International Marketing Report: McDonald's Market Expansion Strategies

This report provides a comprehensive analysis of McDonald's international marketing strategies. It begins with an introduction to international marketing, defining its scope and key concepts, and then explores McDonald's rationale for international expansion. The report delves into market selection criteria, entry strategies (including franchising), and the global versus local marketing debate. It analyzes various international marketing approaches McDonald's could adopt, compares home and international orientations, and examines challenges like foreign regulations and communication difficulties. The report emphasizes the importance of franchising for McDonald's expansion in new markets, such as Ghana, considering factors like GDP, legal forms, and the political system. The conclusion summarizes key findings and recommendations for McDonald's international marketing efforts.

International
marketing

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1. Key concept and scope of international marketing..........................................................1
P2. Rationale...........................................................................................................................3
LO 2.................................................................................................................................................5
P3 Key criteria and selection process of international market...............................................5
P4 Market entry strategies with examples..............................................................................6
LO 3.................................................................................................................................................9
P5 Overview of the key arguments in global verses local debate regarding market expansion 9
P6 Differentiation in marketing mix in the context of global and local markets.................10
LO 4...............................................................................................................................................13
P7. Analysing different international marketing approach McDonald can adopt................13
P8. Comparing home and international orientation..............................................................14
CONCLUSION .............................................................................................................................15
REFERENCES..............................................................................................................................17

INTRODUCTION
International marketing defines as the application of marketing principles to satisfy the
various needs and wants of the different peoples across the world. It also recognise as the
business activity of the firm which design to plan, price, promote and direct the flow of product
and services to customers in more then one country for a profit. McDonald is an American fast
food company and it established in 1940 by the Maurice and Richard McDonald (Alguacil,
Martí, and Orts, 2017).
Company recognised as the worlds fourth largest employer by 1.9 million number of
employees. Report will present the scope and Key concepts of the international marketing and
also explain the various market routes that organisation can adopt for expanding their market
internationally. Study also define and analyse the various international marketing approaches for
McDonald. Furthermore, the home country will compare to the international country so that
industry get an idea and will decide effectively to expand the business or not.
LO1
P1. Key concept and scope of international marketing
International marketing defines as the strategy which allows the organisation to take
better opportunities which is offered by the foreign markets and cope with international
competitions. Marketing is the key concept in the business strategies that ensure that products of
the industry promote effectively that influence the mind of consumers and maximise the sales.
The international environment of the organisation is quite more complex as compared to the
national environment of the firm. International marketing develops together with the marketing
experiencing for organisational developments through international marketing
strategies(Budzinski, 2017) . International marketing takes place when organisation carried out
their business activities in more than one nation. It is all about identifying and satisfying global
customers needs better than competitor company and coordinating marketing activities with in
the constraints of the global environment.
Scope of the international marketing
The scope of the international marketing increasing with global marketing opening up for
business organisation. It includes various factors which defines the scope of the international
marketing in the organisational context such as Export, import, and contractual agreement.
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Export: It refers to the process which provide an opportunity to organisation for trading
of its goods and services one country to another by promoting the business activities through
social media and abiding by the rules and regulation of both the home country and foreign
country with respect to the rules and regulation(Datta, Ailawadi and van Heerde, 2017) .
Import: It is the main component of international marketing concept which provides a
opportunity to the company in terms of importing goods and services from foreign country and
selling in the domestic market. It is based on the demand of customer for imported goods and
services.
Licensing: License is an administrative procedure which is issues by national
government which for authorizing of certain goods into its territory. It offers flexible work
agreement which is based on interest and needs of licensor and licensee.
Franchising: It is another international marketing concept which is implied by firm when
expanding business. It is the best strategy when functions of existing organisation are not going
right and instead of starting from scratch the firm can opt for franchise as it reduces the risk of
consumer acceptance.
Foreign direct investment: The organisation moves beyond their domestic boundaries,
at this time scope of international marketing exposes it to greater chance of doing more business
operations which results in expanding market, consumer base as well as values and profit of the
firm. Organisation can grow exponentially by getting into contractual agreement with other
business partners (De Mooij, 2018).
Joint venturing: In this strategy two or more business entity come together and run
business in the new market. They are also responsible to distribute their market share equality or
on the bsis of ratio and as well as profit and loss. In this the investment, profit and losses are pre-
decided in terms of values and time period. It is beneficial for a company to enter into a joint
venture which raise the scope for international marketing and results in creating barrier for new
entrants in the foreign market.
Local marketing International Marketing
 It refers to marketing within a
geographical area.
 It is served in small area
 In means the activity which is done
beyond local area.
