INTERNATIONAL MARKETING

A PROJECT REPORT ON INTERNATIONAL MARKETING OF

MACDONALD’S

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD

OF THE M.COM DEGREE OF

MASTER IN COMMERCE
(MANAGEMENT)

SUBMITTED TO
UNIVERSITY OF MUMBAI,
LALA LAJPATRAI COLLEGE,MAHALAXMI,MUMBAI

SUBMITTED BY
NAME OF THE STUDENT UNIVERSITY ROLL NO
RAMSHA SHAIKH

SUPERVISED BY

OCTOBER 2016
 CERTIFICATION

I hereby certify that the work which is being presented in the M.Com internal project report
entitled “_________________________________”, in partial fulfillment of requirements for
the award of Masters of Commerce in management and submitted to Lala Lajpatrai College of
commerce and economics, Mahalaxmi, Mumbai 400034 is an authentic record of my own work
carried out under the supervision of _____________. The matter presented in this project report
has not been submitted by me for the award of any other degree elsewhere.

Signature of student:

Signature of supervisor:

Internal Examinar:

External examiner:

College stamp Principal

ACKNOWLEDGEMENT

I would like to place on record my deep sense of gratitude to Prof____________, Dept. of for
his generous guidance, help and useful suggestions.
I express my sincere gratitude to Prof.___________, for his stimulating guidance, continuous
encouragement and supervision throughout the course of present work.

I also wish to extend my thanks to Prof.___________ and the colleagues for attending my
seminar and for their insightful comment and constructive suggestions to improve the quality of
this project work.

I am extremely thankful to ______ coordinator and Principal ___________,for providing me

infrastructure facilities to work in without which work would not have been possible.

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TABLE OF CONTENT
 CHAPTER 1
INTRODUCTION TO INTERNATIONAL MARKETING

International marketing is the export, franchising, joint venture or full direct entry of an
organization's product or services into another country. This can be achieved by exporting a
company's product into another location, entry through a joint venture with another firm in the
target country, or foreign direct investment into the target country. The development of the
marketing mix for that country is then required - international marketing. It can be as
straightforward as using existing marketing strategies, mix and tools for export on the one side,
to a highly complex relationship strategy including localization, local product offerings,
pricing, production and distribution with customized promotions, offers, website, social media
and leadership. Internationalization and international marketing meets the needs of selected
foreign countries where a company's value can be exported and there is inter-firm and firm
learning, optimization and efficiency in economies of scale and scope. The firm does not need
to export or enter all world markets to be considered an international marketer.

Today, more and more businesses are exporting, importing and/or manufacturing their goods
with other countries. The companies that are not involved in international business also feel the
effects of their customers and competitors that are doing business overseas. As competition
continues to increase, the number of companies doing business with the United States
will only continue to decrease.1

There are many companies that sell a large portion of their goods overseas and depend on
those profits to survive. Now companies do not look at the United States as their only
opportunity for business but look at the whole world as a possible place for their business
activities.

When companies decide to go overseas with their products there are many environmental
forces that the marketer will have to confront and adapt to. For example, the foreign
uncontrollable elements include: political/legal forces, economic, competitive social and
cultural forces, the level of technology, physical and geographical. The marketer may find it
easier to deal with the marketing controllable.
RESEARCH METHODOLOGY

Research methodology commonly refers to the the process used to collect information and data
for the purpose of making business decisions. The methodology may include publication
research, interviews, surveys and other research techniques, and could include both present and
historical information.

Research in simple terms refers to search for knowledge. It is a scientific and systematic search
for information on a particular topic or issue. It is also known as the art of scientific
investigation. Several social scientists have defined research in different ways.

In the Encyclopedia of Social Sciences, D. Slesinger and M. Stephension (1930) defined

research as “the manipulation of things, concepts or symbols for the purpose of generalizing to
extend, correct or verify knowledge, whether that knowledge aids in the construction of theory
or in the practice of an art”.

Research plan
Research approach: Explanatory method
Data sources :

Primary source:

Primary sources of data are the data which needs the personal efforts of collect it and which are
not readily available. Primary source of data is the other type of source through which the data
was collected.
Following are few ways by which data was collected:
1. Questionnaire: it is the set of questions on a sheet of paper was being given to fill it,
based on which the data was interpreted.
2. Observation method
3. Interview method

Secondary sources:

Secondary sources are the other important source through which the data was collected. These
are readily availably sources of data which need not put much efforts to collect it because it is
already been collected and part in an elderly by some researcher, experts and special.

The secondary sources helpful for the study were:

1. Text books were referred.
2. Internet was made use doe the collection of data.
3. Newspaper were also referred
4. Magazines were referred.
Objective of the study

Limitation of the study

 CHAPTER 3
LITERATURE REVIEW

Growing globalization in recent decades has been responsible for the emergence of a new
stream of research focusing on international marketing. The purpose of this paper is to report
the findings of a study that assesses the contribution of leading mainstream marketing journals
to the international marketing discipline. The scope of research provided a balanced coverage
of country settings, methodological aspects, sample sizes, response rates and analytical
methods improved over time with issues pertaining to the macro-environment, marketing mix
and buyer behaviour attracting heightened attention.[1]

The marketing capabilities have positive effects on firms’ international performance.

