Franchise

Posted: January 4th, 2023

Student’s Name:

Tutor’s Name:

Course Title:

Date:

Franchise

Prompt 1

McDonald’s Corporation commenced its activities in 1940 as a small restaurant operated by Maurice McDonald and Richard McDonald. The U.S. multinational corporation started as a fast food company in San Bernardino, California, and soon after rechristening the business as a hamburger selling point, it transformed into a franchise, and adopted the golden arches trademark in 1953 (McDonald’s). The company that is regarded to be the globe’s largest restaurant chain in terms of revenue serves more than 70 million buyers daily, in more than 120 nations across 37,900 outlets as of early 2018 (McDonald’s). Even though the company targets buyers of all ages and economic classes with its undisputable French fries, cheeseburgers, and hamburgers, it has gained fame for its breakfast items, chicken products, desserts, soft drinks, and milkshakes that have distinct taste, and are of superior quality (McDonald’s). The group has also added to its menu an assortment of fruits, fish, salads, and smoothies in reaction to the changing consumer tastes and the negative criticism surrounding the production of foods that pose significant health risks (McDonald’s). The company while expanding its franchise operations should settle on a country that has strong economy, stable politics, growing population, high supply and demand, and good culture for foreign investment.

Expanding to other Countries

Expanding to Kenya

McDonald’s has operated as a franchising corporation since 1955 and mainly relies on its franchisees to serve a crucial role in the company’s success. McDonald’s is still dedicated to franchising as the major way of engaging in business, and is known to be the leading international food retailer. The corporation, however, may increase its coverage and revenue by exploring other markets that have great potential to give profitable returns. A suitable place to open a franchise would be in Nairobi, Kenya, which is the country’s capital. One of the appealing factors why McDonald’s should expand to Kenya is the East African country is experiencing economic growth, particularly in the recent past (MyGov). Kenya’s Gross National Product (GNP), for example, was recorded as $87.18 billion, which is an increase from the 78.08 achieved by December 2017 (MyGov). The highest GNP was the realization in 2018 and the lowest the country ever attained is 764.96 million that it realized in 1960. Regarding the gross national income, Kenya comes second in the East African countries such as Uganda and Tanzania. Whereas it attained a gross national income of $161.5 billion in 2017, Tanzania achieved $162.2 billion, while Uganda attained only $78.02 billion (MyGov). Furthermore, Kenya now enjoys political stability following the coming together of the former political archrivals (the current President, Uhuru Kenyatta and Raila Odinga, the former Prime Minister) (MyGov). The stable and sound political activities allow for the formation of appropriate macroeconomic policies that encourage growth by offering an environment that is conducive for private and foreign direct investment. McDonald should also consider expanding to Kenya because of its population that has grown over the decades. Kenya as at 2017 had 49.7 million people which increased from the 41.35 million in 2010 (MyGov). Nairobi alone, the country’s capital, has more than 4 million people, and is the most populous city in the country and east Africa. McDonald’s would surely benefit from the stable economy, unwavering politics, and growing population if it expands to Kenya.

The Kenyan culture that is welcoming to foreign investors and the growing supply and demand are both likely to create a working environment that is appealing to McDonald’s. The constitution of Kenya allows its people to enjoy the freedom of worship, which makes major religions such as Islam, Christianity, and Hinduism rampant (MyGov). The Kenyan people speak English among other local languages, which make it possible for the investors to interact with local consumers using the lingua franca (English) (MyGov). More essentially, even though the dining patterns vary according to the ethnic groups, the table manners of people in this country are quite formal.

MacDonald’s management had identified the opportunities in Kenya and had previously invited investors to put applications for setting a franchise in the country. The report emerged after other international brands such as Kentucky Fried Chicken (KFC) and Subway entered and record satisfying results in the country (Mutegi). McDonald’s, however, said through Ron Christianson (the head of corporate affairs), that the management has not confirmed the media reports (Mutegi). The earlier unconfirmed media reports stated that the global fast-food chain would set up a franchised branch at a Total fuel station in one of the upper end estates in Nairobi (Mutegi). Even though the management still contemplates about entering the market, its sending of investors is an indication that it eyes the East African country.

