McDonald’s Internal Business Situations

Discuss about the Global Marketing Strategy and Planning.

According to Alon & Eugene (2012), global marketing refers to a product strategy that applies promotion and advertisements to increase the sales globally. It deals with a wide area for business operations. It can be said that almost all business has a global existence. According to Kotler et al (2015), even the companies that are operational within their native places try to attract global market. The increase in global marketing is the primary reason of why it is important to study. It is a major area of business because it offers access to large scale profit margins, better quality of life and vast demographic audiences.

The internal business situations of McDonald’s are discussed in the following:

Recently in 2015, McDonald has reformed its company structure for a better handling of global operations. McDonald is among the largest fast food restaurants of the world. The focus has always been given to the current market related issues. Sachdeva (2015) outlined that they have a divisional organizational structure. Each division manages a particular operational area. The objective of the organization is to support autonomy besides maintain organizational flexibility. According to Schlegelmilch (2016), the main characteristics of their organizational structure are the following:

• Global hierarchy
• Performance-based divisions
• Function-based groups

De Mooij (2013) mentioned that McDonald’s has 23,500 restaurants in 109 countries across the world. Lee & Carter (2012) opined that almost 85% of McDonald’s restaurants are owned and managed by franchisees. These are independent and full time operators. They have restaurants in exotic tourist locations, highways, theme parks and inside the Wal-Mart. (“McDonald’s: Burgers, Fries & More. Quality Ingredients.”, 2016)

 The burgers are the most sold product of McDonald. They use 100% USDA inspected beef without any fillers and additives in their products. The chickens are also 100% farm raised without any fillers and additives. According to Pearce (2013), they work in a close association with growers, ranchers and suppliers for world class food quality. Only the brand items such as Dannon yogurt, Nestle chocolate, Heinz Ketchup are used by them. The branded menu items include Big Mac, and Chicken McNuggets. The popular products of McDonald’s are hamburgers, pork burgers, and beef. To survive in India, they have added lamb, chicken, and fish burgers into their menu. These items gained popularity in the metropolitan cities of India. In spite of it, Pizza Hut, Domino’s, Subway and KFC are giving competition to McDonald’s here.

Organizational Structure

It is a fact that the new trends are faced by the consumers because there are many competitors offering quality fast foods to them. Subway and KFC are such competitors. Following the new trends, McDonald’s are offering foods in low price rates, offers discounts, and also introduced healthy food. Many have questioned the high proportion of fat in the burgers and in many countries the foods of McDonald’s are banned because of the health related issues. Even they have introduced McMuffin to spread nutrition awareness. It is a move by McDonald to spread its business in those countries too.

According to Griffith & Hoppner (2013), McDonald’s supply chain follows the concept of three-legged stool. It is the following;

• Suppliers
• Company
• Franchisees

According to GUPTA (2013), the company has invested years in establishing a unique cold chain. Through this, the integrity of the food products are maintained and the nutritional values is also retained. The company assists in the selection of high quality seeds, refrigerated transportation system, and drip-irrigation technology. They have also enabled the E-Procurement system through which the buyers and sellers can specify the costs and also invite online bids. Customers can also qualify for special offers and volume discounts over internet. They have an E-Procurement website named Emac Digital Company. It is jointly owned by McDonald’s and Accel-KKR Internet Co. (“McDonald’s: Burgers, Fries & More. Quality Ingredients.”, 2016)

The external situations of the McDonald’s are discussed in the following

• Although McDonald’s is considered world’s largest fast food chain, it is facing tough competition from companies such as KFC, King Burger Corporation, Subway, BKC, and Yum foods. McDonald’s generates most of their revenues from eight countries. Jeon et al (2016) pointed out that these are- Australia, Canada, United Kingdom, United States of America, Germany, France, Brazil, and Japan. They started their business in India during 1996 and since then they have adopted with the food habits, cultures, and lifestyles of India. (“McDonald’s: Burgers, Fries & More. Quality Ingredients.”, 2016)

McDonald’s is a famous brand in Singapore’s market. The industry analysis of McDonald’s is discussed in the following in terms of Singapore’s market.