Marketing capabilities foster international commitment and influence the choice of
international entry mode. Specifically, it demonstrates that marketing capabilities influence
both the international commitment of the company and the selection of the
appropriate international mode of entry.[2]

The recent explosion of international business activity on the World Wide Web will have a
profound impact on the practice of international marketing. The Internet-enabled international
marketing, provides a low cost gateway to global markets for small and medium-sized
enterprises.[3]

E-marketing is growing at a dramatic pace and is significantly impacting customer and business
market behaviors. Most firms have started developing e-marketing strategies for the Web. The
paper proposes that the evolution of e-marketing strategies is based on the countries
infrastructure and marketing institutional development. [4]

The author investigate the influence of various factors on international marketing namely,
collaboration with foreign counterparts, autonomy and international experience. Low and high
levels of international experience positively influence project creativity, whereas
moderate international experience negatively influences project creativity.[5]

In the light of the growing importance of policy for international marketing practice, a case is
made for an increase in policy oriented international marketing work in academia by presenting
some key policy issues and developing international marketing research dimensions associated
with these issues.[6]
International schools are a growing class of educational institution. It has been suggested that
few schools of this type have a marketing plan while research into development planning
showed that few had a long-range plan. [7]

International marketing has performed extremely well during the second-half of the twentieth
century. This paper examines the outstanding performance from different perspectives and
evaluates the future of international marketing in the age of globalization.[8]

The authors found that often focus on export and global marketing, with consumer behavior
and branding being the fastest growing concerns. a mature and leading journal in the field
of international business, International Marketing Review IMR’s frequent contributors consist
of world renowned experts in international marketing and business and the authors of IMR use
a wide variety of data collection and analysis methods.[9]

The paper examines how ethics in international marketing have evolved and progressed
towards the current ethics era and presents discussion surrounding the role and value of an
ethical approach towards marketing in a global marketplace. Essentially the paper argues that
marketers should creatively embrace the complex challenges of the international marketplace
by rethinking their approach to marketing ethics.[10]

(Johansen & Vahlne, 1977 and 1990)

. This view of internationalexpansion is not inconsistent with the options value approach, where
firms also commit resourcesonly gradually and thus have occasion to update their evaluation of
different opportunities.Internationalization theory, however, with its focus on risk aversion, also
suggests that firms expandabroad only once they have exhausted opportunities within their
home market, and that they then
expand first in markets that are ―familiar‖ to them, namely markets similar culturally or in
close
geographic proximity to those they are already in, and that they exhaust opportunities in each
market before moving into new ones. Economic theory suggests instead that the firm will conti
nuously pursue best opportunities across all markets.
 CHAPTER 3
INTERNATIONAL MARKETING

DIFFRENCE BETWEEN DOMESTIC MARKETING AND

INTERNATIONAL MARKETING

Marketing is the process of focusing the resources and objectives of an organisation on

environmental opportunities and needs. It is a universal discipline. However, markets and
customers are different and hence the practice of marketing should be fine tuned and adjusted
to the local conditions of a given country. The marketing man must understand that each person
is different and so also each country which means that both experience and techniques obtained
and successful in one country or countries. Every country has a different set of customers and
even within a country there are different sub-sets of customers, distribution channels and media
are different. If that is so, for each country there must be a unique marketing plan. For instance,
nestle tried to transfer its successful four – flavour coffee from Europe to the united states lost a
1% market share in the us.

It is important in international marketing to recognize the extent to which marketing plans and
programmes can be extended to the world and the extent to which marketing plans must be
adapted. Prof.Theodore Levitt thought that the global village or the world as a whole was a
homogeneous entity from the marketing point of view. He advocated organisation to develop
standardized high quality word products and market them around the world using standardized
advertising, pricing and distribution. The companies who followed Prof. Levitt’s prescription
had to fail and a notable failure amongst them was Parker pen. Carl Spiel Vogel, Chairman and
CEO of the Backer Spiel Vogel Bates worldwide advertising agency expressed his view that
Levitt’s idea of a homogeneous world is non – sensible and the global success of Coca Cola
proved that Prof. Levitt was wrong.

The success of Coca Cola was not based on total standardization of marketing mix. According
to Kenichi Ohmae, Coke succeeded in Japan because the company spent a huge amount of time
and money in Japan to become an insider. Coca Cola build a complete local infrastructure with
its sales force and vending machine operations. According to Ohmae, Coke’s success in Japan
was due to the ability of the company to achieve global localisation or ‘Glocalisation’ i.e. the
ability to be an insider or a local company and still reap the benefits of global operations. Think
global and act local is the meaning of Glocalisation and to be successful in international
marketing, companies must have the ability to think global and act local.

International marketing requires managers to behave both globally and locally simultaneously
by responding to similarities and dissimilarities in international markets. Glocalisation can be a
source of competitive advantage. By adapting sales promotion, distribution and customer
service to local needs, Coke capture 78% of soft drink market share in Japan. Apart from the
flagship brand Coca Cola, the company produces 200 other non- alcoholic beverages to suit
local beverages.

