Table of Contents

Table of Contents.......................................................................................................1 Question 1..................................................................................................................2 Question 2..................................................................................................................4 2.1 countries in Eastern Europe (Hungary, Poland).................................................4 2.2 countries in West Asia (Iran, Turkey).................................................................8 2.3 Countries in Africa (South Africa, Egypt).........................................................10 Question 3................................................................................................................12 3.1 critically discuss McDonalds globalization strategy........................................12 3.2 Explain how and why the entry strategy of McDonalds was different in china in comparison with the rest of the world...............................................................15 Question 4................................................................................................................17 Question 5................................................................................................................19 Question 6................................................................................................................23 Bibliography.............................................................................................................24

Question 1
Outline the reasons for the fast global growth of McDonalds. In the fast food industry, McDonalds is the largest firm in terms of establishments, employees and profits. It is the most recognizable name in the industry. McDonalds has introduced the American concept of fast food abroad and franchised to many foreign and specially emerging markets. In many of the countries where McDonalds now operates, it brought along not just one but two new concepts: its product the hamburger, or fast-food itself and franchising. As a pioneer, it faced significant uncertainty, not knowing how the population would react to its product offering (Lafontaine & Leibsohn, 2004). By now, McDonalds has expanded throughout most of the world. In the United States McDonalds has built more and more stores and has also increased sales at existing locations. Outside the United States, it has derived new income with little overheads by franchising rather than operating its new locations. McDonalds is operating in fast growing and desirable markets such as China, India and Middle East where there is long term economic growth. The GDP per capita is growing in these markets and therefore the population will find fast food affordable. Moreover the cities in these regions are fast pace and people find it convenient to be served in a very short period of time. The comfortable, clean and hygienic restaurant environment of McDonalds is attractive to the growing middle class in these regions. This category has increasing purchasing power and spend out easily since a typical middle class family will be one where both the man and woman work and do not have time to cook. McDonalds has extended its opening hours to twenty four hours in major cities of the world to be able to meet the demands of the urban population and adapt to urban life. It has also introduced variety in its breakfast menus. In countries where food taste largely differs, McDonalds has extended its core menu and adapted to the taste of people throughout the world.
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The introduction of salads and public nutrition campaigns are examples of McDonalds efforts to adapt its business model to changing trends in the market.

Question 2
Problems McDonalds may encounter when opening outlets in:

2.1 countries in Eastern Europe (Hungary, Poland)

To highlight the problems that McDonalds may encounter in Eastern Europe, we shall compare the US culture with the culture of two countries in Eastern Europe namely Hungary and Poland. Hungary is a high income economy and a popular tourist destination. It became a republic in 1989 and became a member of the EU in 2004. A comparison of different cultural dimensions between the US and Hungary using the Geert Hofstedes model will help understand what problems McDonalds can face in Hungary. Poland is a post communist country which had its slumps in social and economic standards. It is nowadays a democracy with a president and a head of state. Poland has a high income economy. It has in recent years extended its responsibilities and position in European and international affairs, supporting and establishing friendly relations with many 'Western' nations and a large number of 'developing' countries. The following diagram shows the different scores for the US Figure 1: Score for United States (itim international, 2009)

The estimated scores for Hungary are PDI 46, IDV 80, MAS 88 and UAI 82. The estimated scores for the United States are PDI 40, IDV 91, MAS 62, UAI 46 and LTO 29. The estimated scores for Poland are PDI 50, IDV 55, MAS 60, UAI 73 and LTO 32. A comparison of the six cultural dimensions of the Geert Hofstedes model between the United States and these two countries are as follows: Power Distance Index (PDI) is the extent to which less powerful members of organizations and institutions accept and expect that power is distributed disproportionately. PDI is slightly higher in both Hungary and Poland than in US. Since there is only a small difference, McDonalds does not have to review its usual work structure as far as employees are concerned and may opt to create the same kind of hierarchy as in the US since there is a great chance that it will be highly accepted by the Hungarian community and in Poland. It is to be noted that in 2010, McDonalds was awarded employer of the year in Hungary. Individualism (IDV) on the one side versus its opposite, collectivism, that is the degree to which individuals are integrated into groups. The high Individualism (IDV) ranking for the United States indicates a society with a more individualistic attitude and relatively loose bonds with others. The populace is more self-reliant and looks out for themselves and their close family members. (itim international, 2009)4 Hungary also has a high IDV ranking, though slightly lower than that of the US. Since both countries have quite high IDV scores mean that McDonalds does not have to provide more varieties of family meals that it already provides in the US. However IDV is much lower in Poland indicating that bonding among people is strong. Therefore McDonalds has to adapt to this culture and provide more family-like seating arrangements and menus.

