McDonald applied the process of internationalization
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The internationalization process of a company from the global point of view results in the creation of multinationals. The internationalization is based on the execution of a comprehensive and rigorous analysis of strategic character. McDonald’s success in India since 1996 settled in the application of an efficient process of internationalization. One of the main objectives of this strategy is to have competitive advantages taking into consideration distinctive characteristics of each market. Mac Donald used this business philosophy in India developing new products and adapting their value chain to Indian market requirements. Despite, some problems appeared at the beginning because of cultural aspects Mac Donald faced, corrected and learned of those mistakes. In the nineties McDonald was consolidated worldwide in countries where the culture was quite similar to the United States.
Clearly, McDonald was a company strong, competitive and financially stable enough in fast food industry. McDonald already had a model of internationalization more than proven that already represented an attractive opportunity for expansion in other countries. Strategic analysis of the company is important because give internal information and allow creating a diagnostic tool of the current state of the company. For McDonald this does not represent a real challenge from the internal perspective it was more about attract new potential consumers. Even McDonald developed this analysis that at first sight showed obvious information about how good they were in that time to capture. Other companies could not afford to not do this because the analysis is essential for identify strengths and weaknesses of the company.
After knowing they were strong internally McDonald decided to make a strategic analysis of the environment to evaluate their chances of success in India. An analysis of the Autonomous University of San Luis Potosi showed that India had a “prosperous and attractive market around 200 million potential middle class consumers” (Valerdi, 2012). McDonald thought they had done well in their study and assumed that world view gained before was enough. At entry the Indian market McDonald faced labor stoppages and disturbances by Hindu citizens. For example, a judgment for use beef extracts oil cost $ 10 million and a public apology (Valerdi, 2012). In addition, after some failures caused by a bad analysis of Indians culture they understood impact that they caused in India. McDonald decided to restructure its external analysis changing the menu from beef to chicken or lamb and others Indian plates.
The new approach of the external analysis which focused on culture was essential in order to reduce its negative image won previously. There are different strategies for internationalization of a company as joint ventures, strategic alliances, acquisitions, franchising and Greenfield companies. McDonald after making internal and external analysis of the environment they had to make the decision of what will be the internationalization. The strategy chooses was a mix between Franchise and Join-Venture because this was the way decided to go into India. According to Thompson in his book called Administración Estratégica “the advantage of franchising is that the franchisor runs most of the costs and risks to settle in a foreign location and the franchisor only provides resources, training and supervision” (p. 211).
McDonald decided to enter in India with a franchise because their risk was high for being a demanding market and polarized. The franchisee in India Vikram Bakshi was the one who faced the initial risks. On the other hand, thanks to the Join-Venture McDonald acquired a considerable share in taking business decisions. The internationalization process that McDonald made to enter in India was certainly successful. But to have this success in this country were necessary mainly corrections in the cultural aspect. The importance of following properly these steps is essential and thus have certain whether it is viable or not to enter into foreign markets. If that country is difficult to get in it an internationalization process helps to know the preventive and corrective actions to take.
A good internationalization process also helps to leverage the strengths and opportunities thereby mitigating the weaknesses and threats. Undoubtedly, the experience and resources of McDonald as a powerful multinational company plus appropriate internationalization strategy facilitated the adaptation of this business model to a market as complex as was the Indian market for McDonald.
Thompson, A. Strickland, A. (2012). Administración Estratégica. México: Mc Graw Hill. Universidad del País Vasco. (2006). La estrategia de internacionalización de la empresa un estudio de casos de multinacionales vascas. Retrieved from