There are other companies who have created strong international brands through international
marketing. For instance, Philip Morris has made Marlboro the number one cigarette brand in
the world. In automobiles, Daimler Chrysler gained global recognition for its Mercedes brand
like his competitor Bayerische. Mc Donald’s has designed a restaurant system that can be set up
anywhere in the world. Mc Donald’s customizes its menu in accordance with local eating
habits.
SCOPE OF INTERNATIONAL MARKETING

International Marketing constitutes the following areas of business:-

Exports and Imports: International trade can be a good beginning to venture into international
marketing. By developing international markets for domestically produced goods and services a
company can reduce the risk of operating internationally, gain adequate experience and then go
on to set up manufacturing and marketing facilities abroad.
Contractual Agreements: Patent licensing, turn key operations, co – production, technical and
managerial know – how and licensing agreements are all a part of international marketing.
Licensing includes a number of contractual agreements whereby intangible assets such as
patents, trade secrets, know – how, trade marks and brand names are made available to foreign
firms in return for a fee.

Joint Ventures: A form of collaborative association for a considerable period is known as joint
venture. A joint venture comes into existence when a foreign investor acquires interest in a
local company and vice versa or when overseas and local firms jointly form a new firm. In
countries where fully owned firms are not allowed to operate, joint venture is the alternative.
Wholly owned manufacturing: A company with long term interest in a foreign market may
establish fully owned manufacturing facilities. Factors like trade barriers, cost differences,
government policies etc. encourage the setting up of production facilities in foreign markets.
Manufacturing abroad provides the firm with total control over quality and production.
Contract manufacturing: When a firm enters into a contract with other firm in foreign country
to manufacture assembles the products and retains product marketing with itself, it is known as
contract manufacturing. Contract manufacturing has important advantages such as low risk,
low cost and easy exit.

Management contracting: Under a management contract the supplier brings a package of skills
that will provide an integrated service to the client without incurring the risk and benefit of
ownership.

Third country location: When there is no commercial transactions between two countries due to
various reasons, firm which wants to enter into the market of another nation, will have to
operate from a third country base. For instance, Taiwan’s entry into china through bases in
Hong Kong.

Mergers and Acquisitions: Mergers and Acquisitions provide access to markets, distribution
network, new technology and patent rights. It also reduces the level of competition for firms
which either merge or acquires.

Strategic alliances:
A firm is able to improve the long term competitive advantage by forming a strategic alliance
with its competitors. The objective of a strategic alliance is to leverage critical capabilities,
increase the flow of innovation and increase flexibility in responding to market and
technological changes. Strategic alliance differs according to purpose and structure. On the
basis of purpose, strategic alliance can be classified as follows:
i. Technology developed alliances like research consortia, simultaneous engineering
agreements, licensing or joint development agreements.
ii. Marketing, sales and services alliances in which a company makes use of the marketing
infrastructure of another company in the foreign market for its products.
iii. Multiple activity alliance involves the combining of two or more types of alliances. For
instance technology development and operations alliances are generally multi- country
alliances.
On the basis of structure, strategic alliance can be equity based or non equity based.
Technology transfer agreements, licensing agreements, marketing agreements are non equity
based strategic alliances.

Counter trade: Counter trade is a form of international trade in which export and import
transactions are directly interlinked i.e. import of goods are paid by export of goods. It is
therefore a form of barter between countries. Counter trade strategy is generally used by UDCs
to increase their exports. However, it is also used by MNCs to enter foreign markets. For
instance, PepsiCo’s entry in the former USSR. There are different forms of counter trade such
as barter, buy back, compensation deal and counter purchase. In case of barter, goods of equal
value are directly exchanged without the involvement of monetary exchange. Under a buy back
agreement, the supplier of a plant, equipment or technology. Payments may be partly made in
kind and partly in cash. In a compensation deal the seller receives a part of the payment in cash
and the rest in kind. In case of a counter purchase agreement the seller receives the full
payment in cash but agrees to spend an equal amount of money in that country in a given
period.
STRATEGIES FOR GLOBALISATION:

When a company makes the commitment to go international, it must choose an entry strategy.
This decision should reflect an analysis of market potential, company capabilities and the
degree of marketing involvement and commitment management is prepared to make. The
approach to foreign marketing can range from minimal investment with infrequent and indirect
exporting with little thought given to market development, to large investments of capital and
management in an effort to capture and maintain a permanent, specific share of world markets.
Depending on the firm’s objectives and market characteristics, either approach can be
profitable. In fact, a company in various country markets may employ a variety of entry modes
since each country market poses a different set of conditions. Having more than one strategy
allows the company to match its expertise with the specific needs of each country market.

The various strategies available to Indian firms to enter the international environment are
discussed as follows:

EXPORTING

Exporting is perhaps the first step for a company to go global. It is the first of the attempts to
understand the international environment develop markets abroad.
Exporting can be direct or indirect. With direct exporting the company sells to a customer in
another country. This is the most common approach employed by companies taking their first
international step because the risks of financial loss can be minimized. In contrast, indirect
exporting usually means that the company sells to a buyer in the home country who in turn
exports the product. Customers include large retailers like Wal-Mart or Sears, Wholesale supply
houses, trading companies, and others that buy to supply customers abroad.
In a global environment, the sourcing of finance, materials, managerial inputs etc. will also be
global. However, with 0.5 percent share in the world trade, India is an insignificant player.
There are a number of products with large export potential but these have not been tapped
properly..

