1

INDEX
Sr No
Chapter 1

Chapter 2

Topic
Multinational Corporation
1
Introduction
2
Characteristics Of MNCS
3
Classifications Of MNCS
4
Merits Of MNCS
5
Demerits Of MNCS
6
Innovation In MNCS
7
Government And MNCS
8
WTO In MNCS
9
Why Companies Become MNCS?
10 Why Are MNCS Attractive To Developing
Countries?
11 Why Are MNCS In India?
12 Role Of MNCS In India
13 Profit Of MNCS In India
14 Problems Of MNCS
15 Social And Cultural Factors
16 Globalization
McDonalds
1
Introduction
2
History
3
Goals And Objectives
4
Facts And Figures
5
Global Operations
6
Business Model
7
Environmental Policies
8
Financial Performance
Conclusion
Bibliography

Page No
5-24
5
8
10
11
13
15
15
16
17
18
19
20
21
22
23
24
25-36
25
27
29
30
31
33
35
36
37
38

MULTINATIONAL CORPORATION
INTRODUCTION

A multinational corporation/ company is an organization doing business in more

than one country. Transnational company produces, markets, invests, and operates
across the world. It is integrated global enterprise which links global with global
market at profit. These companies have sales offices and/ or manufacturing
facilities in many countries. A corporation (MNC) engages in various activities like
exporting, importing, manufacturing in different countries. MNCs have worldwide
involvement and a global perspective in its management and decision- making.
1. MNCs consider opportunities throughout the globe through they do the
business in few countries.
2. MNCs invest considerable portion of their assets internationally.
3. MNCs engage in international production and operate plants in the number
of countries.
4. MNCs take managerial decision based on a global perspective. The
international operations are integrated into the corporations overall business.
MNCs are huge industrial/ business organizations. They extend their industrial/
marketing operations through a network of branches or their majority owned
foreign affiliates. MNCs produce the products in one or few countries and sell
them in most of the countries. Transnational corporations produce the products in
each country based on the specific needs of the customers of that country and
market these. A transnational corporation mostly uses the inputs of the host country

where it operates unlike a multinational company. Large corporations having

investment and business in a number of countries, knows by various names such as
multinational corporations, international corporations and global corporations have
become a very powerful driving force at the worlds economy.
A multinational corporation is usually a large corporation which produces or sells
goods or services in various countries. It may be attributed as multinational
corporation when a corporation is registered in more than one country or has
operations in more than one country.
The problem of moral and legal guiding behaviors of multinational corporations,
given that they are effectively "stateless" actors, is one of the urgent global
socioeconomic problems that emerged during the late twentieth century.
Multinational corporation's plays an important role in globalization. Arguably, the
first multinational business organization was the Knights Templar, founded in
1120. After that came the British East India Company in 1600 and then the Dutch
East India Company, founded March 20, 1602, which would become the largest
company in the world for nearly 200 years.
MNCs are huge industrial organizations which extend their industrial and
marketing operations through a network of their branches or their Majority Owned
Foreign Affiliates. MNCs are also know as Transnational Corporation (TNCs).
Till 1991, India was more or less a closed Economy. The growth rate of the
economy was limited. The contribution of the local industries to the countrys GDP
was limited that were the main cause of shortage of funds for various development
projects initiated by the government. In an effort to revive the industries and to
bring the country back on the right track, the government began to open various
sectors such as Infrastructure, Automobile, Tourism, Information Technology, Food
and Beverages, etc to the Multinational Corporations. The MNCs slowly but

reluctantly began to pour capital investment, technology and other valuable

resources in the country causing a surge in GDP and up liftment of the economy as
a hole. This was the post 1991 era where the government began to invite and
welcome giant MNCs into the country.
DEFINITIONS OF MNCS
According to UNO, multinational companies means, Those enterprises which
own or control production or service facilities outside the country in which they are
based.
According to International Labour Organisation, The essential nature of the
multinational enterprises lies in the fact that its managerial headquarters are located
in one country, while the enterprise carries out operations in number of other
countries.
According to N.H. Jacob, A multinational corporation owns & manages its
business in two or more countries.