Masculinity (MAS) is the value placed on traditionally male or female values (as understood in most Western cultures). In so-called 'masculine' cultures, people (whether male or female) value competitiveness, assertiveness, ambition, and the accumulation of wealth and material possessions. In so-called 'feminine' cultures, people (again whether male or female) value
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relationships and quality of life (wikipedia, 2011) Hungary (88) has a higher MAS score than the US (62). Therefore Hungarians employed at McDonalds will have greater ambitions, will need a good career plan and a good salary scale for them to become satisfied and loyal employees. Since Hungarians value competitiveness more than in America, employees in Hungary will fully measure the importance of doing better sales than McDonalds competitors. Masculinity in Poland and US is almost the same.

Uncertainty avoidance (UAI) measures the extent to which different cultures socialize their members into accepting ambiguous situations and tolerating ambiguity. Hungary has a very high UAI (82) as compared to the US (46). Poland also has a high score of 73. McDonalds employees in Hungary and Poland will prefer explicit rules to follow when performing in their day to day job. They will also prefer their tasks to be formalized and explained to them so that they exactly know what to do and not. However McDonalds American employees prefer more flexibility in their work and informal activities rather than strict adherence to guidelines. Employees in these two Eastern Europe countries will stay longer with their employer than Americans. Therefore McDonalds can develop future career plans and invest more upon training and education of Hungarian employees than American ones. Long Term Orientation (LTO) is a society's "time horizon," or the importance attached to the future versus the past and present. In long term oriented societies, people value actions and attitudes that affect the future: persistence/perseverance, thrift, and shame. In short term oriented societies, people value actions and attitudes that are affected by the past or the present: normative statements, immediate stability, protecting one's own face, respect for tradition, and reciprocation of greetings, favors, and gifts. US has a low LTO score of 29. The score for Hungary is unknown but as an indicator it is known that the score for Eastern Europe is moderate. Therefore in Hungary there will be some importance attached to thrift and perseverance. Hungarian McDonalds employees will have long term plans and the career that they choose also need to be for a long term. They need to be able to picture at what stage in their career they will be in some years time. LTO in Poland (32) is almost the same as that in US.

Indulgence vs. restraint refers to how much a society allows relatively free gratification of basic and natural human desires related to enjoying life and having fun. Restraint stands for a society that suppresses gratification of those needs and regulates it using social norms. Indulgence is higher in America as compared to Eastern Europe. Restraint is normally more present in Eastern Europe than America. McDonalds must make an effort to adapt its advertising to the less liberal culture of Poland and Hungary and bear in mind that advertisement should not shock these two cultures. To conclude, Eastern countries are economically less developed than the US. Some Eastern Europe countries are relatively young democracies and have recently opened up to the world. McDonalds needs to practise low prices and give value for money to attract customers in this part of the world.

2.2 countries in West Asia (Iran, Turkey)

