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Globalisation and Opportunities for Business Expansion

Question:

Discuss about the Impact of Global Environment and International Marketing Strategy of MacDonald’s.

Rapid technological advancement and globalisation has reduced the barriers of global business and there are number of multinational organisations that have focused on developing a strong global strategy which would help them to operate in the global market effectively. When these organisations thought about global business, international marketing strategy came into the picture. With further international expansion organisations understood that doing business globally is a tad different from operating in the local environment. It was realised that in order to develop a strong business strategy it is important to understand the global environment and accordingly strategising the business plans effectively which would help to make sure business expansion is possible and fruitful. Due to technological growth the global trade rate has increased rapidly which makes it essential for the organisations to come up a strong strategy which would help to analyse the global environment and then develop an international marketing strategy. One of the key challenges that international marketers face nowadays is to understand the global market and decide to use the best possible market entry approach for the respective organisation. MacDonald’s is one of the leading retail food chain organisations which have been effective in understanding the global environment effectively (Feenstra, 2015). The present study will discuss these aspects of the impact of global environment on the development of international marketing strategy and market entry approach. The present study will also entail the discussion of adapting to international marketing mix to provide effective global and local services

Globalisation one of the vague and highly rated term of the century has apparently allowed business organisations opportunities to expand their business all across the globe. However, when a company is expanding its business in other regions it should develop the marketing strategy based on the needs and wants of its clientele which is extremely important. The advantage of internationalism is evident in the contemporary market as numbers of organisations have successfully expanded into number of regions all across the globe helping them to bring genuine profit in the market. Even though apparently it might seem that internationalism is easier and effective but it is important to mention that the global environment imposes number of issues which have to be eliminated in order to develop a strong international marketing strategy as well as select an effective market entry approach. The global marketing environment is a set of controllable and uncontrollable market environment which has to be analysed by the organisations effectively while developing international marketing strategy of an organisation (Verhoef & Leeflang, 2009).

MacDonald’s which is one of the leading food retail organisations in the world presently is considered as the success story of international expansion but it is important to understand how MacDonald’s was able to make their international marketing strategy a benchmark for many companies opting to expand the business in the international market. MacDonald’s faced number issues while expanding in the global environment. The Global macro environment is one of the biggest threats to organisations operating in the global market. The external environment poses a number of issues while the organisation focuses on expanding in different international markets. The main issue that MacDonald’s had to face was the social issue. When a western organisation expands its business in the Asian Sub-Continent or Middle East or in certain European and African nation it becomes extremely important for the organisation to make sure it understands the culture of the organisation effectively (Paliwoda & Thomas, 2013).

Understanding the Global Market


It could be said that Internationalisation has its own profits as well as challenges and hence it is important to make sure to understand the global market where the business is expanding. The companies like MacDonald’s allocate huge amount of money on their international marketing strategy which usually adapting to incorporate emergent trends in the market and hence for that understanding the issue of cross cultural communication also becomes important. Cross cultural communication definitely improves the understanding of the market and also helps to communicate effectively, apart from that it can also help the company to realise how to market their products in the market. Apart from the global social environment, the political environment of the market largely contributes to developing marketing strategy (Ghauri & Cateora, 2010).

The operation of the international organisations like UNO, World Bank, WTO et cetera. The role of WTO has become extremely important to reduce barriers in the market and hence technological improvement made in the respective market also allows developing the international marketing strategy. The global environment will put significant barriers like social issues which would have to be managed effectively. It is important to mention that marketing efforts should not only look into social issues but also it should take into account the technological advancements for instance keeping up with the consumers through social media and online market which MacDonald’s have been able to do with its global database and server. Global environment is too much hyped with the concept of CSR and environmental awareness and it is important for the organisations to make sure the marketing efforts put have no harm on the environment and rather contribute to Corporate Social Responsibility. Government’s approach towards international trade also impacts the international marketing strategy as more the government becomes friendly better the international marketing strategy becomes for the organisation (Griffin & Pustay, 2012).

