McDonald's & Marketing to a Foodie World

Student: Teclar Mweta
Student No: 1103643358
TOPIC: MCDONALD’S IN CHINESE
MARKET & THE STRATEGIC
ANALYSIS
Marketing Management
Module Code: PGBM15
Masters (MBM) Business Management
Student: Teclar Mweta
Student No: 1103643358
Tutor: Muhammad Azam
Submission: 20/11/2019
Word Count: 3,985
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Student: Teclar Mweta
Student No: 1103643358
Table of contents
INRODUCTION....................................................................................3
COMPANY BACKGROUND..................................................................3
MARKET ORIENTATION......................................................................4
HOLISITIC MARKETING APPROACH..................................................
BUSINESS
CHALLENGES.............................................................................6
EXTERNAL ENVIRONMENT ANALYSIS OF MCDONALD’S.................6
PESTLE ANALYSIS................................................................................7
PORTAL FIVE FORCES ANALYSIS........................................................11
SWOT ANALYSIS.................................................................................15
STRATEGIC
CHOICE..................................................................................16
BCG MATRIX......................................................................................17
ANSOFF MATRIX................................................................................17
MARKETING MANAGEMENT APPROACH......................................19
RECOMMENDATION AND CONCLUSION..............................................20
REFERENCES....................................................................................21
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Student: Teclar Mweta
Student No: 1103643358
1.0 Introduction:
Strategic marketing management involves the concepts of implementation of the
mission of an organization through focused ways to utilise the existing marketing
plan in the best possible way (Ilieska 2013). It also help to identify the targeted
customers of an organization, along with enabling a business house to use the
resources in efficient ways to increase both the sales and competitiveness in the
market places where they perform (Chernev 2018).
Fast economic development, the evolution of global trade and cultural integrations
have change the dimension of people lifestyles and taste over time especially the
country of China, which is the main object of this paper. Based on research, it has
been observed that, there is a shift in people’s taste of food consumption as people
are gradually shifting from traditional food to westernised diet as a result of market
opportunities and the extension of popular brand strategies in fast food industry
worldwide (Ron 2018). McDonald’s is a centralised global company that specialised
in fast food offering competing in supplying hamburger, French fries, and other
consumables items by employing standardisation, global expansion and branding as
a driving force to have competitive advantage and increase large market shares.
This paper will analyse the strategy of McDonald’s to Chinese market. Consideration
will be given to the external environment using PESTEL and portal five’s forces and
the internal strength of McDonald’s will be examine in order to determine the
strategic choice and recommendation will be made on launching out it brand
extension in China.
1.1 Company’s Background
McDonald’s restaurants operate in 121 countries and serve almost 68million
customers every day with 37,855 restaurants around the world. McDonald’s applied
a powerful, swift expansion into foreign countries through the traditional methods of
franchising, company owned restaurants and joint ventures
McDonald’s has embarked on increasing the numbers of its restaurants in Mainland
China from 2570 to 4500 by the end of 2022 taking advantage of market
opportunities by extending its brand strength using the traditional transactional
strategy that takes into consideration the local culture, legal, political and economic
environment for the brand extension (Mcdonalds.com 2020).
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Student: Teclar Mweta
Student No: 1103643358
Operation management strategy in this context can be regarded as the approaches
or strategies through which the companies reach to their business objectives. The
operational strategies of the business houses like McDonald’s to examine the market
places where they are performing and implement efficient as well as effective
systems of using the employees, resources and the overall work process. For
example, in the product orientation concept, the management of this American
organization is focused on the quality of the product along with improving the integral
parts of marketing strategies (Qureshi and Hassan 2013). The management fully
focuses on the brands that are sold by them across the global market place. On the
other hand, the selling concept that is followed by McDonald’s is increasing the
transaction of sales, and the management gives priority on this more than building
profitable and long-term customer relationships. The main focus is to sale the
products prepared by McDonald’s rather than what is wanted by the market places.
On the other hand, holistic marketing approach can be regarded as the chain of
concepts of marketing which is part of the marketing stratr4gies that are framed and
followed by the business entities like McDonald’s. All the departments of these
business houses need to perform altogether to set up a positive brand image in front
of the customers across the global market places (Salami, Johl and Ibrahim 2014).
