120 countries. In pursuing its expansion and globalization agenda, 80 percent of the company global outlets are franchised (McDonald 2013, p.1).

Approach to internationalization

Market entry strategies

McDonald’s is popular for introducing the model of franchising when focusing on expansion. Through the model, the company has gradually but steadily expanded to most global food markets.

By reflecting on the model used by the company to expand its business, one is able to discover what attracts companies to the meticulous market opportunities as opposed to the other markets they will follow later (Buckley & Casson 1998, p.540).

Inherently, the company first entered markets that were culturally and closely similar to those of the founding country, the U.S. McDonald began with Canada that has a consumer base with close proximity in terms of culture to the US consumer tastes and preferences. The company expected the consumers to behave more or less the same to the U.S consumers.

However, geographical proximity was also a factor in deciding to venture into the Canadian market. In other scenarios, companies are driven by new considerations including essential drivers of the market potential (Shane 1996, p.74).

These affect the projected profitability of a market and consequently the company’s resolution with respect to where to enlarge. Institutional considerations also play a role in a company’s evaluation on the worth for internationalization.

The nature of McDonald’s business requires the company to enter the international market in one phase as opposed to manufacturing companies that can enter the international market by first exporting the products. McDonald’s has to be physical within the reach of the consumers considering that it is a retail company. In fact, it must be within the vicinity of the prospective buyer for it to make sales (Davidson 1980, p.13).

The company has to open foreign subsidiaries to amplify the number of customers. This actuality opens the avenue for examining the strategies used by the company to enter into the international market.

The nature of McDonald’s products makes them impossible to export since they are perishable. The company hence has to decide on other operational approaches. These approaches differ from market to market. Some of these markets may require advanced level of dedication and allocation of resources than others. This leaves the company with limited options including opening subsidiaries that franchise directly.

The company may set up a master franchising deal where the main franchisee owns and manages all other outlets in the region. The company may also sign a partnership deal with local partners. Alternatively, the company may pursue acquisition of similar companies in the target markets.

The company in the past attempted all these entry modes with each presenting different results. However, all the ventures have been successful. The degree of success has been attributed to the level of commitment the company gives to the ventures.

The level of venture dedication McDonald’s commits to the markets varies across diverse governance models. However, in all cases, the company exercises substantial control over the number of units and the increase in the numbers of the units in every market (Lafontaine & Leibsohn 2004, p.5).

Subsequently, the company largely internalizes the price of expansion, although to varying scale while relying on the management within every market. The corporation also takes upon itself to set the growth path inside the domestic, regional, and global markets.

Even when the company does not fully internalize the expansion costs, a contract entered into with the franchisee specifies an enlargement plan that indicates the number of units to be added at diverse points in time. The company directs the growth course in such a market.

Moreover, considering that strict growth schedules entail advanced expenditure on the master franchisee, the franchisee may not be able to meet the costs of rapid expansion. Hence, the franchisee will not be willing to pay whatever the company would require for such contracts.

On the contrary, such franchisees would be willing to pay as much for a slow expansion contracts. The company absorbs the expenditure on the fast expansion in master franchise situations. This also applies when the company engages in direct franchise or joint ventures.

Internalization theory indicates that acquaintance would be a driving consideration in deciding the locations that McDonald’s will expand to internationally. However, other considerations that the economic theory suggests may be essential for the company to expand internationally given that they seem attainable.

The economic theory on the company entry overtly focuses on the significance of sunk costs when deciding on the number of companies that can operate in a single market (Lambson & Jensen 1995, p.537). Assuming that McDonald’s puts this into consideration, it has to incur expenditure associated with learning the consumers and the systems that direct that market. The expenditure would also involve advertising costs.

In this view, the company has intentionally retained low supply to create queues in the outlets consequently increasing the consumer curiosity and superiority discernment. The cost of such a move is the loss of income the company would have made if it ran extra units very fast in the same market.

Trade limitations/barriers that apply to McDonalds

Various obstacles face companies longing to venture into the international market. The most evidenced are the cultural, political, societal, and trade restrictions. Culture entails national ideas, values, and tangible items like food (Mead 1994, p.10). However, societal forces involve the traditions, beliefs, and education.

Selling products manufactured in one country to another state is at times difficult if the cultures are different (Fatehi 1996, p.20). McDonalds was met with protests when it established its first outlet in Rome. The people were objecting the smell of frying hamburgers. The social forces that influence international business are another set of limitations.

Religion in some countries significantly sways the purchasing habits of items including the basic merchandizes such as clothes and food. In most countries, individuals do not possess similar preferences in terms of clothing, food, or healthcare (Gielens & Dekimpe 2001, p.237). For example, it will be difficult for McDonald to make beef burger sales in India.

Political limitations affect all companies that go abroad (Henisz 2000, p.343. The laws and legislations governing how business should be conducted are inherently different worldwide. The mind-set of investors in countries experiencing political unrests is negatively affected. The instabilities generate unfavorable climate for international business.

The political instability culminating from riots in Indonesia led to the closure of more than 20 of the McDonald’s 101 outlets. Some of the outlets had been destructed by the rioting mobs. This was necessitated by the moribund buying capacity of the domestic consumers. Additionally, the Rupee sharply depreciated leading to the tripling effect on the cost of imported but unprocessed materials.

Trade restrictions are hindrances to international business (Keneth, 2010). These are often enforced through importation tariffs, exchange controls, quotas, and embargoes. India and Australia are infamous for these behaviors. The restrictions are aimed at discouraging what they refer to as ‘trade intrusion’.

How McDonalds deals with limitations

In order to overcome cultural and social limitations in Rome, the company exchanged the exhaust systems of the outlet. However, to overcome social limitations, the company normally ensures that it studies the target market first as well as learns the customs and beliefs of the target customer before entering such markets. This ensures that the company offers products required by the consumers in that market.

Such was the case in China where the company carried out a five-year research before opening the first outlet (Han 2008, p.73) When political climate is unfavorable, the company reduces the number of outlets while retaining units in stable regions.

In some cases, the company completely ignores such markets such as Somalia in Africa. In order to overcome trade limitations, the company only invests in countries where the terms of trade favor them or negotiate with the authorities to be offered better terms for investment (Shaver, 1998).

Performance in internationalization, market entry and trade

McDonald has been an excellent example of the internalization of business. The company has managed to successfully franchise in more than 120 countries with more than 34,000 outlets.

How to improve internationalization

Since the company usually utilizes local human resources, it may consider exporting its existing competencies to give it an advantage in the international markets (Edstrom & Galbraith 1977, p.249). McDonald should also reduce its costs by accessing cheaper labor, materials, or advanced technology by off-shoring production to countries such as India and China while maintaining quality.

The internalization approach adopted by McDonald’s is in line with the company’s franchising approach to expansion. It has successfully overcome all the barriers through effective strategies. The effectiveness of the strategies makes the company a viable option for an investor to invest in the corporation (Shaver, 1998). There are strong indications that the strategies will continue endowing the company with profitability.

Conclusion and Recommendations

This study has explored the international business with regard to the growth of McDonald’s, a leader in the fast-food industry and a pioneer of franchising. The company did not enter the international market due to domestic saturation. In fact, the company takes advantage of the arising opportunities.

The company still has markets that have not been explored. The company largely expands internationally through franchising. For instance, franchising represents the company’s 80 percent global business.

The company should venture into the emerging markets where labor is cheap and raw materials are inexpensive and readily available. The company should ensure the addition of special domestic treats to the main products to suit the tastes and preferences of the consumers.

It should strive to obtain raw materials locally whenever possible and buy them using the domestic currency to ease exposure to the unenthusiastic impacts. In markets where competition is stiff, the company should pursue acquisition instead of making a completely new entry.

The company has had significant effect on China. Going by the trend it received regarding its opening, the company should consider amplifying its Asian presence. Considering the trend in which families are becoming conscious of their health, the company should offer the consumer very healthy product choices. There should be menus that are acceptable by the consumers.

References

Buckley, P & Casson, M 1998, “Analyzing foreign market entry strategies: extending the internationalization approach”, Journal of International Business Studies, vol. 29 no. 3, pp. 539-561.

Davidson, W 1980, “The location of foreign direct investment activity: country characteristics and experience effects”, Journal of International Business Studies, vol. 11 no. 2, pp. 9-22.

