McDonald's Expansion in Nigeria

This report examines the feasibility of McDonald's expanding into the Nigerian market. It utilizes Porter's Five Forces framework to assess the attractiveness of the fast-food industry in Nigeria, considering factors like competitive rivalry, bargaining power of suppliers and buyers, threat of new entrants, and threat of substitutes. The report concludes by evaluating the overall potential for McDonald's success in Nigeria.

GLOBAL POLICY AND
ATTRACTIVENESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Rationale for International Expansion........................................................................................1
Application of Porter Diamond...................................................................................................1
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
In the present world of globalization, international expansion of business constitutes to be
one of the most popular steps. However, it is highly imperative for these businesses to assess the
attractiveness of the target market or country. These decisions shall be undertaken in a wise
manner to ascertain its own competencies in relation to the opportunities available in the target
market. The present report shall study the international expansion of Mc Donalds in Nigeria, the
reasons attached to such a decision and ascertaining the country attractiveness.
Rationale for International Expansion
One of the primary determinants which shall push Mc Donalds to expand in Nigeria is
that the country has reflected great potential, owing to a high pace economic growth. Moreover,
Nigeria is the biggest country of Africa, which has still not been covered by this brand. It has
been ascertained that the economy of Nigeria has expanded 8.2 percent per year, thereby making
its per capita income to $1725. Moreover, considering the popularity of the brand Mc Donalds
and the number of outlets it has already opened across the globe, Nigeria seems to be one of the
potential markets (About time! Mc Donalds Plans to Expand to Nigeria, 2014). It has been
ascertained that the food franchise opportunities is much higher in Nigeria, considering the
success of other brands such as KFC or Chicken Republic. In respect to these trends it can be
stated that there exists a market gap which Nigeria has reflected, considering the presence of
potential consumers and the opportunities which has only been exploited to some extent by other
international fast food brands. Thus, in order to bridge this gap and further make an expansion in
the African continent, Nigeria presents great potential for Mc Donalds expansion.
Application of Porter Diamond
On the basis of Porter Diamond Model, the country attractiveness of Nigeria can be
ascertained. Further, this assessment shall be undertaken by analysing the manner in which
national advantages being enjoyed by Mc Donalds are translated into international advantages.
Considering the strong reputation and effective strategies being employed by Mc Donalds it can
be stated that these elements shall prove to be highly supportive in establishing the brand in
Nigeria. The determinants of this model are: Factor Conditions: The factor conditions reflected by Nigeria are highly lucrative as the
economy of the country has been growing with a high pace. The consumers present in
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this market has shown great potential and preference towards these fast food brands. The
infrastructure in the nation is highly developed. The positive economic growth is one of
the most positive attributes (McDonald’s in Nigeria: ‘It’s not about if, it’s about when’,
2015). Related and Supporting Industries: It has been determined that Nigeria has offered great
popularity to Dominos, KFC and Chicken Republic. The consumers in the nation have
shown great inclination towards these brands. However, the industry has not yet been
explored to its highest potential. Home Demand Conditions: Mc Donalds is currently operating 36000 outlets across the
globe in 100 different countries. It can be stated that it enjoys a significant market share
in other nations and on the basis of which has been able to attain economies of scale
(Luo, 2009). Moreover, it has set up a very strong network across the world and has been
easily bearing the transportation costs. Strategy, Structure and Rivalry: Mc Donalds operate on the basis of Franchising model
and has been able to cover a significant market, operating on this simple method. The
brand is constantly innovating its products and has the policy to offer products which are
suitable to the culture of the country. Thus, the products of the brand are sensitive to the
culture and preferences of a country. Government: The government of the nation has undertaken significant measures to
promote available opportunities for foreign investors. In respect to the same, various
policies and regulatory frameworks have been amended to attract an increased number of
businesses from other nations to enhance the overall quality of services and products
available to the market (IBP, 2015).
 Chance Events: The available opportunities in Nigeria is one of the primary reasons for
Mc Donalds to expand in the region. It is an established fact that Mc Donalds believe in
innovation, and tapping every opportunity in the most effective manner. Thus, on the
basis of this it can be stated that the combination of Mc Donalds and Nigeria can prove to
be a successful venture.
CONCLUSION
On the basis of discussion, it can be stated that Nigeria offers to be one of the most
lucrative offers, as the market is still completely unexplored by the brand. Moreover, it also
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presents high potential for fast food ventures, considering the extent to which it has been
explored by other international brands. Therefore, Mc Donalds shall make an expansion in
Nigeria.
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REFERENCES
Books and Journals
IBP, Inc., 2015. Nigeria Investment and Business Guide, Lulu.com
Luo, Y., 2009. Entry and Cooperative Strategies in International Business Expansion.
Greenwood Publishing Group.
Online
About time! Mc Donalds Plans to Expand to Nigeria, 2014. [Online]. Available through:
<http://nairametrics.com/time-mcdonalds-plans-expand-nigeria/>. [Accessed on 14th April
2017].
McDonald’s in Nigeria: ‘It’s not about if, it’s about when’, 2015. [Online]. Available through:
<https://www.howwemadeitinafrica.com/mcdonalds-in-nigeria-its-not-about-if-its-about-
when/>. [Accessed on 14th April 2017].
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