Globalization of Mcdonald”S on China

McDonald’s is one the largest fastest growing fast-food restaurant in the world. McDonald’s have become a household name across the world. The fast food giant has come a long way from being just a burger stand in San Bernardino, California in 1940. The original owners were two brothers, Richard and Maurice McDonald.

The hot dog stand evolved into a restaurant offering 25 items on the menu. In 1947, Richard and Maurice (going forward the “McDonald Brothers”) decided to shutdown the restaurant to renovate to improve the business.The McDonald Brothers wanted to meet the demands of their customers, young and on the move. The idea was to create a Speedee Service Systems, known today as Fast-Food. These brothers had no Idea the level of success that was to come, but they knew what they had was great.

In 1953, based off the practices of White Castle, the McDonald Brothers decided to franchise their successful restaurant. Always looking for ways to improve, in 1954, the McDonald Brothers came in contact with Ray Kroc, a Multimixer milkshake machine salesman.They wanted a milkshake machine that could make more than one shake at time. Ray Kroc noticed the success of this restaurant and wanted to seize the opportunity to become a part of this great franchised organization. Ray Kroc took McDonald’s to Des Plaines, IL and began opening new restaurants all over Illinois. Today, McDonald’s touches lives every day all around the world.

Now in 2011, McDonald’s has over 32,000 restaurants worldwide and are in over 119 countries. McDonalds has saturated the U. S. with restaurants and maximized their growth opportunities.

It is important for McDonalds as a company to pursue globalization investments. China is one country that has been great for McDonalds but challenging as well. China is the largest populated state in the world with over 1. 3 billion people.

China is the fastest growing major economy and also the second largest importer in the world. China is one country that is critical for McDonald’s to nestle in and grab a stable market share of the fast-food industry there. In China, McDonald’s have encountered a few challenges that have hindered their progress.Globalization in China has proven to be one of the most difficult challenges. In China McDonald’s is a symbol of westernized way of living.

The Chinese people are very traditional and loyal to its heritage. Many in China see McDonald’s as an invasion of their culture. McDonalds in China must make an effort to blend in with the culture and not seem like the great westernization invasion. Through a more diversified menu, McDonalds can begin creating that seemless culture transition. McDonalds must become more creative with their menu in China.

Diversifying their menu is another challenge McDonalds must overcome in China. Not only is the customer perception and liking a great challenge for McDonalds but the way of doing business in China has presented yet another challenge. McDonalds has designed a very detailed processes and unique procedures to maintain quality control and food safety. Unlike in the U.

S. , where the government has an entire department to make sure manufactures and restaurants are all following the same guidelines, China has no such department.McDonalds as a company must take additional steps to ensure their product is as safe to eat as possible. Summary of findings/results –In China, the name McDonalds mean more to them then it could ever mean to an American. McDonalds in China is not just a restaurants but a life style. The idea of McDonalds designing a menu that is to the Chinese people liking may prove to be challenging.

However, McDonalds efforts will give the illusion of blending in with the culture, which is key to their success in China.Through the gathering of data through the internet, print text, and organizational behavior course text, I would advise McDonald’s CEO of a couple of key factors. As a whole McDonalds has made great strides to gain a comfortable share to the fast food industry in China. McDonalds must be more aggressive with opening more stores in China. McDonald’s CEO need to find more effective ways of dealing with China’s local vendors and people of political influences. In order for any business to be successful in globalizing they must be willing to conform to the culture.

* Importance of the Research: McDonalds touches the lives of millions of people across the globe. Thru its charitable donations and its empowerment of people. McDonalds has become a global icon for western civilization. Globalization is a broad term used for the developing of global society in which economic, political, environmental, and cultural events in one part of the world becomes meaningful for people in other parts of the world. McDonald’s Golden Arches has become that peaceful globalization symbol.

“McDonaldization” is a term used by sociologist George Ritzer in his book The McDonaldization of Society: Revised New Century Edition. (Ritzer, 2004)* Organization: The first McDonald’s restaurant opened in 1940 on 1398 North E. Street in San Bernardino, California. The original owners were two brothers, Richard and Maurice McDonald.

In 1947, Richard and Maurice (going forward the “McDonald Brothers”) decided to invest in this restaurant and purchased the best possible appliances to create McDonald’s Speedee Service Systems.These brothers envisioned this restaurant as being the greatest. In 1953, based off the practices of White Castle, the McDonald Brothers decided to franchise their successful restaurant. In 1954, the McDonald Brothers came in contact with Ray Kroc, a Multimixer milkshake machine salesman.

