You'd be hard-pressed to find somebody who isn't familiar with McDonald's (NYSE: MCD), one of the best-known American corporate icons. So when the Golden Arches packs up and leaves an entire country, you know you're witnessing a chilling state of affairs. The burger chain's departure from Iceland also gives Fools fast food for thought when it comes to international investing.

According to Bloomberg, McDonald's is leaving Iceland after the collapse of the krona, the Icelandic currency. (There were only three McDonald's on the tiny island, all owned by a franchisee, but still!) Despite their best efforts, the company and the restaurants' owner couldn't cook up a workable solution.

Bloomberg's report shed light on McDonald's unappetizing state of affairs in Iceland. Most ingredients had to be imported to the island from Germany, an understandably difficult and expensive process in trying times. Icelandic McDonald's costs have doubled in the last year; the restaurants would have to raise their prices by 20%, and charge the equivalent of $6.36 per Big Mac stateside, to achieve the margins needed to remain open.

McDonald's frozen fate in Iceland demonstrates that expanding into certain foreign markets can be challenging for even the best companies. Consider the culture shock when Starbucks (Nasdaq: SBUX) tried to put a store in China's Forbidden City, or Yahoo! 's (Nasdaq: YHOO) public-relations problems when it gave information to Chinese authorities that led to a journalist's arrest. Wal-Mart 's (NYSE: WMT) expansion into Indiais also fraught with questions. And what about the huge problemsIkea faced in Russia?

Then again, perhaps no portfolio should rely on just a single country's economic fortunes -- even our own. For all the potential pitfalls of foreign expansion, it's still Foolish to consider American investments with exposure abroad. For example, many investors like Yum! Brands ' (NYSE: YUM) prospects because of its great success expandinginto China. Yum! is not a one-trick pony, and exposure to different markets could insulate its earnings in case something goes wrong in one corner of the globe.

Fortunately for its shareholders, McDonald's has a vast presence at home and abroad; Iceland is just a tiny blip in its fortunes. Nonetheless, investors need to consider the dangers of placing too many investing eggs in one country's basket. If the unthinkable does happen -- as it did in Iceland, and as it still could anywhere, at any time -- diversification can help protect your portfolio from spectacular flameouts.

This article was originally published as When Iceland Freezes Overon Fool.com

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