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Were hoping from this presentation you will: Learn a bit about the history of McDonalds. Understand just how much international

expansion McDonalds is partaking in. Criticism/Opposition to McDonalds SWOT Analysis Few small legal cases involving McDonalds McDonalds in India and China

Infrastructure Politics

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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 McDonalds globally

In 2004, Morgan Spurlock came out with a documentarytitled Super Size Me that looked at the fast food

corporation as a contributor to obesity In about 30 markets outside the U.S., McDonalds

restaurants are operated by developmental licenseeswho own the business and pay McDonalds royaltiesbased on a percentage of sales.

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Began by two brothers: Dick McDonald

Mac McDonald

Started off as a hot dog stand in CA [1937] 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

McDonaldsHamburgerCost $.15

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Brothers realize Burgers were most profitableClose down restaurant and reopen as a Speedy

Service System

Offer only burgers, shakes, and fries McDonalds is franchised to several locations[1953]

First McDonalds to feature the Golden Arches

Ray Kroc discovers McDonalds [1954]

Creates McDonalds Systems Inc to startfranchising [1955] Renamed to McDonalds Corporation [1960]

A McDonalds inDowney, CA is theoldest operating

McDonalds today[opened in 1953]

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In 1967 the first McDonalds outside of the US opens up Richmond, British Columbia

Big Mac and Apple Pie introduced [1968] 1971 McDonalds really starts going global

Asian: Tokyo Ginza District, Japan European: Netherland, Munich, Germany

1974 McDonalds Starts the Ronald McDonald House Charities asa non-profit organization to improve the health and well being ofchildren. In 1985 the first RMHC opened internationally in theNetherlands.

McDonalds inGermany

offered Beer asa part of their

menu

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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 phoneticallyapproximate 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 McDonalds Corporation (USA) and twoIndian businessmen.

Two separate operations in Northern & Western India. Partners and their management teams trained extensively in Indonesia & the U.S.

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India: Sandwich sauces, shakes and soft-serve productsdo not contain eggs in order to offer more variety tovegetarian customers.

Uruguay: McHuevo (hamburger with a poached egg ontop)

Norway: McLaks (grilled salmon sandwichwith dill sauce)

Germany: Beer Thailand: Samurai Pork Burger (sausage patty in teriyaki

sauce) Taiwan: Rice Burger

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Dutch Prefabricated modular restaurants

(temporary & easily moved)

Widely used for big outdoor events Sweden

Enhanced meat freezer now used throughout entire firm

Singapore Small, limited menu satellite restaurants (low overhead)

Now in hospitals and sports arenas in the U.S.

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Expansion rate slowed in the last few years due to declining operatingmargins and focus on improving existing restaurants and menuofferings.

International expansion was led by late CEO, Jim Cantalupo, whopassed away of a heart attack in April 2004, age 60.

By the late 1990s, McDonalds aggressive expansion resulted incannibalization of its own sales because stores were built too close toeach other.

In 2003,the focus changed from adding new restaurants tobuilding 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 wereclosed in the U.S., Japan, Latin America and Jamaica.

SARS concerns had a negative impact on sales in 2003 in many Asiancountries.

Jim Cantalupo

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McDonald's has most certainly had a profound effect onChina.

When the first McDonald's opened in Beijing more than adozen years ago, 40,000 people lined up to observe a Big

Mac and get their picture taken with the infamous RonaldMcDonald. McDonald's is growing faster in China than in the United

States. McDonalds 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 withinthe coming years.

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While offering the basic burger and fries,McDonalds in China also offers:

Szechuan-style spicy chicken wings Seafood Soup

Rice

Oriental Sauces Taro and Red Bean Dessert

Red Bean Dessert

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In 1992, McDonalds opened its first restaurant in Beijingand the restaurant enjoyed good sales.

2 years into the 20-year lease, the city government toldMcDonalds to move the restaurant.

The location would be used for another complex plannedby a developer from Hong Kong.

McDonalds tried to enforce its contract by taking thegovernment 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.

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Guanxi literally means relationships

Concept is deeply rooted in Chinese culture (based on2000-year-old Confucian ideology).

Guanxi is crucial for building long-term relationships anddoing business in China.

McDonalds did not have the same connections as theChinese developer.

By not accepting the governmentsdecision gracefully and taking it tocourt, McDonalds damaged itsreputation with the city government

Chinese Symbol for Guanxi

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In December 2005,China got its first

drive thru in the heartof the central

business district ofDongguan

GuangdongProvince, thirty

years after the firstMcDonalds US drive

thru was established

In 1997 China passes first franchise law.Prior to this, all McDonalds restaurants werecorporately owned and operated.

Demand for western style conveniences isincreasing as Chinas middle class grows. Drive-through fast food windows

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While there are some 150-200million middle-class people inIndia that can afford McDonaldsthere is also a vast majority of theIndian population that is still toopoor to afford it

Limited menu, fresh food, fast serviceand affordable prices have been thepillars behind McDonalds success inIndia. Intense competition and demandsfor a wider menu, drive-through and sit-

down meals - encouraged the fast foodgiant to customize product varietywithout hindering the efficacy of itssupply chain

McDonalds in India offershome delivery. Also if you

go to a McDonaldsrestaurant and order food,you take a seat and theybring it to your table.

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For thousands of years, India's Hindu culture hasrevered the cow and does not eat the meat of thescared 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 andchicken. All foods are segregated vegetarian and non-vegetarian, due to the fact that many Hindus arevegetarians.

