McDonald's Expansion Strategy: Market Entry and Resource Analysis

This report provides a detailed analysis of McDonald's market entry strategies, focusing on their planned expansion into the Maldives through a merger with Lemongrass restaurant. It examines various market entry strategies such as licensing, franchising, and joint ventures, along with substantive growth strategies including market penetration, product development, and diversification. The report justifies the selection of a market development strategy using tools like the Ansoff matrix, SAFE analysis, and Porter's Five Forces model. It assesses the roles and responsibilities of personnel involved in strategy implementation, covering corporate, functional, and operational strategies. Furthermore, the report analyzes the estimated resource requirements for implementing the new strategy, utilizing McKinsey's 7S model to evaluate the alignment of structure, strategy, systems, skills, style, staff, and shared values. The analysis highlights the importance of human, material, and financial resources in achieving successful implementation and future growth. Desklib offers more resources for students, including past papers and solved assignments.

Management

Table of Contents
MAIN BODY...................................................................................................................................3
TASK 1 ...........................................................................................................................................3
Analyse the appropriateness of different strategies relating to market entry, substantive
growth, limited growth or retrenchment for a given organization.........................................3
TASK 2 .......................................................................................................................................4
Justify the selection of strategy.............................................................................................4
TASK 3............................................................................................................................................6
Assess the roles and responsibilities of personnel who are charged with strategy
implementation.......................................................................................................................6
TASK 4............................................................................................................................................7
Analyse the estimated resource requirements for implementing a new strategy for a given
organization............................................................................................................................7
REFERENCES:...............................................................................................................................9
Books and Journals.................................................................................................................9

MAIN BODY
TASK 1
Analyse the appropriateness of different strategies relating to market entry, substantive growth,
limited growth or retrenchment for a given organization.
Organisations expand their businesses so that they can acquire large market area by
offering services in different parts of world (Ismail and Hanafiah, 2019). McDonald is also
planning to expand their branch in Maldives by merging their business with local restaurant
which is Lemongrass restaurant because this location attracts large number of people in effective
manner. There are various strategies relating to entry methods which are as follows:
 Licensing: In this strategy, organisations give rights to other parties to use their products
for sale. McDonald sell the rights to lemongrass restaurant which is located in Hulhumale
face two for the business so that they can earn good amount with expanding of
infrastructure.
 Franchising: Organisations who expand their businesses in effective manner without
excessive cost, they can opt for franchising. McDonald use this strategy because it is best
suitable for food industry. They have various outlets at different locations which serve
same quality of food.
 Joint venture: In this type of strategy, two or more companies agree to work together on
the basis of contract and agreement. McDonald's also plan to create joint venture in
Maldives so that they can share profits and losses with their partners.
Substantive growth
This refers to the growth and expansion of an organisation in limited time frame. There
are mainly four types of substantive growth strategies which market penetration, market
development, product development and diversification. All these strategies help McDonald to
expand their business with the evaluation and identification of taste and preferences of the
customers.
McDonald is following the horizontal integration for some of their products which have
high demand in the market. This refers to the the increment in production services in the same
supply chain. They can adopt this with the help of acquisition of company, merger or internal

expansion. Operations and assets are combined by McDonald for their operations with their
competitors so that they can achieve goals in minimum cost.
Vertical integration is the another strategy where organisation take over the control of
various stages in distribution and production of goods and services. This satisfy the demand of
customers in more better way by understanding their needs and wants. There are three types of
vertical integration which are forward vertical integration, backward vertical integration and
balanced vertical integration.
Diversification growth strategy involves introduction of new products in new market
area (Shen and Gao, 2019). This helps McDonald's in generating more revenues by increasing
their supply chain in desired manner. They are establishing new stores in Maldives with
lemongrass restaurant to offer new products and services which help them in building brand
image in new market area.
Value chain analyses helps McDonald's in analysing the internal factors of their
organisation. Managers try to find the best activities which generate more revenues for the
organisation. Activities which are not necessary and incur huge cost in production and
manufacturing process are eliminated so that they establish effective operations.
Retrenchment strategy helps in cut down various operations from organisation which
are not necessary. It makes McDonald's financially stable by eliminating excessive expenditures
from their activities. There are various types of retrenchment strategies which are turnaround
strategy which reduce negative trends in organisation, divestment strategy and liquidation
strategy.
TASK 2
Justify the selection of strategy
Market entry strategies plays important role in expanding the business in best possible
ways. McDonald's use market penetration strategy which involves offering of same
manufacturings and products in new targeted market. McDonald's is planning to expand in
Maldives by merging their business with lemongrass restaurant with the help of various market
entry strategies. This involves lesser risk because companies do not invest in production of new
products. Managers of McDonald's invest in higher research and development so that they can