To highlight the problems that McDonalds may encounter in West Asia, we shall compare the US culture with the culture of two countries in Eastern Europe namely Israel and Turkey. In Iran the state owns the oil and the large enterprises. Private trading is on a small scale. The economic environment of the country has been improving over the last years, however, inflation and unemployment remains high. The service sector has a significant contribution to the countrys GDP. In Turkey, a series of large privatizations, the stability fostered by the start of Turkey's EU accession negotiations, strong and stable growth, and structural changes in the banking, retail, and telecommunications sectors have all contributed to a rise in foreign investment. The estimated scores for Iran are PDI 58, IDV 41, MAS 50 and UAI 59. The estimated scores for the United States are PDI 40, IDV 91, MAS 62, UAI 46 and LTO 29. The estimated scores for Turkey are PDI 72, IDV 32, MAS 40, and UAI 80. Iran and Turkey have a high PDI and UAI as compared to US. Turkey's highest ranking of UAI indicates the societys low level of tolerance for uncertainty. To reduce uncertainty, strict rules and regulations are adopted. The ultimate goal of this type of society is to control everything in order to eliminate or avoid the unexpected. As a result, changes are not readily accepted. Both Turkey and Iran have a higher PDI than the US. It is indicative of a high level of inequality of power and wealth within the society. This condition is accepted by the society as their cultural heritage. Clear cut hierarchy among the employees at McDonalds will be accepted in these countries. The low ranking on IDV in both Turkey and Iran indicates the society is collectivist as compared to individualist. There is a close long-term commitment to the family. Loyalty in a collectivist society is very important. The society favors strong relationships where everyone takes responsibility for fellow members of their group. McDonalds Family meals will be very popular in both countries. Family seating areas need to be accommodated for in both countries.
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To adapt to Turkeys culture and food taste, McDonalds offers the Turkish drink ayran and McTurco, a Turkish Kebab with either chicken or lamb. Additionally, Turkey menu features a sour cherry pie, which is similar to the Apple Pie in US. Sour cherry is a popular flavor in Turkey. According to the Turkish McDonalds website, the meat used in the McDonalds branches in Turkey is 100% halal (does not contain pork meat), and has been supplied to them for 25 years by Pinar, a Turkish company. To boost sales McDonalds has adapted its menus to the peoples food taste. McDonalds did open in Iran in 1994 but was open for two days before it shut down for political reasons. It opened up in Iran again in 2010, with a revamped Big Mac newly named Satans Burger. People rushed to buy the new burger. Other information about McDonalds in Iran was not available.

2.3 Countries in Africa (South Africa, Egypt)

To highlight the problems that McDonalds may encounter in Africa, we shall compare the US culture with the culture of two countries namely South Africa and Egypt South Africa is a democracy that has diverse cultures and languages. South Africa has a mixed economy because of the great disparity between the rich and the poor and it has a low GDP per capita. Ghana is a republic located in West Africa and is a middle income economy. Ghana's political and economic stability, low crime rate, and wide use of English make the country an attractive entry point to West Africa for foreigners. The estimated scores for South Africa are PDI 43, IDV 60, MAS 58 and UAI 43. The estimated scores for the United States are PDI 40, IDV 91, MAS 62, UAI 46 and LTO 29. The estimated scores for Ghana are PDI 73, IDV 17, MAS 41, UAI 50 and LTO 11. McDonalds opened its first restaurant in South Africa in November 1995. Today, McDonalds operates 132 restaurants in nine of South Africa's provinces - Gauteng, Western Cape, Eastern Cape, KwaZulu-Natal, Mpumalanga, Free State, Northern Province, North West and Northern Cape. SA has a low IDV as compared to United States. Otherwise the other cultural dimensions have almost the same values. Low IDV implies that collectivism has a strong presence in the society. People prefer to be in group or in family. This is the reason why the kids corner has a high importance in South Africa. Birthday parties, fun stuff and Ronald McDonalds, the magical friend are present. To involve the locals and gain their confidence, more than 97% of all food served in McDonalds restaurants is produced by local South African suppliers. All of McDonalds SA restaurants are Halaal certified by the Islamic Council of South Africa (ICSA). McDonalds is also a FIFA World Cup Sponsor until 2014, McDonalds has global rights to both the 2010 FIFA World Cup South Africa and the 2014 FIFA World Cupin Brazil. This enables McDonalds to continue to bring the worlds passion for football to life for millions of
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fans as part of the companys im lovin it strategy of building stronger connections with its customers in South Africa around the world (McDonalds, 2010) McDonalds is not present in Ghana. It has plans to open up in Ghana in 2011 and is looking for partners to run the business as a joint venture with a US-based Ghanaian businessman. There are factors that McDonalds need to take into consideration when opening up in Ghana. With an IDV score as low as 17, communal values such as love for the family, respect for the elderly and honoring traditions and rituals are some of the main features of the culture of Ghana. This includes honoring traditional rulers and the importance of dignity and proper social conduct. Language will not be a big problem since, even if there are about fifty two major languages and many dialects are spoken, English is the official language. To conclude, McDonalds has a good presence in South Africa but is almost inexistent on the rest of the continent. The major reasons would mainly be due to the poverty present in these countries, people will not be able to afford the fast food. Another reason will be because of the politicial instability and lack of security in many African countries, doing business becomes a challenge.

