McDonald's Geographic Structure and Strategies

Explore the geographic structure and strategies of McDonald's, one of the leading fast food chains in the world. Learn how the company divides its operations into different regions and how it expands into new markets. Discover the impact of cultural differences and the company's corporate social responsibility initiatives. Recommended strategies for entering new markets are also discussed.

Management

Executive Summary
McDonalds is known for being one of the leading fast food retail chains of the world. The
business structure of McDonald is based upon the geographic structure of the regions within
which it operates. The geographic structure in turn impacts the strategies of the company. The
overall functioning of the company has been divided into 5 geographical divisions. The highest
generators of revenue for the company are Europe and United States. The most significant
strategic approach of the company is consistent maintenance of the major markets expansion of
the business into other new markets of the world.

Table of Contents
Introduction......................................................................................................................................4
Cage distance framework................................................................................................................4
CSR..................................................................................................................................................5
USA.............................................................................................................................................5
India.............................................................................................................................................6
Hofstede's cultural comparison........................................................................................................6
Power Distance Index..............................................................................................................6
Masculinity..............................................................................................................................6
Individualism...........................................................................................................................6
Uncertainty avoidance.............................................................................................................7
Long term orientation..............................................................................................................7
Indulgence................................................................................................................................7
Conclusions and Recommendations................................................................................................8

Introduction
McDonald's established itself in the year 1940 in California, United States of America. It is
known for being one of the most successful and famous international fast food chains of the
world. Since the very beginning the company has been using various effective expansion and
management Strategies for entering into global markets and gaining a reputation within the
global market of fast food. McDonald's is very well known for the creation of customer loyalty
and brand for those services and products which it is efficient in providing. The brand image of
the company is being enhanced by the means of strengthening its initiatives related to the
corporate social responsibility.
Cage distance framework
The cage Framework has been developed by Pankaj Ghemawat who is a professional of
international business strategies (Hasan, Ibrahim, and Uddin, 2016). The Framework helps
companies by providing various parameters for the evaluation of nations on the basis of distance
between them.
Cultural Administrative
There are various hindrances towards the
successful transition of businesses such as different
languages, religion, ethnic societies and social
values (Griffioen, 2011). In a country such as India,
most of the people follow Hinduism and the cows
are worshipped. Hence, eating beef in this country
is neither allowed nor tolerable (Alderman, 2012).
Such an issue became a socio-cultural challenge for
the company due to which it had to face difficult
times while surviving within different religions and
cultures. McDonald's has a big presence right now
within India and plans to expand itself more in
terms of vegetarian outlets across the nation (Nagy,
2011).
For McDonalds, entering the markets of India was
quite feasible and easy for the company due to the
past relationships of strong trading between United
States and India (Kalagir, 2014. The Bharatiya
Janata Party of India is considered to be one of the
dominant political parties of the country, which in
the year 2001, came forward for protesting against
the company by attacking its outlets present in the
country (Tapper, 2014). According to research,
80% of the food menu of McDonalds in India, is
Indianised, meaning the food menu has been
modifying with respect to the preferences of the
people.
Geographic Economic

While establishing itself within the markets of
India, McDonald's developed various
communication and standard technologies for
promoting itself within the country also used them
for reduction of the distance with the suppliers and
customers of the nation (McDonald's, 2015). A new
branded affordability programme was incorporated
by the company where it offered the Indian
customer with burgers for only 20 rupees. It was
not initiated as an offer or discount, but to make
statement that the firm offers affordable food and
great value.
When the company entered into the Indian market,
the economy of the Nation was stuck into inflation.
The pricing strategy of the company often had to be
varied because the currency of India as well as
United States have different values across the
world. In India, the big Mac of McDonald's is
undervalued however has to maintain price range
of products which is valid enough with respect to
the location where it is operating. The economy of
USA is stronger than that of India. The country’s
annual budget over revenues are $2.45 trillion
whereas India’s is $172.10 billion.
The company faced various issues after entering into an economy that was already struggling and
is considered to be one of the toughest markets for international businesses due to the hardships
imposed on the firm by the Indian Government. McDonalds was able to overcome these issues
by incorporating the franchise entry mode which allowed its stakeholders for sharing the risks
and rewards of exploring and pursuing the new opportunities. After facing a lot of protest from
the country and its people, in the initial time, the company overcame all issues by quickly
adapting to the national culture and modifying its products and services in accordance with the
local choices. This helped the company in gaining a competitive advantage and a big market
share.
Hofstede's cultural comparison
Power Distance Index
USA
USA's score of the same was 40. This reflects on the fact that America's premises are about
justice and liberty for all.
India

