Description
McDonald's is a "centralized, International Division" company composed of franchisees and joint venture partners. McDonald's utilizes a broad approach and initially grew overseas by relying on transferring new products, processes, and strategies from the United States to less developed markets
McDonald’s Corporation
by
Dominic Doria
Management 222
December 18, 2002
1
Table of Contents
McDonald’s Background…………………………………………………………………4
nternational !perations "igni#icance……………………………………………………$%
nternational &'pansion ()roug) *ranc)ising……………………………………………+
,dministrati-e .eritage…………………………………………………………………$$8
McDonald’s "tructure and "trategy………………………………………………………/
Company Control and Coordination……………………………………………………$10
0roduct De-elopment and Marketing……………………………………………………11
*uture ssues……………………………………………………………………………$$1%
Bibliograp)y……………………………………………………………………………$$12
,ppendices
2
Executive Summary
McDonald’s Corporation is a 3Centrali4ed, nternational company5, 6)ic)
competes in t)e #ast #ood industry supplying )amburgers, #renc) #ries and ot)er
consumable items using standardi4ation, )ea-y e'pansion and branding as t)e dri-ing
#orce$ McDonald’s operates in o-er 121 countries and )as o-er 10,000 restaurants
6orld6ide$
McDonald’s utili4ed an intense, rapid e'pansion into #oreign countries t)roug)
t)ree primary met)ods, #ranc)ising, company o6ned restaurants, and 7oint -entures$
8it) t)e ma7ority o# international restaurants stemming #rom #ranc)ising agreements,
McDonald’s management relied on t)is met)od to aid in t)e acceptance o# a ne6 style o#
eating into un#amiliar markets$ 8it) minimal risk and ma'imum gains, #ranc)ising
continues to contribute )ea-ily to McDonald’s international success
%
$
8it) a centrali4ed, international structure, McDonald’s keeps a tig)t grasp on
operations, cost and 9uality$ 8it) an et)nocentric management strategy, McDonald’s
relies on domestic based logic and attitudes and trans#ers t)em to t)eir international
outlets and restaurants$
n order to control its o-erseas operation, McDonald’s uses a combination o# t6o
approac)es$ ()e ma7ority o# control 6ould #all under t)e rules approac), meaning t)at
control lies 6it) )ead9uarters creating procedures and policies #or t)e subsidiaries to
#ollo6$ .o6e-er, t)ere is also a little o# t)e cultural approac) t)at )as sur#aced and is
being utili4ed 7udging by t)e adaptation t)at )as occurred in some o# t)e o-erseas
restaurants$ ()is )as occurred e-en 6it) t)e tig)t internali4ed norms t)at are constantly
presented and en#orced by )ead9uarters$
1
McDonald’s Background
8it) operations in o-er 121 countries and o-er 10,000 restaurants around t)e
globe, McDonald’s Corporation is t)e largest #ast #ood ser-ice and supplier in t)e 6orld$
(o ser-e all o# t)e t)eir customers and demonstrate t)e incredible si4e o# t)e company,
McDonald’s )as more t)an one and a )al# million employees and ser-es more t)an
ninety:si' percent o# t)e 6orld’s population at least once a year$ McDonald’s operates in
t)e #ast #ood industry and its core product lines include )amburgers and #renc) #ries, but
t)e c)ain also sells c)icken, salads, and #is) products among ot)ers
1+
$
"ince t)e #irst restaurant operations in t)e early nineteen #i#ties, McDonald’s )as
gro6n at an incredible pace t)roug) an internal p)ilosop)y o# 3e'pand at all costs$5
8)at t)is p)ilosop)y means is open as many stores as possible as #ast as possible$ ,t t)e
peak o# t)e company’s gro6t), t)is rapid pace )ad a ne6 McDonald’s outlet opening
e-ery #our )ours e-eryday o# t)e year$ Management instilled t)e idea t)at as more
restaurant locations are opened t)e more customers 6ill be ser-ed, and t)is leads to
)ig)er pro#its t)at 6ould be reali4ed across t)e board$ "ince t)e beginning, t)is intense
e'pansion plan )as been success#ul, bot) in t)e domestic and #oreign markets abroad
%
$
.o6e-er, recently t)ere )a-e been issues de-eloping 6it) saturation across t)e globe t)at
)a-e )ad an impact on sales, 6)ic) 6ill be discussed later in t)e paper$
()e company )as al6ays utili4ed #our ma7or principles t)roug)out its )istory to
e'pand rapidly, increase sales and remain t)e market leader$ By le-eraging t)eir
enormous cas) #lo6, brand po6er, real estate and customer spending )abits, McDonald’s
)as not only emerged as t)e 6orld:6ide leader, it )as also c)anged t)e 6ay t)e 6orld
eats$ ,s t)e means to rapid e'pansion are not t)e #ocus o# t)is paper, altering t)e eating
4
)abits around t)e 6orld represent a -ery signi#icant topic and 6ill also be addressed later
in t)e paper$
International Oerations Significance
McDonald’s #irst international e'pansion occurred in 1/+2 6)en t)e company
opened in Canada$ ()e company’s international di-ision 6as #ormed s)ortly a#ter in
1/+/ and )as continuously gro6n since$ !-er t)e years, t)e international section o# t)e
McDonald’s Corporation )as become increasingly more important to t)e company’s
o-erall success$ ,s o# t)is past year, non:;" based restaurants account #or o-er )al# o#
t)e company’s