understand the market area of Maldives. There are various tools and models which justify this
strategy which are mentioned below:
Ansoff matrix
This matrix helps managers of McDonald's to evaluate the marketplace of Hulhumale so
that they identify the opportunities and risks. There are four stages in Ansoff matrix which are
discussed below:
 Market penetration: In this strategy organisations use their existing products to increase
their sales by offering them in existing market (Brown and Lent, 2019). It can increase
profits because it attracts new customers with less production cost. Organisations can
promote their products so that their sales increase in effective manner.
 Product development: When organisations produce new products for their existing
market, it refers to product development. Organisations also make changes in their
offering which helps them to attract customers.
 Market development: Organisations explore new market to expand their business with
their exiting products. This helps in targeting new segments but involves huge capital
investment. McDonald's can enjoy benefits with the help of this strategy as they merge
with lemongrass restaurant which is located in Hulhumale
 Diversification: It gives opportunities to offer new products in new marketplace. It
involves higher research and development and generally new start ups opt this method.
McDonald use market development strategy so that they can capture the large market
by offering quality products in Hulhumale.
Safe Analysis
This framework helps in analytical planning and thinking so that they can implement
programs in effective manner. This follows a particular structure which involves scoring pattern
against the acceptability, suitability and feasibility (Das and et.al., 2019). It helps McDonald's in
analysing the current situation of company which help in growth and development. It also study
the external environment with the help of various tools and techniques. Internal capabilities are
measured which evaluate the strengths, weaknesses, opportunities and threats of the McDonald's.
This analysis identifies the critical problems and provide solutions and recommendations so that
company can overcome those problems.
Porters 5 force model

Competitive environment of an organisation can be analysed with the help of this model.
Business strategies can be formulated with this model so that they can grab the competitive
advantages (Ghobaei-Arani and et.al., 2020). McDonald's use this model during the merger
acquisition with lemongrass restaurant in Hulhumale to study the business environment in
following ways:
 Competition in industry: It refers to the number of competitors in the market against to
the company. McDonald's also face problems due to their competitors but they have build
brand image in Hulhumale which help them in increasing profits.
 New entrants in an industry: New emerging companies in an industry also affect the
profit generation due to increased competition. New competitors can not affect the
growth of McDonald's because it is very huge brand which have acquired large market
area in Maldives with quality products.
 Power of suppliers: Suppliers affect the operations by the supply of raw material and
their cost. McDonald's maintain good relations with their suppliers which help them in
cut down of excessive cost.
 Power of customers: Bargaining power of customers affect the profitability of company.
Customers of McDonald's do not bargain because they offer quality products which
justify the price in effective manner.
TASK 3
Assess the roles and responsibilities of personnel who are charged with strategy implementation.
Strategy implementation is an important task which is compulsory for all the
organisations. It helps in identification of the market environment that it is favourable for
business or not. McDonald's assign roles and responsibilities to each and every individual so that
they can perform task in desired manner.
Corporate strategy
These are the long term goals which are formulated by businesses, various corporate
values are created, define targets and motivate the employees in an organisation which helps in
satisfaction (Avvaru, 2019). Managers of McDonald's are responsible for implementation of
corporate strategy which includes vision, objective setting, allocation of resources and strategic