The score of India on this dimension is 77, which indicates towards an appreciation of
hierarchical form of management and down-top structure within organisations and society.
Masculinity
USA
USA's score is 62, implying the society of the country is driven by achievement, success and
competition.
India
India's score was 56. The country is masculine in terms of power and success' visual display.
Individualism
USA
USA scored 91 here. In all the aspects of the government and society of the country, equal rights
are provided to everyone.
India
India scored 48 here. This implies that the country has traits of both, individualists as well as
collectivists.
Uncertainty avoidance
USA
USA scored 46, implying there is a fair level of acceptance for innovative products and new
ideas.
India
India score 40, implying it has a low medium preference towards the avoidance of uncertainties.
Long term orientation
USA

USA scored 26, implying the nation prefers maintenance of norms and traditions while viewing
change within society.
India
India scored 51, implying the country takes greater level of pragmatic approaches and
encourages efforts and thrift in modern education. The country also maintains its norms and
traditions.
Indulgence
USA
USA score 68, implying it has an Indulgent society. The country believes in working hard and
playing hard. The society is known for being prudish.
India
India scored 26, implying it has a culture of a restraint. It has tendencies for pessimism and
cynicism.
CSR
The stakeholders of McDonalds impact the company the means of the consumer perception.
There are a variety of programs related to the corporate social responsibility of the organisation
for addressing the interests of its stakeholders. Being a global fast food giant, the company has
developed various strategies for corporate social responsibility for minimising the negative
impacts of its stakeholders while at the same time fulfilling their interests. Recently, various
diversity benchmarking and inclusion events have been held at the company for discussing and
addressing issues of corporate social responsibilities where it was said that CSR is the business
of everybody.
USA
The franchise of McDonald's within the United States of America announced that it would be
investing more than 6.5 million dollars into the program of Agricultural technical assistance as a
part of their efforts towards the increase in the sustainability of coffee.

The first national restaurant chain of McDonald's USA sustainable fish which were MSC-
certified within all the locations and states of the US.
The franchise outlined a ten year plan for bringing an end to the usage of gestation stall.
The company funded scholarships worth $10,000 to four students who were Hispanic.
Introduced usage of oil which would reduce the TFA by 48% within the fries served by the fast
food giant.
India
The various corporate social responsibility activities of McDonalds in India were:
Started the Ronald McDonald House Charities; showed various commitments towards children;
started and supported the notion - "Light up your life, adopt a child"; indulged into various
educational workshops and; introduced the programme of Hand in hand saving sight. In addition
to these, the company has also taken various initiatives regarding food safety and security and
improvement of quality and has also taken various actions regarding trans fatty acid.
By showing more response, positive attitude and social responsibility towards the societies of
both the countries, the company was able to gain the attention of new customers and obtained
trust within the old an existing customers. As such, the brand recognition of the company was
enhanced since people, media and organizations stated to appreciate the organization for its
social welfare activities, especially towards the children and students and healthcare of people.
Conclusions and Recommendations
From the above assessment, it can be concluded that strategy formation is a consistent and
diverse procedure which keeps on evolving from time to time. For company like McDonald's,
strategy planning should not be deviating from the long term objective which was planned but
instead, consistently coming up with new options analysing the same with the available
resources. The company should be more open towards flexibility while making entry into various
nations and emerging markets. The intended strategy of the company should be abandoned to a
specific level in order to become successful. The strategic procedure of the company should
highly emphasize upon the outcomes but primarily emphasize upon the steps for reaching the

outcomes and objectives. To overcome the risks, uncertainty and hindrances of doing business in
countries like India, the best strategy for the company would be tying up with the local partners.

Reference List
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