Strategic Report: McDonald's Global Expansion and China Entry Analysis

This report provides a strategic analysis of McDonald's, focusing on its current operating position, international competitive strategy, and organizational structure. It includes a SWOT analysis highlighting strengths, weaknesses, opportunities, and threats. The report details McDonald's entry strategy into China, emphasizing localization through partnerships like the Evergrande Group, and its three-legged stool system for supply chain management. It also examines human resource management practices in China, focusing on training and cultural sensitivity. The report identifies opportunities and challenges for management, such as cultural diversity and changing customer preferences, and concludes with recommendations for continuous innovation and targeting diverse age groups. Desklib offers this and many more solved assignments.

Strategic Analysis of Mc
Donalds
Student’s Name

Current Operating Position
• The company is making continuous efforts to increase its broad-
based momentum. It is analysed that the company’s global sales in
increased by 5.5% and the operating income is increased by 5% due
to the adoption of the franchising strategy.
• The company is getting positive response across all the markets
primarily driven by Germany and the United Kingdom.

International Competitive Strategy
• The Company makes the huge investment in advertisement
and expansion of the franchising model. The company
develops a competitive strategy focusing on the cost, speed
and the quality of the food product( Keegan and Green,2015).

Organizational Structure
• The company adopts the divisional organizational
structure and has the global hierarchy to cover all its
operations worldwide. The company ensures the
corporate control and effectively manages the
controlling issues.
• The divisions in the organization are performance-based
and function-oriented so that the efficiency can be
maintained and delivers quality performance. (Hao et
al, 2016).

Strengths
 Strong brand image and recognition.
 Specialised training for employees.
 Low cost menu and speedy delivery of food.
Weakness
 Employee turnover rate is high.
 Dissatisfied franchises due to high fees structure paid
by the company.
 Food quality perceptions developed by customers.
Opportunities
 Expansion into vegetarian market.
 Development and expansion through licensing and
franchising.
 Expansion leads to increasing growth of the
company.
Threats
 Potential competitors.
 Customers getting health conscious.
 New Entrants
 Playing in mature and saturated industry
SWOT Analysis of Mc Donalds

Entry Strategy adopted by Mc
Donalds to enter China
• Mc Donalds has accelerated its localization strategy by
entering into a partnership with Evergrande group. The
company is aiming to open 2000 outlets in China and focusing
on competing with KFC and emerge as a global leader.
• The company has adopted the strategy of localization by
collaborating the country’s largest brand Evergrande. It will
help the company to quickly expand its footprint over the
country especially in the three and the four-tier cities.

Supply Chain Management in entering China
Mc Donalds uses the three legged stool system which
includes suppliers, company and franchisees.
The company adopts the E- procurement model to
purchase and sale the supplies,
work and services.

Supply chain management

Supply chain management
• The company adopts the supply chain which starts
from purchasing of the raw material and ends at
marketing of the company.
• The company takes all the possible efforts to
conserve the water and the resources and protection
of the food.
• The next step is the distribution and the storage
medium

Management of human resource across
China
• The company applies extensive research and planning to
enter into the new market. It focuses on hiring and
selecting the best employees for the company.
• The company applies various training methods to upgrade
the required skills in the workforce and further encourages
them by increasing the wages of the Chinese employees.
• The Company strives to apply flexibility and sensitivity to
local cultures. It aims to develop the local culture in the
workforce so that the customers do not feel the cultural
diversity and deliver higher satisfaction to the customers
(Elegbe, 2016).

Opportunities and challenges for management
• Adoption of franchising and localizing in different countries provides the
opportunity to the company to be the market leader quickly and
increase its sales.
• The company receives the opportunity to expand its business globally
and be a market leader. It provides the opportunity to the company to
charge different prices and bring a variety of options according to the
difference in taste and preference.
• The challenges faced by the management are the cultural diversity and
the changing taste and preferences of the customers. The changing taste
leads to difficulty in meeting the expectations of the customers. Increase
in the close competitors creates the chances for failure of the company.
(Zhu, Anagondahalli and Zhang, 2017).

Recommendations
• The company must make continuous efforts to meet the
changing demands of the customers. It should strive to
bring continuous innovations in the taste and should focus
on enhancing the product quality.
• The company must focus on targeting the different age
groups. It should also concentrate on targeting the older
generation because in China the customers’ demands for
the quality product and are ready to pay the price for that.