Multinational Corporations: McDonald’s Corporation

Multinational Corporations: McDonald’s Corporation
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Multinational Corporations: McDonald’s Corporation
Introduction
Multinational companies provide numerous benefits to the home and host countries. MNCs provide necessary social and economic development for the nation by providing a smooth flow of money. MNCs assist in balancing imports and exports in the country to achieve the intended macroeconomic goals. MNCs provide employment and spending in the country for increased economic performance. A company will improve competitiveness by identifying the right countries to operate and increase profits (Hamilton & Webster 2018). The United States is a country with many MNCs due to friendly trade policies. McDonald’s Corporation is a multinational company that operates in the US and internationally. McDonald’s Corporation focuses on mitigating risk by operating in the US and other nations. The international excellence of MNCs is realized by using the right expansion strategies to increase company revenue. McDonald’s Corporation's expansion strategies to different nations focus on raising the company market share.
Methods of McDonald’s Corporation Conduct International Business
McDonald’s Corporation is an American fast-food company founded in 1948 by Maurice and Richard McDonald (McDonald’s, 2019). The selling of fast food to the US and global customers has provided a competitive advantage for the company. The growth plan applied by McDonald’s focuses on dealing with the local and international competition in the fast-food industry. The expansion strategy applied by McDonald’s was franchising. Franchising is an expansion concept where the franchisor provides the franchisee with permission to use the brand name to sell products and services. Franchising is an expansion strategy that assists the franchisor and franchisee to maintain a competitive edge in the target market (Hoy, Perrigot & Terry 2017). McDonald’s allows small business owners from different countries to have a large business by using the franchising expansion strategy. Franchising has been a successful expansion strategy by McDonald’s making it possible for the company to have restaurants in different nations. McDonald’s Corporation started expanding in Canada in 1967, by 1988 the company had 10,000 stores, and by 2019 McDonald’s Corporation has nearly 40,000 restaurants in over 100 countries (McDonald’s, 2019). McDonald’s restaurants focus on using healthy menus to increase international competitive advantage in the fast-food industry.
Reason to Conduct McDonald’s Corporation
McDonald’s founders approached Multimixer salesman Ray Kroc in search of a nationwide franchising agent (McDonald’s 2019). The start with local expansion in the US was an approach to understand customer behaviors. In 1955 Ray Kroc opened his first McDonald’s and achieved the first-day sale of $366.12 (McDonald’s 2019). Franchising is a good method for a business to expand and reduce the risks of entering new markets. The saving on labor costs and supplies is possible by an MNC that uses franchising as the expansion strategy. McDonald’s applied the franchising method of international expansion in reducing cases of losses due to expensive labor and supplies. According to Hoy, Perrigot, and Terry (2017) franchisee uses the MNC brand name and trademarks in attracting different potential consumers in the market. The franchisor benefits are receiving royalty payments from the franchisee, reduced financial risk, and increase the geographical presence of the company. The franchisee benefits with reduced start-up costs, lower marketing costs, and increased brand security. In 2018 Entrepreneur Franchise 500 ranked McDonald’s number 1 franchising company (McDonald’s 2019). McDonald’s franchise agreement provides a good opportunity for different entrepreneurs in different nations. McDonald’s franchising focus on building customer loyalty in the international fast-food market.
Financial Repor...