CHARACTERISTICS OF MULTINATIONAL CORPORATIONS (MNCS)

The distinctive features of multinational companies are as follows.

1.Large Size: A multinational company is generally big in size. Some of the

multinational companies own and control assets worth billions of dollars. Their
annual sales turnover is more than the gross national product of many small
countries.
2.Huge Capital: These companies can easily raise huge capital by way of issuing
shares to general public, within & outside the country. They exercise great degree
of economic dominance. A large part of the capital assets of the parent country are
owned by the citizens of the home country.
3.Worldwide operations: A multinational corporation carries on business in more
than one country. Multinational corporations such as Cococola has branches in as
many as seventy countries around the world.
4.International management: The management of multinational companies are
international in character. It operates on the basis of best possible alternative
available anywhere in the world. Its local subsidiaries are managed generally by
the nationals of the host country. For example the management of Hindustan Lever
lies with Indians. The parent company Unilever is in The United States of America.
5.Mobility of resources: The operation of multinational company involves the
mobility of capital, technology, entrepreneurship and other factors of production
across the territories.
6.Integrated activities: A multinational company is usually a complete
organisation comprising manufacturing, marketing, research and development and
other facilities.
7.Several forms: A multinational company may operate in host countries in
several ways i.e., branches, subsidiaries, franchise, joint ventures. Turn key
projects.

8.Centralized Control: These multinational companies have their branches

worldwide. They control all its branches through head office which is situated in
home country of those companies.
9.Employment: It provides with employment opportunities to a large number of
unemployed individuals in the respective countries of their operation. In 2006,
foreign affiliates of MNCs employed over 73 million people, compared to 25
million in 1990.

CLASSIFICATION OF MNCS
MNCs can be classified on the basis of several criteria, such as function, control,
investment, origin, turnover, products, etc.

On the basis of functional criterion, the MNCs are broadly grouped into:
1. Service MNCs: A service MNCs is defined as a transnational company which
derives more than 50 per cent of its revenues from services. Service MNCs are
found in areas such as banking, insurance, finance, transport, tourism, etc.
2. Manufacturing MNC: A Manufacturing MNCs is one which derives at least 50
per cent of its revenue from manufacturing activity. A large number of MNCs has
entered into the manufacturing sector. Out of the top 200 MNCs, 118 firms are
manufacturing MNCs. They produce a variety of goods. For example, Parry and
Cadbury Fry produce Chocolates, Colgate and Palmolive produce soaps and
detergents, Ponds -cosmetic goods, Olivetti -Teleprinting equipments, Dunlop,
Good Year, Ceat-tyres and tubes.
3. Trading MNCs: A trading MNCs is the one which derives at least 50 per cent
of its revenue from trading activity. These are the oldest form of multinationals.
Trading MNCs control about 60 per cent of the world's export trade. Tatas,
Liptons, Brooke Bond, Hindujas etc. are the trading MNCs.

MERITS OF MNCs
1) Economic Development: The Developing countries need both foreign capital
and technology to make use of available resources for economic and industrial

growth. MNCs can provide the required financial, technical and other resources to
needy countries in exchange for economic gains.
2) Technology Gap: MNCs are the instruments of transfer of technology to the
host country. Technology is necessary to bring down cost of production and
produce quality goods on a large scale. The services of MNCs can be of great help
to bridge the technological gap between developed and developing countries.
3) Industrial Growth: MNCs are dynamic and offer growth opportunities for
domestic industries. MNCs assist local producers to enter the global markets
through their well established international network of production and marketing.
And there by ensure industrial growth.
4) Marketing Opportunities: MNCs have access to many markets in different
countries. They have the necessary skills and expertise to market products at
international level. For example, an Indian Company can enter into Joint Venture
with a foreign company to sell its product in the international market.
5) Work Culture: MNCs introduces a work culture of excellence, professionalism
and fairness in deals. The sole objective of Multinational is profit maximisation. To
achieve this, they use various strategies like product innovation, technology up
gradation, professional management etc.
6) Export Promotion: MNCs assist developing countries in earnings foreign
exchange. This can be done by promoting and developing export oriented and
import substitute industries.