Ray Kroc seized the opportunity to become a part of this great franchised organization. Ray Kroc took McDonald’s to Des Plaines, IL and began opening new restaurants all over Illinois. The Golden Arches began to spread rapidly across the United State.Now in 2011, McDonald’s has over 32,000 restaurants worldwide and are in over 119 countries.

These countries include: Canada, France, Puerto Rico, Germany, Russia…the list goes on and on. In each country McDonald’s has kept there main menu of hamburgers however the menu is slightly different in each country. In India McDonald’s do not sell any beef products in those restaurants. McDonald’s is learning to conform with the every changing culture.Currently McDonald has their headquarters in Oakbrook, Illinois.

McDonalds employees over 400,000 people. According to Forbes.com, McDonald's contributed their second quarter high earning to its strong global growth. In 2011, Net profit was $1.4 billion, or $1.

35 per share, up from $1.2 billion or $1.13 per share in the year-ago quarter. Sales increased 16% to $6.9 billion during the quarter, as global comparable sales increased 5.6%.

Analysts were expecting profit of $1.28 per share on revenue of $6.6 billion.Per Forbes.

com, operating income grew 34% in the Asia/Pacific, Middle East and Africa segment, led by strong sales in China. (Struck, 2011) "I am pleased with our second quarter performance and confident that the united efforts of our owner-operators, suppliers and employees will drive profitable growth for our shareholders over the long term, despite the continuing challenges of our economic environment," said McDonalds CEO Jim Skinner. (Struck, 2011)* Globalization Challenges on Country/Region: Though McDonald’s have met there share of globalization challenges they have survived in many countries across the world. China is one country that has been great for McDonalds but challenging as well. China is the largest populated state in the world with over 1.

3 billion people. China is the fastest growing major economy and also the second largest importer in the world. China is one country that is critical for McDonald’s to nestle in and grab a stable market share of the fast-food industry there. However, McDonald must deal with three major challenges before they could be a success in China.

McDonald’s faces globalization challenges. The people in China do not want McDonald’s westernize culture to have too much of an influence in their country. The people in china are very traditional in values.Maintaining Quality Control and Food Safety in China for McDonald’s has presented many different obstacles.

In the United State the food industry is regulated and held to high standards. In China McDonald’s have to take extra precaution to make sure their food is save to eat.McDonald’s is also faced with the challenge of compiling a more diversified food menu. In China, mom and pop are competitors; because these mom and pop shops offer the traditional foods the Chinese people are use to.

McDonalds must find a way to keep the integrity of their brand while making their menu more appealing to China’s customers.Research Methods:* The research for this project was initiated by visiting the Chicago State University’s reference library. We learned there were several methods for seeking out information on the Globalization of McDonalds in China. Our group chose to utilize both primary and secondary research methods. Various data gathering strategies were used in order to obtain a substantial amount of qualitative information.

The primary method used for this project was through the use of the internet, and printed text, including the course textbook. The course textbook was beneficial in assisting us with integrating the information we found with that of organizational behavior concepts. We found videos online which covered our topic, helping us understand the strengths, weakness, and challenges associated with the Globalization of McDonalds in China. The secondary methods consisted of the utilization of the Business Database found on the Chicago State University library website.

* In an effort to maximize input, our group chose to first gather information individually then discussed our findings with the group during meetings. This allowed group members to benefit from each other’s knowledge and gave us each a sense of accountability and ownership.Review of Literature:* Sociologist George Ritzer wrote a book named “The McDonalization of Society” in 1993, provided by Wikipedia. Mr.

Ritzer discusses McDonald’s Golden Arches as a peaceful symbol of globalization. He references how globalization has impacted our economics, our politics, and environment and how it’s perceived culturally from people across the globe. He also communicated the globalization challenges that McDonald faced while attempting to succeed in China’s largely populated economy. China has over 1.3 billion people with a rapidly growing fast food industry, making it an ideal state to attain a stable share in its marketplace.* As reference in the Encyclopedia Britannica about the history of McDonalds and how the McDonald brothers decided to franchise their successful hamburger restaurant business.

The brothers witnessed the success of White Castle and envisioned their restaurant to become the best. According to the Encyclopedia there is over 32,000 McDonald franchise restaurants worldwide to date.* During an interview, Wally Griffith of CNBC TV on msnbc.com convey the challenges with food diversity and maintaining the quality and safety of the food in China, while attempting to maintain the integrity of the McDonald brand and upholding the customer satisfaction of China’s consumer. Mr. Griffith notes in his interview that McDonald is utilizing safe food handling concerns as strength in China.

