As the Challenge Case shows, international management is essential to the future growth of McDonald’s. The company’s greatest expansion is occurring in the Asia/Pacific region, the Middle East, and Africa, notably Egypt and South Africa—locations where populations are large and incomes are rising. Therefore, in spite of his own lack of firsthand experience managing a foreign operation, CEO Don Thompson will be able to use his analytic skills to recognize opportunities in these far-flung locations.

As McDonald’s has grown beyond the boundaries of the United States, it has become more of a multinational corporation—an organization with significant operations in more than one company. Managing such an organization is highly complex. Thompson and his management team need to take into account differences in economic conditions, people, levels of technology, market sizes, and laws. In doing so, the company must take into account the risks of investments in many different countries. Recently, for example, the economies of many European countries—where McDonald’s also has franchises—have been nearing a financial crisis and new recession. At the same time, political upheaval poses risks in the Middle East. Managers at McDonald’s need to balance the risks against the market potential and prepare the company to manage the risks.

A key variable in McDonald’s international operations is the people it employs and the franchisees with whom it works. The company must identify the best talent to plan menus and marketing programs, sign contracts with suppliers, and provide support to franchisees. These people will be a combination of expatriates, host-country nationals, and third-country nationals. Given Thompson’s limited international experience, he will need to be sure that his management team includes people who have lived and worked in the countries served by McDonald’s. When hiring choices involve relocating employees to another country, McDonald’s must help them navigate the adjustment to another culture.

Careful planning is essential for a multinational company. At McDonald’s, this function includes the company’s needs for foreign purchasing, manufacturing, and distribution of food and supplies, as well as financing needs in the countries where it operates. The company also needs to identify the strengths and weaknesses franchise owners will face in their local labor forces as well as the local demand for various kinds of fast food. It must determine what roles imports and exports will play in its food purchases, and it may need license agreements for some of its franchises, depending on local laws and customs.

A multinational company’s organizational structure may be based on function, product, territory, customers, or manufacturing processes. The organizational structure of McDonald’s is based on territories served. The company has four major business divisions: United States; Europe; Asia/Pacific, Middle East, and Africa (APMEA); and other countries (including Canada and Latin America) and corporate functions. Managers selected for McDonald’s corporate positions should have a geocentric, rather than an ethnocentric or polycentric, attitude. This will enable the company to tap the best management skills without regard to a manager’s country of origin.

Influencing people in a multinational corporation such as McDonald’s becomes increasingly complicated as the company extends its global presence. The cultures of people in the various locations where the restaurant operates differ. McDonald’s acknowledges this in the different menu choices and service options it tailors for each locale. When corporate management travels to or works in other countries, managers would benefit from having a working knowledge of the languages spoken and the attitudes and needs that motivate people in each country. For example, rewards that motivate employees in Chinese McDonald’s restaurants may be quite different from the rewards that are the most motivating in the United States.

Control processes at McDonald’s should involve standards, measurements, and needed corrective action. These efforts are important for maintaining both food safety and the company’s global reputation for fast, friendly service. In terms of financial controls, McDonald’s must be prepared to handle differences in the currencies used for buying supplies and selling food in 119 different countries. In terms of ethics, controls should ensure that the company’s employees and franchisees respect human rights, accommodate local traditions, and demonstrate what is considered “correct” behavior in each country.

Finally, if McDonald’s uses expatriates in foreign operations or brings foreign employees to its U.S. headquarters, it needs to prepare them for work in the new country. It should take appropriate steps to help them find housing and health care, explain how the assignment will affect their long-term careers with the company, and provide counseling for any personal problems the expatriates face as a result of living in an unfamiliar culture. Training for expatriates should also include a description of the host country’s culture, steps for adapting to that culture, basic information about logistics such as calling for emergency help, and specifics of the jobs they will be performing.