Edstrom, A & Galbraith, J 1977, “Transfer of managers as a coordination and control strategy in multinational organizations”, Administrative Science Quarterly, vol. 2 no. 1, pp. 248-263.

Fatehi, K 1996, International management, Prentice Hall, New Jersey.

Geringer, J & Hebert, L 1989, “Control and performance of international joint ventures”, Journal of International Business Studies, vol. 15 no. 6, pp. 235-253.

Gielens, K & Dekimpe, M 2001, “Do international entry decisions of retail chains matter in the long run?” International Journal of Research in Marketing, vol. 18 no. 2, pp. 235-259.

Han, J 2008, “The business strategy of McDonald’s”, International Journal of Business and Management, vol. 3 no. 11, pp. 72-74.

Henisz, W 2000, “The institutional environment for multinational investment”, Journal of Law, Economics and Organization, vol. 16 no. 2, pp. 343-363.

Johanson, J & Vahlne, J 1990, “The mechanism of internationalization”, International Marketing Review, vol. 7 no. 4, pp. 11-24.

Keneth, A 2010, Barriers to international business. Web.

Lafontaine, F & Leibsohn, D 2004, Beyond entry: examining McDonalds expansion in international markets, Sage, New York.

Lambson, V & Jensen, F 1995, “Sunk costs and the variability of firm value over time”, Review of Economics and Statistics, vol. 3 no. 1, pp. 535-544.

McDonald 2013, Get to know us.Web.

Mead, R 1994, International management: cross cultural dimensions, Blackwell, Oxford.

Shane, S 1996, “Why franchise companies expand overseas”, Journal of Business Venturing, vol. 11 no. 2, pp. 73-88.

Shaver, J 1998, “Accounting for endogeneity when assessing strategy performance: does entry mode choice affect FDI survival?” Management Science, vol. 44 no. 4, pp. 571-585.

Abstract

McDonald’s Corporation is one of the largest fast food retailers in the world. The publicly traded company was founded on 15^th May 1940 in San Bernardino, California. Over the years, the company has managed to achieve consistency with regard to meeting various customer needs, maintaining high quality products, and adapting well to the dynamic nature of the international market. The company mainly sells fast foods such as hamburgers, chicken, French fries, soft drinks, coffee, milkshakes, salads, and desserts.

With more than 35,000 chains in 119 countries, McDonald’s is definitely one of the world’s best known brands. One of the main factors that have contributed to the strong brand is the ability of the company to understand the changing lifestyle choices of their customers by providing menus that meet their dietary needs. McDonald’s often conducts market analysis to understand various factors that influence the dietary choices of its customers in order to develop new products that match their changing needs.

Drivers for new product-menu development at McDonald’s

New product development refers to the complete process of introducing a new product to a market. The process at McDonald’s involved increasing the product range and variety by introducing new items (Barnes, 2007). In addition, the company developed new product lines and renovated the existing ones to include healthier options.

The new developments made at McDonald’s were customized to reflect the tastes and customs of the local market. One of the main factors that contributed to McDonald’s introducing the balanced lifestyle menus was the changing needs of the customers (Barnes, 2007). People in the contemporary world have become overly conscious about their health and the need to life a healthy lifestyle. Meeting the dynamic customer needs is a complex process that required McDonald’s to make numerous considerations with regard to the interplay of factors that influenced various food choices.

Healthy living entails eating low fat foods and daily exercise (Williams & Carter, 2011). McDonald’s considered these factors because they have a huge effect on food decisions made by their clients. Customers responded very well following the introduction of the balanced lifestyle menus, thus boosting the company’s revenue across various outlets.

Another driving force for new product development at McDonald’s was the need to retain their customers and continue their dominance in the global market (Barnes, 2007). With the customer needs and preferences rapidly changing, the company could not afford giving their competitors a chance to take away their customers. Thus, they needed to act swiftly by introducing the balanced lifestyle menus across it numerous outlets.

Reflection of new product development in McDonald’s menu lines

The concept of new product development reflects on McDonald’s menu lines in various ways. It is important to note that the company sourced the ideas for its new menu across various functional international teams comprising of its employees and experts. The balanced lifestyle menus were supported by three pillars namely, menu choice, need for physical activity, and information (Barnes, 2007).

Under menu choices, McDonald’s focused on adding new products that would help its customers to adapt healthy living. In addition, it introduced new menu lines that introduced new products such as salads, fruits, and vegetables (Williams & Carter, 2011). For example, McDonald’s units in Europe, Canada, and Hong Kong were among the first to introduce fruit salads, fruit yoghurt, and other new products created by the company (Hawkes & Henson, 2009).

In other menu lines such as Taiwan, Australia, and Sweden, McDonald’s introduced new products such as toasted rice burger, carrot slices, cereals, juices, as well as low-fat milk and yogurt. The introduction of balanced lifestyle menus also focused on promoting the concept of physical activity (Williams & Carter, 2011). The initiative was highly localized as the company wanted to create a positive appeal to its customers across the world. McDonald’s used a number of strategies in its efforts to internalize its business.

The first strategy was developing a work partnership with the international Olympic committee during the launch of its “Go Active” program (Barnes, 2007). This help the company to create a global appeal to its customers across the world, a step that helped to boost its performance in the international market. For example, the sponsorship deal with Stepometers in order to promote their happy meals, also help McDonald’s to have an easier time creating an international appeal (Williams & Carter, 2011). The main aim of the program was to provide McDonald’s customers with various online physical resources and personal fitness assessment tools.

Designing of new products and innovation teams at McDonald’s

Over the years, McDonald’s has been very consistent and effective with regard to designing new products. This has been necessitated by it ability to bring together a highly creative innovation team that identifies opportunities as soon as they sprout (Barnes, 2007). The balanced lifestyle menus represent one of McDonald’s latest products to be introduced into the market.

This new product was designed and developed with an orientation towards fulfilling the increasing demands for healthy foods by the customers (Bratskier, 2015). The innovation team that came up with the new menus comprised of nutritionists, as well as experts in the fields of wellness and physical activity. One of the corporate objectives of McDonald’s is increased promotion of innovation and development of new products that meet the dynamic needs of various customers (Associated Press, 2004).

The customer is always the top priority, a phenomenon that influenced the kind of new products developed by McDonald’s. In addition, the food retailer also developed and promoted new and healthier menus that considered the tastes and customs of local in its various outlets. The innovation teams generate and source ideas for new products by conducting a thorough market analysis (Hawkes & Henson, 2009).

Research has established that a market analysis helps in developing new perspectives about consumer choices, a factor that highly influences the development of new ideas. In addition, creating an innovation team with individuals providing expertise in various fields helps to introduce efficiency in the decision making process (Associated Press, 2004).

Activities by McDonald’s geared towards increasing the acceptance of new menus

First, the company focused on developing menus that promoted the habits of the local people and at the same time meeting their dietary needs (Barnes, 2007). Research has established that culture a lot of influence of the choices that people make with regard to food. Therefore, it was important for McDonald’s to ensure that their new menus had a cultural aspect that would draw more customers.

Second, McDonald’s created an active lifestyle team, whose main duty was to provide the management team with strategic directions with regard to achieving efficiency in the introduction of new products (Gilbert, 2008). The cross-functional team was very influential in ensuring that customers understood the health benefits of the new products through well coordinated advertisements (Williams & Carter, 2011). In addition, it ensured that the information available in the company’s website is updated as soon as new products are developed.

Third, McDonald’s also hired a global team of nutrition experts, whose main role was creating contact with the right stakeholders. The reason for creating a nutrition team was to ensure that the culinary culture of various communities was considered when developing new products for respective markets (Barnes, 2007). This played a crucial role in increasing customers’ acceptance of new products because they met all their nutrient and culinary requirements.

Exploiting the power of social media

Social media has changed the way people do things in a lot of ways. Research has established that social media tools such as blogs are very influential in the food industry with regard lifestyle choices and food decisions (Hill & Jones, 2011). There are numerous ways through which McDonald’s can exploit the power of social media to increase the acceptance level of their new menus among their customers.

