McDonalds Glocalization Concept

History Two brothers, Dick and Mac McDonald founded McDonalds in 1937. The brother developed food processing and assembly line system at a drive-in restaurant, California.

In 1954, Ray Kroc, a milk-shake mixer salesman, saw an opportunity in this market and negotiated a franchise deal giving him exclusive rights to franchise McDonalds in the USA. The McDonalds brothers sold out for $2.7 million in 1961. McDonalds first international venture was in Canada, during 1967. The key to internationalization success of McDonalds has been the use of franchising. By franchising to local people, the delivery and interpretation of what might be seen as US brand culture are automatically translated by the local people in terms of both product and service. McDonalds is the leading global foodservice retailer with over 30.000 restaurants serving 52 million people in more than 100 countries. More than 70% of McDonalds restaurants worldwide are owned and operated by independent local men and women. In 1986, McDonalds opened its first restaurant in Taksim. Ali Vardar was the master of franchising of McDonalds. Between the years 1986-1990, McDonalds has implemented really aggressive growing strategy. After 1990s, McDonalds took over all shares from Vardar, so it became totally direct investment. In 1970s, while McDonalds globally growing in Turkey that was the time of economic liberalization, and of growing expenditures. McDonalds is supporting Turkish economy through the usage of local suppliers. McDonalds buy its %98 of ingredients from local suppliers. Moreover, they helped local suppliers to sell out overseas McDonalds restaurants. Beside this, if local suppliers cannot meet the standards of McDonalds, they made foreign investors come to Turkey and create work area for Turkish economy. Between the years 2001-2003, they experienced downsizing, they had to close up 60 unprofitable restaurants. But the profit per remaining restaurants has increased. So this strategy had some great effects. They changed their aggressive growing strategy to sensible degrees. Today McDonalds have 93 restaurants with over 2800 employees in our country. In 2005, Anadolu Group became licensor of McDonalds for 20 years. McDonalds thought that charging someone who knows country will be an appropriate and reasonable decision. For 2007, they are expecting 185 million YTL revenue and 60 million customers. Strategy The concept of think global, act local has become the business phrase of the 20th century. McDonalds has also adopted this strategy to continue its operations worldwide. Globalization involves developing marketing strategies as through the world is a single entity, marketing standardized products in the same way everywhere. Global companies should view the entire world as a single borderless market according to Levitt. McDonalds CEO Jim Skinner said in one of his interviews that We are American Icon but also a Turkish company, in other words he wants to underline their glocalization strategy. McDonalds target market is mother and children and young adult population. Marketing Mix Product One of the aims of McDonalds is to create a standardized set of items that taste the same whether in Singapore, Spain or South Africa. McDonalds has learnt that, although there are substantial cost savings through standardization, being able to adapt to an environment ensures success. Adaptation is required for many reasons including customer tastes/preferences and laws/customs. For example in India, Hindus do no eat beef, Muslims do not eat pork and Jains do not eat meat of any type. So they serve Vegetable McNuggets and mutton based Maharaja Mac.

