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UNIT 5 - assignment 3 International business
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UNIT 5, assignment 3: Strategies and Resources: Leon TerholliIn this report I will be researching McDonalds, I will explore the different strategies they use
in order to conduct business successfully across different countries. I shall also include the
different types of resources that McDonalds use in order to make trading internationally
viable.
P8:Explain how products and processes have to be adapted for international markets by a
selected business:
Firstly, McDonald’s ownership of their businesses tend to be franchises, this means that the
franchisor can sell the rights of the company to an independent company, known as the
franchise. The benefits of franchising include lower risks as it isn’t an independent business
with more liability, but it also helps financials as money becomes easier to secure when you
are a franchised business; and finally franchised businesses already come with an
established plan. Another method sometimes used by McDonald’s is subsidiary business,
this is when the company belongs to another company, for instance parent company. The
advantages that follow a subsidiary business is firstly that they can establish their own
management style and also gain its own brand recognition. Another thing is that the
subsidiary may be able to entice customers who are not interested in the parent company,
which opens up the customer market for that business. These two types of business
ownership make it simplistic for McDonald’s to expand into overseas markets, therefore this
allows the franchisor to enhance its customer base abroad in a larger, global market.
McDonald’s processes vary from country to country as they need to conduct large amounts
of different research in order to collect the correct information for the country they would
like to launch in. They need to conduct surveys to get a clear understanding of what type of
products customers will want to see and purchase, as this will not be the same from country
to country. The company needs to consider the different advertising skills and platforms
that they will be shown on as not all countries will broadcast certain adverts. Costing in each
country needs to be considered as import costs will vary as well as minimum wages for each
business, therefore labour might be relatively expensive in certain places. A big factor that
needs to be considered for different countries is the supplier of goods, and how reliable
they will be at delivering the quality and demand of certain items McDonalds might like to
offer in specific regions.
, McDonald’s then takes into
consideration all the different
cultures and customer preferences
that people would want from them
products and processes. For
instance, products that sell extremely
well in one country, such as the original Big Mac burger in America, would not sell as well in
a country like Dubai. The reasons behind this is down to cultural differences, due to people
being Halal, MacDonald’s has to incorporate this into their meals. So instead of selling beef
patties, they substitute it for 100% halal beef patties in Dubai.
This is the first example of how McDonald’s would have to adapt their products to suit
international markets and customers, otherwise they wouldn’t be able to sell their products
very efficiently in certain countries if they disregarded certain elements as stated above.
MacDonald’s not only have to be conscious of cultural differences, but also changing trends
within society. This includes people being more health conscious, therefore as McDonald’s
was predominantly an unhealthy, fast food brand; people will be reluctant to go and
purchase meals. However, this is when innovation of products steps in and they started to
release healthy alternatives, such as fruit bags for children, smoothies, the fish fillet burger
and so on. This was an act in order to entice customers that wanted to be healthy to still
spend their money with McDonald’s, especially when it came to the children’s happy meals
as parents could now feel better about treating their children to a McDonald’s. Next,
vegetarian and the vegan trend also started to grow, this was McDonalds next step to
introduce options that would accommodate their vegetarian or vegan customers.
McDonald’s successfully released a handful of vegetarian options, as seen below, however
are still in the making of releasing vegan options that are purely plant-based items. There
have been hints of a veggie sausage or even a plant-based burger in the future to come!
McDonald’s products can have certain variations in size, names of products and the
products offered specifically in the chosen country. Starting with America, where
McDonalds originated from and rapidly grew. They sell on average around 2.3 billion
burgers in the US per year, with their target market being focused on young people and
children, which reflects their low prices in food as it is affordable by a large age group. The
meal sizes across the US tend to be relatively big due to peoples varying appetites, so drinks,
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