FOREIGNINVESTMENT

It refers to investment in foreign country. Foreign investment by Indian Companies have been
negligible because of factors such as assured domestic market, want of global orientation,
protective government regulation etc. However, this inward orientation has undergone
substantial change after the adoption of the new economic policy 1991. With the economic
liberalization and growing global orientation, many Indian firms are setting up manufacturing, .
Further, through acquisition route, Indian companies have made substantial investments abroad.
The Aditya Birla Group has been pioneer in making foreign investments much before the
adoption of the new economic credo. Indian companies are also setting up production bases in
foreign countries to get an easy entry into the regional trade blocks. For instance, a production
facility in Mexico opens the doors to the NAFTA area for Arvind Mills. Yet another example is
that of Cheminoor Drugs by Dr. Reddy’s Labs in New Jersey which is set up as a subsidiary.

MERGERSANDACQUISITIONS

In merger, two companies come together but only one survives and the other goes out of
existence as it is merged in the other company. While in acquisition, one company (acquirer)
gets control over the other company (acquired) at the willingness of each of the companies.
Mergers and acquisitions is an important entry strategy in international business. Mergers and
acquisitions can be used to acquire new technology, reduce the level of competition and
provides quick access to markets and distribution network. Many Indian firms have resorted to
the acquisition route to gain a foothold in the foreign market. For instance, Indian companies
had spent $ 711.4 million in acquisitions abroad in 2000 in industries such as InfoTech, drugs
and pharmaceuticals, paints, tele-communication, petroleum and broadcasting. Some of the
major acquisitions include investments by Zee Telefilms, Leading Edge System BPL Software
and Tata Tea. Dataline Transcription, Teamasia semiconductors, Goa Carbons, Wockhordt and
Acro lab are few other firms to name from a long list.
England.

JOINTVENTURES

Joint Ventures as a means of foreign market entry have accelerated sharply since the 970s. Joint
ventures refer to joining with foreign companies to produce or market the products or services.
Besides serving as a means of lessening political and economical risks by the amount of the
partner’s contribution to the venture, JVs provide a less risky way to enter markets that pose
legal and cultural barriers than would be the case in an acquisition of an existing company..

STRATEGICALLIANCE:

A Strategic International Alliance (SIA) is a business relationship established by two or more

companies to cooperate out of mutual need and to share risk in achieving a common objective.
It is an agreement between companies that is of strategic importance to one or both companies’
competitive viability. Strategy refers to the means to fulfill company’s objectives. In every day
business, the term ‘strategic alliance’ is generally used to describe a wide variety of
collaborations, irrespective of strategic importance. In a strategic alliance, a firm could
establish relationships with organization that have the potential to add values. Bench marking,
re-engineering, outsourcing, merger and acquisition are examples of strategic alliance.
On the basis of structure, strategic alliances can be classified into equity based and non- equity
based..

LICENSING AND FRANCHISING:

A means of establishing a foothold in foreign markets without large capital outlays is licensing.
It is a favorite strategy for small and medium sized companies. International licensing helps a
firm from one country (licensor) to permit another firm in a foreign country (licensee) to use its
intellectual property such as patents, trademarks, copyrights, technology, technical know-how,
marketing skill etc. in return for royal payments. Royal payments or license fee is regulated in
most of the countries.
The advantages of licensing are most apparent when: capital is scarce, import restrictions forbid
other means of entry, a country is sensitive to foreign ownership, or it is necessary to protect
trademarks and patents against cancellation of nonuse.
An important risk of licensing is that the licensor may give birth to his own competitor i.e. the
licensee can become a competitor after the expiry of the licensing agreement. The only anti-
dote that is available to the licensor to pre-empt any potential or actual competition is
continuous innovation. Only innovation will provide sustainable competitive advantage.
Franchising is a form of licensing in which a parent company (franchiser) grants another
company (franchisee) the right to do business in a specific manner.
Nature of International Marketing

1. Broader market is available – Unlike domestic marketing the market is not restricted to
national population. Population of other countries can also be targeted in international
marketing.

2. Involves at least two set of uncontrollable variables – In domestic marketing the

marketers have to interact with only one set of uncontrollable variables. In international
marketing at least two set of uncontrollable variables are involved or more if the marketing
organization deals in more countries.

3. Requires broader competence – Special management skills and broader competence is

required in international marketing/business.

4. Competition is intense – An international marketing organization has to compete with both

the domestic competitors and the international competitors. Hence, the competition is intense in
international marketing.

