hoping from this presentation you will:
Learn a bit about the history of McDonald’s. Understand just how much international expansion McDonald’s is partaking in. Criticism/Opposition to McDonald’s SWOT Analysis Few small legal cases involving McDonald’s McDonald’s in India and China
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Began in 1940 Located in 122 Countries 51 million people are served a day at 30,000 different locations Independent local business people own and operate more than 70% of McDonald’s globally In 2004, Morgan Spurlock came out with a documentary titled Super Size Me that looked at the fast food corporation as a contributor to obesity In about 30 markets outside the U.S., McDonald’s restaurants are operated by developmental licensees who own the business and pay McDonald’s royalties based on a percentage of sales.
Began by two brothers:
Dick McDonald Mac McDonald
Started off as a hot dog stand in CA  Hot Dog stand moves to Rt.66 and becomes a Hamburger Joint.
Offers 25 menu items Becomes car hop Highly profitable teen hang out
1st McDonald’s Hamburger Cost $.15
realize Burgers were most profitable Close down restaurant and reopen as a “Speedy Service System”
Offer only burgers, shakes, and fries
First McDonald’s to feature the Golden Arches
Creates “McDonald’s System’s Inc” to start franchising 
Renamed to “McDonald’s Corporation” 
A McDonald’s in Downey, CA is the oldest operating McDonald’s today [opened in 1953]
McDonald’s is franchised to several locations
Ray Kroc discovers McDonald’s 
In 1967 the first McDonald’s outside of the US opens up Richmond, British Columbia Big Mac and Apple Pie introduced  1971 McDonalds really starts going global Asian: Tokyo Ginza District, Japan European: Netherland, Munich, Germany 1974 – McDonald’s Starts the Ronald McDonald House Charities as a non-profit organization to improve the health and well being of children. In 1985 the first RMHC opened internationally in the Netherlands.
McDonald’s in Germany offered Beer as a part of their menu
1967 - Canada & Puerto Rico (first restaurants outside the U.S.) 1971 - Tokyo, Japan, Amsterdam, Netherlands & Sydney, Australia 1979 - Rio de Janeiro, Brazil 1990 - Moscow, Russia & China
The Chinese characters "Mai Dang Lao" are used to phonetically approximate the word "McDonald's“.
1992 - Casablanca, Morocco & Czech Republic 1993 - The first McDonald's at sea opens aboard the Silja Europa, the world's largest ferry sailing between Stockholm and Helsinki. 1994 - Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad and United Arab Emirates. 1996 - First restaurant opens in India.
50-50 joint venture partnership between McDonald’s Corporation (USA) and two Indian businessmen. Two separate operations in Northern & Western India. Partners and their management teams trained extensively in Indonesia & the U.S.
India: Sandwich sauces, shakes and soft-serve products do not contain eggs in order to offer more variety to vegetarian customers. Uruguay: McHuevo (hamburger with a poached egg on top) Norway: McLaks (grilled salmon sandwich with dill sauce) Germany: Beer Thailand: Samurai Pork Burger (sausage patty in teriyaki sauce) Taiwan: Rice Burger
U.S. fast food market showed signs of saturation by early 1980’s after 3 decades of rapid growth. Foreign revenues and profit have grown 22% annually since early 1980’s. By end of 2000, the foreign restaurants generated $21B (53%) of the corporation’s $40B in revenues. Foreign markets are sources of valuable new ideas.
Prefabricated modular restaurants (temporary & easily moved) Widely used for big outdoor events Enhanced meat freezer now used throughout entire firm Small, limited menu satellite restaurants (low overhead) Now in hospitals and sports arenas in the U.S.
Expansion rate slowed in the last few years due to declining operating margins and focus on improving existing restaurants and menu offerings. International expansion was led by late CEO, Jim Cantalupo, who passed away of a heart attack in April 2004, age 60. By the late 1990‘s, McDonald’s aggressive expansion resulted in cannibalization of its own sales because stores were built too close to each other. In 2003,the focus changed from adding new restaurants to building sales at existing restaurants.
Struggling European and South Korean restaurants
U.K. - public concerns over unhealthy menu items Germany & South Korea - adverse economic conditions
Between 2003 and 2004, underperforming restaurants were closed in the U.S., Japan, Latin America and Jamaica. SARS concerns had a negative impact on sales in 2003 in many countries.
