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McDonalds: A Case Study in Glocalization

Alice Crawford, Georgia College & State University


Sarah A. Humphries, Ph.D., Georgia College & State University
Margaret M. Geddy, Ph.D., Georgia College & State University
ABSTRACT
The purpose of this research report was to assess McDonalds globalization strategy. We examined
McDonalds strategy across six dimensions: menu, promotion, trademarks, restaurants, employees, and
service. We also compared the companys performance across these six dimensions in 10 different countries: Saudi Arabia, France, the United Kingdom, Greece, Brazil, Indonesia, India, China, Japan, and
New Zealand to measure McDonalds success in capitalizing on globalization and localization. As discussed in this report, McDonalds is a global brand through its worldwide standards and training operations, but the company is also local, with its franchising to local entrepreneurs, locally sourcing food,
and targeting specific local consumer market demands. McDonalds is an excellent example of blending
global with local an organization that has glocalized very successfully.
Introduction and Purpose

McDonalds: The American Standard

McDonalds has been serving fast food


to America since 1955 and has grown into one of
the worlds leading fast food giants. Today,
McDonalds is the leading global foodservice
retailer with 1.7 million employees and more
than 34,000 restaurants in 119 countries serving
nearly 69 million people each day (McDonalds,
Annual Report, 2012).

The McDonalds American model focuses on fast and convenient service with high purchasing turnover. Its recognizable bright red and
yellow colors with the iconic golden arches
reaching into the sky offer Americans a piece of
the familiar in a foreign country. Our goal is to
become customers' favorite place and way to eat
and drink by serving core favorites such as our
World Famous Fries, Big Mac, Quarter Pounder
and Chicken McNuggets (McDonalds, Company Profile, 2012).

Not too long ago people believed


McDonalds would become a lumbering cash
cow in a mature market (Serwer & Wyatt,
1994). However, its success abroad has offset the
maturing market in America. In fact, 65% of
McDonalds sales came from international revenues (McDonalds, Annual Report, 2012.) Its
worldwide operation concentrates its global
strategy, Plan to Win, and on customer experience, which includes people, products, place,
price, and promotion.
This paper will compare McDonalds
marketing strategy to determine how well it capitalizes on both globalization and localization. It
will look at this strategy by examining ten different countries: Saudi Arabia, France, the United
Kingdom, Greece, Brazil, Indonesia, India, China, Japan, and New Zealand, across six different
dimensions: menu, promotion, trademarks, restaurants, employees, and service.

Menu
McDonalds always offers its core menu
no matter where one goes on the globe. However, the menu will also include a variety of items
catering to local preferences and unique cultural
tastes. McDonalds ability to source farm fresh,
local foods contributes to its global success. In
Saudi Arabias western region, McDonalds is
launching its breakfast menu, and it will include
its signature McMuffins and big breakfasts using
locally sourced eggs. Marketing Manager, Mohamed Alireza, commented that McDonalds
success was because of its ability to source farm
fresh ingredients to order (McDonalds brings
famous breakfast menu to KSA, 2012). Beyond
locally sourced foods, McDonalds is embracing
a trend toward localization. For example, an
item unique to McDonalds Middle East menu is

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the McArabia launched in 2003; then, the Moroccan McDonalds franchises tweaked the seasoning and sauce for their market, and it is now
sold as the McArabia Tangine (German, 2010).
Another instance of localization was
McDonalds introduction to France. Since opening its first French restaurant in Strasbourg in
1979, McDonalds has sought to leverage the
strength of the global conglomerate while tailoring its menu to the French palate (Fancourt,
Lewis, Majka, 2012). In 1995, McDonalds began
using locally sourced French cheeses such as
chevre, cantal, and blue. They even exchanged
traditional mustard for a whole-grain French
mustard sauce. By being sensitive to the French
palate, McDonalds started executing a multidomestic strategy and winning the hearts of
French consumers (Fancourt et al, 2012).
Part of McDonalds global success is its
ability to localize and adapt to changing consumer demands. The lessons learned in France
paved the way for satisfying globally diverse
tastes. In Greece, McDonalds offers the Greek
Mac, which is essentially a Big Mac drizzled with
Tzatziki sauce, and then wrapped in a pita. In
India, McDonalds offers the Maharajah Mac,
which is a chicken Big Mac. In Brazil, McDonalds offers the cheddar McMelt and various banana desserts. In Indonesia, one can easily order
a bowl of buryam rice porridge with chicken and
fried crisps. Another Asian twist to the McDonalds menu is the kao fan burger in Hong Kong, a
fried chicken patty served in a bun made of rice
(Golden arches abroad: International McDonalds menu offerings, n.d.).

