Most of the concepts provide an underlying principle, which helps to get involved in international activities. These activities are mostly based on the economical functions that provide a competitive advantage in establishing and internalization of those activities. They are done with the help of rationale that is present in the market and delves to extend the life of the product or to expand the network with which the company is attached (Demirbag & Yaprak, 2015).
The theory of comparative advantage states that a country may stand to gain on an international standard if it can deliver the best product that it produces with all the resources that it has in the company. The company may face difficulty if it tries to produce all kinds of goods in most of the countries, which may hamper its reputation. It is best to specify the products, which will help the company to get international recognition. The principle idea is to become a multinational entity rather than just being focused on the local market, which will help the company to get involved in the overseas business (Goodnow & Hansz, 1972).
The life cycle of the product in a marketing dialect states that the products has to pass through the stages that is being produced to getting abandoned in the market finally. The product life cycle consists of four stages that are introduction, growth, maturity and decline. To make the product survive in the market when it reaches the maturity and the decline period, the company may take change the packaging of the product or introduce it in a new market, where such a product has not been established (Blackburn & Nolan, 2014).
The multinational companies need to have a prior knowledge of the political conditions that are present in the particular country or region where the company wants to operate. Most of the previous economies are indirectly under the influence of the government and the company needs to tread carefully before making a plan of expanding its operations (Henneberry, Ackerman & Eshleman, 1992).
The company is recognized as a fast food chain that deals in hamburgers primarily and has recently started selling different aerated soft drinks along with other side dishes. The company was established as a barbeque joint in 1940 and became a well-known company in the year 1948. The company became a major food outlet and diversified its range of foods in to six main sectors. The major food sectors are sandwiches and burgers, side dishes and snacks, aerated drinks, breakfast, desserts and salads. For the breakfast and snacks sector, the company has introduced McCafe recently that serves a wide array of coffee, chocolate drinks and smoothies (Jeon et al., 2015).
McDonald Environmental Analysis
The company presently operates in 119 countries on a global basis and has a very complex environment related to the market. This is mainly due to the international operations and the competition that it faces from the various fast food units.
The environment related to business has different external and internal factors, which impacts deeply on the manner how the company works and helps in shaping up the policies and strategies of the company. McDonald also has various methods, which creates an impact on the countries related to its business operation (Inui, Ito & Miyakawa, 2014).
Environmental factors of McDonald
The company caters to all kinds of customers such as children, young adults and adults. The customers have different tastes and preferences and the company tries to meet all their demands as much as possible.
- The company tries to make the place filled with fun activities that will attract the child customers. The company offers different toys and helps in arranging small gatherings and parties to make the children remember the brand.
- The price range of the food products is very nominal and makes the place an ideal location for the younger generation to keep a memory of the visit (Kaynak & Hassan, 2014).
- The food is healthy as it is full of nutrients and less fat, which helps to meet the expectations of the children, as they are more focused on diet-based foods.
The company offers different varieties of product so that different segments of customers can cherish their moments with the food in a very hygienic outlet. The quality of service is maintained, which assures quick delivery that helps to cater to the needs of the customers. The main principle of the company is to provide the customers with the best service (Inui, Ito & Miyakawa, 2015).
The employees of the company are trained to serve the customers in the best possible way with a quick delivery system. The employees who work in the restaurants form the major group in the employee structure of the company. The employees have to join the company and undergo training in the probationary period, which will ensure that their service is up to the standards of the company. These employees after completing the period will get absorbed by the company (Leung & Chan, 1997).
The company is known for low wage payment to the employees and the process of hiring and firing policy. The employees have to undergo vocational trainings that will make the employees reach the higher positions within the company, which will help the company to retain the employees.
Since the food joint is internationally recognized, many competitors try to hamper the sales of the company by absorbing a certain portion of the market share. The product range of the competitors are not as vast as McDonald but it has the capacity to take away a certain section of the market share by using different methods and offering a better range in terms of food and service (Koch, 2001).
The market presence of the company has increased due to the global expansion taken up by the company. This has led to the deceleration of the growth and reduction in the share of the market of the company.
The range of food products that are offered by the company has seen many competitors like KFC and Subway. Starbucks and Taco Bell have taken over the coffee segment of the company that is McCafe. The company constantly changes its strategies and has to be at par with the strategies that are taken up by its competitors (Millington & Bayliss, 1990))
Overseas Expansion of McDonald
The company mainly concentrates on the basic food habits of its customers. The company tries to innovate the food menu according to the tastes and preferences of the customers and in the markets that it operates. For example, in Germany the company sells beer along with the food to its customers in all the units that the company has in that country. It sells mutton pies in Australia, as the company is aware of the natural food habits of the country. The company specializes in selling chicken nuggets and French fries to the customers. It is also trying to introduce the method in most of the countries where it operates (McFarlin & Sweeney, 2014).
Towards the end of 1985, the company has advanced their nature of service to around 22 percent overseas and had a sale of around 2.2 billion dollars with the operating profit at around 18 percent. By the end of 2000, half of the sales of the company were through the foreign market (Popli & Sinha, 2014).
Overseas Market and Macro-Environmental Factors
The global occurrence of the company is that it tends to serve the customers according to the local cultures and the tradition of the country. The mass production by the company along with the cultural reforms in the food processes has made the company specialized in creating niche food for its customers. The company has personified its cultural forms and has promoted a specific cultural supremacy, which has now caught the attention of the competitors who are competing recently with the company (Papadopoulos & Heslop, 2014).
