McDonalds the Global Adjustment, Research Paper Example

Globalization has increased international trade by reducing barriers which may be legal, political, and/or geographical in nature. More and more companies are setting operations abroad due to reasons that include limited growth opportunities in home market, pursuit of greater profitability, and strong brand appeal in international markets. In an ideal world, all geographical markets in which a particular business operates will have similar tastes, cultures, lifestyles, and other characteristics but the reality is sometimes quite different. Thus, it is important to pay attention to differences among different markets in order to increase the probability of success. McDonald’s has an extensive international presence which is due to the fact that the company thinks globally and acts locally.

One of the motivations behind international expansion is to take advantage of economies of scale. While certain products do have global appeal, cultural differences may still require a certain degree of localization in order to show respect towards local customs and traditions. One example is India which portrays itself as the world’s largest secular democracy but where, nonetheless, religion plays an important role in everyday life. This is not surprising since 80.5 percent of Indians are Hindus and 13.4 percent are Muslims (CIA). Hindus don’t eat beef since there consider cow a sacred animal and Muslims don’t eat pork because pig is considered a filthy animal in Islam. As a gesture of respect towards the two greatest religions in India, McDonald’s doesn’t offer beef or pork products in the country (Petrun, 2007). McDonald’s also caters to the religious needs of minority groups in certain countries where religion doesn’t play as big a role in the society. For example, it offers products made from halal meat to cater to the needs of Muslims customers at some of its establishments in Australia (McDougall, 2013).

Just as McDonald’s cater to local belief systems, it also pays attention to local food culture and offers products that are unique to that particular market. French bread, also known as baguette, is a popular local food item in France and not surprisingly, McDonald’s offers sandwiches in France that replace traditional bun with baguettes. Similarly, the company also offers certain other products that are an important part of French food culture such as macarons and crepes (Fox News, 2013).

It is almost unthinkable to find beer at McDonald’s in the U.S. but McDonald’s actually offers beer in certain international markets including Germany and Austria (Nasr). This is a great example of how McDonald’s pay attention to local cultures and lifestyles and customizes local menu in order to increase its appeal to customers. This also demonstrates that McDonald’s pay attention to local competitors and may respond by offering unique items even if they may not seem a great fit at first. Before McDonald’s started offering beer in certain European countries, few would have imagined that a fast food chain like McDonald’s, which specializes in burgers and french fries, may add beer to its menu.

One of the major ways globalization benefits multinational companies is through economies of scale. The benefits from economies of scale are directly proportional to the similarities among markets targeted by an organization. But sometimes significant  differences in certain characteristics call for localized approach towards business in different markets. The companies that effectively cater to the needs of individual markets reap huge rewards in the long term and McDonald’s is a great example of this. McDonald’s may sell certain products in all markets but the company also studies local tastes and other market characteristics and doesn’t shy away from offering products that are major part of local food culture.

References

CIA. (n.d.). India. Retrieved August 12, 2014. Web.

Fox News. (2013, July 25). Unique McDonald’s meals from around the world. Retrieved August 12, 2014. Web.

McDougall, B. (2013, May 22). Halal food dishing out change in our fast food society. Retrieved August 12, 2014. Web.

Nasr, S. L. (n.d.). 10 Unusual Items from McDonald’s International Menu. Retrieved August 12, 2014. Web.

Petrun, E. (2007, April 2). Where’s The Beef? Retrieved August 12, 2014. Web.