7) Tax Revenues: For the host country, there is a likelihood that the MNC will
have to be subject to the tax regime in that country. As a result, many MNCs pay
large sums in taxes to the host government. In less developed countries the
problem might be that there is a large amount of corruption and bad governance

and as a result MNCs might not contribute the tax revenue they could and even if
they do it might not find its way through to the government itself.
8) Improvements in Infrastructure: In addition to the investment in a country in
production or distribution facilities, a company might also invest in additional
infrastructure facilities like road, rail, port and communications facilities. This can
provide benefits for the whole country.
9) Raising Standards: Multinational corporations bring about competition in the
foreign markets they venture in. Multinationals produce goods and services that
adhere to the best possible standards. Since consumers are willing to spend their
money on only the best products, local businesses are forced to improve on the
quality of their products. This competition to produce good quality ends up
benefiting consumers who get good value for their money.
10) Job Creation: Multinational corporations play a big role in creating
employment in the foreign countries they venture in. Because of their massive
operations, they employ many local people in those countries to work there. They
also employ some to work in their headquarters, thereby giving foreign nationals a
chance to gain international career exposure. In 2006, foreign affiliate of MNCs
employed over 73 million people, compared to 25 million in 1990. Greater part of
increase of employment in foreign affiliates in recent times has taken place in
developing countries.

DEMERITS OF MNCs
1) Profit maximization: The basic purpose of MNCs in the maximization of profit
through exploitation of host country's resources. MNCs hardly bother about the
economic development of the host country.

10

2) Plunder of wealth: MNCs plunder wealth to their home countries in the form of
transferring the huge amount of foreign exchange gamed through royalties, fees,
dividends etc. to their home countries.
3) Useless transfer of technology: The technology transfer which takes place is of
the nature of capital intensive and import oriented which doesn't suit to the
underdeveloped countries. Generally it is observed that the MNCs do not transfer
their advanced technology to the underdeveloped countries.
4) Effect on Employment: Employment might not be as extensive as hoped, many
jobs might go to skilled workers from other countries rather than to domestic
workers. Moreover, the amount of new jobs are created depends on the type of
investment. Investment into capital intensive production facilities might not bring
as many jobs to an area as hoped.
5) Misuse of weak Government: The size and power of multinationals can be
used to exploit weak or corrupt governments to get better deals for the MNC. The
MNCs may use their economic power to turn the political table in their own favour.
They may even see to it that the choicest party Govt. should get elected by hook or
crook.
6) Undermining Local Cultures and Traditions: The MNCs have been criticized
for their business strategies and practices in the host countries. They may
undermine local cultures and traditions, change the consumption habits of the
people for their benefit against the long term interest of the local community,
promote conspicuous consumption, and dump harmful products in the developing
countries.
7) High tempo of show and advertisement: The MNCs may take undue
advantage of their financial strength in terms of lavishly spreading the huge
amount in unnecessary showrooms and advertisement as a result of which the
prices of goods zoom like anything in the host country.

11

8) Repatriation of profits: Profits might go back to the headquarters of the MNC

rather than staying in the host country. Hence, the benefits might not be as great.
These funds will not be beneficial for the domestic country which is allowing
MNCs to establish their base in the home country.
9) Destruction of Local Industries: Multinationals usually have more money in
terms of capitalization than local businesses. This means that they are able to
finance operations for a long time even without making a profit in the knowledge
that, once they have developed brand loyalty, they will start making sustainable
profits thereafter. This means that they can deliberately set very low prices so as to
take the market share of the companies they have found in that market. This may
therefore lead to the local companies to close down as they cannot afford to charge
these low prices.
10) BOP Problem: The MNCs transfer the technology which is import oriented
due to which the host countries imports increase. On the contrary due to high
prices prevailing in the host country its exports curtail. Thus the B.O.P. problem
gets aggravated.
11) Monopoly: The MNC's being the joint companies establish their monopolies
and iron out competition in the host country.
12) Evasion of taxes: The MNC's may evade the taxes by manipulating their
accounts. In the era of Liberalization we are not suppose to look towards MNCs as
a agents of exploitation but they also act as agents of development by helping the
host countries to increase domestic investment and employment generation, boost
exports, transfer of technology and accelerate economic growth.
INNOVATIONS IN MNCS
Innovations are a growing trend in todays world and MNCs are successful till
they maintain their innovativeness and creativity. Innovation does not necessarily
come from the home country but it can also be sourced in the local country. The