 It is served at larger area.
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 the customers are almost same.  The taste of customers varies from
point to point.
Buying a company: It is another method, in which market buying an existing local
company which is quite suitable market entry mode. It is so because company has good market
share and they are the direct competitor due to government regulations which needs to be enter
into new market.
Major challenges faced by the McDonald's :
 Foreign Cause and regulations: When McDonald's enter into new country, it faces
some foreign law and every company have their own tariff or fee which needs to be
charge by the company in order to bring into new country.
 cost calculation and global pricing strategy: Each country have their own rules and
their own way and the global pricing strategy is another major issue which affect
McDonald's. Therefore, setting the price for a product is major challenge.
 Communication difficulties: Communicating across cultures is the real challenge and
every country has their own language, therefore, it is essential for the firm to understand
regional language in order overcome the issue.
 Political risk: This risk is uncertain and in stable. Such that change in government laws,
also affect the business of McDonald in negative way.
P2. Rationale
McDonald is a leader in convenient food and beverages, they are trusted and famous food
store in America and Europe with registration of about $25 billion and over 1.60 million
employees worldwide serving consumers (Morgan, Feng and Whitler, 2018). The biggest reason
to select internationalisation for McDonald in Ghana is because. McDonald has many outlets in
other countries such as UK, US, India, etc. but they have few outlets in the African countries.
When entering into international markets firm can consider use of circular agreement which is
promise to perform a certain action, conditioning my obligation on their both making a
corresponding promise and performing their action. The west African country has welcomed a
number of various fast-food joints to the capital in recent years such as; KFC and Chicken
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Republic but there is yet no sign of McDonald's. Thus, company is planning to enter their
business into African markets.
In today's global economy, McDonald is the fastest globalisation food chain and the
reason behind McDonald want to market internationally because this type of expansion provide
many advantages to the company and provide them greater opportunity for diversification and
market growth (Johanson and Mattsson, 2015).
Increase in sales and profit- The reason is to market internationally by McDonald is
because economic growth rates in USA, Europe and Japan are very low in compare to the large
and new emerging markets. International marketing allow the company to reach as much
population in the world as possible. The company is succeeding in domestic market and all the
risk taken by the industry helped them to improve their revenue. Moving internationally,
company have advantage and ability to enhance demand for their products and in developing
new consumers that is the biggest reason that McDonald want to market internationally.
However, to develop customer in international market and to enhance sales firm will be focusing
on diversifying competitors. In accordance with this McDonald’s can diversify its products by
adding new product range against product portfolio of competitors.
Increase innovation and management learning- The reason behind McDonald
extending their consumer base internationally is because it can help them to gain new learning
from the competitive markets and competitors. There is no outlet of the franchise in the African
country and it drives their sale and consumer base. Their aim is to be the global leader and global
brand that is the reason company internationalise so much.
But along with the benefits marketing internationally bring so many opportunities and
challenges for McDonald (Morschett, Schramm-Klein and Zentes, 2015). Market internationally
bring so many challenges in front of the organisation such as; unfamiliar culture, shipping
restriction on products in the country, etc. One of the most challenging aspect of international
marketing is legal issues. All the international market have different compliances standard than
US, thus, it is challenging for them to understand and follow all the regulations. The international
marketing give opportunity to the company to take risk and succeed by learning and adopting
various culture and also it gives the opportunity to McDonald to be the global leader.
Franchising- Franchising is expanding strategy that can be used by the company to enter
into new market by using their brand name. This can be done through transferring license to the
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franchisor. The best market route for McDonald to enter into new international market is
franchisee that already adopts by the company in their many international expansion in other
countries. It is one of the effective approach of international marketing. McDonald should adopt
international franchising as their main market entry method in the global market of Ghana.
Franchising minimise the operating cost and risk as the huge proposition of these cost burden are
put on franchisee (Solberg, 2017). It is a beneficial concept when expanding business because it
enables access to credit and promotes comparative assessment which depicts the need of
innovation in exiting products and services of firm. Franchising is effective for McDonald’s
expansion plan in African countries because it will aid the firm in managing change in its
promotion and advertising strategies which ill improve its brand equity.
LO 2
P3 Key criteria and selection process of international market
Evaluation of key criteria for selecting international market-
Development of GDP
McDonald can select international market on the basis of development of GDP of that
country. Here McDonald is entering in the market of Ghana. The economy of Ghana is increased
by 1.70 % in 2018 as compare to previous year quarter. This shows sign of growth in Ghana
where McDonald can open its branch without any hesitation regarding economic growth(Festa,
and et.al. 2016) .