Interconnected marketing activities are involved in this holistic approach to assure
the purchase of the products of a particular company rather than competing with
each other within the same sector. The management of this American brand of
McDonald’s has successfully placed themselves as the leading fast food restaurant
chain in all the market places where they operates. Advancement in the usage of
smartphones has helped the management of this company in performing their digital
marketing strategy efficiently and more focused on delivering better quality food
products to the customers globally (Werner 2013). This helps them to identify the
ever-changing needs and requirements of the people. The right message is also
successfully delivered by the management of McDonald’s to their targeted group
through the marketing communication channels followed by this organization. This
consistency helps to raise the level of confidence within the customers that raises
the brand image of the company and build a better relationship with their customers.
This is called relationship marketing, where both internal and customers is benefitted
(Kandampully, Zhang and Jaakkola 2018).
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Student: Teclar Mweta
Student No: 1103643358
1.2 MARKETING STRATEGY
Marketing strategy enables a company to direct its limited resources towards the
best opportunities for raising sales and attain a feasible competitive advantage (Irwin
McGraw-Hill 2015). A marketing strategy revolves around the key idea of “consumer
satisfaction” as being the primary objective of every company (Selfgrowth, 2016).
McDonald's offers a wide range of high quality, incredible tasting menu alternatives
(Mcdonalds, 2016). Customers can choose balanced, nutritious and delicious meals
from the McDonald's menu, based upon their likings and requirements (Bluechiplist
2019). To keep itself in line with the tastes of local individuals round the globe,
McDonald's has made necessary transformations in its menus. Most of the
McDonald's restaurants provide two types of services, i.e. Counter-Hop and Drive-
Thru (implying that the clients can request and pay for food at the entryway, drive
past the restaurant, and take their sustenance at the exit), with the facilities of both
indoor dining as well as outdoor seating.
McDonald’s has successfully collaborated with other food organizations, i.e.
McDonald’s entered into a strategic partnership with Coca-cola. In addition to this,
McDonald’s provide various discount coupons attached to its menus that can be
availed at any McDonald’s restaurant by producing those coupons while billing. Apart
from this, these can be acquired in different ways, for example, by subscribing to the
McDonald’s newsletter, and they are accessible by downloading and printing them
from their website, or the websites of the organizations they associate with, for
example, eBay. (Cui & Ting, 2019) The ingenious commercial of McDonald’s is very
imperative in attracting the customers, for example, the clown character called
Ronald McDonald. This clown is utilized as the essential mascot of the McDonald’s
fast-food network and also shown interacting with ordinary children in their regular
lives. In TV advertisements, the clown occupies a dreamland called McDonald and
has adventures with his companions Mayor McCheese, the Hamburglar, Grimace,
Birdie the Early Bird, and the Fry Kids. McDonald's Corporation has also described
Ronald McDonald can speak 31unique dialects, including Mandarin, Dutch, Tagalog,
and Hindi (Edwards 2011).
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Student: Teclar Mweta
Student No: 1103643358
2.0 BUSINESS CHALLEGE &EXTERNAL ENVIRONMENT ANALYSIS-
MCDONALD’S
2.1 PESTEL ANALYSIS PESTEL
Analysis is generally done to study the external environment in which the
organization survives and operates. It gives the organization an insight into the
market situation, which can in turn shape or reshape its strategies for the coming
future (Rajwinder, (2015). Here, PESTEL of McDonald’s has been done to
understand the various external factors hampering its position in the Chinese market.
POLITICAL Challenges
The political factors includes the government’s policies that affects the company’s
operations, for example, imposing a new law, fiscal policy, new tax or duty due to
which the organizational strategies and schemes pertaining to revenue generation
changes partially or entirely. The Chinese economy is the socialist economy, which
means that government rule prevails and each land and area belongs to the Chinese
government, and it can take away any land when it needs. This happened to
McDonald’s itself. Zhang (2012) Moreover, the food safety issues in China in 2014
affected the company’s sales and it prompted the governmental and non-
governmental organizations, concerning the health aspects has also raised the ears
of the corporation. This political aspect suggests that it has always been a threat to
the growth of the corporation in China (Khalid et al 2020).
ECONOMIC Threats
In 2015, after the increase in wages was announced, paid time-off to the employees
at all company operated restaurants along with providing educational assistance for
the employees of the restaurant from July 1, 2015, company expected its profit
margin under pressure. (Anon., (2018)) This demonstrates that economic factors of
the region can be a threat when it faces a downturn, but can provide potential
opportunities when the country is growing in terms of GDP, per capita income, etc.
(Rajwinder,(2015)
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