Impact of Globalization on Multinational Company: McDonald's

This report examines the profound impact of globalization on McDonald's, a prominent multinational corporation. It delves into the core concepts and definitions of globalization, exploring its economic, environmental, political, and cultural dimensions. The analysis includes the causes and drivers of globalization, such as improved communication, transportation, free trade agreements, and the growth of multinational corporations. The report also investigates the different types of globalization: economic, cultural, and political, and how they influence McDonald's operations. Furthermore, it assesses the advantages and disadvantages of globalization for McDonald's, including free trade, increased competition, and the challenges of adapting to diverse cultural contexts. The report uses McDonald's as a case study to illustrate how a multinational brand navigates the complexities of the global market, emphasizing the importance of strategic decisions, resource utilization, and adaptation to sustain success in the international arena. The report also provides recommendations for McDonald's to thrive in the global market.

A34651
GLOBAL POLICY AND
STRATEGY
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TABLE OF CONTENTS
Introduction......................................................................................................................................3
Definition and Concept of globalization..........................................................................................3
Causes of globalization....................................................................................................................5
Pros and Cons of globalization........................................................................................................7
Recommendation.............................................................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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INTRODUCTION
Globalization is the prime aim of organizations that supports in increasing revenues of
company and giving international presence to the corporation. Present assignment is based on the
global policy and strategy (Faulconbridge and Muzio, 2016, pp.89-124). Aim of report is to find
out the impact of globalization on multinational company . Concepts and definitions of
globalization will be discussed in this study. Objective of the report is to identify advantage and
disadvantage of international business. Corporations have to face many issues at the time of
working with different countries as well as all problems, causes and drivers of globalization will
be discussed in this study. Present assignment is based on McDonald's which is a multinational
brand that provides quality food and services to customers across the world (Seo and Gao, 2015,
pp.30-36).
DEFINITION AND CONCEPT OF GLOBALIZATION
According to Dasgupta and Ghatge (2015, pp.283-292) Globalization can be explained as
the trade relationship with more than two countries. In the modern era, most of the businesses are
highly depended upon international trade, finance and macro-economic policies. It can be
defined as diffusion of values, technologies and practices that can influence the business
worldwide. Globalization is the enlarged movement in many countries with respect to trade,
money, investment, etc (Ritzer and Dean, 2015). It has four main dimensions, that is, economic,
environmental, political and cultural. Globalization has influenced the world’s economy and due
to this, businesses are operating across border rapidly as well as there is fast flow of information.
It supports organizations in gaining global presence and helps in enhancing their revenues as
well. Now, entities have huge target market and they can attract more customers towards the
brand. Statistics show that merchandise trade has been increased since 1950 to 2004
approximately 7.5 times. It can be explained as elimination of state restriction of exchanging
goods and services across border. Globalization has positive and negative impact on McDonald's
as to sustain in the global world, cited firm has to produce quality food and has to provide
excellent services (Salcito and et.al, 2014, pp.39). It has improved the standard as well as it is
getting competitive advantage in the global market. It is utilizing resources well and giving
flexibility to its workers so that it can sustain in the international market for longer duration.
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Apart from this, company is spending sufficient amount in research and development so that
needs and requirements of customers can be identified. By this way, cited firm can be able to
trade well in the new country (Dasgupta and Ghatge, 2015, pp.283-292). This is the reason;
products of McDonald's are satisfying the needs of service users in each nation.
According to the Grear and Weston (2015, pp.21-44) globalization is an integrating
process through which companies can integrate with government, economy and companies of
different nations. It has brought lots of strategic changes in the business world and organizations
are free to trade across the border. Hill has argued that transnational formalities in Foreign policy
are better than globalization (Hill, Cronk and Wickramasekera, 2013). It is very important to
have a strong relationship between foreign policy and globalization that put its huge impact on
the overall growth of organizations. Globalization is giving many opportunities and creating
threats to companies. Managers of McDonald's should provide flexibility to the workers so that
they would feel comfortable in the organization. Managers of cited firm have to lead the team
well and involve them in decision making process (Grear and Weston, 2015, pp.21-44).