Even there are many variations, recent structure of the McDonalds menu remains essentially uniform the world over: main course burger/sandwich, fries and a drinkoverwhelmingly Coca-Cola. They keystone of this winning combination is not hamburgers, it is the fries. Quality Assurance teams are responsible for monitoring the quality of McDonalds food products, both in restaurants and at suppliers at all stages of production. This involves continuous round of visits, inspections and audits, announced and unannounced, to all production facilities, distribution centers and restaurants. No delivery is accepted until a series of quality and safety checks is completed. All restaurant staff receives comprehensive training in food safety and hygiene and food preparation procedures. This is a global practice and is one of the distinguishing features of McDonalds as a fast-food restaurant. McDonalds as a big purchaser, they have unique opportunity to leverage their influence to help shape and impact social, environmental, animal welfare. In the first years in our country, the product variety was limited but Ayran has been a drink alternative from the beginning. Today there are many alternatives that specially produced for Turkish taste. For example; there are McTurco (with beef/chicken), MaxBurger, and MeatBurger. Nowadays changing eating habits of most people and the increasing obesity cases pushed fast food industry serve healthier products. Their aim is to grow their market size and answer the critiques. McDonalds added information about calories of its products on menus and on its website. Then they created new range of products called Light&Active which slogan is Yedigin Kadar Yak, Yaktn Kadar Ye. Place McDonalds realizes the potential for growth in international markets and plans to benefit from lessons they learned in the USA. For example they realize when looking back that they could build more restaurants at a time when competition was no so great. They have applied this to growing international business, especially in markets where competition is not so strong. Longer term, markets like China, Italy and Mexico are expected to represent a growing proportion of restaurant additions. They view McDonalds is a part of the local community, the surrounding environment, the economy, and ultimately the planet itself. They will be opening 18 new restaurants throughout the year. Diyarbakr, Alanya, Bodrum are some of the planned locations. They will invest 10 million dollars for these openings. In Turkey, Burger King has more than 120 restaurants but McDonalds have only 93, when we compare them we see that they have the same income. In other words, McDonalds works more efficient and effectively. Price Pricing strategy is one of localization rather than globalization. McDonalds has had to come up with different pricing strategies for different countries. Overall pricing objective is to increase market share. In each country, they look at the demand for their product as a barometer for setting price. Depending upon the perception of price by the customer then will the price of the McDonalds product be determined. In US market it is in the decline stage of the PLC and so has to cut prices to re-establish lot revenue. On the other hand, the Japanese market is in its growth to maturity phase and so can price the Big Mac higher with greater success in term of profitability.

In USA the price of the meat is much cheaper ($1-$2) than Turkey ($7-$8). When we look at the Big Mac Index, we see that Turkey menu prices are higher. Beside this, the purchasing power of Turkish people is lower. So McDonalds do some sales promotions to reach C1 and C2 groups. But in general, they serve fro A-B group. Promotion Using marketing tools, Mc Donalds looks to localize its marketing communications strategy as it needs to consider the enormous range of cultural and other differences that it would be faced with in each country. It also needs to analyze consumers attitudes towards its product, usage patterns and ethnic, moral and religious considerations in that environment. Although the idea is to promote McDonalds as a global image, McDonalds focuses on the needs of the communities they are entering. Advertising McDonalds has a wide range of advertising campaigns in various countries. For example in the UK they use English footballer Alan Shearer as a figurehead to promote their hamburgers, whereas in France they use Fabien Barthez, the French goalkeeper. The point is that the image they are trying to convey the same; McDonalds just use different personalities in different cultures to get their message across. McDonalds advertising strategy concentrated on standardizing their brand name but localizing their advertising campaign. In 1994, McDonalds changed their advertising slogan to There is nothing quite like a McDonalds. They adopted more personal approach to their customers. Lastly, in 2003 they started Im loving it campaign worldwide which focuses much more young people. For this campaign they used famous pop star Justin Timberlake. In Turkey, they have also used local figures on most of its advertisements. Lastly, Zuhal Topal has played. They decide not to organize a big celebration pat for the 20th year in Turkey instead with this money they are going to apply an open doors program which will help to change the prejudices and perceptions about McDonalds. Besides TV advertising, they give information at their websites. Public Relations McDonalds localization strategy figure in Beijing is that, in contrast to the US practice of substituting technology for human workers, the Beijing McDonalds relies heavily on personal interactions with customers. Then, we also see global strategy applications. In 1997, McDonalds announced a global alliance with Walt Disney which allowed them to share exclusive marketing rights for everything from films to food, for next ten years. Sports sponsorship Globally, McDonalds enhances its brand name with such associations as the Olympic Games and the World Cup, the two biggest sporting events in the global calendar. Nationally, McDonalds targets specific events with which it would like to be associated. In the US, McDonalds has strong links with the NBA and NASCAR. Community Relations McDonalds concentrates on helping seek solutions for the problems facing children and families today. People 4