McDonald's has most certainly had a profound effect on China. When the first McDonald's opened in Beijing more than a dozen years ago, 40,000 people lined up to observe a Big Mac and get their picture taken with the infamous Ronald McDonald. McDonald's is growing faster in China than in the United States. McDonald’s owns & operates more than 600 stores across 105 cities in China. More than 100 more McDonald's stores will be added annually to Chinese cities within the coming years.
offering the basic burger and fries, McDonald’s in China also offers:
Szechuan-style spicy chicken wings Seafood Soup Rice Oriental Sauces Taro and Red Bean Dessert
Red Bean Dessert
In 1992, McDonald’s opened its first restaurant in Beijing and the restaurant enjoyed good sales. 2 years into the 20-year lease, the city government told McDonald’s to move the restaurant. The location would be used for another complex planned by a developer from Hong Kong. McDonald’s tried to enforce its contract by taking the government to court, but it lost the case. In the West, contract law governs business transactions. In China, personal power and relationships/connections determine how business is conducted.
Guanxi literally means relationships Concept is deeply rooted in Chinese culture (based on 2000-year-old Confucian ideology). Guanxi is crucial for building long-term relationships and doing business in China. McDonald’s did not have the same connections as the Chinese developer. By not accepting the government’s decision gracefully and taking it to court, McDonald’s damaged its reputation with the city government
Chinese Symbol for Guanxi
1997 China passes first franchise law. Prior to this, all McDonald’s restaurants were corporately owned and operated. Demand for western style conveniences is increasing as China’s middle class grows.
Drive-through fast food windows
In December 2005, China got it’s first drive thru in the heart of the central business district of Dongguan Guangdong Province, thirty years after the first McDonald’s US drive thru was established
•Limited menu, fresh food, fast service and affordable prices have been the pillars behind McDonald’s success in India. Intense competition and demands for a wider menu, drive-through and sitdown meals - encouraged the fast food giant to customize product variety without hindering the efficacy of its supply chain
•While there are some 150-200 million middle-class people in India that can afford McDonald’s there is also a vast majority of the Indian population that is still too poor to afford it
McDonald’s in India offers home delivery. Also if you go to a McDonald’s restaurant and order food, you take a seat and they bring it to your table.
For thousands of years, India's Hindu culture has revered the cow and does not eat the meat of the scared cow. In addition there are some 140 million Muslims in India, who do not eat pork. To respect and adapt to Indian culture, McDonald's created an Indian version of burgers which are made from mutton and chicken. All foods are segregated vegetarian and nonvegetarian, due to the fact that many Hindus are vegetarians.
Veg McCurry McAloo Tikki McVeggie Pizza McPuff Crispy Chinese Paneer Salsa Wrap
Chicken Maharaja Mac McChicken Filet-O-Fish Chicken Mexican Wrap Chicken McGrill Chicken McCurry Pan
“McDonald’s strategy of positioning itself as a family restaurant with an emphasis on local menus and local values seems to be working well in India. But to what extent McDonald’s can continue its growth in India remains uncertain. McDonald’s is more than just another American fast food chain. It carries a symbolic load of Americanness—American variant of capitalism and its overwhelming domination over the global economy. It is also a symbol of American cultural imperialism. For this reason, McDonald’s operations in India, like other parts of the world, will continue to face opposition from religious fundamentalists, environmentalists, protectionists, animal rights activists, and antiglobalization protestors. “
Quoted from: http://www.thunderbird.edu/pdf/about_us/case_s eries/a07050015.pdf
menu items specifically for vegetarians are introduced. It is made aware that the food is produced locally to show investment in Indian Infrastructure. McDonald’s developed and maintains community parks to prevent public resentment.
supply chain created:
Operates best when chain is balanced Necessary to maintain food freshness
McDonald’s transferred its food processing centers to India to increase efficiency
Mumbai, there is an event called McDonald’s Spotlight. This is an annual interschool performing arts competition. This competition is open to all secondary school students. Since 2002, McDonald’s has participated in World Children’s Day. On this day, McDonald’s raises money for any charity of their choice. [Usually educational programs]
Sociologist George Ritzer, author of “The McDonaldization of Society”, states that McDonaldization is a transformation of rationalization, moving away from traditional to rational modes of thought, and scientific management. Ritzer has highlighted 4 major concepts of McDonaldization: Efficiency - the optimal method for accomplishing a task Calculability - objective should be quantifiable (i.e. sales) rather than subjective (i.e. taste)
Predictability - standardized and uniform services Control - standardized and uniform employees
These concepts have led to the stability and expansion of McDonald’s in the overseas market, especially in East Asia, where more and more McDonald’s franchises are opening constantly, leading to the belief that maybe one day every restaurant will be taken over by McDonald’s itself. McDonald’s franchises in various countries also offer a variety of meals to better help customers in choosing food that is best accustomed to people’s beliefs.
