Globalization has resulted in movement to the integration of several different markets. Over the past years we can observe markets from across the world have transitioned to function jointly, being more interrelated and interdependent to each other. The move towards one world economy was made possible because globalization has brought forward several benefits which enabled the simple movements of business operations in one country to another. Technology has rapidly advanced over time which made it much simpler to use internationally and the increase in the power and importance of global organizations (like World Trade Organization) to discourage trade obstacles among countries and promote international business and trade. Globalization has encouraged firms going global and operate outside their local market. International extension are done through various ways, companies can export their products and sell in international market segments, franchising and licensing involve permitting a business' procedure in other marketplaces or allowing creation of goods and services in other marketplaces, e-business also helps reach out to customers all around the world. Businesses find it healthy and good for operate in international marketplaces because it is seen as a way of distributing risk, challenging their way across new opponents and attracting clients towards the business's goods and services.
McDonalds, a favorite and valued fast food company would be utilized as an instance of how international business has helped the business achieve their goals and be successful overall. McDonalds was first set up in 1940, two brothers Richard McDonald and Maurice McDonald partnered up and exposed a restaurant in California, moved towards 'self-service drive-in restaurant' with a limited menu which consisted of cheeseburgers, milkshakes, pie and 'the celebrated French fries' of McDonalds. They differentiated their service by concentrating on keeping time [their 'Speedee Service System'] to fulfill customers. Later, McDonalds got successfully created a unique brand image which was trademarked. The success of McDonald's outlet stores in america has encouraged them to go global. They were able to open restaurants in Canada, Japan, Germany, Australia and France. McDonald's main form of extension was through franchising themselves to different markets. The company could successfully open over 30000 outlet stores surrounding the world in more than 120 countries. McDonald's international success has acquired them to be 'positioned 8th in the most notable 100 of the World's most valuable brands in 2008. '
Every international business success will depend on its strategy towards a new market. When it comes to joining new different markets it is very important for just about any company to investigate the market it wishes to operate in. Here, they'll need to study all the aspects that makes the market not the same as its local market, your competition that exists for the reason that market, as well as the market's macroeconomic environment. A country's macroeconomic environment can have a great impact on a company's performance. The macroeconomic environment basically contains four major factors which affects the market function. The first factor is the monetary factor of the marketplace. This focuses on the economy's well-being, i. e. income level, career, inflation and how these can influence decision making of international businesses. The next factor focuses on the country's legislation introduction, the rules and restrictions that companies may follow if they wish to operate in that market. The third, political factor mainly amounts up to the doing exercises vitality of the country's federal government. Political status and stability of an country can greatly effect the attractiveness of foreign direct investment in to the country. The last factor which includes a direct effect on international business operations is the culture of the market. Culture identifies 'a system of ideals and norms that are shared among a group of people, ' -Hofstede. Culture differs from country to country. It really is usually dependant on the country's ethnicity, spiritual views, education, language spoken etc. This factor of macroeconomic environment helps it be difficult for international businesses to determine their success in functioning in new markets.
In the situation of McDonalds, the four factors of macroeconomic environment have provide an affect McDonald's products and their standard method of operating their fast food restaurants. From economic factor, McDonalds have placed their brand as one of the better fast food outlet stores with the best value foods offered. Dissimilarities in income levels didn't effect McDonalds because they give their dishes at low fair prices. For example in Dubai, McDonalds offers the lowest economic prices for their value meals in comparison with the other junk food stores such as Hardees or Burger Ruler. McDonalds is now recognized to 'list the 6th most effective global brands this year 2010. ' The legal factor of macroeconomic environment have affect the products of McDonalds. Regulations that were followed by every company in a particular market needed to be followed by McDonalds too.
For example, McDonald's playthings that have been given in Kid's Happy Dishes should be approved by safety precautions. The labeling with their products like the green dot which symbolizes 'suitable for vegetarians' is also another example which McDonalds adapts with relation to labeling laws to inform consumers. In Muslim countries, any beef products needed to be Halal, McDonalds sandwiches had to adapt to meet spiritual requirements. When it came to promotion, McDonald's advertising also needed to be managed and approved by certain market segments like Saudi Arabia. Certain Television set Commercials that use attractive feminine models may be seen as an unacceptable method for McDonalds to market in Saudi Arabia. The political factor of macroeconomic environment does not directly have an effect on McDonald's procedures but governments in different countries do have control on what products a small business is permitted to sell in their markets. Political reasons can affect McDonald's performance internally through taxation etc affecting their profitability.
The cultural factor of every market can be used as an edge for every international business to differentiate their products and adapt to these cultural distinctions thus valuing their brand image among local consumers. McDonalds functions in over a hundred countries plus they have deeply focused on using ethnic views to distinguish their products in various markets. McDonald's products respond to local preference and choices.
There a wide range of instances which show us how McDonalds have changed to offer differentiated products, having special offers on special occasions and events that are placed in different countries. McDonalds acquired recently introduced a dessert offer during Ramadan in Dubai. This was the McBrownie Sundae which was advertised around attracting the Ramadan atmosphere in to the picture using the moon, emphasis of historical track record, colors etc.
McDonalds respond to catering to local customers likes too. In India, McDonalds offers a sandwich specifically to that country, the McAloo Tikki Burger. McDonalds also has their famous McArabia value foods in the centre East.
