mcdonald's a case study in glocalization

8/16/2019 McDonald's a Case Study in Glocalization

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The Journal of Global Business Issues – Volume 9 Issue 1 11

McDonald’s: A Case Study in Glocalization

Alice Crawford, Georgia College & State University

Sarah A. Humphries, Ph.D., Georgia College & State UniversityMargaret M. Geddy , Ph.D., Georgia College & State University

ABSTRACT

The purpose of this research report was to assess McDonald’s globalization strategy. We examined McDonald’s strategy across six dimensions: menu, promotion, trademarks, restaurants, employees, andservice. We also compared the company’s performance across these six dimensions in 10 different coun-tries: Saudi Arabia, France, the United Kingdom, Greece, Brazil, Indonesia, India, China, Japan, and New Zealand to measure McDonald’s success in capitalizing on globalization and localization. As dis-cussed in this report, McDonald’s is a global brand through its worldwide standards and training oper-ations, but the company is also local, with its franchising to local entrepreneurs, locally sourcing food,and targeting specific local consumer market demands. McDonald’s is an excellent example of blendingglobal with local – an organization that has glocalized very successfully.

Introduction and Purpose

McDonald’s has been serving fast foodto America since 1955 and has grown into one ofthe world’s leading fast food giants. Today,McDonald’s is the leading global foodserviceretailer with 1.7 million employees and morethan 34,000 restaurants in 119 countries servingnearly 69 million people each day (McDonald’s, Annual Report, 2012).

Not too long ago people believedMcDonald’s would become “a lumbering cashcow in a mature market” (Serwer & Wyatt,1994). However, its success abroad has offset thematuring market in America. In fact, 65% ofMcDonald’s sales came from international reve-nues (McDonald’s, Annual Report, 2012.) Its worldwide operation concentrates its globalstrategy, “Plan to Win,” and on customer experi-ence, which includes people, products, place,price, and promotion.

This paper will compare McDonald’smarketing strategy to determine how well it cap-italizes on both globalization and localization. It will look at this strategy by examining ten differ-ent countries: Saudi Arabia, France, the UnitedKingdom, Greece, Brazil, Indonesia, India, Chi-na, Japan, and New Zealand, across six differentdimensions: menu, promotion, trademarks, res-taurants, employees, and service.

McDonald’s: The American Standard

The McDonald’s American model focus-es on fast and convenient service with high pur-chasing turnover. Its recognizable bright red and yellow colors with the iconic golden archesreaching into the sky offer Americans a piece ofthe familiar in a foreign country. “Our goal is to become customers' favorite place and way to eatand drink by serving core favorites such as our

World Famous Fries, Big Mac, Quarter Pounderand Chicken McNuggets” (McDonald’s, Compa-ny Profile, 2012).

Menu

McDonald’s always offers its core menuno matter where one goes on the globe. Howev-er, the menu will also include a variety of itemscatering to local preferences and unique culturaltastes. McDonald’s ability to source farm fresh,local foods contributes to its global success. InSaudi Arabia’s western region, McDonald’s is

launching its breakfast menu, and it will includeits signature McMuffins and big breakfasts usinglocally sourced eggs. Marketing Manager, Mo-hamed Alireza, commented that McDonald’ssuccess was because of its ability to source farmfresh ingredients to order (“McDonald’s bringsfamous breakfast menu to KSA,” 2012). Beyondlocally sourced foods, McDonald’s is embracinga trend toward localization. For example, anitem unique to McDonald’s Middle East menu is


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the McArabia launched in 2003; then, the Mo-roccan McDonald’s franchises tweaked the sea-soning and sauce for their market, and it is nowsold as the McArabia Tangine (German, 2010).

Another instance of localization wasMcDonald’s introduction to France. “Since open-ing its first French restaurant in Strasbourg in1979, McDonald’s has sought to leverage thestrength of the global conglomerate while tailor-ing its menu to the French palate (Fancourt,Lewis, Majka, 2012). In 1995, McDonald’s beganusing locally sourced French cheeses such aschevre, cantal, and blue. They even exchangedtraditional mustard for a whole-grain Frenchmustard sauce. By being sensitive to the Frenchpalate, “McDonald’s started executing a multi-domestic strategy and winning the hearts of

French consumers” (Fancourt et al, 2012).