12

MNCs hire the employees of the local country so it can be possible that
innovations are from the local country.
GOVERNMENT AND THE MNCS
There are differences among the MNCs about the Government policies and
regulations. Governments encouragement or inhibition for the oil and gas industry
depends on the type of country and the requirement of such an MNC in the
country. There are also significant differences across various locations for the
involvement of Government in the MNC activities. This depends on the need of the
country to grow and develop and also on the economy of the country. The
Government involvement depends on the asset availability of the country which is
location specific.

13

WTO IN MNC ACTIVITY

WTO and regional trade agreements influence the MNC activities in many ways.
The fundamental principles of WTO are non discrimination, free trade,
encouraging competition and extra provisions for less developed countries.
Through non discriminatory trading system, all the MNCs are provided with their
rights and obligations to be used while performing their operations. Each country
and MNC receives fair exports and fair treatment in the markets of other countries.
It provides responsibilities regarding implementation of agreements, technical
cooperation and increased participation in the global trading system. These
agreements help in removing trade barriers and duty free access. It also helps in
protecting industrial property rights and dispute settlement. The trade agreement
system helps in promoting peace, provides more choices of products and qualities.
Export processing zone refers to one or more specific areas of a country where
some of the normal trade barriers are ruled out and bureaucratic necessities are let
down in the desire of attracting new business and foreign investments. This zone
also refers to the manufacturing centers, which are labor intensive involving the
import of raw materials and the export of factory products. This zone is of great
importance for the operations of MNCs.

14

WHY COMPANIES BECOME MULTINATIONAL COMPANIES?

15

WHY ARE MNCS ATTRACTIVE TO DEVELOPING COUNTRIES?

Developing countries are attracted to MNCs mainly because of the FDI that they
bring. Aid and financial grants have declined since the 1980s, so developing
countries Governments are increasingly focused on FDI . FDI creates employment
opportunities and new economic sectors though technology and skills transfer, and
helps with external debt payments. Although some scholars are skeptical
of FDIs he debate, FDI plays an important role in many developing economies.
One benefit of MNC investment in developing countries is increased productivity
inexpert sectors. Tybout and Erdem analyzed trade liberalizations countries
productivity from the early 1970s to the mid 1990s and found that productivity
increased as supply chain integration intensified, but was uncorrelated to the
overall growth rate. Similarly in Bangladeshs apparel industry, FDI increased
employment opportunities and raised gender equality, but had little effect on poverty
reduction. Sector is low-skilled, not unskilled, and thereby excludes the extreme
the poor. Another reason to attract FDI is that MNC operations bring technological
and other spillovers. However, these spillovers are industry-specific and only
become significant to economic growth when appropriate local capabilities already
exists, particularly in high to middle level technology based industries. This is not
pertinent for the apparel industry because it uses low-level technology that is easily
learnable, replaceable, and fixable with low investment.
Also, some countries Bangladesh and Myanmar do not have the initial platform for
technological innovation, and the exploitation of cheap labour is more profitable
than improving technology. While developing countries compete to receive or retain their
share of FDI, the playing field is not level. Investment-money follows proven
success. 2006 FDI in flows to Asia maintain an upward trend at 15%, with the
highest share destined for China. This concentration of FDI exacerbates SouthSouth competition and negatively effects labour standards.

16

WHY ARE MULTINATIONAL COMPANIES IN INDIA?

There are a number of reasons why the multinational companies are coming down
to India. India has got a huge market. It has also got one of the fastest growing
economies in the world. Besides, the policy of the government towards FDI has
also played a major role in attracting the multinational companies in India.
For quite a long time, India had a restrictive policy in terms of foreign direct
investment. As a result, there was lesser number of companies that showed interest
in investing in Indian market. However, the scenario changed during the financial
liberalization of the country, especially after 1991. Government, nowadays make
continuous efforts to attract foreign investments by relaxing many of its policies.
As a result many of multinational companies have shown interest in Indian
markets.

