McDonald’s started as a small business in the USA in the 1950s (Stonehouse, Campbell, Hamill & Puride, 2004). Today, it has grown to be a global phenomenon with 34,000 restaurants in over 118 countries (McDonald’s Australia, 2014). Through this expansion, McDonald’s has faced the challenge of transferring a symbol of American culture to places where there are significant national, cultural and religious differences. This essay will analyse some management issues that McDonald’s has experienced. Firstly, the strategic debate regarding global integration versus national responsiveness will be examined. Associated with this issue, is the matter of diversity across different regions. Finally, the essay will consider McDonald’s corporate image of social responsibility in relation to environmental sustainability and increasing problems of worldwide obesity.

McDonald’s as we know it today is a result of Ray Kroc taking the entrepreneurial hamburger ‘stall’ established by the McDonald brothers, and franchising the business with Ted Turner to create an international organisation (McDonald’s Australia, 2014). In the 1950s there was significant domestic growth in the United States of America. International expansion began in the late 1960s and 1970s, initially targeting Canada, the United Kingdom and western European countries of Germany, the Netherlands and Sweden (Stonehouse, et al, 2004). The first restaurant opened in Australia in 1971 (McDonald’s Australia, 2014). In 2001, McDonald’s was one of the top 10 brands and the leading food retailer serving 46 million customers per day, worldwide (Rowley, 2004). Today over 50 million customers will consume a McDonald’s product each day (McDonald’s Australia, 2014).

From the beginning, McDonald’s has used franchising as its way to expand. This has allowed some centralization in terms of decision making (Luthans & Doh, 2011). Franchisees must agree “to use recipes and specifications for menu items; comply with specific standards of operating including systems of inventory control, financial record keeping and marketing; display and use McDonald’s trademarks and other registered logos and marks; and, meet McDonald’s standards for restaurant and equipment layout and display signage” (Stonehouse, et al, 2004, p. 434). While 80% of stores worldwide are franchised, McDonald’s Corporation directly controls the remaining 20% from national centres (McDonald’s, 2014). Interestingly, however, in the Middle East where political issues have influenced public opinion of the United States, and thus symbols of American culture, all McDonald’s restaurants are owned by local nationals (Stonehouse, et al, 2004).

McDonald’s presents with a geocentric predisposition where there is a global product with local variations (Chakravarthy & Perlmutter, 1985 cited in Luthans & Doh, 2011). It is a network of organizations, with a complex structure divided into five regions and country-specific subsidiaries. For example, McDonald’s Australia is in the Asia Pacific region, along with McDonald’s China, McDonald’s India, McDonald’s New Zealand, and McDonald’s Fiji Islands. McDonald’s Australia is an unlisted Australian public company (McDonald’s Australia, 2014). Internationally, there is a shift from the traditional economic dominance of the United States with the growth of the BRIC economies in Brazil, Russia, India and China and indeed developing nations in Africa, the Middle East and South America (Luthans & Doh, 2011). Luthans and Doh (2011) propose that multinational corporations, such as McDonalds, may embrace the Base of Pyramid strategy which targets the 5 billion potential customers in these emerging economies. It is interesting to see the associations McDonald’s has made with the 2014 FIFA World Cup where it is the official restaurant. Similarly, McDonald’s has made adjustments in densely populated countries such as China and Malaysia, where there is limited land to permit drive-thru restaurants and instead customers can call or order online and have their meal delivered.

Therefore as it has expanded internationally, McDonald’s has had to decide whether to use global or regional strategies. Luthans and Doh (2011) propose that is this a source of conflict for multinational corporations whereby the organisation either produces and distributes homogenous products and services, which is a global integration strategy, or the company undertakes a national responsiveness strategy, tailoring their products and services to meet regional needs, tastes and standards and regulations. Rowley (2004) suggests that McDonalds uses glocalization. This sees the standardisation of products and services, as detailed by franchisee requirements, and supports global marketing and allows for economies of scale in terms of production and supply, but where required menu items, uniforms and restaurant layout, for example, are modified to local needs (Stonehouse, et al, 2004). Certainly, Luthans and Doh (2011) highlight that multinational corporations will utilise local strategies for a range of reasons including that some customers prefer to buy local (e.g. the 100% franchised operations in the Middle East), the continual demand for goods to meet local tastes, and the difficulty of centralized management across the globe and thus the ability of local subsidiaries to customize to their market. McDonald’s embraces a transnational strategy where there is both global integration and local responsiveness (Luthans & Doh, 2011). However, there are cultural challenges associated with this approach. As one of the most recognisable brands worldwide, McDonalds focuses on consistency in providing the same quality product and service, but this aim is based on the premise that the product does not have to mean the exact same menu items. For example in India, there are no beef or pork items available and additionally a vegetarian menu is provided, while in Islamic locations, all food is halal. Moreover, uniforms respect religious beliefs such as Muslim female staff wearing a hijab.

