Strategic Analysis and Market Entry Plan for McDonald's in Macedonia

This report provides a strategic analysis of McDonald's potential market entry into Macedonia. It begins with an executive summary highlighting the importance of strategic planning in business and the specific context of McDonald's expansion efforts. The report then delves into a PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors that could impact McDonald's operations in Macedonia. Different market entry options such as franchising, mergers and acquisitions, and buying a company are discussed, with franchising being recommended. The report also presents market segmentation and targeting options for McDonald's to effectively reach its audience in Macedonia and explores Porter's generic strategies to identify competitive advantages. The analysis includes relevant factors and strategies to facilitate McDonald's successful expansion into the Macedonian market, making recommendations for strategic decision-making.

Strategic Planning

EXECUTIVE SUMMARY
Strategic planning plays a crucial role in business environment. McDonald operated
variety of food in all over world but still there are some countries where the company did not
offer its product such as Macedonia. The company uses different marketing strategies in order to
develop or grow its existing business.
McDonald also offer variety of product such as hamburgers, double cheeseburger,
McFeast etc. The company faces macro as well as micro factors such as political, economical,
social, technological etc.
The report gives various market entry options with different opportunities as well as
threats. To introduce the product in new country it is necessary to target audience which is also
present in this report.
The report also presents market segmentation and targeting options in order to emerge
into new country and also describe porter's generic strategy which help to identify the
competitive advantage in particular market.

Table of Contents
INTRODUCTION...........................................................................................................................3
1. Presenting PESTLE analysis of McDonald............................................................................3
2. Describing different market entry options for a company......................................................5
3. Presenting market segmentation and targeting for a company to emerge in new country......6
4. Presenting different Porter's generic strategy..........................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic planning is very necessary to expand a business in some other country. The
present report based on McDonald who wants to expand its business in Macedonia but there are
some factors that affect the profitability as well as productivity. The report focus on different
micro and macro factors that affect the environment of a company such as its political, social,
economical, technological and environmental factors. It also provide some suggestion that help
to overcome such threats. The report also analysis the main market entry modes that help Mc-D
in operating in another country. It also provides deeper understanding the company target its
audience effectively through undertaking the tactic of segmentation etc. It also explains porter's
generic strategy and helps in identifying one strategy which is suited for the company to expand
its market within a country.
1. Presenting PESTLE analysis of McDonald
McDonald has a great opportunities to expand its business in Macedonia and it will help
to enhance global supply chain. The company always try to introduce new product in a country
such as cheeseburger, hamburgers, french fries etc. there are various factors that affect the
environment of a company when try to introduce same in new country and these factors are
mention below:
Political Factors: The government and political factors such as taxes, threat of tourism
attack of the Macedonia definitely affect the working environment of a company. These political
factors such as government incentives of Macedonia may impact the decision when relate to
establishing some industry. The current political position and the expected annual budget of
government support McDonald to establish its branch in a country. The company also has good
relationship with international market so it is always trying to open all the branches in many
countries. The political status of a company is deteriorated from last many years as it did not
participate in any elections which may result in decrease in market share (Political sitaution of
Macenodia, 2018). The country has large population and have many internal political crises and
many institution are trying to fulfilling the demands of Europeans.
Economical factors: the economic condition of Macedonia is quite average and there is
a demand of establishment of McDonald in that country. The country has many internal political
crises which somehow disturb the economic performance of a company Inflation rate of the
country is quite slow that may be affect the planning of McDonald. As the company slowly

