McDonald's in Germany in the context of Americanization

McDonald's In Germany In The Context Of The Americanization

McDonald's in Germany in the Context of Americanization

Prior to World War II, the American economy has generically been an enclosed one and its international trade relations were rather limited. After the first war, it turned into the creditor of the affected countries, but as the Great Depression of 1929-1933 became imminent, the United States was less and less able to consolidate a strong economy. After the Second World War, the country's officials saw an opportunity for economic revival in increased levels of consumption and developed international relations. They as such set the basis for a free market and encouraged other countries to implement the early stages of globalization. The practice would generate multiple advantages, such as an increased ability to benefit from the comparative advantages of various global regions (as initially suggested by economist David Ricardo) or a reduced governmental intervention within the marker and the creation of an open market which sets the prices based on supply and offer and which regulates itself (principle introduced by Adam Smith in his theory of the invisible hand). It would also mean increased competition and significantly larger customer benefits.

During the incipient stages of globalization, the United States constituted the largest political and economic power. This allowed them to implement the concepts of a liberalized market better than other states. The U.S.' fight for globalization and market liberalization has often been condemned as it was perceived as an aggressive means of promoting their economic, social, cultural and political values, threatening as such the cultural identify of states. These arguments in detriment of globalization, in the context in which the United States was the largest globalizing force, led to the creation of the concept Americanization. The notion is complex and difficult to define, but in a most simplistic formulation, it refers to the American endeavors in expanding and imposing their values. It was achieved through an expansion of American films, music, language, as well as political, technological, military or economic principles. In the commercial sector, it was achieved through the territorial expansion of U.S. corporations, such as Nike, Microsoft or McDonald's. The aim of this paper is to discuss the presence and role the McDonald's Corporation played in the Americanization of Germany.

2. Brief Description of McDonald's

McDonald's was founded in 1940 in San Bernardino, California by brothers Dick and Mac McDonald and it is currently headquartered in Oak Brook, Illinois. McDonald's operates on all six continents throughout a total of 99 countries. In 2008, it served an estimated 58 million customers per day and 80% of the operations were run through 5,000 franchises across the globe. In terms of financial performances, these often outweigh the largest players in the restaurants' industry. Moreover, despite the financial crisis, the Oak Brook-based company continued to increase its revenues. A specification must however be made in that the growth rate for 2008 relative to 2007 has been reduced in comparison to the growth rate for 2007 relative to 2006. The company's revenues increased from $16,611 million in 2007 to $16,561 in 2008; the operating income increased from $3,879 million to $6,443 million and the net income increased from $2,395 million in 2007 to $4,313 million in 2008 (McDonald's 2008 Annual Report).

Throughout its existence, the fast food giant has been subjected to intense criticism but their approach to complaints has been a constructive one. For instance, the company was once accused for promoting its products through children -- as a result, they stopped featuring children in their advertisements. Another time, the organization was blamed for their products' negative toll on consumers' long-term health -- they diversified their menus and introduced more dietary dishes, such as salads. McDonald's success is attributed to a multitude of factors such as high managerial skills and the ability to simultaneously address various customer palettes. Children for instance love the Happy Meals and the fact that they can celebrate their birthdays at McDonald's; teenagers meet at McDonald's after school and parents love it as the restaurants do not serve alcohol nor allow smoking; finally, the senior citizens frequent McDonald's for the breakfast menus and the ability to freely read the daily papers. All in all, despite the criticism to which it has been subjected, McDonald's remains the ultimate epitome of corporate success.

3. McDonald's in Germany

As of 2007, McDonald's operated through 1,276 stores in Germany (Deutche Welle, 2007). The first store was opened in 1971 and by the beginning of the 1990s, the company was operating more than four hundred stores; the 1,000th restaurant was opened in 1999 in Berlin. By 2000, the number of their store was larger than 1,000 and the number of employees had reached more than 50,000. A McDonald's restaurant in Germany typically employs anywhere between 45 and 100 employees and serves an estimated 741 million customers per year. Most of the growth was registered up to the early 2000s and the ascendant trend is maintained in the future, with the specification that, similar to the company's overall financial performances, the growth rate has suffered reductions from one year to the next.

During the 1980s, the company was faced with the first criticism and it did not manage to establish adequate and fruitful relations with the unions of workers (Royle and Towers, 2002). Much of McDonald's success in Germany was however due to the adaptation to cultural demands. The main dish is for instance named after German city Hamburg, popular for its ground-beef steaks and, unlike other international restaurants that use imported fried potatoes, McDonald's Deutschland uses only German potatoes and only Bavarian cow dairy for its burgers (Schlosser, 2001).