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Question 3
3.1 critically discuss McDonalds globalization strategy
Over the years, McDonalds had developed a booming market around the world and as of end 2008, was present in more than 100 countries. Even in the difficult times of economic recession, McDonalds had shown improvement in sales. Its international business had also helped insulate it from the housing-led US economic downturn. McDonalds maxim Think global, Act local is present in each and every strategy it devises for a particular country. By thinking global, the entire world is viewed as a borderless market and by acting local, social, cultural, technological, political differences are taken into consideration when penetrating a country. McDonalds uses several strategies in the international market including its localization, pricing, promotional, and operational strategies in various countries. Some of the localization strategies used included adding local items to its menu and deleting from it certain food items that were controversial in some places. One example would be India where only chicken and mutton can be served because of the muslim and hindu culture of not eating pork or beef. The Big Mac was replaced by the Maharaj Mac, made from mutton. 75% of the menu in McDonalds in India is indianised. The company also undertook different marketing techniques in different countries and accustomed the pricing according to the current economic conditions there. There is an increasing number of people in the workplace, which reduces the amount of time spent on preparing meals at home. Fast food is a weakness among the human race, especially if it is cheap, convenient and tasty. MCDs knows this weakness. It provides quick meals and no dish to wash nights to families. MCDs also uses a two-pronged strategy which works very well, namely: A domestic strategy which include local decision making, focusing on increasing sales at existing locations by renovating stores, expanding menu options and extending store hours. While focusing on increasing sales rather than opening up more restaurants McDonalds does a cheaper investment, understands customer needs better and thus improves customer loyalty. By
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modernizing the shop space, McDonalds creates a buzz around its stores and attract a wider range of customers. This may potentially boost up sales because word of mouth advertising is a powerful tool for any company and having a positive reputation will always bring in customers. Expanding menu options domestically provides a test ground for new products. In the domestic market, it is always safer and less costly to remove a product which is not selling well. The healthy food options such as salads, light dressings, grilled chicken, fruit salads and low fat dressings, wraps and reduced fat ice cream were all tested domestically first. Another domestic strategy was to extend store hours. This helps to reach a larger number of customers and is cheaper than opening up at new locations while keeping shorter working hours.

One of the key factors to the success of McDonalds globalization strategy is franchising. However, in several countries where it entered, McDonalds faced opposition from anti-World Trade Organization (WTO), anti-America, anti-capitalism, anti-globalization activists and organizations. Protesters, associating the growth of McDonalds with American dominance, opposed the rapid reach of the company all around the globe. By franchising to local people, the delivery and interpretation of what might be seen as US brand culture are automatically translated by the local people in terms of both product and service ( Vignali, 2001). Franchising also allows McDonalds to invest considerably less than it would have if it were to open at new locations. McDonalds is not limited by its available capital as long as it finds franchisees. The latter takes most of the financial risk involved. A franchise business has the potential to earn a much higher rate of return on the capital invested than a traditional business. Brand identity has considerably enhanced as McDonalds expands to multiple locations in a wide variety of geographic areas. This extra familiarity provides an important marketing advantage for the products and services. Customers who are familiar with the McDonalds brand from other places will recognize it in different cities, distinguishing it in their minds from other available options.

MCD invests in different social programs and international events such as sports on both a national and global scale. It has associated with the Olympic Games and the world cup, the two biggest sporting events in the global calendar. This kind of sponsorship reinforces their
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reputation as an international brand. Within the community McDonalds aim at improving the lifestyle of under-privileged children. They attack this global problem by addressing the problems locally in 27 countries.( Vignali, 2001). To conclude, McDonalds challenges will be continuous expansion in order to increase their profit margin. It should continue to focus on expanding in India and China because they are both developing countries with increasing economies and high populations. It should add more menu choice and variety to promote healthier lifestyles.