increases in all over the world and contributed a good amount of share in the GDP (Economic
condition of Macedonia, 2018). The GDP of Macedonia is good as to introduced the new
company in the market. But the GDP of Macedonia is quite weak which does not help the
company to establish its branch. The inflation rates and foreign exchange rate directly affect the
growth of the company and overall new implementation of rules or regulations related to the
company adversely affect the company's growth. the country perform very well and occupy good
position in bank list but the FDI inflows is quite low as compared to last year.
Social factors:it is another factor that reflect the social and cultural state. The sudden
change in customers taste may affect the profit of a company. There is a sudden change in public
taste and their behavior that may affect the profitability of a company. The company also target
young generation because only they like and prefer junk food while senior citizen did not. In
Macedonia, population is quite large and McDonald target mostly young generation public to
help them for establishing a company there.
Technological factors: the company have great opportunities to increase its research and
development process in order to improve company's effectiveness and profitability but still the
company try to apply new technologies in order to attract more number of customers. Almost
Illustration 1: Pestle Analysis
Source: PESTLE, 2018

more than population depend on new technologies and the country has good technology system
that help McDonald to introduce its branch in Macedonia (Papke-Shields and Boyer-Wright,
2017). The company always uses innovative ideas in order to increase its customer base and as
the country has good technological products which will help McDonald to establish its new unit
in Macedonia.
Legal factors:this factor describe those factor which are relate to legal and regulatory
framework . If a company wants to enter in new market then it is necessary to know all the rules
and regulations. There are some countries where anti monopoly laws makes it difficult and this is
not to same in the case of Macedonia. The company follows all the legal rules and regulation as
it offer non veg product but it know Animal welfare regulation act, labor & employment law,
corporate law etc.
Environmental factors:In recent times, more than ever people are quite concern about
environmental factors. People live in Macedonia also take care environment and uses those
products that did not cause harm to environment. McDonald also takes care of environment by
using best quality of packaging material and good source of ingredients, as oil and water are the
most common ingredients which a company uses (Tikhomirov and Frenkel 2017). The company
now recycling vegetable oil and convert them into fuel which is used for diesel in trucks. As the
company uses eco friendly products because there is a need to be careful about environment.
The company wants to expands its market at international level and it try to develop new
product and services such as want to introduce dining area for their customers. The new format
of their menus will also help to attract more number of customers. The company has great
opportunities related to innovation with healthy life style. There are different types of threats that
company faces such as sudden change in rules and regulation of government regarding fast food.
The company also faces great competition from Yum! Brand as well as Burger King. People are
more health conscious and there may be chances that they may not be take junk food. The
increase in price of commodity may increase the cost while weak economy may affect the profit
of a company (Umpfenbach and et.al., 2018).
There are different suggestions that should be taken by a company in order to overcome
from threats. As the company faces tough competition with other brands so, McDonald should
charge low price of fast food as compared to their rivals that will help to increase its sales as well
as maximizes profit. The company offer variety of products but modern public are quite

conscious related to their health so they introduce new healthy products with new innovative
ideas in order to attract new customers.
2. Describing different market entry options for a company
As McDonald want to enter in new market of Macedonia so there are different options
available through which the company may entered and some of them are mention below:
Franchising: it is the most suitable method which a McDonald may opt in order to
expand its business in new country. Franchising is mostly suitable to that country who offer food
products. There are two caveats required while doing franchising, the first one is the company
should be unique and strong brand power which McDonald is actually and secondly the company
may be create own rivals. As per many data collection it is proved that McDonald is one of the
best example for franchising because company put a package of successful ingredients that help
to make it popular in its home market then franchise holder comes and give training to marketing
their own service and products. In this way company can establish its new unit in different
company (McLean, 2018).
This method has many advantages such as it receive plenty of support that include hiring,
advertising and training. Sometimes franchisers also help in the terms of financing, selecting and
management too which is a biggest advantages. But on the other side an parties bound by an
agreement and there is no freedom and flexibility while operating a business.
Procedure followed by McDonald
The formal procedure which McDonald follow in order to establish itself in Macedonia is
firstly the company has to identify the response to the operator's renewal request and then
developing a informal process in order to identify the past performance of the company and then
draft the model of franchise documents to analysis the operator's response and then developing a
negotiation strategy. Last stage comes, to adopt the franchise documents, by this method,
McDonald can easily hire franchise.
Merger and Acquisition: It is another method that company may. In this method, any
two organization come together to form a company and then establish its new unit in new
country. Using merger form, McDonald merge with new organization and then establish a new
unit in new country because at that time these two company share their knowledge as well as
profit too (Bryson, Edwards and Van Slyke, 2018). This option have many advantages such as it
help to access better resources such as new staff and technology. Both the organization share risk