First, the company can create a nutrition blog that will give their customers a platform to interact with each other and nutrition experts (Hill & Jones, 2011). The blog can also be used to generate posts that educate people about various products contained in the menus and their importance in terms of achieving success in adapting a healthy lifestyle. In addition, the customers can share their different experiences with the new menus on the blog, thus influencing other users who have not tried them to do so (Hill & Jones, 2011).

Second, social networking sites such as Facebook provide a good opportunity for McDonald’s to promote its new recipes among the high number of people using the tool. By hiring a social media manager, McDonald’s can increase the customer adoption of its balanced lifestyle menus through status updates and instant chat messaging service (Hill & Jones, 2011). The number of people that use Facebook keeps increasing every day, thus creating an even bigger opportunity for McDonald’s to dominate the online market.

Another effective way in which McDonald’s can exploit the power of social media is giving free meal vouchers to the people who like their social media pages and profiles (Hill & Jones, 2011). This is a form of advertisement that the company can use to promote their menus because the few followers who will get a chance to sample the menus will definitely influence the others depending on the kind of feedback they give. Social media is a very powerful tool that can propel a business to prolonged success as long as it is used effectively (Hill & Jones, 2011).

Measuring the success of new menu items

There are numerous elements that McDonald’s can use to assess the success rate of its new balanced lifestyle menus. The first element is the number of people that visit their outlets every day (Love, 2008). A sudden increase in the number of customers is a clear indication that the menus are a success, while a reduction in the number of people visiting various outlets can indicate the ineffectiveness of the new products. The second element that can be used to measure the success of new menus is the kind of feedback and comments from customers.

Positive remarks would definitely mean that the customers appreciate the new menus, while negative remarks indicate that there are certain things that should be improved (Love, 2008). Profitability can also be another effective element that McDonald’s can use to assess the effectiveness of their new tools. Increase in revenue is an indication that more people make purchases, while a reduction in profit margins can be an indication that the demand for the new products is very low (Gilbert, 2008).

References

Associated Press. (2004). McDonald’s Phasing out Supersize Fries, Drinks: Efforts to Offer Customers a Balanced Lifestyle. Web.

Barnes, D. (2007). Operations Management: An International Perspective. New York: Cengage Learning.

Bratskier, K. (2015). Want Kids to Eat Healthy? Make their Meals More like McDonald’s. Web.

Gilbert, S. (2008). The Story of McDonald’s. San Francisco: The Creative Company.

Hawkes, C., & Henson, S. (2009). Trade, Food, Diet, and Health: Perspectives and Policy Options. New York: John Wiley & Sons.

Hill, C., & Jones, G. (2011). Essentials of Strategic Management. New York: Cengage Learning.

Love, J.F. (2008). McDonald’s: Behind the Arches. New Jersey: Paw Prints.

Williams, E.M., & Carter, S.J. (2011). The A-Z Encyclopedia of Food Controversies and the Law. California: ABC-CLIO.

Executive Summary

In this paper, a comprehensive report has been provided to examine the modern applications of cross-cultural management in multinational corporations and their impact on managing workforce, organisations, and business processes in foreign cultures. In particular, the report takes a case study approach, using the fast-food multinational company, MacDonald’s, which is a leading American multinational corporation in global business.

In particular, the entry and adaptation of the company in the vast Chinese market will be examined with special consideration of the cultural differences between Chinese and American societies. Using the case of McDonald’s, the paper concludes that it is important for managers to develop comprehensive knowledge and understating of cross-cultural management to develop quality interventions in international marketing, mergers, and acquisitions.

Introduction

With an increasing trend towards the globalisation of business, the number of companies working in foreign nations has increased significantly.

As modern companies attempt to diversify their business to cover multiple nations, the number of employees working in foreign lands or for foreign corporations has increased tremendously¹. For instance, it is estimated that more than 70 million people across the world work for foreign companies or in foreign countries. Studies have shown that this number has more than doubled between 1990 and 2010.

Methodology

The paper will carry out a comprehensive analysis of the cross-cultural patterns used in MacDonald’s business in China. It will examine the cultural differences between China and the USA based on existing theories, such as Hofstede’s cultural diversity model². In particular, the study attempts to examine how the company has used cultural adaptation strategies in China and how Chinese customers think about the company’s adaptive behaviours in the country.

Thus, the paper will examine the cross-cultural issues facing the company in its Chinese market, the behaviours adapted to deal with these issues and the customer perceptions of the corporate strategies. The research is a qualitative approach that uses a case study approach as a study protocol. The case of MacDonald’s presence in China and the strategies the company has used to deal with cultural differences and adapt to the Chinese culture have been examined from the case study approach.

Also, it describes the perceptions of Chinese customers towards the cross-cultural strategies that the company has used to fit into Chinese culture. First, the paper will provide a brief but detailed analysis of different definitions of culture, culture, and cultural adaptations and different cultural frameworks. Secondly, it will examine the company’s strategy for entering the Chinese marketing, with a special reference on issues that relate to culture and cultural differences.

The paper attempts to answer the question on the measures and strategies that the company has taken to adapt to Chinese culture. Also, the paper tries to answer the question of the factors that contribute to the successful adaptation model at the company, which is favoured by the target customers.

Body of research Report

Different definitions of culture

According to Hofstede³, Culture is a collective programming of the human mind, which forms a difference between groups of people. According to this model, culture is a system of values that are collectively held among a given group of people or society. On the other hand, Becker⁴ states that culture refers to all the things that are done thought, or possessed by people as members of a given society.

This definition states that culture is made up of distinct components- material objects, beliefs, ideas, attitudes, and values as well as behaviour either specified or expected. Thus, this definition has become an important model for examining culture and cultural differences between individuals in different countries.

The current examination of culture in a narrow concept regarding a given market or society is an important aspect of modern studies on cross-cultural management. In this concept, culture is considered as a form of behaviour adaptation by an organisation as a legal entity or a person⁵. Several scholarly works have been carried out to investigate this notion.

In particular, the notion of cross-cultural adaptation has become an important area of research in business and management. Elements of cultures, such as normal values, rules, language, attitudes, and customs, are significant in these studies.

Ady⁶ asserts that cultural adaptation is a process of evolution through which individuals and groups modify their habits, behaviour, and customs to ensure that they fit into a given culture. Also, other scholars have asserted that cultural adaptation is a gradual process that particular society or culture undergoes as individuals or groups from other cultures actively participate in the culture through sharing of ideas, objectives, perspectives and other practices.

It includes the behaviours that allow people to live independently and function in the desired manner in their daily lives expected of a particular age or social setting. For an individual or group to adapt to a particular culture, several challenges are involved. Studies have shown that it is a difficult task because there are always defined rules or norms that an individual is to follow. Also, an open mind is required for an individual or group to adapt to a new culture

According to Kotler⁷, the cross-cultural adaptation involved a long process that allows an individual, group, or institution to adjust to the native ways of behaviours and thinking to achieve consistency with the target culture.

Culture and cultural adaptation in marketing

Kotler⁸ has developed one of the most convincing models of studying culture in a business setting. According to this model, culture is the most important and basic of the needs and behaviours of an individual. Also, a model by Herrmann and Heitmann⁹ asserts that multinationals must consider cultural differences when developing management strategies for marketing across borders.

This assertion also argues that differences in cultures between societies in different regions tend to result in different consumer responses to a product or service. According to Kotler¹⁰, culture and cultural differences have a profound influence on consumer behaviour through personal, psychological, and social factors. Similarly, the influence of social, cultural and personal factors has a profound influence on consumer behaviour in any given market¹¹.

Thus, companies and their leaders need to study and understand these factors to have a good knowledge of consumer behaviour and behaviour patterns. In this way, the corporate world is likely to achieve effective and profitable decisions in the market using the conventional market mix¹².

Different cultural frameworks

To elaborate on this assertion, Kotlter (2006) has developed a comprehensive model to describe how culture influences consumer behaviour at the market place. This model shows that culture, social, psychological, and personal factors affect two important elements in a market, which are consumer behaviour and marketing mix. The element of culture is comprised of social class as well as sub-culture. The social factor includes several elements, such as family roles and status as well as the reference group.

Similarly, the personal element is comprised of several elements, such as lifecycle and age, occupation, personality, and economic situation¹³. Finally, psychological factors include leaning, motivation, perceptions, beliefs, and attitudes.

