MCDONALDIZATION

PROF: DR. MONALI CHATTERJEE

TEAM MEMBERS: 1) 2) 3) 4) 5) B10 HITESH CHAURASIA B37 JAY MODI B42 AJ PARIKH B46 HARSH PATEL B50 JIGAR PRAJAPATI

Globalization has been blamed for everything from child labor to environmental degradation, cultural homogenization and a host of other ills affecting rich and poor nations alike. Not a day goes by without impassioned authors and activists, whether anti or pro globalization, putting their oars into these agitated waters. But even after all these defects with globalization, there is a company far off in the continent of America which has prospered all over the world and is loved by one and all. We are talking about none other than MCDONALDS. A hamburger food chain that changed the shape of fast food and is serving more than 58 million customers every day and employs 1.6 million people in 118 countries. It was founded in 1955 by Ray Kroc. It is considered as Americas favorite first job. A lot of high school students have the experience of working with McDonalds. We all have heard the famous story of a Japanese boy telling his mother on the streets of New York look mom, they have got McDonalds in America This is the perfect way to explain Globalization. There really was a person named McDonald who started McDonalds. There were two of them, in fact brothers Richard and Maurice or, as they were known to all their friends, Dick and Mac. Their story begins in the late 1940s when McDonald brothers were searching for a way to improve their little drive in restaurant business in San Bernardino, California. But then Ray Kroc came to visit their restaurant in 1954 and everything changed. The fast food industry was about to take off. Kroc a 52 year old milkshake machine salesman when he founded the company that revolutionized the way the world eats. McDonalds was a combination of a milkshake salesman, a grill man and Richard and Maurice who took this food chain to new heights. McDonalds was dependent on three things: Franchises, the suppliers and the company. But the most important factor about McDonalds is the diversity. Its Workforce. As of January 1, 2009 McDonalds workforce comprised of 62 percent women, 35 percent Hispanics, and 20 percent African Americans, and 5 percent Asians and 2 percent Native Americans. But these numbers are only a small part of the story. Today the definition of diversity for McDonalds

includes a broad mix of different ideas, opinions, backgrounds and life experiences in addition to the traditional measures like race and gender. When it was founded in 1955 by Ray Kroc McDonalds reflected the attitudes of US society in general. In that post World War II environment race and gender inequality in the workforce were unheard off, and talked about very little. But all of this changed after Ray Krocs McDonalds Lillian McMahon becomes the first woman franchisee of a McDonald restaurant in 1960. In 1970 the Black McDonalds Operators Association (BMOA) is formed in Chicago electing Ed Wimp as its president. Diversity is the major aspect of McDonalds. And that is what makes it a globalize company. (None of us is as good as all of us: 5-25)

Company Management
McDonalds plan to win approach is a revival of the five Ps of marketing; Price, people, product, place and promotion. Organizational culture is the concept that guides the operations of McDonalds. McDonalds operates according to four values: quality, service, convenience and value. Organizational culture is part of the knowledge and information transmitted by McDonalds to the franchisees in other countries. Part of organizational culture is the delivery of uniform quality of food and service wherever the branch is located. The good reputation of the company and the expectation of an excellent service no matter which branch people eat is a marketing strategy of McDonalds. Despite this basic standard, the company expects the different stores to adapt to the needs of the local market by managing their stores in a manner that makes the employer-employee relations, customer service and the food products served satisfactory to the local community. McDonalds sets a standard applicable to all its branches worldwide. However, the company also gives leeway for innovation by allowing the branches to integrate culture into food and service increasing market share. (None of us is as good as all of us: 35-39)

Company Strategy
Attracting more customers to McDonald's remains its goal for growth. In the U.S. market, the strategy is to leverage menu innovation; in Europe, upgrading the customer experience and enhancing local relevance have driven management efforts; and the

Asia/Pacific, Middle East, and Africa markets have focused on building sales through extended hours. The question remains whether focusing on the core business will yield maximum return. At McDonald's the executives are betting on the core brand and hoping that this strategy will pay off. The hospitality business is fiercely competitive. When McDonald's began its rapid expansion in the middle of the 20th century, there were few fast - food alternatives. McDonald's did more than any other company to shape the fast - food market, picking up new rivals at every stage. As domestic growth began to level off, the company increased its investments outside of the United States. However, other American companies followed, and foreign rivals began to develop and expand in their home markets. At the turn of the millennium, the company faced some of its most difficult problems as the domestic U.S. markets neared saturation and consumers ' tastes began to change. This giant of the foodservice industry made a remarkable recovery by reinventing itself and returning to the basics of focusing on the customer experience. (Hospitality Strategic Management: Concepts and Cases: 2)