In terms of language dimensions McDonalds are described differently in different markets surrounding the world. Most of the West refers to McDonalds as 'Mickey Ds, ' in Australia their slang for McDonalds is 'Maccas. ' When it comes to religion McDonalds will take religious criteria into consideration, this way it shows how they value their customers. McDonald's adverts, way of product packaging all come under appropriateness towards the market they are portion. All of McDonald's dishes in Muslim countries are Halal. McDonald's retailers in different marketplaces restrict them to market certain type of products in those market segments. The McPork burger was incorrect to market in Middle East or Muslim countries, even almost all their beef products weren't offered in outlet stores situated in India since it was seen prohibited and against Hindu religion.
Businesses that have a tendency to go global always plan out and adapt a worldwide strategy which can only help assist them towards achieving their targets and permanent goals. Whenever a company determines for global growth there are usually four common strategies they can choose from with regards to their way towards the market, either follow a global strategy, localization strategy, global standardization strategy or transnational strategy. These four strategies are influenced by the pressure of two proportions. The foremost is the pressure experienced from cost reduction options, where this depends usually on your competition of the market. Profitability and survival mainly will depend on this strategy, so when a company wishes to operate in some other market they should make sure that they are in line with other competitors when it comes to cost related or price related products. The other aspect is the pressure of local responsiveness, depending over a company's versatility towards altering to local consumers style and preferences. The nature of the merchandise would impact this pressure, food products tend to be more local responsive because it is directly related to satisfying consumers flavor and personal preferences.
'McDonalds is often cited as an obvious exemplory case of standardization, the chief executive of McDonald's International has insisted that the company is "all the an integral part of local culture as is possible" (Ritzer, 2004, p. 179) and its standard menu has been glocalised to support local foods. '
McDonalds focus on following a more hybrid kind of global strategy when getting into international marketplaces. They associate with transnational strategy procedures. The company has over 3000 junk food outlets throughout the world and so McDonalds discovered that it was more good for their outlets to gain competitive benefit in these different marketplaces by differentiating their menu and meals offers that would cater to and fulfill consumer's tastes and preferences in a variety of different markets. Based on ethnicity, culture, faith, trend people flavor and choices differed from country to country. For instance, India is famous for their savory spiced food. Most of Indian Cuisine tends to be hotter in flavor than compared to tastes of individuals in the West. Which means McAloo Tikki, a spicy traditional flavored burger, is a specially differentiated product of McDonalds which suits the flavor of consumers in India. By differentiating their sandwiches and meals to market requirements McDonalds finds it much easier to operate in these marketplaces because this reduces the chance of uncertainty of the success or failing in operating in these new markets. Differentiated products also add value to brand because customers end up drawn to their differentiated products. McDonalds always focused on cost stresses to avoid dangers from competitive fast food outlet stores. Costs are always held at its lowers so that McDonald's selling prices wouldn't be high enough for customers to mistrust their purchase and change their mind over McDonalds. Catering to consumer responsiveness towards taste and taste, and concentrating on low costing/prices increases the brand reputation and value, thus favorably impacting on their sales characters. Although, food related businesses follow localization or transnational strategy, McDonalds also attempts to adapt a worldwide standardization technique for some of its meal products. McDonald's menu is mainly standardized because the company wishes to protect some of its original ideas that have been innovated from home. Some examples of McDonalds products that they wish to keep standard in every markets are the McFries, McNuggets and Big Mac pc Sandwich.
These products continued to be unchanged or fine-tuned towards local responsiveness and so were offered to market segments as a representation of McDonald's culture. The products got the 'McDonaldization' methodology where these products mainly 'standardized and centered on efficiency and predictability. '
McDonald's hybrid strategy towards global extension has its limitations. Apart from having more pressure on concentrating on following two different guidelines of strategy they might not have the ability to be sure how successful their standard menu would profit them. As seen earlier folks have different tastes and preferences, specially when it comes to foods. So McDonald's offering their home-based standard menu would be seen as a risk to enter into new different markets. They might have to spend a lot on research and development to adjusting to consumer responsiveness. Not merely does indeed McDonalds make sandwiches which would meet local consumer. They might also need to spend a good deal on differentiated advertising, coming up with ground breaking offers on special events like Eid, Diwali, Xmas etc. McDonalds current position in the global economy is quite strong so its constraints wouldn't influence them the maximum amount of. They own great strengths in comparison to another international business. McDonald's opportunities are wide to them, further expansion and differentiation of these standard food menu in various markets would reap in sustained sales and earnings to the business. Their crossbreed strategy not only offers them the competitive advantages to contend with competitors, it also defends the organization culture and historical principles by keeping some aspects of McDonalds standardized. McDonalds ensures it doesn't let any factor have an impact on them provided they react versatile to changes and adapt to what consumers want, valuing their thoughts, tastes and tastes.
With the assistance of macroeconomic environment examination, international businesses like McDonalds find it simple to plot down their steps towards attaining their targets and long term goals. Monetary, legal, politics and ethnical reasons do impact on every business that functions internationally which is why it is very important for these international businesses to check out an appropriate procedure and adapt an efficient global strategy. Any external factors can influence business operations and thus when you are as flexible as is feasible to the changing environmental factors, international businesses like McDonalds can prosper into learning to be a major successful well recognized valued organization.
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