McDonald's the largest fast-food chain across the globe. This is through spanning of approximately 30,000 restaurants across the globe with the aim of maximizing its revenues and profits at the end of the financial year. McDonald's Organization aims at being the customers' favourite place and way to eat and drink as its mission to meet the needs and preferences of its consumers. The pattern of internationalisation of McDonald's Company proves to be similar in the countries of operation because of the tendency of the organization to establish contracts of areas of development with local businesspersons.
How does international business achieve its internationalisation objectives in the contemporary context?
Brief overview of the organisation and its mission/objectives related to international business
McDonalds Company is one of the most effective and explosive business entities across the 21st century (Company Spotlight, 2005). The organization focuses on the provision of quality products and services to the consumers in the context of fast food restaurants. McDonald's the largest fast-food chain across the globe. This is through spanning of approximately 30,000 restaurants across the globe with the aim of maximizing its revenues and profits at the end of the financial year. The organization focuses on the provision of products through its menu and diverse restaurants such as Chicken, Big Macs, McNuggets, Quarter Pounders, and Filet-O-Fish. In the United States, the organization has approximately 13,700 restaurants out of which 2,100 are under the operation and management of the concept of corporations. The remaining entities or outlets are operated as franchises (McDonald's Corporation, 2008).
McDonald's Organization aims at being the customers' favourite place and way to eat and drink as its mission to meet the needs and preferences of its consumers. The international operations of the business entity depend on the 'plan to win' strategy thus essential in the maximization of the goals and objectives of the organization within the financial year. 'Plan to Win' strategy focuses on five critical factors: exceptional customers (people), products, promotion, price, and place. The main objective of the organization in the global market is to continue with the improvement of the operations and enhancement of the consumers' experience.
McDonald's focuses on the integration and incorporation of various values with the aim of improving its services and products to the consumers (McDonald's Corporation Case Study, 2012). One of the essential values in the operation of the organization is placement of the consumer at the core of all its activities. It is the duty of the organization to note that consumers are the reasons for their existence within the market and industry. This makes it vital for McDonald's to demonstrate appreciation to the consumers through the provision of high quality and superior products in relation to clean, welcoming environment, and efficiency in the service delivery. The second value for the organization is the commitment to the people. This is through provision of opportunities, development of talents, leaders, and motivation of the achievement. The organization is committed to the development and implementation of a team of diverse experiences and background for the achievement of the goals and objectives within the market and industry of operation.
McDonald's Company also promotes the belief in the systems of the organization with reference to the business model. The business model of the organization focuses on the promotion of an effective and efficient balance in relation to suppliers, employees, and operators. In order to maximize its operations, McDonalds also focuses on the execution of its business interactions in an ethical means thus reflection of honesty, loyalty, and transparent interactions with stakeholders and shareholders. The organization is also committed to giving back to the community thus the development of image and reputation. This is through working with the consumers in the development of better communities. Other values include growth of the business profitably and consistent strive towards improvement of the services and systems of the organization (McDonald's Corporation SWOT Analysis, 2012).
Analysis of the internationalisation process of the organisation and its impacts on the international context
Analysis of the internationalisation process of an organization is vital in the understanding key academic theories in relation to international business entities. It is also vital in the illustration of the roles and actions of the players in the international market towards the development of the entire society.
What did the organisation do to internationalise itself?
In 1970, following the assumed peak of McDonald's entities in the context of the United States and Canada, the organization saw the need to embark on a critical internationalisation process. The organization had attained about 1,800 units in the United States and Canada during that moment. Despite this development, the chain of the organization in relation to markets in North America, was illustrating substantial growth in the 1970s with approximately development of 60 units per annum. The organization had critical reasons behind the development of the concept of internationalisation in the 1970s. One of the essential reasons for the organization to internationalise was to address the issues of the slower pace of growth in relation to the internal market (Yamada, 2010). Another possible reason for internationalisation by McDonald's Company was the need to address the swelling force of competition in the internal market (Yamada, 2010). Slow growth and stiff competition in the internal market were affecting and cutting into the profit margins of the organization thus the need to seek growth in a wider perspective (McIntyre & Huszagh, 1995).
Close examination of the internationalisation process of McDonald's Company indicates that the organization has two main criteria points in the selection of the areas sufficient for the international expansion. These two criteria include similar culture to the one explicit in the United States and essence of geographical proximity. By 1970s, the organization had international outlets in the context of Germany, Holland, Japan, Sweden, Panama, and Virgin Islands. There was an increase in the rate of internationalization with reference to the case of McDonalds in 1980s (McDonald's: Europe drives growth, 2010). This was essential in the increase in the position of the organization in Europe and vital penetration into countries of the former Soviet Union, North Africa, and Middle East. An examination of 1997 indicates that the organization had its outlets in approximately 103 countries through development of 13,000 units.
The pattern of internationalisation of McDonald's Company proves to be similar in the countries of operation because of the tendency of the organization to establish contracts of areas of development with local businesspersons. This indicates that local businesspersons have the right to spread McDonald's brands into their countries or regions. This process also indicates that the businessperson has the obligation of undertaking investment risks and responsible for the franchise's growth plan in the region or country of development. There is a limitation towards licensing or franchising the brand further by the businesspersons in the area of development as stipulated in the contracts (Zorska, 2010).
The organization divides accumulated profits equally with the area leader. In case of franchised units, it is essential to note that no percentage over profits goes to the area leader. This indicates that there is a split of the profits between the franchisee and the organization. The organization focuses on the improvement of its internationalisation process through enhancing the performance of the leaders. This is through provision of brand know-how and technical development, logistic, and marketing support essential in the realization of the goals and objectives in the area of development. The organization does not permit the area leader to expand the chain without seeking the approval of McDonald's Company. This is an indication that the organization holds the franchising right thus limitation of opening of new franchise units by the area leader in the process of internationalisation. McDonald's Company has the obligation in relation to the determination of the needs of the technical know-how, changes, or improvements to the franchises under contracts. Area leaders own physical property in the area of development despite adhering to the demands and regulations of the mother corporation as the final decider in the context of further expansion. The mother corporation starts to negotiate with the area leader on the acquisition of the facility in the area following sufficient dominance within the market. The organization focuses on the examination of the policies of each nation in relation to the overall aims of McDonald's Corporation before embarking on the aspect of internationalisation.
McDonald's Corporation adopts and implements Uppsala school approach or model in the concept of internationalisation. This is through illustration of sequential pattern of entry in the foreign markets or regions thus progressive deepening of commitment in relation to each market. The organization tends to develop substantial interest thus increase in the level of commitment in the foreign markets due to development of experience in the execution of business duties in the new markets. McDonald's Corporation focuses on the acquisition of the market knowledge prior to the venturing. This is through application of the area leaders in the promotion of the brands of the organization (Khan, 2005).