Case Study FOm

INTERNATIONAL CASE:
9
McD0NALD~S: SERVING FAST FOOD AROUND THE WOR LD
Ray Kroc opened the first McDonald's restau- know what a hamburger is. In Europe, M~Don-
rant in 1955. H~ offen~d a limited menu of hjg~- ald's maintains a very small peYcentage of
quality, moderately pnced food served fast 1n · restaurant sales but commands a large market
spotless surroundings. Mcl;)onald's "OSC&V" share of the fast-food market.
(quality, service, cleanliness, and value) was a The taste for fast food, American_sty~e, is
hit. The chain expanded into every state in the growi(lg more rapidly abroaa-than at home.
nation. By 1983 it had over 6000 restaurants in McDohald's international sales _have been
the United States. increasing by a large percentage every year.
In 1967 McDonald's opened its first restau- Every day more than 18 million people in over
rant outside the United States, in Canada. By 40 countries eat at McDonald's.
1985 international sales represented about one Its traditional menu has been surprisingly
fifth of McDonald's total revenues. Yet fast food successful. People with diverse dining habits
has barely touched many cultures. While 90 have adopted burgers and fries wholeheartedly.
percent of the Japanese in Tokyo have eaten a Before McDonald's introduced the Japan ese to
McDonald's hamburger, few outside the eities · french fries, potatoes were used in Japan only
vehicles. The strategy has help_ed McDonald's
to make starch. The Germans thought ham- develop a strong market share in the fast-food
burgers were people from the city of Hamburg. market, even though its .U.S. competitors and
The fast, family-oriented service, the clean- new local competitors quickly enter the market
liness, and the value accounted for much of The advertising campaigns are based O·
McDonald's success. McDonald's was one of local themes and reflect the different environ~
the first restaurants in Europe to welcome ments. In Japan, where b~rgers are a snack,
families with children. Not only are children wel- McDonald's competes against confectionerie
comed, but in many restaurants they are enter- .,, t s
and the new ''fast sus hI res aurants. Many
tained with crayons and paper, a playland, or of the charitable causes McDonald's supports
maybe even Ronald McDonald, who can speak abroad have been recommended by the local
twenty languages.
McDonald's golden arches promise the restaurants.
McDonald's has been willing to relinquish
same basic menu and QSC&V in every restau-
the most control to its Far Eastern operations
rant. Its products, handling and cooking proce-
where many restaurants are joint ventures with
dures, and kitchen layouts are standardized
local entrepreneurs who own 50 percent or
and strictly controlled. McDonald's revoked the
first French franchises because they failed to more of the restaurant.
meet its standards for fast service and cleanli- European and South American restaurants
ness, even though they were highly profitable. are generally company operated or franchised
This may have delayed its expansion in France. (although there are many affiliates -joint ven-
The restaurants are run by local manage- tures - in France). Like the U.S. franchises
ment and crew. Owners and managers must restaurants abroad are allowed to experiment'
attend the Hamburger University near Chicago with their menus. In Japan, hamburgers are
to learn how to operate a McDonald's restau- smaller because they are considered a snack.
rant and maintain QSC&V. The main campus The "Quarter Pounder" didn't make much sense
library and modern. electronic classrooms to people on a metric system, so it is called a
(which include simultaneous translation sys- "Double Burger.'1 Some of the German restau•
tems) are the envy of many universities. rants serve beer; some French restaurants
McDonald's ensures consistent products serve wine. Some Far Eastern McDonald's offer
by controlling every stage of the distribution. oriental noodles. But these new items must not
Regional distribution centers purchase prod- disrupt existing operations.
ucts and distribute them to individual restau-
rants. The centers will buy from local suppliers if 1. What opportunities and threats did McDonald's
the suppliers can meet detailed specifications. face? How did it overcome them? What alterna·
McDonald's has had to make some conces- tives could it have chosen?
sions to available products. For example it is
difficult to intro~uce the Idaho potato in E~rope. 2. Before McDonald's entered the European market,
McDonald s uses essentially the same few people believed that fast food could be sue·
competitive strategy in every country: Be first in cessful in Europe. Why do you think McDonald's '
a market and establish your brand as rapidly as succeeded? What strategies did it follow? How
possible by advertising very heavily. New did these differ from its strategies in Asia?
restaurants are opened with a bang. So many 3. What is McDonald's basic philosophy? How does
people attended the opening of one Tokyo it enforce this philosophy and adapt to ditterenl
restaurant that the police closed the street to environments?

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