All these factors have a direct influence on consumer behaviours in a given market. In turn, consumer behaviour has a direct influence on the marketing mix adopted by an organisation in the market. This implies that the four factors have an indirect but important influence on the marketing mix adopted in an organisation to deal with cultural challenges in a particular market.

Luckhohn and Strodbeck developed another important model in the 1960s. This model argues that differences in culture have significant practices in leadership. According to the model, the basic nature of humans is an important dimension of culture. It states that individuals are good if left to their devises, which makes them act reasonably and responsibly. On the other hand, they can be evil and untrustworthy if the reverse is true.

Moreover, people can be a mixture of good and evil. Secondly, the dimension of the relationships between people is important in this model. It argues that people are individualistic, which is a primary characteristic of every individual. Group relationships are developed between groups and families, giving individuals an ability to fit in a group or family. The activity of orientation is also an important dimension in this model. It argues that “being” is the point of an individual’s life that seeks to help one to live and experience a given task.

The relationship between man and nature is also an important dimension in this model. It argues that the relationship can be subjugation, harmony, or domination. In the subjugation relationship, the environment and nature determine human activities. In the state of harmony, humans live in harmony with their environment. In domination state, humans dominate the environment.

Hofstede’s model is one of the most studied ones in the modern world. It argues that culture is based on certain dimensions. First, the power distance is an important dimension because it determines whether people accept or reject the inequality in power distribution. Secondly, it emphasises on the dimension of uncertainty avoidance, which refers to the degree of comfort associated with ambiguity and uncertainty.

The third dimension, known as individualism versus collectivism, measures the social frameworks in which people give priorities to individual or group needs. Finally, the dimension of masculinity versus femininity emphasises on whether a culture places the importance of male versus female roles and activities.

Managerial roles and differences across cultures

Managerial roles are an important aspect of managing an organisation across different cultures. While the roles of the management are well defined in scholarly work, there are several differences in managerial roles due to differences in cultures. Manager’s interpersonal roles include figurehead, leadership, and liaison.

All three are affected by cross-cultural differences. For instance, figureheads have symbolic value in certain cultures while in other cultures, it is not an important thing to refer to a leader as the figurehead. In leadership roles, highly individualistic cultures have a higher preference for visible leaders. On the other hand, highly collectivistic cultures have a high preference for consultative leaders.

International mergers and acquisitions

Cross-border mergers and acquisitions are common in the modern business world. They are similar to any other international business project in several ways. For instance, they require an initial outlay. Also, they are expected to generate cash flows with a higher value than the initial cash investment is.

The motivations behind the formation of mergers and acquisitions are mainly based on global consolidation as well as market share, which makes companies seek to enter into new markets, but in an indirect manner.

Mergers and acquisitions on an international level have several advantages. For instance, they take less time and gain benefits from customer relations with a foreign nation because the acquired company in the target market will establish channels for good relations. They allow companies to increase their benefits and trade them off against incremental costs incurred when establishing the ventures.

There are several types of mergers and acquisitions applied at the international level. For instance, mergers and acquisitions can be based on functional roles within the target market. In this case, a horizontal merger is achieved when two companies in the same business sector joint together either by the acquisition of one by other or merging into one unit.

On the other hand, a vertical merger applies to the case in which a business acquires its supplier. A third example is conglomerate mergers and acquisitions, which involve two irrelevant companies joining either through merging or one being acquired by the other. They are both in different and irrelevant areas of specialisation.

Strategic merging is one of the most important methods in the modern world. It involves a long-term event in which an organisation targets at and holds an acquired firm, which allows them to create synergies through the expansion of market share, customer based and corporate strengths in the long run.

Explanations of Different integration mechanisms and approaches

The purpose of this section is to examine the strategies that McDonald’s has used to ensure that it fits into the Chinese market, which is defined by a culture different from that of the American one. In this case, the company’s ability to grow and achieve profits is examined from the cultural perspectives, taking into consideration the strategies that have been used to influence customer behaviour and perceptions towards its presence, products, and strategies.

Specifically, the examination of the company’s cultural adaptation strategies will be done based on the definition of culture that Becker¹⁴ developed. This means that three aspects of culture will be examined – material objects, values, beliefs, attitudes, values, and behaviour, either specified or expected.

Product innovation to meet the demands of the Chinese tastes and preferences is an important strategy. At McDonald’s, a well-developed strategy offers worldwide-standardised products within their menu. Nevertheless, entry into the Chinese market proved different in some way. The company realised that Chinese culture and market are unique in different ways.

When the company was entering the market, its leaders claimed that the company was not willing to change its global menu in China. It wanted to retain the American style in foreign markets. According to Bian¹⁵, the company argued that it wanted to do what it had been doing in the US. They wanted to ensure that Chinese food would have been similar to what the company had been offering in other markets. However, this strategy did not work as expected.

The company failed to consider the cultural differences between Chinese and American societies. Chinese consumers have a behaviour of selecting Chinese standards and developing negative attitudes towards western ones.

Also, the presence of other companies like KFC affected MacDonald’s. For instance, KFC is an American multinational fast-food corporation that entered the Chinese market some years before MacDonald’s. KFC attempted to consider Chinese preferences and tastes in food, which were relatively different from American tastes. This aspect is a product of the cultural differences between the two societies.

To deal with the problem, MacDonald’s has decided to reconsider its previous views. For instance, in 2004, the company started preparing and offering Chinese products to its customers. For example, friend eggs and Chinese pancakes were included in the company’s breakfast menu. In 2007, the company further introduced a relatively new hot drink enriched with ginger and honey, which are some of the products that are popular in Chinese food culture.

In Chinese food culture, ginger and honey have been used in drinks to drive away coldness. Nevertheless, the company retained its traditional American products, especially hamburgers, which indicate that it is not willing to change its global culture to adapt the local expectations in China.

Between 1990 and 2003, the company’s strategy in the Chinese market was based on its global marketing culture. The company’s products were targeting families with children, leaving out other segments of the market. When reviewing its strategy in 2003, the company added products for the youths and children aged above four years. It used a new slogan, “Young, lively and fashionable,” hoping to entice the young Chinese citizens by providing them with a positive and happy experience.

Currently, the company is using this strategy even in its advertising strategy. For instance, its decorations in restaurants and commercials for advertising are mainly designed to entice and attract youths. Also, it uses commercials depicting such topics as romance, music, and sports to appealing to the young people in the market. For example, it uses the services of celebrities in sports, film, and music to advertising its products.

Also, the type of music played in its outlets is relatively recent, especially Chinese pop, which attempts to attract young people. However, the company is still using its American approach to deal with Chinese cultures. For instance, it is still using children toys based on American mentalities, such as those toys common in American movies like “Toy Story” and others.

According to several studies in China, Chinese people consider going to a restaurant as a genuine habit of meeting friends, family members, peers, and business partners. Chen¹⁶ has shown that most Chinese people like meeting people in restaurants for social and business purpose as opposed to taking meals.

Thus, meals in restaurants are taken for socialising. The study also shows that most Chinese prefer taking their friends to restaurants instead of inviting them to their homes. This is in contrast to the American culture, where restaurants are visited for nourishment.

In 2006, McDonald’s borrowed the American idea of “drive-thru restaurants,” a concept that allows order to be placed through microphones and picked at a window. Customers are allowed to remain in their vehicles when ordering and taking meals. To enhance this new idea, the company entered into two partnerships with petroleum dealers Sinopec and Petro China.

The deal allows the company to use the expansive packing areas in the gas stations to allow customers to sit back in their vehicles as they take meals. According to the company, a new strategy is a promising idea that is likely to be a future strategy for expansion, especially in a country that is quickly becoming a world economic powerhouse.

Also, it is an idea that works well in rural areas, which carries the largest population in China. However, this idea is not common or popular in Chinese culture, despite being one of the most popular services offered to fast food consumers in the US. Chinese people prefer eating while seated inside a restaurant where they can meet friends and new people. Thus, a new idea is facing problems in China, and its future is unknown.

McDonald’s Corporation has faced conflicts of cultural differences between the American and Chinese standards of culture, especially when entering the market or introduction a new.