as well as profit too but on the other hand it also have many disadvantages such as there may be
clash of cultures and management styles, as two different companies work together, there may be
great imbalance related to expertise, asset etc. there may be lack of clear communication.
Buying a company: sometimes it is also consider one of the most important market entry
options. Buying an existing local company may be the most appropriate strategy in order to enter
in new market. It is so because the existing company has great market share and have direct
rivals and due to sudden change in government rules and regulations only this option is helpful to
use and entered in new market.
The biggest advantage of using this market entry strategy is that it will help to status of
being a local company and help to get benefit of using all local market knowledge with a good
customer base and also the company will be treated as a local organization by the government
and buying an existing company will also help in immediate cash flow while on the other side
there are some disadvantages such as external factors of a company may affect the future growth,
if the existing business is not performing well in market then it requires lot of investment to
make it profitable (Wolf and Floyd, 2017). If the person wants to sell a business then make sure
and find out why the person is sell a business.
Recommended strategy
Among all market entry method, it is to be advised that McDonald can chooses
franchising options because it help to manages a business in simple way and there may be
higher chances of increasing expansion in those areas. Using franchising, the company can gain
new business at local level and there may be lesser chance of risk of failure and loss of
investment while choosing other option there may be increase in the chances of risk. Choosing
franchising help to enhance the management abilities and it also offers a better chance to succeed
while others do not. The company chooses to entered through franchises because this option has
many advantages such as
 McDonald receive plenty of support that include hiring, advertising and training.
 Franchisers also help in the terms of financing, selecting and management too which is a
biggest advantages for the company.
 The risk of failure of business is reduced by using this mode.
 Using this mode to enter in a market will help to maintain good relationship with their
suppliers.

 Franchising will help to share ideas and communication well with their customers as well
as their suppliers.
There are various types of documents needed when taking a franchise such as franchise
disclosure documents, state disclosure documentation which includes Franchise Registration
State, Filing and notice states, operations manual, Financial statements of a company then
company take a franchise.
3. Presenting market segmentation and targeting for a company to emerge in new country
Market segmentation is a process of diving market into different types of groups on the
basis of their characteristics.
Demographic Segmentation: The market segmentation is done on the basis of gender, age
group, income, place, occupation, beliefs, demographic, customer's behavior, age and lifestyle.
It is the first step of strategic planning and by using this strategy, company can easily identify
market condition, people age group so that it can deliver focus products and services as per their
need and requirements. Under this strategy, McDonald chooses youngsters whose age group is
between 18-30.
Geographic segmentation: As McDonald wants to introduces its new branch in
Macedonia, but before that the company first done market segmentation because it will help it to
emerge into new country in very well manner (McLean, 2018). The country has strong
population and people are also well educated. The company target mostly new generation people
in order to enhance its brand level image and segments its market using geographic region where
it chooses different places in order to attract wide number of customers.
Psycographic segmentation: under this segmentation McDonald uses psychology of the
people which direct relate to the customers thinking. The company also segments market using
people's lifestyle which is based on entertainment, sudden change in customer's taste which is
mostly seen in young generation people only. Another option for market segmentation can be
done on the basis of customers buying power which is necessary to identify when a new unit is
establish in new country. As McDonald identify the customer's nature of purchasing and level of
usage then the company can easily determine their behavior regarding the buying power. If the
channel of distribution of a company is better then there is increased chances of creating best

