Guilherme Karaoglan
MBA 509: International Business Management
Dr. Sivakumar Ventakaramany
Individual Research Project
McDonalds in Brazil
November 24th 2013

McDonalds
Introduction
McDonald's is a company responsible for an international fast-food chain, being the second largest network in the world in the area, just behind Subway network. The term also refers to the brand of this company, which transcends and reveals inserted in contemporary mass culture. The network was founded in April 1955 in Illinois, USA. It currently sells about 190 burgers per second in the world, with a new store being opened every ten hours. Between 1955 and 1993, its 14,000 stores sold 80 billion sandwiches. Alongside brands like Coca-Cola McDonald's is considered one of the most widespread international symbols of capitalism. Its most famous product is the sandwich known as Big Mac. (http://pt.wikipedia.org/wiki/McDonald's)
Arcos Dorados, the largest McDonald's franchise in the world, added profit of nearly $ 20 million in the third quarter of this year. In Brazil, the network operation achieved sales of 444.5 million dollars, similar to that achieved a year earlier amount.
The Brazilian market represented, between the months of July to September, 44% of total company revenues, which totaled revenues of $ 1 billion in the period, up 6.2% compared to 2012.
Currently, Arcos Dorados has almost 2,000 restaurants, 2,157 dessert centers and 344 McCafé units operating in 20 countries where it operates. In Brazil, the network has 762 units functioning.
The company said results for the year are in line with expectations. "The pace of store openings should fall in the short term and will be redoubling efforts to increase the profitability of the network." the company said in a statement. (http://exame.abril.com.br/negocios/noticias/no-brasil-mcdonald-s-vende-mais-de-us-440-mi-em-tres-mes )
History
The business began in 1940, with a restaurant opened by brothers Richard and Maurice McDonald at 1398 North E Street at West 14th Street in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 furthered the principles of the modern fast-food restaurant that the White Castle hamburger chain had already put into practice more than two decades earlier. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee". Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs. (www.wikipedia.org/wiki/McDonald's)
McDonald's first filed for a U.S. trademark on the name "McDonald's" on May 4, 1961, with the description "Drive-In Restaurant Services", which continues to be renewed through the end of December 2009. In the same year, on September 13, 1961, the company filed a logo trademark on an overlapping, double arched "M" symbol. The overlapping double arched "M" symbol logo was temporarily disfavored by September 6, 1962, when a trademark was filed for a single arch, shaped over many of the early McDonald's restaurants in the early years. Although the "Golden Arches" appeared in various forms, the present form as a letter "M" did not appear until November 18, 1968, when the company applied for a U.S. trademark.
In Brazil, McDonald's settled first on February 13, 1979, at Rua Hilario de Gouveia, in Copacabana, Rio de Janeiro, and two years later on Paulista Avenue in São Paulo. In 2005, sales of Big Mac surpassed 53 million units. The network has more than 1,100 points of sale in the country, including restaurants, kiosks and McCafe units and operates in 22 states plus the Federal District. Restaurantes6 and 616 are nearly 600 kiosks, plus over 50 McCafe units, through which about 1.5 million customers per day. McDonald's is one of the largest employers in Brazil, with more than 34 thousand employees.
It was elected by the Great Place to Work Institute (GPTW) as one of the hundred best companies to work for in Brazil.7 is the fourteenth largest retailer in the country, ranking second in the Ibevar in 2012.
Mission and Vision
Mission
McDonald's brand mission is to be our customers' favorite place and way to eat and drink. Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers' experience.

