This sample will let you know about:
- Discuss Globalisation.
- Define the forces driving globalisation.
Introduction on Globalization
The term globalisation refers expanding the local markets globally. This can be done by interdependent and free transfer of goods and services across the nations. It does not include unnecessary transfer of labour. It is also suggested by some authors and economists that globalisation may hurt flimsy economies only if it is applied chaotically. It has increased the risk of new entrants influencing the customer but has also increased the market for the domestic companies (Daniela, 2010).
One such company who has witnessed huge globalisation is Mc Donald’s. This is the biggest restaurant chain which has 32000 outlets across 117 countries. This giant chain provides employment to about 1.7 billion people. This company alone made profit of $1.2bn and had incurred revenues of $1.6bn in the first 3 months of 2011. Over the past 20 years company faced huge criticism because of providing bad diet to the people, still Mc Donald is going strong (Wang and et. al., 2010).
Globalisation was emerged in the 20th century and was rapidly expanded in the whole world. Thus the process of globalisation is evolved several years ago. One such example of evolution of globalisation is expansion of European Countries to colonise the Asian and other countries of the world (Thomas and et.al., 2005).
Forces Driving Globalisation
Due to increase in foreign trade and capital inflows, increase in growth rates and rising GDP has opened the world economics assignment help motivating globalisation. There are some forces which drive globalisation and they are:
- Technology: Digitalisation and invention of new and fast technology at low cost have tremendously integrated national markets. This has opened new and better area of expansion to the companies. This broken national barrier is used by Mc Donald to expand itself and establish its name in the entire world.
- Liberalisation: Introduction of World Trade Organisation provided clarity to the liberalisation of the country’s trade. These organisations take all the trade related decision and every issue faced by the companies are solved by this organisation. This also helped mc Donald to grow and expand well (Standards of Business Conduct for Employees. n.d).
- Trade Flows: With the removal of trade barriers, rate of trade within the countries have increased. Trade protection policy is made which protect the trade. Better distribution channels are available which protect the goods and services. Mc Donald takes use of these better means for importation and exportation of its food products and thus have established good quality in the restaurant market.
- Capital flows: Internet has simplified our lives and also helped in easy and fast generation of capital anytime anywhere.
- Modernisation: Another factor is modernisation. As the awareness is increasing among people and they are accepting the changes this is enhancing the scope of Mc Donald to expand easily in the globalised market.
Competitors And Competitive Advantage
Expanding globally means increase in levels of competition. And thus Mc Donald also have to compete with numerous restaurant chains such as KFC, Starbucks Corporation, Yum Brands Inc, Chipotle Mexican Grill, Whitbread PLC, Darden restaurant Inc , Burger King etc. Thus to survive the competition and expand globally Mc Donald is required to make certain strategies that act as a competitive advantage for the company and thus help the company to survive this cut throat competition (Jurse and Mulej,2010).
Competitive Advantage means positioning the company in relation to other firms or industries. According to Michel Porter, to sustain in the competition there are three different competitive advantage strategies and they are:
- Cost Leadership: This strategy is used by the organisations that provide similar products at a price lower than what is offered by its competitors. In this the quality of the product must not get affected.
- Differentiation: This strategy indicates that firms are providing better and superior quality of product than what is provided by its competitors at the same level of price. Differentiation generally makes its customers believe that the quality of product provided by the firm is actually of superior quality than the one offered by other firms (Asgary and Walle, 2002).
- Focus: This term states that firms in same business line focuses on a particular segment of market and get specialised in that area so that it will appeal that particular grade of customers (Tamer, 2009).
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Impact on the Environment And Sustainability
Sustainability is the major issue for every company today. For globalisation also company needs to maintain sustainability. Sustainability simply means using the resources today without sacrificing the needs of future. Coming to Mc Donald, in 1990’s the company has worked with Environmental Defence Fund (EDF), in order to reduce wastage packaging (Smith, 2005). At that period of time the world was facing issues related to garbage and running out land space. Mc Donald wanted to be a part of the social welfare and thus the company in partnership with EDF produced a Waste Production Action Plan that included about 42 initiatives to reduce reuse and recycle.
Mc Donald also implemented Environmental score card for its suppliers to access the resources they are using and to continuously try to conserve energy, water, air and avoid its wastage (Mitchell, 2009). This scorecard was developed in partnership of Conservation International and several large suppliers. The company also prohibited child labour and made all the compliance of law.
In regards to animal welfare, Mc Donald stopped producing beef products as it started destructing the Amazon Forests. It deals with suppliers dealing with animal husbandry after ensuring that they have complied with all the regulations related to the Animal Husbandry Guiding Principles (Maynard, 2004). Recently, Mc Donald USA, announced its participation with the leading scientists, NGO’s and egg suppliers to provide a cage free and healthy environment to the animals and birds.
Mc Donald also recently gave a decision to conserve the energy and oil as the prices of oil were rising, thus the company started better practices and for that in spite of delivering individual packages the company decided to go for bulk oil usage.
Ethical dimensions in International business
Ethics is the most important factor for the companies. With the growing level of business and its regular expansion globally companies need to improve their ethical policies and must work ethically (Kline, 2010). An unethical practice influences the brand image of the company and diminishes it in the eyes of its customers (Bank, 2010).
Mc Donald believes in following a 3 E policy which consist of Environmental, Ethical and economical. Company always tries and emphasis on working and growing ethically under the social responsibility. For this the company does not appoint any child labour in the business. Mc Donald has created its own ethical values which are to be followed by all its customers. The concern employees have to abide all the rules and each year the employees have to certify that they have duly read and followed the Standard of Business. Employees also have regular training on the standards, anti bribery law, any many other laws apart from them proper training related to follow all the rules and regulations is also given. Company also follows Foreign Corrupt Policies which contain policies related to dealing with other countries (Hopkins, 2011).
In spite of this Mc Donald faces certain ethical issues for that they are regularly criticised. These issues are mainly about spreading obesity, illness, heart diseases, asthma, cow diseases etc. It is the junk food of the company that is the major ethical disadvantage faced and it is assumed that the company is playing with the health of its customers. If you are struggling with dissertation topics, get finance dissertation topics from our experts!
From the above report, it is clear that globalisation is a major aspect of expansion for every company as it provides a better market to the company to promote its product and make huge profits (Carroll and Gannon, 1997). The report also gives a view about how competitive advantage is helpful for the organisation to capture large market along with importance of sustainability and working ethically. The above report gives detailed description about Mc Donald, its strategies and how it is getting globalised.
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