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Role of Culture in Growth & Evolution of McDonald's

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Role of Culture in Growth & Evolution of McDonald's

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In order to expand to many different countries that have different cultures, McDonald's searched and dig for information of certain countries' cultures such as India, Japan and Thailand that have completely different cultures with other countries. And by that they developed and invented new menus to satisfy and attract the citizens in order for their company to be successful in those areas.

India is mostly populated by Hindu, and Hindus are not allowed to consume beef, which is why McDonald's came up with new vegetarian menus that also uses indian spices. They don't sell anything beef-related and most consists of egg, vegetables and/or chicken.

Japan, although there aren't any restrictions in food that are consumed, McDonald's thought that to make them welcomed and successful in Japan it is a good idea to include Japanese-style food into their menus. They offer teriyaki burgers, katsu burgers, shrimp nuggets and many more. They also added drinks such as matcha milkshakes since matcha is one of Japan's most well-known ingredient

Thai people enjoys pork and very spicy foods, and McDonald's respects that by making spicy menus with pork and Thai curry. They also offer rice-based meals since Thai people often eat rice. They also provide mooncakes since they know that a lot of people living in Thailand have Chinese blood and they celebrate Chinese New Year.

Culture has a great impact in McDonald's growth and evolution as a company. By studying and respecting other cultures, they are able to be successful in many different countries all over the world.

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- Internal (organic) growth

- External (in-organic/fast-track) growth

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Why is Internal Growth called Organic Growth?

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Why is Internal Growth called Organic Growth?

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Internal is known as Organic growth because the business expansion is done slowly and steadily, and it uses what the business already has.

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1. Better control and coordination of the growth:

It is easier growing from the inside rather than the outside, and if the business is growing internally, it means that it has a larger span of control as to what is happening to the growth of the business (no outsiders can interfere).

2. Cheaper:

As mentioned before, organic growth is usually financed from the business themselves using retained-profit. Therefore, the capital involved is relatively lower.

3. Maintaining corporate culture:

All businesses have their own unique "culture" (management style, how to gain capital, etc.). Since growing internally is basically the business expanding with what it already has, it does not have to worry about other business "cultures", and there won't be any culture clashes with other companies/businesses

4. Low risk:

Basically, from all the reasons above, internal growth has a really small risk for a business to grow, as it only depends on the strengths of the business, such as brand or customer loyalty

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How do businesses expand via organic growth?

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How do businesses expand via organic growth?

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The business expands organically by selling new and/or developed products, or maybe opening new shops/offices in different places, using their own resources & capabilities. It is usually financed by themselves (using retained-profit), or maybe loaning it from a bank or other capital sources

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1. Diseconomies of scale:

There may be higher unit costs of production from internal growth. There will also be more hierarchical structure if the business expands (more "jobs"/"positions" needed), resulting in slower communication and decision making.

2. Restructure is needed:

If a big company wants to expand, just as explained before, it will have new "jobs"/"positions", therefore it needs to "restructure" its organizational structure. By doing so, it will take time, effort, and money. E.g. Requires employee trainings, Specialists managers are needed, etc.

3. Dilution of control and ownership:

If a business grows by changing its legal status, such as turning to a public limited company, the original owners of the company must share the decision making with the new owners of the company (shareholders). With more owners, decision making can be a harder and longer process, since there may be internal conflicts.

4. Slower growth:

Internal growth is slower than external growth from the reasons above. Because it's slower, the company's gain will also be slower, and shareholders may tend to want to invest on "fast growing" businesses to return their investments back,

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Diversification of companies is the riskiest growth strategy a business can pursue, because the chances of it failing is high, although if successful, there are way more advantages than disadvantages. Ways to diversify:

- Introducing a new product to the market (related diversification):

E.g. Apple diversified from being a computer company into being a hand phone company too. It introduces its new products, the iPhone and iPod into the market, and it turned out to be successful. By doing so, Apple gains more market share.

- Being a holding/parent company:

A holding company is a business which owns and controls other diverse companies (i.e. it owns enough shares to be able to control what happens in the "smaller" companies). Holding companies benefit by "investing" in different kinds of markets in different regions in the world.

E.g. Google. Google now has a holding/parent company called Alphabet, which controls other businesses too, like Google X, Calico, Google Ventures, and many more. By doing so, Alphabet has more "control" to couple of companies and benefits over their success, and their wide range of variety of products.

- Selling different, unrelated goods or services to new markets (unrelated diversification):

E.g. Samsung has operations in consumer electronics, shipbuilding, construction, retail, chemicals, and insurance.

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1. Find a strong franchise company to ensure its security

2. Contact the franchisor (See whether he wants to expand to the desired place or not)

3. As the franchisee, make a contract/deal with the franchisor (what the responsibilities of the franshisor and the franchisee are, the amount of royalty paid by the franchisee to the franchisor, etc. )

4. Both the franchisee and the franchisor starts to do their responsibilities

5. Done. The franchisee now "owns" the business/company it wants