International Business Strategy for McDonald's in Czech Republic

This report showcases the analysis of Czech Republic’s hospitality industry and suggests the use of hybrid strategy as the core strategy for McDonald's. It includes Porter’s five force analysis, Porter’s generic strategies, Bowman’s strategy clock, hotel facilities, and references.

International Business Strategy

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Contents
INTRODUCTION .................................................................................................................. 2
Task 1 ................................................................................................................................... 2
Porter’s five force analysis ................................................................................................. 2
Task 2 ................................................................................................................................... 3
Porter’s generic strategies ................................................................................................. 3
Bowman’s strategy clock ................................................................................................... 4
Hotel facilities .................................................................................................................... 5
Conclusion ............................................................................................................................ 5
References ........................................................................................................................... 7

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INTRODUCTION
There are many restaurants that are moving in other parts of the world as a part of
expansion. This is done by them to ensure that they have new revenue sources that can
give them competitive advantage over the rivals (Smrčka, Arltová and Schönfeld, 2011).
Hotels as big as Golden Arch Hotel Division when aiming to enter in Czech Republic, they
need to ensure that they know the hospitality industry’s dynamics. This report will showcase
the analysis of Czech Republic’s hospitality industry.
Task 1
Porter’s five force analysis
 Bargaining power of supplier: There are large numbers of local and international
suppliers available within the country. This is reducing the bargaining power of
suppliers Hotels have large numbers of options available with them.
 Bargaining power of consumers: With technological options available with the
consumers, it is easier for the consumers to compare all the services provided by
different hotels and due to this the bargaining power of consumers is increasing.
 Competition: There are many small and big hotels operational within Czech Republic
and this has made the competition to highest of levels. With new investors coming in
the Hospitality industry it is highly possible that competition within the industry will be
further increasing (Heryán and Kajurová, 2016).
 Threat of new entrants: Right now the economic condition in European region is not
so good. In this environment, it is less likely that new investors will add and come to
the hospitality industry. This is also because of the fact that in the slowdown of the
economy, the hospitality industry gets affected more severely.
 Threat of substitution: With new innovations in the business models it is highly likely
that threat of substitution remains on the moderate side. This is because innovations
in the business model will promote substitution but on the other hand people still love
to go in the hotels hence the threat of substitution will remain on the lower side.
In order to understand the company’s position in this industry environment, it is critical to
understand the type of strategy that will be used. The ansoff matrix in this regards suggests
that company choose market penetration (Pollard and Jemicz, 2010). They can use existing
product and services so as enter into different markets. In terms market development they
have chosen are developing new products that are different from most of their competitors
so that they can helps them in the market development.

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Task 2
Porter’s generic strategies
Among the different porter’s generic strategies the one that can help the company in gaining
competitive advantage over the rivals and it will also allow the company to align vision and
strength of McDonalds the porter generic strategy that can be used within the firm is
differentiation. Following this strategy, this Hotel is providing different kinds of services at
different prices. They also differentiate their hotel in terms of the quality they are providing
and the value they are adding. Due to this strategy this company has been able to improve
its experience for the customer experience (Kapiki and Tarikulov, 2014). They also try to
distinguish themselves in front others with the help of differentiated services and products
from their consumers. The “Golden Arch Hotel Division” is able to work on the challenges
that are faced by them along with the fact that they are able to gain competitive advantage
over the rivals. Focused differentiation also allows them to look at the needs of different
people because according to the consumer demands, they will have to redesign their
services that can help them in achieving their objectives. This will help the company in
attracting people in the Czech Republic towards their Hotel and they will be easily able to
make their mark in the specified market. Differentiation will also allow the firm to make sure
that they have something to offer for all the segments in the society. This will enhance the
overall sales and revenue of the company.
Porter’s generic strategy alone is not able to make sure that this company will gain
competitive advantage over the rivals. The porter’s generic strategy will help the company to
improve their position but will not be able to carter all the changing needs of the all the
operational departments of the Hotel. In the type of the competitive environment that is
present in the country and type of threats that are confronting the business of the cited firm,
it is difficult for the management to just manage all these operations with the help of
differentiation strategy hence the situation that is proposed does not strictly fit Porter’s model
hence it is essential that Hybrid strategy is used within the organisation. This is because the
hybrid strategy allows the firms to make sure that all the operations within the firm are
according to the demand of the market (Kánská, et al. 2013). Hybrid strategy also allows the
firm to make sure that balance between the consumer demands and requirements of the
industry both are met.
This can be understood by the balanced scorecard.
Mission/Vision/Strategic Themes/Results
Strategy Measures Targets Initiatives

