RMIT International University Vietnam

BUSM 3311 – International Business

Subject Code:
BUSM-3311 / 4626

Subject Name: International Business

Location & Campus RMIT Vietnam , HCMC

Class Group Number: Group 1

Student Name: Au Duong Khai Hoa

Student Number: S3836372

Your Teacher: Tzach Ronen

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Word Count:

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Jamaica, where McDonald’s failed : The lesson for International Business

I. Introduction

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McDonald’s is an American food-fast company providing good food, people, and neighbor for
customers and the community, which positions itself as the leading global foodservice retailer
with more than 35.000 restaurants located in 118 countries (McDonald’s Vietnam 2021). Adam
(2019) stated that McDonald's has been taken efforts in achieving international business success
by understanding cultural differences and maintaining strong relationships with its partners
across Asia, the Pacific, Middle East, and Africa.

In 1995, at that time Jamaica was aimed as McDonald’s globalization strategy which
potentially has more than 2.3 million inhabitants and attracts millions of tourists yearly (John
2005). Besides, McDonald's has an advantage as Jamaica and the USA have a long history of
doing business, specifically, the fast-developing segment is also the fast-food restaurant sector
in this market (Food Export 2021). But, unfortunately in 2005 McDonald’s officially
announced that they would close their last restaurant and exit from Jamaica after 10 years of
operating (John 2005). As a huge retail industry in the globe following with advantaged
backgrounds, this failure has raised concerns and doubt on the company in implementing
internationalization strategy in other markets.

This paper is aimed to analyze the three main issues that McDonald’s faced during the period of
the entrance of the Jamaica market, as a result, leading to the failure today. Additionally,
following by some practical recommendations supported by terms of International Business
theories.

II. Analysis
a. Business culture conflicts

National culture is considered as values, beliefs, conduct, norms, and customs of a unique
specific country. The culture of a nation has always been a significant consideration of business
activities when expanding its market (International Business) it determines a business’ ability to
operate and adjusting from its structure to performance to survive in society (Buchan 2005).
Furthermore, Culture in retail internationalization is also a process of understanding the cultural
factors in order to drive the retail structure to successfully approach the market. This is relevant
to considerations of market culture, business practices as well as competitors in the host market
(Dimitrova, Rosenbloom & Andras 2016).

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According to the case study of McDonald’s in Jamaica, prior to becoming a franchisee, any
local enterprise is required McDonald’s training and full-time commitment which were
intensive. Specifically, the owners both suffered nine unpaid months for only learning all the
aspects of McDonald’s business culture and very harsh additional fees simultaneously (Denise
2020). Moreover, a report pointed out that franchisees do not allow to have any other business
interests and must dedicate their entire time focusing on McDonald’s business (Money Max
2013).

Even though McDonald’s is the head in the fast-food industry, they overwhelm in their market
expansion strategy with greedy ambitions (Adam 2019). The main issue faced by McDonald’s
here in the internationalization was the heavy use of the standardized operating model, leading
to the conflict in the cultural working perspectives. Those above requirements were such an
unacceptable, Becky Stockhausen, the Director of the American Chamber of Commerce and a
resident of Jamaica and other Jamaican investors also said that Jamaican enterprises wanted to
operate many different businesses; therefore, putting all just into one project will never attract
to the business culture here (Money Max 2013). Unfortunately, during the time of market
penetration, Jamaica was on a period of low economic growth, and addition with strict
requirements above, it was so risky to invest in (Denise 2020).

b. Misunderstand customers’ cultural needs.

Frenchy (2005) wrote that most Jamaican preferring to be full of meats and carbohydrates when
they pay for a meal and McDonald’s did not fit with that need. To be detailed, for customers,
the main problem was their burgers, they were not ‘Nuff' enough and too tiny for the meals of
the local. Afterward, McDonald’s thrived to develop good relationships with the local and its
supply chains to adapt to the host market’s demands which is to use local ingredients to serve
local inhabitants (Adam 2019). Despite taking awareness of Jamaican favorite classic ‘Jerk
Chicken’ to combine with their menu, McDonald’s were still received a failure in efforts to
appeal to the local’s taste (Denise 2020).

It was reasonable to see that McDonald’s was pulled out owing to tackling the very first
challenge in the internationalization aspect which is analysis (Heino 2008). Multinationals
operating in a foreign market require a variety of difficulties in adapting their products to local
demands and tastes. In the first stage, they did not go hard and take into consideration
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accurately into implementing food approach, resulting in lacking consumers (Frenchy 2005). At
the same time, Burger King which is also a fast-food retailer, did well with their meals,
especially the burger’s sizes fit the customer needs and receive quite good experiences,
consequently this impact directly on McDonald, their competitive advantage was no longer
stable (Denise 2020).

