McDonald's Corporation is an American multinational fast food chain, founded in 1940 as a

restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United
States. They rechristened their business as a hamburger stand, and later turned the company
into a franchise, with the Golden Arches logo being introduced in 1953 at a location in Phoenix,
Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise agent and
proceeded to purchase the chain from the McDonald brothers. McDonald's had its previous
headquarters in Oak Brook, Illinois, but moved its global headquarters to Chicago in June 2018.

The menu of McDonalds is different in two countries. The McDonalds on the streets of New York
and in a mall of New Delhi is not the same in all aspects, rather the taste and menu are
influenced by local responsiveness. In 1955, McDonalds opened its first restaurant in Des
Plaines, Illinois. Today, it operates over 37,000 restaurants worldwide, in 119 countries, on six
continents, and can be considered a multidomestic company because it adjusts to the cultures
and consumers of their host countries. Their increasing success over the past decades was
because of the company’s ability to understand their diverse target audiences to create effective
global marketing strategies while providing the best customer experience for their guests.

For example, in Korea they have a bulgogi burger where the patty is sweeter. Meanwhile, in
Canada and Australia, they sell the Angus burger where the beef is considered to be more high
quality because the patty is more marbleized and thicker than the regular patty.

Not only do they show understanding and support for cultural diversity, they make sure to
understand the country’s preferences and values. For instance, in China, their rapid
urbanization has raised many concerns for the environment and public health because of water
scarcity and pollution. In response to this, many people in China are very concerned with the
sanitation of their food. As a result, McDonald’s advertisements in China were more focused on
displaying fresh, clean ingredients. Another example is India, cows are held sacred in the Indian
religion of Hinduism which is why McDonald’s India doesn’t serve beef. Additionally, many
establishments in India that sell beef are looked upon negatively. As a result, McDonald’s tailors
to this culture by not selling any beef products in their stores but chicken and fish products
instead.
Another reason McDonald's is globally popular is their practice of good ethics and moral
responsibility. They provide a customer centric experience and stay updated with the current
trends of that country. Globally, we are familiar with red and yellow representing McDonald’s.
However, in European countries, their brand colors are dark green and yellow to respect their
culture of environmental preservation.

McDonalds is a firm that seeks a middle ground between a multidomestic strategy and a global
strategy. The firm tries to balance the desire for efficiency with the need to adjust to local
preferences within various countries. McDonald’s relies on the same brand names and the
identical core menu items around the world. But make some concessions to local tastes too.
And that is why McDonalds demonstrates a transnational strategy. McDonald’s recognized
early in its life that the overseas market required an extremely high degree of local
responsiveness and that they needed to manage business spread across different regions
efficiently, which would be achieved only through transnational Strategy.

Company’s Global Strategy

Think Global Act Local

McDonald employs a transnational strategy in terms of local responsiveness and global
integration.

They recognized that the overseas market required an extremely high degree of local
responsiveness and since their business has grown too big they also need to manage business
spread across different regions effectively and efficiently which would not be achieved through
any of the other strategies. The value chain needs to be constructed taking into consideration
local culture, legal-political and economic environments in mind.

● Local Management: McDonald’s emphasizes local management for better

responsiveness to the external environment. Moreover, hiring locals would bring more
acceptance of the company in the local market by customers and companies can gain
easy access to bureaucracy associated with local government. This brings up the culture
of innovation, accountability, and better customer responsiveness. Having local
management also enables franchisees to address employees’ issues more effectively
taking into consideration local culture. Through the franchise model McDonald’s are able
to reduce the cost of setting up new businesses in different regions.

● Environmental Friendliness: The strategy of being environmentally friendly is a new

emerging concept. Many developed countries enforce certain environmental laws to
make companies comply with the norms. E.g. There are specific kinds of directions for
the disposal of wastes generated by the business operations. Environmental friendliness
in effect brings goodwill to the company and also provides opportunity to build a brand.
McDonald’s also engage themselves in CSR activity like sustainable supply chain
management, healthy and nutritious food products etc. Recently McDonald’s have come
up with products which have low calorie content, nutritious to the health of customers.

● System and Process Standardization: As a transnational company it is essential to have

a standardized system and process in place for effective and efficient management of
the businesses running in different territories. E.g. McDonald’s forces standard operating
procedures like make to order make to stock and just-in-time processes. Implementation
and integration of ERP systems across businesses of various countries and with
business associates would standardize in their business processes. This would help
McDonald’s reduce their cost, reduce manual work, more transparency and efficiency in
information sharing, better responsiveness to stakeholders etc.
 ● Politically Sensitive Strategy: One of the company‟s major concerns was to develop
ways to avoid political confrontation with the Indian government. The other major
concern was to be careful of the religious sensitives in India. Almost 80% of Indians do
not eat beef, and over 150 million Indian Muslims do not eat pork, therefore, instead of
supplying the normal Big Mac, which consists of beef, the company developed the
Maharaja Mac that is made of two lamb patties. Other foods were also added to the
non-standardized menu including McAloo Tikki Burger, and other common Indian dishes.

● Employment Opportunity: Foreign enterprises are often reluctant to hire locals in

their companies, specifically at the managerial positions, however, McDonald’s
emphasizes on local management for better responsiveness to the external
environment. Moreover, hiring locals brings more acceptance of the company in the local
market by customers and companies can gain easy access to bureaucracy associated
with local government.

● Corporate Citizenship: In order to better its reputation, this multinational firm gives back
to the local citizens in all countries it operates. For example, the company provides
several financial donations to local organizations. This is one way to encourage
consumers to eat at its restaurants, as it is an incentive that is used to spread the name.

● Pricing: As the value of currencies varies worldwide, McDonald‟s is often forced to

change its pricing strategy in accordance with its target market. For instance, the value
of a Big Mac varies worldwide (see Chart 1). In Switzerland, the Big Mac is valued $.60
over the U.S. (price base of the product). However, in China, it is undervalued by $0.60
in comparison to the price of the Big Mac in the U.S. It seems that the company tries to
maintain a price range on all its products based on the location, income distribution and
it is for this purpose that the company opens up most of its restaurants in major cities
such as New Delhi, Shanghai, Beijing, and so on. Its primary goal is to initially attract
middle and upper class citizens, as they can afford McDonald‟s prices. After this, they
slowly target the lower middle class citizens. In the United States, for example, the
restaurant chain has appealed equally well to all classes ranging from the poor to the
upper class; however, its popularity continues to be among the lower, middle and upper
middle class.

Business Strategy: As a part of business strategy McDonalds seems to adhere to differentiation

strategy. It attempts to establish and maintain the image that this fast food line is unique from
others in the same market segment. McDonalds compete by charging reasonable prices for
quality goods and services. Also, McDonalds’ expansion policy has used the franchising
strategy worldwide. It has successfully replicated its business model, not in the US but also in
global locations. Today more than 80% of the restaurants of the company are operated through
the franchisees. This calls for McDonalds to focus on achieving highly efficient operating
procedures so that its costs are lower than its competitors’. This allows it to sell its food service
for lower prices and reflects McDonalds’ overall cost leadership strategy.