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Vegetarian Menu Veg McCurry

McAloo Tikki

McVeggie Pizza McPuff

Crispy Chinese

Paneer Salsa Wrap

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Non-Vegetarian Menu Chicken Maharaja Mac

McChicken Filet-O-Fish

Chicken Mexican Wrap

Chicken McGrill Chicken McCurry Pan

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Quoted from:http://www.thunderbird.edu/pdf/about_us/case_s

eries/a07050015.pdf

McDonalds strategy of positioning itself as a family restaurant withan emphasis on local menus and local values seems to beworking well in India. But to what extent McDonalds can

continue its growth in India remains uncertain. McDonalds is

more than just another American fast food chain. It carries asymbolic load of AmericannessAmerican variant of capitalismand its overwhelming domination over the global economy. It isalso a symbol of American cultural imperialism. For this reason,McDonalds operations in India, like other parts of the world, will

continue to face opposition from religious fundamentalists,

environmentalists, protectionists, animal rights activists, and anti-globalization protestors.

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New menu items specifically for vegetariansare introduced.

It is made aware that the food is producedlocally to show investment in IndianInfrastructure.

McDonalds developed and maintainscommunity parks to prevent publicresentment.

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Unique supply chain created: Operates best when chain is balanced

Necessary to maintain food freshness

McDonaldstransferred its

food processingcenters to India toincreaseefficiency

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In Mumbai, there is an event calledMcDonalds Spotlight. This is an annualinterschool performing arts competition. This

competition is open to all secondary schoolstudents.

Since 2002, McDonalds has participated in

World Childrens Day. On this day,McDonalds raises money for any charity oftheir choice. [Usually educational programs]

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Sociologist George Ritzer, author of The McDonaldization ofSociety, states that McDonaldization is a transformation ofrationalization, moving away from traditional to rational modesof 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

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These concepts have led to the stability and expansion ofMcDonalds in the overseas market, especially in East Asia,where more and more McDonalds franchises are openingconstantly, leading to the belief that maybe one day everyrestaurant will be taken over by McDonalds itself.

McDonalds franchises in various countries also offer avariety of meals to better help customers in choosing foodthat is best accustomed to peoples beliefs. For example, various faiths dont permit people eating pork or beef.

The substituting of an existing meal with an alternative food can leadto the creation of new menu items, therefore, keeping the volume ofcustomers high at all times as long as the expectations of customersare met with the outcome of higher revenues.

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McJobs Program:

McDonalds is one of the top 25 companies that has focusedin hiring people with disabilities, giving them a chance tomake a living like everyone else, leading to the creation ofthe McJobs Program.

Looking to employ disabled people is what McDonaldsfocuses on because, according to John Yeh, employment ofpersons with disabilities is a win-win situation for employers,persons with disabilities, and service providers.

Considered the best employer for Asians McDonalds worldwide willingly hires people constantly in order

to supplement the growing need of employees for its growingfranchise in over 101 countries.

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The American fast-food market has becomeincreasingly competitive as rivals such as BurgerKing, 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

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Focus on already existing operations before continuingexpansion in order to increase their profit margin.

Continue focusing on expanding in India and China

because they are both developing countries withincreasing economies and high populations.

Add more menu choice and variety to promote healthierlifestyles.

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Today, the company operates more than 30,000 restaurants in approximately 120 countries on

five continents

Since its founding in 1955, McDonalds has sold well over 100 billion hamburgers

McDonalds prepares more than 6.8 million pounds of French fries every day

Advertisting Age named McDonalds marketer of the year for 2004

Ranked 5th for Social Responsibility by Fortune magazine

All franchisees are independent, full-time operators

Approximately 70% of McDonalds restaurant businesses world-wide

are owned and operated by franchisees

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Often blamed for Obesity

Blamed for excessive packaging waste

Anti-Globalization protestsSeen as American symbol of economical

resource dominance

Exploitative advertisingSuffering and exploitation of livestock

High calorie foods

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wikipedia.com

In 1994, McDonald's successfully forced Elizabeth McCaughey of the SanFrancisco 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 oftrademark 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, McDonalds 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 ofMcChina

Wok Away, Chinese takeway outlets in various part of the UK.

In South Africa, however, McDonald's had to battle against the country'strademark laws, which stated that a registered trademark had to be used withina certain period of time. This resulted in a local company announcing plans tolaunch its own fast-food chain using the McDonald's name, although the SouthAfrican High Court eventually ruled in McDonald's favor.

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In 2005 McDonalds had some oppositionwhen they decided to name one of theirburgers in Africa the McAfrika Believed to have a negative connotation

Improper to the starving people of Africa

"It's inappropriate and

distasteful to launch ahamburger calledMcAfrika' when largeportions of southern

Africa are on the verge ofstarvation"

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To extend the shelf life of carrots that comewith a happy meal, McDonalds was dippingtheir 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 hydrogenperoxide?

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In 2001 McDonalds was sued by threevegetarians, including two Hindus, claimingthat McDonalds used beef fat in the oil to

make their fries despite McDonalds claimthat it was using 100% vegetable oil. In 2002, McDonalds conceded by offering

$10 million in compensation to the plaintiffs

and offered an apology for misleading thepublic about the ingredients used for theirfries and hash browns.

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According 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 bookalso states that McDonalds is thelargest private operator of playgrounds in theU.S., as well as the single largest

purchaser of beef, pork, andpotatoes.