CORVINUS UNIVERSITY OF BUDAPEST

MARKETING DEPARTMENT

Are there any special characteristics of the international business relationships and networks?

The strategic alliances of McDonalds

Duzsek Rka, oso9ef MSc Marketing International B2B Marketing Course leader: Tibor Mandjk December 16, 2012

Introduction
McDonald's is the leading global foodservice retailer with more than 34,000 local restaurants serving nearly 69 million people in 119 countries each day.1 1,8 million employees are working for the company and 80 % of the restaurants are franchised, this means they are operated by local businessmen and women all over the world. The McDonald brothers (Richard & Maurice) started off a drivein restaurant in San Bernardino, California. In 1940s, the McDonald brothers invented a revolutionary new concept called selfservice and in 1948 they reduced their menu to nine items: hamburger, cheeseburger, soft drinks, milk coffee, potato chips and a slice of pie. They sold their 100 millionth hamburger in 1958 and the opened the 10th restaurant one year later. Today, McDonalds is listed on the New York, Frankfurt, Munich, Paris and Tokyo stock exchanges.

Market proliferation
A map showing every country with at least one McDonald's restaurant in 20122

1 2

http://www.aboutmcdonalds.com/mcd/our_company.html http://upload.wikimedia.org/wikipedia/commons/a/a6/McDonaldsWorldLocations.svg

The McDonalds went international in 1967, they opened their first restaurant in Canada and Puerto Rico3, but they really started to aim to global goals in 1971. This year they started to conquer Asia and Europe, they opened restaurant in the Tokyo Ginza District in Japan and in Munich, Germany. As the global expansion went further they set foot in Rio de Janeiro in Brazil in 1979. In1990, they also reached the more difficult countries, the communist China and Russia. In Moscow it was located in Pushkin Square and more than 30,000 customers were served on the opening day. They also opened restaurant is the developing countries; in 1996 they arrived in India, in Mumbai and Delhi too. First the brand image was like a foreign brand that you didnt know what to expect from. By time this changed in all countries to a friendly atmosphere and with the familiarity with the brand.

Strategic alliances
McDonalds had some big strategic alliances, but the most important of all of them were the alliances with the Coca-Cola and Walt Disney. McDonalds, Coca-Cola and Disney, the worlds top three brands, are linked by a web of alliances that offer the best hope of future growth. In Disneyworld you can find a McDonald's themed restaurant, where the staff wears special Disney-approved uniforms showing McDonald's characters, and in the middle of the store an oversized bottle dispenses Coke. The ties between these three giants are part of a broad trend. John Harbison, a consultant at Booz, Allen & Hamilton, reckons that some 32,000 alliances have been formed around the world in the past three years, three-quarters of them across borders. Alliances now account for 18% of the revenues of America's biggest companies. 4 This is being driven by two fashionable and modern ideas: globalization and core competence. The first compels companies to look for ways to sell their product in as many
3

http://www.aboutmcdonalds.com/mcd/our_company/mcdonalds_history_timeline.html?DCSext.destination= http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html 4 Booz Allen & Hamilton (2000): The Allianced Enterprise: Breakout strategy for the new millenium http://www.smartalliancepartners.com/Images/Allianced%20Enterprise.pdf

different places and ways as possible, which often requires other people to help them. The second, the trend for a firm sticking to what it does best, means that they must often let outsiders help them with everything else. According to Coca-Cola the 100 % of their revenue is coming from alliances. They said that that every dollar which the soft-drink giant earns comes from some form of partnera bottler, a distributor, and so on. 5