Vision
“Double the value of the company, expanding the lead in each of the market”.
(www.mcdonalds.com.br)
ABOUT THE COUNTRY
Environment
Food in Daily Life: Rice, beans, and manioc form the core of the Brazilian diet and are eaten at least occasionally by all social classes in all parts of the nation. Manioc is a root crop that is typically consumed as farinha , manioc flour sprinkled over rice and beans, or farofa , manioc flour sautéed in a bit of oil with onions, eggs, olives, or other ingredients. To this core, meat, poultry, or fish are added, but the frequency of their consumption is closely tied to financial well-being. While the middle and upper classes may consume them on a daily basis, the poor can afford such protein sources far less often.
Traditionally the most important meal of the day is a multicourse affair eaten after midday. For middle-class and elite families it might consist of a pasta dish or a meat or fish course accompanied by rice, beans, and manioc and a sweet dessert or fruit followed by tiny cups of strong Brazilian coffee called cafezinho. For the poor it would be primarily rice and beans. The evening repast is simpler, often consisting of soup and perhaps leftovers from the midday meal.
As Brazil urbanizes and industrializes, the leisurely family-centered meal at midday is being replaced by lanches (from the English, "lunch"), smaller meals usually consumed in restaurants, including ones featuring buffets that sell food by the kilo and such ubiquitous fast-food eateries as McDonalds. The poor, who cannot afford restaurants, are likely to eat the noon meal at home, to buy snacks sold on the street, or to carry food with them to work in stacked lunch buckets. In rural areas itinerant farm laborers who are paid by the day and who carry such buckets have been dubbed bóias-frias, "cold lunches." (http://www.everyculture.com/Bo-Co/Brazil.html#ixzz2lKtwQXCa)
Economy
Brazil is one of the world giants of mining, agriculture, and manufacturing, and it has a strong and rapidly growing service sector. It is a leading producer of a host of minerals, including iron ore, tin, bauxite (the ore of aluminum), manganese, gold, quartz, and diamonds and other gems, and it exports vast quantities of steel, automobiles, electronics, and consumer goods. Brazil is the world’s primary source of coffee, oranges, and cassava (manioc) and a major producer of sugar, soy, and beef; however, the relative importance of Brazilian agriculture has been declining since the mid-20th century when the country began to rapidly urbanize and exploit its mineral, industrial, and hydroelectric potential. (http://www.britannica.com/EBchecked/topic/78101/Brazil/25089/The-economy)
The rise of Brazil has been one of the greatest economic success stories of the last decade. Record levels of foreign investment, millions of people lifted out of poverty, and a booming middle class has created a vibrant new marketplace for global commerce. But now the country is facing stagnant GDP growth—a mere 1 percent in 2012—as the engines that powered Brazil’s ascendance in the last decade are scrambling for new sources of fuel. Investors are starting to turn their heads to Latin America’s other successful markets, like Mexico and Colombia. To continue its upward march, Brazil must unlock new drivers of economic growth. Brazil 2013 will explore promising sources of growth and debate the economic and political models that will allow them to flourish. (http://www.economist.com/events-conferences/americas/brazil-2013)
Politics
The politics of Brazil take place in a framework of a federal presidential representative democratic republic, whereby the President is both head of state and head of government, and of a multi-party system. The political and administrative organization of Brazil comprises the federal government, the states, the federal district and the municipalities.
The federal government exercises control over the central government and is divided into three independent branches: executive, legislative and judicial. Executive power is exercised by the President, advised by a cabinet. Legislative power is vested upon the National Congress, a two-chamber legislature comprising the Federal Senate and the Chamber of Deputies. Judicial power is exercised by the judiciary, consisting of the Supreme Federal Court, the Superior Court of Justice and other Superior Courts, the National Justice Council and the Regional Federal Courts.
Currently, Brazil is divided politically and administratively into 27 federal units, being 26 states and one federal district. The executive power is exercised by a governor elected to a four-year term. The judiciary is exercised by courts of first and second instance addressing the common justice. Each State has a unicameral legislature with deputies who vote state laws. The Constitution of Brazil knows also two elements of direct democracy, stated in Article 14. The legislative assemblies supervise the activities of the Executive power of the states and municipalities.
The municipalities are minor federal units of the Federative Republic of Brazil. Each municipality has an autonomous local government, comprising a mayor, directly elected by the people to a four-year term, and a legislative body, also directly elected by the people.(http://en.wikipedia.org/wiki/Politics_of_Brazil)
Social Aspects
Whatever its origins, Brazilians are known for their informality, good nature, and charm as well as their desire not to be thought unpleasant or boorish. They place high value on warmth, spontaneity, and lack of pomp and ceremony. Despite regional and social class variations, the Brazilian way of life has common traits that distinguish it from the customary ways of dealing with people and situations in North America and Europe and even in other Latin American countries. Its uniqueness seems to result from the peculiar blend of Portuguese, African, and Amerindian cultural influences in a setting in which central authority attempted, without great success, to exploit the people and resources and to enforce religious norms. Under these circumstances, it was preferable to appear to obey than actually to obey.
At the level of interpersonal relations, in contrast to what is usually found in Spanish-speaking Latin America, where behavior tends to be more formal and rigid, there are in Brazil strong cultural values in favor of conciliation, tolerance, and cordiality. To the extent possible, direct personal confrontation is avoided. This Brazilian style of behavior may be derived from an Iberian and colonial heritage of diverse ethnic groups living together, weaker central authority exercised by the Portuguese crown, and day-to-day practical forms of resistance to exploitation. It may also have an element of popular emulation of the genteel behavior of the elites. (http://countrystudies.us/brazil/38.htm)
Business Analysis Leader in the fast food service segment, McDonald's stands for quality products and service. McDonald's is the largest and best-known company fast food service in the world. Present in 119 countries, the network has more than 33,000 restaurants, where 1.7 million employees who daily feed more than 64 million customers work. In Brazil, the network is operated since 2007 by the Golden Arches, master franchisee of the McDonald's brand throughout Latin America.
Arcos Dorados (Golden Arches) is McDonald’s largest franchise in the world, both in total sales of the system as in number of restaurants. The company is the largest network of service supply in Latin America and the Caribbean, with exclusive rights to own, operate and grant franchises of McDonald's restaurants in 20 countries and territories, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, St. Croix, St. Thomas, Trinidad & Tobago, Uruguay and Venezuela. Directly or through franchises, the company operates more than 1,840 restaurants in the McDonald's brand in the region, with more than 90,000 employees serving approximately 4.3 million customers every day.
• McDonald's is a leader in the food segment outside the home and has nearly 700 restaurants and 75 McCafe in Brazil.
• R$ 3.45 billion - Revenue in Brazil in 2009
• 4.8% - network growth compared to 2008
• 8 - position of McDonald's sales in Brazil in the ranking of countries of the corporation
• 50,000 - employees in Brazil
• 1.7 million - employees worldwide
• 119 - countries where it is present
• 33,000 - Restaurants around the world
• R$ 249 million - the amount of collected taxes and social contributions
(www.mcdonalds.com.br )