McDonald's is a "centralized, International Division" company composed of franchisees and joint venture partners. McDonald's utilizes a broad approach and initially grew overseas by relying on transferring new products, processes, and strategies from the United States to less developed markets
McDonald’s Corporation
by
Dominic Doria
Management 222
December 18, 2002
1
Table of Contents
McDonald’s Background…………………………………………………………………4
nternational !perations "igni#icance……………………………………………………$%
nternational &'pansion ()roug) *ranc)ising……………………………………………+
,dministrati-e .eritage…………………………………………………………………$$8
McDonald’s "tructure and "trategy………………………………………………………/
Company Control and Coordination……………………………………………………$10
0roduct De-elopment and Marketing……………………………………………………11
*uture ssues……………………………………………………………………………$$1%
Bibliograp)y……………………………………………………………………………$$12
,ppendices
2
Executive Summary
McDonald’s Corporation is a 3Centrali4ed, nternational company5, 6)ic)
competes in t)e #ast #ood industry supplying )amburgers, #renc) #ries and ot)er
consumable items using standardi4ation, )ea-y e'pansion and branding as t)e dri-ing
#orce$ McDonald’s operates in o-er 121 countries and )as o-er 10,000 restaurants
6orld6ide$
McDonald’s utili4ed an intense, rapid e'pansion into #oreign countries t)roug)
t)ree primary met)ods, #ranc)ising, company o6ned restaurants, and 7oint -entures$
8it) t)e ma7ority o# international restaurants stemming #rom #ranc)ising agreements,
McDonald’s management relied on t)is met)od to aid in t)e acceptance o# a ne6 style o#
eating into un#amiliar markets$ 8it) minimal risk and ma'imum gains, #ranc)ising
continues to contribute )ea-ily to McDonald’s international success
%
$
8it) a centrali4ed, international structure, McDonald’s keeps a tig)t grasp on
operations, cost and 9uality$ 8it) an et)nocentric management strategy, McDonald’s
relies on domestic based logic and attitudes and trans#ers t)em to t)eir international
outlets and restaurants$
n order to control its o-erseas operation, McDonald’s uses a combination o# t6o
approac)es$ ()e ma7ority o# control 6ould #all under t)e rules approac), meaning t)at
control lies 6it) )ead9uarters creating procedures and policies #or t)e subsidiaries to
#ollo6$ .o6e-er, t)ere is also a little o# t)e cultural approac) t)at )as sur#aced and is
being utili4ed 7udging by t)e adaptation t)at )as occurred in some o# t)e o-erseas
restaurants$ ()is )as occurred e-en 6it) t)e tig)t internali4ed norms t)at are constantly
presented and en#orced by )ead9uarters$
1
McDonald’s Background
8it) operations in o-er 121 countries and o-er 10,000 restaurants around t)e
globe, McDonald’s Corporation is t)e largest #ast #ood ser-ice and supplier in t)e 6orld$
(o ser-e all o# t)e t)eir customers and demonstrate t)e incredible si4e o# t)e company,
McDonald’s )as more t)an one and a )al# million employees and ser-es more t)an
ninety:si' percent o# t)e 6orld’s population at least once a year$ McDonald’s operates in
t)e #ast #ood industry and its core product lines include )amburgers and #renc) #ries, but
t)e c)ain also sells c)icken, salads, and #is) products among ot)ers
1+
$
"ince t)e #irst restaurant operations in t)e early nineteen #i#ties, McDonald’s )as
gro6n at an incredible pace t)roug) an internal p)ilosop)y o# 3e'pand at all costs$5
8)at t)is p)ilosop)y means is open as many stores as possible as #ast as possible$ ,t t)e
peak o# t)e company’s gro6t), t)is rapid pace )ad a ne6 McDonald’s outlet opening
e-ery #our )ours e-eryday o# t)e year$ Management instilled t)e idea t)at as more
restaurant locations are opened t)e more customers 6ill be ser-ed, and t)is leads to
)ig)er pro#its t)at 6ould be reali4ed across t)e board$ "ince t)e beginning, t)is intense
e'pansion plan )as been success#ul, bot) in t)e domestic and #oreign markets abroad
%
$
.o6e-er, recently t)ere )a-e been issues de-eloping 6it) saturation across t)e globe t)at
)a-e )ad an impact on sales, 6)ic) 6ill be discussed later in t)e paper$
()e company )as al6ays utili4ed #our ma7or principles t)roug)out its )istory to
e'pand rapidly, increase sales and remain t)e market leader$ By le-eraging t)eir
enormous cas) #lo6, brand po6er, real estate and customer spending )abits, McDonald’s
)as not only emerged as t)e 6orld:6ide leader, it )as also c)anged t)e 6ay t)e 6orld
eats$ ,s t)e means to rapid e'pansion are not t)e #ocus o# t)is paper, altering t)e eating
4
)abits around t)e 6orld represent a -ery signi#icant topic and 6ill also be addressed later
in t)e paper$
International Oerations Significance
McDonald’s #irst international e'pansion occurred in 1/+2 6)en t)e company
opened in Canada$ ()e company’s international di-ision 6as #ormed s)ortly a#ter in
1/+/ and )as continuously gro6n since$ !-er t)e years, t)e international section o# t)e
McDonald’s Corporation )as become increasingly more important to t)e company’s
o-erall success$ ,s o# t)is past year, non:;" based restaurants account #or o-er )al# o#
t)e company’s