Participative approach of leadership helps McDonald’s in globalizing its business. As it has hired
employees across the world, so, due to globalization, company is getting learning opportunity for
the workers. According to Hill report, approximately 1.5 billion foreign transitions are taking
place daily and approximately, 8.9 trillion goods are transacting across the border (Hill, Cronk
and Wickramasekera, 2013). After the Second World War, communication, technologies and
processing have been changed to a great extent. Globalization has removed barriers and now,
companies can trade easily with international countries. With the help of this concept, entities are
working well in the international market. McDonald's is a multinational brand and supplying
quality services to customers across the world. It has good connection with many nations and
employees are skilled that support the cited firm in expanding its business globally (Lapatinas,
2015, pp.0_1). Globalization is the concept which defines that whole world is a single market
and companies are free to produce similar products and can trade freely across the world. Due to
this, FDI has been enhanced from 2.2 billion to 154 billion (Ramsay, Olliaro and Reeder, 2016
pp. 235).
McDonald's is continuously bringing innovation in its workplace so that workers will feel
encouraged and they would stay in the organization for longer period. To survive in the
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competitive global world, it focuses on introducing new services and implement the latest
technologies. By this way, it would be able to sustain in the highly complex environment for
longer span of time. For instance: Brexit was the great issue which has affected he political and
economic condition of UK. Now, UK is free to make new trade agreement. By this way, it would
be able to make a strong relationship with other countries. This political relationship can help
McDonald's in expanding its business across the world (Pillsbury, 2015 pp. 116).
Apart from this, due to this issue, economic condition of nation has been affected.
Initially, UK had to face many financial problems as foreign reserves were not sufficient. It
negatively affected the business of organization. Later, that with the help of trade agreements
with developed countries entities are now able to expand their business well. It has impact on
the exports and imports of the organizations. Being the member of EU, Britain was getting
inward foreign direct and portfolio investments. But free trade can give benefits to the countries
and it would help in improving economic condition of the nation. Therefore, it would help in
doing business with international countries (Niza and et.al, 2014).
CAUSES OF GLOBALIZATION
Globalization is beneficial for the countries, as organizations can exchange their goods
and services with other nations. Causes of globalization are as following: Improved communication: it is one the main cause that has helped in globalization of the
business. Development of internet, email, mobile phones has helped the McDonald's in
growing well and in expanding its operations across the world. Development of TY
channels, Sky, CNN has helped the firm in spreading brand name of the firm globally.
Due to increased communication cost of the company has got down to great extent. Improved transport: Transportation facilities have been improved that has caused to
globalization. Improved air transport, bulk shipping etc, has supported in easy movement
of goods throughout the world. Free trade agreement: It is the main cause, as rich capitalist countries welcome to such
business for their own wealth. World trade organization (WTO) and IMF also promote
free trade (Shah, Jan and Khan, 2016, pp.106). That impacts positive on the McDonald's,
as by this way cited firm being able to make effective connections with mass audience.
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 Growth of MNCs: These multinational companies invest much amount that is the cause
and consequence of globalization.
Drivers of globalization
There are many factors that drive the globalization. Technological innovation is one the
main element that brings revolution in the company. McDonald's is introducing innovative food
products to customers so that it can sustain in the competitive environment for longer period.
Hygienic food items, quick services, online orders is giving success to the cited firm (Un, 2016,
pp.44-67). Strategic decisions of McDonald's is depended upon its resources, as entity utilize its
human and technical resources well. Services diversification and advanced knowledge of the
latest technologies are giving support to the McDonald's to survive in the international market.
Market is another factor that drive globalization. Use of media for advertising the brand
is giving high support to cited firm. As organization is engaged in online business as well and
with the help of technical advancement it is adopting direct marketing techniques that increasing
its profit significantly. McDonald's is giving training to its staff members and motivating them
by giving rewards and recognition. That helps the entity in bringing down weakness of its
workers. Political drivers of globalization help the entity in growing well. FDI activities, trade
agreements drive the company towards the globalization.
Production is another factor that drive globalization. Many countries are producing
quality products to consumers. Globalization is driven by the production, as due to this
McDonald's is able to know about food standards and it can match with these benchmarks. Cited
firm uses fresh and quality raw material and give training to its staff members so that its
production can get improved. That is why cited firm is able to meet needs and the consumers to
great extent. On other hand production cost of the multinational company get increased by his
way.