Competitor Analysis
Subway (stylized as SUBWAY) is an American fast food restaurant franchise that primarily sells submarine sandwiches (subs) and salads. It is owned and operated by Doctor's Associates, Inc. Subway is one of the fastest growing franchises in the world with 40,735 restaurants in 102 countries and territories as of 14 November 2013.It is the largest single-brand restaurant chain and the largest restaurant operator globally.
The SUBWAY ® began operations in Brazil in 1993. In this period, the stores were installed in large and affluent neighborhoods, the cost of very high operation and low brand recognition have prevented some restaurants. Due to various setbacks, the SUBWAY ® has undergone a period of adjustment in which he tried to understand the Brazilian market. To get a sense of seriousness and intent of the SUBWAY ® here, today Brazil is now the 7th largest global enterprise market, among the 92 countries are behind only the United States, Canada, Australia, England, Germany and Mexico. And the number of sandwiches sold at every restaurant, every week is among the top 3 in the world along with New Zealand and Singapore. The SUBWAY ® is here to stay, and definitely came away with the goal of becoming the largest chain of fast-food of Brazil until 2015.(www.subway.com.br)
Burger King, often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain. After Insta-Burger King ran into financial difficulties in 1954, its two Miami-based franchisees, David Edgertonand James McLamore, purchased the company and renamed it Burger King. Over the next half century, the company would change hands four times, with its third set of owners, a partnership of TPG Capital, Bain Capital, and Goldman Sachs Capital Partners, taking it public in 2002. In late 2010, 3G Capital of Brazil acquired a majority stake in BK in a deal valued at US$3.26 billion. The new owners promptly initiated a restructuring of the company to reverse its fortunes.
(www.burgerking.com.br)