Possible legal forms
Ghana is the country where government put adequate rules and restriction on the
international trade , by imposing tax and tariff policy. In addition to this McDonald have to fulfill
various formalities related to carrying business operations in Ghana and have to follow the rules
of company formation or branch opening in the new country.
Political system
Political system of Ghana is very stable .There is less interference of political parties in
the business environment , that will help McDonald in smooth running of business operations in
the new country. In addition to this there are employment and safety laws that must be adapt by
the organisations . If McDonald will not abide by the laws then it may have to pay fines and
penalties to the government (Festa, and et.al. 2016).
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Selection process of international market-
Identification of country – For entering into new market McDonald have identify a
country on the basis of macro economic factors like exchange rates , level of domestic
consumption, willingness of people to spend , income level of the consumers. On the basis of
which a list with no. of countries will be prepared.. Now the marketers of the McDonald have to
start with calculating costs of markets entry and identifying the nature of markets. In addition to
this marketer should ensure that the listed countries must have political stability (Morschett,
Schramm-Klein and Zentes, 2015). Here marketer will decide and prepare a list of countries that
he wants to prefer(Gillespie and Riddle, L., 2015) .
Depth screening- At this stage marketer of McDonald will consider those markets which
are feasible and passed all the criteria. In addition to this marketing manager will collect a
detailed information about the target markets so that further decision can be taken . Now it is the
time to deal will micro economic factors along with local condition of the markets in the selected
countries which can be done by marketing research related to marketing mix which includes
process of distributing products, the process of communication with the target markets , also a
research should be carry out for identifying the need for adaptation of the new product in the
markets of selected countries(Grzegorczyk, 2017) .
Final Selection- At the third stage a list of nation with potential will be decided by the
marketing manager of McDonald . Now the company will focus on goals and strategies match it
with new markets. Also company will lay emphasis on the competitors and substitutes for its
product. On the basis of which it will decide the price of its product . After all these criteria
marketer will give final scoring , weighting and ranking and will shortlist remaining nations.
Face to face experience- Personal experience is an essential part where marketer will
travel to the selected nation that is Ghana to see actual culture and procedure of carrying business
practices. Here representative of McDonald will compare which things are similar and dissimilar
to its country , and will understand the trends of the nation. Finally it cam establish its branch in
Ghana(Mathews and et.al. 2016) .
P4 Market entry strategies with examples
The selected country for the expansion is Ghana. McDonald planning to enter into new
market by the end of 2022. There are following types of market entry strategies that can be used
by McDonald to enter into the markets of Ghana-
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Franchising
It is the method by which companies expand their business. Here franchisor (person who
will give rights to carry on its business in the another country) provides licence to franchisee (to
whom rights are given) for managing , organising and merchandising the business of the owner
for some consideration for a particular period of time. McDonald can take following benefits by
entering new markets through franchising-
Advantages-
 In franchising company is establishing their business under the brand name as of
McDonald. The brand has already covers a huge market share so there will be need of
market testing of segments of Ghana.
 Here franchisee of McDonald do not need prior experience as all the training is given by
Franchisor regarding the skills and expertise required to carry business operation in
Ghana (Mathews and et.al. 2016).
 As McDonald have Goodwill in the market so it will be easier for it to available funds for
opening a new branch, as banks will easily lend money to those company that have good
reputation in the market.
Disadvantages-
 This type of route to enter in new market is costly.
 Franchise agreement of McDonald will include some restrictions over carrying a
business. Sometimes it will not easy for McDonald to make any change in the local
markets of Ghana due to these restrictions.
 The franchisee can make bad reputation of the brand if it does not provide the product
with the same quality , as was offered by the franchiser(Melo, 2017) .
Licensing
It is an agreement between licensing and licensor , where owner of the company gives
rights to the licensee to have regarding its intellectual property, brand name and the product
which licensor is offering. (Melo, 2017). There are some fast and more profitable way to grow
the business such as; licensing trademark, patent, copyrights and other intellectual property.
Advantages-
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 It will encourage innovation as licensee of McDonald will be indulge in research and
development and reduce the risk involved in doing business or expanding in new market.
 It will help licensor of McDonald to reach its product faster in the market as the brand is
already established in the market(Ozturk, Joiner and Cavusgil, 2015) . It reduces risk for both the parties, licensee have to take fewer risk regarding
manufacturing and distribution as challenges and methods of production are already
planned on the other hand licensor have fewer risk related to selling the goods and
service . Here both parties do not need to invest their own money to earn revenues. That
create win win situation for both parties.
