Overview
This lecture explains why McDonald's, despite being a global fast food giant, must combine both global and local strategies to succeed in diverse international markets.
Global Strategy at McDonald's
- McDonald's leverages standardized products like Big Macs, fries, and Coke for economies of scale.
- Global branding and research enable cost savings and broad customer satisfaction.
- The company benefits from global menu innovation and resource sharing across countries.
Reasons for Local Strategy
- Local dietary preferences require customized menus, such as vegetarian dishes in India and chicken options in China.
- Menu adaptations address cultural and religious practices, such as not serving beef in certain countries.
- Local competitors differ by region, requiring McDonald's to adapt positioning to local market landscapes.
- Laws vary by country; for example, beer is sold in Spanish McDonald's but is illegal in UK outlets.
Franchise Model and Local Promotions
- McDonald's uses a franchise model, offering business concepts and operational guidance to local owners.
- Franchisees require motivation and control over local marketing to boost performance and profits.
- Local promotions are managed by franchisees to tailor marketing to regional tastes and preferences.
Local Service Quality
- Food is prepared and served locally, requiring consistent training and quality control.
- Standardized equipment is paired with local rulebooks and training at "Hamburger Universities."
- Continuous monitoring ensures international standards are maintained in each restaurant.
Key Terms & Definitions
- Global Strategy — a business approach using standardized products and processes worldwide for efficiency and brand consistency.
- Local Strategy — adapting business operations, products, and marketing to fit regional cultures, preferences, and regulations.
- Franchise — a contractual relationship where local business owners operate under a company's brand and business model.
- Economies of Scale — cost advantages gained by producing large quantities of standardized products.
Action Items / Next Steps
- Review examples of McDonald's local menu adaptations in different countries.
- Prepare for discussion on the balance between global efficiency and local responsiveness in multinational companies.