III. Recommendations
a. Joint Venture

A joint venture is a strategy that two or more companies cooperate for business goals. In
the joint venture, business not just responsibly shares profits, costs, and loss but the company
aslo expands to the foreign region also has more opportunities to get more knowledge about the
host market including culture, building higher chance of locating and building good
relationships with other parties (Chetwin 2011). Thus, the joint venture is suggested for
McDonald’s to build partnerships with existing local businesses to understand more their
business culture and customers and create a supplier network to decline cost and be supported
to operate longer in the new market. Most of the cooperation currently still use joint
venture  application thanks to its benefits when doing international business, some
collaborations have been generated such as Global rivals Carrefour and Wal-Mart, Sun Art
Retail Group by Groupe Auchan with Taiwan conglomerate Ruentex or Volkswagen Group and
GM Motors in China, Mexico, and among others (Channon & Bonnici 2015).

b. Multi-Domestic Strategy

According to theories, in the terms of international business, there are four primary types of
international strategies: international, global, transnational, and multi-domestic (Kelly 2020).
Relating to the McDonald’s case, to return to Jamaica, multi-domestic strategy is suggested. To
be more clear, the emphasized point is researching and focusing on investigating insightfully
the culture, preferences, and habits of each country (Rufín, Parada and Serra 2008). The
company applies that would make their products appealing to the nation’s needs. Similarly,
McDonald’s could have been successful if they adjusted their menu with better sizes and taste
of dishes, plus adding alcohol services as Jamaicans have heavy drinking habits (Gunn 2016).
In reality, taking into consideration of Endura Milk company, operating in the U.S, has used
multi-domestic strategy, they put effort into modifying their product image and packaging, and
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advertisings when approaching the Mexican. As a result, it was confident to say that they have
gained more engagement in that area (My Accounting Course 2021).   

IV. Conclusion

In conclusion, the lack of analysis and understanding of McDonald’s is a valuable lesson for
other later businesses to prevent failure in the internationalization. Those recommendations
given above are to deal with their problem facing in business culture, customer’s demand and
behaviors with the local resources. More importantly, implementing cultural research carefully
prior to penetrating a new area is an indispensable first step of internationalization, which
supports business to develop globally and prevent from disadvantageous conditions.

V. Reference List

Adam 2019, McDonald’s Internationalization Thinking with a Focus on The APMEA Market,
University of Salford Machester, viewed 17 April 2021,
<https://www.researchgate.net/publication/335172197_McDonald's_Internationalization_Think
ing_with_a_Focus_on_The_APMEA_Market>

McDonald’s Vietnam 2021, About McDonald’s Vietnam, McDonald’s Vietnam, viewed 17

John 2005, ‘McDonald’s Leaving Jamaican Market’, Caribbean, 13 October, viewed 17 April
2021, <http://web.b.ebscohost.com.ezproxy.lib.rmit.edu.au/ehost/pdfviewer/pdfviewer?
vid=1&sid=a1b77782-96fb-4332-9ed0-33ba79bd7a28%40sessionmgr102 >

Food Export 2021, Jamaica Country Profile, Food Export, viewed 17 April 2021,
<https://www.foodexport.org/export-insights/market-and-country-profiles/jamaica-country-
profile >

Dimitrova, B, Rosenbloom, B & Andras, T 2016, ‘The impact of national cultural values on
retail structure : evidence from the World Values Survey’, Emerald Insight, pp.894-920.

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Denise, L 2020, ‘5 reasons why McDonald’s did not survive in Jamaica’, Jamaicans, viewed 17
April 2021, <https://jamaicans.com/5-reasons-why-mcdonalds-didnt-survive-in-jamaica/ >.

Money Max 2013, CASE STUDY: Why Did McDonald’s Leave Jamaica? 7 Reasons – A Look
At Jamaican Franchising, Money Max, viewed 17 April 2021,<
https://moneymax101.com/research/case-study-why-did-mcdonalds-leave-jamaica-7-reasons-a-
look-at-jamaican-franchising/>

Babbletop 2019, 10 countries where McDonald’s Failed, Babbletop, viewed 17 April 2021,<
https://babbletop.com/10-countries-where-mcdonalds-failed/ >

Frenchy 2005, McDonald's Pulls Out of Jamaica, Africannamerica, viewed 17 April 2021,<
https://www.africanamerica.org/topic/mcdonalds-pulls-out-ofjamaica?
reply=128788938051633937#128788938051633937 >

Heino 2008, ‘Challenges of Internationalization’, Lahti University of Applied Sciences, viewed

Kelly 2020, The Ultimate Guide to International Strategy, Born to Be Global, viewed 17 April
2021, <https://borntobeglobal.com/2020/07/14/international-strategy/#:~:text=Four%20Types
%20of%20International%20Strategy,%26%20Ghoshal%20Matrix%20(1989). >

Rufin, C, Parada, P and Serra, E, 2008, ‘The Paradox of Multidomestic Strategies in a Global
World: nonmarket strategies in developing countries’, EBGN, vol. 10, n.26, p. 63-85.

My Accounting Course 2021, What is a Multidomestic Strategy ?, My Accounting Course,

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Gunn 2016, ‘Alcohol Remains Most Used Drug in Jamaica’, Jamaica Information Service, 1
December, viewed 17 April 2021,< https://jis.gov.jm/alcohol-remains-used-drug-jamaica/ >

Channon, D & Bonnici, T 2015, Joint Venture, Research Gate, viewed 17 April 2021,
<https://www.researchgate.net/publication/272352896_Joint_Ventures >

Chetwin 2008, ‘The Broad Concept Of Joint Venture: Should It Have A Fixed Legal
Meaning?’, International Business & Economics Research Journal, Vol.7, n.1,p113-123.

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