McDonald’s

MNC in a multi-domestic industry and overseas

expansion
About Mcdonald’s
• Started in San Bernardino, California, in 1940.
• It serves in more than 100 countries, operating 32000 restaurants
and serving 60+ million customers daily.
• The company has become a symbol of Globalization and the
spreading American way of life
• McDonald’s is considered as the largest restaurant network with
revenue of $20 Bn and brand value of more than $126 Bn
• The company is known for its action on “THINK LOCAL, ACT
GLOBAL” statement
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About Industry
 256 bn dollar industry
 Variations contain fast-casual restaurants, food trucks, kiosks and smaller
hole-in-the-wall establishments
 Over the past 10 years, well-established US-based QSR brands are
continuing to grow even after changing nutrition standard
 McDonald's was also the most critical nutriment company in terms of
systemwide sales, followed by brands like Starbucks, Subway and Yum!
Brands - the parent company of Taco Bell, KFC & Pizza Hut

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McDonald’s in RUSSIA

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4P’s in Russia
PRODUCT
•Sandwiches (shrimp roll, beef roll)
•Salads (vegetable, caesar, carrot, apple)
•Desserts (muffins, pies)
•Beverages (lemonade in guava and raspberry, juices)
•Coffee tea (cappuccino, espresso)
•Sauces (barbecue, mustard, salsa).
PROMOTION
•Issue a license for the franchise only to proactive,
experienced entrepreneurs
•Control flow of visitors to its network of fast food
advertising campaigns on public television
•Combined with the constant use of sales promotion in the
form of the distribution of gifts visitors
PLACE
•People now view McDonald's as an intercontinental
brand, run and supplied by local people
•Company built a 100k-square-foot McComplex in
Moscow to produce basic products
•In response to institutional voids, McDonald's created an
upright integrated operation in Russia
PRICE
•Different strategies for different product
•Low price of goods at low cost on sales promotion for ice
cream
•Prices are seen as a flexible tool to influence sales, and
their value changes throughout the "life cycle" of the
goods
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PESTLE: Russia
POLITICAL
As a result of tension between
Moscow and Washington over
the war in Ukraine, The Russian
Govt banned the import of
western food import
TECHNOLOGICAL
Initiatives such as  self-service
and customizing meals with
digital kiosks,mobile ordering  regulations for food was found
Entered into partnership with
Uber eats to expand the chain’s
reach
ECONOMIC
McDonald’s controlled 80% of
the fast food market and opened
60 new restaurants in the country
reflecting continued profitability
despite the country’s economic
downturn
LEGAL
Numerous violations of sanitary
requirements and technical
SOCIAL
Customers felt uneasy with
staff’s behaviour
McDonald’s offerings were
centered around local culture
ENVIRONMENTAL
2014 McDonald’s started to
design new restaurants under
environmental concept
Moved to 100% recyclable
straws by early 2018
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Porter’s diamond model
Related And Supporting
industries
Initially imported, but soon
partnered with local enterprises
Firms structure strategy Factor Conditions
and rivalry
•Popularity and excellent •Young population willing
customer service to work
•Less competition from •27000 people applied and
other American chains 630 got the job
•Beef suppliers also entered
Demand Conditions
the markets
•A high demand due to
popularity
•Hamburgers were considered a
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luxury product
Cold War
• Russia’s food protection watchdog
• Deterioration in association between
Russia and the West over Ukraine
• Alleged violations of sanitary rules by
McDonald’s
• Consumer sentiment also is changing in
the nation
• 4 restaurants were closed
• 200 out of McDonald’s 440 Russian
restaurants were under government
investigation
Strategic alliances
• Outsources most of its supply chain
operations.
• Unable to find adequate local suppliers,
in large part because of institutional
voids
• McDonald's created a vertically
integrated operation in Russia
• Now, 75% of raw ingredients needed for
Mcdonald’s in Russia Restaurants are
purchased from more than 130
independent Russian suppliers
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Golden Arches Theory Of Conflict Prevention
• The theory explains how Globalization affects foreign policy and conflicts. The theory
points out that no two countries that both had a McDonald’s had fought a war on each
other since each got its McDonald’s.
• McDonald’s stores represents a close economics interdependency and global supply
chain
• Support: “McDonald’s Country”
• Outcome of the theory: Due to Globalization, countries that have made strong
economic ties with one other have too much to lose to ever go to the war with one
another
• Exceptions: A democratic government may follow the Golden Arches Theory, but the
theory may snap down when confronted with cases of non-democratic or authoritarian
regimes.

