Discussion #3 Essay Example | Topics and Well Written Essays - 500 words - 1

Discussion 3 - Essay Exampleket by expanding its function in a number of countries outside America, even to far flung continents such as Africa where it has a formidable market share in the fast food sector (Luthans & Hodgetts, 2012).McDonalds Corp employs the franchising market system to expand its operations globally. Franchising involves the order offering subsidiary firms the rights to use the Macdonalds brand/trademark denote or business model to offer products and services exactly similar to those offered by the parent company in exchange for some discount on sales and the payment of royalties for using the companys brand name (Luthans & Hodgetts, 2012). Thus, with the use of this strategy, the company has outlets in over one hundred and twenty countries with a total of twenty-five thousand outlets. McDonalds Corp considered the idea of franchising as the best alternative for incisive the global markets because franchising is a relatively cheaper technique of expanding op erations globally, compared to penetrating into the international markets with the firms feature capital, which is more risky and uncertain given the global competitiveness of the industry. Therefore, company considered this strategy as a prudent idea because franchisees (the local firms) fully understand the market dynamics influencing their respective countries and regions thus, are split up positioned to tackle any eventuality arising as a result of rolling out new products or services in that market (Luthans & Hodgetts, 2012).However, earlier on the firm had employed licencing as a merchandising strategy for expansion when it awarded a licence to Ray Kroc in the year 1954. It is this licencing deal that gave birth to the well-nigh lucrative McDonalds Corp business outside the United States of America because within the first cardinal years of the deal, the company managed to establish more than seven hundred McDonalds outlets in Canada the largest number of outlets in any na tion outside USA (Luthans &