The global marketing environment seems to impact the market entry approach of the organisation. It is important to mention that economical and political environment of the region largely impacts on the decision making regarding market entry. It could be said that if the economic position of the region is stable and if it is easily accessible then organisations could decide a way of entering the market. However, decision might change if there is excessive political turmoil and the government imposes higher tax and price of raw materials are high then the market entry process would change (Meissner, 2012). Hence it is important to mention that change in the global political and social issues will affect the market entry procedure of the organisation. For instance MacDonald’s operate though number of franchisees in the Indian market as well as in Licensing as and even through direct exporting as  the Indian market is suitable for foreign trade due to the active presence of WTO and ASEAN as they regulate the business environment effectively. In Mexico MacDonald’s have direct export as it is easier for the organisation to get resources and manufacture products, it also operates through joint ventures in market and buying companies in Africa and European Union effectively (Papadopoulos & Heslop, 2014).  

Case Study: McDonald's and International Expansion

The term “Glocalisation” is an amalgamation of the words local and global. It mainly indicates the adaptation of both the approaches combined to deliver services in a market. A firm should focus on understanding the consumer base of the market as well as the society and culture in order to adapt to the marketing mix. Glocalisation is the fusion between the present practices of an organisation that might encounter cultural issues but accordingly maneuvering them with innovative products which could help the organisation to operate in the market. The adaption of marketing mix will only happen when an organisation is able to sell the same products in different markets and become a household name even in the foreign market. The marketing mix of MacDonald’s is not changed much is kind of adapted to the environment. The adaption of the marketing mix is done based on the global environment. For instance MacDonald’s adapted to the Indian and Chinese market and had to change its operations to a large extent Czinkota & Ronkainen, 2013).

The society and culture of the international market stands to be important for companies like MacDonald’s to realise its impact is huge and it can largely affect the business. For instance the Indian market Beef is not eaten due to the social and cultural differences as in India Cow is considered holy and hence selling beef would be a real issue and business could be affected and hence MacDonald’s doesn’t sell beef. Similarly it doesn’t sell pork burgers in India whereas in other countries like China, Thailand, and Hong Kong all have Pork in their Menu in MacDonald’s. The company has realised the importance of social issues while operating in these countries. Similarly while operating in the Middle East the organisation had to keep in mind about the meat product it sells has to be halal or else it will face criticisms from its Muslim consumers. The organisation had to change its outlets and designs in order to adapt to the Asian market. The marketing strategy was more or less standardised but in order to create that nationalist approach the organisation focuses on involving local and national celebrities which makes the company look like a domestic organisation. Hence to conclude it could be said that organisations will have to assess the global environment and assess the similarities and dissimilarities of the market to adapt or standardise it accordingly (Terpstra et al., 2012).

Conclusion

It is important for the organisations to assess the global environment and the key factors like the social, political, and economic factors effectively to make sure they are able to develop a strong international marketing strategy and are also able penetrate the market with a strong market entry approach. Adapting the marketing is tough and hence it is important for an organisation to analyse the market environment before applying adaptation or standardised marketing mix. It could be said that in the present case MacDonald’s adapted to the Asian market. The present study has discussed the key aspects of international marketing which has helped to cover up the objectives of the study.

References

Buckley, P.J. and Casson, M., 2010. Analysing Foreign Market Entry Strategies: Extending the Internalisation Approach. In The Multinational Enterprise Revisited (pp. 177-204). Palgrave Macmillan UK.

Couturier, J. and Sola, D., 2010. International market entry decisions: the role of local market factors. Journal of General Management, 35(4).

Czinkota, M. R., & Ronkainen, I. A. (2013). International marketing. Cengage Learning.

Feenstra, R. C. (2015). Advanced international trade: theory and evidence. Princeton university press.

Ghauri, P. N., & Cateora, P. R. (2010). International marketing (pp. 15-16). McGraw-Hill Higher Education.

Griffin, R. W., & Pustay, M. W. (2012). International business. Pearson Higher Ed.

Meissner, H. G. (2012). Strategic international marketing. Springer Science & Business Media.

Paliwoda, S., & Thomas, M. (2013). International marketing. Routledge.

Papadopoulos, N., & Heslop, L. A. (2014). Product-country images: Impact and role in international marketing. Routledge.

Sousa, C. M., & Filipe Lages, L. (2011). The PD scale: a measure of psychic distance and its impact on international marketing strategy. International Marketing Review, 28(2), 201-222.

Terpstra, V., Foley, J., & Sarathy, R. (2012). International marketing. Naper Press.

Verhoef, P. C., & Leeflang, P. S. (2009). Understanding the marketing department's influence within the firm. Journal of marketing, 73(2), 14-37.

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