Mcdonalds Decentralization

Case Analysis of Big Mac’s Local Flavor

McDonald’s is becoming bigger and bigger. It has become so big in domestic market (USA) so that it expands overseas. As time passes, its overseas operation and the profit that comes along becomes bigger than that of domestic market. Its US revenue was just 36% of the total in 2004 in contrast to 39% revenue from Europe. The growth in overseas market is even far higher. Now, it serves in 119 countries and 58 million customers per day.

To achieve that growth, McDonald’s adapts by changing its strategy from ethnocentric approach to a balance of that of geocentric and polycentric. No longer all the ideas come from its R&D center in Oakbrook. Now, McDonald’s encourages its many divisions in different countries to research what is best to approach their local markets.

To look at that strategy, we must look the history of McDonald’s. McDonald’s was founded by McDonald’s brothers and later acquired by one of its franchisee, Ray Kroc. Ofcourse, as a franchisee the local McDonald’s has its own marketing mix. Its own thoughts. When Ray Kroc made McDonald’s expand, his experience must have affected the strategy. That’s why only 15% of McDonald’s is operated directly. The rest is a mix of joint venture and franchise.

The ideas that come from the research may also move to another McDonald’s in another country and even come into the home country. The German innovation is a fine example. Its new burgers make way into Swedish market.

McDonald’s in different countries adjust to local tastes. Managers are given freedom how to decide their marketing mix (4Ps), but they must work within framework. There must be standard so that customers world-wide will feel the same McDonald’s.

The 4 Ps that make McDonald’s strategy :

a. Products

McCaffee which comes from Australia and McRice in Indonesia.

The products can come from local managers’ idea and may make its way to another market if possible.

b. Price

This varies according to...