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

Discussion #3 - Essay Example ket by expanding its operation 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). McDonald’s Corp employs the franchising market strategy to expand its operations globally. Franchising involves the company offering subsidiary firms the rights to use the Macdonald’s brand/trademark name 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 company’s 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. McDonald’s Corp considered the idea of franchising as the best alternative for penetrating the global markets because franchising is a relatively cheaper technique of expanding operations globally, compared to penetrating into the international markets with the firm’s own capital, which is more risky and uncertain given the global competitiveness of the industry. Therefor e, 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 better 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 marketing 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 most lucrative McDonald’s Corp business outside the United States of America because within the first two years of the deal, the company managed to establish more than seven hundred McDonald’s outlets in Canada; the largest number of outlets in any nation outside USA (Luthans &