The firm has more than a million employees. Before entering a country for the first time the HR department has a list of questions that must be answered. These include: What are the labor laws? Would McDonalds be able to establish part-time and flexible work schedules? Are there a maximum number of hours an employee can work? McDonalds adapts to each individual situation, there one could describe the process as glocal. The company is strongly committed to staffing locally and promoting from within. The emphasis when recruiting is that the applicants are customer-focused; the right attitude is seen as more important than technical ability. There is a hamburger university in Illinois, USA. It provides training in 22 languages, although the course teaches a standard practice to be used in restaurants worldwide, and teaching is adapted to suit the needs of overseas students. Turkey has first met with part-time working with McDonalds. Process The procedure for making food is identical everywhere, each restaurant has the same kitchen layout. This epitomizes globalization; McDonalds standards have to be met the world over. Suppliers have to be meeting all the specifications and demand that McDonalds sets them; if they cannot do this, McDonalds vertically integrates. Under the franchise agreement, the company agrees to provide the McDonald's trademarks, restaurant decor, signage and equipment layout. In addition, the franchisee can use the recipes for the firm's products, their stock control, accounts systems, method of operation, and marketing. Physicals Focusing on consistent delivery of quality, service and cleanliness through excellence in their restaurants, is McDonalds message in every franchise throughout the world. The customer knows that, whatever McDonalds they enter, the message of a family environment will still be conveyed. McDonalds tries to maintain global standards in cleanliness and service. McDonalds has been always the leader in its sector, the hygiene and food safety standards were higher compared to any other Turkish restaurants. This leads to improvement of standards in Turkey. For example, Turkish people have seen the packaged pipettes and disposable eating tools for the first time in McDonalds restaurants. Hygiene and food safety standards are really important issues for them because when you think that McDonalds is serving 50 million people in one day, the dissatisfaction of only %1 of the consumers is a quite big amount. SWOT Analysis Strengths o Strong image, popular world known brand name o Franchising system o Variety of menus o Local partner o Local suppliers o Local employees o Hygiene standards (trip to kitchen) o Fast service o Same taste everywhere o Secure working environment 5

o One of the worlds biggest employer Weaknesses o Increasing costs such as rent because of brand name o High meat prices in Turkey o Using libel laws as a from of censorship (Greenpeace leaflet) Opportunities o More working women, less time for cooking, changing lifestyles o Increasing rate of young population o Improved economical conditions, decreasing inflation rate Threats o Direct and indirect competitors (Burger King says that McDonalds is not competitor, it is cooperator for them) o Increasing awareness on healthy foods o Increasing of obesities o Unstable political environment o Nationalism trend o Increasing antipathy towards American brands Major Obstacles and Problems Current Issue Is fast-food definitely causes obesity? Is McDonalds definitely causing obesity? If we talk about a healthy life style, we should have variety and balance in our nutrition. After all discussions about the obesity and such, McDonalds other target market become the dieticians. They are organizing panels, doing sponsorship agreements with the health based congress and they build up their own stands. Because mothers are confused about how to feed their children and freaked out after all fast-food threats, one to one communication helps to improve this relation. They are organizing a panel on 2nd of June. Their suppliers Coca Cola, Danone and some dieticians will be there to explain McDonalds ingredients and also balanced nutrition. They agreed with Nilgn Belgn. And also there will be some fitness trainers to show people how to work out. They do some trips to preschools and show how to work out to children. They are paying attention to not do these organizations as marketing.