Part of McDonald’s global success is itsability to localize and adapt to changing con-sumer demands. The lessons learned in Francepaved the way for satisfying globally diversetastes. In Greece, McDonald’s offers the GreekMac, which is essentially a Big Mac drizzled withTzatziki sauce, and then wrapped in a pita. InIndia, McDonald’s offers the Maharajah Mac, which is a chicken Big Mac. In Brazil, McDon-ald’s offers the cheddar McMelt and various ba-nana desserts. In Indonesia, one can easily ordera bowl of buryam rice porridge with chicken and

fried crisps. Another Asian twist to the McDon-ald’s menu is the kao fan burger in Hong Kong, afried chicken patty served in a bun made of rice(“Golden arches abroad: International McDon-ald’s menu offerings,” n.d.).

McDonald’s continues to expand itsmarket through research and the addition ofinnovative products to its global menu. In 2009,McDonald’s introduced Angus Beef on its NewZealand menu, and now 100% of the Angus Beefused is locally sourced from New Zealand farms(“McDonald’s New Zealand sells two million ki-

los of Kiwi Angus,” n.d.). With the addition ofthe New Zealand Angus Beef, McDonald’s addednew menu items such as the Kiwi Angus and thePepper Mayo Angus to the New Zealand menu.Furthermore, following two years of productdevelopment, McDonald’s is going to expand itsNew Zealand menu to include 100% New Zea-land lamb products. More importantly, Beef andLamb New Zealand, Ltd. endorses the new lambproducts. McDonald’s research showed that NewZealanders like eating lamb but usually consid-ered it too expensive to order out, so Patrick

Wilson, New Zealand McDonald’s ManagingDirector, is excited to introduce the new lambproducts at affordable prices (“McDonald’s ex-pands menu with 100% NZ lamb products,”2012).

McDonald’s seems willing to continueexpanding both meus and markets, adapting tocultural tastes and pricing standards as well ascultural standards of health and quality. In theUnited Kingdom, McDonald’s offers a variety ofdeli choices as a healthy alternative. McDonald’salso uses 100% British and Irish beef burger pat-ties, 100% British pork, and even 100% Britishmilk, all locally sourced foods from British andIrish farms (McDonald’s UK Menu, 2012).

India McDonald’s also adapted to cul-

tural standards addressing religious issues. Al-most 60 percent of the company’s market isHindus who do not eat beef and Muslims who donot eat pork, so McDonald’s removed both meatproducts from the menu. The chicken and thefish remained on the menu, but soon, IndiaMcDonald’s will launch its first all vegetarianrestaurant for the almost 40 percent of the mar-ket who doesn’t eat meat at all (Finn, 2012).McDonald’s global-local menu has significantmarket value; its familiar American products areavailable for any visiting tourists, but the uniquemenu items cater to the various countries’ con-sumer markets. McDonald’s menu, whether in

America or abroad, is always changing and ex-panding (Finn, 2012). It is McDonald’s ability toadapt, which contributes to its long-term growthand success.

Marketing and Promotion

McDonald’s marketing strategy is to brand globally and think locally (Vignali, 2001). An aspect of its global branding is its choice ofpartners. McDonald’s allies itself with majoruniversally recognized brands, such as Coca-Cola and Disney. McDonald’s and Disney came

together in 1997, and this mutually beneficialglobal alliance has them sharing everything fromfilms to food (Vignali, 2001).

Another way McDonald’s brands global-ly and thinks locally is its sponsorship of a varie-ty of global and national sporting events. Inter-nationally, McDonald’s sponsors both the Olym-pics and the World Cup. The global nature of theevents allows McDonald’s to produce an interna-tional campaign and get their brand out to anestimated 2 million viewers. Brad Bell, the sen-


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ior vice-president of McDonald’s USA, com-mented that, “The Olympic Games has rein-forced our reputation as a truly global brand.”McDonald’s association with the Olympics began with the 1976 Summer Games in Montreal. The

association between the company and the Olym-pics was demonstrated in 1968 when U.S. figureskater Janet Lynn stated in an interview that shemissed the taste of McDonald’s. Soon after herstatement, McDonald’s shipped a few hundredhamburgers to France for both the athletes andthe ABC announcers. This shipment prompted alot of talk and cemented the McDonald’s brandas Americana in France (Lefton, 2005).

