MARKETING 2 – BBA - SPRING 2021

FINAL EXAMINATION – CASE ANALYSIS DR.

RICHARD MCFARLAND – PROMO B

INSTRUCTIONS: This is the case portion of your final exam. You can choose to work on this on
your own or with one, two, or three other students in our class (I’ll call these your exam
colleagues). Your exam colleagues can be anyone you want in our section, it does not have to be
anyone from your project group (although it can include people from this group). You are not
allowed to work with anyone else other than your exam colleagues. This means you cannot speak to
anyone or share any information about any aspect of the exam other than your exam colleagues or
Dr. McFarland. Your answers must be original; the exam will be subject to plagiarism detection
software, which will check your answers against anything published or on the Internet as well as
comparing with other students in the class. Plagiarism will result in a zero on your entire final exam
(both this and the online portion of the test) and the GBBA may take other actions as well.

You must turn this in on Moodle as a PDF file only. Include the names of each person who worked
on this at the top of the page (yourself and your exam colleagues); last name first, and in
alphabetical order. Label it as “Global McDonald’s Case Answers.” This is due by Sunday, May 9 th
at 18:00 (Paris time zone). Exams turned in after that may receive a zero on this part of the exam (I
recommend turning it in early in case there are any technical problems, don’t wait until the last
minute).

CASE: Global McDonald’s

Case Questions:

1. McDonald’s allows its global brand offering to be tailored to better meet different consumer
needs and wants. What are the advantages and disadvantages of this strategy? Are there
examples of any truly global brands that are never customized, if so give an example(s) (also be
sure to explain why or why not)? I am interested in your own views here, so don’t look up an
answer for global brands. The key is how you explain your answer and your logic.

Being such a big and global brand like McDonald's, you have to adjust and listen to
the preferences and interests of people on different continents around the world in
order to increase demand and sales. Therefore, I believe that this strategy is a winning

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one. The company should consider not only the tastes of people, but also their
cultural grounding, location, faith, gender, habits, income, etc. So, main advantage of
this is that they capture more people’s interest in a specific area to better meet
customer needs and wants. However, there is another side of it. First of all, it
obviously takes a lot of recourses to create a variety of services and goods in different
countries. In other words, it will be costly to implement some completely new details,
such as menu, design, motto, etc. Then, it may also cause some problems with a
supply chain, because having different costumers’ tastes preferences MacDonald’s
has to find more suppliers to make new dishes, like for kosher Big Mac in Israel or
burgers with no pork or beef in India.
I believe, that mostly every global brand cannot be completely the same in every
country in the World, otherwise, people will not fill any interest to use it, because of
their interest and beliefs. Hence, some brands may stick to stronger position without
implementing a lot of changes, like IKEA, but without successful integration between
marketing and cultures, company probably will not be able to succeed.

2. What have been the key factors that have led to McDonald’s global success, based on the
materials presented in the case?

Actually, McDonald's has created a completely new fast food industry. They were
among the first to massively refuse dishes, waiters, and individual orders. Instead,
they introduced self-service, disposable tableware, and very quick counter service.
And most importantly, everything was the same for everyone, for example, the
preparation and choice of dishes, the recipe, the place. Consumers had to get used to
self-service, to the lack of dishes. But the cheapness, instant ordering and delicious
burgers did their job: there were a lot of customers. Global success, came through a
new idea of Western fast food restaurants offering a taste of America over the globe.

3. Within France, how do you think McDonald’s positions itself? Do they treat France as a single
target market? Be sure to explain why or why not. How would you define their target market or
markets in France? (Answers should be based on your own knowledge and the case below
only.)

Not being a resident of France, it is a little difficult for me to talk about

positioning, however from my personal experience I can say that McDonald's in
France is not very different from the rest of Europe. Their potential customers are
teenagers, children and people looking for a quick snack during the working day.
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 McDonald's may be placing more emphasis on advertising (motto “I’m lovin it”)
in big cities than in sparsely populated areas. Moreover, European people are not
really tending to use fast food services comparing with USA, that’s why
MacDonald’s is taking into account local tastes and preferences in order to be in
demand. For instance, French people are known as tolerant and homogenous,
accepting gays, therefore MacDonald’s has been even using some advertisement
with gays in it.