One of the challenges for McDonald’s is the increasing diversity within some countries. For example, in Australia 26% of the population was born overseas and a further 20% of citizens are second generation immigrants (ABS, 2013a). There has been an increasing number of immigrants from China and India (ABS, 2013a) as well as refugees from the Middle East and Africa (UNHCR, 2014). Associated with this is a shift in religion, with growths in Hinduism and Islamic members of the community (ABS, 2013b). A limited number of restaurants are offering halal food in Australia but items such as bacon remain on the menu (McDougall, 2013). Moreover as demonstrated in the US, issues can arise with staff not being trained correctly and food not being consistently halal (Karoub, 2013). With such increasing domestic diversity, McDonald’s needs to better accommodate the religious needs of different groups in the community across all restaurants. This may include changing suppliers, the layout of restaurants and providing greater staff training. Similarly, to support diversity in the organisation McDonald’s should be offer flexibility with uniforms; for example, so that Muslim female staff in non-Muslim countries may wear the hijab.

These suggestions for McDonald’s are aligned with the corporation’s emphasis on social responsibility. Certainly their values focus on the respecting the customer, employees, giving back to the community and operating ethically (McDonald’s Australia, 2012). The fast food industry has seen a growing demand for environmental sustainability, to which McDonald’s has responded positively by focusing on how to reduce, reuse and recycle and supporting events such as Clean Up Australia Day (McDonald’s Australia, 2012). While initiatives such as a new napkin dispenser and reusing cooking oil as biofuel (McDonald’s Australia, 2012) can reduce the environmental impact of the company, McDonald’s could take this further, encouraging community involvement with recycling such as allowing McCafe customers to re-use coffee mugs (such as travel mugs). This approach has been adopted by many cafes and chains such as Starbucks, Tim Horton’s in Canada (Schmidt, 2012), Gloria Jeans and Zaraffas. Indeed, some of these competitors to McDonald’s offer discounts for customers who present their own coffee mugs (Schmidt, 2012). This recommendation could save McDonald’s in terms of cost of disposable coffee cups as well as reducing their environmental footprint, and importantly meet community expectations.

McDonald’s sees itself as an active member the community and in Australia this is evident through the Ronald McDonald House charities supporting seriously ill children and their families, and encouraging “activities that improve the health and wellbeing of children” (McDonald’s Australia, 2012, p. 62). However across the globe, there is much argument about McDonald’s purported support of health in the community. Indeed, obesity was the most prevalent health condition affecting first world children in 2011 (McDonald, 2011) and fast-food consuming countries such as Australia, US, UK and New Zealand are amongst the worst in terms of obesity of the population (Su, 2014). Moreover, this problem is now spreading into developing nations. Zaman, Selim and Joarder (2013) argue that developing countries are undergoing a ‘nutrition transfer’ which is characterised by overconsumption of food high in sugar and fat. For example, in Bangladesh changes in the family such as both parents working, greater connectivity with technology and more income sees young people reporting a growing preference for western products and less consumption of traditional food. Gathering at a McDonald’s restaurant is part of the social life and seen by some as a form of status (Zaman, et al 2013). As such there has been a world-wide rise in cardiovascular disease, diabetes, cancer and obesity. McDonald’s has responded by making some menu changes such as introducing salads and healthier options, and in Australia providing kilojoule information on the menu board (McDonald’s Australia, 2012).

While the increase in consumption of fast food, combined with a more sedentary lifestyle and environmental changes such as shrinking backyards (McDonald, 2011), many argue that McDonald’s can still do more. Interestingly, Kaufman (2012) notes that since Morgan Spurlock’s 2004 documentary, Supersize me, McDonald’s share price has quadrupled and Friedman (1970) would certainly argue that McDonald’s profits are meeting the goals of any business. He posits that business has no social responsibilities. Moreover, the UN Global Compact principles focus on the issues of Human Rights, Labor, the Environment and Anticorruption (Luthans & Doh, 2011), with no consideration of social standards relating to nutrition. Yet there is growing pressure worldwide for multinational corporations to contribute positively in all aspects of society, and governments can play a greater role within this area. Future areas for consideration for McDonald’s would include developing further healthier options for customers and perhaps working with government to make such choices more economically inviting. Children’s products which may come with toys, could be linked only with healthier meal options, thereby embedding a stronger nutritional focus at the grass roots level.

Overall, McDonald’s is a highly successful multinational corporation. Through its structure, it is able to provide a relatively consistent product with variations to meet regional needs. The future for McDonald’s includes undertaking more initiatives to meet cultural diversity within nations and extending its corporate social responsibility through environmental sustainability and healthier meal options. As it continues international expansion, McDonald’s will face challenges in terms of meeting government regulations, supporting communities, working with local suppliers and corporate image related to political threats. Importantly, McDonald’s must continue to monitor both the external and internal environment and continuously seek improvements.

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