Analysis of McDonalds’ Expansion Strategy

Analysis of McDonalds Expansion Strategy drinkationMcDonalds is championness of the most giant burger brands in the spheric nimble nutrient chain which is presented in well-nigh 120 countries (Keegan and Green, 2013). However, McDonald unchanging has to challenge with a snatch of problems arisen in not only home martplace and overly planetary nutrient mart (CBS Chicago, 2014). Based on its report of terminal quarter last year, at that place was a long name of its nodes buying McDonalds products has been decreased. Especially in the U.S market place in 2013, the participation has lost to a greater extent than 1.6 percent of its customers comp ard to the same moment with previous years (CBS Chicago, 2014).Question 1McDonalds has lost its customer withdrawion in home market, however, its reputation is still general in emerging markets overdue to the lack of trust on their local brands (Doctoroff, 2014). Understanding this opportunity, McDonald has made a decision of expanding its military support to the global market (Rudarakanchana, 2013). Though McDonalds segmented its stemma in a procedure of parts, the superior of its products and go has been claimed thatMcDonalds was built on a pixilated foundation of a core menu that we took around the world but we need to make sure we are more locally relevant, (Grant, 2006).In particular(a), the quality of its products volition be locally delivered that is varied with another(prenominal) regions by applying polycentric orientation which related to localized approach (Keegan and Green, 2013). This answer give character four main aspects of merchandising mix to collapse how McDonalds run its business locally in its segmentations.ProductWhen McDonalds entered the India market, it coped with the problems of beefs products in in that respect because the most Indian people equal the Hinduism avoid utilize meat from beef or cow (Rowley, 2012). Hence, McAloo Tikki which is a beef-free bur ger has been provided in the India market and quickly became the most favourite(a) products in India McDonalds (Hickman, 2013). In addition, in the France, McDonalds has also produced the McCamembert for the local market which utilise the Camembert cheese the popular cheese brand in France (Tepper, 2013). Moreover, McArabia burger product, which uses chicken sandwiched among a long bread, has been presented in the Middle East market (Hickman, 2013). postureMcDonalds expansion outline has been executed with a huge number of nearly 40 thousands stores in over 110 countries (McDonalds, 2014). Taking avails from this succeed and its bring forth in home market, the corporation be after to keep increasing the number of over 400 drive-thru stores to compete with other rivals in global market (Vignali, 2001). For example, McDonalds in the UK has opened its stores in diversified places but still focus on high commerce locations such as in shop malls, near entertainment areas or at a irports and train stations (McDonalds, 2014). It happened as the same as in India McDonalds where has more than 200 restaurants in the last quarter of 2010. McDonalds effected also nearly 2000 outlets in China and virtually 1000 restaurants in France (Keegan and Green, 2013).PriceThe price for a McDonalds burger, in particular the prominent mac, was hurtd based on the average net incomes of customers in the market. The high minimum wages is, the higher price of a Big Mac will be charged (The Economist, 2014). The Figure 1 will present the differences of prices of Big Mac that McDonalds charges in some popular markets.The income rank of India has been considered as a lower in the middle class with the minimum wage from USD 5 to USD 6 per day (Office of Labour Department, 2014). Hence, the price of USD 1.54 for a Big Mac of McDonalds is much cheaper compared to the price in the UK market with the price for a Big Mac burger is charged USD 4.63, approximately equal price in the US home market.PromotionFirstly, understanding the habits of watching commercial on television in China, McDonalds in China plans to attract its customers through sucker media (Vignali, 2008). In addition, Green promotion has been executed in India with the claim of no beef products delivered (Keegan and Green, 2013). Secondly, sponsorship activities have been implemented in a number of sports. For example, in the USA, McDonalds maintains close alliance with the most favourite basketball league NBA to attract the awareness of its audience on McDonalds brand (Vignali, 2008). Brand name of the McDonalds was also changed in station to be suitable to the market. For example, in Australia, Maccas was cognize as McDonalds in on that point (The Telegraph, 2013). Thirdly, sales promotion has been also delivered to McDonalds customers. For example, some other burger each weekend promotion was conducted in Czech market which provided different tastes of burgers (Keegan and Green, 2013 , pp. 55)Question 2For a giant service-orientated corporation as McDonalds, there will exist a number of arisen problems related to environmental aspects that knead the internationalisation of its brand. This paper will analyse these impacts by using the gadfly framework which will be briefly presented in Figure 2.FactorsOpportunities panics semipoliticalConflicts between national presidential term and Beijings government in terms of McDonalds promotion planLegislators and critics discouragements in terms of McDonalds impacts on French provender cultureEconomicChina is one of the rapidest-developing market funds instabilitySocialIndian customers are interested in McDonaldsIndian prevents using beefs productsFrench complains about World Cup sponsorship of McDonaldsTechnological shrewd outlets by using more glass window and air chilling systems in IndiaApplying electronic devices to provide better servicesCreating Order maskingPolitical promoterIn order to conduct a huge investm ent on promotion scheme in China, McDonalds has played out more than USD 1 billion on building a big shop mall in the middle of Beijing where is considered as a herd area. However, though having agreements from Beijing government, this project of McDonalds was still postponed by the nation government of China (Keegan and Green, 2013).In