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3.2 Explain how and why the entry strategy of McDonalds was different in china in comparison with the rest of the world.
McDonalds only launched their first stores in China in 1990; they now have nearly 1,000 stores across China and over 50,000 employees in their workforce. In China, the development strategy is focused on opening more restaurants with drive-thrus to make the most of on the increasingly mobile population there. In the US, the drive through is a given for any fast-food service. If a person is on the go, the drive-through is a convenient option. In China, this concept was completely new and novel until recently in 2005. Before, the streets were filled with bikes. But with Chinas economic growth for the past few years, bikes evolved into motorcycles which evolved into cars. So today, there are many cars present in China. This strategy received a significant boost with the signing of a strategic partnership with Sinopec, China's largest petroleum retailer. The agreement gives McDonalds first right of refusal of co-developed drivethru restaurants at existing and new Sinopec outlets, which number more than 30,000. By doing so, McDonalds has a great choice to identify and prioritize the best locations across China. The menu in china is different but the same there is the same familiar Big Macs, Chicken McNuggets, and fries; but there are new entries targeting a more local taste including a pork sandwich. Pork and chicken have traditionally been more popular than beef among the Chinese. Raising cattle requires a lot of grazing land that China needs for farming. Even if china has a lot of development potential McDonalds had a lot to learn about the country and its culture in order to adapt. Competition was intensifying and its biggest rival being Yum Brands. When McDonalds opened its first mainland store in 1990, rival KFC had already been there for three years. Today, there are more than 1,900 KFC stores in China more than twice as many as the Golden Arches. Just like in other parts of the world, fast food appealing characteristics of taste, convenience and price are important in China as well. But due to past experiences, food safety is an issue in china. Safe food handling practices are still largely unknown and corruption is crawling in restaurants kitchen. Food safety concerns are one reason all Chinese McDonalds stores have hand washing stations and hand sanitizers right out in the main restaurant. And behind the scenes, McDonalds says its stores, and its Chinese suppliers meet the same standards as those in the U.S. Food
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safety is one more strength McDonalds is hoping to market in China. It has also been a major sponsor of the 2008 Olympics in Beijing. McDonalds could not enter china through franchising because the Chinese franchise law did not exist when MCDs wanted to penetrate the market of mainland China in 1990.The entry mode in China, owing to the Chinese governments regulations and policies, were either wholly owned by the company or jointly-owned, contrary to the setting up of franchising stores elsewhere. McDonalds has established a joint venture with Beijing Agricultural, Industrial and Commercial Federal Corporation to expand its presence in the domestic market. It was a slow and risky process. The main reason why McDonalds chose this partner is that the department of agriculture is controlled by the government of china and in order to receive agricultural supplies, McDonalds needs the departments approval. This venture brought down barriers concerning agricultural products and suppliers relationships. Peter Chen, president of McDonalds China Development Company said that given China's large territory, it is hard to promote McDonalds to various regions without help from a franchising system, especially in the small and medium cities and the far hinterland regions (China Daily, 2001)

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Question 4
Explain some of McDonalds efforts to localize its offerings in china and describe how successful these efforts were. When McDonalds entered china, fast food was not something new because rival KFC was already present and stalls of light Chinese food were present on the streets. The food culture in China is vastly different from that in the West, but the food culture, lifestyles and legal structure were altering as a result of economic growth and massive urbanization. McDonalds had the ability to adapt to local conditions based on its vast experience from other countries and its business mantra think global, act local. By entering into a joint venture with the department of agriculture, many of the barriers to access local primary ingredients fell. By 2006, 95% of materials employed by McDonalds in its supply chain for the Chinese market (e.g., beef, potatoes, milk and vegetables) were sourced from the country (Ko, 2008). Chinese prefer chicken and pork over beef. McDonalds has capitalized on this preference by providing different chicken burgers and even chicken wings. Side items, which would have seemed out of place in America, such as seafood soup, are available from time to time. However McDonalds tried to provide rice patties since rice is the staple food of china. This effort was surprisingly not appreciated by the Chinese who didnt like the product. During the Chinese festivals McDonalds makes special efforts to decorate its stores to welcome its customers and be part of their culture. Red traditional Chinese decorations, luck charms and objects symbolizing prosperity are used. Special festive food items such prosperity burger are also sold during these periods and are very popular. With fast economic growth, the traditional bicycles in china were replaced by cars. Urbanization changed the lifestyle of young adults who were more and more influenced by the western culture. Then came the idea of introducing drive thrus restaurants and 24 hour services in partnership with Sinopec petrol stations. Another change in lifestyle was the popularity of
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internet shopping among chinas younger generation. To increase its exposure and attract these internet users, McDonalds china partnered with a popular Chinese online shopping site, taobao.com, in September 2007 to give online shoppers coupons for McDonalds food and other promotional items. The partnership was successful since it gave McDonalds greater online presence than its direct competitors (Ko, 2008). McDonalds has targeted chinese children by creating a McKids in China (unique concept to develop products in the country). This retail store offers clothing, toys, books, videos, etc. however this is a deviation from the core competency of McDonalds which is fast food and it was therefore very difficult to manage this junior mckid brand. In 2008, for the Olympic games, the company slogan for its marketing campaigns in china Im loving it when china wins triggered criticism back in the US; Brian Sullivan, the American news anchor for the fox business channel openly commented supporting the host nation is one thing.. and youre [McDonalds] spending a lot of money on the games and its appreciated. But show your appreciation to the American athletes and dont openly pander to chinas Olympic fervor. Remember: you are an American company. You were built here (Ko, 2008). To conclude, McDonalds has chosen to play the card of nationalism in china and it should continue to do so as it boost up sales and increase its acceptance on the market. However McDonalds should not overdo it and attract such criticism as mentioned above. Moreover, the youngsters in china are more and more attracted towards the western culture and McDonalds should always keep its signature offerings such as its long fries in any country it chooses to enter.