The German McDonald's is organized into six groups, initially named after geographic positions, but coming to in fact not be linked to geography. These regions are North, Northwest, West, Anver South, Southwest and Southeast. Out of all McDonald's restaurants, 65% are franchises and 35% are wholly owned and managed by the parent company; the value is lower than the international average of 80%, but the increased levels of control and guidance from McDonalds' U.S.A. remain high. This helps franchise managers implement the most suitable decisions for the overall group, but also increase the chances of success for each individual store. In Germany, McDonald's is legally constructed as a LLC -- limited liability company (Royle and Towers). It basically materializes in managerial flexibility, and pass-through taxation, but also in that, in case of bankruptcy or any other major debts, the owners are not considered liable and will not be executed to recuperate the company's losses.

Similar to other international regions, the consumer base in the central European country became reduced as a direct result of increasing obesity cases and a growing focus on healthy eating. Additionally, throughout the past year, McDonald's sales in Germany also suffered decreases due to the globalized financial crisis. The efforts to readjusting the menu to respond to the economic crisis have been fairly limited and at best translated into price reductions for some menu entries. Instead, the reduced demand in the context of growing concerns for a healthier life was more constructively addressed in the meaning of new menu entries, such as salads, fruits, more chicken dishes (in the detriment of pork), yoghurt or even milk supplied by ecologic farms. Also, the company invested large sums of money into sponsoring sports clubs for children. Still, despite these efforts, the general perception of McDonald's remains relatively low; yet this does not stop the customers from purchasing and consuming fast food products from the Oak Brook-based corporation. "However, McDonald's has a bad reputation in Germany. Asked for their opinion on restaurants, Germans ranked McDonald's consistently at the lowest levels. Nevertheless, every second German admits to visiting a McDonald's restaurant on regular basis" (Adam, 2005).

4. Americanization of Germany through McDonald's

Before commencing the discussion on the Americanizing role that McDonald's plays in Germany, one has to note the company's ability in understanding the features of each foreign market and adapting to its unique requirements. In India for instance, they do not serve beef; in Canada, they offer lobster menus; in Japan, they offer shrimp sandwiches; the Norway menus contain numerous fish dishes or, in Greece, they offer burgers wrapped in pita. The list of examples could go on with numerous other countries and menu entries, but a point has been made in that the American fast food giant is not only interested in supporting globalization and Americanization, but that it also cares about the traditional values and strives to integrate them in its product offering. Otherwise put, through an adaptation to local features, McDonald's promotes national values. In Germany, they included large sausages and beer in the menus (Adams, 2007) and in the cafes, they serve coffee in porcelain cups instead of paper cups and offer their customers the ability to sit on leather couches instead of plastic chairs (Deutche Welle).

Given these considerations, alongside with the strong belief that a country cannot be entirely changed without its cooperation, it is concluded that McDonald's did not globalize Germany. However, through several features and efforts, it did contribute to the process of Americanization of Germany. The first example in this sense is given by the decreasing restaurants industry within the central European country. Internationally recognized for their schnitzels, bratwursts, knackwursts or sauerbraten, the German restaurants are slowly decreasing in popularity. Once the dominant part of the restaurants industry, the traditional German restaurants now account for less that one third of all players within the sector. Their demise could easily be associated with internal and economic modifications, such as the high costs of running these types of facilities, but it can also be seen how the growing popularity of McDonald's generated a reduced demand for traditional restaurants. "The traditional German restaurant […] is rapidly disappearing in Germany. Such establishments now account for less than one-third of the German foodservice […] McDonald's Deutschland, Inc. is by far the biggest restaurant company in Germany today, more than twice as large as the nearest competitor" (Schlosser). Otherwise put, the emergence of the American fast food giant within the central European country generated mutations in customer demands and reduced the interest in traditional locations. As a result, the process of Americanization commenced with the replacement of national eating customs with the McDonald's menus. And given that the descendant trend in terms of traditional restaurants is expected to maintain in the future, the process of Americanizing Germany could no longer be seen as a far fetched idea.

