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McDonald’s Corporation In Emerging Market

McDonald’s Corporation In Emerging Market

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Published by: Md. Rakibul Hasan Rony on Jul 15, 2010
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05/12/2014

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By Md. Rakibul Hasan Rony 
McDonald’s Corporation
In Emerging Market
 
JAGANNATHUNIVERSITY
BBA in Marketing
 
 
McDonald’s Corporation in Emerging Markets
 
1.0 Case Summary
The case focuses on the US- based fast food chain McDonald's entry and expansionstrategies in the Chinese market and Russian market. McDonald's entered China andRussia in 1990. Since then McDonald's in China and Russia have been expandingsteadily by providing outstanding quality, service, and value to its customers. Itentered into Russia at a time when the country was still struggling to gain politicaland economic stability after reforms had been introduced. McDonald's strategic planin both countries was to focus on core menu extensions, convenience and value. Thecase details the operational strategies of McDonald's in China and Russia. The casealso discusses the different challenges faced by McDonald's in both Countries. Suchas- problems of obtaining building materials to build the restaurant as sand or gravel,short supply of sufficient sugar and flour and another problem was some supplieswere not simply produced or consumed in the Soviet Union like iceberg lettuce,pickling cucumbers, the Russet Burbank potatoes etc. in Russia. And on the otherlacking of quality supplies and distribution difficulties are problems in China. InJanuary 1990, it was almost impossible to accommodate the crowd, when the
restaurant’s door opened for the first time in Moscow though it was the largestMcDonald’s in the world. At the first day, an estimated 30000 customers were servedthough the price of McDonald’s products was so high, the crowds continued.
 
China’s
government wanted establish its fast food market and felt that western companies like
McDonald’s could take the risks in proving its success. In 1990, the entry of McDonald’s into china resembled its experience in Russia. In china McDonald’s
moved more smoothly which was not possible in Russia.
Macdonald’s opened 96
restaurants in China, totaling 430 restaurants altogether in the first six month of 2001.
Macdonald’s success in China has continued into the twenty first century.
McDonald'sdid a tremendous success in Russia as well as China.
 
 2.0 Discussion
McDonald's Corporation is one of the oldest chains of quick service restaurants in theworld and the largest, serving nearly 47 million customers daily. It was started in thelate 1930s by two brothers Richard and Maurice McDonald in California, the US.Within a few years, the chain had become quite popular and it started to grow innumbers. The founders started to franchise out the stores to other partners at apremium price. In 1967, it started its international expansion for the first time byentering Canada and subsequently ramped up its presence in other internationalmarkets. A McDonald's restaurant is operated by a franchisee, an affiliate, or thecorporation itself. The corporation's revenues come from the rent, royalties and feespaid by the franchisees, as well as sales in company-operated restaurants. McDonald'srevenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9%growth in operating income to $3.9 billion
(Wikipedia, 2010).
McDonald's sellshamburgers, cheeseburgers, chicken products, french fries, breakfast items, softdrinks, milkshakes, desserts, salads, wraps and fruit etc.
3.0
 
Facing problem
Operating Business in Russia and China, McDonald’s faced several probl
ems. Here
our discussion regarding the problems which faced by McDonald’s in Russia and
China. In Russia, they got negative response from Moscow City Council like Sorry,
“You are not in my five
-
year plan”
. Others problems are- To build the restaurant,attempting to obtain such material as sand or gravel, short supply of sufficient sugarand flower, strict allocation regulation of soviet dictated that no opportunity to
 produce products for McDonald’s leaving the existence soviet companies
and anotherproblem was some supplies simply were not produced or consumed in the SovietUnion like iceberg lettuce, pickling, cucumbers, and the russet Burbank potatoes.
Macdonald’s also
faced some roadblocks in China- Lacking of quality supplies anddistribution difficulties.

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