• Customer analysis: McDonald’s has segmented its customers in terms of their lifestyle and age. Although the target customers are teenagers, adults, and seniors, they heavily target the children. Keegan & Green (2015) opined that in Singapore, they retain communication with the customers apart from anticipating their demands. However, most of their customers belong to well-educated and economically affluent families. It is found that McDonald’s has made changes in their menu keeping in mind different needs of different customers.
• Competitor analysis: Yum Brands and McDonald’s are fighting neck to neck for the number one spot in Singapore. The products of McDonald’s are more costly than Yum Brands. Therefore, many customers prefer it over McDonald’s. In spite of it, McDonald’s has their own set of regular customers.
• Buyers: McDonald’s have a large section of regular customers. They belong to the affluent section of the society.
• Suppliers: McDonald’s does not have a single supplier at the global level except Coca Cola, which is a cold drink company. They have their own farm from where they get meat and from the local store they collect raw materials.
• Substitutes: some healthy foods that are becoming popular among the health conscious customers are posing threats to McDonald’s food products. Therefore, they have shifted their focus on the healthy foods.
• New Entrants: No new entrants are endangering McDonald’s demands in the market of Singapore. (“McDonald’s: Burgers, Fries & More. Quality Ingredients.”, 2016)

McDonald’s is already a popular fast food brand. Still for the development of their business they can look into certain opportunities. Many people restrict themselves from eating food products of McDonald’s because of rising health awareness. Newer range of healthy foods can attract more customers. The company should also explore the opportunity to expand in foreign market more. They can also think of renovating their old restaurants, decrease the food prices to attract the middle class customers. Even they can also introduce new popular products such as coffee because of its rising popularity worldwide.

Introducing new and healthy products should be given importance. In many Asian countries, McDonald’s products are not acceptable to the customers and also to the governments. In an age of growing health issues and health consciousness, customers should be served healthy foods.

• Strength: They have a diversified income scheme. The revenues are generated from various countries across the world. It never depends on one key source of income. McDonald’s sales were US$16.488 billion in the last year. It earned US$8.925 billion from franchisee stores.
• Weaknesses: The declining market share, quality of food are the two main weaknesses. Many people do not eat beef and in many countries the products are banned.
• Opportunity: International expansion, joint ventures with the retailers, and their adaptation with the regional and current trends are the main opportunities.
• Threats: Growing competition from companies such as subway, KFC and Burger Ken, more health consciousness among the consumers are the big threats facing by the McDonald’s. (“McDonald’s: Burgers, Fries & More. Quality Ingredients.”, 2016)

• Political: It has to follow the government regulations related to foods and hygiene. Some government has banned the junk foods of McDonald’.
• Economic: It has to decide whether to buy the raw materials or import them is a major economic factor. The tax rates, i.e. the tariff on the imported products is another concern.
• Socio-cultural: Changes in lifestyle and food habits of people in specific regions are the main concerns. Asian people prefer rice over hamburgers, which is a preferred food item in Unite States.
• Technological: technology helps in saving time and resources. It helps in scheduling, ordering, foot traffic, and forecasting sales. Easy customer payment is also helpful.
• Environmental: They have replaced polystyrene with paper-based packaging to avoid environmental hazards. (“McDonald’s: Burgers, Fries & More. Quality Ingredients.”, 2016)

Conclusion

Global marketing management has evolved widely. It is a best way to expand the business of the company. Whereas International marketing is limited, global marketing is fast growing. McDonald’s is one such company that has expanded across the globe following the trends. It can be known from the SWOT and PESTEL analysis of the company. Most of the big companies are getting involved into global marketing in case they are not willing to tie up with the franchisees. In today’s market scenario, the global marketing not only helps the sellers but also the consumers are getting benefitted from various products. Many companies set the product range keeping in mind the customer’s needs. It is an important factor of global marketing. Moreover, the companies are earning shares from all over the world and they do not depend on any specific market in a specific region.

Reference

Alon, I., & Eugene, J. (2012). Global marketing. Mcgraw Hill Higher Educat.

De Mooij, M. (2013). Global marketing and advertising: Understanding cultural paradoxes. Sage Publications.

Griffith, D. A., &Hoppner, J. J. (2013). Global marketing managers: Improving global marketing strategy through soft skill development.International Marketing Review, 30(1), 21-41.

GUPTA, D. A. (2013). Organizational challenges towards international growth. Arthprabandh: A Journal of Economics and Management, 2(10), 24-33.

Jeon, H. J. J., Meiseberg, B., Dant, R. P., &Grünhagen, M. (2016). Cultural Convergence in Emerging Markets: The Case of McDonald’s in China and India. Journal of Small Business Management, 54(2), 732-749.

Keegan, W. J., & Green, M. C. (2015). Global Marketing. Boston: Pearson.

Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2015).Marketing. Pearson Higher Education AU.

Lee, K., & Carter, S. (2012). Global marketing management. Oxford University Press.

McDonald’s: Burgers, Fries & More. Quality Ingredients.. (2016). Mcdonalds.com. Retrieved 14 October 2016, from https://www.mcdonalds.com/us/en-us.html

Pearce, R. (2013). Global Marketing: Foreign Entry, Local Marketing, and Global Management. International Marketing Review

Sachdeva, A. (2015). Evaluation and selection of differentiation as a strategy for McDonald’s.

Schlegelmilch, B. B. (2016). The Future of Global Marketing Strategy. InGlobal Marketing Strategy (pp. 221-249). Springer International Publishing.