McDonald’s doesn’t just support and promotethe Olympics. McDonald’s also promotes its food by using English and French footballers (Vignali,

2001). Another sport the company supports isthe National Basketball Association, and it en-couraged the NBA to look outside U.S. bordersand even began hosting the McDonald’s Openand McDonald’s Championship Games in 1987, where the Milwaukee Bucks bested Italian andRussian Teams. The NBA has also attendedgames in China. NBA Commissioner David Sternsaid, “If we didn’t have McDonald’s support in-ternationally from a marketing and financialperspective, our league was sufficiently fragilethat we likely would not have undertaken it our-selves” (Lefton, 2005). McDonald’s has a longtradition of sponsoring both local and global

sports events; currently, the company’s largestsponsorships are the Olympics, the FIFA WorldCup, Association of Volleyball Professionals, andthe NBA. But it also capitalizes on hot regionalsports markets through individual franchises(Lefton, 2005).

McDonald’s also brands globallythrough global and local community involve-ment. In 2000, the company partnered with Walt Disney and UNESCO for the MillenniumDreamers, a global children’s recognition pro-gram that named 2,000 “ambassadors” with

outstanding community involvement in over 90countries. They came together at Disney Worldfor one of the largest global youth summits everheld (“McDonald’s and Disney name MillenniumDreamers,” 2000). Another area of McDonald’sglobal community involvement is its support ofThe Ronald McDonald House Charities. Startedin 1974, these Charities provide free home awayfrom home accommodations for the families while their seriously ill children are in the hospi-tal. McDonald’s community service mission is to“seek solutions for the problems facing families

and children today,” according to Ken Barun, theCEO of Ronald McDonald House Charities(Vignali, 2001). Currently, there are over 300Ronald McDonald Houses in more than 56countries addressing this global problem on a

local-specific scale.

McDonald’s marketing strategies vary bycountry and cultural values. McDonald’s Franceintroduced advertising campaigns to educate theFrench public about just how French it had be-come. Responding to French cultural values,McDonald’s strengthened its ties to agribusi-ness, advertising widely that 95% of the compa-ny’s ingredients came from France and the restfrom the European Union (Fancourt et al.,2012). Similarly, McDonald’s India launched anadvertising campaign to dispel consumer con-

cerns and push forward its global image of “fam-ily values and culture,” as well as an image of“comfortable and easy.” McDonald’s India cam-paign, like France, was an effort to familiarizeand educate Indian consumers about McDon-ald’s (Kulkarni, Lassar, Sridhar, Venkitachalan,2009).

McDonald’s globally markets itself as aneighborhood restaurant; locally, this marketingstrategy can translate into different campaignstargeting the specific cultural values of consum-ers. McDonald’s Hong Kong has made great ef-forts to present itself as a champion of environ-

mental awareness and public welfare. In Indo-nesia, McDonald’s promotes its menu as certi-fied halal by Islam religious leaders, meaning itis religiously clean and permissible to eat. Formany years, McDonald’s Indonesia had the larg-est following of Muslims because of the publicityabout the halal sign on its food (Liao, Widowati,Hu, 2011).

McDonald’s targets younger generationsof consumers in East Asia, investing heavily intelevision advertising aimed specifically at chil-dren. In Indonesia, the younger generation grav-

itates to McDonald restaurants to taste westernfood and because it is a convenient, clean andcool place to be. However, McDonald’s Chinadoes not invest in television commercials. Chi-nese commercials, unlike Western commercials,appear only during the break between programs. Advertising has little chance to make an impacton consumers because after watching a program,audiences usually switch channels, thereby miss-ing the commercials. For this reason, McDon-ald’s uses Chinese newspapers and popular


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rant designs in order to succeed (Fancourt et al.,2012).