5. Involve high risk and challenges – International marketing is prove to various kinds of risk
and challenge like – political risk, cultural differences, changes in fashion and style of foreign
customers, sudden war, changes in government rules and regulations, communication
challenges due to language and cultural barriers, etc,.
 CHAPTER 2
MACDONALD’S

The McDonald's Corporation is the world's largest chain of hamburger fast food restaurants,
serving around 68 million customers daily in 118 countries. Headquartered in the United States,
the company began in 1940 as a barbecue restaurant operated by Richard and Maurice
McDonald; in1948 they reorganized their business as a hamburger stand using production line
principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He
subsequently purchased the chain from the McDonald brothers and oversaw its worldwide
growth. A McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation
itself. McDonald’s Corporation revenues come from the rent, royalties, and fees paid by the
franchisees, swell as sales in company-operated restaurants. In 2012, McDonald's Corporation
had annual revenues of $27.5 billion, and profits of $5.5 billion. McDonald’s primarily sells
hamburgers, cheeseburgers, chicken, French fries, breakfast items, soft drinks, milkshakes, and
desserts. In response to changing consumer tastes, the company has expanded its menu to
include salads, fish, wraps, smoothies, and fruit. McDonald’s restaurants are found in 118
countries and territories around the world and serve 68million customers each day. McDonald's
operates over 32,000 restaurants worldwide, employing more than 1.7 million people.
The company also operates other restaurant brands, such as Piles Café.

Focusing on its core brand, McDonald's began divesting itself of other chains it had acquired
during the 1990s. The company owned a majority stake in Chipotle Mexican Grill until
October 2006, when McDonald’s fully divested from Chipotle through a stock exchange. Until
December 2003, it also owned Donates Pizza. On August 27, 2007, McDonald's sold Boston
Market to Sun Capital Partners. Notably, McDonald's has increased shareholder dividends for
25 consecutive years, making it one of the S&P 500 Dividend Aristocrats. In October 2012, its
monthly sales fell for the first time in nine years.
BUSINESS STRATEGIES ADOPTED BY MC DONALD

MCD has diversified its locations by operating over 32,500 restaurants in 118
countries, which decry eases the company‘s
Exposure to the intensely competitive fast food industry in the United States.
Also, MCD serves an average of 68 million consumers each day. This per day figure has
Increased
By $14 million (30%) since 2001 and $2 million over the past year. MCD currently divides its
revenues into four segments: the United States, Europe, the APMEA(Asia, Pacific, Middle
East, and Africa segment), and other countries (i.e. Canada and Latin America and corporate
sales). Almost 65% of MCD sales are derived internationally. MCD focuses both
on penetrating emerging markets and expanding in developed markets

But just being McDonald's isn't enough. It’s doing a lot, domestically and globally, to stay
ahead. Here are ten strategies that are keeping McDonald's barreling forward:
 Focusing heavily on emerging markets
McDonald's may seem like it's already everywhere, but it hasn't quite saturated the world yet.
Over the past few years, McDonald's has made a heavy push toward emerging markets. And
not just trendy markets like China and India, but places previously devoid of the Golden
Arches, like some African nations. Sales are up 8.1% from last year in Asia/Pacific, Africa and
the Middle East. Still, China is McDonald's most important international front, where
it's battling Yum brands whole heartedly. It plans to have a whopping 2,000 stores there by2013
.

 McCafe has been a big win

The McCafe has been demolishing expectations ever since the company started revving units
marketing machine for it in 2002. Now, there are 1,300 McCafé's worldwide in dozens of
countries, and it just keeps growing. Its latest moves have been to Ukraine, along with national
rollout in Canada. The McCafé menu has been growing as well, adding non-coffee items like
smoothies over the past couple years.

 Offering a wider variety of food to attract more segments

It's not just snack foods and desserts that it's expanding into There’s a whole lot more.
McDonald’s is trying to get more consumer segments to chomp up its offerings by expanding
on-traditional menu items, while keeping its core base of burgers-and-fries eaters. Many of the
new items help combat McDonald's ever-present negative image of unhealthiness, thought will
likely never shake it fully. For instance, oatmeal has been a big hit for McDonald’s, serving as a
replacement for high-calorie breakfast sandwiches. Additional types of salads have worked too,
for people looking for a somewhat healthier option.

 Delivering food to customers in places that demand it

Though not traditional in the US, McDonald's delivers in many markets around the world, and
the company cites it as one of the reasons it has been so successful in those markets. Delivery is
a common practice, even for fancy restaurants, in many Asian and Middle Eastern cities, so
McDonald's is just meeting the cultural norms of its surroundings.

 Making its stores more attractive to get customers in

McDonald's is improving its physical locations to make them more appealing to customers, and
it seems to be working. In China, it's trying out a "Less is more" concept design, which goes
with softer colors and cushioned seats. Also, over 95% of McDonald's locations have extended
their hours now, and it has several thousand stores that are open 24/7. Free Wife now available
in McDonald's restaurants across the world, and lately it has made a big pushto get flat screen
TVs in the stores. It's even starting up its own TV channel with original programming, called
McTV

 Increasing its offering of snack items

Americans love to snack on stuff, and McDonald's has recognized that demand and
answeredwith a plethora of new products. Smaller items like wraps, along with an
expansion intodesserts (which it plans to ramp up soon), have made their way onto the menu
and have donewell.

 Shortening its menu cycle

The most prominent example of this is the McRib, making an unprecedented second
nationalappearance in two years. It took front and center this fall and was incredibly
successful,driving a 4.9% gain in same store sales. Special edition McFlurries have been in and
out ofmenus too, along with limited time smoothies. This sort of menu cycle is a move toward
amore European model, which swaps out new menu items every six-to-eight weeks,
reports Nation's Restaurant News.
  Importing more of its successful niche products internationally
McDonald's has an incredible variety of culture-specific food items across the planet, andmost
wouldn't stand a chance internationally. But some are winners, and the company hasstarted to
test them out in other markets. One example is Australia's Chicken McBites
(think popcorn chicken), which are now being tested in Detroit, Michigan. Then there are full-
sizewraps, common in Europe, which are being tested in new markets like the U.K. They have
so many of these products that some are bound to be hits, it just has to find the correct area
toexpand them to.

