McDonald’s is one of the most abundant fast food restaurants in the world. Its headquarters are in Illinois in the US. The first restaurant was started by Mac and Richard McDonald who were brothers in the state of California. Currently, the company has more than 117 restaurants that are distributed in different parts of the globe. Most of these restaurants are owned and operated by independent owners. The corporation engages in corporate social responsibility activities as a way of empowering society. It mainly conducts these activities throughout their owned entities and franchises. The company’s main principles comprise of maintaining high standards, maintaining high standards and empowering their employees. McDonald’s continues to thrive in the competitive hospitality sector. The company conducts a thorough risk analysis before committing their resources in any country. The corporation has also invested in security cameras that assist in conducting twenty-four surveillance. It ensures that the corporation’s clients are always safe within their areas of operation. This paper will mainly focus on the global plans of McDonald’s entity and how it uses Bartlett & Ghoshal’s typology in its activities.
According to Harzing (2000), Bartlett and Ghoshal typology of international corporations (MNCs) is a threefold typology of global corporations that was tested using information from 166 subsidiaries of 37 multinational companies. The three categories included Global, Multidomestic and Transnational levels. This is the same strategy that McDonald’s uses to carry out its activities across the globe. McDonald’s uses this strategy to administer its worldwide operations using global integration and local responsiveness.
McDonald’s uses this strategy at the corporate level to gain from the economies of scale. In this case, the corporation has a holding company and several subsidiaries that enable it to save on costs as results of increased production. Due to a large customer base, the company produces its products in large quantities. This allows them to cut down on expenses that other entities that provide their items in small amounts. On the other hand, local firms are to respond to countrywide differences. Transnational companies must also cope with strategic demands. McDonald’s also engages in healthy competition with its rivals. The main reason is to give customers alternatives from the available choices. This is because the product markets are diverse to compete in the same market.
McDonald’s uses a centralized system where the head office monitors the operations of all the other subsidiaries. The primary role of the affiliates, in this case, is to implement the strategies of the parent company. Without the presence of subsidiaries, the company cannot reach the broader market audiences that are dispersed in different regions of the globe (Harzing, 2000). Therefore, the associates play a crucial role in extending the operations of the company to other areas. MacDonald’s subsidiary companies have a centralized system of management. They are free to carry out their actions even though the holding corporation has an interest in their activities. Transnational corporations also act as the centers of excellence. They allow the flow of people and goods beyond any nation’s border. They also allow for free movement of information among individuals. McDonald’s subsidiaries are the ones obligated to respond to local client’s preferences. Therefore, the strategy significantly assists in maintaining customer’s loyalty as they cannot shift to the competitor’s products.
Moreover, McDonald’s associate’s research and development is closer to the customer. It makes it easier to modify the products to meet the needs of the customers. The approach is likely to increase sales once the product arrives in the market. The situation is contrary to the global entities that cannot locate these value chains close to the client. They do not see any need to access this market information. As a result, the products sold by the associates of both transnational and multidomestic corporations have a higher R &D and local production. It is higher than the products sold by McDonald’s affiliate and its global companies.
McDonald’s international companies are interdependent. This enables them to enjoy a symbiotic relationship among themselves. Therefore, each of them depends on the other for survival. The level of integration among these companies is high. There are two types of dependency among McDonald’s associates. The first one is where they rely on the headquarters of other subsidiaries. There are also cases where the associates depend on the main branch rather than operating separately. This relationship is essential as it enables the operations of the business to move on smoothly. The companies also share vital information that can allow them to progress in the future.
On the issue of human resource, the holding company and its subsidiaries have their staff members. They also have the powers of recruiting their staff members within their regions. Therefore, associates are given the ability to manage their affairs although the headquarters of the corporation monitors their issues. Both the multinationals and the subsidiaries can hire staff beyond their territories all over the world. Most of these entities carry out their activities past their borders.
On the other hand, the transnational and multidomestic firms recruit workers locally. It is because they do not operate beyond their home countries. However, the control mechanism of the entire company is on the hands of the holding corporation. It monitors all the other entities and makes important decisions on behalf of the firm.
From this analysis, I have been able to come up with several recommendations. First, the leading company should devolve some of its activities to the subsidiaries. This will help in improving their efficiency in the delivery of services to the customers. The commendations logically flow because of the interdependence that exists between the multinational and their associates. This symbiotic relationship shows that people must work as a team instead of doing things separately. This will significantly assist in improving the efficiency of services in the business. The conclusions also indicate that companies must increase their output to enjoy the economies of scale. This suggests that the corporation must continue expanding its operations if it anticipates enjoying the benefit in the future. From the report, it is also clear that the recommendation usually influences the decision that the entity makes. For instance, McDonald’s can only expand its operation if it gets information that there is a gap that needs to be filled in other parts of the globe. Additionally, the commendation was given also indicates where the company can compete. For example, multinationals and subsidiaries compete globally while the transnational and multinational corporations only compete nationally.
Several justifications support most of the decisions that were made in this discussion. First, Corporations need to rely on each other by sharing information and resources since they belong to one family of the McDonald’s group of companies. Besides, this interdependence helps in reducing conflicts and creating better relationships among these corporations. Secondly, it is essential for McDonald’s to increase its output to continue benefiting from economies of scale. The nature of the company also justifies mass production since it is a multinational corporation. Eventually, mass production is acceptable since it will assist the corporation in reducing its operational costs. McDonald’s overall centralised system is permissible because there must be a center of command even if some of the responsibilities are devolved. This can assist in knowing who should be held liable if a mistake occurs. An integrated approach simplifies the entire structure of the organization and makes the decision making the process easier. It also enhances better relations between the central and devolved managers and staff members in the entity.
The company is also justified to have several subsidiaries because they have been in business for decades. Therefore, they understand the dynamics involved in the hospitality industry. Additionally, the demand for their products is gradually increasing all over the world because of the quality services they offer to their customers. The affiliates are also justified to carry out research and innovation that is closer to the clients. This will help in understanding the needs of the customers before coming up with strategies on how to fulfill them. In conclusion, it is evident that Bartlett and Ghoshal typology has assisted McDonald’s to experience tremendous growth over the years since its incorporation. It should, therefore, continue using this plan that is much valued by multinationals to carry out its operations.
Harzing, A. (2000) An Empirical Analysis and Extension of the Bartlett and Ghoshal Typology of Multinational Companies. Journal of International Business Studies, 31(1): 101–119.