Disney
The McDonald's/Walt Disney Company global alliance joins the world's two leading family brands in a 10-year multi-divisional, multi-national partnership. McDonalds has executed more than 1,000 Disney programs worldwide since the alliance began on January 1, 1997 (Hollensen, 2007). McDonald's restaurants around the world bring Disney's hottest new film releases, theme parks, videos and television properties to life for customers via a variety of fun promotions every year. From Happy Meal toys to special premiums and decor, Disney programs are always among McDonalds most successful. McDonald's and Disney began a formal ten-year alliance with the early hit, the Flubber, an indifferent Disney film whose box-office returns were helped by tie-ins at McDonald's. They also promoted the Armageddon, a $100m film starring Bruce Willis, selling tickets and special Astromeals at each of its 23,500 restaurants worldwide. This time the target is not children but young adultsa market where McDonald's is weaker.6 The Happy Meals were an important part of the agreement. McDonalds gives toys to the children that feature Disney cartoon characters, when Disney relaesases the animated movie. The promise of the toys attract more families to the restaurants, and beside this the children who recived the toy would like to see the movie itself. (Budd and Kirsch, 2005) McDonald's has also opened three showcase restaurants two at the Walt Disney World Resort near Orlando,, and one at Disney Village, on the site of DisneyLand Paris.7

5 6

http://www.economist.com/node/361379 http://www.economist.com/node/361379 7 http://mcdepk.com/LiloAndStitch/pdf_files/DisneyMcDonalds_bkgrnder.pdf

Coca-Cola
In contrast with the Disney formal contact, the Coca-Cola and the McDonalds doesnt have any formal or written agreements. As they said it is about a common vision and a lot of trust (Hollensen, 2007). Although Coke sells drinks to other restaurants, its relationship with McDonald's goes far beyond that of a simple supplier. It has helped its partner to set up new operations around the world (Coke is sold in almost twice as many countries as McDonald's). Coke's ties to Disney are arguably the weakest of the threebut they are still considerable. Coke has been the sole provider of soft drinks at Disney theme parks since 1955, and it has had a marketing alliance in place since 1985. Coke has also helped Disney overseas. One thing that makes the Coke-Disney-McDonald's triumvirate so powerful is that they are all market leaders within their own industries.

Conclusion
The question of this paper is that are Are there any special characteristics of the international business relationships and networks? and the answer is definitely yes. Above I presented an alliance with a lot of special characteristics, like the Coca-Cola and McDonalds relationship which hasnt got a written form; or the Disney and McDonalds relationship which is one of the key success factor of both companies. The network of this 3 giant companies is a really special in case of its management, and it should be really hard to have it since all those years.

References
About McDonalds http://www.aboutmcdonalds.com/mcd/our_company.html Downloaded: December 16, 2012 A map showing every country with at least one McDonald's restaurant in 2012 http://upload.wikimedia.org/wikipedia/commons/a/a6/McDonaldsWorldLocations.svg Downloaded: December 16, 2012 McDonald's History http://www.aboutmcdonalds.com/mcd/our_company/mcdonalds_history_timeline.htm l?DCSext.destination=http://www.aboutmcdonalds.com/mcd/our_company/mcd_histo ry.html Downloaded: December 16, 2012 Booz Allen & Hamilton (2000): The Allianced Enterprise: Breakout strategy for the new millennium http://www.smartalliancepartners.com/Images/Allianced%20Enterprise.pdf Downloaded: December 16, 2012 The science of alliance http://www.economist.com/node/361379 Downloaded: December 16, 2012 McDonald's and the Walt Disney company http://mcdepk.com/LiloAndStitch/pdf_files/DisneyMcDonalds_bkgrnder.pdf Downloaded: December 16, 2012 Svend Hollensen (2007): Global Marketing: A Decision-Oriented Approach, Pearson Education http://books.google.hu/books?id=asjCurc4ye0C&printsec=frontcover&hl=hu&source =gbs_ge_summary_r&cad=0#v=onepage&q&f=false Downloaded: December 16, 2012 Mike Budd, Max H. Kirsch (2005): Rethinking Disney: Private Control, Public Dimensions, Wesleyan University Press http://books.google.hu/books?id=tBiQo8XUhLYC&printsec=frontcover&hl=hu&sour ce=gbs_ge_summary_r&cad=0#v=onepage&q&f=false Downloaded: December 16, 2012