Employees

A distinguishing feature of McDonald’sis its global practice of comprehensively trainingits employees, franchisees, and suppliers in foodsafety, hygiene, and food preparation proce-dures. And McDonald’s goes even further, byoffering its managers the chance to train atHamburger University, located at companyheadquarters in Oak Brook, Illinois. Many of itsgraduates, who are participants from at least 22countries besides the United States, liken thistwo-week intensive training program to “a crashexecutive M.B.A. program” (Serwer & Wyatt,1994). Besides Hamburger University, McDon-

ald’s also has additional training centers in Mu-nich, Tokyo, Sydney, London, and China(Vignali, 2001).

When it comes to hiring employees,McDonald’s emphasizes to all its managers theimportance of hiring employee applicants withcustomer-focused attitudes, attitudes that areeven more important than technical ability. Thecompany also stresses this customer focus in itsrecruiting advertisements and preliminaryscreenings (Vignali, 2001). McDonald’s Francegoes so far as supporting its employees throughprograms to give them nationally recognized

diplomas and certifications in order to meetFrench cuisine expectations. In turn, employeesin France regularly protect McDonald’s brand onInternet forums and blogs (Fancourt et al.,2012). In Japan, McDonald’s provided employ-ees with 25 chapter manuals that detail every-thing from methods of preparation and qualitycontrol to how to deal with customers. Thesequickly train the part-time workers, who makeup 95% of McDonald’s Japanese employees, inthe matters of taste, quality, and service that willsatisfy customers. What’s more, these manualshave made McDonald’s Japan a leader in super-

visory management and training (The McDon-ald’s Effect, 2001).

The company’s management develop-ment program is a direct route to management with intensive training, and all managers followthe management development program. The junior management program and the two-yearrestaurant-based program are available globallyand adapted locally for applicant qualifications(Vignali, 2001).

Service

McDonald’s does not just sell burgersand fries; McDonald’s sells a service to consum-ers across the globe. Globally, McDonald’s ex-

ports a service; locally, McDonald’s adapts thatservice to different cultural communities (Sewer& Wyatt, 1994). In France, McDonald’s restau-rant ambience invites customers to linger andenjoy their food, and these restaurants reflectthe French culture’s emphasis on enjoying food(Fancourt et al., 2012). McDonald’s in Beijing,China, in contrast to the U.S. practice of substi-tuting technology for human workers, reliesheavily on building personal relationships be-tween its employees and customers. The ChineseMcDonald’s have several public relations staff ineach outlet to answer consumers’ questions. Al-

so, each restaurant assigns a number of femalereceptionists to take care of children and talk with parents. This kind of personal customerservice isn’t necessary in the United Kingdom orthe United States where consumers usually pre-fer to eat their meal and leave promptly (Vignali,2001).

Similarly, consumers in Korea, Japan,and Taiwan have a distinctly different idea about“fast food.” While “fast food” may mean fast service, it does not translate into fast consumptionas it has in the UK or the U.S. Customers in East Asia tend to linger, where students, elderly peo-

ple, and courting couples might spend hoursover a cup of tea, thus turning McDonald’s intoan inexpensive teashop. McDonald’s Hong Konghas added wedding packages to the menu. Thismay seem a strange niche for McDonald’s, but if you consider that countless people will have metand even had dates in McDonald’s restaurants,it’s not so unusual for McDonald’s to providethis service. Three locations in Hong Kong arenow equipped to stage affordable, intimate, andfun marital festivities for couples. “The McWed-ding is casual, stress-free, and inexpensive: the basic Warm and Sweet Wedding Package for 50

guests goes for under $1,300. For another $165,the bride can rent a gown of pearly white bal-loons” (Brenhouse, 2011). In Eastern Asia,McDonald's has “become a ‘local’ institution foran entire generation of affluent consumers”(Collins, 2000).

McDonald’s also adapts its restaurantsand practices to cultural customs. In Saudi Ara- bia, McDonald’s restaurants have separate din-ing-areas for men and women. And during East-er, Greek McDonald’s restaurants serve spinach


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pies, since many people do not eat meat prod-ucts during this holiday (Markatos, 2006). InIndonesia, McDonald’s restaurants offer a postsunset meal as a special to Muslims fasting dur-ing the month of Ramadan (Liao, et al., 2011).

