INTERNATIONAL MARKETING MCDONALDS EXPANSION IN EASTERN EUROPE

Company Background

McDonalds celebrated its 50th anniversary in April 15, 2005 and remained true to the statement "As far as I can tell, the only place you can't get a Big Mac is in outer space." The company operates as a global business through franchising. In 2004, the company reported to have established 30,000 local restaurants located in 115 countries across five continents. It is the biggest fast food retailer conquering markets worldwide. In almost every country, there is a McDonalds restaurant and in a single state or region, there are several branches. The company has spread so widely that the term mcdonaldization, was coined to describe the organization and culture of the company. The term has evolved to refer to the general business strategy of expansion.

Company Expansion Strategy

McDonalds expands its operations through franchising. 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.

Company Management and Marketing Strategies

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.

McDonalds integrates a combination of scientific management and human relations approaches in its organizational standards and work ethic. Scientific management is the process of achieving efficiency by actualizing the principles that employees are motivated by economic rewards, a clear delineation of interrelated tasks, and a clear structure of recognized authority that facilitates all aspects of the operation. Scientific management requires the managers of the business to analyze the operations of the business and create objective methods of dealing with problems. This became popular because of the prevalence of disputes among workers and between workers and management with the proliferation of new industries.

The human relations perspective recognized the importance of the non-rational element in the organization behavior such as the development of relationships between workers and the role of an effective leader in facilitating the constructive communication and participation of all members of the organization. Human relations management considers the techniques of forming problem-solving teams, improved communication by the company with its employees, the offer of employment security, skills and training support for employees and incentives for efficient work.

McDonalds applies scientific management by recognizing the value to employees of monetary rewards given in recognition of their valuable contribution to the company. Although the salary of employees varies in different countries, the company ensures that its franchises comply with the acceptable wage rates and working hours in different countries. The company also ensures organized collective work by having a clear

delineation of interrelated tasks and rotating employees so that they experience a holistic view of service delivery. The managers of branches are hired locally so they can apply the local practices in hiring employees, determining wage and work hours, and giving the monetary incentives recognized by employees so that employees are motivated to contribute to the companys success. The company appoints managers belonging to the locality to make sure that the manager has a good grasp of the market demand and work culture in the locality so the company does not offend anybody due to offensive policies. In introducing the standard values of the company, these are presented to employees in a language they understand and in the context of the local culture.

McDonalds also apply human relations management by considering the importance of interpersonal relations in the day-to-day operations of the company. Interpersonal communication is the key to achieving cooperation among the employees in performing related tasks. An effective leader is required to facilitate the communication and participation of all employees. The company trains managers to be adept at effective communication. The manager knows how to speak the local dialect and English and proves to command respect from the employees as a leader that can unite the collective efforts of the crew. The result of cooperative employees is teamwork in problem solving. During peak hours, the members of the crew are designated in areas needing assistance. When the kitchen is lagging behind in meeting orders employees on the floor are asked to help until normal operations is achieved.

McDonalds employees are versatile. The manager plays a vital role in the achievement of a good employer-employee relationship in the branch.