17

ROLE OF MNCS IN INDIA

Profit maximization.
International network of marketing.
Diversification policy.
Concentration on consumer goods.
Location of central control offices.
Techniques to achieve public acceptability.
Existence of mordern and sophisticated technology.
Existence of modern and sophisticated technology.
Business, but not social justice.
No concern towards social responsibilities and business ethics.
MNCs and process of planned economic development in INDIA.
Cultural erosion.
Unconcern for environmental pollution and ecological balance.

PROFIT OF MNCS IN INDIA

It is too specify that the companies come and settle in India to earn profit. A company enlarges
its jurisdiction of work beyond its native place when they get a wide scope to earn a

18

profit and such is the case of the MNCs that have flourished here. More over India
has wide market for different and new goods and services due to the ever
increasing population and the varying consumer taste. The government FDI policies
have somehow benefited them and drawn their attention too. The restrictive policies that
stopped the company's inflow are however withdrawn and the country has shown
much interest to bring in foreign investment here. Besides the foreign directive policies the
labour competitive market, market competition and the macro-economic stability are some of
the key factors that magnetize the foreign MNCs here. Following are the reasons why
multinational companies consider India as a preferred destination for business:

Huge market potential of the country

FDI attractiveness
Labor competitiveness
Macro-economic stability

PROBLEMS OF MULTINATIONAL COMPANIES

Language
Of course, this part is so important, how could multinational companies
expand their market if those companies don't able local languages.

19

Culture
This aspect is must be considered by multinational companies because when
they want to advertise the products to local, they must thing what they can
do and what they can't do. Actually, not just in advertising aspect, but also
employment.
Geography
Multinational companies must consider this thing because it is impossible if
those companies build their branch offices at jungle or mountain. Who will
buy their product or services?
Transportation
To avoid high cost on product distribution, this aspect is must be considered
by multinational companies

SOCIAL & CULTURAL FACTORS

The MNCs are also affected by social and cultural factors of the local country.
They have to conduct the business according to the conditions in that country. The
products should be manufactured according to the needs and requirements of the

20

people. The cultural and social sentiments of the people should be taken care of.
For example, when Mc Donalds started its business in India, it made beef burgers.
But this was failed in India, as it was against the cultural, religious and social
sentiments of the people of India, because Indians worship cows so they would
never prefer a beef burger.
But many a times it happens that MNCs also shape the social, cultural, political
and even the legal framework of the local country. The people of the local country
many a times adapt to the products of the MNCs. For example, Pizza Hut,
Dominos, etc. have totally changed the eating habits of the people wherever they
have spread their business. The dressing style of the people changes, e.g. Indians
started wearing western style clothes. They also convince the Government to make
its legal policy flexible to suit their business conditions because the country is
being benefited by the MNCs.

GLOBALIZATION
Multinational

corporations

are

important

factors

in

the

processes

of globalization. National and local governments often compete against one

21

another to attract MNC facilities, with the expectation of increased tax revenue,
employment, and economic activity. To compete, political powers push towards
greater autonomy for corporations, or both. MNCs play an important role in
developing the economies of developing countries like investing in these countries
provide market to the MNC but provide employment, choice of multi goods etc.
The number of MNCs have increased greatly from 7000 in 1970 to over 78,000 in 2006. What
many people aren't aware of is that MNCs account for over half of the industrial
output of the world. The names of some of the largest MNCs include Wal-mart,
General Motors, Exxon-Mobil, Mitsubishi, and Siemens. However, according to data
from 2005, only one of the 200 largest MNCs are based in a developing nation which happens
to share a border with the United States, Mexico.
The North holds a monopoly when it comes to large corporations including MNCs and this
power difference continues to create a rift between the North and South.