 Expanding its dollar menu to breakfast

McDonald's fired up a breakfast dollar menu in 2010 as the economy continued to slump,which
supplemented its existing dollar menu for its usual fare. It has been working well thusfar,
capitalizing on Americans' attraction to the super-cheap in times like these. But even before
that, its breakfast business was growing, just at a lower rate than normal. Competitorslike
Burger King and Dunkin' Donuts have made their own types of dollar menu, but nobodyhas
had the widespread success that McDonald's has enjoyed.

 And it hasn't been scared to take anybody on

Many of these expansions drew looks from brand new competitors, because McDonald's
wasencroaching on their territory. In most cases, McDonald's leveraged its size and brand
toattack head on. McCafé is the most obvious example, and it has performed admirably
againstStarbucks and Dunkin' Donuts. Its upcoming expansion into desserts is likely to
concernDunkin' even more, along with niche dessert chains like Dairy Queen. But there's
plenty ofrisk in doing this. As it opens itself to more fronts than ever, it has more big, powerful
brands breathing down its neck, and even more complexity to worry about in its internal
operations.

The new strategy

In 2003 McDonald‘s switched to generating more sales from its existing restaurants. In 2013
around 90% of the company‘s growth is expected to come from incremental sales at its existing
restaurants. Capital expenditures for new restaurants decreased $544 million in 2013 because
the companyo pened fewer restaurants and focused on growing sales at existing restaurants
including reinvestment initiatives such as restaurant reimaging in several markets around the
world.

How it reached to the every corners of the world

In 1940, McDonald‘s operated only one QSR but today has restaurants at 33,000 locations in
118 countries. McDonald‘s utilizes a variety of international market entry modes for rapid
expansion:sole ventures, franchising, master franchising and joint ventures. 15% of
McDonald‘s branded restaurants are operated as sole ventures. This involves a significant
capital commitment but allows the highest degree of control. Most restaurants are operated as
franchises, allowing rapid expansion without high capital requirements. Franchising has also
allowed McDonald‘s to benefit from local knowledge, demonstrated by the menu differences
by country. The combination of the master franchisee‘s local knowledge and McDonald‘s brand
and model has been a successful formula,allowing expansion whilst maintaining significant
control. McDonald‘s has also expanded internationally through joint ventures. Again, this
allows for rapid expansion and utilizes theknowledge of firms in closely-linked markets. Since
14 both firms invest equity in the project, thereis a lower financial risk for both parties.
Using the 7P‘s of marketing mix, McDonald earned business success at every part of the globe.

 Product
McDonald‘s strives to offer a standardized service worldwide. However, the company is
embedded with an ‗entrepreneurial spirit‘ giving franchisees some local control and
creativity, providing the service offering is of a high standard. Some of the most famous
products including the Fillet o‘ Fish, the Egg McMuffin and the Big Mac were created
through franchisee innovation. Franchisees are given autonomy to adapt the productswhilst the
corporation maintains a high degree of standardization through quality control.The majority of
well-known products are usually offered in all markets unless they do notsuit local customs and
religion. For instance, Big Macs are not sold in Indian outlets as the population is primarily
Hindu. However, even ‗iconic‘ products are adjusted to local taste such as providing spicier
food in most Asian countries, allowing the company toovercome a variety of cross-cultural
barriers.

 Price
McDonald‘s has positioned itself as a fast-food outlet offering low-cost food and drink.The
affordable menu has been adapted worldwide whilst maintaining their core goal ofquality
assurance. Ongoing innovation has allowed new pricing strategies such as the Dollar Menu‘ or
its equivalent ‗Saver menu‘ in the UK. In response to increasing foodcosts, McDonald‘s opted
to increase prices by less than 1%, adopting the change gradually to the menu in order to
retain price-sensitive customers

 Place (International Distribution and Supply Chain)

Although McDonald‘s product offerings differ between countries, they operate a
standardized global supply chain. This lean operation is 100% outsourced with no back-
upsystem. The chain comprises of two tiers. Tier 2 suppliers are primarily food
producers,whilst Tier 1 suppliers are processors. For example, a Tier 2 potato farm supplies a
Tier 1 processing firm who turn the potatoes into French-
fries and potato wedges. Produce istransported to distribution centers before allocation and
delivery to individual restaurants.

 Promotion
McDonald‘s achieved 6th position on Best Global Brands 2011 as a result of continuous
promotional activities. The iconic ―Golden Arches are used in promotions globally. The ―i‘m
lovin‘ it‖ campaign, launched in 2003 used celebrity endorsement to increase their appeal to
younger consumers. Justin Timberlake was used for vocals and thecampaign was launched in
86 English-speaking countries and was adapted for non-English
speaking countries. Recently, the ―what we‘re made of‖ campaign increased transparency and
was used to fight against negative publicity regarding ingredients

 People
At McDonald‘s, service employees represent the brand at the frontline where customershave
their first interaction with the organization. It is important that staff give a goodimpression and
therefore, training is of paramount importance. Employees undergorigorous on-the-job training
in customer service, food handling and preparation. In addition, McDonald‘s provides
opportunities for managers and would -be franchisees todevelop and hone their management
skills through a dedicated facility - the HamburgerUniversity (HU).