Types of globalization
There are mainly three types of globalization; economic, cultural and political. Economic
globalization can be defined as interconnections between two country's economy in the form of
trade and exchange of resources. Political globalization is the term that defines the political
relationship between two countries. Free trade agreements, similar policies are the example of
such type of globalization (Globalisation, 2005). The third type is cultural globalization which
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can help in getting information about values and culture of other countries. These types help the
McDonald's in expanding its business and running its business in different nations. With the help
of economic globalization multinational companies can do business with other nations and can
enhance its revenues to great extent. It is related with the international trading, unregulated
market and uninhibited tariff barriers can help the entities like McDonald's in expanding its
business across the world. Similar polices and trade agreements impact positive on the firm as by
this way it would be able to run its operations in the different countries well. Cultural
globalization is differed from both above types (Drivers of Globalization: Integration of
Theories and Models, 2005). As with the help of this cited firm will be able to identify needs and
culture of customers of particular country. And it would be able to offer them such food which
people can take and can enjoy. For instance McDonald's offers vegetarian food varieties in the
Indian market whereas in British market it offers variety of non-vegetarian food products. This
supports the entity in satisfying he desires of consumers by his way people like the food and be
loyal towards the brand.
Pros and Cons of globalization
Globalization has made drastic change in the business world. Free trade agreements. Easy
movements of capital, foreign investments are giving huge benefits to the multinational
organizations.
Advantage for McDonald's of globalization: Free trade: Globalization has reduced trade barriers and now multinational companies
are able to do business with many other countries. Reduction of restriction has given
benefits to McDonald's and it can expand its business easily. That is why number of
customers of entity have been increased to great extent. Due to this, organizations get to
know about culture and tests of other countries people (Are we truly globalizing the world
marketplace? A critical view, 2014). It has impact positively on the corporation as now it
is able to serve such food what people like most. It is advantage for the McDonald's as it
has developed good will of the company in the international market. Apart from this,
revenues and profit of cited firm has been increased to great extent. Reduction in import
and export barriers have given positive results to the entity.
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 Competition drives price down: Due to globalization McDonald's can trade in many
countries that is why it is gaining competition advantage. That supports the cited firm to
sell its products to distributors. It has helped the firm in contacting with number of
suppliers those who can offer raw material at lower cost. By this way organization can
offer its food at lower cost to customers (Globalization Pros and Cons List, 2014). Movement of labour: With the help of globalization employees of the McDonald's can
travel in different countries and can identify the needs of consumers. It would impact
positive on the cited firm, as company will be able to provide goods and services to
customers as per their needs and demands. By this way economic condition and good will
of the organization will get improved. Apart from this, McDonald's can get to know
about the latest technologies and it will be able to train its workers accordingly so that
they can operate machinery easily. By this way productivity of the employees have been
increased and helps in the economic growth of McDonald's (Globalisation, 2005). Expanding knowledge of foreign culture: As McDonald's is working in the international
market that helps the firm in getting information about foreign culture. By this way
buying behavior, test, preferences of customers can be identified by he cited firm. It
would help the firm to modify its operations accordingly so the needs of the users can get
fulfilled (Are we truly globalizing the world marketplace? A critical view, 2014). That is
advantage for the company and it will create positive image of the entity in front of
consumers (The Economist, 1975). Foreign investment and development of human resource: Knowledge of employees of
McDonald's is increasing, they are getting knowledge about latest trends, technologies
and foreign market. Some time different policies create problem for them but training
supports them in getting career opportunities (The Financial Times, 1996).
Cons of globalization labour drain: Due to movement of employees from one country to another can create
problem of labour drain for the McDonald's. By this way skilled persons would get better
job opportunities and they can leave the job, which can negatively impact on the
organization.
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 Political decisions: Multinational firms like McDonald's has to follow rules and
regulations of particular country. That can create problems for them because they have to
modify its operations and working practices. Due to this, employees can get dissatisfied
and it can harm the overall efficiency of the services. As wages, employment laws of
each country are differed from each other so it can create problems for the workers and
they will not like the workplace so job turn over can get increased .
 Affect internal environment: As company has to modify its operations according to the
norms of foreign country. That can be negative and can reduce profit of the organization.
Recommendation
McDonald's can give cultural and technological training to its staff members. It would
help in making them comfortable thus, they will support the firm well. Company can motivate
them by giving rewards and recognition so that skilled persons stay in the organization for longer
period. It would be better for the multinational entity like McDonald's as managers need not to
hire new staff, so this cost will be reduced if existing employees work with the corporation for
longer period.
Political decisions can affect negatively to the working of the company but by making
good relationship with government and by spending more amount in the research and
development cited firm can find out the market worth of the country. By this way corporation
can make such environment which can give positive results to the organization and can fulfill
needs of customers. That would give economical benefit to the entities.
Conclusion
From the above report it can be concluded that global polices and strategies impact on the
multinational organizations. Firms have to identify the culture and working pattern of particular
nation and accordingly they have to modify their operations. Globalization can give economical
benefit to the entities as it can help in increasing number of consumer of the firm and can
enhance its brand image across the world.
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