Globalisation has now become a phenomenon that is predestined to never-ending controversy. Wetherly and Otter (2014) suggest there are six main aspects of globalisation. They include International trade and the creation of the global marketplace, globally organised production and investment flows, migration, communication flows, cultural flows, and lastly, rapid technological change. Within this essay, some of the aspects of Globalisation will be critically assessed in relation to one of the largest fast food restaurant chains, McDonalds. The essay will also touch on the ethical issues which are currently surrounding globalisation.
Globalisation is defined in a number of ways. It can be argued that Globalisation is where the world becomes more amalgamated, this can involve the economy, or a general increase in different flows across borders. (Wetherly and Otter, 2014) Globalisation is also defined as the increase of the interconnectedness within all aspects of our lives, not just economic. This can include the cultural aspects. (Held et al., 1999, cited in Hamilton and Webster, 2015)
Richard and Maurice Macdonald created McDonald’s in 1937. In 1955 Ray bought the McDonald brothers out for $2.7 million and the first McDonald’s opened in Des Plaines, Illinois. (BBC, no date) As a result of Globalisation, there are over 36,000 stores across 119 countries (Kuzoian, 2015) McDonald’s has changed the lives of many across the globe, according to BBC (no date:online) ‘in the USA more people now eat in McDonald’s than go to Church or Synagogue’. Thus, proving how McDonald’s has reformed the world we live in today.
The first aspect to discuss is rapid technological change. This involves how technology such as the internet has advanced, as well as other technological changes which have encouraged globally economic activity to take place. This also involves the cost of transport and communications falling which has effecting tourism and industries around the world. (Wetherly and Otter, 2014) Technological advancements have had a significant effect on the globalisation of McDonalds. For example, in recent years McDonalds have been renovating their restaurants to the new ‘Experience of the Future’ design which puts technology at the forefront of the changes. They now have self-service kiosks which allows customers to browse at the food options in no rush and customize their orders to their specific wants and needs. Not only this, the stores also now have tables with phone chargers and tablets for convenience. (Mintel, 2016) This has been proven a success for McDonald’s as they had the best sales rise in 5 years in 2017. (Nicolaou, 2017)
Technological change hasn’t only occurred within McDonalds stores, they now have a ‘McDelivery’ system operated by a partnership with the food delivery app UberEats and Deliveroo in 2017. (The Guardian, 2017) Even more recently, McDonald’s have now set up a click and collect service on their app, where customers can order online, check in at their local restaurant and collect their food. (McDonald’s, 2017) According to the BBC (2017:online) ‘net profit has jumped almost 48% to $1.9bn compared with the same quarter last year’ for McDonald’s, proving that the technological improvements they are making are paying off financially.
However, rapid technological change may make the day to day running of McDonald’s more difficult, this is due to the overwhelming amount of orders that will be placed using the new technology that is now available. This will mean McDonald’s will have to employ more staff to meet the demand that rapid technological change will bring to stores, and effective execution along with a high quality of employee training will be key to ensure customers are happy with the service McDonald’s are providing them with. (Forbes, 2017)
Another aspect relevant to McDonalds is cultural flows. This involves how different cultures are combining due to rising communication networks. Meaning businesses such as McDonalds face the challenge of having to meet a variety of needs, and cater to different consumer wants within diverse communities. (Wetherly and Otter, 2014) This is also known as a recent term Glocalisation which is very similar to McDonaldization. Glocalisation involves the integration of global world and local communities, which results in a variety of outcomes depending on the area. (Ritzer, 2015) An example of this is ‘…McDonald’s cannot sell Big Macs in India because to Hindus the cow is sacred…’ (Hamilton & Webster, 2015:27-28) Ritzer (1998:85) states that ‘In Norway, McDonald’s sells McLaks, a grilled salmon sandwich with dill sauce on a whole-grain bread.’ This is a prime example of McDonald’s changing their menus to adapt to local culture.
Ritzer (1998:84) states that ‘fast-food restaurants and credit cards are beginning to flood the globe’ this is known as Americanization, which is the process through which people become more American by adopting the culture of people within the United States. (Cortés, 2013) Not only is Americanization about fast-food companies such as McDonalds providing other countries with their classic meals. It’s also about the style of eating that American’s possess. For example, the way that eating is meant to be a task that is completed quickly and effortlessly. (Ritzer, 1998) This works to McDonalds’ advantage as if other countries are becoming more westernized, this allows for McDonald’s to expand their business even more, as they are being accepted as an organisation all over the world.