22

MCDONALDS
INTRODUCTION

The McDonald's Corporation is the world's largest chain of hamburger fast food
restaurants, serving around 68 million customers daily in 119 countries across
35,000 outlets. Headquartered in the United States, the company began in 1940 as
a barbecue restaurant operated by Richard and Maurice McDonald. In 1948, they
reorganized their business as a hamburger stand using production line principles.
Businessman Ray Kroc joined the company as a franchise agent in 1955. He
subsequently purchased the chain from the McDonald brothers and oversaw its
worldwide growth.
A McDonald's restaurant is operated by either a franchisee, an affiliate, or the
actual corporation itself. The McDonald's Corporation revenues come from the
rent, royalties, and fees paid by the franchisees, as well as sales in companyoperated restaurants. In 2012, the company had annual revenues of $27.5 billion
and profits of $5.5 billion. According to a 2012 BBC report, McDonald's is the
world's second largest private employerbehind Walmartwith 1.9 million
employees, 1.5 million of whom work for franchises.

23

McDonald's primarily sells hamburgers, cheeseburgers, chicken, french fries,

breakfast items, soft drinks, milkshakes, and desserts. In response to changing
consumer tastes, the company has expanded its menu to include salads, fish, wraps,
smoothies, fruit, and seasoned fries.

HISTORY
The business began in 1940, with a restaurant opened by brothers Richard and
Maurice McDonald at 1398 North E Street at West 14th Street in San Bernardino,
California (at 34.1255N 117.2946W). Their introduction of the "Speedee Service
System" in 1948 furthered the principles of the modern fast-food restaurant that the
White Castle hamburger chain had already put into practice more than two decades
earlier. The original mascot of McDonald's was a man with a chef's hat on top of a
hamburger-shaped head whose name was "Speedee". By 1967, Speedee was

24

eventually replaced with Ronald McDonald when the company first filed a U.S.
trademark on a clown-shaped man having puffed-out costume legs.
On May 4, 1961, McDonald's first filed for a U.S. trademark on the name
"McDonald's" with the description "Drive-In Restaurant Services", which
continues to be renewed through the end of December 2009. On September 13 that
same year, the company filed a logo trademark on an overlapping, double-arched
"M" symbol. By September 6, 1962, this M-symbol was temporarily disfavored,
when a trademark was filed for a single arch, shaped over many of the early
McDonald's restaurants in the early years. Although the "Golden Arches" logo
appeared in various forms, the present version as a letter "M" did not appear until
November 18, 1968, when the company applied for a U.S. trademark.
The present corporation dates its founding to the opening of a franchised restaurant
by Czech American businessman Ray Kroc in Des Plaines, Illinois on April 15,
1955, the ninth McDonald's restaurant overall; this location was demolished in
1984 after many remodels. Kroc later purchased the McDonald brothers' equity in
the company and led its worldwide expansion, and the company became listed on
the public stock markets ten years later. Kroc was also noted for aggressive
business practices, compelling the McDonald brothers to leave the fast-food
industry. Kroc and the McDonald brothers all feuded over control of the business,
as documented in both Kroc's autobiography and in the McDonald brothers'
autobiography. The San Bernardino restaurant was demolished in 1976 (1971,
according to Juan Pollo) and the site was sold to the Juan Pollo restaurant chain.
This area now serves as headquarters for the Juan Pollo chain, as well as a
McDonald's and Route 66 museum. With the expansion of McDonald's into many
international markets, the company has become a symbol of globalization and the

25

spread of the American way of life. Its prominence has also made it a frequent
topic of public debates about obesity, corporate ethics and consumer responsibility.

GOALS AND OBJECTIVES

McDonalds vision is to be the worlds best quick service restaurants
experience.
McDonalds is committed to maintaining and developing the best food
products in the quick service restaurant market.
In order to deliver this, the company has made a number of commitments to
food safety and nutrition.
Lead the Quick Service Restaurant market by a program of site development
and profitable restaurant openings, and by attracting new customers.

26

Increasing sales through promotions will enable them to continue their

program of expansion.
McDonalds have an objective to continual enhance and improve their menu.
This will better satisfy their customers and give customers more reason to
visit. Many ideas for new items on the menu come from the franchisees
responding to customer demand. Consumer tastes change over time and
McDonalds has to respond to these changes.

