Outline the Reasons for the Global Growth of McDonalds

Question 1

Outline the reasons for the global growth of Mcdonalds?

Mcdonalds is a prime example of international business in our modern times. Mcdonalds has achieved huge growth since its inception and there are a few reasons the organization expanded the way it did.

Ray kroc took his vision and started Mcdonalds in 1940, and through his vision, Mcdonalds has grown into one of the largest brands in the world. It now has over 33000 restaurants and operates in 119 countries with more than 80% of the restaurants being franchised out. But differentiated Mcdonalds from the rest of the restaurants and what gave it the fast global growth that it attained. These reasons will be highlighted below.

* Ability to Match the fast pace of city life by providing food speedily and meeting customers need to save time on meals

It no secret that in today's society, the thing that we seem to have the least of is time. We are constantly looking for ways to improve on time management, and tend to go for certain products that will cost us the least time to obtain. Mcdonalds identified this concern and addressed it with various methods. The organization extended operational hours to 24 hours in major cities, which gave individuals more options with regards to meal times. The introduction of drive troughs were also an initiative which would eliminate time wastage in obtaining the products. Basically, Mcdonalds made it convenient to have meals any time in this fast pace world in which we now live in.

* Low prices

Michael porter identified low cost as one of the strategies that would provide a competitive advantage over the competition. Mcdonalds realized the need for their products to come in at a low price, especially in a market in which we see consumers becoming more and more price sensitive. Mcdonalds introduced the Value meal, which was released at 20cents, and the name said it all, it most definitely was value for money. Consumers could get a reasonable meal at Mcdonalds that they could not get anywhere else, thus handing them a competitive advantage.

* Clean, hygienic, consistent food quality

Mcdonalds always wanted their food to be superior offering. The food quality is consistent in all their restaurants, and there are strict regulations for the franchise partners with regards to this. McDonald's restaurants are always clean and hygienic as this made patrons more comfortable and believe that they were getting a great product for their money. In today's ever changing world, consumers are becoming more health conscious as well. Mcdonalds was under a lot of pressure with regards to the health of their product and thus introduced a healthier menu which included salad proving that they care about the general well-being of their patrons.

* Comfortable restaurant environment, quality service and choices

When visiting a McDonald's restaurant you can be assured of a comfortable and inviting atmosphere. They have a children's play pen where by you can sit and enjoy your meal, without being interrupted by the kids. The service at any Mcdonalds franchise is always above average, always greeting you with a smile and giving you fast efficient service. The menus at Mcdonalds offer a large variety for all tastes of people and as mentioned before, also offer salads for consumers watching their health. The breakfast menu is world renowned and they have a product known as the Mcsausage which revolutionized the breakfast world. They also offer an exceptional desert menu; hence they offer everything for every occasion.

These factors contributed to the fast global growth of the Mcdonalds franchise and the ability to regulate this consistency throughout the 119 countries in which they operate and the 33000 restaurants that all function under one vision of quality

Mcdonalds needs to adapt to different cultures and conditions when it sets up business in different parts of the world. What problems might McDonald's encounter when it opens outlets in;

Countries in Eastern Europe?

Culture can be defined as the systems of values and norms that are shared among a group of people and that when taken together, constitute a design for living.(). With this being said, let us examine the culture of Eastern European People and Identify the challenges that Mcdonalds faced.

The eastern European market offers an attractive emerging market for most international businesses. With the collapse of socialism in 1989, most Eastern European countries prepared for a more capitalist approach to business and society at large. This move prompted the flow of foreign investment, increasing of household income, increase in consumer spending and cheaper labor compared to the western European countries. With this transformation still in progress, Eastern European countries provide a lucrative investment to expand business internationally.

Eastern European People are generally economically backward and have a weaker purchasing power then those in the USA. This could be a difficulty for Mcdonalds to overcome as the society might be extremely price sensitive. The Consumer might see that importance of providing general necessities rather then splurge on fast food. The Eastern European people also have a deep sense of tradition and prefer to have a home cooked meal around the dinner table rather then an individual having a McDonald's burger all by themselves. According to hofstedes model, the USA has a score of 91% in the individualism (IDV). While the Eastern European countries scored much less. This is based on the degree to which individuals are integrated into groups. On The Americans side we find individuals who are loose where everyone is expected to look after themselves or their own family. On the other hand Eastern Europeans experience collectivism and integrated into group of people and dependant on them, for example extended family. As mentioned earlier, IDV means that people will prefer the dinner table to the restaurant counter, it would be a challenge for Mcdonalds to create an image of Mcdonalds becoming a family tradition so to speak.

The masculinity MAS part of hofstedes model defines the degree to which females are treated. USA is more liberal and less sexist then the people in Eastern Europe in which females tend to except that men are more valuable then women, this would cause huge difficulties in the way busies is conducted, for example, it would be difficult to employ a female as a Manager and expect a group of men working