Entry and Expansion strategies of McDonalds Analysis 2022

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Entry and Expansion strategies of McDonalds
Entry and Expansion strategies of McDonald's
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Entry and Expansion strategies of McDonalds
1.0 Introduction
The main aim of the paper is to provide critical analysis of entry and expansion strategies of
the McDonalds corporate. The analysis of entry and expansion strategies is essential for an
organization as it allows it to build brand loyalty in local and international perspectives as well as
setting rules of a market. Furthermore, upon assessment of the available entry and expansion
strategies in market, a company is able to select expansion or entry mode that fits into the micro
and macro environment of a market in which an organization intends to venture. Thesis, the
paper examines the expansion and entry mode strategies adopted by McDonald's to venture into
global markets, factors that drive adoption of entry and expansion strategies and provide a
recommendation of suitable strategies that company could use to successfully venture into
international markets.
2.0 Background of McDonald's
McDonald's is a multinational company which was founded in 1940 by Richard and Maurice
McDonald (Gheribi, 2017). The corporate started as a private but late transformed to public
company in 1965. Since it became a public company, the company announced its first-ever
quarterly loss of $343.8 million in January 2003. With McDonald encountering losses, the
company decided to change its business model and all approaches to growing the business. The
company changed its models of increasing number of restaurants to increasing number of sales in
its existing restaurant. The strategy worked well as the company announced that the sale of the
company has increased in 2004 as compared to 2003 (Germar, (2018). In 2018, McDonald's
shifted its international headquarters to Chicago from Oak Brook, Illinois. The main source of
McDonald’s corporation revenues is believed to be generated from sales in company-operated
restaurants, fees raised by franchisees, royalties and rent. The corporate is famously known for

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Entry and Expansion strategies of McDonalds
its high-end products such as hamburgers, French fries, desserts, wraps, milkshakes, soft drinks,
cheeseburgers, breakfast items and chicken products. Currently, the corporate has added to its
menu fruits, salads, smoothies and salads to response to changes in consumer patterns and tastes
and the current trend and negative criticism of unhealthiness of their products from different
countries around the world. Furthermore, McDonald's is the second-largest private employer
around the world after WalMart with reports showing that by 2018, the company employed over
1.7 million workforces behind 2.3 million’s Walmart (Rodrigues, Nikhil and Jacob (2016).
3.0 Discussion of the strategies
3.1 Entry strategies
Entry strategies are techniques which are used by companies to successfully enter into
new markets regardless of location, competition and the nature of market. Diverse companies use
different entry strategies such as licensing, direct exporting, franchising, joint ventures,
partnering, buying a company, piggybacking and Greenfield investment in order to venture into
new markets successfully.
Direct exporting involves a company selling its products and services directly into the
market using its own resources. Licensing involves a company transferring the right to service
and product use to another company. Franchising which can be categorizes as either entry or
expansion strategy involves a company transferring or distributing its services and products
through franchisees (affiliated dealers). Partnering involves a company merging with other
companies and sharing the profits and losses equally or under agreed portion by the partners.
Joined venture involves creation of a third independently managed company either in local or
international markets. Buying a company involves a company acquiring another company that
has substantial market share. Greenfield investments involve a company buying land in a foreign
market, building a facility and starting its operation.