McDonald’s is one of the largest franchise corporations in the world. This factor alone makes the company a multinational corporation with many locations. While McDonald’s is known for its one dollar burgers and crisp French fries, the company often has to adapt to its surroundings and to the culture of the country in which it is doing business. The purpose of this essay is to discuss and compare two of McDonald’s international locations: McDonald’s Turkey and McDonald’s UK. Based upon these analyses, the writer will be able to draw conclusions in regards to the substantive competitive future of the McDonald’s franchise in these countries.
McDonald’s has been in Turkey for over 20 years. In fact, the corporation celebrated its 20th year in the country in 2006. At that time, the franchise was yielding more effective results than various other McDonald restaurants throughout the world. After reaching this point, McDonald’s partnered with the Andolu Group and decided to open additional restaurants throughout the country. Such a partnership resulted in a substantive competitive advantage for McDonald’s in Turkey. Moreover, McDonald’s Turkey’s restructuring efforts enabled the corporation to increase sales in a tremendous way (Turkish—U.S. Business Council, 2006).
Thus, McDonald’s Turkey is seeing “…135,000 people visit McDonald’s restaurants daily in Turkey…” (TAIK, 2006, para. 4). In addition, the corporation has given over 50,000 employees a memorable start to their work careers. Not only that, McDonald’s Turkey has 20 years worth of sales that have resulted in “…375 million sandwiches, 28,000 tons of meat, 35 million liters of milk and 110,000 tons of potatoes…” (TAIK, 2006, para. 5). All the sandwiches, drinks, and French fries being sold means that people are visiting McDonald’s Turkey.
Business, culture and tourism
As a result, tourism in the country brings in additional customers. Yet, in order for tourists to reach Turkey from other countries, they must have adequate transportation. Well, “Boeing Co. said on Thursday Turkey’s Sky Airlines ordered three of its Next-Generation 737-900ER jetliners, worth $226 million at list prices” (The Gemini Post, 2006, Turkey’s Sky Airlines…, para. 1). This planes offer a quick method of travel to and from the country. However, transportation is not the only business flourishing in Turkey, so is the real estate market.
Some real estate chains are internationally locating their headquarters at Century 21’s Turkey office. This alone brings in additional culture. Consequently, either the newcomers will adapt to the Turkish ways of live or implement new traditions. In fact, The Gemini Post (2006) discussed, “Turkey has become a favorite of real estate chains because of its recent performance, together with its special geographic location between Europe and the Middle East, Realty World Turket CEO…said” (Turkish real estate…, para. 1). What do these things have to do with McDonald’s Turkey? It depends on the situation.
New business often means people coming to the country for conferences, training seminars, career changes, study abroad, etc. Also, in 2006, Larson indicated at the Business Partners Day that,
…McDonald’s (sic) went through global problems five years ago. This was felt more in Turkey because of the 2001 crisis. But with the new leadership plan we implemented in 2002, we have profited for 36 consecutive months around the world. (The Gemini Post, 2006, McDonald’s 20th year in Turkey, para. 1)
Significantly, the 2001 situation mentioned refers to the 9/11 attacks that occurred in the United States. These attacks caused some division amongst countries and lead to the “War on Terrorism” which has created controversy in many nations. Consequently, any multinational corporation that is successful in another country has to be doing something right. Furthermore, the fact that Google opened up an office in Turkey only enhances McDonald’s Turkey profitability potential (The Gemini Post, 2006, Googles opens office in Turkey). Google is a company that serves as an Internet search engine. Thus, any Americans visiting Turkey who want a familiar location to frequent can find out where the nearest McDonald’s is from their living quarters. Remarkably, McDonald’s Turkey also knows when to align itself with well-known brands, such as Coca-Cola.
McDonald’s and Coca-Cola of Turkey signed a deal to work together. At first, Coca-Cola only worked with Burger King. This was not good for McDonald’s since Burger King is one of the franchises fiercest competitors. Yet, Coca-Cola saw the growth and profitability potential that McDonald’s Turkey possessed. Thus, although the two companies began a slow growth in its partnership ventures, that growth is gradually increasing (United World, 2005). However, a strong ally does not prevent problems from occurring.
Effects of the War on Terrorism
One problem with trying to bring the American culture to another country is the possibility of war, terrorism, and vandalism. For example, in 2004, a bomb went off near a Turkish McDonald’s restaurant. It was noted that “Several McDonald’s restaurants have been targeted by attacks in Turkey in the past” (Israel is real, 2004, para. 5). Thus, some individuals take out their displeasure for the wars in various places on United States’ companies through the methods of vandalism and retaliation. It is almost as if some Turkish individuals believe that McDonald’s is doing nothing for the country.
How McDonald’s is improving Turkey
McDonald’s, however, is improving the country. Just opening restaurants is not the only thing McDonald’s is doing for Turkey. While the first McDonald’s Turkey opened in October 1986 in Istanbul, the corporation has given back in a mass consumer culture type of way. Codrington (2005) explained,
Because the foreign, or American, image of McDonald’s is attractive to people in many countries, local businesses sometimes copy as much of the name and image as they believe they can get away with…This is a contemporary example of cultural adaptation. (p. 704)
Yet, reverse adaptation occurs as well. For example, McDonald’s Turkey has a chilled yogurt drink that is called an Ayran. So, McDonald’s Turkey is a franchise that other companies are trying to model their organizations against as well as a corporation that does what is necessary to be successful. Is McDonald’s UK the same way? Yes and no.
