Essay on "Mcdonald's in Germany in the Context of the Americanization"

Essay 11 pages (3257 words) Sources: 3

[EXCERPT] . . . .

McDonald's In Germany In The Context Of The Americanization

McDonald's in Germany in the Context of Americanization

Prior to World War II, the American economy has generically been an enclosed one and its international trade relations were rather limited. After the first war, it turned into the creditor of the affected countries, but as the Great Depression of 1929-1933 became imminent, the United States was less and less able to consolidate a strong economy. After the Second World War, the country's officials saw an opportunity for economic revival in increased levels of consumption and developed international relations. They as such set the basis for a free market and encouraged other countries to implement the early stages of globalization. The practice would generate multiple advantages, such as an increased ability to benefit from the comparative advantages of various global regions (as initially suggested by economist David Ricardo) or a reduced governmental intervention within the marker and the creation of an open market which sets the prices based on supply and offer and which regulates itself (principle introduced by Adam Smith in his theory of the invisible hand). It would also mean increased competition and significantly larger customer benefits.

During the incipient stages of globalization, the United States constituted the largest political and economic power. This allowed them to implement the concepts of a liberalized market better than other states. The U.S.' fight for globalization and market liberalization has often been condemned as it was perceived as an aggressive means of promoting their economic, social, cultural and political values, threatening as such the cultural identify of states. These arguments in detriment of globalization, in the context in which the United States was the largest globalizing force, led to the creation of the concept Americanization. The notion is complex and difficult to define, but in a most simplistic formulation, it refers to the American endeavors in expanding and imposing their values. It was achieved through an expansion of American films, music, language, as well as political, technological, military or economic principles. In the commercial sector, it was achieved through the territorial expansion of U.S. corporations, such as Nike, Microsoft or McDonald's. The aim of this paper is to discuss the presence and role the McDonald's Corporation played in the Americanization of Germany.

2. Brief Description of McDonald's

McDonald's was founded in 1940 in San Bernardino, California by brothers Dick and Mac McDonald and it is currently headquartered in Oak Brook, Illinois. McDonald's operates on all six continents throughout a total of 99 countries. In 2008, it served an estimated 58 million customers per day and 80% of the operations were run through 5,000 franchises across the globe. In terms of financial performances, these often outweigh the largest players in the restaurants' industry. Moreover, despite the financial crisis, the Oak Brook-based company continued to increase its revenues. A specification must however be made in that the growth rate for 2008 relative to 2007 has been reduced in comparison to the growth rate for 2007 relative to 2006. The company's revenues increased from $16,611 million in 2007 to $16,561 in 2008; the operating income increased from $3,879 million to $6,443 million and the net income increased from $2,395 million in 2007 to $4,313 million in 2008 (McDonald's 2008 Annual Report).

Throughout its existence, the fast food giant has been subjected to intense criticism but their approach to complaints has been a constructive one. For instance, the company was once accused for promoting its products through children -- as a result, they stopped featuring children in their advertisements. Another time, the organization was blamed for their products' negative toll on consumers' long-term health -- they diversified their menus and introduced more dietary dishes, such as salads. McDonald's success is attributed to a multitude of factors such as high managerial skills and the ability to simultaneously address various customer palettes. Children for instance love the Happy Meals and the fact that they can celebrate their birthdays at McDonald's; teenagers meet at McDonald's after school and parents love it as the restaurants do not serve alcohol nor allow smoking; finally, the senior citizens frequent McDonald's for the breakfast menus and the ability to freely read the daily papers. All in all, despite the criticism to which it has been subjected, McDonald's remains the ultimate epitome of corporate success.

3. McDonald's in Germany

As of 2007, McDonald's operated through 1,276 stores in Germany (Deutche Welle, 2007). The first store was opened in 1971 and by the beginning of the 1990s, the company was operating more than four hundred stores; the 1,000th restaurant was opened in 1999 in Berlin. By 2000, the number of their store was larger than 1,000 and the number of employees had reached more than 50,000. A McDonald's restaurant in Germany typically employs anywhere between 45 and 100 employees and serves an estimated 741 million customers per year. Most of the growth was registered up to the early 2000s and the ascendant trend is maintained in the future, with the specification that, similar to the company's overall financial performances, the growth rate has suffered reductions from one year to the next.

During the 1980s, the company was faced with the first criticism and it did not manage to establish adequate and fruitful relations with the unions of workers (Royle and Towers, 2002). Much of McDonald's success in Germany was however due to the adaptation to cultural demands. The main dish is for instance named after German city Hamburg, popular for its ground-beef steaks and, unlike other international restaurants that use imported fried potatoes, McDonald's Deutschland uses only German potatoes and only Bavarian cow dairy for its burgers (Schlosser, 2001).

The German McDonald's is organized into six groups, initially named after geographic positions, but coming to in fact not be linked to geography. These regions are North, Northwest, West, Anver South, Southwest and Southeast. Out of all McDonald's restaurants, 65% are franchises and 35% are wholly owned and managed by the parent company; the value is lower than the international average of 80%, but the increased levels of control and guidance from McDonalds' U.S.A. remain high. This helps franchise managers implement the most suitable decisions for the overall group, but also increase the chances of success for each individual store. In Germany, McDonald's is legally constructed as a LLC -- limited liability company (Royle and Towers). It basically materializes in managerial flexibility, and pass-through taxation, but also in that, in case of bankruptcy or any other major debts, the owners are not considered liable and will not be executed to recuperate the company's losses.

Similar to other international regions, the consumer base in the central European country became reduced as a direct result of increasing obesity cases and a growing focus on healthy eating. Additionally, throughout the past year, McDonald's sales in Germany also suffered decreases due to the globalized financial crisis. The efforts to readjusting the menu to respond to the economic crisis have been fairly limited and at best translated into price reductions for some menu entries. Instead, the reduced demand in the context of growing concerns for a healthier life was more constructively addressed in the meaning of new menu entries, such as salads, fruits, more chicken dishes (in the detriment of pork), yoghurt or even milk supplied by ecologic farms. Also, the company invested large sums of money into sponsoring sports clubs for children. Still, despite these efforts, the general perception of McDonald's remains relatively low; yet this does not stop the customers from purchasing and consuming fast food products from the Oak Brook-based corporation. "However, McDonald's has a bad reputation in Germany. Asked for their opinion on restaurants, Germans ranked McDonald's consistently at the lowest levels. Nevertheless, every second German admits to visiting a McDonald's restaurant on regular basis" (Adam, 2005).

4. Americanization of Germany through McDonald's

Before commencing the discussion on the Americanizing role that McDonald's plays in Germany, one has to note the company's ability in understanding the features of each foreign market and adapting to its unique requirements. In India for instance, they do not serve beef; in Canada, they offer lobster menus; in Japan, they offer shrimp sandwiches; the Norway menus contain numerous fish dishes or, in Greece, they offer burgers wrapped in pita. The list of examples could go on with numerous other countries and menu entries, but a point has been made in that the American fast food giant is not only interested in supporting globalization and Americanization, but that it also cares about the traditional values and strives to integrate them in its product offering. Otherwise put, through an adaptation to local features, McDonald's promotes national values. In Germany, they included large sausages and beer in the menus (Adams, 2007) and in the cafes, they serve coffee in porcelain cups instead of paper cups and offer their customers the ability to sit on leather couches instead of plastic chairs (Deutche Welle).

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