McDonald's: Business Strategy, International Markets Analysis

This reflective journal provides an in-depth analysis of McDonald's business strategy, focusing on competitive advantages and strategies for competing in international markets. The author, a part-time McDonald's employee, examines the company's business models, including franchising and licensing, and evaluates how McDonald's achieves a competitive edge through cost leadership, universal taste, and effective distribution. The journal reflects on the application of differentiation and cost leadership strategies in international markets, the importance of global competitiveness, worldwide learning, and multinational flexibility. The author suggests strategic alliances for McDonald's and discusses the company's expansion strategies, particularly in Singapore, and the need to adapt to local preferences and maintain high standards. The analysis covers the evolution of strategy, the impact of globalization, and the importance of innovation for sustained success. The journal concludes with recommendations for future store management and expansion strategies, highlighting the significance of adapting to changing market dynamics to maintain a strong competitive position.

Student Name
Institutional Affiliation(S)
business strategy
Topic 1 & 7

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1. Introduction
This reflective journal releases findings and evaluation of an analysis carried during
the class module along with finding out my personal skills, abilities and experience to
become a store manager in McDonalds firm. Since I work for McDonalds stores on
part time basis, I will pursue to become a store manager in McDonalds in my future
career. Strategy, business models, and competitive advantage along with strategies
for competing in international markets are significant areas that needs to be given
critical thought over since my responsibilities will be based on looking at store
maintenance along with keeping a close watch over company rivalries and making
basic planning for preserving company assets. As I worked for the company, I came
to know that McDonalds serves around 68 million customers each day and is spread
across 119 countries with having more than 36,525 outlets. Serving fresh and ready
to eat food like burger and soft-drinks are primary products served by the company
restaurants that are managed by the company itself as well as by partnership firms
(Dixit, 2017).
2.0. Strategy, business models, and competitive advantage
I have come to know about how McDonalds have evolved their strategies and
business models over the years by implementing several concepts like competitive
advantage to achieve organisational goals. According to Ranjith (2016), “There is a
strong relationship between the business models and the competitive advantage”.
The author states that present organisations in the emerging marketplaces strives to
improve sustainable competitive advantage for which they adopt business models
after combining organisational capabilities and resources to strike industry forces.
Business models is a theoretical framework utilised by businesses to identify the
process in which strategies are created, fulfilled and values extracted (Ranjith,
2016). Innovative business models prove significant for contemporary organisations
in which companies encompasses finding appropriate opportunities to develop
business strategies that did not exist previously and have evolved due to existing
business models. Strategy, on the other hand refers to the choice made among
business models through which organisations can compete in the marketplace
(Prahalad, 2005). The concept of strategy has evolved substantially in last few

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decades where organisations have learned to analyse their business competitive
environment more precisely (Friis, et al., 2016). As I was going through many
research articles, I found that due to globalisation and development in internet,
business competitiveness has become more complex in today’s business
environment. A contemporary analysis model was developed by Porter in 1979 that
gave a great depth in understanding about relative competitive position of firms
within specific industry. His theory not only provided entrepreneurs and business
analysists with clear framework required for accessing external environment
examination, but also in determining firm’s ability to sustain competition in
marketplace ( Ong & Ismail, 2008). However, Srivastava, et al. (2013) further argues
that to build resources in longer term perspective, firm’s need to possess capabilities
that provides high barriers for rivalry firms.
2.1. Self-Reflection
As I am working for McDonalds company, I will utilise business strategy that involves
around international market expansion and cost leadership strategies. Presently
McDonalds utilises licencing and franchising business models that are present in its
core business strategy to great extent. Moreover, service and product
standardisation can also be seen in McDonalds business strategies as the
restaurants of McDonalds offer considerably uniform food menu. Through my
evaluation, it has been found that along with enhanced service and food quality
standards, McDonalds also considers local preferences and tastes while developing
its menu for new marketplace (Vignali, 2001). In fact, McDonalds prefer showing
utmost care for environment and sustainability development in all its branches by
enabling corporate social responsibility related strategies. The company’s expansion
strategy incorporates both top-up and bottom-down approaches that proves very
advantageous for McDonalds long-term success.
Following points reveal McDonalds competitive advantage:
 True to taste and enhanced food format in all of its restaurants has made
McDonalds famous for maintaining enhanced and speedy customer service
without compromising service quality.

