Seminar 3, October 19-23, 2009

Seminar 3
Seminar Tutor: NG


Topics Covered

A. Brief Review of the Individual Assignment

By now, you should have finalised which case you will do.

And now it is time to start working on it.

When you come to the seminar next week, I expect you to have started working on your case!

B. Case 1: McDonald’s Expands Globally While Adjusting Its Local Recipe

Overview. Today, McDonald’s golden arches are one of the most recognized symbols in the world, just behind the Olympic rings. While growth within the U.S. has slowed, the picture outside the U.S. has appeared brighter, until recently. However, globally, taste profiles and consumer desires are changing. McDonald’s has responded to these changes by altering their basic products (when necessary) to fit the requirements of the local markets. While not always successful, it has proven to be a winning strategy.

Q1. Identify the key elements in McDonald’s global marketing strategy (GMS). In particular, how does McDonald’s approach the issue of standardization?

The popularity of American-style hamburgers, fries, and soft drinks is growing around the world, supporting Levitt’s view of the global village. Also, the restaurants themselves offer the consumers a chance to experience for themselves a fast food legend. However, students should point out that, in many locations, menu items are adapted according to the customs and tastes of individual countries. McDonald’s offers an ideal example of “global localization.”

Q2. Do you think government officials in developing countries such as Russia, China, and India welcome McDonald’s? Do consumers in these countries welcome McDonald’s? Why or why not?

Despite concerns by governments and citizens in some countries about “cultural imperialism,” McDonald’s and other franchises with well-known brand names are generally welcome. Such businesses provide both much-needed jobs and employee training.

McDonald’s does a good job of earning the support of local authorities and the local population by working with agricultural producers to develop local supply sources for beef, potatoes, and dairy products. Finally, thanks to changing lifestyles around the globe, more people are embracing the whole concept of fast food.

Q3. At the end of 2003, McDonald’s announced t was selling the Donatos Pizza unit. Then, in 2006, the Chipotle chain was spun off. In light of these strategic actions, assess McDonald’s prospects for success beyond the burger-and-fries model.

McDonald’s spent a period of time acquiring businesses they believed to be complimentary to their core burger-and-fries model. However, during this expansion, they made the error of “taking their eye off of the ball.” This allowed competitors to make inroads and resulted in their core business flagging. By reasserting themselves in their core business, they are reestablishing themselves as innovators in the market. Success beyond their core model is certainly possible; however, attention can not be diverted from their core business model.

Q4. Is it realistic to expect that McDonald’s – or any well-known company – can expand globally without occasionally making mistakes or generating controversy? Why do antiglobalization protesters around the world frequently target McDonald’s?

McDonald’s has a reputation for being sensitive to local issues and mentalities. According to the staff director for international human resources in Central Europe, “One of our guiding principles is that our restaurants should always be a reflection of the communities they serve.” Mistakes such as the one in France represent exceptions that can serve as learning experiences. Still, each new national has the potential to present unique problems. In Israel, for example, McDonald’s must deal diplomatically and appropriately with dietary laws pertaining to kosher foods and operating restaurants on the Sabbath (Friday and Saturday).

Another issue is to maintain the service attitude that was a cornerstone of McDonald’s U.S. reputation. A German student noted that in Germany, good service is not associated with McDonald’s because counter help consists of immigrants who do not exhibit the cheerful demeanor of their U.S. counterparts.