Expansion Strategy
In recent years McDonalds has adopted the global vision of becoming the worlds largest and best fast food restaurant chain. Some of McDonalds key objectives emphasize global standardization, as in the statement: Expand our global mindset by sharing best practices and leveraging our best people resources around the world. McDonalds restaurants are a mix of company owned and independently owned franchised restaurants that sell McDonalds products (almost) exclusively. The extensive use of franchising lowers expansion costs and keep owners motivated to provide high-quality service so as to earn high profits. McDonalds itself owns many of the restaurants with city centre locations. This allows the company direct control over quality and keeps control of the most profitable locations. McDonalds strategy is based on achieving low costs and prices long with reliable quality and value for money, based on the McDonalds brand. Franchising is a hybrid manner of expanding and organizing the business by establishing a relationship of agency with the franchisees. Franchising involves the convergence of a parent company and several small businesses. The parent company sells to the smaller businesses the right to

distribute its products or use its trade name and processes. A contract governs the agency relationship established between the parent company and the franchisees. The franchise contract defines the conditions of the agency and the duration of the relationship. The companys strategy is based on knowledge of modern lifestyles, young peoples tastes, food production processes, and service levels. Coupled with this is constant product innovation and effective marketing tools including the twin arches logo and constant new promotional campaigns. Aspects of McDonalds global strategy emphasize standardization in terms of key products and product features, food production systems, staff training, service levels and so on. McDonalds entry to new national markets is always preceded by an exercise to identify local suppliers who can meet the companys stringent quality standards. Such suppliers are expected to comply fully with McDonalds recipes and procedures. The recent restructuring of McDonalds into five geographical divisions, while continuing to support the companys quality and service standards, has been accompanied by a reduction in central control, greater local autonomy and by greater variations in product and service offerings in different parts of the world. For example, salads and beer are offered in restaurants in continental Europe, chicken is served on the bone in China and in Greece they have recently introduced the Greek Max, a burger accompanied by Greek salad, served in pitta bread. As well as indicating McDonalds recognition to adapt to the needs of local markets, this strategy represents the companys attempt to transform itself through innovation. McDonalds intends to innovate through new product offerings and restaurant designs. The development of McCafes, following the global trend for coffee shops, is an example of recent strategic innovation. (Global and Transnational Business: Strategy and Management: 192)

Anti Mcdonaldization
Boves colorful assault on McDonalds will not survive scrutiny either. For every protester, there are many more who patronize McDonalds throughout France. Since 1972, when it arrived in France, its French customers have made France McDonalds third largest market in Europe. Its Champs-Elysees branch raked in revenues of nearly $5 million in 2001

alone. The irony is not that McDonalds has destroyed French culture but how French culture and French consumers have decimated instead the mold that marks its American restaurants: For 50 years, a primary ingredient of the recipe for expansion at McDonalds and the entire fast-food industry had been consistency. Menus might vary to reflect local tastes, but the essential offering was universal: cheap food served in a bright, clean and, above all, familiarlooking setting. A dramatic departure from that formula is taking place here in France, where franchisees face increasing competition from fast baguettes. Half of this nations 932 McDonalds outlets have been upgraded to a level that would make them almost unrecognizable to an American. Far from being cookie-cutter copies, each of the remodeled restaurants features one of at least eight different themes such as Mountain, complete with a wood-beam ceiling reminiscent of a ski chalet. The company has even begun to replace its traditional red-and yellow signs with signs in muted tones of maroon and mustard. And while the basic burger offerings remain the same, there is espresso and brioche. True, the sociologist Jean-Pierre Poulain has observed: During my field research, I have been struck by the strange self-justification discourse used by most adults, saying that they were coming to McDonalds for the first and last time. It was as if they were coming out of an X-rated movie. But such masking behaviour is all too common, of course, during a cultural or social exposure to new impulses, as is happening in France as it encounters and embraces, adopts and adapts to, American television. For those who worry about the intrusive presence in their beloved locales of the McDonalds icon, the golden arches, there is a further lesson to be learned: even the most sacred icons will yield to profits. And the arches have in fact gone from many McDonalds restaurants around Paris. cinema, pop music, food, and

Europeans may want to view every Big Mac as a terrifying sign of American culture imperialism, but Chinese have mostly welcomed the invasion indeed they have internalized it. In one recent survey, nearly half of all Chinese children under 12 identified McDonalds as a domestic brand, according to the Beijings Horizon Market Research. (In Defense of Globalization: 110)

Our View Point on McDonalds:When we look at the menu of McDonalds and what it offers, we can see that the menu is different for different countries. So is the language. But one thing that strikes us particularly is the way in which McDonalds has standardized on the things that are within its control. It has realized that it must cater to local tastes and change the restaurant design and adapt to each country. We very well know the example of India. McDonalds was selling hamburgers which had beef in it, and we very well know that Hindus dont eat beef that is cow meat. So after a year, they decide to change the menu and included more vegetarian items. As we know, India is a land of diversities, every state has its own diversities and problems so standardizing everything in McDonalds was a tough task but McDonalds was upto the task and it set up its own fields to grow its vegetables. They started the Standardization from the grass root level. That is why a cheeseburger in America will taste the same as it tastes in Japan. This very strict regime of standardization in everything is termed as McDonaldization. There is a university in everything like the counters, menus, bathrooms, sauces, French fries and so on and so forth. Thats why Jim Skinner, CEO of McDonalds rightly said, NONE OF US IS AS GOOD AS ALL OF US. (Principles of Management: 114)

BIBLIOGRAPHY
BOOKS:
Harris, Patricia Sowell. None of us is as good as all of us. New Jersey: John Wiley & Sons, 2009.

Daft, Richard L. Principles of Management. New Delhi: Cengage Learning, 2009.

Stonehouse, George, David Campbell, Jim Hamill, and Tony Purdie. Global and Transnational Business: Strategy and Management. West Sussex: John Wiley & Sons, 2004.

Bhagwati, Jagdish. In Defense of Globalization. New Delhi: Oxford University Press, 2005.

Enz, Cathy A. Hospitality Strategic Management: Concepts and Cases. New Jersey: John Wiley & Sons, 2010.

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