Recommendations

This research paper reveals that the need to adapt to the local culture is an important aspect of managing across cultures. Cultural differences between two nations or societies are likely to affect the business of an organisation, especially if the marketing strategies are undeveloped in a manner to attract the local people. Corporate leaders need to develop marketing strategies based on prior knowledge of the local culture, which makes it possible to adapt to the local customs, values, norms, and beliefs.

Bibliography

Ady, J. C. Toward a differential demand model of sojourner adjustment. Sage, Thousand Oaks, 2010.

Becker, K. Culture and International Business. Jaico Publishing House, London, 2005.

Bian, J. KFC’s evolution in China. Citic Press, New York, 2009.

Browaeys, M. Understanding Cross-Cultural Management. Prentice Hall, New York, 2011.

Chen, S. The comparison analysis of the development of Chinese and western restaurants chains. Business Culture, New York, 2006.

Herrmann, A. & M., Heitmann, ‘Providing more or providing less? Accounting for cultural differences in cons’, Cross-Cultural Research, vol. 23, no. 1, 2006, pp. 7-25.

Hofstede, G., ‘Cultural dimensions in management and planning’, Cross-Cultural Research, vol. 2, no3, pp. 81-99, 2004.

Kotler, P. Marketing management. Pearson Education, New York, 2009.

Rinne T., G. Steel & J. Fairweather, ‘Hofstede and Shane Revisited: The Role of Power Distance and Individualism in National-Level Innovation Success’, Cross-Cultural Research, vol. 46, 2: pp. 91-108, 2012.

Thomas, D. Cross-Cultural Management: Essential Concepts. Sage, New York, 2008.

Thomas, D. Readings and Cases in International Management: A Cross-Cultural Perspective. Sage, New York, 2003.

Footnotes

1. D. Thomas, Cross-Cultural Management: Essential Concepts, Sage, New York, 2008.
2. Hofstede, G., ‘Cultural dimensions in management and planning,’ Cross-Cultural Research, vol. 2, no3, pp. 81-99, 2004.
3. Hofstede, 88.
4. K. Becker, Culture and International Business, Jaico Publishing House, London, 2005, p.87.
5. D. Thomas, Readings and Cases in International Management: A Cross-Cultural Perspective, Sage, New York, 2003, p. 47.
6. J. C. Ady, Toward a differential demand model of sojourner adjustment, Sage, Thousand Oaks, 2010, p. 34.
7. P. Kotler, Marketing Management, Pearson Education, New York, 2009, p. 238.
8. Kotler, 253.
9. A. Herrmann & M, Heitmann, ‘Providing more or providing less? Accounting for cultural differences in cons’, Cross-Cultural Research, vol. 23, no. 1, 2006, pp. 7-25.
10. Kotler, 321.
11. M. Browaeys, Understanding Cross-Cultural Management, Prentice-Hall, New York, 2011, p. 139.
12. T. Rinne, G. Steel & J. Fairweather, ‘Hofstede and Shane Revisited: The Role of Power Distance and Individualism in National-Level Innovation Success,’ Cross-Cultural Research, vol. 46, 2: pp. 91-108, 2012.
13. M. Browaeys, Understanding Cross-Cultural Management, Prentice-Hall, New York, 2011, P. 341.
14. Becker, 92.
15. J. Bian, KFC’s evolution in China, Citic Press, New York, 2009, 16.
16. S. Chen, The comparison analysis of the development of Chinese and western restaurants chains, Business Culture, New York, 2006, p.231.

Introduction

With changing landscape of the business environment globally has forced businesses to adapt and be more relevant to the customers. Companies that fail to do so promptly end up either ceasing to exist or losing market share. One of the most significant changes that the business world has seen over the last decade is the automation of business processes and electronic trade. As stated, e-commerce uses computer networks, primarily the internet, to buy and sell products, services, and information. A more technical definition is “a modern business methodology that addresses the need of organizations, merchants and consumers to cut costs while improving the quality of goods and services and speed of service delivery by using the internet.”

E-Commerce Application at McDonald

McDonald’s is the leading global foodservice retailer, with more than 31,000 local restaurants serving more than 58 million people in 118 countries. More than 75% of McDonald’s restaurants worldwide are owned and operated by independent franchisees. Though the company started with the opening of its first restaurant by brothers Dick and Mac McDonald in 1940; the way the formal company was organized began in the year 1961 with Ray Croc, who was a franchisee of Mcdonald’s before that buying out the concept and rights from McDonald brothers for $2.7 million.

Mcdonald’s has taken a lot of initiatives to provide customers with a faster, better, and more convenient service experience. Mcdonald’s website (www.mcdonalds.com) provides a lot of interactive tools to enhance the patrons’ experience. For example, the site has an online store locator that helps visitors locate restaurant locations and provides the facility details for each location. This allows customers quickly find the restaurants, especially in a new area, and plan events like parties depending on the facilities available at each location.

The website also has a feature that allows the patrons to shop online for various items like merchandise, gift certificates, and forms for Mcdonald’s Arch cards. Mcdonald’s arch Cards are like pre-paid debit cards and come in four denominations for users’ convenience. It is also available for large corporate sales in multiples of twenty-five cards. These cards are public at all participating outlets, and the form can be downloaded from the Mcdonald’s website. The website also allows customers to check balances online. The site also offers a wide selection of merchandise like T-shirts, caps, sweatshirts, pants, footballs, and other memorabilia, among other collectibles.

E-Commerce and Competitive Advantage

With facilities like restaurant tracker and online merchandise sales, Mcdonald’s can fulfill many objectives. While, on the one hand, it brings direct revenue and customers to the company, it also ensures customer loyalty by providing better services with speed and cost-effectiveness.

E-commerce helps Mcdonald’s achieve improved and lower costs while being available round-the-clock, virtually from anywhere in the world. This helps to expand markets for both buyers and sellers by increasing availability. This also decreases the cost of paper-based information and communication for the firm.

Louis Gerstner’s comment and e-commerce at McDonald

The former IBM chairman Louis Gerstner commented that e-commerce is “all about cycle time, speed, globalization, enhanced productivity, reaching new customers, and sharing knowledge across institutions for competitive advantage.” In the case of McDonald’s case, it is visible that new initiatives are targeted in the same direction. Providing online services is a way to increase traffic and loyalty while it also helps keep track of the customers and recognize their preferences. E-commerce helps McDonald’s achieve quicker turnarounds and make operations globally synchronized and standardized.

McDonald’s has other agreements with vendors like Torex that allow them to synchronize business and data to control the company better. For example, in January 2008, McDonald’s signed a five-year licensing deal with Torex to provide point-of-service (POS) software, dubbed NewPOS-POS, across the chain’s outlets worldwide. Among other automation initiatives, McDonald’s and MasterCard operate the OneSmart MasterCard PayPass transaction system. Consumers can tap their MasterCard card on a PayPass reader to purchase in selected McDonald’s restaurants. The technology also allows small value purchases to be completed quickly, securely, and efficiently. Such initiatives help cut costs and maximize revenue.

Bibliography

Goel, Ritendra. Electronic Commerce- Technology and Prospects, Chapter-1 in e-commerce, (New Age International: 2008), Page-1.

McDonalds Corporation, Our Company, 2009. Web.

Mcspotlight, A brief history of McDonald’s, 2009. Web.

McDonalds Website, Corporate Sales, 2009. Web.

computing.co.uk, Mc Donald’s signs up Torex, 2009.Web.

Mastercard Worldwide, About OneSmart™ MasterCard® PayPass™, 2007. Web.

Introduction

In public relations, it is important to be able to conduct an analysis of an organization to uncover its structure and the communication activities it carries out. In this paper, we will provide such an analysis of McDonald’s, one of the most known companies around the world.

The Sector in which the Company Operates

McDonald’s is a global corporation that operates in the restaurant industry, specifically, in the fast food branch. It opens restaurants that sell different types of fast food. The foods sold by the company include hamburgers, French fries, various desserts, beverages, etc.

The Company’s Organizational Structure

The enterprise’s headquarters are located in Illinois, the U.S. (“Contact Us” par. 2). The following features are characteristic of the company’s organizational structure: global hierarchy, performance-based divisions, and function-based groups. Global hierarchy means that the CEO supervises all the areas of the business, and the mandates are passed downwards to regional, local administrators, and concrete restaurant managers. Performance-based division means that the basis for it is not regional; the global structure includes the following divisions: “(a) U.S., (b) International Lead Markets, (c) High Growth Markets, and (d) Foundational Markets and Corporate” (“McDonald’s Organizational Structure Analysis” par. 5).