France, concerning the negative impacts of McDonalds into traditionalistic lifestyle of French people, there was a lot of legislators and critics has been in disagreements with continuing to allow McDonalds outlets to be established more (Keegan and Green, 2013).Economic factor callable to the hundred time of victimisation in terms of meal industry in India, McDonalds has considered this statistic as one of dominance changes to expand its business in this market. Hence, the high society opened a number of outlets mainly in areas where have high customer traffic (McDonalds, 2014).Since McDonalds has realized the potential of flying food industry in China, it has planned to enter this market and achieved considerable outcomes in terms of profits and customer attentions. Hence, China was considered by McDonalds as the rapidest-developing market that stimulates the company to keep expanding in there (Keegan and Green, 2013).However, currency instability was also recognized as one of serious threats for McDonalds in terms of economical factor. callable to its main ratio of profits generated from external American market, there whitethorn cause a significant threats to McDonalds profit if exchange rates are not constant. For example, in 2012, nearly 0.5 percent of companys revenue has been decreased because of this switch off of exchange rates (Gasparro, 2012).Social factorThe customer expectation for the fast(a) food industry was increased strongly in India when McDonalds entered this market in 1996. After a number of being presented here, the amount of money for purchasing fast food products has been increased strongly an d will be judge to be increased up to 1.5 time in 2016 compared to the statistic in 2013 (Nayak, 2013).However, there still has a number of considerations towards this factors. For example, most Indian people follow the Hinduism which indicated that beefs and products from beefs will not able to be employ in there. Therefore, McDonalds has had to spirit a different menu for its customers in this market (Hickman, 2013). In addition, the front line of its brand in World Cup 1998 in France was received a lot of criticisms in terms of health issues from French people.Technological factorUnderstanding the fast innovation of technology that affects considerably towards business outline, McDonalds has spent much efforts on planning to apply high-technological devices in delivering its services (Patton, 2013). In order to make its customer comfortable and be relax when using McDonalds services, iPod and television were provided to customers to use. In addition, in India, glass window and air change systems have been used to jock McDonalds outlets in this market satisfy Indian customers (Keegan and Green, 2013).Question 3Assuming that McDonalds has decided to expand its business into Vietnam fast food market, the following step is very essential for the corporation to last planning a strategy to deliver its products in this market. This part will use the international market insertion strategy which will be outlined in Figure 3 to provide recommendations for McDonalds. confirming exportationThis decision of market entry was considered as the safest way for the McDonalds. When this type of strategy is chosen, the company will not participate to export its product marine and it also not participate in merchandise strategy in the target market (Lambin, Chumpitaz and Schuiling, 2007). For example, McDonalds may trade its products with a local company and allow to sell these products into Vietnam market. Hence, this local company will take debt instrument for the sales of these products. However, with the weak connections between McDonalds and its products, the company may be unrealised to attract the huge awareness from target customers (Lambin, Chumpitaz and Schuiling, 2007). sway exportingIn contrast with the indirect exporting decision, with the direct exporting strategy, McDonalds will now participate to export its products to a Vietnamese company to sell it in this market. The advantage of this action is that the company can ensure its merchandising strategy in the targeted market (Lymbersky, 2008). Hence, though McDonalds has to spend a lot of efforts on justifying the market in the lead making decision, it will have more role on managing its sales and trade activities in the foreign market (Lymbersky, 2008). Direct investmentThe popular activity related to this direct investment strategy is to collaborate with a local company in the target market, especially Vietnam market, in order to create a joint venture form. The advant age of this activity is that McDonalds is not the only one who has to suffer risks from entering invigorated markets, especially in terms of profits. It also has a chance to start out more teaching of the market from its partner. However, managerial issues can be arisen when on the job(p) with the local company due to the dis kindredity between two cultures (Keegan and Green, 2013).Indirect investmentRelated to this type of strategy, licensing and franchising are considered as two popular method actings which are used to plan to enter a new market (Keegan and Green, 2013).Licensing. Similar to direct investment decision, licensing will be used for the semipermanent purpose which provides less risks to the company, in this case is McDonalds. The local company in the targeted market will be empower to use the reputation of McDonalds to cover products in its market (Lymbersky, 2008). Because of using image of popular products, it will create an opportunity for the local distribut or to attract a huge number of customers for these products that related to increase sales revenue (Lambin, Chumpitaz and Schuiling, 2007). Hence, McDonalds in this case may take profit benefits from this method. However, it is also considered as a risk for McDonalds due to the lack of power on controlling the delivered marketing strategy of the distributors into the market (Lambin, Chumpitaz and Schuiling, 2007).Franchising. Franchising plays as one of recommendations for investing in at one time to enter the new market. This method is the agreement between the franchiser, in this case is McDonalds, and the franchisee who will be empowered by McDonalds to sell its products in the