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McDonald’s in JAPAN

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4P’s in Japan
PRODUCT
•Incorporated more fish products and Asian specialities
•Seasonal burgers like The Teri Tama Burger
•Introduced Chocolate Fries
•Introduced Cheesecake McFlurry
•The drink sizes and fries were smaller than that of US
•Smaller burger sizes to suit the eating habits
PROMOTION
•Promotion varied when approaching the target
•Heavy use of Advertising
•Other promotional techniques were Sales Promotion,
Public Relation and Direct Marketing
•Direct Marketing included telephone marketing, Email
marketing etc.
PLACE
•Largest market for Japan with 13% of McDonald’s
worldwide outlets.
•Approximately 4,000 locations
•Distribution through McDonald’s mobile application
•Seasonal sales through Kiosks used in professional sports
competition
•Known as Makudonarudo in Japan
PRICE
•Different strategy for different target segments
•Two pricing strategies used by McDonald’s in Japan
•First – Bundle pricing strategy , eg: Meals
•Second – Psychological pricing strategy, eg: not rounding
off the amount to the nearest Yen.
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PESTLE: Japan
POLITICAL
The Consumer Affairs Agency’s
report called out McDonald’s for
the misleading advertisement
TECHNOLOGICAL
McDonald’s gets vital customer
intelligence about where and
when they go to the restaurant,
how often, if they use the drive
thru or go into the restaurant, and
what they purchase
ECONOMIC
McDonald's Japan represents
about 65% of the local
cheeseburger market and
showing the most elevated sales
in the restaurant industry
LEGAL
McDonald has to declare third
party inspection of its kitchen
after Chinese provider of chicken
was found to violate food safety
guideline
SOCIAL
Japanese advertisements
campaigns are centered around
local culture
ENVIRONMENTAL
 Japanese McDonald’s are taking
part in an energy-saving
campaign employing 13 different
green technologies
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Porter’s diamond model
Related And Supporting
industries
mutually beneficial collaboration
with local suppliers and
supporting companies.
Firms structure strategy Factor Conditions
and rivalry
The political, physical and
•Company itself handled economical environment
strategic decisions coupled with rapid
•Not using the western industrialisation and
marketing and promotions globalization
•Competition was low Demand Conditions
increase in disposable income in
the hands of consumer
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Food Safety Scandal In Japan
In 2014, a Chinese
supplier found to be McDonald’s
breaching safety switched suppliers to
standards Thailand, apologised Around 2 years later
(relabelling expired and took gained back their
meat) responsibility foothold in Japan

Losses incurred by Started undertaking

McDonald’s Japan, quality assurance
stock price took a measures, and
fall, around 100 distribution of more
stores were closed food quality
information to
customers

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Cultural Differences in Japan
• Collectivist society
• Food as a medium of family bonding
• Rice being an integral part of the meal
• Bread isn’t considered “filling”
• Perception of hamburgers as “Snack”
• Need for incorporation of better sitting arrangements

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Conclusion & Recommendation
• McDonald’s should focus on effective communication management
• Russian restaurants owned by McDonald’s should try to steer clear of any
sanitary violations because of the strict nature of their agencies.
• Feedback from the customers should be the prime area of market research
which needs to value and incorporated to maintain satisfaction
• A key takeaway from Japan expansion would be to keep a regular check
on the suppliers.
• Regular check on Quality & Hygiene of McDonald’s product, so as to not
lose any loyal customer or the brand value of McDonald’s

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THANK YOU

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