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Question 5
Discuss the challenges that McDonalds faced when entering the Chinese market and to expand its operations. The two diagrams below show the cultural dimensions of the Geert Hofstede model for the United States and China. (itim international, 2009)

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China has a high PDI score as compared to the US. This indicates a high level of wealth inequality in the country and is accepted by the population as their cultural inheritance. However in the US, discrimination is much less accepted and there are more communications across power levels in society and within the family. The following traditional values in relation to the high PDI in China need to be taken into consideration by McDonalds: Greetings are done in order of age and the oldest person in the family needs to be greeted first. In china status is given by age, qualifications and profession. A person should be addressed by his/her title and never by his/her first name. McDonalds American business negotiators need to respect these values when dealing with their suppliers in china. Senior staff members are usually given the role of communicating and making announcements to general staff. This hierarchy should be respected when addressing to the Chinese McDonalds employees. Chinese sometimes do not say things directly and Americans need to learn how to interpret their way of talking and behavior. For example, answers like "we will see," or "let us think about it" actually mean "no" in the non-confrontational Chinese society. One should also avoid asking pointed questions in China. The IDV score in china is very low as compared to that of the US. This may be attributed, in part, to the high level of importance on a collectivist society by the communist rule, as compared to one of individualism. The low individualism ranking is manifest in a close and committed member 'group', be that a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount. The society fosters strong relationships where everyone takes responsibility for fellow members of their group (itim international, 2009).

US has one of the highest IDV ranking that shows that individuals have loose bond with others, which is the complete opposite of China. McDonalds needs to work upon building lasting business relationships to succeed and maintain a smooth flow without disruption in its supply chain. This is what McDonalds aimed at when partnering with the Beijing department of
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agriculture. Since Chinese like to work with people they know, this partnership brought down barriers to the manufacturing products needed at its restaurants. The low IDV score in China implies that decisions are not taken by one individual in a company but after a series of consultation among themselves. This is the opposite of what happens in America.

Geert Hofstede analysis for China has Long-term Orientation (LTO) the highest-ranking factor (118), which is true for all Asian cultures. This Dimension indicates a society's time perspective and an attitude of perseverance; that is, overcoming obstacles with time, if not with will and strength. However LTO is very low for US. This low LTO ranking is indicative of the societys belief in meeting its obligations and tends to reflect an appreciation for cultural traditions.

MAS is 62 for the US while china has a score near the world average of 50. Gender differentiation of roles is high in US and women will tend to become more assertive and competitive, moving away from their female role. This is not the case for china where the gap between mens values and womens value is smaller than that in US.