targeted market (Jobber and Fahy, 2009). Though it seems to be similar to licensing, there is a difference that the franchise will run its business as the same as the business in the host landed estate (Keegan and Green, 2013). For example, there will be an outlet of McDonalds in Vietnam which has the same design of outlets and deliver the same services with McDonalds in the US. This type of market entry strategy has been also used by McDonalds in overall markets that it entered (McDonalds, 2014). The main advantage of this decision is that McDonalds, who plays as the franchiser role, can apply its global marketing strategy to its outlet in Vietnam. Moreover, it is easy for McDonalds for controlling the quality of delivered products, the quality of recruited staffs in the Vietnamese outlet to ensure the similarity between its outlets in home market and in Vietnam. Hence, it could be seen that Vietnamese customers can have a chance to experience the products and services as the same as it is delivered in the U.S (Lymbersky, 2008).Taking advantages from the success in terms of franchising strategy in the world market and the popularity of its reputation, it could be recommended that franchising should be adapted in the Vietnamese market.Question 4Based on the global expansion strategy of McDonalds, Plan to Win was designed in order to create a standard marketing plan which will be adapted in any market in general (McDonalds, 2014). However, for a particular market as Vietnam fast food market, there still has to concern in a number of factors initiatively that influence the strategy of marketing to create militant advantage. Porters five forces model (Porter, 2008) will be used to explain in detail.Threat of New Entrants. With the positive GDP step-up of the economy started from 2004, Vietnam was reported as one of the fastest and the most steadfast economy in Asia. In addition, in 2007, Vietnam has been conceded as one of formal members of WTO and the government of this country has renovated its laws and regulations which provided open opportunities for multinational companies like McDonalds to enter Vietnamese market. (KPMG, 2012).Threat of Power of Suppliers. Though there is a lot of potential local suppliers for food ingredients and equipment for fast food services, only few flow foreign brands in Vietnam accepted to participate with them due to disagreements (Vietnamnet Bridge, 2014). Hence, there has a chance for McDonalds to find its suppliers in the local market to reduce the price from importing oversea if the company find solutions for this issue.Threat of Power of Buyers. Due to the increase of young population and the high proportion of middle income customers in Vietnam, the demand for reputable brands, particularly in fast food restaurants, has been brook rapidly (Azzaro, 2012). Hence, it partly reduces pressures for McDonalds entering the new Vietnam fast food market.Threat of Substitute Products. In case of charging the price of McDonalds products as similar as them in some Asian market, McDonalds may have to suffer the tone ending of customers to sculptural relief products. For example, steam sticky rice, pho or noodles are popular traditional fast food in Vietnam which can be considered as substitute products for bu rgers of McDonalds (Vietnamnet Bridge, 2014).Threat of Competitors. McDonalds could be considered as a late fast food giant in Vietnamese fast food market because there was a number of giants, for example, KFC, Lotteria, Starbucks, Subway or Burger King have preceding entered the market than McDonalds (Vu, 2014).Understanding these five forces can help McDonalds to create its take in competitive advantage over its current rivals in Vietnam fast food industry. Presented as a late competitor in this market, in order to compete with its competitors, it could be recommended that spending significant efforts on executing its marketing plan is very important though Plan to Win global strategies has been provided with clear marketing mix. As the same as obtaining qualitative and quantifiable results by creating an effective marketing plan, there are three marketing executing tools which are popular to be applied to implement its plans (Pride and Ferrell, 2008). customer Relationship Man agement. Though researching on customers needs before entering the market is necessary, maintaining the relationship between McDonalds and its customers is also important. (Pride and Ferrell, 2008). Hence, McDonalds should collect information or feedbacks of customers who used its products and classify this data to enhance the better services to the customers. Since potential customers are satisfied, it is less challenge for the company to create marketing plans to maintain the relationship with its customers in long term (Pride and Ferrell, 2008).Internal Marketing. Customers are not only known as people who use products or services but also known as the human resources who directly participate in delivering products and services of a company. This is considered as internal customers (Saxena, 2009). Therefore, the company should assign clear job tasks and suitable reward systems for employees that fulfil their expectations to help them commit to contribute to the success of the com pany (Pride and Ferrell, 2008).Total Quality Management. Due to the low-priced products strategy, McDonalds has to spend a considerable effort to effectively control the quality of its products and services. It is not only related to ensure the customer relationship maintenance but also its suppliers relationships in order to increase its market shares and reduce the costs of production (McDonalds, 2014). Therefore, the company can satisfy its customers by delivering cheaper products but still ensuring its high quality.ConclusionThis paper has attempted to analyse McDonalds expansion strategy and provided justification and executing plain for entering Vietnam fast food market. With the positive researched information of fast food market in Vietnam, it could be believed that McDonalds will be successful to attract the customers and compete other rivals to become market leader in there. However, adjustments for this marketing plan will be required due to the change of environmental fa ctors in the market.