image in a market and if the company also response all marketing efforts in good way then also it
may establish new unit in new country.
As, McDonald want to introduce its new unit in Macedonia, where the company has to
target young age of people because they are only fond of junk foods, want to try new foods and
as they are adopting new lifestyle, that is why company target this age group of people and
introduced hamburger in their region (Market Research, 2018). The company also uses different
promotional schemes as per their taste, the country is financially strong so it means that people
can afford to buy high range of products that is why company also introduce high range of
products for their customers. For lower income group, the company introduce new combo pack
with french fried, medium size burger and many more. In this way, the company target young
age group in order to increase its sale and emerge itself into new country.
Targeting and positioning:
Whereas, targeting is quite different term from market segmentation. Targeting is a
process of choosing one or more segments that gives an output due to the market segmentation
process. Targeting is done on the basis of market and segment size, clear cut difference between
each other, expected revenue generation and accessibility.Potential target customers are those
customers which can be target by a company. As McDonald target young age group people in
order to increase its market as well as brand level image. Target customers will definitely help to
raise its sales and maximizes its profit.
4. Presenting different Porter's generic strategy for McDonald
Porter's generic strategy is mostly used to know the competitive advantages by creating
superior performance in a market area. Basically there are four porter's generic strategy
 Cost leadership : under this strategy, the company is set about minimize the cost of an
organization in order to deliver its best products and services. Under this strategy,
McDonald set minimum price for their products so that it will helpful to attract wide
number of customers.
 Differentiation: this strategy, help to make the services and product different from
another by applying innovative ideas (Bryson, Edwards and Van Slyke, 2018). In the
context of McDonald, to introduce itself in the new market, uses different innovative
products so that its promotion become successful in new market.

 Cost focus: this strategy help to create brand image in market. This strategy help market
segment less attractive as compared to its rivals. Under this strategy, McDonald makes its
brand unique as compared to other and also set minimum price for their customers in
order to grab new customers attention towards it.
 Differentiation Focus: this strategy exploits the special needs of buyer and it only focus
on single market segments because of small organization who serve broad market. Using
differentiation marketing strategy, McDonald tries to present different from other brand
and this is only done by using various promotional activities and set the price at
minimum cost.
Among all, McDonald chooses cost leadership strategy and considered best strategy
because while establishing new unit in new market with low cost then it help to increases profit
while other strategies only help to increases its level of performance only. Critically it is also
analyses that choosing cost leadership as a best strategies among all also have advantages and
disadvantages which are mention below:
Advantages :
 it require low cost base which includes labor, material and facility.
 To establish competitive edge, using cost leadership is the biggest advantages.
 Lowering a price is the common way to decrease cost, by using this strategy McDonald
can easily be reach to wider number of customers and offered variety of product in
Macedonia (Tikhomirov and Frenkel, 2017).
 The company may uses many techniques to lower the cost and it will be result as a
specific advantage.
 This strategy help to create benefits related to new entrants.
 McDonald chooses this strategy because it will help to create barriers to entry and that
help to protect the firm.
Disadvantages:
 the biggest disadvantages of using this strategy is that may be competitors may copy cost
reduction of McDonald.
 This strategy creates the need for high sales volume.
 Highly fragmented markets and those market who involved in brand loyalty also not offer
so much opportunities to attract wider number of customers.

 The lack of market research can sometimes create barriers for the company (Papke-
Shields and Boyer-Wright, 2017).
 In recent times, customers are more willing to pay extra just to enjoy the brand as per
their requirement and choice which may creates confusion for the companies.
CONCLUSION
By summing up above report, it has been concluded that strategic planning plays a
significant role in the business environment. To explore or expand a business it is necessary to
have good planning and know all the major factors that may affect the business internally as well
as externally. The report provide a complete macro and micro factors that affect whole business
environment of McDonald. The report also explain country's political, economical, social,
environmental and technological factors that affect the profitability as well as productivity. The
report also describe various market entry options that help McDonald to come in Macedonia and
create a brand image in a market. It also explain country's market segmentation and its targeting
that help to target its customer's effectiveness. The report also concluded different porter's
generic strategy that help a company to run effectively in new country and help to gain more
profit and production using strategic planning.