International Failures
Companies around the world are seeking to expand overseas, driven by many different reasons whether to lower labor costs, technological innovation or the almighty dollar. No matter what the reason, without the proper knowledge and financial funding the company will fail. There have been numerous companies that have experienced this first hand. If they would have noticed the warning signs they may have been able to salvage the company.
Fast-food companies have been one of the fastest to globally expand. They also experience some of the hardest down falls. An often quoted example is the failure of Prague's first Pizza Hut which closed down because too many ingredients had to be imported in for the one existing restaurant. The added expense for importing ingredients made operating expenses too high. Fortunately, most fast-food chains are large enough to overcome closure to a couple stores. But what would happen if an entire country was rejecting the company. This is the problem that McDonald's is facing.
McDonald's is one of most successful fast food chains with 29,000 stores in 119 countries and sales of 38.5 billion dollars. But now, with growth slowing worldwide, McDonald's will add just 1,400 new restaurants, the lowest numbers since 1994. International sales already represent 51% of the global sales. They arrived in Brazil in 1979; many of the franchisees had a strong business selling big macs. After many years of growth, from 175 restaurants in 1995 to 563 this year, Brazil is McDonald's eighth most important market worldwide(Smith 1). Their sales in Brazil went from 620 million Reais in 1995 to 1.3 billion last year. Until recently, the company was still planning to double its current number of restaurants here by 2003.
Behind the lines of customers eager for a burger, the Brazilian franchisees are having a hard time financially. According to an estimate made by franchisees that are in judicial litigation against the fast food chain, around 80% of the 152 franchisees that own half of the stores in Brazil are having difficulty to make ends meet at the end of the month(McDonald's 1). Some decided to sell their business. Others decided to fight.
The first main concern of the franchisees is the rapid growth of new stores. The expansion program that increased the fast food chain in the last two years is crea...
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... can succeed globally if they know what they are doing and have the financial funding
WORK CITIED
AT&T, BT pull Concert plug. CNN Money. October 2001. http://money.cnn.com/2001/10/16/international/bt Capell, Kerry and Heidi Dawley. Commentary: How British Telecom blew it. Business Week Online. April 2001. http://www.businessweek.com Gomoloski, Barb. Going global: Some lessons from eToys and Yahoo that might help You. InfoWorld. February 2001. http://staging.infoworld.com McDonald's Problems in Brazil. 2000. http://mcdonalds-problems-in-brazil.com Monti, Joseph A. Taking the high road when going international. Business Horizons.
July 2000. http://www.findarticles.com Smith, Tony. Brazil franchisees sue McDonald's. AP Business Writer. December 2001. http://www.washingtonpost.com Pappalardo, Denise. Sprints ION, AT&T-BT's Concert reach end of the line. Network World. October 2001.
Weber, Joseph. AT&T-BT: A big Telecom deal up north. August 1999.
Weintraub, Arlene. How eToys could have made it. Business Week Online. February 2001. http://businessweek.com Zwaig, Melvin and Michelle Pickett. Early warning signs. MSI Network.
http://msi-network.com
From a study completed by Chicago-based Research International USA completed a study called “Fast Food Nation 2008. The panel consisted of 1,000 respondents of ages 16-65 who provided their inputs with an online survey which was conducted between March 13 through 2008. Which was based on results on fast food restaurants like McDonald’s, Burger King, and Wendy’s are gaining popularity even through the economic hardship and recession. Marketing strategy has become more of influence on kids and young American’s. As population grows and the demand increases of fast food restaurants are expanding their stores to capturing more consumers. Fast food chains are also willing to change their menus to continue to gain and retain repeating customers. With each generation that passes, brings fast food chains into more homes and continues impacting lives.
McDonald's current customer environment is people on the go or people who don't want to spend a lot while going out and need something quick and good to eat. It is best stated in McDonald's mission statement that they want to be the world's best quick service restaurant experience. As stated before, McDonald's has restaurants in 121 countries and has extensive global experience in customer service and satisfaction. McDonald's is excellent at researching an international area before building restaurant there. For example, in India McDonald's realized that the majority of the population was Hindu and vegetarian, they therefore, did not even bother to put beef or any other red meat on the menu.
Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business. Panera determined where bakery-café locations could be. The franchisees bore the cost of opening new locations, and were required to obtain their ingredients from the home company. Expansion using the franchise model provided many upside benefits for Panera, while limiting the downside r...
