28 Aug Marketing Class
McDonald’s Buys Out Rogue Licensee in India
This week’s discuss relates to the topic of global marketplace covered in Chapter 6. It focuses on cross-cultural differences and international franchise operations.
When McDonald’s terminated its agreement with one of its joint-venture partners in India back in 2017, the partner went rouge and continued to use McDonald’s trademarked branding and menu despite being told to stop. The partner had previously been instrumental in helping McDonald’s expand into India, where cross-cultural differences required modifications to the firm’s operations and menu. After the relationship soured decades later, the rogue partner was able to locate new suppliers to cobble together the ingredients needed for some of its staple items, like the Maharaja Mac, but it did have to streamline its product offerings and use unbranded packaging to the serve food after McDonald’s suppliers cut it off. After months of negotiations, against the prospects of a protracted legal battle in India’s notoriously slow courts system, the two sides reached an agreement to buy out the partner. The newly-acquired restaurants will be closed temporarily while McDonald’s conducts quality-control inspections, but the end of the ugly dispute should leave McDonald’s in India poised for success in a fast-growing market of over a billion people.
DISCUSSION QUESTIONS:
1.Discuss the advantages and disadvantages of using franchising as a strategy to enter international markets.
2. Discuss the challenges of cross-cultural differences that firms have to overcome when expanding internationally. Use the case of McDonald’s as an example. Do you think McDonald’s could have acted differently handling its dispute? How?
SOURCE:
McDonald’s Buys Out Rogue Licensee in India (Links to an external site.)Links to an external site.
By Corinne Abrams
May 09, 2019
The Wall Street Journal
McDonald’s Has a McSpicy Problem: An Indian Partner Has Gone Rogue (Links to an external site.)Links to an external site.
by Corinne Abrams and Eric Bellman
Oct 10, 2018
The wall Street Journal
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