FACTS AND FIGURES

By 1993, McDonald's had sold more than 100 billion hamburgers. The once
widespread restaurant signs that boasted the number of sales, such as this one in
Harlem, were left at "99 billion" because there was only space for two digits.
The McDonald's in Northport, Alabama commemorates President Ronald Reagan's
visit
McDonald's restaurants are found in 118 countries and territories around the world
and serve 68 million customers each day. McDonald's operates over 35,000

27

restaurants worldwide, employing more than 1.7 million people. The company also
operates other restaurant brands, such as Piles Caf.
Focusing on its core brand, McDonald's began divesting itself of other chains it
had acquired during the 1990s. The company owned a majority stake in Chipotle
Mexican Grill until October 2006, when McDonald's fully divested from Chipotle
through a stock exchange. Until December 2003, it also owned Donatos Pizza. On
August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.
Notably, McDonald's has increased shareholder dividends for 25 consecutive years,
making it one of the S&P 500 Dividend Aristocrats. In October 2012, its monthly
sales fell for the first time in nine years. In 2014, its quarterly sales fell for the first
time in seventeen years, when its sales dropped for the entirety of 1997.

GLOBAL OPERATIONS
McDonald's has become emblematic of globalization, sometimes referred to as the
"McDonaldization" of society. The Economist newspaper uses the "Big Mac
Index": the comparison of a Big Mac's cost in various world currencies can be used
to informally judge these currencies' purchasing power parity. Norway has the
most expensive Big Mac in the world as of July 2011, while the country with the
least expensive Big Mac is India (albeit for a Maharaja Macthe next cheapest
Big Mac is Hong Kong).

28

Thomas Friedman once said that no country with a McDonald's had gone to war
with another. However, the "Golden Arches Theory of Conflict Prevention" is not
strictly true. Exceptions are the 1989 United States invasion of Panama, NATO's
bombing of Serbia in 1999, the 2006 Lebanon War, and the 2008 South Ossetia
war. McDonald's suspended operations in its corporate-owned stores in Crimea
after Russia annexed the region in 2014. On 20 August 2014, as tensions between
the United States and Russia strained over events in Ukraine, and the resultant U.S.
sanctions, the Russian government temporarily shut down four McDonald's outlets
in Moscow, citing sanitary concerns. The company has operated in Russia since
1990 and at August 2014 had 438 stores across the country. On 23 August 2014,
Russian Deputy Prime Minister Arkady Dvorkovich ruled out any government
move to ban McDonald's and dismissed the notion that the temporary closures had
anything to do with the sanctions.

Some observers have suggested that the company should be given credit for
increasing the standard of service in markets that it enters. A group of
anthropologists in a study entitled Golden Arches East looked at the impact
McDonald's had on East Asia, and Hong Kong in particular. When it opened in
Hong Kong in 1975, McDonald's was the first restaurant to consistently offer clean
restrooms, driving customers to demand the same of other restaurants and
institutions. McDonald's has taken to partnering up with Sinopec, the second
largest oil company in the People's Republic of China, as it takes advantage of the
country's growing use of personal vehicles by opening numerous drive-thru

29

restaurants. McDonald's has opened a McDonald's restaurant and McCaf on the

underground premises of the French fine arts museum, The Louvre.
The company stated it will open vegetarian-only restaurants in India by mid-2013.

BUSINESS MODEL
McDonald's Corporation earns revenue as an investor in properties, a franchiser of
restaurants, and an operator of restaurants. Approximately 15% of McDonald's
restaurants are owned and operated by McDonald's Corporation directly. The
remainder are operated by others through a variety of franchise agreements and
joint ventures.