Wilson, New Zealand McDonalds Managing


Director, is excited to introduce the new lamb
products at affordable prices (McDonalds expands menu with 100% NZ lamb products,
2012).
McDonalds seems willing to continue
expanding both meus and markets, adapting to
cultural tastes and pricing standards as well as
cultural standards of health and quality. In the
United Kingdom, McDonalds offers a variety of
deli choices as a healthy alternative. McDonalds
also uses 100% British and Irish beef burger patties, 100% British pork, and even 100% British
milk, all locally sourced foods from British and
Irish farms (McDonalds UK Menu, 2012).
India McDonalds also adapted to cultural standards addressing religious issues. Almost 60 percent of the companys market is
Hindus who do not eat beef and Muslims who do
not eat pork, so McDonalds removed both meat
products from the menu. The chicken and the
fish remained on the menu, but soon, India
McDonalds will launch its first all vegetarian
restaurant for the almost 40 percent of the market who doesnt eat meat at all (Finn, 2012).
McDonalds global-local menu has significant
market value; its familiar American products are
available for any visiting tourists, but the unique
menu items cater to the various countries consumer markets. McDonalds menu, whether in
America or abroad, is always changing and expanding (Finn, 2012). It is McDonalds ability to
adapt, which contributes to its long-term growth
and success.
Marketing and Promotion

McDonalds continues to expand its


market through research and the addition of
innovative products to its global menu. In 2009,
McDonalds introduced Angus Beef on its New
Zealand menu, and now 100% of the Angus Beef
used is locally sourced from New Zealand farms
(McDonalds New Zealand sells two million kilos of Kiwi Angus, n.d.). With the addition of
the New Zealand Angus Beef, McDonalds added
new menu items such as the Kiwi Angus and the
Pepper Mayo Angus to the New Zealand menu.
Furthermore, following two years of product
development, McDonalds is going to expand its
New Zealand menu to include 100% New Zealand lamb products. More importantly, Beef and
Lamb New Zealand, Ltd. endorses the new lamb
products. McDonalds research showed that New
Zealanders like eating lamb but usually considered it too expensive to order out, so Patrick
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McDonalds marketing strategy is to


brand globally and think locally (Vignali, 2001).
An aspect of its global branding is its choice of
partners. McDonalds allies itself with major
universally recognized brands, such as CocaCola and Disney. McDonalds and Disney came
together in 1997, and this mutually beneficial
global alliance has them sharing everything from
films to food (Vignali, 2001).
Another way McDonalds brands globally and thinks locally is its sponsorship of a variety of global and national sporting events. Internationally, McDonalds sponsors both the Olympics and the World Cup. The global nature of the
events allows McDonalds to produce an international campaign and get their brand out to an
estimated 2 million viewers. Brad Bell, the sen-

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ior vice-president of McDonalds USA, commented that, The Olympic Games has reinforced our reputation as a truly global brand.
McDonalds association with the Olympics began
with the 1976 Summer Games in Montreal. The
association between the company and the Olympics was demonstrated in 1968 when U.S. figure
skater Janet Lynn stated in an interview that she
missed the taste of McDonalds. Soon after her
statement, McDonalds shipped a few hundred
hamburgers to France for both the athletes and
the ABC announcers. This shipment prompted a
lot of talk and cemented the McDonalds brand
as Americana in France (Lefton, 2005).
McDonalds doesnt just support and promote
the Olympics. McDonalds also promotes its food
by using English and French footballers (Vignali,
2001). Another sport the company supports is
the National Basketball Association, and it encouraged the NBA to look outside U.S. borders
and even began hosting the McDonalds Open
and McDonalds Championship Games in 1987,
where the Milwaukee Bucks bested Italian and
Russian Teams. The NBA has also attended
games in China. NBA Commissioner David Stern
said, If we didnt have McDonalds support internationally from a marketing and financial
perspective, our league was sufficiently fragile
that we likely would not have undertaken it ourselves (Lefton, 2005). McDonalds has a long
tradition of sponsoring both local and global
sports events; currently, the companys largest
sponsorships are the Olympics, the FIFA World
Cup, Association of Volleyball Professionals, and
the NBA. But it also capitalizes on hot regional
sports markets through individual franchises
(Lefton, 2005).
McDonalds also brands globally
through global and local community involvement. In 2000, the company partnered with
Walt Disney and UNESCO for the Millennium
Dreamers, a global childrens recognition program that named 2,000 ambassadors with
outstanding community involvement in over 90
countries. They came together at Disney World
for one of the largest global youth summits ever
held (McDonalds and Disney name Millennium
Dreamers, 2000). Another area of McDonalds
global community involvement is its support of
The Ronald McDonald House Charities. Started
in 1974, these Charities provide free home away
from home accommodations for the families
while their seriously ill children are in the hospital. McDonalds community service mission is to
seek solutions for the problems facing families

