GLOBALIZATION

Globalization and International Business: Evaluating McDonalds' Strategies

Globalization and International Business: Evaluating McDonalds' Strategies

Introduction

Globalization, in general, refers to the political, economical and socio-cultural integration of process, technology and information beyond geographical boundaries. Rugman and Collinson (2006) define globalization as the production and distribution of products and services that are uniformed in terms of type and quality globally. Although the term was initially coined by economists, it eventually proved to have a widespread effect on the world order and structure. Globalization redefined the ways in which different nation states are interdependent on each other, compete with each other, and has opened new doors to competition, specialization and efficiency. Over the years, the rapid advancements in the field of Information and Communication Technologies (ICT) have made the corporate ecosystems so dynamic that global interdependence has become inevitable (Kramer, 2000, pp. 12).

Company Overview

The world's largest hamburger fast food restaurant chain, McDonald's began its operations in 1940, in the United States of America, as a barbecue restaurant. Eight years later, the owners Richard and Maurice McDonald's restructured their business and product portfolio to a hamburger stall. The company saw massive growth as a dynamic brand after a businessman Ray Kroc purchased its stakes in 1955. Kroc then expanded the business through franchising and affiliations across the globe. Today, the company exists in 119 countries and is the most popular and the largest hamburger brand in the world.

The company's globalization process was driven by a strategy that ensured the visibility of McDonald's as a global icon around the world. The company intended to position the brand so aggressively that the word Big Macs and Mc Chicken would become integral part of global culinary vocabulary. The globalization process was based on strict standardization policies. Mc Donald's licensed out its brand internationally but made sure that all the franchisees and there key employees were trained at the Mc Donald's training headquarters in the United States (Vignali, 2001, pp. 99-103).

McDonald's Expansion and Globalization

McDonald's is one of the few companies that envisioned, acknowledged and embraced the changing dynamics of the international corporate ecosystems. The company successfully included strategies that enabled the company to sustain its growth and adapt to the effects of globalization. Localization of products, acknowledging cultural values, building brand equity through aggressive marketing strategies and cost-effective production strategies are major influencers that underline the corporation's expansion strategy.

Driving Forces of Globalization

McDonald's has globalized itself using a strong and innovative franchise model. It has one of the most successful franchise models in the world that allows integration of both regional and global stakeholders in order to form a lucrative business structure (DeBres, 2005. pp. 115-117). There are several factors that supported McDonald's successful internationalization. McDonald's had developed a strong franchise based business model to expand itself across the United States. Over the years, the telecommunication and media revolution took over the global climate thus leading to increased consumer awareness and accessibility. Furthermore, free trade agreements and the consequent leniencies in the legislation systems followed ...