McDonald’s Brazil is collaborating with AOLBrazil to provide Internet service in restaurantsso that customers can surf the web while munch-ing on their food. To highlight the deal, “AOLBrazil will develop special content for the McIn-ternet Portal.” McDonald’s is also offering wire-less enabled laptop computer users one hour offree Internet access with the purchase of an Ex-tra Value Meal at participating restaurants(Lohmeyer, 2003). McDonald’s adapts the foodserved, restaurant design, and customer serviceacross different countries and cultures in orderto deliver the McDonald’s experience.

Mcdonald”S Glocalization Strategy

So how did McDonald’s, the Americanfast food giant, become a global success story?The answer, McDonald’s adopted strategy ofglocalization. This portmanteau of globalizationand localization coined by Japanese economistsin the 1980s in the Harvard Business Reviewdescribes a product or service developed anddistributed globally, but fashioned to accommo-date the user or consumer in a local market.McDonald’s success comes from mixing globaland local marketing strategies. First, its fran-

chise business model allows all of its franchise-members, management, and stakeholders toshare the risks and reward from the discoveryand exploitation of new business opportunities.Through franchising, McDonald’s takes ad- vantage of local connections and expertise, whiletraining potential franchisees and managers touphold global standards. Second, McDonald’sunderstanding of demographics, economic via- bility, and local factors around the world allowthe company to innovate and adapt fresh prod-ucts for a diverse consumer market. Third,McDonald’s standardizes its training for fran-

chisers and employees while also formatting itfor different cultures. These three strategies al-low McDonald’s to deliver a global standard oftaste, quality, and service, while also adapting tocultural specific values and preferences. McDon-ald’s global system connects franchises with lo-cal suppliers in order to deliver consistent, local-ly relevant restaurant experiences to customers.McDonald’s strategy allows it to innovate andadapt to different consumer needs.

Conclusions

So what is the secret of McDonald’sglobal success? McDonald’s realized early that it wasn’t just selling burgers, it was selling the

McDonald’s experience through glocalization, itsability to brand globally, but think locally.McDonald’s is a global brand through its worldwide standards and training operations, throughits global brand recognition and sponsorship of world sporting events. But the company is alsolocal, with its franchising to local entrepreneurs,locally sourcing food, and targeting specific localconsumer market demands. McDonald’s Plan to Win is working as it provides a global frame- work, which allows for local adaptation and astore focusing on the five key elements of theplan - People, Products, Place, Price, Promotion.

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Alice Crawford earned her B.A. in Accounting from Georgia College & State University. She is continuing her edu-cation with a Masters in Accountancy from GCSU. She plans to pursue a career in teaching and research with a fo-

cus on international business law and taxation.

Sally Humphries (PhD, Social Psychology, The University of Georgia) has worked in the private sector for a globalInformation Technology and Management consulting firm in addition to 26+ years of academic instruction at the Uni-versity level. In the last several years, her interests have focused on the pervasive effects of culture on internationalbusiness. Her current research interests include examining the effects of culture on corporate governance boardcharacteristics.

Margaret “Meg” Geddy (Ph.D., American Studies from Saint Louis University) teaches Business Communication forthe J. Whitney Bunting College of Business at Georgia College & State University. Before starting at GCSU, she wasa Business and Sales Content Editor for WMe3, Inc., a Sales & Marketing Consultancy, and Ciber, Inc., a global ITConsulting firm. Meg has also been an Adjunct Public Speaking Instructor at Mercer University and a tenured Assis-tant Professor of English at Georgia Southern University.


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C o p y r i g h t o f J o u r n a l o f G l o b a l B u s i n e s s I s s u e s i s t h e p r o p e r t y o f J o u r n a l o f G l o b a l B u s i n e s s

I s s u e s a n d i t s c o n t e n t m a y n o t b e c o p i e d o r e m a i l e d t o m u l t i p l e s i t e s o r p o s t e d t o a l i s t s e r v

w i t h o u t t h e c o p y r i g h t h o l d e r ' s e x p r e s s w r i t t e n p e r m i s s i o n . H o w e v e r , u s e r s m a y p r i n t ,

d o w n l o a d , o r e m a i l a r t i c l e s f o r i n d i v i d u a l u s e .

mcdonald's a case study in glocalization

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