and children today, according to Ken Barun, the


CEO of Ronald McDonald House Charities
(Vignali, 2001). Currently, there are over 300
Ronald McDonald Houses in more than 56
countries addressing this global problem on a
local-specific scale.
McDonalds marketing strategies vary by
country and cultural values. McDonalds France
introduced advertising campaigns to educate the
French public about just how French it had become. Responding to French cultural values,
McDonalds strengthened its ties to agribusiness, advertising widely that 95% of the companys ingredients came from France and the rest
from the European Union (Fancourt et al.,
2012). Similarly, McDonalds India launched an
advertising campaign to dispel consumer concerns and push forward its global image of family values and culture, as well as an image of
comfortable and easy. McDonalds India campaign, like France, was an effort to familiarize
and educate Indian consumers about McDonalds (Kulkarni, Lassar, Sridhar, Venkitachalan,
2009).
McDonalds globally markets itself as a
neighborhood restaurant; locally, this marketing
strategy can translate into different campaigns
targeting the specific cultural values of consumers. McDonalds Hong Kong has made great efforts to present itself as a champion of environmental awareness and public welfare. In Indonesia, McDonalds promotes its menu as certified halal by Islam religious leaders, meaning it
is religiously clean and permissible to eat. For
many years, McDonalds Indonesia had the largest following of Muslims because of the publicity
about the halal sign on its food (Liao, Widowati,
Hu, 2011).
McDonalds targets younger generations
of consumers in East Asia, investing heavily in
television advertising aimed specifically at children. In Indonesia, the younger generation gravitates to McDonald restaurants to taste western
food and because it is a convenient, clean and
cool place to be. However, McDonalds China
does not invest in television commercials. Chinese commercials, unlike Western commercials,
appear only during the break between programs.
Advertising has little chance to make an impact
on consumers because after watching a program,
audiences usually switch channels, thereby missing the commercials. For this reason, McDonalds uses Chinese newspapers and popular

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magazines as a better way to present McDonalds public image (Vignali, 2001).

$200,000 a year per store (Sewer & Wyatt,


1994).

Trademarks

At the end of 2010, nearly 59% of


McDonalds were conventional franchises, 21%
were licensed to foreign affiliates or had developmental licenses, and 20% were actually company-operated (McDonalds, Investors, 2012). In
the European markets, company-owned subsidiaries run company-owned stores and run franchise licensing. McDonalds structures its European operations this way because these markets
are similar to U.S. markets, so the company can
run them basically the same way as they do in
the U.S., making adjustments as needed. For
instance, McDonalds opened stores in Hollands
suburbs, only to find the Dutch have different
patterns of eating. So the company moved its
stores downtown (Serwer & Wyatt, 1994). However, in Asian markets, the company structures
its operations differently, favoring joint ventures, usually fifty-fifty arrangements, which
allow the company to tap. Here, the company
favors joint ventures, usually fifty-fifty arrangements that allow the company to use the partners contacts and local expertise. McDonalds
has such an arrangement with eccentric billionaire Den Fujita operating 1,000 plus stores in
Japan (Serwer & Wyatt, 1994). In India,
McDonalds also set up a fifty-fifty venture between McDonalds and regional Indian partners,
such as Hardcastle Restaurants Private Limited
in western India (Kulkarni et al., 2009). In Arabic and African markets, McDonalds uses a developmental licensee model, in which the restaurants are 100% owned and operated by local
business owners (Salama, 2013).