Expanding to Iceland

McDonald should reconsider its stand of operating in Iceland, taking into account some of the possible opportunities that can now benefit the franchise company. The economy of Iceland continues to stabilize following the fall of the value of its currency (Government of Iceland). Iceland’s GNP hit $26.126 billion in 2018 compared to the $24.544 billion realized in 2017. The relatively low GNP compared to Kenya’s may be attributed to the low population of about 360,394 (2019) (Government of Iceland). Another feature that could serve as an opportunity to McDonald’s is Iceland enjoys a relatively stable government, especially with Katrin Jakobsdottir assuming power as the country’s new Prime Minister. The leader promises to build political stability, and to promote legislations that improve the country’s economy and social welfare (Government of Iceland). Also crucial towards improving the economy and local growth is the new Prime Minister puts more emphasis on fighting corruption, which was a major problem in the previous governments. Concerning culture, many tourists visit Iceland every year to experience its dramatic landscape, the hot springs, lava fields, and geysers (Government of Iceland). The entry of many tourists in this region offers a good opportunity for McDonald’s to invest in the region. The local people also prefer hot food because of the cold weather and introducing some of the hot stuff by McDonald’s could offer a good chance for the company to restore the glory it once enjoyed in the region. The group, however, may have to hire employees who understand the local languages such as Icelandic and Danish that are quite rampant. Even though students learn English in school, the language is not as widely spoken (Government of Iceland). McDonald’s may also find features of the market overview appealing, especially with regard to the demand and supply rate. Various key areas such as construction, manufacturing, health, and hospitality continue to witness increased supply and demand, which favors business across the country. McDonald’s should consider how the opportunities may benefit the company and consider setting up a franchise in the region.

Expanding to Seychelles

McDonald’s while seeking to expand its franchise should consider entering Seychelles that despite being one of the major tourist destinations in Africa and the world, is free of any multinational fast food outlets. The absence of these global food chains does not imply that the islanders are not big fans of French fries and juicy burgers (Government of Seychelles). Indeed, the local culture on cuisine is diverse and well developed. Even though the locals take fish as their staple food, chicken dishes are rampant, and preferred by many, which gives McDonald’s a good opportunity to exploit the market (Government of Seychelles). More fortunately, English and French are the official languages, which make it easy for the organizational leaders and investors to converse with the locals. Economically, Seychelles continues to record increased gross national income with the country achieving $2.574 billion in 2017 compared to the $2.464 billion in 2016 (Government of Seychelles). The country, however, is still a young democracy because since the attainment of independence in 1976, the country the initial multiparty presidential election was conducted in 1993 after the new constitution came into effect. The leadership understands the country’s economic potentiality and the legislators try to come up with regulations that promote foreign direct investment. It is because of the political stability in Seychelles that the nation’s external position has stabilized in the recent past, but still structural challenges remain because the country largely rely on foreign funding for local investment as well as on imported items (Government of Seychelles). The GDP growth of 3.6% as of 2018 influences the supply and demand which has increased in various areas such as construction, housing, and tourism. The improved rate of supply and demand implies that the household and individual income in this country is stabilizing, and consumers may be in a position to acquire the products by McDonald’s. The main challenge McDonald’s may experience, however, is the low population of slightly above 0.1 million people (Government of Seychelles). The low population could affect demand, especially when the number of tourists goes down. McDonald’s, therefore, should pay particular attention to the five critical factors (economy, culture, political stability, supply and demand, and population) before establishing a franchise in the region.

Identification of the Best Country to Expand

Evaluating the three countries reveals that Kenya is the most favorable destination due to a number of factors. First, the East African state has a relatively bigger economy compared with the other two. While Kenya has a GNP of $87.18 billion (MyGov), Iceland and Seychelles only have $26.126 billion (Government of Seychelles) and $2.574 billion (Government of Iceland) respectively. Other than the stable economy, the East African state serves as the most suitable destination because of its large population, which is likely to increase the demand for the products and services by McDonald’s. The evaluation shows that Kenya’s population is 49.7 million while Iceland and Seychelles only have about 360,394 and 0.1 million respectively. It is apparent that even though the other places have features that could be more appealing to McDonald’s, the low population may affect the rate at which people purchase from the franchise company. Otuedon (48) considers the economy of a particular market to be a critical determiner for success in any business. He says that the economy determines the buying power, the supply power, as well as legislations that govern business operations (Otuedon 48). McDonald’s in this case, should just go ahead with its initial plans of opening a franchise in Kenya and take advantage of the opportunities in the market.

Possible Challenges and Possible ways to overcome the Obstacles

The greatest challenge McDonald’s is likely to witness in Kenya is the locals do not spend much on non-essential commodities and luxuries as it happens with other markets such as America, China, Japan, and the UK. Most Kenyans will spend on items that are very essential, unless the price is appealing and favorable to their economic status (MyGov). McDonald’s in this case might have to employ the concept of market segmentation if it wants to understand how to serve its customers in the best ways possible. Otherwise, the franchise may have considerable challenges attracting buyers, especially the middle income earners.