Macro Environmental Factors and its Impact
The external environment that has the power to influence the strategies taken up by the company is commonly known as the macro environmental factors. These external forces are uncontrollable and are difficult for most of the companies to handle these situations.
To survive in the market, the company needs to adopt flexible methods that is open to technological advances and the rules and regulations that are set by the government bodies to compete in a market. The micro and the macro environmental factors plays a huge role for the development of the strategies in marketing for all companies (Heslop, 2014).
The macro factors consist of the following:
- Demographic environment with respect to the market area
- Market area related to economic development
- Market area related to forces in the environment
- Technological factors present in the market
- Political forces in the market area
- Socio-cultural forces that impacts the market area
The local environment of the overseas market is taken in to account, which helps in understanding the impacts of the macro factors. The factors vary in different countries and the company needs to implement different strategies in the countries where it operates (Grunhagen, 2014).
Macro Environmental Factors of McDonald
Demography helps in studying the human population with respect to size, density, age and sex of the target population. It further helps in studying the occupation and the different statistics that is present in the target population.
The change in the demographic environment had a huge impact on the company as it capitalized the factor by supplying diversified range of food products.
- An example of this would be China who had adopted the single child strategy to keep a check on the population. This led to the six-pocket syndrome where the child was pampered by providing them whatever they wanted. This made the company flourish as it tried to capitalize this situation by pampering the child with respect to their food habits. The company supported this syndrome, which led an increase in the sales (Ryu, Jang & Cho, 2014).
- The syndrome helped the company to achieve more than their target because of the marketing techniques of the food products that was applied by the company.
These factors cannot be controlled and the company needs to manage their strategies accordingly. The supply of the raw materials along with the recession in some of the markets has changed the outlook of the market strategies adopted by them in Russia and Far East.
The economical factor is not negative in all the situations and the company tries to overcome the recession whenever it is possible by adopting the new technologies and studying the purchasing power of the population. This helps them in matching their range with respect to the food products (Sharma, 1989).
To keep up with globalization and the constant change in the food habits of the people, the company kept changing its strategies that helped them in matching up with the expectations of the people. They did this by offering them a wide range of food products. The company started by offering nutritious products in their menu, which was also cheap for the common people.
These factors involve the topographical and the climatic conditions of a specific region. The company has a proper knowledge that the demand and the wide range of the products will have an effect in different regions. The company, before entering a market thoroughly studies the climatic conditions, humidity and the taste and preference of the local people so that it can help them in serving better quality food (Ryu, Jang & Cho, 2014).
- The company needs to have a prior knowledge about the material that is used in wrapping and the rules related to pollution
- The use of plastic and Styrofoam materials are not permitted in some countries doe to the environmental impacts
- The company makes sure that the rules and regulations related to environmental policies are met (Sharma, 1989).
The technological advancements have affected the social and business responsibilities of the company, which helped in fulfilling the objectives.
- Quick packaging
- Proper utilization of raw materials that will ensure low wastage
- Storing the food products
- Regulation of temperature
- Proper management of supply chain
- Efficient communication channel
- Managing finance and daily reporting
- Proper communication with the main centres (Tuschke, Sanders & Hernandez, 2014)
The company has its presence in several countries and makes sure that it follows the political norms that are present in those countries. The political factors make the company to change its strategies constantly but try to maintain the objective of serving best quality products.
- The government tries to manage the supply chain because of the health issues and the labor issues.
- The company sometimes face the anger of the different political parties and has to change their food menus
- The company needs to change according to the political scenario in the different locations and takes necessary steps in those cases (McFarlin & Sweeney, 2014)
The company has to adhere to the cultural and social situations in the different markets in which they operate. The company has taken these factors in to consideration, is offering customers the food products that have a regional taste, and maintains religious tolerance.
- When the company entered India they made sure that the menu did not contain beef and pork products, which helped them in maintaining religious tolerance
- They introduced lamb meat and vegetable burgers to meet the demands of the local people
- To match the culture of the Muslim dominated countries, the food products contained halal meat (Zou & Zhou, 2015).
- The company provided dates, cookies and milk to the Middle Eastern regions where the climatic conditions were taken in to account apart from the religious beliefs
- The company standardized these menus, which offered a wide variety of food products along with local flavors that created an impact on the population.
McDonald Strategy in Overseas Market
The company has expanded its business in small towns and cities with the help of franchisees, which has helped them in getting a grip of the market. the company has entered in subsidiary and franchisee units where the markets are unstable so that they can exclude the establishment cost. The recruitment of the employees are mostly based locally who undergoes training so that they can keep up the standards while meeting the demands and the preferences of the customers (Verma, Gupta & Nangia, 2014).
The company has done excellent business in the past few decades and has spread across 119 countries on a global basis. They have maintained their standards globally and has been successful in infusing the talent that is present locally instead of hiring employees from elsewhere. They have utilized the strategies that helped them in acquiring the tastes and preferences and the prices that are present locally, which helped them in tackling the competitions from the point of view of the competitors.
The company has maintained its brand and quality of food throughout because of their food processing and hygiene maintenance. The use of local spices in their food has helped them to produce food on a local standard yet being recognized internationally. The company has inducted nutritious food in its menu, which was a great strategy to draw young customers. The company prices the food products according to the areas in which it operates.
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