Essay About Fast-Food Chain And United States

The Impact of Globalization on Business Enterprises: McDonald’sJoin now to read essay The Impact of Globalization on Business Enterprises: McDonald’sThe Impact of Globalization on Business Enterprises: McDonald’s“Hours after the United States started its bombing raids in Afghanistan…angry crowds vandalized McDonald’s outlets in Islamabad and Karachi…demonstrators burned an American flag outside a McDonald’s restaurant in the resort town of Makassar and then stormed it. No company faces the issue of globalization more acutely than McDonald’s.” (Barboza, para 1) Often the symbol of American entrepreneurship and capitalism in the world, McDonald’s has enjoyed successes with its association to the United States. However, that same association in recent years has become a vice to this fast-food chain as U.S. foreign policy around the globe is being met with resistance from enemies and allies alike. How will the McDonald’s Corporation adapt to the new challenges of globalization in world of growing resentment of anything American?

Found in 119 countries around the world, McDonald’s has branched out into 30,000 locations serving nearly 50 million customers each day. (McDonald’s, 2006) The global success of this fast-food giant can best be attributed to its ability to adapt to local cultures and resources. Problems of globalization can quickly be turned into opportunities by the company’s continued sensitivity to local cultures. “McDonald’s training programs are delivered in up to 40 languages, with the primary languages being Chinese, English, French, German, Italian, Japanese, Portuguese and Spanish for the top markets.” (Ray, para 3) Because “more than 70% of McDonald’s restaurants around the world are owned and operated by independent local businesspersons,” (McDonald’s, 2006) adherence to cultural values is often a natural occurrence. For example, in Saudi Arabia, single men must eat separately from women and children. In India, there is no beef or pork, but a vegetarian Maharanja Mac, the equivalent of a Big Mac. In Japan, where the “r” sound is rarely pronounced, Ronald McDonald is known as Donald McDonald. (Barboza, para 25) Even with the corporation’s ability to locally adapt, the world’s perception of “Golden Arches” continues to put pressure on these local franchisors.

As has become the trend in the United States and subsequently the world, healthier eating and non-fast-food lifestyles have given McDonald’s a black eye. The image of greedy, obese Americans is often associated with this iconic corporation. McDonald’s has become the poster example of public health nightmares that have contributed to the “doubling of obese people in the United States from the late 1970s to the early 1990s. Over one quarter of adults and more than 12% of children in the U.S. are obese.” (Goodman, 2002) McDonald’s has been forced to modify its product line. For example, in the Philippines, “McSpaghetti” has been added because it was discovered that Filipinos consider spaghetti to be a treat. (Blackwell & Stephan, Global Selling). Coinciding with child obesity, “the anti-McDonald’s website ‘McSpotlight’ criticized the fast-food giant for its disregard for nutritional value and the environment, and the way it panders to children.” (Feine, para 5) Listing other examples would merely demonstrate the likely reality of “too little, too late.” Health realities only contribute to the larger problem image.

In countries where the U.S. has experienced recent political discord, direct examples of globalization pressures were felt by McDonald’s. Politically and religiously motivated clerics in Lucknow, India urged the faithful to boycott all things American to include “McDonald’s, Coca-Cola and Nike.” (Barboza, para 8) Trying to disassociate itself from the United States, McDonald’s allowed its French outlets to run “print advertisements that poked fun at Americans and their food choices by depicting a hefty American cowboy.” (Barboza, para 16) As the symbol for cultural imperialism and multinational corporate greed, McDonald’s (as well as other U.S. global giants) takes great deal of heat.

Comparative advantages of developed countries over poor nations have recently become a fast-food industry challenge as well. “U.S. fast-food giants, in a move reflecting the crucial role of agricultural subsidies at the World Trade Organization, are for the first time injecting themselves into trade talks in a big way.” (Kilman & Gray, para 1) Many fast-food notables have joined together to “support efforts to lower barriers to trade in processed foods and commodities, ultimately lowering the prices of ingredients world-wide. (Kilman & Gray, para 8) It is quite evident that the vast supply lines of fast-food franchises often originating in highly-developed nations are being affected by import barriers of less-developed nations. In many ways, this is a smaller nation’s attempt to

to better compete globally, and increase its own contribution to the world economy. The problem‴of having fewer available fast-food outlets in certain U.S. cities was also discussed as a potential solution by the AEA, especially when the number of fast-food outlets in the fast food industry was estimated to be increasing in the US by an average of just over 1 million per year (Gibbed et al., 2004a,b). There is no doubt that a large portion of fast-food outlets in low-income countries are located there, which puts pressure on prices, labor, and competition among those in the same market. In addition, at the same time, fast-food consumers are increasing demand for products and services from poor countries, which could, therefore, increase their profit margin and increase their number of fast items. These factors in turn can lead the fast-food chains to look for alternatives to US competitors.

3.8.4 Local Competence . “Local competition” is defined as, 1) a supply chain in which products and services of an established fast-food chain are supplied by a local supplier from one or both competitors; 2) a new competitive advantage, which is a greater share of global revenues and economic growth. This translates into increased sales efficiencies and increases in productivity, both here in low-income countries and in non-poor countries, for example. (Gibbed et al., 2004a,b) 3 Local competition in high economies can therefore be a good mechanism for increasing their own profitability by cutting costs in the long run.

3.9 Efficient Trade Contingents . In its recent report International Trade Contingency and the American Way of Food , the AEA concluded that, “While the United States continues to use innovative techniques to achieve the growth of its fast-food empire, there remain concerns about the relative cost structure of local food imports when compared to the more common imports for most other developed nations. Local food imports tend to be a significant source of imports for both fast-food restaurants and retail shops, although the relatively low cost level for imports relative to imports implies that some of the cost efficiency gains for those import costs could not be completely achieved as compared to those of imports from the outside.” (AEA, no. 1, p. 29) One might wonder how the government justifies the fact that much of the country’s cheap fast-food competition has to do with poor competition in the food-processing industries. After all, many of the other goods considered by the AEA for this category of category are less costly, and thus not significantly more environmentally friendly. [5] “The fact that some imports from low-income countries are so burdensome for consumers of these poor imported items is an implicit consequence of the absence of any meaningful environmental benefits to an American company. Unfortunately, the same is true if American fast food companies start buying from cheap U.S. imports, even after they have done so in the past. (AEA, no. 3,