Conclusion

The study identifies Kenya, Iceland, and Seychelles as the destinations that McDonald’s could expand its franchise, but settles on Kenya as the most suitable option. Kenya proves to be the most suitable option because other than the idea that the multinational company is yet to venture in most African countries, the East African nation has the highest GNP and population compared with the other two.  

Prompt 2 – Why Nationalism is Superior to Globalism

Understanding the meaning of nationalism and globalism and their primary tenets may help to know why nationalism is superior to globalism. Nationalism is an ideology or perception that advocates for the interests and desires of a particular country, particularly with the objective of achieving and maintaining the country’s self-governance or sovereignty (Guibernau 28). The ideology of nationalism asserts that every nation should rule itself, free from external interferences, and that the country is the only right source of political authority. Nationalism further aims at building and maintaining a uniform national identity that shares common social features such as politics, religion, language, culture, and beliefs (Guibernau 28). The idea of nationalism, therefore, aims to preserve and promote a country’s traditional culture, and to foster pride in national gains. Globalism, on the other hand, refers to various interlinked systems with measurement beyond the international sphere. Globalism serves as a term used to describe and understand all the interrelations of the contemporary world and to highlight the patterns that form them (Guibernau 45). Alternatively, globalism could be termed as cosmopolitanism or internationalism, and the supporters of this ideology believe global citizenship provides solutions to some of the key issues people face today. The proponents of the ideology believe that democratic globalism makes it easy to protect the rights and needs of people regardless of their background (Guibernau 45). The groups supporting globalism have the feeling that thinking from a global perspective and acting locally can create positive changes across all spheres.

            Whereas the idea of globalism is fast developing, many thinkers feel that nationalism still presents features that safeguard the interests of people living in a particular place. Nationalism helps to promote cultural identity, which is under significant threat under globalism. The movement of people from one place to the other in quest for jobs, learning opportunities, and better lifestyles among other reasons as it happens in the modern world put many countries at the risk of losing their cultural identity, such that the younger ones can hardly know and understand how the past beliefs and practices influenced and continue to determine the present. Guibernau (31) argues that deletion of the community’s history is one major weakness of globalism. He supports nationalism by saying that the ideology prevents clash of civilization and does not allow room for the erasure of political systems that are accepted by the local dwellers (Guibernau 31). Sometimes, globalism introduces deeds that are widely opposed or unacceptable in certain areas, and such acts may draw sharp reactions. Globalism, for instance, is perceived to have eroded the dressing style in many countries, especially in third world nations where more individuals and cultures are conservatives when it comes to the dress code (Guibernau 48). Globalism may also be perceived to be the leading cause for the spread of terrorism, with this issue receiving more attention from the U.S. government that became a victim of terror attack in 2001. Nationalism, on the other hand, only creates policies and regulations that meet the needs and desires of the local people. The two ideologies now receive much focus in the political field than ever because while some groups feel that it is possible to acquire suitable leadership styles from imitating others, some have the feeling that adopting leadership styles that are not consistent with the nationals could lead to oppositions and relentless rivalry (Guibernau 51). The idea that nationalism safeguards the interests of the local residents, however, does not imply that globalism is not significant in any way. Actually, globalism is attributed to some of the major developments at the global and national fronts, and some nations would still be far behind in terms of socioeconomic development if it were not for globalism.

Works Cited

Government of Iceland. “Government of Iceland.” Government of Iceland, 2019. https://www.government.is/. Accessed on 6 December, 2019.

 Government of Seychelles. “Seychelles Government.” Government of Seychelles, 2019.  http://www.egov.sc/. Accessed on 6 December, 2019.

Guibernau, Montserrat. Belonging: Solidarity and Division in Modern Societies. Polity Press, 2013.

McDonald’s. “McDonald’s.” McDonald’s, 2019. https://www.mcdonalds.com/us/en-us.html. Accessed on 6 December, 2019.

Mutegi, Mugambi. “McDonald’s Denies Reports on Plans to Open Nairobi Outlet.” Nairobi News, December 19, 2017. https://nairobinews.nation.co.ke/news/mcdonalds-denies-nairobi-outlet. Accessed on 6 December, 2019.

MyGov. “myGov.” MyGov, 2019. http://www.mygov.go.ke/. Accessed on 6 December, 2019.

Otuedon, McLeish. “Factors Affecting International Marketing Strategies: Pricing, Channe Structures and Advertising.” European Journal of Business and Management, vol. 8, no. 5, 2016, pp. 42-52.