Mcdonald’s Russia: Managing a Crisis Essay

1083 Words5 Pages
#1. In the late 1980s, Soviet Union had brought its glasnost (openness) era. Soviet president Mikhail G. introduced the revolutionary idea of Perestroika, which refers to “economic restructuring.” Gradually, Soviet’s culture and business began to grow. The political parties began to spring up, and farmers began to sell their products on the open market. In 1987, the Kremlin passed a new law on the joint ventures, easing restrictions on the importation of foreign capital, technology, and expertise.

#2. First of all, Cohon’s idea to open a McDonald in Russia was originated at the Montreal Olympic Games where he met a group of dignitaries from the Soviet Union went in McDonald’s for snacks. When these officials entered McDonald’s, they
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The third risk had to do with the question of Soviet employees. They were unmotivated without standard costumer service. To overcome this challenge, the major thing had done was to train employees and sent them away to join training program. In addition, a number of Canadian managers were brought in to support Russian crew.

The fourth risk involved currency decision. Cohon had to decide which kind of currency to accept in the restaurant, which would affect the profitability of the restaurant. After intense deliberation, Cohon made his decision to accept ruble only and his decision was motivated by several factors.

#4. It was a good choice because Soviet law stipulate that Moscow city administration control all service in the city, including restaurants, and real estate, so partnering with them was the only way to make things happen. For example, if they needed land, they could get them land etc.

#5. McDonalds in Russia was created to be a Russian company, with Russian employees, Russian suppliers, and Russian-sourced product. They managed business for long term and took money and reinvest it in the country. They built a network of restaurants and most importantly, McDonalds accepted ruble-only in the restaurant to gain the trust of Russians.

#6. For example, in a typical Russian dinning room, where there was a coat check area for people to hang coats. People wouldn’t allow entering the restaurant without hanging up
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