McDonalds has adapted their trademark logo to reflect consumer demand. McDonalds golden arches that look like an M on a
field of red are a globally recognized trade logo.
But internationally, McDonalds franchises have
differentiated this logo. In France, in contrast to
the standard golden and red colors, the golden
arches are on a field of forest green, part of
McDonalds push to publicize the greening of
its image in France. This change was initially
controversial with the US head office; however,
several other European subsidiaries adopted the
new greening logo (Fancourt et al., 2012). In
fact, European consumers have increasingly demanded more environmentally sustainable
products and companies. In Great Britain, faced
with falling sales, McDonalds replaced its logo
altogether with a question mark in an effort to
get consumers to reconsider its image as a fast
food retailer (Brook, 2005).
McDonalds also adapted their standard
male mascot to fit cultural preferences. In the
United States, Ronald McDonald is a clown who
entertains children and whose appearance uses
the companys trademark bright red and yellow.
In McDonalds China-Beijing, the company
paired Ronald McDonald with Aunt McDonalds, female companions whose job is to befriend and entertain children while theyre in the
restaurant (Vignali, 2001). In Japan, Ronald
McDonald transformed into a sexy woman with
long, straight red hair wearing a yellow dress
(and in some commercials a bikini). This adaptation was a gender-bender twist meant to appeal
to the popular culture in Japan involving costume-play as a way to bring adults back into
McDonalds (Brook, 2005).
Restaurants
McDonalds screens its potential franchise owners using a two-year screening process.
It demands all potential franchisees first work in
a restaurant and go through training before it
will consider them for a franchise. Then, franchise owners pay $45,000 to sign a 20-year contract that gives McDonalds a royalty of 4% sales,
plus 8.5% or more sales for rent. In addition,
franchise owners pay 4% of sales for advertising.
Many McDonalds operators join co-ops and service groups, which let them take home about
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In France, all McDonalds restaurants,


more than 1200, are locally owned franchises,
and these restaurants differ drastically from the
American model. In order to appeal to French
customers, McDonalds spent approximately $5
billion renovating restaurant interiors in France
to create a welcoming environment where customers linger, a departure from the American
model where the strategy is to minimize customer visiting and maximize turnover. The interiors
are sleek, with modern tables and plush comfortable chairs. The exteriors are also different as
French signage is more subdued and almost invisible to people walking by until they are directly in from of the restaurant. This near invisibility
contrasts with the American model, whose lighted golden arches logo is highly visible from a
distance. French franchise owners opt for tasteful, diverse, and regionally appropriate restau-

The Journal of Global Business Issues Volume 9 Issue 1

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


2012).
Employees
A distinguishing feature of McDonalds
is its global practice of comprehensively training
its employees, franchisees, and suppliers in food
safety, hygiene, and food preparation procedures. And McDonalds goes even further, by
offering its managers the chance to train at
Hamburger University, located at company
headquarters in Oak Brook, Illinois. Many of its
graduates, who are participants from at least 22
countries besides the United States, liken this
two-week intensive training program to a crash
executive M.B.A. program (Serwer & Wyatt,
1994). Besides Hamburger University, McDonalds also has additional training centers in Munich, Tokyo, Sydney, London, and China
(Vignali, 2001).
When it comes to hiring employees,
McDonalds emphasizes to all its managers the
importance of hiring employee applicants with
customer-focused attitudes, attitudes that are
even more important than technical ability. The
company also stresses this customer focus in its
recruiting advertisements and preliminary
screenings (Vignali, 2001). McDonalds France
goes so far as supporting its employees through
programs to give them nationally recognized
diplomas and certifications in order to meet
French cuisine expectations. In turn, employees
in France regularly protect McDonalds brand on
Internet forums and blogs (Fancourt et al.,
2012). In Japan, McDonalds provided employees with 25 chapter manuals that detail everything from methods of preparation and quality
control to how to deal with customers. These
quickly train the part-time workers, who make
up 95% of McDonalds Japanese employees, in
the matters of taste, quality, and service that will
satisfy customers. Whats more, these manuals
have made McDonalds Japan a leader in supervisory management and training (The McDonalds Effect, 2001).
The companys management development program is a direct route to management
with intensive training, and all managers follow
the management development program. The
junior management program and the two-year
restaurant-based program are available globally
and adapted locally for applicant qualifications
(Vignali, 2001).

Service
McDonalds does not just sell burgers
and fries; McDonalds sells a service to consumers across the globe. Globally, McDonalds exports a service; locally, McDonalds adapts that
service to different cultural communities (Sewer
& Wyatt, 1994). In France, McDonalds restaurant ambience invites customers to linger and
enjoy their food, and these restaurants reflect
the French cultures emphasis on enjoying food
(Fancourt et al., 2012). McDonalds in Beijing,
China, in contrast to the U.S. practice of substituting technology for human workers, relies
heavily on building personal relationships between its employees and customers. The Chinese
McDonalds have several public relations staff in
each outlet to answer consumers questions. Also, each restaurant assigns a number of female
receptionists to take care of children and talk
with parents. This kind of personal customer
service isnt necessary in the United Kingdom or
the United States where consumers usually prefer 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 consumption
as it has in the UK or the U.S. Customers in East
Asia tend to linger, where students, elderly people, and courting couples might spend hours
over a cup of tea, thus turning McDonalds into
an inexpensive teashop. McDonalds Hong Kong
has added wedding packages to the menu. This
may seem a strange niche for McDonalds, but if
you consider that countless people will have met
and even had dates in McDonalds restaurants,
its not so unusual for McDonalds to provide
this service. Three locations in Hong Kong are
now equipped to stage affordable, intimate, and
fun marital festivities for couples. The McWedding 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 balloons (Brenhouse, 2011). In Eastern Asia,
McDonald's has become a local institution for
an entire generation of affluent consumers
(Collins, 2000).
McDonalds also adapts its restaurants
and practices to cultural customs. In Saudi Arabia, McDonalds restaurants have separate dining-areas for men and women. And during Easter, Greek McDonalds restaurants serve spinach