 Process
McDonald‘s prepares and serves food rapidly. Strict guidelines and regulations arefollowed in
food preparation to ensure high standards of hygiene and food safety.Customers can usually see
the kitchen while being served, allowing transparency, socustomers can eat in confidence. Food
is mass-cooked and hot-held until service.However, due to the continual stream of customers, it
does not deteriorate before
consumption. To maintain its foothold as market leader, McDonald‘s maintains a high
degree of process standardization across all outlets to increase efficiency. This ensures thatthey
have high standards of hygiene and food safety in all outlets.

 Physical Evidence
McDonald's has a homogenous ‗look‘ across their outlets from décor to staff uniform.
Their global re-branding strategy furthers standardization, allowing consumers to areas,there
are indoor playgrounds to satisfy customers. The company ensures that al franchisees comply
with regulation regarding hygiene to maintain their reputation for cleanliness. Staff training is
standardized globally to ensure customers are treated consistently
Advantages of a franchise business and its impact on McDonald

 Franchising requires less capital than other growth methods

Franchising permits your company to grow with capital invested by individual
franchiseowners. For the majority of Fran Source clients, the investment required to franchise
their business is recouped through the sale of the first two to three franchises.

 Rapid Expansion
In today‘s marketplace, the window of opportunity for a new or unique business concept
closes very quickly. Franchising permits multiple units to be opened simultaneously, gaininga
foothold over would-be competitors.

 Market Dominance
Multiple locations increase the company‘s competitive advantage over similar type
businesses.

 Franchising puts a "business owner" in charge

Franchising ensures that qualified "managers" are operating additional locations rather
thanemployees. A new business demands a great deal of time, effort and sacrifice.
Franchiseesare motivated by their ownership of the business and the capital they have invested.

 Greater Buying Power

Franchisors that purchase products and services for their franchise network can oftennegotiate
volume discounts from vendors and suppliers. Sharing a portion of the saving with franchisees
provides higher operating margins and a competitive advantage over othersimilar businesses.

 Increased Name Recognition

As additional locations are opened, name recognition increases. In the United States,customer
loyalty towards recognized brands is at an all-time high. Consumers typically feelmore secure
frequenting a business they recognize by name. Franchising permits anindividual to benefit
from the collective power and growth of the franchise network, which inturn leads to greater
name recognition and competitive advantages for each individualfranchisee.

 Increased Advertising and Marketing Budget

Franchisees may be required to contribute a percentage of their gross sales (or a set fee) to
anadvertising fund administered by the franchisor. This enables the franchisor to advertise
inregional and/or national media for the benefit of the franchise network.

 New revenue streams are created

Franchisors earn revenue from many sources, including:

The external environment and its effect on strategic marketing planning of

McDonald
  Political/legal factors
Political environment consists of the government activities covering the economy and
itssubdivisions. Ecological regulation, business margins, tariffs, income tax policy, labor
ruleand political constancy are some of the main components of it. The safety, schooling,
andinfrastructure of a nation are also the concern of government. While operating globally,
different types of taxes cover up a significant company obligation.Countries with strong
consumer protection laws may associate great costs if there is aviolation in product quality or
service through litigations and lawsuits.

 Economic factors:
Economic expansion, the rates of interest, exchange and inflation comprises the overall
economic environment. They extremely affect a business‘s function and core decisions. Cost of
capital is the main determinant of a business escalation and growth. This cost of capitaloften
fluctuates with the movement of interest rates whereas exchange rates affect the cost
ofexporting and price of imports

 Product lines and pricing:

McDonald's first and foremost sells hamburgers, french fries, soft drinks, breakfast
items,various types of chicken sandwiches and desserts. In most markets, McDonald's also
offerssalads and vegetarian items, squashing and other unique local products. Soup type
productsare served only in some selected countries like Portugal etc. And for this special
deviation from its standard menu helps McDonald‘s to be popular among the countries other
than its homeland. Sometimes this difference is employed either for regional food taboos
andreligious prohibition like the one in India as no beef is served there. In India, non-
vegetarianmenu contain s chicken and fish items only.

 Customer’s preference:
With a brand value of $49.5 billion, McDonald‘s has grown 49 percent in worth and now is the
most favored brand in the fast-food group. McDonald‘s innovative choice and
givingimportance to the people‘s ever-changing demand with due progress, technology and
development is the key to McDonald‘s present situation. Now a day fast food cafes are
becoming the dining hall of the majority for superior child-size menus, playing
grounds andimpulsive branding crusades.

 Competitors:
One of the environmental factors surrounding McDonald‘s is the fierce competition from
thecompetitors. There is an intensive price war, extreme battle of innovations, breakthrough
andserious promotions and advertisements. Different competitors in the global fast food
industryare now just going mad about increasing competition that led to aggressive pricing
strategiesamongst the large brands. Competitions also pushed them to increased menu
diversification, product developments for increasing sales and market share and at least
maintaining currentmarket share.