AT&T had developed a reputation for providing high-quality long distance telephone services. It moved rapidly to exploit this reputation in the newly competitive long distance market by aggressively marketing its services against MCI, Sprint, and other carriers. Also, AT&T had traditional strengths in research and development with its Bell Labs subsidiary. To exploit these strengths in its new global competitive context, AT&T shifted Bell Labs' mission from basic research to applied research, and then leveraged those skills by forming numerous joint ventures, acquiring NCR, and other actions. Through this process, AT&T has been able to use some of its historically important capabilities to try to position itself as a major actor in the global telecommunications and computing industry.
A world without the Big Mac, Happy Meals, Chicken McNuggets, and the phrase “I’m lovin’ it,” is almost inconceivable. People around the globe have become accustomed to the high gleaming golden arches that make up the famous emblem for McDonald’s. McDonald’s has grasped the concept that culture flows from power. In this case, the American culture flows through the veins of this fast-food giant and the more that is supplied, the greater the demand. It is no secret that McDonald’s has become one of the world’s largest fast-food retailers. It has become a well known icon that has played a huge part in globalization, with chains located in many different countries… transforming the meaning of fast-food all around the world.
Background One. Tel was launched by Jodee Rich and Brad Keeling in 1995 (Cook, 2001). At first, it looked to get the advantages from deregulation of the telecommunication industry by reselling other network’s capacity and making money through stock market speculation. Rich and Keeling tried to increase the company’s shares rather than profit the company (Cook, 2001). Initially, One.
According to Royle (1999) McDonald’s is a very large multinational enterprise (MNE) and the largest food service operation in the world. Currently the company has 1.5 million workers with 23,500 stores in over 110 countries with the United Kingdom and Germany amongst the corporation’s six biggest markets, and over 12,000 restaurants in the United States. In 1974 the United Kingdom corporation was established and in 1971 the Germany corporation was established, currently the combined corporation has over 900 restaurants and close to 50,000 employees in each of these countries (Royle, 1999).
McDonald’s has the largest fast food market share in the world. As mentioned, it serves 68 million customers every day in 119 countries, allowing it to be the second largest outlet operator with more than 34,000 outlets.
He saw how much potential the restaurant has, so he bought it out and opened one of the first franchises. Within the first year of Ray Kroc buying it, there were one hundred and two locations all around the world. McDonalds currently is one of the largest fast food restaurants in the world and currently has served over sixty four million customers through one of their thirty two thousand sites. It has almost become a way of life for America. Though, McDonalds started off as a small business between two brothers, it grew into one of the largest restaurant franchises in the world and greatly affects our society and how we eat our food.
McDonalds has always been a leader in the fast food industry. Through its dynamic market expansion, new products and special promotional strategies, it has succeeded in making a name for itself in the minds of the target customers. However, McDonald’s earnings has declined in the late 1990’s and 2000s. This is mainly due to a fiercely competitive industry and variety in customer tastes and preferences.
McDonald’s has made it obligatory for anyone wanting to own a McDonald’s franchise to join a course where they are trained on the main operations of a McDonald’s store. These events are split into operations in the McDonald’s kitchen and employee management. The course aims at guaranteeing that the food quality at McDonald’s store is not negotiated and there remains proper working order in all stores. The store décor and architectural design are consistent in across countries globally. In order to maintain the quality of supplies, McDonald’s has preapproved list of suppliers that all franchisees must stick to
Fierce and growing competition – big fast food companies like Burger King and Kentucky Fried Chicken are constantly competing with McDonalds for customers and trying to take the spot as the top fast food chain.
McDonald’s has proven over time that the business practices they utilize work well and have led them to obtaining the title of the largest food retailer in the world. The founder of the company made a tactical decision in franchising the idea of providing fast food at a cheap price. Today, fast food has become a staple of not only American life but a viable food option all over the world. For McDonald’s a critical factor in them reaching the level of growth they currently experience has been franchising. It can be assured that McDonald’s will continue to grow through the usage of the franchising techniques as new food markets continue to develop all over the world.
Burger King uses a dispersed configuration for day to day operations as the majority of their restaurants are franchises with local suppliers. Yet Burger King Headquarters uses a concentrated configuration for marketing and development of products, as well as pricing. This centralization of marketing assists all franchises worldwide and provides the greatest value for the company, but the direction of available products and pricing has proven detrimental to the overall success of the firm. An article on CNNMoney.com describes the failure of the $1 double cheese burger to stimulate sales and how a number of franchisees filed lawsuits against the headquarters due to being forced to sell the double cheese burger at less than cost in order to boost revenues for the headquarters and shareholders and not the franchisees.
...ll as private sectors have gone international with new ventures outside the country. These companies are generating revenue, though modest compared to their overall sales revenue, by deputing their expert personnel outside.