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I’d Like to See the World as One (Big Franchise)

February 27, 2009

“Our greatest export has always been the American way of life  and nothing is a better symbol of true Americana than McDonald’s and Coca-Cola,” says Cecily. McDonald’s recent $120 million investment into the expansion of its Russian franchises and Coca-Cola’s $1.2 billion commitment to Russia in the next 3-5 years certainly supports this claim.  After years of hanging idly in streetside cafes, Europeans are flocking to the idea of fast and tasty food.

Some analysts have argued that the downturn in the economy has assisted in the success of cheap food joints like McDonald’s, but the fact remains that McDonald’s has always had a strong staying power – especially outside of the U.S. In 2008, McDonald’s reported a net income raise of 80% for a total $4.3 billion.  4 percent gains were garnered in the U.S., but the majority of their profit came from Europe and elsewhere. McDonald’s experienced 8.5 percent gains in Europe and 9 percent in Asia/Middle East/Africa.

Cecily explains  why Coca-Cola has been equally successful: “Coca-Cola is an enduring icon that has wrapped itself in the idea of wholesomeness (what it stands for, not its ingredient list). Further, as the ‘real thing’ Coke promoted its beverage as a main-stage mediator for world peace, asserting that when people share something in common — a taste for Coca-Cola, for example — the likelihood of living in ‘perfect harmony’ just might be possible.  Captured in their “I’d like to see the world as one” commercial (1971), that association is as burned-in to the American psyche as any brand can be. And for that matter, the world’s psyche.”

Russia is an attractive place to expand for many reasons. A growing middle class, with growing appetites for global goods, is a good bet for McDonald’s. And now with the $25 billion China has agreed to pump into Russia, in exchange for an increase in oil supplies (a pact just reached on 2/16/09), the country is a great investment for companies like McD’s and Coke.

Cecily continues, “America and Russia have been at odds recently over security and ideological issues. From their opposition to Bush’s missile-defense program, cozy relations with Iran and China, and their incursion into democratic Georgia last summer, Russia is clearly on the other side of a number of strategic interests for the U.S. Since countries that do business together are less inclined to go to war with one another, serving up Big Macs and Cokes in Russia may help quell the tension.  – Now that’s a value meal!”

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