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McDonald’s: Serving Fast Food Around the World

Strategic Management

Submitted toDr. Rajendra Suwal, Instructor

as a partial fulfillment of group assignment

Submitted BySiddhi Lal Kayestha

Sujan RanjitkarSambhavit Narayan Shrestha

ACE Institute of Management, EMBA Spring 2010New Baneshwor, Kathmandu, Nepal

August, 2011

1. What opportunities and threats did McDonald’s face? How did it overcome them? What alternatives could it have chosen?

Opportunities and threats that McDonald’s faced are listed in a tabular form.

Opportunities ThreatsIt commands large market share of the fast-food market being a world leader in fast food chain.

The guiding principle ‘QSC & V’ (quality, service, cleanliness and value) is a hit. But to maintain all these by franchise is difficult.

Rapidly growing trend for American style fast-food in abroad with increase in international sales representing one fifth of total sales revenue.

Negative perspective about fast-food habit by health conscious people.

It can create new products to cater need of local society and to localize itself in the market where it goes.

Challenging to ensure consistent product by controlling every stage of distribution.

Serving local food and beverage along with global menu of McDonald’s to meet social and cultural requirement creating opportunities to grow for its market.

Heavy advertisement to establish brand rapidly, decreasing market share.

Overcoming threats

1. To ensure consistent product, McDonald’s has implemented a strategy of buying supplies at regional level, which purchase products from local supplier meeting required specification and distribute them to individual restaurants.

2. McDonald’s has localized its products as per the need of society. It has helped to create a different perception that people do not take it as a pure American food which is responsible for obesity primarily. In fact it has created a positive feeling in the heart of people to love it.

3. The advertisement campaigns are based on local themes reflecting different environment. It was not presented as an alternative of snacks. Quantity of food it serves varies from one society to other depending on food habit but maintaining the quality of food.

4. To operate and maintain ‘QSC & V’ every restaurant owner and manager must attend the Hamburger university near Chicago

Alternatives to Choose

1. Select market with huge demand, instead of going to every place where cost of branch extension is high with respect to turnover that branch generates.

2. Not to lose profitable market after operation for not maintaining standard requirements, do lot of homework and analysis about the people, place and culture.

3. Endorse items which are not its product, to sustain in a market with different culture. Like French and German prefers to have wine and beer respectively in lunch. But this should not interrupt existing product of McDonald’s

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2. Before McDonald’s entered the European market, few people believed that fast food could be successful in Europe. Why do you think McDonald’s succeeded? What strategies did it follow? How did these differ from its strategies in Asia?

In Europe, people are prone to fast-food. Eating habit is somewhat similar with American culture. Lifestyle in Europe is very busy. Working life is very difficult. People tend to go for ready-made and fast-food because of busy life. But they make good earnings. Purchasing power is high. They do afford expensive and standard products with quality.

McDonald’s prefers to ‘QSC & V’ and serves quality food. Product with little higher price but of quality, good service and cleanliness do have a market in Europe because of high purchasing capacity of people. Above all this, the menu traditionally followed by McDonald’s is in line with test of European.

In France, people like to have wine with food. Similarly beer in Germany is common while eating food. McDonald’s changed its strategy and opened few restaurants in Europe which serves beer and wine as well. Also a new trend is introduced in France. McDonald’s was one of the first restaurants in Europe to welcome families with children.

Contrary to Europe, Asia has a different culture, food habit and social norms and values. Work culture is different. It is changing now a day’s though. People like to have fresh food prepared taking time but not instant foods.

A basic food item, French fries, in a menu of McDonald’s becomes new things in the Asian country like Japan. Normal size of hamburger is considered bigger in size so that it has to be made smaller because Japanese considered it as snacks.

3. What is McDonald’s basic philosophy? How does it enforce this philosophy and adapt to different environments?

Quality, service, cleanliness and value “QSC & V” is the basic philosophy of McDonald's and mainly focused on customer satisfaction and hygiene and consistency in its menu. It believed that there should be similarities in menu to some extent across all chain it has around the globe. Basic menus are same and can be found in menu of McDonald’s all over the world reflecting similarity and maintain uniqueness.

And it focused on quality, service, cleanliness and values “QSC & V” which was very popular concept. The golden arch of McDonald’s represents the philosophy of same basic menu and “QSC &V”.

Regional distribution centers purchase products and distribute them to individual restaurants. This is to ensure the consistency of the products. McDonald’s

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controls in every stage of the distribution to assure consistency in product it delivers. The centers buy goods required to prepare food from local suppliers if the suppliers can meet specifications of products.

Next, McDonald’s is very specific on its operation part. Product handling and cooking procedure along with layout of kitchen are standardized and strictly controlled. The restaurants are run by local mangers and crews. Owner and managers have to attend the Hamburger University near Chicago to learn how to operate a McDonald’s restaurant maintaining QSC&V.

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