Question 1

Read the following Excerpt from the case given and answer the following questions.

The McDonalds Story

The McDonald Brothers

Dick and Mac McDonald moved to California to seek opportunities they felt unavailable in New England. Failing in the movie business, they subsequently proved successful in operating drive-in restaurants. In 1948 they took a risk by streamlining their operations and introducing their Speedee Service System featuring 15 cent hamburgers. The restaurants success led the brothers to begin franchising their conceptnine becoming operating restaurants. At the San Bernardino location, Dick and Mac McDonald perfected their Speedee Service System featuring a limited menu including fifteen cent hamburgers, shakes and fries. The brothers sold 14 franchises of which 10 became operating restaurants not including their original location in San Bernardino.

McDonald brothers San Bernardino McDonalds restaurant 1948-1955.

McDonald brothers franchised brochure c. 1952.

A native Chicagoan, Ray Kroc left high school after his sophomore year to join the World War One Red Cross Ambulance Corps. The war ended before his unit was sent overseas with Ray returning home to earn a living as a musician and later selling paper cups. In 1939, he became the exclusive distributor of the Multimixer (a milkshake mixing machine). He visited the McDonald brothers in 1954 which led to him becoming their franchise agent. In 1955, Kroc opened the first McDonalds east of the Mississippi river.

Newspaper advertisement announcing the opening of Ray Krocs first McDonalds.

Ray Krocs first McDonalds restaurant in Des Plaines, Illinois just prior to opening on April 15, 1955.

Ray Krocs vision was that there would be 1,000 McDonalds restaurants solely in the United States. Yet, McDonalds continued to grow and expand into international markets beginning in 1967 opening in Canada and Puerto Rico. Today, the company has over 36,000 restaurants in over 100 nations. The most recent opening was in Kazakhstan in 2016. Their motion to move internationally is due to saturation of the local market as Burger King is already fully established much earlier

McDonalds expanded into international markets with the opening in Canada of its restaurant in Richmond, British Columbia in June, 1967.

Their mission is to make delicious feel-good moments easy for everyone.

The backbone of the Brand is, and always has been, a commitment to a set of core values that define who they are and how they run their business and restaurants.

When they live their values every day and use them to make decisions - big and small they define McDonalds as a brand our people, and the people we serve, can trust.

Their values are the filter through which all business decisions are made because actions are bigger than words.

Their strategy is underpinned by their focus on running great restaurants, empowering the people, and getting faster, more innovative, and more efficient at solving problems for the customers and people.

Question:

1. Discuss the reasons McDonalds ventured into the global market.
2. Discuss McDonalds strategy to gain a competitive edge in their international operation.

*** The full article had been given to you (MGBS Case Study #1) in WhatsApp group.

Question 2

Why Walmart Failed In Germany

1997, WalMart had entered in the German retail market through acquiring the failing German retail chain Wertkauf but quickly encountered problems. WalMart had demonstrated phenomenal success in the US by providing an Every Day Low Prices Guarantee, inventory control, and efficient distribution.

Walmart failed the endeavor because they attempted to apply their proven US success formula in an unmodified manner to the German market, and through the process, they failed to offer German customers any compelling value proposition in comparison with its local competitors.

Walmart can boast that it has more than 8,500 stores in 15 countries, under 55 different names, that its the largest private employer in the United States, the largest in Mexico (as Walmex), and the third largest in Canada. In fact, its the biggest private employer in the whole world. It has 108 stores in China alone, and operates another 100 Chinese outlets under the name of Trust-Mart.

Still, for all of Walmarts conspicuous success, the retailing giant, after having set up shop in Germany in 1997, was forced to withdraw from the country in 2006, abandoning Germanys lucrative $370 billion retail market. Even though this happened five years ago, the German debacle still reverberates. Its still being discussed. After all, as anyone whos been paying attention can tell you, Walmart rarely fails in these endeavors.

Because America and Europe share similar cultural and political antecedents, one might naturally assume that an American enterprise would have a better chance of succeeding in Europe than in Asia. But the German smackdown proved thats not always the case. Indeed, while the nominal Communist regime of the Peoples Republic of China embraced Walmarts corporate philosophy, the Germans rejected it.

Though no one can say precisely why the venture failed, theres been no shortage of explanations. One is that Germany was too green for a slash-and-burn outfit like Walmart, with its plastic bags and plastic junk Another is that Walmart couldnt hack the pro-labor union culture of Germany. Another is that Germany is anti-American when it comes to name-brand retailers (even though Dunkin Donuts and Starbucks are popular there). Another is that German consumers prefer small neighborhood stores rather than impersonal chain (even though Aldi, a discount supermarket chain, is successful).

While there is probably some validity to all of these explanations, three additional cross-cultural idiosyncrasies have been identified as determining factors.

One issue was the chanting. Walmart employees are required to start their shifts by engaging in group chants and stretching exercises, a practice intended to build morale and instill loyalty. Fiendish as it sounds, Walmart employees are required to stand in formation and chant, WALMART! WALMART! WALMART! while performing synchronized group calisthenics.

Unfortunately, this form of corporate boosterism didnt go over particularly well with the Germans. Maybe they found it embarrassing or silly; maybe they found it too regimented. Or maybe they found this oddly aggressive, mindless and exuberant exercise in group-think too reminiscent of other rallies.like one that occurred in Nuremberg several decades earlier.

Another issue was the smiling. Walmart requires its checkout people to flash smiles at customers after bagging their purchases. Plastic bags, plastic junk, plastic smiles. But because the German people dont usually smile at total strangers, the spectacle of Walmart employees grinning like jackasses not only didnt impress consumers, it unnerved them.

The third was the ethics problem. Back in 1997, Walmart not only required employees to spy on fellow workers (and report any misconduct), but prohibited sexual intimacy among its employees. Apparently, while the folks running the Bentonville, Arkansas-based company had no problem with screwing the environment, they couldnt abide employees doing it to each other (alas, a German court struck down Walmarts ethics code in 2005).

Whatever the specific reasons, the German market is now verboten to Walmart. Clearly, the failed experiment was a severe blow to the companys pocketbook and pride. And while no one can predict where a company as aggressive and acquisitive as Walmart will turn up next, presumably, they will pick up the slack by opening a store in Libya.

Question: Based on the above articles, discuss why the company failed in its International Operation. Besides Walmart, demonstrate another two examples of companies that experience International Failure.

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