International Business Strategies of McDonald's Corporation

This report provides a comprehensive analysis of McDonald's international business operations. It begins with an executive summary and introduction, then delves into McDonald's foreign entry strategy, primarily focusing on franchising as a key mode of expansion. The report examines competitive dynamics, including value proposition, pricing, and quality experience, highlighting McDonald's cost leadership strategy and its impact on market competitiveness. It explores supply chain management, emphasizing vendor relationships, sourcing, and the cold chain system as competitive advantages. The organizational structure is analyzed, showcasing the company's divisional structure and its adaptation to global market pressures. The report also covers knowledge management activities, innovation, and provides a conclusion summarizing the key findings and references used throughout the analysis. The report highlights McDonald's ability to maintain quality and standardization across its global operations through its franchisee system and training programs.

qwertyuiopasdfghjklzxcvbnmqwe
rtyuiopasdfghjklzxcvbnmqwertyu
iopasdfghjklzxcvbnmqwertyuiopa
sdfghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmqwertyuiopasdfghjkl
zxcvbnmqwertyuiopasdfghjklzxcv
bnmqwertyuiopasdfghjklzxcvbnm
qwertyuiopasdfghjklzxcvbnmqwe
rtyuiopasdfghjklzxcvbnmqwertyu
iopasdfghjklzxcvbnmqwertyuiopa
sdfghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmqwertyuiopasdfghjkl
zxcvbnmqwertyuiopasdfghjklzxcv
bnmqwertyuiopasdfghjklzxcvbnm
qwertyuiopasdfghjklzxcvbnmqwe
rtyuiopasdfghjklzxcvbnmrtyuiopa
International Business across borders
[Type the document subtitle]
9/11/2019
student name

International Business across borders 1
Executive summary
The report will discuss and critically analyses strategy of a multinational entity entry across the
domestic boundaries has gained competitive dynamics in the international business. McDonald’s
corporation was initiated in 1940 in America and now has been expanded to most of the nation
across the world to offer supreme quality fast food across the globe.
The evidence suggests that the knowledge management activities of McDonald’s are affected in
nature, this can be fed through the franchisee system adopted by the company and the training
provided to the employs which have made it possible for the company to maintain standard
across the global operations. Some of the key identified areas in operation and a McDonald’s that
reflect innovation include ingredients packaging, and Lean manufacturing process.

International Business across borders 2
Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................3
Foreign entry strategy......................................................................................................................4
Competitive dynamics.....................................................................................................................5
Value proposition.........................................................................................................................5
Pricing strategy............................................................................................................................6
Quality experience.......................................................................................................................6
Supply chain management...........................................................................................................7
Organizational structure...................................................................................................................8
Knowledge management.................................................................................................................9
Innovation......................................................................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

International Business across borders 3
Introduction
Conducting business across borders has provided various opportunities for the companies to
grow and expand their business across the domestic borders and target large number of
customers around the globe. It can be said that international marketing has increased the scope
for organization to grow and increase the business with the increase of globalization of it (Bach,
2017). A fast food chain is one of the industries that have been growing internationally for years,
which reflect the purpose of this report. The report will discuss and critically analyses strategy of
a multinational entity entry across the domestic boundaries has gained competitive dynamics in
the international business (corporate.mcdonalds, 2019).
McDonald’s is one of the popular global fast food chains of friend fast food products like
hamburger, French fries, desserts and beverages. However the company has faced really
challenge while interested to find market which phone also is included in the report further.
McDonald’s corporation was initiated in 1940 in America and now has been expanded to most of
the nation across the world to offer supreme quality fast food across the globe. Along with good
quality food McDonald’s has also considered cost leadership strategy as one of the successful
strategies that have led to company to words growth and availability of food. The company has
expanded the business in North America, various nation of South America, most of the regions
of Europe, Africa, Asia, and Lebanon. Therefore it can be said that McDonald’s is a global fast-
food company that has grown through international business across the globe
(corporate.mcdonalds, 2019).

International Business across borders 4
Foreign entry strategy
Foreign entry strategy is one of the major strategies if a company is going international, the
reason being this strategy will impact the open threat for the company will enter into a nation.
Considering McDonald’s for an entry strategy franchisee is one of the common mode that has
been used by the company to enter into international market. By now McDonald’s is conducting
business in more than hundred nations around the globe for which global franchising has been
considered by the company. It can be said that there are various challenges in franchising of food
chain but there is also large number of opportunities that the company has gained that has
transformed the fast food company into global franchisee chain (Doole & Lowe, 2008).
There are various other modes of entry into foreign market which can be helpful for various
companies, like direct exporting, licensing, joint-venture, contract key and franchisee. It has been
identified that the foreign entry strategy used by McDonald’s is the most suitable one for the
company, the reason being the company considers standardization as one of the most important
element while conducting business in international market. The company positioning strategy in
international market is through the quality of food and taste of food which is similar in the
nation, which is one of the unique selling propositions of the company and has to gain
competitive advantage. Through franchising some of the advantages that McDonald’s has
considered while entering into the contract with the franchisor include repeat growth of the
company considering the variables like sales value and geographical expansion of the company
(Baker & Bowen, 2015).
The personal cost can be minimized due to which the company has been able to consider cost
leadership strategy as one of the competitive advantage strategies which have led to growth of
the company. The capital investment of the company is of lower-level as the investment has been