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15

pies, since many people do not eat meat products during this holiday (Markatos, 2006). In
Indonesia, McDonalds restaurants offer a post
sunset meal as a special to Muslims fasting during the month of Ramadan (Liao, et al., 2011).
McDonalds Brazil is collaborating with AOL
Brazil to provide Internet service in restaurants
so that customers can surf the web while munching on their food. To highlight the deal, AOL
Brazil will develop special content for the McInternet Portal. McDonalds is also offering wireless enabled laptop computer users one hour of
free Internet access with the purchase of an Extra Value Meal at participating restaurants
(Lohmeyer, 2003). McDonalds adapts the food
served, restaurant design, and customer service
across different countries and cultures in order
to deliver the McDonalds experience.

Conclusions
So what is the secret of McDonalds
global success? McDonalds realized early that it
wasnt just selling burgers, it was selling the
McDonalds experience through glocalization, its
ability to brand globally, but think locally.
McDonalds is a global brand through its worldwide standards and training operations, through
its global brand recognition and sponsorship of
world sporting events. But the company is also
local, with its franchising to local entrepreneurs,
locally sourcing food, and targeting specific local
consumer market demands. McDonalds Plan to
Win is working as it provides a global framework, which allows for local adaptation and a
store focusing on the five key elements of the
plan - People, Products, Place, Price, Promotion.

McdonaldS Glocalization Strategy


References
So how did McDonalds, the American
fast food giant, become a global success story?
The answer, McDonalds adopted strategy of
glocalization. This portmanteau of globalization
and localization coined by Japanese economists
in the 1980s in the Harvard Business Review
describes a product or service developed and
distributed globally, but fashioned to accommodate the user or consumer in a local market.
McDonalds success comes from mixing global
and local marketing strategies. First, its franchise business model allows all of its franchisemembers, management, and stakeholders to
share the risks and reward from the discovery
and exploitation of new business opportunities.
Through franchising, McDonalds takes advantage of local connections and expertise, while
training potential franchisees and managers to
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understanding of demographics, economic viability, and local factors around the world allow
the company to innovate and adapt fresh products for a diverse consumer market. Third,
McDonalds standardizes its training for franchisers and employees while also formatting it
for different cultures. These three strategies allow McDonalds to deliver a global standard of
taste, quality, and service, while also adapting to
cultural specific values and preferences. McDonalds global system connects franchises with local suppliers in order to deliver consistent, locally relevant restaurant experiences to customers.
McDonalds strategy allows it to innovate and
adapt to different consumer needs.

16

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5242.1781marketing%20mix23.pdf

The Journal of Global Business Issues Volume 9 Issue 1

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Alice Crawford earned her B.A. in Accounting from Georgia College & State University. She is continuing her education with a Masters in Accountancy from GCSU. She plans to pursue a career in teaching and research with a focus on international business law and taxation.
Sally Humphries (PhD, Social Psychology, The University of Georgia) has worked in the private sector for a global
Information Technology and Management consulting firm in addition to 26+ years of academic instruction at the University level. In the last several years, her interests have focused on the pervasive effects of culture on international
business. Her current research interests include examining the effects of culture on corporate governance board
characteristics.
Margaret Meg Geddy (Ph.D., American Studies from Saint Louis University) teaches Business Communication for
the J. Whitney Bunting College of Business at Georgia College & State University. Before starting at GCSU, she was
a Business and Sales Content Editor for WMe3, Inc., a Sales & Marketing Consultancy, and Ciber, Inc., a global IT
Consulting firm. Meg has also been an Adjunct Public Speaking Instructor at Mercer University and a tenured Assistant Professor of English at Georgia Southern University.

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The Journal of Global Business Issues Volume 9 Issue 1

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