However, cultural flows can be a difficulty for businesses trying to succeed within the globalising world. This is due to the variance in consumer behaviour within different countries and also their different work cultures. This means businesses such as McDonald’s need to adapt to not only their consumer wants, but also their employee’s needs, due to likely having a multi-cultural workforce. This can involve adapting equipment. (Hamilton and Webster, 2015) Another problem is how local restaurants are affected by McDonald’s restaurants being all over the globe. In particular within tourist areas abroad, where it used to be a norm to try countries local cuisine, it is now common for tourists to instead go to restaurant chains they already know and trust, such as McDonald’s. Some of the reasons for this are the convenience, clean conditions and Wi-Fi that is available. This leads to local restaurants going out of business due to MNC’s like McDonald’s. (Osman, 2014)
Communication flows are also a relevant aspect to McDonalds. Communication flows involves the rising speed of communications and the methods in which organisations can now communicate with consumers. For example, using telecommunications, the internet, and the media as a whole. (Wetherly and Otter, 2014) Communication flows are of high importance for McDonald’s due to their high levels of competition within the fast food industry. (Barfield et al, 2012)
As a result of increased communication flows, McDonald’s have been able to attract consumers internationally. McDonald’s have previously used celebrity endorsements in order to do this. This is where companies use a celebrity in order to aid brand recognition, this is due to consumers seeing this celebrity who works with a company, and companies hope that the consumer will associate the celebrity with the organisation. (Spry et al., 2011) An example of McDonald’s doing this is when they used England footballer Alan Shearer to indorse the organisation, whereas in France McDonald’s used Fabien Barthez who is a French international goalkeeper. McDonald’s want to portray the same image internationally, however they cleverly used different celebrities in order to get their message to consumers. (Vignali, 2001)
McDonald’s are now also using a new method of communicating with their customers by putting surveys on the back of their receipts that customers fill out online, the survey is about the service they received when visiting the McDonald’s restaurant, and in return they get a £1.99 food voucher back. This method is useful for McDonald’s as they are using technology to help them improve other areas of the organisation that may clearly be slacking. (McDonald’s, 2017)
McDonald’s also use social media to interact with customers, this is through Twitter, Facebook and Instagram in different ways. Facebook and Twitter allows customers to share positive or negative feedback about their experiences with the organisation, as well as allowing McDonald’s to respond and also share upcoming promotions that are becoming available. Instagram is used by customers, potentially to post pictures of their meal, which may then work in McDonalds’ favour, and attract more customers to visit the restaurants. (Smith et al., 2010)
However, the rise in communication flows can have negative effects on businesses. For example, in 2012 McDonald’s was subject to backlash when they began an online campaign containing the hashtag #McDStories. It was originally meant to send positive feedback around about McDonald’s however the campaign was soon taken down due to a large number of negative comment being shared vastly around the internet. (Hill, 2012)
Globally organised production and investment flows involves businesses organising their production process across different countries. The reason businesses do this is due to the lower costs that can be involved, and also the fact that different countries have specialisms in a variety of areas, which may aid the production process. (Wetherly and Otter, 2014) They also do this to be nearer to foreign markets. This can be in the form of Foreign Direct Investment. FDI arises when an organisation begins or increases their production facilities in another country. It is Multi-National Corporations who are accountable for FDI and its recent increases. (Hamilton and Webster, 2015)
McDonald’s work with a variety of suppliers internationally who are specialists in different areas, they all collectively make sure that the ingredients within the McDonald’s is of the best quality possible. (McDonald’s, 2015) McDonald’s (2017:online) state that their top beef sourcing countries are ‘US, Australia, Germany, Brazil, Ireland, Canada, France, NZ, UK, Poland’ this group collectively signify over 85% of global beef volume for McDonald’s. Producing within other countries will allow McDonald’s to be a more efficient organisation as they can supply ingredients to restaurants around the world more effectively, leading to a smoother supply chain.
FDI by MNC’s such as McDonald’s may attract other MNC’s to also invest if they see the benefits it brings to the organisation. FDI can also increase employment and real GDP.
However, the MNC’s who do invest could exploit workers due to different working regulations in other countries, this takes me onto the ethical issues with Globalisation. (Cohen, 2007)
The topic of globalisation opens up the discussion of a number of ethical issues that surround it. Firstly, the different employment practices within different countries can raise ethical issues. This can involve poor working conditions, exploitation of the third world, and organisations taking advantage of lower costs and wages. (Wetherly and Otter, 2014) McDonald’s did have trouble with this in Brazil, 2014. This involved issues such as low wages and the maltreatment of pregnant workers. Protests took place by employees in order fight for their rights. (Wong, 2014)
Another ethical issue is abuse of market power. This is calculated by assessing how much market share an organisation holds. (Baker and Dodgson, 2002) McDonald’s have had issues with this in 2016, they were accused of abusing their market power, and giving their franchise owners unfair contracts within Europe. These contracts not only affect the franchisee, they also affect the employees and consumers. This is because the franchise restaurants have to result in increasing prices which deters customers away from visiting the franchises. (BBC, 2016)
To conclude, based on the analysis above, it is clear to see the impact a number of aspects of Globalisation has had on McDonald’s and the industry it is within. Although Globalisation is a phenomenon that is predestined to never-ending controversy, the suggestion is made that Globalisation has overall had a positive impact on McDonald’s. These include technology providing McDonald’s with an increase in sales and net profit, also, cultural changes have allowed McDonald’s to expand and open up more restaurants due to many countries becoming more westernized. Increases in communication has allowed them to receive quick feedback from customer’s which means they can continuously improve the organisation. However, evidence shows that Globalisation has also had a negative impact on McDonald’s. For example,