Disadvantage-
 In this strategy McDonald have to face various challenges like in licensing there is a high
dependency of licensee on licensor as it take approximately all the risk related to carry a
business with the same quality of intellectual property that has been used by the owner to
earn higher amount of profit (Morgan, Feng and Whitler, 2018). Apart from that another challenge that can be faced by the McDonald while entering in
new markets through licensing is that it may lead to litigation as licensee may refuse to
pay royalty which can be expensive as litigation and arbitration procedure of the
company needs lots of money (Ozturk, Joiner and Cavusgil, 2015) .
Direct exporting
It is the strategy of companies to enter in the new markets where McDonald can export its
product directly to the customer rather than distributing it to the third party. But somehow it is
not possible for the food companies to do direct export. But it may have several benefits which
are as follows-
Advantages-
 In direct exporting potential profit are higher because of elimination of intermediaries
which also reduces cost of production and will increase the profit margin of the
McDonald.
 This approach will be effective for McDonald’s as in this firm will be able to have
control over foreign marketing plan. Further, this method aims at collection of feedback
which is only specific to target market. Customer feedback regarding the product of
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McDonald is faster as compare to other modes of entering in the new markets, because of
short chain of supply(Ozturk, Joiner and Cavusgil, 2015).
Disadvantages-
 It requires more time, efforts and money, as there are monotonous situations where
McDonald have to perform various activities at one time because exporting is the
complex job and here companies aims at eliminate intermediaries and prefer to do all the
activities on their own.
 Here the company will be responsible for all whatever happens , company have top bear
all the risk. It is more risky than franchising and licensing (Johanson and Mattsson,
2015).
LO 3
P5 Overview of the key arguments in global verses local debate regarding market expansion
As per Stead and Hastings, (2018) McDonald will be more beneficial if it carry on its
business operation and expansion within the local boundaries of the country as it will be easy for
the company to understand the culture and values of the particular region. On contrary to this De
Mooij, (2018). says that global expansion of McDonald will help to expand its branches in
various other countries that will make it more competitive and allows McDonald to take
opportunities from the new markets. In addition to this Stead and Hastings, (2018) says that local
expansion would be more easier for the McDonald as it require less amount of investment as
compare to global expansion ,as McDonald have to spend less money on managing the supply
chain because it is already established in the local markets.
Apart from this marketers of McDonald have to spend less money to promote the food
products of McDonald , as it is already promoted in the local markets. In contrary to this Melo,
(2017)global market expansion of McDonald will help it in taking competitive advantage over
the limits of the competitors present in the international market. According to Stead and
Hastings, (2018)local expansion will give more benefits because there is less risk of competitors
and substitutes, and company can create monopoly in the market. Further more as peR Stead and
Hastings, (2018) another benefit of going into international market is that McDonald can recruit
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international talent in tits organisation that will help in increasing quantity and quality of
productivity.
According to Stead and Hastings, (2018) Local expansion will allow initial feedback
from the customer because the seller is in direct contact with the customer. In contrary to this
Budzinski, 2017)says that local expansion will unable to identify the level of capacity of the
company which is the plus point of international expansion that identifies the extent of capacity
of the company to which it can grow. Apart from De Mooij, (2018)..says this Global expansion
of McDonald will help in understanding new culture that will give new perspective on business
relations with customers for this company can hire culture consultant who can give knowledge
about the culture of the new country. This will not only help in setting business in the new
market but also helps local markets to handle its customers.
De Mooij, (2018) states that going into the markets of Ghana will help in diversification
of business , as demand of variety of the product will be high in international market , so
marketers will try to add on more to the product or focus on increasing the product line. On
contrary to this as per the view of Ozturk, Joiner and Cavusgil, (2015) local expansion will
provide less diversification as the size of market is less and there are less potential consumers so
McDonald will unable to bring innovative products and new product line.
According to Alguacil, Martí and Orts, 2017, standardisation of products of organisation
is a process of implementing and developing technical standards on the basis of consensus of
stakeholders like, users, interest groups, standards organizations and governments. Further, the
approach is beneficial for the companies planning market expansion because it facilitates
commoditization of formerly custom processes. However, Festa, and et.al. 2016, discussed about
glocalization is effective approach of growth because it aims at managing operation at local as
well as international level which reduces the risk of failure and customer acceptance. Further, it
helps the organisations in managing innovation in services on the basis of different type target
buyers.
P6 Differentiation in marketing mix in the context of global and local markets
Marketing mix is a strategic tool that allow the company to evaluate their 4Ps that are;
Price, Product, place and promotion. It will enable company comparatively understand the
company's capability in global and local market.
Target market: Ghana is the target market of McDonald's
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