Assignment 2: Operating Globally

Conduct research to identify a company that operates in two countries located in two different geographical regions. After evaluating the assigned readings and the research literature related to this module, explain adjustments that had to be made in the way the business operates in each country and how products and/or services are offered in one country versus the other.

Submit your findings in a 2–3-page paper. Make sure you write in a clear, concise, and organized manner; demonstrate ethical scholarship in accurate representation and attribution of sources; and display accurate spelling, grammar, and punctuation.

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Running head: OPERATING GLOBALLY

OPERATING GLOBALLY 4

Operating Globally

Managing Global Challenges

January 28, 2015

Business Strategy of McDonald

McDonalds Corporation Franchises and operates McDonald’s restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. As an MNC, McDonald continues to face criticisms for all the wrong reasons. In order to counter various ethical issues and criticism, MNCs such as McDonald must consider the long term benefits for all the stakeholders and maintain healthy subsidiary-host relationships (Argosy University, 2015). MNCs can achieve this by sharing resources, ideas, and opportunities. This leads to the creation of larger pool of knowledge base for products and processes; at the same time, helping to understand customer requirements and improving competitiveness and performance 9srgosy University, 2015). According to Doane (2005), organizations that address social standards in supply chains, such as Fair Label Association in the United States or the United Kingdom’s Ethical Trading Initiative, have flourished. Another important and valuable component of conducting business is gaining knowledge and skills about different cultures and organization (Argosy University, 2015).

An evaluation of McDonald’s operations in China and in United States reveals some issues that contribute to the company’s declining sales. The China meat scandal in which a local reporter secretly captured footage of contaminated meat being processed inside a factory, has been a source of decline in sale for McDonald in China after the video went viral in the country. McDonald has made adjustments by deciding to continue its 50-year long business with the food processing group by using a different OSI plant. The company kicks against using local alternatives believing that the quality of meat is still better than the local alternative. However, the company mentions that it will ensure high quality of meat in the future (Team, 2014).

McDonald offered some worldwide standardized main products on their menus. The standardized menus are being offered in the United States. At the very beginning in China, the company claimed that they would not change the menu in China and will always stick to the American style menu. However, the intense competition from KFC made it difficult for McDonald to always stay outside. Therefore, the company started in 2004 to introduce some menu items to cater for Chinese taste. These include: fried egg and Chinese pancake, a new hot drink with honey and ginger launched in the winter of 2007 (Zhou, Zhang, & Pahlberg, 2012). However, most of these Chinese products are only offered for a limited period, but its key products are always hamburgers of all kinds (Li, 2007).

In United States, McDonald locates most of its restaurants beside the main streets or highways to reflect the American eating habit in which most people choose fast food restaurants for its quick food service and convenient access. However, the eating habit in China is different and McDonald had adjusted its operation to adapt to Chinese eating habit. For the Chinese, going to a restaurant is like going to dinner. They regard this as an occasion to communicate with each other, meet friends, who haven’t met for a while. The adjustment for this eating habit is that McDonald mostly builds its restaurants in downtown area where population is condensed, and almost every restaurant is equipped with a children’s playground with sliding board, for parents to better relax and stay longer in the restaurants (Zhou, Zhang, & Pahlberg, 2012).

In United States, the concept of “drive-thru” is seen as an easy and convenient way of placing order on-the-go while customers remain in their cars. McDonald envisions the “car life style” to be future trend in China, and therefore introduced the concept of drive-through restaurant in China in 2006. McDonald however, chose the gas station in rural areas as the location choices for the drive-through as against the main streets in the United States

References

Doane, D. (2005). The myth of csr. Retrieved from

http://www.ssireview.org/articles/entry/the_myth_of_csr

Li, Y. (2007). The internalization strategy of KFC and McDonald’s in China. North East

University of Finance.

Team, T. (2014, September 11). McDonald’s faces declining sales in Asia After China food

scandal. Retrieved from

http://www.forbes.com/sites/greatspeculations/2014/09/11/mcdonalds-faces-declining-sales-

in-asia-after-china-food-scandal/

Zhou, L. Zhang, Q., & Pahlberg, C. (2012). Cultural adaptation pattern analysis of McDonald

and KFC in the Chinese market. Retrieved from

http://www.diva-portal.org/smash/get/diva2:534795/FULLTEXT01.pdf