The last Geert Hofstede Dimension for the US is Uncertainty Avoidance (UAI), with a ranking of 46, compared to the world average of 64. A low ranking in the Uncertainty Avoidance Dimension is indicative of a society that has fewer rules and does not attempt to control all outcomes and results. The US also has a greater level of tolerance of variety of ideas, thoughts, and beliefs. China has a low UAI of around 32. When holding a meeting with Chinese, one must take into consideration the fact that the latter like to have an objective (clear subject of the meeting) but with no rigid agenda defined such that the case is built around the questions they will ask. There are frequent meeting rescheduling in China and one has to always confirm a scheduled meeting 1-2 days before.

Another aspect which is a challenge in China is to get customers to like beef. McDonalds had done educational beef advertising campaigns to attract especially young Chinese people. McDonalds is using many marketing channels to challenge young Chinese people. You can
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register within stores as a beef person, join the beef club online, share in the beef experiences of stars, and of course engage nutritionists from the China beef promotion. All of this just goes to show, the nutritional value of beef will be ingrained in the minds of Chinese consumers (The China Expat, 2011). Advertising in China has also been a challenge. In 2005, there has been a controversial advertisement where a man was down on his knees begging for discount in a shop. The voiceover informed that contrary to the shop, McDonalds offers discounts 365 days a year. The Chinese vehement reactions were negative and they perceived the ad as degrading them to beggars. The ad stopped running after a few days and McDonalds had to publish a declaration to explain the ad and express regrets. This kind of misunderstanding could have been very bad for McDonalds image and sales in china. It shows a non-respect of the Chinese cultural values. Even if there was no advertising laws to prevent this ad from being shown to the public. McDonalds should have better understood the unwritten powerful rules of the Chinese society

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Question 6
Where do you think the best opportunities for future growth lie for McDonalds? Why? McDonalds should focus on maintaining its core strengths while carefully experimenting with new options. The greatest strength was creating an image in the minds of the people and introducing them to the fast food culture. Delivery speed, customer care and cleanliness are the core strengths on which the stores expanded. McDonalds should continue to rapidly expand its operations whether by franchising or by opening its own restaurants. The more it creates its presence all over the world the more successful it will be in establishing the brand image and logo in the minds of millions of people. It can also leverage the brand through the introduction of new products. This is something which has been ongoing at McDonalds whereby it has even tried to get shares of market through the introduction of different products such as coffee and smoothies. McDonalds should continue to focus on customer relationship management and monetizing their customer base by collecting and analysing their customer data. McDonalds was looking for improved functionality for their customer satisfaction group as well as a tool that provided the company with real-time access, via flexible and comprehensive reporting, to the data that was collected from customers each day. "The Astute product was exactly what we were searching for," explained Christopher Garrity, director, McDonalds Customer Satisfaction Department (Astute Inc, 2001) The tool allows McDonalds to strengthen the brand and improve customer relationship To keep up with rapidly changing consumer preferences, demographics and spending patterns, McDonalds has introduced new items. The strategy reflects the philosophy that novelty, as opposed to loyalty to traditional products is the key determinant of sales in the fast food industry. In line with the innovation of what McDonalds already brings, it could go to the next level and launch higher-end restaurants under new brands that wouldnt be saddled with McDonalds fastfood image. The companys environment efforts, should not overshadow its marketing initiatives, but should be more visible in Corporate Social Responsibility, packaging, in-store layout, etc. McDonalds has its own customized software McEnvi which is a tracking software with filtering options that
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supports planning and tracking of waste quantities and costs. With McEnvi Environment Coordinators can forecast the amount of waste for the coming period and easily monitor such things as the frequency of cleaning grease traps or the income from the sale of used cooking oil. Innovative design solution will enable customers to separate waste and increase recycling. McDonalds should support sport and healthy living. One example is that McDonalds has partnered with weightwatchers in Australia to promote three of its menus as health food. This kind of initiative should be extended to the rest of the world. Moreover McDonalds should continue to support sports events and expand this initiative globally as well. To conclude, the Fast food industry is becoming an increasingly competitive sector. MacDonalds keeps up with competitors through expensive promotional campaigns which leads to limited margins to gain market share.(st Johns, 2005). McDonalds has opportunities for growth but not domestically where it has already saturated the market. It should focus on its operations abroad specially in fast developing countries like India and China where the potential of the market is huge. It should innovate to adapt to the local taste of Indians and Chinese but should keep an eye on maintaining its core strengths of quality and consistency.

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