Directly linked to McDonald's role within the German fast food industry is as well the impact it generated upon consumers. Otherwise put, we already know that it changed their eating preferences from traditional dishes to all-American meals, but it is also important to notice that prior to the arrival of the Illinois fast food giant, most Germans were reticent to eating out and preferred the privacy of their own homes. McDonald's changed this and convinced the German population it was pleasant to have a meal outside the home. "In fact, McDonald's […] has been a major factor in changing German eating culture and behavior. Snaking and eating out have become popular because of the pioneering role of McDonald's in the fast food sector" (Adam). For the Americans, such behavior is common, but for the more private Germans it was something new -- it was another step in the Americanization of Germany.

Aside from eating out, McDonald's also brought into Germany the values of the American language as their menus contain the inscriptions of the meals in both English as well as German. People grew accustomed to the English language and their increased ability to understand it further increased the popularity of features expressed in English language and transmitting the American values, such as the music or the Hollywood films. The outcome has furthermore been strengthened by the airing of various McDonald's commercials which not only promote the language, but also the American values (this is mostly applicable to the target market formed from teenage consumers). The endeavor set the basis for an Americanization of the Germanic language, which could in the future materialize in the loss of the national identify through the loss of the national language.

Just like in most European countries that carry the history of totalitarian political regimes, the populations saw the arrival of the Americans as an opportunity for liberalization. The youth were the first to embrace the new trends set by McDonald's and they did not perceive this as Americanization, but as liberalization. The ability to wear ripped jeans, go to rock concerts and hang out at McDonald's stores allowed them to better express their individualities and make a statement of freedom. But despite their perception as freedom, the actions did in fact make for Americanization, as the German teenagers lost part of their national individuality and came to look more and more alike the American adolescents.

The Americanization of the German teenagers, a process strengthened by McDonald's, has already materialized in various mutations. The adolescents in the central European country desire to enjoy the same freedom as the American teens and this includes not only the ability to wear the clothes they want, but also in an ability to study the subjects they want (while the American schools offer increased flexibility, the German educational institutions are rather rigid). Also in the process of adopting the American values, the German teenagers long for the organization of sports and other out of school events that create "school spirit." Aside the freedom of school related activities, changes have occurred in the habits of going out, as more and more German teenagers follow the American model of going out to dinners, movies and dating. Despite the initially harmless effects of these changes in adolescent behavior, one has to realize that the American teenager is a growing victim of drugs ("drugs are a bigger problem in the U.S. than they are in Germany. I have heard from numerous students how unbelievably easy it is to get drugs" (Fisher, 1999)) and that excessive alignment to the American teenage values could mean that the German teenager becomes more exposed to the risks of doing drugs. This in turn would materialize into a social problem.

Then, another force of Americanization has been introduced by McDonald's in their treatment of the staff members. Despite the fact that they employ more than 50,000 individuals within the central European country, the company's board does not have a member to speak for the rights of the workers. This was possible due to the fact that McDonald's Deutschland was not created as an individual company, but as an organization fully owned by McDonald's U.S. And as such, subjected to American legislation. "With over 50,000 employees in over 1,000 restaurants, one would expect that McDonald's Germany would have employee representatives sitting on a supervisory board, but this is not the case, and the main reason is that McDonald's Germany has retained American registration, making it a wholly owned subsidiary of the American McDonald's Corporation" (Cooke, 2003). This basically means that the political and employment customs within Germany have been subjected to Americanization and that the rights of the national employees are less protected under U.S. legislation than under national laws. The process is evermore dangerous as it not only helps the American corporation increase its revenues, but it also constitutes a profitable business model that could be easily adopted by German employers. The long-term result for such an action would be a significant decrease in the rights of the German labor force.

As a final remark, the Americanization of Germany must also be analyzed through the lenses of historic events. With the end of the Second World War, defeated Germany was perceived as the main culprit of the many casualties and financial losses throughout the globe. The population lost its self-respect and much of its determination and power. In this context, the country, and other international players, found it difficult to set the basis for fruitful relations with Hitler's Germany. In a setting in which the central European state was struggling to regain its dignity and national identity, the United States opened the door to economic collaboration and cooperation. The opening of hundreds of McDonald's stores convinced other global investors of the economic capabilities of working with a strong industry and market. However, most of the foreign investors in Germany came from the United States, constituting as such an additional step in the Americanization process. More specifically, the end of the war and the decision of the United States to restore economic collaboration with Germany through ventures including the opening of McDonald's stores meant that more and more American organizations would territorially expand into Germany to promote the American values, culture, products and traditions. The contemporaneous Germany is filled with subsidiaries of American corporations such as General Motors, Burger King, Pizza Hut, Nike, IBM and so on (Pauwels, 2003).