4. Why do you think McDonald’s is so successful in France, despite it being seen as representing
negative aspects of the United States, and given the importance of quality dining in France?

Overall, Macdonald’s is known as a Western brand offering a taste of America, this

fact may lead to some disagreement among those French people who do not like
America, consider McDonald's as a source of junk food or not at all safe for the
environment. In this case, the company has to adopt their marketing campaigns with
a French culture. This process can take more than one year and every mistake could
be fatal, consequently, I consider, that the key to success for Macdonald’s in France
is a deep analysis of the French environment, society, as well as constant updates in
the menu, advertising, concepts and even costumer segments’ attitudes towards the
brand.

5. How has the franchising system allowed McDonald’s to grow so rapidly? Be sure to consider
how this helps them in different global markets, and how it allows them to capitalize on local
knowledge of franchisees.

It is obvious that franchising is a key concept for MacDonald’s to grow up. Company
includes approximately more than 90% of their restaurants franchising. This strategy
promotes the intensive growth of restaurants that are run directly by local
entrepreneurs. this allows management to reduce the level of control and provide an
opportunity for early expansion of their company. In addition, the managers who run
the restaurant from the spot have a more specific vision of the situation and actions
that should be taken depending on the situation, since they are local residents and are
familiar with the environment. MacDonald’s increase their revenue rapidly, without
spending a lot of resources on creating their restaurants over the globe. the only
drawback that can be noticed is the lack of own real estate, which can lead to some
difficulties in obtaining loans.

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 MCDONALD’S CASE

Mention the name McDonald’s and you will find that nearly everyone has a reaction. This ground
breaking, quick-service restaurant brand is seen by many as “the epitome of US culture”, an
outstanding runaway marketing success, but is reviled by some because of its popularity and
accused it of encouraging unhealthy eating lifestyles (Murry 2002).

Acclaimed as one of the premier global brand worth US$31bn and ranked 8th in the world,
according to Interbrand, McDonald’s is the world’s largest food service company, proudly boasting
over 32,000 restaurants in over 100 countries worldwide, serving more than 56 million customers
each day.

Founded in the 1950’s by Ray Kroc, a visionary milkshake salesperson, McDonald’s has taken the
American burger and fries meal concept to the global masses. In the late 1970’s in south east
England you had to drive some distance to find a McDonald’s (and similarly in any country outside
of North America). Now they are ubiquitous, following us wherever we go into football stadiums,
motorway rest areas, airplanes, trains and even to ski resorts. Put simply, McDonald’s is a counter
service, family restaurant phenomenon that has taken the world by storm.

So why has the global brand of McDonald’s been so successful?

The McDonald’s recipe for success at first glance seems obvious; quick service enabled by a limited
menu, a focus on cleanliness, family friendly facilities and good value for money. The emergence
of a cash rich, time poor lifestyle, shopping mall destination shopping and societal acceptance of a
more casual approach to eating on the run helped the emergence of McDonald’s and effectively the
birth of the fast food industry as we know it today. Economic growth fueled the wallets of eager
consumers, keen to feast upon the American dream food. Customer research undertaken by
McDonald’s in China highlights consumer preference because it is a strong Western brand, offering
a taste of America. Local food such as rice or congee, the Chinese believe is better eaten at home or
in Chinese restaurants. This perhaps helps explain why the hamburger and fries, western style, has
remained at McDonald’s core.

Innovation in food preparation technology and service delivery provided a fast service format that
customers appreciated. Quick counter service surrounded with bright, self-seating and self-clearing
areas helped McDonald’s grab market share from both the traditional take-aways and the table
service operators, with waiter labour cost savings passed onto consumers through lower prices.
McDonald’s were also in the leading group of companies to introduce franchising in the global
market place, augmenting organic restaurant growth by harnessing the management, cultural and
entrepreneurial capabilities with the capital of local business people around the world.

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Big Mac conquers the world!