Function-based groups mean that the company consists of separate departments, each of which deals with its own spectrum of issues. These departments include the departments of “corporate affairs, marketing, human resources, national operations, regional managers, finance, information, and strategic planning” (“What is the Structure of McDonald’s” par. 3). Other departments include “legal, customer services, franchising, security, hygiene and safety, property and construction, supply chain and restaurant services” (“What is the Structure of McDonald’s” par. 4).

It is also worth pointing out that McDonald’s operates as a global franchisor. According to the company’s official website, over 80% of the company’s restaurants around the world and approximately 90% of its locations in the USA are owned and run by independent businesspeople (“Our Business Model” par. 2).

The Company’s Communication Activities

When it comes to communication activities that McDonald’s carries out, it is worth noting that the company regularly runs various advertising campaigns in order to attract new customers and retain the old ones (“How do McDonald’s Communicate” par. 4). The enterprise continually stresses that its food is high-quality.

At a certain point, the business decided to change its external rhetoric and highlight the nutritional value of its foods; McDonald’s even won a number of awards for this PR move (“McDonald’s Sets Up a Nutrition Network” par. 4). Nowadays, the organization provides its customers with information about the nutritional value of the food it offers; this information can be obtained from informational stands inside the restaurants, as well as read on the individual packages of most foods.

It also should be observed that the company attempts to adapt its menu to the local tastes around the world, and uses that as a PR move; for instance, in the United Arab Emirates the restaurants offer foods made from halal meat, and provide respective certificates (“Our Ingredients” par. 1-2).

Certain political issues related to the American roots of the company sometimes arise. For instance, in 2000, citizens of Saudi Arabia started boycotting a number of American companies, including McDonald’s, due to the support that the U.S. offered Israel. McDonald’s responded by a charity campaign in Saudi Arabia; they would donate 26 cents from each meal sold to children’s hospitals in Palestine (“Saudi Burgers to Help Palestinians” par. 2, 5). On the whole, the company appears to adopt an appeasing attitude in such situations.

Conclusion

To sum up, McDonald’s is a global chain of fast food restaurants. Its organizational structure’s main features are the global hierarchy, performance-based divisions, and function-based groups. The company regularly runs advertising campaigns; to attract customers in different countries, it attempts to adapt their menu to the local cultures. The enterprise sometimes suffers due to political issues related to its American roots, and seems to generally adopt a placating attitude in these cases.

Works Cited

Contact Us. n.d.

How do McDonald’s Communicate Internally, Externally and to its Customers? 2011.

McDonald’s Organizational Structure Analysis.

McDonald’s Sets Up a Nutrition Network to Change Public Perception about its Menu. n.d.

Our Business Model. n.d.

Our Ingredients. n.d.

Saudi Burgers to Help Palestinians. 2000.

What is the Structure of McDonald’s and How Each Department in the Organisation Interact? 2011.

Introduction

Corporate social responsibility is a form of self-imposed duty. Business enterprises practice it as a way of giving back to the community. It is a social virtue that ensures commercial enterprises relate well with the society. Therefore, the community is likely to support their commercial operations. Essentially, a responsible firm contributes positively to a country’s development. It takes care of the community’s interests such as provision of funds to clean up the environment and others ways of giving back to the society. Such a firm conforms to all the laws of the land and employs acceptable methods of resolving conflicts such as dialogue, mediation and arbitration. Corporate social responsibility is an important aspect that interests economists. Ruschak (2012) adds “it is one of the leading topics in World Economic Forums (WEF)” (p. 14).

Corporate Social Responsibility: Focus on McDonald’s Corporation

McDonald’s Corporation believes in the provision of satisfactory services to its customers. The company has been on the run to improve the dietary allocations in its dishes. Proper diet is important in maintaining good health. The management aims at incorporating healthier food stuffs such as fruits and vegetables in its culinary arts. Additionally, it wishes to reduce the sale of foods with high calorific but low nutritional value. The firm plans to include locally produced whole grains to its range of authentic cuisine. The practice will promote the local producers economically and uplift the consumers’ health. It strives to relate well with the community through conforming to the laws of the land.

The company offers training to its employees to enhance food safety. Therefore, the employees can handle, cook and store food appropriately to reduce chances of contamination. Similarly, it engages its suppliers in the safety measures to ensure that the supplies are safe. It conforms to the rules of the Hazard Analysis Critical Control Point (HACCP). The company engages the community in capacity building to enhance economic growth. McDonald’s believes in respect for basic human rights as per the dictates of the federal constitution. It supports programs to sustain natural resources such as oceans and forests among others. It ensures that the material used to manufacture its packs is a product of sustainable agriculture (Slama, 2014). Similarly, it recycles the packs for sustainable development.

The company minimizes its use of products which emit chlorofluorocarbons to the atmosphere. Chlorofluorocarbons are harmful greenhouse products which environmental researchers link to problems such as greenhouse effect and global warming. Global warming is to blame for problems such as depletion of the ozone layer and unpredictable weather patterns. McDonald’s remains alert on this effect and works hard to minimize emission of such gases. Therefore, it has adopted sustainable strategies such as the use of renewable sources of energy, designing its buildings to reduce emissions to the environment and management of its energy consumption.

The company engages in waste recycling to reduce the volume of waste it exposes to the environment. Waste is becoming a big menace in many cities in the world today. Therefore, it is critical to initiate a waste management platform to make the world a better place to live. Hence, McDonald’s recycles most of its waste products. For instance, it converts surplus cooking oil into fuel to power automotives. The company gives back to the society through sponsoring major events such as sports. For instance, it supported the Paralympic games in 2012. Sponsoring such events helps grow talents and create good relations between the participants.

McDonalds is an important provider of employment considering the opportunities it offers to the immediate community. It offers job opportunities to people who would otherwise be jobless. Notably, it creates employment to reduce joblessness in the society. In addition, it enhances professional development to its employees through in-service training to help them sharpen their skills and respond to the industry’s dynamics.

McDonalds provides an all rounded environment favorable for social- cultural interaction among customers, employees and suppliers. It is important to note that it does not discriminate people on the basis of their gender, color or race. Hence, people can share their cultural experiences. Additionally, the company is strict on all manifestations of discrimination and addresses them accordingly. It is a gender sensitive firm that ensures women remain competitive. It supports those in leadership positions and mentors them to become more productive. It promotes awareness to break the social constructs which label women as weak beings and incompetent leaders. In addition, it organizes regular forums to train women leaders and help them cope with management dynamics

Conclusion

A company ought to take responsibility for its impact to the community. It enhances a company’s competitiveness considering its contribution to the society. A firm’s responsibility to the community is essential in promoting its image among the target group. More often than not, a responsible company gains recognition from the consumers. It is important to note that a responsible company may gain directly through support from the community. Similarly, contented employees work hard; thus, increasing the company’s output and vice versa. It allows a firm to partner with others; thus, increasing its presence in other regions.

References

Ruschak, K. (2012). Corporate Social Responsibility: Corporate Social Responsibility and the Theories it Generates From. MüNchen: GRIN Verlag.

Slama, J. (2014). McDonald’s Can Make History and Rescue its Brand with Sustainable Food. The Huffington Post.

Introduction

The McDonalds is a public corporation operating in the restaurant industry. The company is the largest chain of fast food and hamburger outlets (McDonalds 2013a). The company serves about sixty-eight million consumers on a daily basis, at the 119 countries covered by its business outlets.

The headquarters of the company is located in the US (Pederson, 2008). The McDonalds Company is a public company traded on the New York stock exchange. The company has adopted the legal structure of a franchising company, structured along functional contours, where the CEO oversees five major activity areas.

These areas include operations, which covers franchising and equipment; development, which covers construction and property finance, which entails new product development and supply chain management (McDonalds 2013b).

The other areas are marketing, which entails the marketing and sales and human resources, which entails safety, personnel, customer service and hygiene. The business profile of the company covers property investing, restaurant franchising and operating company restaurants.

The products of McDonalds include fast foods like hamburgers and chicken; vegetarian foods like salads and other food items like rice and soup (McDonalds 2013b). The company offers franchising services, marketing, and property management and investment, where it collects rents (Pederson, 2008).

