McDonald’s is the leading chain of fast food restaurants in the world. It is stated that it serves close to over seventy million customers on a daily basis, in its thirty-five thousand outlets in over a hundred and nineteen countries. The company was founded in 1940 in America from a single barbecue restaurant operated by Maurice and Richard McDonald. Using the production line business, the two individual realized that their company was a hamburger stand. The worldwide growth was then realized after subsequent purchase by ray Kroc. Through a corporation basis or affiliate entity, the company is operated across any destination worldwide. With an annual revenue base of close to over twenty-seven point five billion and profits soaring to five point five billion, it is the second largest private employer with over one point five million employees.
One of the key globalization strategies that McDonald Company uses is the franchising and affiliating plan. In the franchising, the company is able to open chains of its restaurants across any nation in the world at the predisposed time. The company then uses its own enablement of management and employee base in order to ensure that its operations are in line with the standard protocols set from the headquarters in the United States. According to the franchising agreements, all proceeds and costs from all the chains of the restaurants are transferred to the main company. The company through its administrative functions delivers the outright exercise of authority in terms of management, payment of functional costs, catering to the employees and ensuring the revenue base is in a progressive state. It also ensures that the franchising fees is delivered on time an calculation of percentage sales meet with the set standards as basis of sales.
In its international operations, the company also seeks the entry mode through affiliation of its franchise name. It enables leasing the chain of restaurants in any international destination under agreed contract and procedural corporate business level of operations. The availability of markets under these agreements is always easier as the operational cost upon entry and establishment are catered for by the mother company while there is utilization of easier labor from the locally available employees. There is limited need for expatriates and shifting of services according to management and administrative functions, which require more capital and instability of success. In addition, the company’s mode of entry is advantageous to the firm as it abides by the political, economic, social, and environmental obligations of the host country. It helps reduce any chances of conflict on awarding of employment to the local people while maintaining good public relations.
One of the major recommendations that McDonald’s should consider in increasing its entry level on international operations is merger or direct acquisition in the developing markets. The strategy involves investing in the already established local chains of the respective country and promoting its values with time as its stock increases. In time, McDonald’s can then take over the franchises, restaurants, or chains due to the input level. The strategy increases specialization and diversification of the local values promoted by the consumers and therefore, there is guaranteed maximum returns once the takeover is complete. It also saves on the operation costs in the end while maintaining a closer scope on consumer behaviors for stability without any form of exploitation to the public.