Some Mistakes and Problems Worldwide McLibel Trial 6

The infamous 'McLibel' trial during the late 1990s is believed to have caused serious damage to McDonald's public image in the UK and abroad. The bad press was caused when two unemployed Greenpeace campaigners were sued for libel (written statements which are damaging to reputations) by McDonald's for distributing leaflets entitled 'What's Wrong With McDonald's?' The leaflet made claims that the firm adopted environmentally harmful processes and did not care about customers' nutrition, among other things Apologize to Hindus In June 2002 the company agreed to pay a $10m settlement to Hindus living in the United States. The group started legal action against the fast-food restaurateurs after the company failed to make clear that it had used beef flavoring in its French fries. Sources were quoted as saying that the company "sincerely apologizes to Hindus, vegetarians and others" for incorrectly describing fries and hash browns sold in the US as vegetarian. McAfrika McDonald's has been accused of extreme insensitivity after releasing a new sandwich called the "McAfrika" in Norway, one of the world's richest countries, at a time when 12 million people are facing starvation in southern Africa. lyak Illness McDonalds is sued for misleading about ingredients by three people who have lyak illnesses. These people are allergic to products contain milk and wheat. Furthermore, McDonalds had announced before that their foods do not contain ingredients can harm allergic people. Today they admitted French fires contain milk and wheat. Super Size Me Morgan Spurlock, play writer, got the idea for the documentary when he was lying on his couch at his family's house shortly after Thanksgiving dinner, watching TV when he saw the news about two teenage girls suing McDonald's for making them obese. Then he does just that and embarks on the most perilous journey of his life. For 30 days he can't eat or drink anything that isn't on McDonald's menu; he must wolf three squares a day; he must consume everything on the menu at least once and supersize his meal if asked. Spurlock treks across the country interviewing a host of experts on fast food and an equal number of regular folk while chowing down at the Golden Arches. Spurlock's grueling drive-through diet spirals him into a physical and emotional metamorphosis that will make you think twice about picking up another Big Mac. The documentary premiered at Sundance in January, 2004. Less than two months later, McDonalds announced that it will no longer sell any of their menu items in "Super Size", although they officially deny that this move was in reaction to the film. In Turkey Two former employees of the fast-food chain, McDonalds, locked a 10-year-old girl in a freezer compartment. The girl, Leyla Alkis, had been trying to sell small packets of paper tissues to

customers in the McDonalds restaurant. Witnesses who were in the McDonalds restaurant when the incident took place have testified that two members of staff locked the little girl in a coldstorage compartment. She was released only after customers intervened. A writ issued by state prosecutors said that even half an hour in a deep freeze could have caused Leyla Alkis's death. McDonalds had dismissed the two members of staff, including the manager of the restaurant. The company described the incident as "totally unacceptable". A spokesman refused to comment on a possible claim for damages from the Alkis family, who could themselves be facing legal action for sending their 10-year-old daughter out to work. Literature Review The Fundamentals of Standardizing Global Marketing Strategy This article examines issues of standardization and adaptation in global marketing strategy and explains the dynamics of standardization. A three-factor model of standardization/adaptation of global marketing strategy has developed. The three factors include; homogeneity of customer response to marketing mix, transferability of competitive advantage and similarities in the degree of economic freedom. The sources of a firms competitive advantage can be identified in different ways, such as the concept of the value chain, lower prices, superior product quality, and superior skills. Transferability of these advantages is the most important globalization driver. When homogeneity across current and new markets or viable subsets of new markets in the variables that constitute the basis for market segmentation is high, homogeneity in the customer response to the marketing mix will also be high, facilitating standardization strategies. When homogeneity across current and new markets in the variables that constitute the basis for market segmentation is low, homogeneity in the customer response to the marketing mix will also be low and standardization strategies will not be facilitated. Economic freedom impacts the environment by changing the motivation and learning of individuals, an issue that is of critical importance in ensuring economic efficiency. Consequently, if other conditions permit namely that we have homogeneity in consumer response to the marketing mix, and transferability of competitive advantage, a high similarity in economic freedom will encourage the marketer to follow policies of standardization while a low level of similarity in economic freedom across markets will discourage or inhibit the marketer from following policies of standardization.

References Principles of Marketing, Philip Kotler Gary Armstrong Gaining and Sustaining Competitive Advantage, Jay Barney Global Marketing, Warren Keegan Mark Green Brand globally, market locally Jennifer Barron Jim Hollingshead Online Branding: the case of McDonalds, Jennifer Rowley The fundamentals of standardizing global marketing strategy, Nanda Viswanathan Peter Dickson McDonalds: think global, act local the marketing mix, Claudio Vignali Think globally, act locally! Competences for global management, Andrew Sheridan May McDonalds Corporation Turkey Office, Corporate Communication Aya Akkaya Hurriyet Archive Sabah Archive www.mcdonalds.com http://www.bized.co.uk

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