The Organizational Purposes Of Businesses

The three major objectives of the McDonalds include quality management, where the company ensures that all its outlets offer services in the quickest manner possible.

The company expressly requires all its outlets to offer high quality products at the reasonable prices offered by the different outlets; the prices of products at the different outlets vary, depending on market dynamics and the country of location.

As an aspect of quality management, the McDonalds Company pursues to expand the customer awareness of the nutritious menu items offered at the different outlets. For example, the company has expanded its menu, to include foods and beverages containing vegetables and fruits in its menu.

Towards getting the information to the customer, the company has worked hard to increase the awareness of its customers, about the vegetable, fruit and dairy options available at its outlets, for children and other consumer groups (Rungfapaisarn 2011; Gasparro and Jargon 2012).

The company strives to offer the highest quality of food products, including the vegetarian fast foods offered at its vegetarian outlets and its organic milk, which were introduced in response to increasing global obesity levels (Ashbridge 2007).

Quality management is monitored through evaluating the performance of the employees of the company, against the standards communicated through the training process and the training manual of the company (GAPbuster 2009).

The quality of products is maintained through the standardization of the infrastructure and the processes employed at the different outlets (GAPbuster 2009).

The second major objective of the company is increasing customer satisfaction, which is an important aspect of the company’s business. The company believes that without increasing their customer loyalty, the result will be a decrease in the meaning of the company developed in the customer’s mind (Mourdoukoutas 2012).

It also believes that low customer loyalty results in a decrease in the positive words of mouth expressed to family and friends, which will reduce its association to excellent service delivery. The company pursues customer satisfaction through the identification of the needs of consumers better than its competitors.

For instance, many of the company’s customers associate McDonalds to the inviting, friendly atmosphere they experience (Mourdoukoutas 2012). The restaurants, also offer comfortable seats, a playground for children and television at its outlets. They also strive to serve customers conveniently, offering their orders in a fast and efficient way.

Customer satisfaction is monitored through the feedbacks given by customers, by the word of mouth responses collected by the company from its customers, as well as through company surveys done among the customer population (McDonalds 2013b).

The company evaluates the customers regarding the levels of customers through a number of channels including observation and direct interviewing, which complements the information collected from the feedbacks collected.

The third major objective of the company is upholding the company’s reputable image. The McDonalds Company started its first outlet in 1954, and by 2011, the company had approximately 32,000 operational outlets, which served a customer population of more than 60 million people on a daily basis, across the more than 100 countries covered by its chain of restaurants (Mourdoukoutas 2012).

The McDonalds Company maintains its reputable image by ensuring that the service outlook and the products offered at their different outlets are uniform. For instance, for a consumer at Paris, they will find many of the menu products at the outlets in a New York City outlet.

The company also pursues improving its status as a player that develops careers, rather than a company that offers, dead-end, minimum-wage scales for its employees (Mourdoukoutas 2012).

The achievement of maintaining the company’s reputation is maintained through the standardization of the services as well as the menu items offered across the different outlets, as well as the training of staffs on service delivery (GAPbuster 2009).

The main stakeholders of McDonalds include the shareholders of the company. The company can improve the effectiveness of shareholder investing in the company, through increasing the revenues created by the company, so that the returns realized by the shareholders increase.

Through that approach, the company will encourage more investment among current investors, and new investing among potential investors. The second main stakeholder groups are the customers of the company, who are the different groups and entities served at the many outlets.

Towards increasing the engagement of its customers, the company should ensure that they respond to the changing customer needs, as well as forecast demand according to the target market. An example is India, where their entry as a vegetarian restaurant was very successful (Gasparro and Jargon 2012).

Towards increasing the engagement of customers, the company should also ensure that they increase their customer service and the quality of the products offered. The third main stakeholder is the workforce, which includes the management and the employees of the company.

Towards increasing the engagement of its work force, the company should improve employee development, which will increase the capacity of the employees to deliver. The company should also adopt effective motivation strategies, for example, the recognition of excellent performance, so as to encourage better service delivery from its workforce.

The McDonalds company strives to engage in environmentally responsible business and process. These include the consumption of less energy, releasing fewer emissions into the atmosphere and reducing the wastes injected into their surroundings (McDonalds 2013b).

The ways of achieving the three major areas of green responsibility include the use of sustainable packaging and ensuring proper waste management at its varied operational centers.

In the area of energy conservation, the company is pursuing alternative sources of energy, intended at increasing their energy consumption efficiency, which will save money and lower their environmental impact (McDonalds 2013c).

The company has also invested in the green restaurant design, by ensuring that building standards ensure the protection the environment. The company also engages organizations and experts, including Conservation International, Wildlife Fund, The US Green Building Council, and Environmental Defense Fund, among others.

The strategic alliances are expected to increase the participation of the company in environmental protection (McDonalds 2013b).

Nature Of The National Environment Of Mcdonalds

An emerging economy is one which is moving from the status of a developing to an industrialized or developed status, while a transitional market is one which is shifting from a centrally administrated economy (where government control is high) to a free market economy.

Examples of a government controlled economy include the Soviet block nations, while free market economies include European and North American nations (Myant and Drahokoupil 2010). The differences include that in a transition economy, more people are likely to enter the middle of the lower class, as the transition brings about many business opportunities into the economy.

Also, the transitional economy differs from the emerging economy, as the very poor are likely to fall into extreme poverty, as they will have limited or no access to the factors of production or opportunities (Myant and Drahokoupil 2010).

An emerging economy, on the other hand, is one characterized by a low or medium level per capita, while a transitional economy is most times characterized by a low level of per capita. Both a transition and emerging economies undergoing economic reforms, which are expected to raise the economies to better economic performance (Mundell N.D).

Among the two types of economies, there is a constant pursuit to realize efficiency and more transparency in the capital markets. Both a transitional and an emerging economy are characterized by liberalization, where the forces of demand and supply determine the prices of products, compared to where prices are set by a planning organization (Myant and Drahokoupil 2010).

Different from a transitional economy, an emerging economy is characterized by a young and growing workforce and an underdeveloped infrastructure, in the areas of housing and roads. Among the two types of economies, there is a characteristic, rapid increase of foreign investment levels.

Some examples of transitional economies include Brazil, Russia, and Ukraine. Examples of emerging economies, as of May 2011 included Chile, Colombia, China, Egypt and India (Myant and Drahokoupil 2010). The case of china is clearly an emerging economy, as the Chinese economy is characterized by an increasing transition from a closed to an open market economy (Jbili, Kramarenko and Bailén, 2007).

The Chinese economy is also characterized by a high, young population of the workforce, which is replacing the aging workforce, and a ready market for the products from the increasing production. The Chinese is also characterized by a rapidly increasing level of foreign investing, which identifies it an emerging economy (Mundell N.D).

Among transition economies is Hungary, as its economy is characterized by increasing unemployment, as a result of the privatization of companies. Hungary is also experiencing a rising inflation level, which is caused by the removal of price control.

The economy is also characterized by a lack of reliable infrastructure, low levels of entrepreneurship and skills, high inequality levels (Economic online N.D).

From the different characteristics of emerging and transitional economies, a conclusion can be drawn, that the characteristics of an emerging economy are evident from transitional economies. The characteristics include that there is a shift from a government controlled economy to a liberalized economy (Economic online N.D).

This leads to the conclusion that an economy can fall under the classes of emerging and transitional economy classifications. The two economies are characterized by a rapid shift from low to middle class levels, as more opportunities are availed (Mundell N.D).

The recovery phase of the business cycle is characterized by a rapid increase in the confidence of customers, about the economy’s market. The recovery phase is characterized by reduced bank lending rates, particularly interest rates, which increase the capacity of investors and companies to finance investment projects.

The phase is also characterized by a rapid increase in production levels, which is adjusted in response to the overall demand in the particular economy. The increase in production levels enhances the capacity of entrepreneurs to offer more employment opportunities, which results in an increase in the incomes of consumers (Neumeyer and Perri 2004).

As a result, the consumers’ ability to purchase capital goods increases. The phase is characterized by an increase in the profit margins of corporations, and the GDP of the economy rises in response.