McDonald’s, who launched their first international operation in 1967 in Canada, did arguably start
out in the globalization rush ahead of the pack. Next Europe beckoned, followed by Asia and South
America. In the 1990’s Eastern Europe succumbed, surprisingly even some Arabic countries
opened their doors to the McDonald’s ‘global realization strategy’. Global conquest did not happen
quickly or easily, however. The company set up the first McDonald’s in the communist Soviet
Union in 1990 after 14 years of negotiations. To ensure high-quality, fresh ingredients, farms were
set up to supply the restaurants, and the city of Moscow struck innovative barter deals that saw the
burger company manage real estate developments. Prepared to queue for hours in the bitter cold,
many young Russians still remember the excitement of experiencing their first taste of America.

Eric Schlosser, in Fast Food Nation, says ‘Fast food chains have become totems of Western
economic development.’ Schlosser also explains that Ronald McDonald has led from the front,
opening new markets for foreign franchisors, supported by US foreign policy, which runs programs
at its embassies to help American franchisors find overseas partners.

The McDonald’s Corporation claims expertise franchising, marketing and training and a “proven
ability” to operate in a variety of economic business and cultural conditions. It is intriguing, then,
that McDonald’s itself has not been able to diversify successfully into the global restaurant business
beyond its flagship brand.

Truly global?

Many consumers have been conditioned to believe that McDonald’s is a no surprises eating
experience, and equate this to mean that all elements of the marketing mix would be the same
everywhere. Not true! Cross any border and visit the nearest McDonald’s and you will likely find
a host of variations, from price to product, even in the presentation. In Uruguay, the McHuevo
boasts a fried egg, in Israel there are kosher Big Mac’s (no cheese), spicy wings are found in China
and in Germany there is a vegetable and cheese pastry and a ciabatta bun option. In parts of rice
loving Asia, the traditional bread bun has been replaced with rice in the Kalubi beef offering. In
India, you will not find pork or beef but goat and lamb burgers and over half the menu is devoted to
tasty vegetarian options. In Japan, the menu is heavily tailored towards local tastes with ingredients
such as cabbage and teriyaki sauce. Targeting women and healthy eaters McDonald’s has launched
a variety of salad options and lite bites for those with smaller appetites, those counting calories or
the health conscious. Corporate McDonald’s encourages new product innovation in local markets
stating, ‘locally relevant products complement our core menu and provide customers more reasons
to visit.’

Although many believe that McDonald’s is the same everywhere, this is clearly a misconception.
Historically, McDonald’s country teams have had considerable autonomy when developing and
marketing new product lines. Some multi-market approaches have been adopted, for example 200

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UK restaurants were renovated within a pan-European design framework and the first global
advertising campaign was rolled out in 2003 with the tag line ‘I’m lovin’ it’ (translated directly as
‘Ich liebe es’ in German), which suggests that marketing cost savings are being sought and/or a
more homogenous view of customers is being taken. Critics have accused McDonald’s of being
slow off the blocks in responding to changing customer tastes, but there is a proven track record for
localized product innovation from within the global arches. For example, customized products such
as Barbacoa Tejana in Latin America, M Burger in Europe and Ebi-Filet-O in Asia are offered. The
corn cup, which was first launched, in China, has also been adopted in other Asian markets, perhaps
suggesting a more global orientation.

McDonald’s has demonstrated impressive growth by expanding into markets across the globe,
increasing restaurant penetration in existing markets, increasing the number of restaurants that are
open 24 hours and stretching its product range to include exciting breakfast, coffee (the first
McCafe opened in 1991 in Sydney, Australia) and with the McFlurry, ice cream options, stretching
the brand offering to fit all day long food consumption opportunities. Given a growing world
population and if everyone eats three meals a day, McDonald’s believes that it enjoys less than one
per cent1 of all meal occasions, a share position that allows plenty of upside growth.

Competition is, however, aggressively snapping at the base of the golden arches. A new genre of
restaurants seems to have emerged, dubbed ‘fast casual’. These outlets offer consumers fresher,
healthier, more varied food, in a more inviting ambience. A McDonald’s spokesperson, despite
corporate fighting talk, has even been quoted as saying that ‘one brand can’t be all things to all
people.’ One clear pretender is the highly successful franchise format, Subway, the made-to-
ordersandwich chain. Thanks to an aggressive and successful approach to franchise by 2009 it had
over 21,663 outlets in 81 countries with more outlets in the USA, Canada and Australia than
McDonald’s. Chicken focused KFC has more than double the number of outlets than McDonald’s
in the high growth Chinese market.

END