In the interview, the importance of conforming to the culture and traditions of the people of China was stated as a challenge.* W. Wen writes in his 2005 article on China Copes with Globalization, about the history of China and of its government. China is a single-party state that is governed by the Communist Party.

In 1976 communist leader Deng Xia seized power and led the country to economic reform allowing for less government input and control, which increased incentives and agricultural production. As a result of the market based reforms, China has emerged as the worlds’ fastest growing economy. Wen correspondingly writes about the challenges in cultural diversity and the factors needed to make it in China’s marketplace, such as their embedded respect for hierarchy.* In 2002, Understanding Business, the article “Working within the Legal Environment” of Business examined strength in leadership and how it relates to McDonald’s failure or success in China. The article outlines McDonald initial failures resulting from them not implementing a localized strategy.

McDonald conducted a comprehensive evaluation on their operations and business model to implement the support and services that they would need to be more competitive in China’s marketplace.* The on-line article, “ McDonald’s to Recruit 10,000 employees in China 2009” from the ChinaRetailNews.com, talks about workforce diversity and the role that gender plays in McDonalds management team. The article examines the total workforce and provides the demographics by percentages.

McDonalds promote from within and 73% are made up of women and people of color. The article also tackles the subject of Leadership and how training for its management teams is an important standpoint of their company’s continuous development.* On October 28, 2009, R. James wrote an article for TimeWorld, “McDonald Abroad” where R.

James describes how McDonald recognized the importance of good customer relations and made the necessary and appropriate accommodations to satisfy their customers. Over 26 drive-thru restaurant facilities were made available to assist the upsurge of car ownership in the early 90s. A Ronald McDonald House of Charity that saves families of sick children millions of dollars annually in hotel cost.* J.

Watson, provided the information used to research globalization challenges, China’s Big Mac Attack. Watson references the many cultural differences of westerners, such as our entertainment industry and our quest for immediate gratification. China’s culture is more of a conservative culture with many contrasting values from that of the west. China is a culture that emphasizes thrift, tradition and collectivism, attributes not synonymous with western culture.

He also reveals China’s apprehension that global influence could destabilize their government and their cultural beliefs.* McDonalds has over 500 regional suppliers who provide various food products, which is why food safety and handling is of great consequence and a global challenge. According to Y. Dengfeng, the author of Are McNoodles and McDonald’s Kinship Connected? the maintaining of quality control and food safety is imperative. Dengfeng maintains that if a customer becomes sick resulting from eating food from McDonalds it could ruin their reputation, causing damage beyond litigation.

Regardless of the relaxed safe food policies in China, McDonald recognizes the importance of an international repute, and adheres to the strictest of safety standards.* The research provided by C. Quintanilla, Big Mac inside the McDonald’s Empire, food diversity on McDonald’s menu was a challenge brought on by cultural differences. China’s cultural diet consists of rice, noodles, and fish, while McDonald’s menu has to have burgers and fries. Therefore, McDonald has to be competitive, satisfy its customers, and remain loyal to its brand.

* The article “Olympic Sponsors Cheer the Home Team” from BusinessWeek, talks about McDonald’s efforts to stay in accordance with governmental policy in respect to China’s culture. Tschang discusses some possible solutions to global challenges involving McDonald. He underlines the need to show corporate respect and outline an endeavor of McDonalds to show support for China through their sponsorship in the 2008 Beijing Olympics. Tschang also speaks about McDonald being proactive regarding food handling and safety in its China’s restaurants. Arguable he believes that McDonald should comply with their own standards concerning quality control and food safety, in order to protect their name and the health of their patrons. Decisively, he states that McDonald’s has overall offered their patrons foods that appeal to both their western and traditional palates.

Strengths and Discussion:* Workforce Diversity:Gender plays a key role in McDonalds Management teams in China. The majority of their Supervisors and Crew leaders are females. This is according to ChinaRetailNews.com editor’s report in 2009. Women and people of color make up 73% of McDonalds total workforce, 43% of all franchise staff, 55% of suppliers and 90% of all facilitators (decision makers) at McDonalds have been promoted from within.

A majority of senior management within the McDonalds franchise has been with the company for over a decade. Why has McDonalds in China taken on hiring more females?Well it maybe that females are the sole provider in their household or wives of military men which gives them strength in financial budgeting as well as decision making in the household. Single parenting in some cases is what drives females to be more successful in the workforce today and working for McDonalds gives them that opportunity. McDonalds has proven that they can keep dedicated employees in their franchise throughout their careers.