Governments can increase the opportunities available to businesses at the recovery stage, by requiring banks to offer credit at lower interest rates, which will encourage the funding of more investments (Neumeyer and Perri 2004). The government can also encourage more foreign investment, which will enhance the creation of more employment, so that more money gets into circulation.

The government can also increase government spending, which directs more money into circulation, allowing more customers to purchase the increased produce by businesses. The government can also reduce taxation, locally and when exporting, so as to enhance more business locally and internationally (Neumeyer and Perri 2004).

According to a report by AlixPartners (2013), as of Feb 2013, the US and the global restaurant are anticipating a forthcoming year of disappointing growth. The anticipated reduction in sales is the result of a reduction in dining frequency, in the next 12 months.

These findings were drawn from a survey of 1000 adult consumers by AlixPartners. As a result of the anticipated changes, restaurants will not be able to increase revenues through the opening of new outlets, but will also require engaging innovative strategies.

Among these strategies are strategic differentiation, increasing cost management levels and through employing innovation in marketing.

Among the industry players that will realize growth, there are expected to engage in a fierce competition for a substantial market share. The major determinant of competitive advantage will be the response to the major influences and drivers of consumer choices, which will be followed by targeted-oriented programs, to drive growth under the uncertain conditions.

The major influence of customer dinning choices include convenience, speed of service, and the customer experience of consumers after service delivery. McDonalds, a major industry player in the restaurant industry is responding well towards adjusting to the uncertainty of demand.

For instance, the company is investing in healthy foods and in markets, where differentiated diets are the major demand characteristic (Gasparro and Jargon 2012). An example is entry into the Indian market as a vegetarian restaurant and its inclusion of organic diets (Ashbridge 2007).

The Behavior Of Organizations In Their Market Environment

The characteristics of a perfect competition include that the market should not be characterized by rivalry, where there is a large number of buyers and sellers and the commodities on sale are similar in many all aspects.

The features, also include that the products offered by the different sellers should be similar in all aspects, implying that a customer can substitute those of one industry player with those of another.

The market should not impose restrictions on the entry and the exit of buyers or sellers (Petri 2004). This implies that in the case the available players increase prices, so they can make abnormal profits – then new entrants should come into the industry, so they can level out the profits realized from sales.

A perfect market is characterized by a perfect knowledge of prices and the commodities in the market, among the consumers. The consumers should also be perfectly informed about the prevailing market conditions, therefore will not be willing to offer any price above the prevailing price.

A market with perfect competition should be characterized by a perfect mobility of the different resources and factors of production, from one usage to another. This characteristic ensures that all industry players and firms are able to control an equal share of the services of the available factors of production, including labor.

Such a market should also be characterized by the absence of transportation costs, as commodities will be offered at the same cost, at the different locations; there will be a single market price. In a perfect competition, there is no development of attachment with the customer, as the products of the different sellers are the same; therefore buyers are free to change from one to another seller (Petri 2004).

The US and global restaurant industry, in which McDonalds is a major actor, does not fit into the definition of a perfect completion market, as most of the characteristics cannot be seen it the industry.

The characteristics that are absent in the restaurant industry include that the industry is dominated by a few large scale sellers, who sideline smaller players. The industry is characterized by a high degree of product differentiation, which shows that the products offered are not homogenous, marking the industry as one that cannot qualify as a perfect competition (Petri 2004).

In the industry, entry and the exit of sellers is not free, as evident from the price differentiation of McDonalds, which shows that there is no normal price balancing. Other characteristics that cannot be identified in the restaurant industry include the perfect mobility of production resources, the lack of perfect knowledge among consumers, and there is also no absence of transportation costs.

Contrary to a perfect competition, McDonalds capitalizes on the building of customer attachment, which shows that the industry does not have perfect competition (Petri 2004).

In the US and the global restaurant industry, a number of barriers to new entrants can be identified. Those that can be identified from the case study of McDonalds include the purchase of patents and licenses for the trademarks of market players (AlixPartners 2013).

This barrier has been effective, as new entrants cannot use the name, the packaging, or the logo of the McDonalds, without going through franchising and contracting as an agency outlet.

Differentiated pricing in the different markets has been effective in the industry, as players like McDonalds offer their prices at a differentiated price at its different areas of operation, showing that it has maintained a market reputation in the different areas (Mourdoukoutas 2012).

The developmental nature of the brands of different players is another barrier to new entrants, as companies like McDonalds are known globally, which offers them a competitive advantage above their competitors, especially new entrants. The company has maintained the strength of its name across the globe, which draws from the effective market entry strategies employed at different markets.

These include its entry into vegetarian markets like India, as a vegetarian chain of restaurants (Gasparro and Jargon 2012). Major players have prevented the entry of new players, through taking advantage of the customer loyalty developed among consumers, locally and internationally.

The marketing strategy of major players like the McDonalds is a barrier to new entrants, as the company changes according to the changing needs of its customers and responds to the unique needs of its different customer groupings (Mourdoukoutas 2012).

Major industry players are also increasing entry barriers through the retention of the highly experienced members of the labor force, and the expansion of its outlets also acts like a barrier to new entrants.

The standardized service delivery of players like McDonalds is another barrier used by the company to control the threat of new entrants. This is evident from the company’s offering of a similar menu at its different operational areas (AlixPartners 2013).

The cultural environment of the McDonalds includes the social and the cultural aspects of target markets, including the differentiated dining preferences and the constant calls to eat healthy, which is increasing, in response to increasing obesity levels in the world (Franke, Hofstede and Bond 1991).

Some of the ways, through which the McDonalds demonstrates its adaptation to the cultural environments of target markets, include the shift to offering vegetarian-only outlets in India (BBC 2012).

This change was employed, in response to the market profile of the Indian market, which is characterized by the non-consumption of meat products, particularly cow meat, as the Hindu regard the cow as a divine creature (Gasparro and Jargon 2012).

Another case of adapting to the cultural environment is the inclusion of varied menu items, including organic products like milk, fruit salads, and vegetarian items, in response to the constant calls over global obesity levels (Ashbridge 2007).

From the case of the McDonalds, BBC (2012) discussed the strategic shift of the company, towards offering innovative menu listing, so as to take advantage of the emerging markets that are characterized by varied customer prefers and product preferences.

One such example is the case of its entry into the Middle East, where they are offering meat-free dishes, particularly pork-free menu items, as the culture of the Muslims regards pork as a religious-banned food (BBC 2012).

Significance Of The Global Factors That Shape National Business Activities

The international market is paramount to the entry of McDonalds into the international market, as it determines the alternatives available to it, in pursuing its entry into developed and emerging markets, where customers’ needs are differentiated.

Some of the entry strategies available to McDonalds include the creation of international agencies, strategic alliances, and international outlets (Franke, Hofstede and Bond 1991). However, the entry of McDonalds into the international market is staged in a manner that allows it to cater for the needs of the target market, as opposed to imposing strategies that have worked elsewhere.

As a result, the products of the company are localized according to the customers’ needs, offering products that are preferred at the target markets. An example is the product localization of the company’s products in India and the Middle East, where the larger populations prefer meat-free dishes (Gasparro and Jargon 2012; BBC 2012).

The challenges facing UK businesses in emerging markets like the UAE include competing in new competitive environments, creating a new customer base, countering new competitors, and countering the increasing expectations of market regulators (ERNST & YOUNG 2011).

Some of the risks that present a challenge for the businesses include intellectual theft; there is an increasing level of regulatory pressure, dealing with the varied cultural preferences of customers. Other challenges include sourcing of qualified, skilled labor, developing strategic partnerships with local players, and reviewing risks and control levels in the new markets (ERNST & YOUNG 2011).

This leads to the conclusion that UK companies venturing in emerging markets should not anticipate profitability in the short run, as they have to master the market profile of the markets, before they can exploit their potential. However, effective research prior to investing can help the entrants in staging more effective entry models, thus increase immediate profitability.

The debt crisis in Ireland and Greece is likely to affect UK businesses, as evidenced by the recent banking sector scandals, due to the impact of the debt crisis on the global economy. The effects include that interest rates will rise, so that governments can raise the money to settle the debt.

As a result, the borrowing capacity of UK businesses will reduce, which will result in reduced investing in new markets and opportunities (PricewaterhouseCoopers 2013).

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