20-10-2012, 01:42 PM
Globalization Strategy of McDonald’s Corporation
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McDonald’s History
McDonald's was started as a drive-in restaurant by two brothers, Richard and Maurice McDonald in California, US in the year 1937. The business, which was generating $200,000 per annum in the 1940s, got a further boost with the emergence of a revolutionary concept called 'self-service.'
The brothers used assembly line procedures in their kitchen for mass production. Prices were kept low. Speed, service and cleanliness became the critical success factors of the business. By mid-1950s, the restaurant's revenues had reached $350,000.
Reasons for going international
Build more brand and shareholder value
Add revenue sources and growth markets
Reduce dependence on your home market
Leverage existing corporate technology ,Supply chains, know-how and intellectual property
Award more franchises in the home country by being global
Branding Strategies
• Single design for packaging
• Aggressive advertising
• Various promotional schemes
• Sponsorships
•Creating an over all McDonalds experience
Advertisement Strategies
Sponsoring the Olympics since1976, and is sponsoring the London Olympics, and would be sponsoring Olympics till 2020.
Sponsoring UEFA European Football Championship since 1992 to till 2017.
Also sponsoring FIFA since 1994.
Different and separate Advertising for each country suited to the specifications.
Brand Fatigue
• Failure to introduce popular items on menu.
• Inappropriate pricing strategies.
• Lack of understanding local tastes.
• Infrastructural inadequacies.
• Over estimation of demand.
• Continuous expansion caused franchisee profit drop by 30% in 1990’s.
• Resulting to a loss $ 343.8 million in 2002.
Political Challenges
•Health and Safety Guidelines
The director of the obesity program for the Children's Hospital Boston, David Ludwig, claims that "fast food consumption has been shown to increase calorie intake, promote weight gain, and elevate risk for diabetes"
Centre for Science in the Public Interest, a long‐time fast food
Critic over issues such as caloric content, trans fats and portion sizes.
Ecological/environmental issue
Fast food industry giants such as Wendy's, Pizza Hut, and McDonalds are some of the largest consumers of paper products in the US. "Every year millions of pounds of food packaging waste litter our roadways, clog our landfills and spoil our quality of life.
Wars and conflicts
War between countries where the company operates.
They have also become a symbol of capitalism and Americanism meaning that they have now become the target of terrorist group and attack.
Social Considerations
To ease customers concern about health issues, McDonald’s has made changes to the following:-
• McDonalds changed its image vastly by evaluating the current menu and making changes to it from using organic products to revising the whole menu entirely by offering salads and vegetarian burgers.
• McDonald’s serves a range of high‐quality foods that can fit into a balanced diet. The accurate and accessible nutrition information help guests make informed menu choices.
Promotional Strategies
McDonald’s promotional activities worldwide were handled by DDB Needham and Leo Burnett.
In India, the local advertising company Mudra, a partner of DDB Needham planned the advertisement along with the marketing team of McDonald’s.
Promotional strategy focused mainly in understanding needs of the local people to attract them.
Involvement in local communities
Created employment opportunity for local people and helped businesses to grow.
The mode of entry depended mainly on the laws of the land.
McDonald’s undertook some corporate social responsibility initiatives in different countries as well.
McDonald’s helped to build supply chain efficiencies by assisting the suppliers in improving their practices.