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 Cost leadership and cheat prices are strongest competitive advantage of
McDonalds where the company engages extensive utilisation of scale of
economy for gaining cost advantage.
 Universal taste also represents another competitive advantage base for
McDonalds. For example, Big Mac tastes universal all over the world due to
common ingredients and application of common standards. Such consistency
in food quality and taste implies customer loyalty.
 Distribution strategies of McDonalds provides competitive advantage as the
company does not create gaps between government regulations and
McDonalds official that helps it to expand in desired market without much
difficulty (Didovsiky, 2016).
Although my considerable examination of McDonalds states that it has
perceived global success, that I have already mentioned above, apart from
marketing and expansion strategies, McDonalds also utilises shutting down of its
rivalry companies by gaining competitive advantage through acquisition of franchises
(Bhasin, 2011). After gaining knowledge about external environment of the company,
I will recommend strategic alliances to McDonalds where cooperative agreements
between diversified companies can be made in the form of joint venture, shared
research or minority equity participation. Strategic alliances models have supported
many international companies and have helped them in gain competitive advantage
in various manner. Contemporary strategic alliance, as mentioned by Twrowska &
Kakol (2013), are usually formed among high internationalised nations and
companies that focuses on creation of enhanced products and technology instead of
distributing existing ones. For me, the main reason behind adopting this strategy is to
make interdisciplinary advancement in my company and produce more R&D efforts.
This can also be supported from my class learning that I have accomplished during
my course where we were taught that companies stay ahead majorly due to
innovation and development in their core strategies.

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3.0. Strategies for competing in international markets
Globalisation and internationalisation of organisational activities has made business
executives and management’s focus upon public policy makers as well as scholars
in increased manner. This along with rise of international competitors has helped in
explaining why nation’s competitiveness can be determined by analysing the
strengths of its corporate firms ( Gamble, et al., 2017). Furthermore, business firms
prefer competing within their business environment so that competitive advantage
within the country they operate in can be determined. For example, determining
firm’s ability to deliver goods and services with similar benefits as provided by their
competitors but in comparatively lower cost or benefits exceeding rivalry companies’
products and services. Under such conditions, the firms are said to gain competitive
advantage over the others ( Veliyath & Brouthers, 2010). According to Kumar (2015),
competitiveness in international market depends upon internal and external factors.
Even I have recognised that to compete effectively, organisations need to develop
global competitiveness, worldwide learning and multinational flexibility. Global
competitiveness can be achieved by managing cost and revenue simultaneously
where firm’s efficiency and innovation proves significant since innovation are
everchanging and extremely necessary in international business environment
(Hooley, et al., 2008). Instead of decentralised or centralised decision making,
international organisations need to make decisions based on current resources and
capabilities. To create flexibility, exclusive dependency on single facility must be
avoided. For this, multinational flexibility strategy must be adopted by international
firms while formulating international strategies to compete in international market
( Veliyath & Brouthers, 2010). The real challenge for international companies does
not limit in being responsive only, but also demands building capacity and remain
responsive in the terms of technology, preferences, regulations, relative price
change and exchange rates. The intensity in competition has led organisations
develop abilities to make advancement in creative responses, sense emerging
trends and diffusing innovations worldwide ( Gamble, et al., 2017).

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3.1. Self-reflection
Being a store manager, it becomes my responsibility to provide company with base
strategies that can assist my seniors in facilitating further expansion strategies.
Since, every multinational company strives to win over other competitors, it becomes
critical to understand core strategies adopted and what necessary changes are
required to be met for future sustainability. McDonalds have received massive
success through effective internalisation strategy formulation. It can be seen in its
rapid embracement to internationalisation where the company has been able to
expand several stores as well as continuing to explore more potential market in
upcoming years. The company’s headquarters at US is spread to England,
Singapore, Australia and recently seen in Chinese and Indian market also. In
Singapore, where I presently work for part time only and aspire to become store
manager, first outlet of McDonalds was opened in 1979 at Liat Towers in Orchard
road. Since then, more than 112 outlets have been opened by the company that
itself shows its rapid growth in Singapore (Dixit, 2017). However, to remain
successful and compete with its rivalry companies like Subway and Domino’s,
McDonalds follow successive strategies especially in its research and development
areas that allows quality products in every country it operates in (Rathi, 2013). I
found that the financial leaders of the company establish prices that are easily
affordable by the country it operates in and according to the currency adopted. Here
I would apply differentiation and cost leadership strategies that can help McDonald’s
compete with its competitors in international market effectively. Through
differentiation strategy, McDonalds needs to become diverse from its rivalry
companies by providing some extra benefits to its usual products that proves unique
for the customers. This competitive strategy can be achieved by designing products
superiorly and marketing management related activities thereby resulting in superior
quality service and food along with brand recognition. Cost-leadership strategy of
McDonalds can be achieved not only by providing effective product pricing, but also
by learning and experiencing operational and effective distribution network for supply
and production of McDonalds products (Bhasin, 2011).

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