 Social factors:
Population growth, career opportunity, cultural distinctiveness, health of the masses and
social security build the ground of societal factors. McDonald‘s food products demand andits
operational strategies differ greatly to cope with the movement of these factors

 Technological factors:
Technological factor‘s main elements are R&D, computerization, technology motivation
andtechnological change rate. Technological movements affect expenditures, excellence, and
innovation and machine made food is more hygienic. McDonald's employee‘s quick serviceand
quality food standards are the result of its high-tech operating procedure. Customizeddatabase
management system and computers and smart cashiers are used in McDonald's tospeed up
serving and operating excellence.

 McMommy Blogging Society:

In December‘ 2007, McDonald's opened up its kitchens to the group of mother bloggers
toreport allegedly unedited findings on McDonald's website and on blogs in the
Internet.McDonald's goal was to make their cooking processes more transparent. It kicks out
storiesof fattening, unhealthy food rumors in books like "Fast Food Nation" and movies i.e.
"Super-Size Me. "McDonald's equipped six mothers chosen from 4000 applicants with
laptopcomputers to record their impressions of its operations over the next few months.
Nothinglike this has ever been done on the internet by a fast food company before.

 Hamburger University:
Hamburger University was founded in 1961 at a McDonald's restaurant in Elk Grove
Village,Illinois. Now it stands in a suburb of Chicago at 2815 Jorie Boulevard in Oak Brook,
Illinois.It has 30 resident professors and more than 70000 managers have graduated from
here.Today Hamburger University has 19 full time intercontinental coaches to educate
apprenticesof more than 119 countries. It comprises 13 teaching rooms, 12 interactive group
rooms, a300 seats lecture theater, and 3 kitchen labs. It has professional translators who can
lecture in28 different languages.

Challenges in Entering Indian Markets :

 Regiocentricism: Re-engineering the menu - McDonald’s has continually adapted to the

customer’s tastes, value systems, lifestyle, language and perception. Globally McDonald’s
was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion
not to consume beef or pork. To survive, the company had to be responsive to the Indian
 sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to suite the
Indian palate.
 The vegetarian customer – India has a huge population of vegetarians. To cater to this
customer segment, the company came up with a completely new line of vegetarian items
like McVeggie burger and McAlooTikki. The separation of vegetarian and non-vegetarian
sections is maintained throughout the various stages.

Evolution of McDonald’s marketing in India:

When McDonald's India launched in 1996, urban Indians in Mumbai and Delhi typically ate
out three to fives times a month, according to AT Kearney, the management consultancy. In the
12 years since then, that average frequency has doubled and analysts forecast that by 2011 the
Indian quick service restaurant market will be worth 30,000 crore (about $6.3bn at October
2008 exchange rates). But from their earliest investments in India, multinational company
(MNC) owners of restaurant chains have struggled to adapt to the needs of India's many
markets. Some pulled out of the country after failed ventures. At the time, consolidation of the
hugely fragmented Indian retail sector had also barely begun, and there was scepticism that
Indians would prefer burgers and fast food to local food offerings. However, in the intervening
decade, McDonald's has continued to open new outlets in the country, evolving its marketing
strategy through several phases.

Twelve years of McDonald's India:

McDonald's India was set up as a 50:50 joint-venture between McDonald's at a global level
and regional Indian partners such as Hardcastle Restaurants Private Limited in western India,
and Connaught Plaza Restaurants Private Limited in northern India. The first Indian
McDonald's outlet opened in Mumbai in 1996. Since then, outlets have begun trading in
metropolitan and Tier II towns across the country. By September 2008, it had premises in
Mumbai, Bangalore, Baroda, Pune, Indore, Nasik, Chennai, Hyderabad, Surat and Ahmedabad.
Amit Jatia, Managing Director, McDonalds India, said: "The past decade has witnessed a
marked change in Indian consumption patterns, especially in terms of food. Households in
middle, upper and high-income categories now have higher disposable income per member and
a propensity to spend more."

CHAPTER 5
CONCLUSION

McDonald’s is one of most successful companies in the world today. With its rapid
embracement of globalization, the firm has been able to expand and retain numerable growth;
as well as continuing toexplore with its growth potential in the coming years. From the
beginning of the company’s development in the United States, to its spread in England,
Australia and more recently India andChina, the firm has been able to provide a variety of
hamburgers and other foods to its consumers.From the Big Mac, to the Maharaja, the companys
successive strategies, specifically with heavyresearch and development have allowed it to fulfill
the tastes of locals in every country it operates.Its leaders in all of its major departments have
established prices worldwide in all types ofcurrencies, making its foods affordable for
customers of all classes. McDonald has adopteddifferentiation and cost leadership strategies. In
terms of differentiation, the firm attempts to bediverse from its competitors by adding
something to its product that will provide a unique value toits customers, achieved through
well-designed and managed marketing activities resulting in a perceived superior
quality product and high brand image and recognition. Further, cost leadership isachieved, not
only through economies of scale but also through learning, knowledge and experiencein
production and operational processes and through effective/efficient distribution networks
andmanufacturing systems.