By Shahil Usman- MBA Candidate ’20
While taking the tasteful bites have you ever compared the menu of McDonalds in two different countries? if not, do it next time, it will give you a startling revelation. The McDonalds on the streets of New York and in a mall of New Delhi is not the same in all aspect, rather the taste and menu are influenced by local responsiveness. And that difference is conspicuous culturally. In 1955, McDonalds opened its first restaurant in Des Plaines, Illinois. Today, it operates over 37,000 restaurants worldwide, in 119 countries, on six continents, can be considered a multidomestic company because it adjusts to the cultures and consumers of their host countries. Take the normal example of India. Cows are held sacred in the Indian religion of Hinduism which is why McDonald’s India doesn’t serve beef in India. Can you imagine? A McDonald’s restaurant without beef? In France, for example, wine can be purchased at McDonald’s. This approach makes sense for McDonald’s because wine is a central element of French diets. Moreover, analyzing profoundly, on the whole, McDonalds is a firm seeks a middle ground between a multidomestic strategy and a global strategy. The firm tries to balance the desire for efficiency with the need to adjust to local preferences within various countries. McDonald’s rely on the same brand names and the identical core menu items around the world. But make some concessions to local tastes too. And that is why McDonalds demonstrate atransnational strategy. McDonald’s recognized early in its life that overseas market required an extremely high degree of local responsiveness and that they needed to manage business spread across different regions efficiently, which would be achieved only through transnational Strategy.
McDonalds exemplify all the four components of Strategy development: Distinctive Competence- McDonalds knows what is that, it does exceptionally well. It understands the magnitude of its brand name. The McDonald name, image, and its food menu are the distinctive competence that allows the firm to succeed in foreign market. Scope of operations-As the data suggests McDonald operates over 37,000 restaurants worldwide, in 119 countries, on six continents. It is needless to say that McDonalds want to be operated all over the world wherever there are consumers interested in fast food. Resource deployment- McDonald’s emphasize on local management for better responsiveness to the external environment. Moreover, hiring locals brings more acceptance of the company in local market by customers and company can gain easy access to bureaucracy associated with local government. Synergy- McDonald has been the single elements of the business as opposed to multiple requiring much synergy. With the right strategy in place and with this single entity of offering food, it has reached to the pinnacle of success.
Corporate Strategy: As a part of corporate strategy McDonalds focuses on single business strategy. McDonalds’ single-business strategy calls for the firm to rely on a single food product line for all its revenue. The most significant advantage of this strategy is that the firm can concentrate all its resources and expertise on that one area. However, this strategy also increases the firm’s vulnerability to its competition and to changes in the external environment. McDonald’s rival McLibel in Britain was one example of that.
Business Strategy: As a part of business strategy McDonalds seems to adhere to differentiation strategy. It attempts to establish and maintain the image that this fast food line is unique from others in the same market segment. McDonalds compete by charging reasonable prices for quality goods and services. Also, McDonalds’ expansion policy has used the franchising strategy worldwide. It has successfully replicated its business model, not in the US but also in the global locations. Today more than 80% of the restaurants of the company are operated through the franchisees. This calls for McDonalds to focus on achieving highly efficient operating procedures so that its costs are lower than its competitors’. This allows it to sell its food service for lower prices and reflects McDonalds’ overall cost leadership strategy.
