Reference no: EM133400063

Case: McDonald's Expands Globally While Adjusting Its Local Recipe

McDonald's Corporation is a fast-food legend whose famous golden arches can be found at more than 37,000 locations in 118 different countries. The company is the undisputed leader in the quick-service restaurant (QSR) segment of the hospitality industry, with more than twice the system-wide revenues of Burger King. McDonald's built its reputation by promising and delivering three things to customers: inexpensive food with consistent taste regardless of location; quick service; and a clean, familiar environment.

The company was also a pioneer in the development of convenience-oriented features such as drive-through windows and indoor play areas for children. Today, thanks to memorable advertising and intensive pro-motion efforts, McDonald's is one of the world's most valuable brands: In 2017, Interbrand ranked it as the world's number 12 brand overall (Apple has been number 1 for several years running). The golden arches are said to be the second-most-recognized symbol in the world, behind the Olympic rings. In 2014, McDonald's was named Creative Marketer of the Year at the Cannes Lions International Festival of Creativity.

Despite these successes, the company faces competitive attacks from several directions. During the 1990s, a wide range of upscale food and beverage purveyors arrived on the scene. For example, consumers began flocking to Starbucks coffee bars, where they spend freely on lattes and other coffee-based specialty drinks. The "fast-casual" segment of the industry, which includes companies such as Baja Fresh, Chipotle Mexican Grill, Panera Bread, and Cosi, is attracting customers seeking higher-quality menu items in more comfortable surroundings. Millennials, in particular, began shunning McDonald's and seeking out alternative fast-dining options such as Five Guys, a "better burger" chain that features freshly cut fries made from locally sourced potatoes. Meanwhile, Subway overtook McDonald's as the restaurant chain with the most outlets in the United States. McDonald's U.S. menu offerings had grown rapidly, and, some would say, quality and service had suffered. Some industry observers also suggested that, in terms of both food offerings and marketing, McDonald's was losing touch with modern American lifestyles.

Until recently, the picture appeared brighter outside the United States. Thanks to changing lifestyles around the globe, more people are embracing the Western-style fast-food culture. McDonald's responded to this opportunity by stepping up its rate of new unit openings. McDonald's International is organized into three geographic regions: (1) Europe; (2) Asia-Pacific, Middle East, and Africa (APMEA); and (3) Other Countries. In 2005, the offices of the country heads for Europe and Asia were moved from the U.S. headquarters to their respective regions; now, for example, the head of APMEA manages his business from Hong Kong. Commenting on the change, Ken Koziol, vice president of worldwide restaurant innovation, explained, "McDonald's was built on a strong foundation of a core menu that we took around the world but we need to make sure we are more locally relevant. Taste profiles and desires are changing."

McDonald's has responded to these changes by altering their basic products (when necessary) to fit the requirements of the local markets. While not always successful, it has proven to be a winning strategy.

Using the perspectives above, answer the following questions. Please limit your answers to one paragraph each. Use numbered lists to elaborate if there are many points in each para. Use the concepts learned so far in the course to describe McDonald's global marketing strategy in each question.

1. Identify the key elements in McDonald's global marketing strategy.

2. Despite a slowdown in global fast-food consumption, McDonald's continues to be a success story. What is the key to its success?

3. Does McDonald's think globally and act locally? Explain with an example.

4. Does it also think locally and act globally? Explain with an example.