Business Result
When many companies were showing negative or no growth McDonald’s had 5.6% Comparable Sales Growth, Earnings Per share of 11% and a Total Shareholder Return of 34.7%, which was number 1 in the DOW 30 (McDonald’s Corporation 2011). As of this report McDonald’s had 104 consecutive months of global sales increases. Their Market Value has more than doubled from 2006 where it was $44.33 to 2011 where it was $100.33. From 2008 through 2010, McDonald’s was responsible for 90% of the sales growth in the U.S. fast-food and fast-casual industry. McDonald’s has been included in FORTUNE’s World’s Most Admired Companies since 2007. In 2012 they were rated at number 11 overall and number 1 in the Food Services area. In the 9 performance area’s rated by FORTUNE, McDonald’s was in the top 10 of 6 of the 9 areas. They were 1st in Use of Assets, 2nd in Management Quality, Financial Soundness, and Global Competitiveness and 4th in People Management and Long-term Investment. (Colvin, G)

Conclusion
McDonalds has been successful for a long time now, and it is the most recognized brand around the world. Their operations are in almost every country, and in some countries it can be found in almost every corner. It has created a different experience for people eating in fast foods with their hamburgers and service. The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries. It "seeks to make exchange-rate theory a bit more digestible". For example, the average price of a Big Mac in America in July 2013 was $4.56; in China it was only $2.61 at market exchange rates. So the "raw" Big Mac index says that the yuan was undervalued by 43% at that time. In Brazil, the Big Mac costs $5.28. (See table in Appendix)
Brazilians enjoy eating their meals at McDonalds, and that is the reason why the company has been around for so long and going strong. (http://www.economist.com/content/big-mac-index)

Reference Page

McDonald history (n.d) Retrieved from http://pt.wikipedia.org/wiki/McDonald's McDonald’s economy in Brazil (n.d) Retrieved from http://exame.abril.com.br/negocios/noticias/no-brasil-mcdonald-s-vende-mais-de-us-440-mi-em-tres-mes
McDonald’s Corporation. (n.d.) Retreived from www.mcdonalds.com
McDonald’s Corporation – Brazil (n.d.) Retreived from www.mcdonalds.com.br - Brazil

Brazil Culture (n.d.) Retrieved from http://www.everyculture.com/Bo-Co/Brazil.html#ixzz2lKtwQXCa Brazil Economy (n.d.) Retrieved from http://www.britannica.com/EBchecked/topic/78101/Brazil/25089/The-economy http://www.economist.com/events-conferences/americas/brazil-2013

Politics of Brazil (n.d.) Retrieved from http://en.wikipedia.org/wiki/Politics_of_Brazil Social Aspects in Brazil (n.d.) Retrieved from http://countrystudies.us/brazil/38.htm Competition (n.d.) Retrieved from www.subway.com.br www.burgerking.com.br

McDonald’s Corporation. (n.d.) Retreived from http://www.aboutmcdonalds.com/mcd.html

Big Mac Index (n.d) Retrieved from http://www.economist.com/content/big-mac-index

Collins, J. (2011). COLLINS on CHAOS. (cover story). Fortune, 164(6), 156-170.
COLVIN, G. (2011). The World's Most Admired Companies. Fortune, 163(4), 109-112.

APPENDIX