International Business across borders 5
done by the partners in the international market in the contract of franchisee which has also
reduced the cost for the company and has again an additional income in the form of fees from the
franchisee. Another major advantage let me have gained is brand recognition that is increasing
demand and brand popularity which has been able companies to proceed help using its
trademark. Since franchising business partners across global boundaries provide it with financial
assistance, selection of equipment, management, advice or corporate distribution strategy,
training to be human resource has helped the company applied strategy of standardization of
services and product of McDonald’s. Other than this the procurement of raw material has been
centralized due to which the company has been able to maintain the quality, design and food
taste which are considered as additional benefit McDonald’s (Feng & Chari, 2018).
The company has faced the biggest challenges and disadvantages due to franchisee are
decreasing reputation in case of any mistake or lack of quality standards in the foreign market
due to franchising partner. The company was not able to pay the amount of profit which it could
have if a good mood like joint venture or export would have considered. Moreover the company
finds difficult to control the financial reporting, quantity, brand reputation in the foreign market
due to this mode of entry and foreign entry strategy (Cabral & Mathiason, 2015).
Competitive dynamics
Competitive dynamic include strategies of the company that has to lead to competitive advantage
for the company this includes
Value proposition
The proposition that McDonald’s have considered is faster and efficient, this reflects that quick
service offer to the customers in order to decrease the delivery time and increase the service

International Business across borders 6
satisfaction among the customers. Through the strategy it has been identified that the company
adopts cutting of the product in numbers from the menu in order to increase the speed of delivery
as that sort number of products and menu quick cooking could be possible for the chef in the
store. For instance initially the company strategic decision included to focus on hamburgers only,
along with the complementary products which make the menu the shortest one along with the
increase in process along with the complementary products which make the menu the shortest
one along with the decreasing plus the style and quick delivery as possible to the consumers
(Chatzoglou & Chatzoudes, 2018).
Pricing strategy
Pricing strategy is one of the major element that has gained a competitive advantage in the
industry for the company, the reason being the company is largely dependent on machine for
production of the food items, it’s make the standardization strategy of the company possible and
brought down the labor cost for McDonald’s as well. According to the Michael porters grid, the
strategy that has been adopted by McDonald’s for competitive advantage is cost leadership
strategy, which depends on the pricing strategy and cost minimization activities of the company
has helped it didn’t competitive advantage in the industry and able to provide cheaper hamburger
to the consumers as compared to the competitors like burger king (Jaworski, 2018).
Quality experience
Another competitive advantage for the company was the quality of the products at a cheap price
that allows every income group to enjoy the meal with high quality experience. This strategy was
found to be affected as it can be said that without quality is shortens a company cannot sustain
for long in an industry especially when it is food and beverage industry ask it has to adopt
various legal norms related to health and safety. It has been found that the company has not only

International Business across borders 7
invested in quality of service and food products but has also invested in the infrastructure quality
in order to enhance the consumer experience while enjoying the burgers in the restaurant.
Moreover the company attempted to keep the premises clean and the training was provided to the
employs to make a customer friendly environment within the restaurant. Therefore it can be said
that the quality experience provided by the company was one of the competitive advantages for
McDonald’s (Kaplan, 2015).
Supply chain management
Supply chain management of McDonald’s is one of the competitive advantages for the company,
the evidence suggests that the version provided by Ray that included the profit earning for
everyone in the supply chain of McDonald’s practice employees, vendors, customers,
corporation, and operators. Vendors are considered as partners as the company is executed spend
less amount of time to understand cheaper and faster way to deliver value to the customer with
their vendors (corporate.mcdonalds, 2019). Communication in the supply chain is considered a
strong point for the company which is responsible for the increase in rent a relationship program
as it is one of the calls for greater collaboration with vendor and co. Sourcing is also a positive
aspect in supply chain management of McDonald’s as the company is a very large purchaser and
due to large number of suppliers and farmers directly connected to the company turned out to be
one of the reason for good quality food products, and quick services for procurement of raw
material. Moreover the company has contracted with the farmers and suppliers in order to reduce
the risk of price fluctuations which is another advantage of the company. The cold chain system
of McDonald’s has also turned out to be competitive advantage in the supply chain management
which reflect adoption of the processing of cold chain, distribution across levels and storage of
the raw material and finished goods in the supply chain system. Moreover the technology has

