International Success Essay, Research Paper

The International Success of McDonalds

As the American people get further away from the traditional eating habits of the early and mid 1900 s we see more people in search of a fast, inexpensive quality meal. In just about any city where there is a McDonalds restaurant a person can witness the lunch hour rush to McDonalds. On any given day around lunch you can expect long lines to get that great All American hamburger, french fries, and soda or milk shake. One man had the vision of a restaurant that would satisfy most of the United States population and a big percentage of the world s population. That man was Raymond Albert Kroc.

In 1954 Raymond Kroc, a milk-shake salesman heard of a hamburger stand in San Bernardino, California. The burger joint had bought five of his milk-shake machines and Kroc wanted to see for himself what kind of business needed this many of his machines. When he arrived in California what he saw would soon change his life. What he saw was a small hamburger stand with a line of people extending back more than one hundred feet waiting to get their 15-cent hamburger. After researching the companies work standards, Kroc found that the company operated smoother than any company he had seen before. What was so remarkable was there was only four employees. At the ripe age of 52, Kroc founded McDonalds and proved himself as an industrial pioneer. He revolutionized at the time the present American restaurant industry by ensuring consistency in the production of milk shakes, hamburgers, and french fries. He wanted the hamburger purchased in Arizona to be the exact same as the one purchased in Vermont. In accomplishing this Kroc made McDonalds the brand name that defined American fast food.

By the late 1950 s there were over 200 McDonald s restaurants across the United States of America. This explosion of restaurants was most likely a direct result of very low franchising fees. (Anderson, 1990) Kroc now had one of the most talked about products of all time. Even with the rapid growth of the company, Kroc was hardly making a profit. Kroc then began to use real estate as a financial lever this he hoped would bring big money back to his starving business. His idea worked, the company exploded shortly after. Through rapid growth and extensive advertising, McDonald s in the early 1970 s became the nations largest fast-food chain and an easily recognizable feature of the American culture landscape. As the owner of McDonalds, Kroc, became a figure of national stature. In 1972, there were more than 2,200 McDonald s outlets in the United States of America with over $1 billion in sales. (McDonalds Corporate Press Release, 1972) Kroc then began to advertise nation-wide to support the rapidly growing number of franchises, and when it appeared that the growth in the company s home territory was slowing in the early 1970 s he began an energetic and successful push to make McDonalds international.

Many financial analysts viewed the rampant growth of McDonalds as unsustainable. However, Kroc believed the company needed to continue to expand in order to survive. Kroc envisioned a world in which tens of thousands sets of golden arches would stand as outposts of a mighty commercial empire. As of 1972 there was one McDonalds for every 90,000 United States citizens, but Kroc knew there were over three billion more people outside the borders of the United States of America who had never even heard of a Big Mac. So Kroc followed the same steps as Henry Ford and embarked upon an ambitious campaign. McDonalds started by invading former Axis powers Japan and Germany in 1971. In 1977, McDonalds introduced the fast-food sandwich to the land of Sandwich, opening the company s 3,000th store in London. (Gross, 1996)

Establishing restaurants in European capitals was just the beginning. Over the course of ten years, the thousands of stores that the company opened overseas fueled its 27 percent annual growth rate. (Anderson, 1990) Golden arches sprung up from the soil in virtually every continent including South America, Europe, and in Asia. One key to the continuing growth of McDonalds is international expansion. With operations in more than 65 countries, McDonalds now opens about one-third of its new restaurants outside the United States of America. One of the many ways McDonalds has been able to succeed internationally is their involvement in the Olympic games.

McDonalds has had a long-standing commitment to the international Olympic Movement. McDonald s participation in the Olympic Partner Program gives them the right to use the Olympic Rings in McDonald s marketing efforts, sponsorship of all the 199 National Olympic Teams around the world and status as the Official Restaurant Partner of the Olympic Games. When Olympic tourists flood in to a nation hosting the games they come face to face with the hundreds of advertisements for McDonalds food. They are bombarded with so many ads for McDonalds, that when they need a quick meal they often seek out those golden arches. One example of this advertising was during the Sydney 2000 Olympic Games. McDonalds created a new Olympic-themed print ad that can be customized by every country for maximum impact. The universal ad shows a relay runner handing off a box of McDonald s World Famous Fries to his teammate. The tagline reads, McDonald s proudly serves the athletes of the Olympic Games. Pass it on. However even with the Olympics under their belt McDonalds has had to adapt to the culture of its hosting nation. (Gross, 1990)

Although McDonalds always insisted on planting its rigid operating system in foreign soil, when it came to other aspects of the restaurants operation, the company was much more flexible. For example, to make the chain s name more easily pronounceable for Japanese consumers, it was changed to Makudonaldo, and its mascot became Donald MacDonald instead of Ronald McDonald. (Gross, 1990) Today, even the menus at McDonald s restaurants in foreign locations clearly reflect differences that do not exist at the companies American outlets. While the stores offer menu items such as hamburgers, french fries, and milk shakes, there have been some additions. For example, when McDonalds restaurants opened in Germany in the early 1970 s they started serving beer. In the Philippines they offer McSpaghetti noodles, while in Norwegian facilities the offer a salmon fillet sandwich, the MacLak. (Gross, 1990) When the Mad Cow Disease swept through the European countries, McDonalds had to act quickly in order to save their business for the growing concern for this disease. They quickly began to advertise the soy burger, which contains no beef. For the burgers that did contain beef they advertised that it was made of muscle tissue of the donating cow, which according to tests was much safer for the consumer. (60 minutes, 1999) This advertising technique worked and business again started to thrive.

Toady McDonalds operates out of over 120 different countries. Raymond Kroc s dream was to see a McDonald in every county in the world. McDonald s is the world s largest global foodservice retailer with more than 27,000 restaurants, serving nearly 43 million people each day in those 120 different countries. It is hard to believe that less than 50 years ago it was just a tiny hamburger stand off a highway in California. Any small business can learn a great deal from what Ray Kroc accomplished. He is the American dream.

References

Daniel Cross. 1996. Forbes: The Greatest Business Stories of All Time.

John Wiley and Sons Pub.

60 Minutes. 1999 (Television Production) American Broadcasting Corporation.

Ray Kroc, Robert Anderson. 1990. Grinding It Out: The Making of McDonalds. St. Martins Press, Inc.

McDonalds Homepage (2001). [On-Line].

http://www.mcdonalds.com