McDonald’s UK opened its first restaurant in 1974. The corporation now serves over 2.5 million people. In fact, McDonald’s UK strives hard to offer convenient locations that are easily accessible. As a result, some of the restaurants are located around cross-channel ferries and in bowling alleys (McDonald’s Corporation, 2007, Restaurant Development). Not only that, McDonald’s UK has Student Information Packs that students can use to find out about the company. The company also recruits students and employs future leaders (McDonald’s Corporation, 2007).
Achieving a competitive advantage
Yet, to achieve a substantive competitive advantage, McDonald’s UK has done many things. For example, the company is putting a 55-page patent on how a sandwich is made. Thus, the franchise will own the intellectual property rights. Significantly, the patent will be filed in both the United States and Europe. McDonald’s UK is hoping that this strategic move will enable the corporation to develop the same tasting sandwich in all its restaurants (Metro, 2006).
Another strategic move that McDonald’s UK made was to change the yellow golden arches to a yellow question mark. The corporation also addressed the obesity issue by offering bagels with cream cheese, fresh fruit, cappuccino, and free-range eggs. All of these things occurred with the McDonald’s in Europe (Pfanner, 2004).
However, probably the single biggest thing that McDonald’s UK is doing from a people’s perspective is allowing families to job share. All the family has to do is get approval from the manager and they can work each other’s shifts. This type of job sharing reduces absenteeism and improves staff retention (BBC News¹, 2006). As a result, it can be said that employees are highly motivated and that this motivation increases productivity. This is extremely important because McDonald’s UK had to close 25 outlets due to low sales. Sadly, the close of these outlets resulted in a cost of $40 million in the 1st quarter of 2006. The costly situation first began to surface for the company as far back as 2003 when the “Plan to Win” revitalization strategy was implemented (BBC News², 2006). Significantly, achieving a cost reduction is part of McDonald’s UK’s strategy to increase profits. Thus, 50 outlets will be converted to franchises (BBC News², 2006).
Consequently, McDonald’s UK will increase its profitability potential. Yet, the corporation is helping the community profit as well. McDonald’s UK is giving back to the community in an environmentally friendly way. The Daily Grist (2007) wrote,
…McDonald’s has announced that it will run all its U.K. vehicles on biodiesel—from its own greasy grills! The chain will convert the 155-lorry fleet to a mix of 85 percent fry grease and 15 percent rapeseed oil by next year, and says the switch will cut its U.K. carbon emissions 75 percent. (para. 1)
As a result, McDonald’s UK is helping to reduce the smog problem while minimizing the cost of fuel.
In addition, the corporation is converting waste (trash) to stored electricity and heat. This energy supply is being used to power hospitals, community facilities, and local buildings. Furthermore, The Guides Network (2007) mentioned,
…McDonald’s have also rolled out new environmentally friendly technologies and techniques within their restaurants. These include solar panels, wind power, recycling schemes for the large quantity of cardboard they use and also energy efficient lighting on their premises. (para. 7)
While all these things are good and more than enough for the corporation to flourish in the UK, McDonald’s takes giving one step further. The corporation provides free WiFi wireless Internet access in about 1,200 UK restaurants (McDonald’s UK, 2007). A move as bold as this is what sets McDonald’s apart from many of the corporation’s competitors.
Yet, McDonald’s knows how to be competitive from a meat standpoint as well. This would mean that the corporation has a cost advantage in its food distribution. Sadly, some food processing, wholesale, and food services’ companies may not. Bunte and Vavra (2006) pointed out,
Food wholesale traders buy and sell less and less on their own account, but rather provide logistic services to retailers. Food service is still far less concentrated than food retailing and food processing. On the other hand, there are large food service companies (e.g. McDonalds) which may derive market power from both their size and their market share. More important is probably the fact that growth in food services limits the possibilities for food retailing to exert the provision of alternative distribution channels. (p. 15)
What does this say about McDonald’s UK? The main thing is that the McDonald’s franchise knows how to adapt to its surroundings: whether it is in strategic alliances, prices, distribution, the environment, or even to the people.
One must keep in mind that McDonald’s restaurants are managed by individuals because a store does not manage itself. Yet, as a franchise, a model exists in which all McDonald’s restaurants can learn from. While the name, McDonald’s, may easily bring in customers, the restaurants still need to be managed. McDonald’s management must be trained about how to deal with diversity, conflicts of interest, and cultural differences. This was evident in the paper as in McDonald’s UK, the employees were able to job share with their families.
Thus, McDonald’s is doing quite well as a multinational corporation. In Turkey, the corporation has over 20 years of experience. Therefore, McDonald’s Turkey has brought many first impressions to the communities and to its employees. Such ties as these are reasons why McDonald’s Turkey is retaining a substantive competitive advantage. As for McDonald’s UK, well, the corporation is becoming a model organization; one in which followers seek leadership. Not only that, McDonald’s UK is minimizing costs while reducing waste. These two qualities help the corporation gain loyalty. Most importantly, however, is the fact that McDonald’s UK altered its golden arches to a yellow question mark. This factor alone proves the corporation is willing to compromise with and adapt to its environment. As a result, McDonald’s UK can develop a substantive competitive advantage.