Question

Some countries require all businesses to be over 50 percent owned by its citizens. If mcdonald’s wants to expand into a country with this regulation, which of the global entry strategies would not be an appropriate choice?.

Answer 1

A wholly owned subsidiary would not be appropriate for McDonald’s to use as a global entry strategy in countries where businesses must be majority owned by local citizens. Instead, strategies like joint ventures or franchising would be more suitable.

Step-by-step explanation:

If McDonald’s wants to expand into a country with a regulation that requires all businesses to be over 50 percent owned by its citizens, the global entry strategy that would not be appropriate is wholly owned subsidiaries. This mode of entry involves a parent company owning 100 percent of the overseas operation, which contradicts the mandate that a majority of the ownership should be held by local citizens. Instead, McDonald’s would need to consider other entry strategies such as joint ventures, franchising, or strategic alliances that comply with local ownership laws and allow for partial foreign ownership while benefiting from local market knowledge and established networks.

These strategies support a harmonious balance between global business interests and domestic regulatory requirements.

Answer 2

A wholly-owned subsidiary is not a suitable global entry strategy for McDonald's if a country requires businesses to be over 50% locally owned. Other strategies like franchising and joint ventures would be more appropriate.

Step-by-step explanation:

If McDonald’s wants to expand into a country that requires all businesses to be over 50 percent owned by its citizens, the global entry strategy that would not be an appropriate choice is establishing a wholly-owned subsidiary. This strategy involves McDonald’s owning 100% of the business entity, which directly conflicts with the host country’s regulation. Instead, McDonald’s could look into other strategies such as franchising, forming a joint venture with local partners, or strategic alliances that comply with the 50 percent local ownership requirement.