McDonald's business model, globalization, and human resources strategies

Mickey Ds

McDonalds is based in suburban Chicago and is the world's biggest quick service restaurant chain (QSR, 2012). The company employs a total of 440,000 people worldwide, and operates in well over 100 countries worldwide (MSN Moneycentral, 2013). In the last fiscal year, the company earned revenue of $27.5 billion and had a net income of $5.4 billion. This paper will analyze McDonalds and touch upon some of the more fascinating aspects of the company's business. There are several different elements that are of interest ot the researcher. These include the company's globalization efforts, its human resources policies and its history.

McDonalds began as a barbeque stand in San Bernardino, CA, but eventually began a burger stand instead. One day, Ray Kroc arrived. He was a milkshake machine sales person and he liked what he saw. He studied the restaurant for a while and decided he wanted to open up a McDonalds of his own. He did just that, keeping the entire formula the way it was. This was the beginning of the franchise concept for McDonalds, and the company was essentially the first in the United States to take this approach to expansion. Kroc first focused on expansion in the Midwest but very quickly the concept spread across the United States. By the 1970s, McDonalds was already operating in Canada, Puerto Rico and Europe and its global expansion continues unabated.

The Business Model

The McDonalds business model is that the company is a differentiated provider of fast food, specifically focused on burgers, fries and soda. McDonalds works in a cost leadership industry, but does not take a cost leadership position within this industry, instead pursuing differentiation. It survives as a quick service provider because it keeps its costs low. It does this through efficient, tightly-managed operations that minimize waste and focus on getting the most out of employees through the use of high-efficiency system. The business model works because of the emphasis on high volumes. This is important for McDonalds, so it supports this with constant saturation advertising and saturation franchising to make sure that people always have McDonalds on the mind and that there is always one nearby.

McDonalds is also positioned as an innovator to make the company continually attractive. The company is willing to experiment, even when such experiments fail. McDonalds once invested a lot of money on pizza, but this idea failed It also has taken the approach of a lot of healthy items on the menu, but is considering dropping many of these because they simply are not popular. However, the company is also innovate with respect to marketing as well. It does this by listening to the franchises. So for example when one franchise had success with a garish clown, the entire company took Ronald McDonald for its own use, making that clown the company mascot. McDonalds has also been an innovator at marketing to children.

Globalization

McDonalds has managed to become a symbol of cultural imperialism thanks to its aggressive track record of international expansion. It was moving overseas very really in life, one of the first American firms to truly embrace globalization. These moves have brought the company billions of dollars but also scorn for destroying rainforests and a whole host of other complaints (Salisbury, 2013). The company today as 31,967 locations in 118 countries. In many of these countries, they have co-opted local foods in order to appeal to the local market. This includes lobster rolls in Nova Scotia, McAloo Tikka in India, banana pies in Brazil, Nurnberger sausages in Germany and more (No author, 2013). The Big Mac is a staple everywhere, though, and has become part of the Big Mac Index, which compares the purchasing power of different countries (James, 2009).

Thus, McDonalds both pleases the international markets and enrages them. The company represents America coming to the local country, something that some people appreciate because they see America as a symbol of wealth and success and something that others feel is inappropriate. The French protested the arrival of McDonalds. We can have French restaurants but the minute they get an American one they freak out, go figure.

Human Resources

When I was in high school, there was kind of a stigma about having a "McJob," but the reality is that 440,000 people around the world work for the golden arches. They are down with the clown, hopefully not until they are dead in the ground. For most people, McDonalds is temporary employment, which represents a significant human resources challenge for the company. To overcome the challenges of motivating a transient unskilled workforce, McDonalds seeks to foster a corporate culture based on excellence and a high level of customer service. The company has a dedication to its employees that is borderline unreasonable, going so far as to provide the Hamburger University, which is used to train good recruits into managerial positions, so that they can instil the corporate culture of excellence on all who arrive at the company (Financial Post, 2013).

Future Plans

McDonalds remained committed to delivering the best food and the best service, so that it can continue to lead its industry. What this means is that the company can expected significant growth for the foreseeable future. At a slow rate of growth, but always steady because there are still a lot of markets that do not have very many McDonalds. The company needs a lot of work in Europe, where some countries have not embraced the company's offerings, but Asia is a major growth market. The company has reinvented its entire menu in India because it does not have beef or pork, and this has helped it to survive.

All in all, we have seen evidence that the McDonalds formula is highly attractive to consumers both in the domestic market but also in the international markets especially in growing markets in Asia and Latin America. McDonalds therefore should stick to its current strategy because we know that it works. There is the possibility that the company can buy another fast food chain in order to expand, but since its own company has a great brand, perhaps there is little reason to go this route. It is important to remember that McDonalds was just a small burger stand in California not too long ago, and that it grew because it was a well-run business with food that people really liked.

Overall, I think that McDonalds has done a good job of taking advantage of globalization, and its human resources corporate culture practices are excellent. There are a few complains, but it needs to work within the framework of reality, and that means continuing to do what it knows will help it gain sustainable competitive advantage in a highly competitive marketplace. This is to continue with excellent operations, great products and international expansion.