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The McDonald's Corporation's business model is slightly different from that of

most other fast-food chains. In addition to ordinary franchise fees and marketing
fees, which are calculated as a percentage of sales, McDonald's may also collect
rent, which may also be calculated on the basis of sales. As a condition of many
franchise agreements, which vary by contract, age, country, and location, the
Corporation may own or lease the properties on which McDonald's franchises are
located. In most, if not all cases, the franchisee does not own the location of its
restaurants.
The United Kingdom and Ireland business model is different from the U.S, in that
fewer than 30% of restaurants are franchised, with the majority under the
ownership of the company. McDonald's trains its franchisees and others at
Hamburger University in Oak Brook, Illinois.
In other countries, McDonald's restaurants are operated by joint ventures of
McDonald's Corporation and other, local entities or governments.

As a matter of policy, McDonald's does not make direct sales of food or materials
to franchisees, instead organizing the supply of food and materials to restaurants
through approved third party logistics operators.
According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight
workers in the U.S. have at some time been employed by McDonald's. Employees
are encouraged by McDonald's Corp. to maintain their health by singing along to
their favorite songs in order to relieve stress, attending church services in order to
have a lower blood pressure, and taking two vacations annually in order to reduce
risk for myocardial infarction.

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Fast Food Nation also states that McDonald's is the largest private operator of
playgrounds in the U.S., as well as the single largest purchaser of beef, pork,
potatoes, and apples. The selection of meats McDonald's uses varies to some extent
based on the culture of the host country.

ENVIRONMENTAL POLICIES
It can be argued that as an organization, McDonalds is comprehensively
environmentally friendly and does reach most of the stated aims and objectives.
The aim in terms of encouraging environmental values and practices needs to be
addressed more clearly to employees and managers alike as opposed to the
specialized McDonalds Environmental Management System so that all employees
of this organization are aware of its environmental duties. Applying this correctly
will help the company to improve on environmental friendliness. Also, there needs
to be a way of quantifying all necessary environmental data in order to ensure that
all employees are accepting an environmental responsibility. Finally, McDonalds

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as an environmental conscious organization also believes in asking the right

questions, challenging themselves, their system and their partners. Having looked
at the environmental policy of McDonalds it can be concluded that as an
organization it can be classed as socially contributive. This essentially means that
McDonalds wishes to be socially constructive in the community it serves to help
protect the natural environment. Recycling is a core part of their policies and helps
to avoid any unethical business actions.

FINANCIAL PERFORMANCE
McDonalds hopes to close these gaps by a heightened focus on restaurant level
execution and marketing. It can be argued that a reduction in significant item costs
and an improvement in worldwide economic conditions will both also help to close
the gaps. Jim Cantaloupe, the Chairman and ChiefExecutive,2003, believes that
McDonalds priorities are to fix the existing business, to take a more integrated
and focused approach to growth, and to ensure McDonalds has the right
Organizational structure and resources. He anticipates that earnings per share
growth will be somewhere between 10% and 15%.

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The key to McDonalds success will be a continuation of their product consistency,

better location choices and improved retail business model execution, particularly
with regard to the training of employees

CONCLUSION
In conclusion, MNCs are beneficial to less developed countries. They improve the
foundations of a "backwards" economic environment through the diffusion of
capital, technology, skills, and exports. MNCs have a direct effect on the
development of a more citizen welfare conscious government. Accordingly, the
number of jobs increases, consumer spending increases, the tax base grows and
health care is more widely accessible. They also have an apparent lasting effect on
the values and institutions of the host country. The values of the country change to
reflect a country committed to staying in pace with a rapidly changing global

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environment; extending to political norms and nationalistic tendencies. Once there

is openness to capitalism, or a more developed capitalist society emerges then there
will be a more stable global society. However, in the end there really is no other
more reliable way to improve the social, economic, and political environment of a
state than by allowing a MNC to invest. The MNCs is fascinating and important
for understanding economic globalization. There has been substantial progress in
the literature in the past couple of decades. Multinational companies are not
disadvantage to our country. India needs MNCs to become developed country. But
employees of these companies should not take responsibility for overloaded work
just for high salary. So that, there can have fulfillment of passion and also
fulfillment of personal life.

BIBLIOGRAPHY
http://en.wikipedia.org/wiki/MNC
www.indoinfoline.com
www.cii.com
http://en.wikipedia.org/wiki/McDonalds
http://www.mcdonalds.com/us/en/home.html