trade off. Generally higher level management of McDonald's implement the corporate strategy
because they are experienced and skilled.
Functional strategy
It refers to the activities which help all the functional operations in an organisation. This
strategy help McDonald's to coordinate between various department who perform different tasks
to achieve objectives. Functional strategies involve various area related to product development,
market penetration and diversification which are implemented by all the managers of respective
departments.
Operational strategy
This strategy refers to the activities which are related to the manufacturing and
production of goods and products. These should be carried out in effective manner so that
McDonald's can achieve goals and objectives. There are four types of operational strategies
which are market penetration, product strategy, customer engagement strategy and supply chain
strategy. Employees who manage these activities are responsible to implement these strategies
so that they can cut down excessive cost.
These strategies should be implemented with proper evaluation so that McDonald's can
earn good revenues when they merge with lemongrass restaurant located in Hulhumale. With the
help of these strategies they can understand the market area in better way which help them in
production of goods and services which are in high demand. Different resources can be utilised
and allocated in effective manner with the help of these strategies which results in future growth
and success.
TASK 4
Analyse the estimated resource requirements for implementing a new strategy for a given
organization.
Organisations need various resources to implement these strategies because they assist in
proper functions and operations. Various tools and techniques are needed so that marketers can
evaluate the business environment in effective manner (Magon and et.al., 2018). To obtain
prescribed goals McDonald's implement various strategies when they merge their business with
lemongrass restaurant with the help of human resource, material resource and financial
resources. Human resource helps in proper assigning of data and tasks so that all the manual

operations are carried out without any difficulties. Tools and equipments which are classified as
material resources are handled by the human resource so that they can commence all the
operations in desired manner. For the arrangement of all the material and human resource,
organisations need financial resources so that they can fulfil the demand of organisation. Various
tools and theories are used to identify the requirements of the resources like Mckinsey' 7s model
which is discussed below:
Mckinsey's 7 model is used to identify the organisational design and its goal is to analyse the
competitive advantage in McDonald's. There are 7 key elements in this model which are:
 Structure: It refers to the pattern in which organisation is assembled. McDonald's
includes chain and hierarchy in their organisation which help in better coordination and
accountability. It helps in maintaining good relationships among the employees which
help in better performance.
 Strategy: This indicates all the business plans and procedures that help companies in
smooth operations. McDonald's formulates strategies so that they can achieve their
missions and goals.
 Systems: Infrastructure of company which provides guidelines for operations like
planning and decision making. McDonald's create their strong technical and managerial
infrastructure so that they can perform in desired manner. Organisation who follow
proper systems generally achieve more success because it assist in smooth operations.
 Skills: It plays vital role in achievement of success and growth because skills are
responsible for carry out all the operations (Yung and Root, 2019). McDonald's train
their employees so that they can improve their performances. Skilled employees are
asset for organisation that is why they invest huge amount on their learning and
development.
 Style: Management style reflect the work environment of an organisation because it
involves behaviour and attitude of managers in an organisation. McDonald's promote
peace and harmony in their organisation by treating every one equally. They follow
particular code of conduct which enhance the productivity of company.
 Staff: Human resources who are responsible for all the activities in an organisation are
refer as staff. Training, rewards, recruiting and decision makings are carried out by the

human resource in McDonald's. Trained employees can handle difficult situations in
effective manner which is a positive aspect for an organisation.
 Shared values: Combination of objectives, missions and values altogether plays
important role in an organisation. It maintain the positive work environment by creating
effective operations which are required by organisation. McDonald's is based on the
shared values as it acts as a foundation.

REFERENCES:
Books and Journals
Avvaru, V.S., 2019. Development and integration of a PLM platform for the management of
data in production systems (Doctoral dissertation, Politecnico di Torino).
Brown, S.D. and Lent, R.W., 2019. Social cognitive career theory at 25: Progress in studying the
domain satisfaction and career self-management models. Journal of Career
Assessment, 27(4), pp.563-578.
Das and et.al., 2019. Solid waste management: Scope and the challenge of sustainability. Journal
of cleaner production, 228, pp.658-678.
Ghobaei-Arani and et.al., 2020. Resource management approaches in fog computing: a
comprehensive review. Journal of Grid Computing, 18(1), pp.1-42.
Ismail, H. and Hanafiah, M.M., 2019. An overview of LCA application in WEEE management:
Current practices, progress and challenges. Journal of Cleaner Production, 232, pp.79-
93.
Magon and et.al., 2018. Sustainability and performance in operations management
research. Journal of cleaner production, 190, pp.104-117.
Shen, M. and Gao, Q., 2019. A review on battery management system from the modeling efforts
to its multiapplication and integration. International Journal of Energy Research, 43(10),
pp.5042-5075.
Yung, K. and Root, A., 2019. Policy uncertainty and earnings management: International
evidence. Journal of Business Research, 100, pp.255-267.