For example, various faiths don’t permit people eating pork or beef. The substituting of an existing meal with an alternative food can lead to the creation of new menu items, therefore, keeping the volume of customers high at all times as long as the expectations of customers are met with the outcome of higher revenues.
Declining market share Weak product development Disgruntled franchisees Quality and taste of products Slowed revenue and income growth
McDonald’s is one of the top 25 companies that has focused in hiring people with disabilities, giving them a chance to make a living like everyone else, leading to the creation of the McJobs Program. Looking to employ disabled people is what McDonald’s focuses on because, according to John Yeh, “employment of persons with disabilities is a win-win situation for employers, persons with disabilities, and service providers.” Considered the best employer for Asians McDonald’s worldwide willingly hires people constantly in order to supplement the growing need of employees for its growing franchise in over 101 countries.
The American fast-food market has become increasingly competitive as rivals such as Burger King, Wendy's and Taco Bell fight to maintain their market share. Strength of competition More health-conscious consumers Changing demographics Fluctuation of foreign exchange rates; Economies
on already existing operations before continuing expansion in order to increase their profit margin. Continue focusing on expanding in India and China because they are both developing countries with increasing economies and high populations. Add more menu choice and variety to promote healthier lifestyles.
Today, the company operates more than 30,000 restaurants in approximately 120 countries on five continents Since its founding in 1955, McDonald’s has sold well over 100 billion hamburgers McDonald’s prepares more than 6.8 million pounds of French fries every day Advertisting Age named McDonald’s marketer of the Ranked 5th for Social Responsibility by Fortune All franchisees are independent, full-time operators Approximately 70% of McDonald’s restaurant are owned and operated by franchisees businesses world-wide year for 2004 magazine
blamed for Obesity Blamed for excessive packaging waste Anti-Globalization protests Seen as American symbol of economical resource dominance Exploitative advertising Suffering and exploitation of livestock High calorie foods
“In 1994, McDonald's successfully forced Elizabeth McCaughey of the San Francisco Bay Area to change the trading name of her coffeeshop McCoffee, which had operated under that name for 17 years. In 1994, McDonald's sued a restaurant in Kingston, Jamaica, because of trademark infringement, although it had opened in 1971, before McDonald's entered the Jamaican market. In 1996, McDonald's lost a legal battle at the Danish Supreme Court to force Allan Pedersen, a mincemeat sandwich vendor, to drop his shop name McAllan. In 1996, McDonald’s forced Scottish sandwich shop owner Mary Blair of Fenny Stratford, Buckinghamshire to drop McMunchies as her trading name. In 2001, McDonald's lost a 9-year legal action against Frank Yuen of McChina Wok Away, Chinese takeway outlets in various part of the UK. In South Africa, however, McDonald's had to battle against the country's trademark laws, which stated that a registered trademark had to be used within a certain period of time. This resulted in a local company announcing plans to launch its own fast-food chain using the McDonald's name, although the South African High Court eventually ruled in McDonald's favor. “
2005 McDonald’s had some opposition when they decided to name one of their burgers in Africa the “McAfrika”
Believed to have a negative connotation Improper to the starving people of Africa
“"It's inappropriate and distasteful to launch a hamburger called “McAfrika' when large portions of southern Africa are on the verge of starvation"
extend the shelf life of carrots that come with a happy meal, McDonald’s was dipping their carrots in hydrogen peroxide and mixing it with acetic acids It is said by some that this is not necessarily unhealthy, but still, would you want to be eating hydrogen peroxide?
2001 McDonald’s was sued by three vegetarians, including two Hindus, claiming that McDonald’s used beef fat in the oil to make their fries despite McDonald’s claim that it was using 100% vegetable oil. In 2002, McDonald’s conceded by offering $10 million in compensation to the plaintiffs and offered an apology for misleading the public about the ingredients used for their fries and hash browns.
to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the US has at some time been employed by McDonald's. The book also states that McDonald’s is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, and potatoes.