International Failures
Companies around the world are seeking to expand overseas, driven by many different reasons whether to lower labor costs, technological innovation or the almighty dollar. No matter what the reason, without the proper knowledge and financial funding the company will fail. There have been numerous companies that have experienced this first hand. If they would have noticed the warning signs they may have been able to salvage the company.
Fast-food companies have been one of the fastest to globally expand. They also experience some of the hardest down falls. An often quoted example is the failure of Prague's first Pizza Hut which closed down because too many ingredients had to be imported in for the one existing restaurant. The added expense for importing ingredients made operating expenses too high. Fortunately, most fast-food chains are large enough to overcome closure to a couple stores. But what would happen if an entire country was rejecting the company. This is the problem that McDonald's is facing.
McDonald's is one of most successful fast food chains with 29,000 stores in 119 countries and sales of 38.5 billion dollars. But now, with growth slowing worldwide, McDonald's will add just 1,400 new restaurants, the lowest numbers since 1994. International sales already represent 51% of the global sales. They arrived in Brazil in 1979; many of the franchisees had a strong business selling big macs. After many years of growth, from 175 restaurants in 1995 to 563 this year, Brazil is McDonald's eighth most important market worldwide(Smith 1). Their sales in Brazil went from 620 million Reais in 1995 to 1.3 billion last year. Until recently, the company was still planning to double its current number of restaurants here by 2003.
Behind the lines of customers eager for a burger, the Brazilian franchisees are having a hard time financially. According to an estimate made by franchisees that are in judicial litigation against the fast food chain, around 80% of the 152 franchisees that own half of the stores in Brazil are having difficulty to make ends meet at the end of the month(McDonald's 1). Some decided to sell their business. Others decided to fight.
The first main concern of the franchisees is the rapid growth of new stores. The expansion program that increased the fast food chain in the last two years is crea...
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... can succeed globally if they know what they are doing and have the financial funding
WORK CITIED
AT&T, BT pull Concert plug. CNN Money. October 2001. http://money.cnn.com/2001/10/16/international/bt Capell, Kerry and Heidi Dawley. Commentary: How British Telecom blew it. Business Week Online. April 2001. http://www.businessweek.com Gomoloski, Barb. Going global: Some lessons from eToys and Yahoo that might help You. InfoWorld. February 2001. http://staging.infoworld.com McDonald's Problems in Brazil. 2000. http://mcdonalds-problems-in-brazil.com Monti, Joseph A. Taking the high road when going international. Business Horizons.
July 2000. http://www.findarticles.com Smith, Tony. Brazil franchisees sue McDonald's. AP Business Writer. December 2001. http://www.washingtonpost.com Pappalardo, Denise. Sprints ION, AT&T-BT's Concert reach end of the line. Network World. October 2001.
Weber, Joseph. AT&T-BT: A big Telecom deal up north. August 1999.
Weintraub, Arlene. How eToys could have made it. Business Week Online. February 2001. http://businessweek.com Zwaig, Melvin and Michelle Pickett. Early warning signs. MSI Network.
http://msi-network.com
Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business. Panera determined where bakery-café locations could be. The franchisees bore the cost of opening new locations, and were required to obtain their ingredients from the home company. Expansion using the franchise model provided many upside benefits for Panera, while limiting the downside r...
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"Studying McDonald's ABroad: Overseas Branches Merge Regional Preferences, Corporate Directives." Editorial. Nations Restaurant News 11 Nov. 2005: n. pag. MasterFILE Premier. Web. 5 Mar. 2013.
Understanding the basic agreements and variable in the franchising process of a McDonald’s restaurant helps to shed light onto how the company has become such a global power in the food ser...
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McDonald's current customer environment is people on the go or people who don't want to spend a lot while going out and need something quick and good to eat. It is best stated in McDonald's mission statement that they want to be the world's best quick service restaurant experience. As stated before, McDonald's has restaurants in 121 countries and has extensive global experience in customer service and satisfaction. McDonald's is excellent at researching an international area before building restaurant there. For example, in India McDonald's realized that the majority of the population was Hindu and vegetarian, they therefore, did not even bother to put beef or any other red meat on the menu.
...ll as private sectors have gone international with new ventures outside the country. These companies are generating revenue, though modest compared to their overall sales revenue, by deputing their expert personnel outside.
In today’s market, McDonalds faces numerous challenges such as fierce competition, a more health conscious customer, and the continual need for improved customer satisfaction and menu. McDonalds needs to go through some changes in order to remain ahead in the fast-food industry.
Fierce and growing competition – big fast food companies like Burger King and Kentucky Fried Chicken are constantly competing with McDonalds for customers and trying to take the spot as the top fast food chain.
By choosing to expand into markets later than other fast food restaurants Burger King hopes to avoid the problems of developing infrastructure and establishing a market base. For instance, by following McDonalds into Brazil, Burger King avoided the need to develop the infrastructure and mark...