International Business across borders 8
applied for McDonald’s as the company has invested into integrated it system which has helped
the global operations of the company through tracking, procurement, real-time monitoring and
every track of deliveries (Gencer, 2017).
Organizational structure
The organizational system and organizational design are defined through the corporate structure
of McDonald’s. It has been identified that the organizational structure of McDonald’s was
reformed in 2015 in order to enhance the handling of international operations of McDonald’s.
The structure of the company facilitates food and service market management considering the
performance of the employees across the globe. As per the refund structure of the company
McDonald’s rolled out new product categories in order to enhance the performance while
increasing the food options for the customers and compete with other fast food chains like
Wendy’s, Starbucks and dunking donuts. Therefore it can be said that while analyzing the
organizational structure in the global market of McDonald’s be operational effectiveness and
maintenance of the components of the structure has been found that is helpful for the company
for supporting the market pressures and market dynamics.
The organizational structure of McDonald’s can be classified as divisional organizational
structure where the responsibilities are divided on the basis of operational requirements of the
company where every division is responsible for particular operational area. The key
characteristics identified for the organizational structure our arrangement of the divisions as per
the importance in food service operations of business that include function based groups,
performance based division and global hierarchy with the global here are key was responsible to
cover worldwide operations. Therefore it can be said that the positive aspect of organizational

International Business across borders 9
structure of McDonald’s is getting support for evaluation and control over the international
business of the company. However some of the issues identified for the organizational structure
include lack of business flexibility (Davis et al., 2016).
Knowledge management
Since McDonald’s has been working on the standardized strategy that is to maintain a similar
standard across the globe for each franchise store of the company, for which information please
major role as it is not easy to transform a particular type of knowledge in an effective way,
however this may depend on the organizational structure and organizational culture of the
company. The evidence suggests that the knowledge management activities of McDonald’s are
affected in nature, this can be fed through the franchisee system adopted by the company and the
training provided to the employs which have made it possible for the company to maintain
standard across the global operations.
Key characteristics identified for the knowledge management to sources of McDonald’s are
identification of the business issues across the globe through arranging organizational meetings
and get suggestion from the staff of the company in order to reduce issues identified and search
for better solutions. Moreover the knowledge audit in the company is also responsible for better
performance and enhances knowledge management in the organization. The evidence suggests
that the communication network in McDonald’s is very strong which reflect the flow of
communication effective me from one operational unit to another across the globe
(corporate.mcdonalds, 2019).

International Business across borders 10
Innovation
McDonald’s have always considered innovation as the key element for success in global
operations however it has been identified that the company has new standardization strategy
when it comes to quality and taste. However globalization strategy has also been identified for
the company while walking into international market. Four example in Asian countries like India
one of the key issues identified for the company was religious norms of the nation that do not
allow people to have beef as the food items, which was included in the menu which raise a
religious scam in the nation, after which the company consider innovation and introduce similar
product type but with different local flavor. This reflects the innovation of the company to
integrate the global standards and localization strategy as well (Amabile & Rigolizzo, 2015).
Some of the key identified areas in operation and a McDonald’s that reflect innovation include
ingredients packaging, as discussed in the previous section the company semi processed food
packaging and packaging of any other ingredients as the company decided to transform these
processed foods from one location to every individual store in the nation. From this one of the
issues identified was use of large number of papers or mess around the kitchen area of the
company, moreover loss of the packages in the transformation. The innovative ideas used by
Fred were designing a reusable and sturdy cardboard box in order to transfer individual stores.
Moreover it worked upon for reduced transformation cost of these boxes. In addition to this, the
experiments were conducted in the company where it was found that the additional wax coating
in the cardboard box and packaging could be responsible for increasing reviews number as it
makes the cardboard box most sturdy (Bruns, 2013).
Lean manufacturing process, another way that the company has found out to decrease the time of
delivery to the consumers is using a lean manufacturing process that is unique selling proposition

International Business across borders 11
of the company as it is not used by any of its competitors and it is generally found to be used in
auto mobile companies. Previously McDonald’s used to prepare sandwiches and use ovals to
keep them warm. This is also helpful to decrease the time to delivery however in the days when
the demand was lower in such products wastage was very high. As to result of this problem the
company initiated to keep the semi finished goods like salad, patty and other ingredients
integrate them into the final sandwich once any consumer please the order. It can be said that this
strategy was an effective strategy the reason being it was a faster response to the demand of the
product and has been able the company to brought down the inventory. Moreover the assembly
line machines were used by the company for preparing beverages, French fries and hamburgers
which help the company to make the orders quick and adopt to standardization in taste and
quality (Coulson-Thomas, 2017).