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Map/Objectives
Financial-
(Enhancement in
revenue,
enhancement in
profitability,
decreasing
operational cost)
Overall Profit
Operating cost
Revenue in target
market
6% increase per
year
6% downfall per
year
8% increase per
year
 Implementation of
new financial
accounting
systems.
 Ease billing
operations.
Customer- Improve
clarity of offering,
enhance market
perception,
enhance
satisfaction level of
customers
%Market share
index
%customer
satisfaction mix
%Focus group
user index
Enhancement by
5% per year
Studying market of Czech
Republic so as to
understand user
requirements
Internal Processes-
Enhance offering
selection,
enhancing
information
services, enhancing
stock reliability and
improve cost control
New items as % of
sales
Brand awareness
score
Cost efficiency
index
10% in 2019
Increase by 3% per
year
 Generate
enhanced offering
selection process
 Training program
for new
recruitments
Organisational
Capacity-
Enhanced skills and
knowledge,
enhanced
technology,
enhanced supply
chain
Plan for Worker’s
development
Supply chain
efficiency index
Technology
training index
90% in place
85% efficient
Product and marketing
training programme
3 year content supply
agreement
Technology enhancement
programme
Bowman’s strategy clock
It is a strategic model that is utilised in the marketing in order to evaluate the company’s
competitive position in comparison to competitor’s offerings. Among the six core strategies
this company has positioned itself as mediocre added value and medium price company.

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However on the axes of perceived value to the customers and prices, the cited firm lies in
the fourth and fifth position where they are practicing differentiation and focused
differentiation as a part of the strategy (Vasant, 2016). Following this strategy, this company
has been able to make sure that they have created a special position for themselves in the
market. Since this company believes that all the companies with which this firm is competing
has their own set of resources hence it is essential that they differentiate them in front of the
consumers so that consumers can select them over the rivals. The sustainable competitive
advantage over the rivals is provided to the company when placed at this spot. However it is
advised that this company changes their position and select the hybrid strategy as their
strategic positioning. This is because it will help the company in adding value to their
products and services (Semeradova and Vávrová, 2016). This will ensure that higher
sustainable competitive advantage is achieved by the firm.
Hotel facilities
 Services- 24 hours open reception, Air-conditioning, Unlimited free Wi-Fi, small
safety box, Laundry service, Fax, Satellite television, Lift/Elevator, Flat-screen TV,
Luggage storage, Concierge service.
 Amenities-Complimentary City Pick Up/ Drop Off Service, Complimentary Movie
Library, Luggage Forwarding Service, Custom-Stocked Fridge/ Mini- Bar etc.
 Cuisine options- All the types of food including Indian, continental, all the menus of
McDonalds, Italian, Chinese.
 Pricing: The pricing used by this company is moderate. This is done by the company
to ensure that prices are in such a manner that it attracts people.
 Location: The location that has been selected is in the centre of the city. This is done
for increasing the visibility.
All these provide sustainable competitive advantage to the rivals. This is also because of the
fact that all these facilities are available in a different manner when it is compared with other
hotels. This is also because of the fact that these resources are able to manage differentiate
them when compared with most of their competitors. In the Czech Republic like market
where it is expected that more numbers of foreign tourists are going to come for travelling
purpose (Pinar, et al. 2011).
Conclusion
A conclusion can be drawn that McDonalds has lot of branded hotels and they want to enter
into Czech Republic. The industry environment suggests that bargaining power of customers
is increasing hence company needs to find the ways in which they can differentiate

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themselves from the others. This is the major reason they have used the differentiation
strategy as a core strategies but they need to utilise hybrid strategy as their core strategy.
The resources that this company has given them competitive advantage over the rivals and
ensure sustainability of the firm in their future.

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References
Heryán, T. and Kajurová, V., 2016. The Financial Position of the Hotel Industry in the Czech
Republic. on European Integration 2016, p.335.
Kánská, E., Jarolímek, J., Hlavsa, T., Šimek, P., Vaněk, J. and Vogeltanzová, T., 2013.
Using social networks as an integration tool in rural areas of the Czech Republic–agricultural
enterprises. ACTA Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 60(4),
pp.173-180.
Kapiki, S. and Tarikulov, M., 2014, April. Development Prospects of Uzbekistan's Tourism
and Hospitality Industry by Utilizing the EU Experience. In Published in the Proceedings of
the “International Conference on Tourism Milestones–Preparing for tomorrow”, Sharjah,
United Arab Emirates, DOI (Vol. 10, No. 2.1, pp. 4753-1845).
Pinar, M., McCuddy, M.K., Birkan, I. and Kozak, M., 2011. Gender diversity in the hospitality
industry: An empirical study in Turkey. International Journal of Hospitality
Management, 30(1), pp.73-81.
Pollard, D. and Jemicz, M., 2010. Social capital theory and the internationalisation process
of Czech SMEs. International Journal of Economics and Business Research, 2(3-4), pp.210-
229.
Semeradova, T. and Vávrová, J.N., 2016. Using a systemic approach to assess Internet
marketing communication within hospitality industry. Tourism Management Perspectives, 20,
pp.276-289.
Smrčka, L., Arltová, M. and Schönfeld, J., 2011. Factual and Mathematical Analysis of
Impacts of the Economic Crisis on Tourism in the Czech Republic. International Journal of
Mathematical Models and Methods in Applied Sciences, 5(6), pp.1118-1126.
Vasant, P. ed., 2016. Handbook of research on holistic optimization techniques in the
hospitality, tourism, and travel industry. IGI Global.