Possible problems faced by McDonalds when opening a new business

McDonald's success can be attributed to their ability to adapt their business to the diverse
culture and fast pace of city life by providing quality fast food in a short period of time.
Their restaurants are generally comfortable, clean and provide a variety of choices on
their fast food menu. The quality of food is generally consistent and prices are low
worldwide. This keeps production costs down enabling them to generate higher turnover
every year.
Furthermore, McDonalds expanded aggressively, opting to franchise rather than operate
its new locations, providing new income and little overheads. They managed to provide
a product and service to the global middle class, particularly in emerging markets like
China, India, and Latin America. This gave McDonald's a massive advantage and great
opportunity.
By inducing the idea of going global, Kroc managed to attract the fast food market, using
Franchised Restaurants, Company Operated Restaurants, and Affiliated Restaurants. To
attract the local market Ray introduced a concept of localizing the products, so that they
will cater to all verities of the local craving. This approach increased the revenue as well
as the stability of the company.
Kroc's strategy of making partnerships with other businesses created huge success to the
company. Going in the same successful path, current management has made partnerships
with companies such as Wall-mart, Sinopec, and Wall Disney to reach more customers.
McDonald's needs to adapt to different cultures and conditions when it sets up business in
different parts of the world.
What problems might McDonald's encounter when it opens outlets in:
Countries in Eastern Europe
Eastern Europe constitutes an emerging market for most businesses. The collapse of
socialism in the region in 1989 facilitated the move of countries to prepare for the
participation in the capitalist market. In 1999, most Eastern European countries were

working to meet the requirements for the European Community. In 2004, Czech
Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovenia and Slovakia became
members of the European Union.
Membership of a number of European countries in the EU prompted the flow of foreign
investments into the country, increasing household income, increasing investment into the
region primarily due to cheap labour compared to wages in Western Europe.
There was a general trend towards the improvement of the standard of living of citizens
of Eastern European countries. However, in the last two years, most Eastern European
countries experienced slowed growth due to the increase in the wages of workers that
discouraged investments. Nonetheless, wages are still more competitive in Eastern
Europe compared to other regions in Europe. Most Eastern European countries are still in
the process of completing their transformation from a controlled to a capitalist Economy.
Full transition and the stability of the political and economic institutions are expected to
boost economic development in these countries. Assessing the potential of a new market
for expansion requires the consideration of several factors providing a comprehensive
background of the environment that the expanding business firm expect to enter into.
In the past unrest created an environment of uncertainty for investors. Products would
have to be sourced from nearby countries creating an increase in transportation and
labour costs. EU currencies did not have strong buying power, so profit earned would not
be enough to sustain the operating costs of the businesses in that region. Consumption
volatility could also have an effect on sales on the eastern region due to the rapid increase
in income resulting in a change in consumer behaviour.
Employment and wage volatility are important factors in deciding to enter a new market
because minimal employment and wage volatility translates to regular income for
households influencing the stability of consumption resulting to sales and revenue for
business firms. The economic condition of the state affects the financial condition of
consumers and their ability to purchase the goods and services offered by entering
business firms.
Although there is a general trend for consumption, employment and wage volatility

among European countries, introducing McDonalds into the region is viable for the
following reasons: First, McDonalds will develop a market by providing technological,
management and marketing expertise to local entrepreneurs enabling them to establish a
known restaurant in different areas that creates jobs translating into income to households
due to the hiring of local employees and the purchasing of raw materials from the local
farmers and businesses.
Countries in West Asia
If McDonald's was to open a new outlet in one of the West Asian countries, it would have
to take a few things into consideration. McDonald's would experience resistance from the
Islamic countries for selling American food and culture. Also, Muslims do not eat pork so
McDonald's would have to source Halal suppliers and adjust their menu variety to
accommodate them. McDonald's has modified its products to cater for local tastes, not
least in countries that have special dietary laws. In Muslim countries like Malaysia, bacon
is not served in McDonald's burgers or in its breakfast menu, as pork is haraam, or not
permissible under Islamic dietary law. In Israel, the nature of kosher dietary laws,
forbidding the mixture of meat and dairy products, means that cheeseburgers are not
popular among Jewish customers; furthermore, all meat not prepared in a certain manner
is considered unkosher by strict observers of the dietary laws. (Spiritus-temporis.com,
2005)
Countries in Africa
In Africa McDonald's may face various problems when trying to open up new ventures in
countries like Ethiopia, Sudan and Zimbabwe. Ethiopia borders Sudan and Kenya and it
is one of the largest and poorest countries in Africa. Its population consists of about 74
million people. Two major religious groups occupy Ethiopia, Muslim and Ethiopian
Orthodox, with Muslim being the majority. Unfortunately Ethiopia suffers some the
world's worst droughts in history, which in turn destroys their economy. Agriculture
produces 60% of exports, and 80% of total employment for the country.
In order to develop a McDonalds in Ethiopia, many major factors such as location
analysis, market, competition, facilities style, and menu must be considered. McDonalds

already has great marketing programs and strategies in place in other foreign markets so
the corporation can help with those variables.
Most cultures in Ethiopia will allow consumption of red meat such as hamburgers but not
of pork. The bacon used for breakfast and on certain sandwiches can be available but also
substitutable with turkey bacon. The Ethiopian culture also doesn't use utensils so they
will also be available but optional.
Zimbabwe is another country that is filled with Political and financial turmoil over the
past few years. McDonald's had indicated its interest in Zimbabwe in 1997 and wanted to
open a franchise in the country in 1999 but a political storm that year, which later
precipitated an unprecedented crisis that saw inflation levels soaring to record highs,
forced the fast foods giant to retreat. (bizcommunity.com, 2011)
Globalisation is the integration of markets and technology to a degree never witnessed
before in a way that it enables individuals, corporations and nation states to reach around
the world farther, faster, deeper and cheaper than ever before. Globalisation affects the
whole world in ways that may benefit some while disregarding others. Global
corporations, such as McDonalds manipulate their advertising to persuade a target
audience to purchase and support what I believe to be an unhealthy scheme. Not only has
McDonalds changed the way people view the world, but through negative impacts such
as health issues, it has also manipulated the everyday life of individuals living in a global
community. The faade of healthy eating posed by McDonalds is epitomised through a
short TV advertisement displaying the disturbing outcomes due to reliance on quick, easy
and convenient food that people pay for, not only with their wallet, but also their health.
Globalisation is the outcome of mixing the concepts of localisation and globalisation as a
portmanteau, it is the coming together of the two terms in a manner which suggests that
there should be a way for businesses and people to think globally, act locally (Egan,
2007). In practice, this generates business strategies and manners of communication
which seek to find innovative ways to blend together the use of a global communication
network and scale with the desire to maintain individual areas and cultures, by means of
modifying large scale organisations to suit smaller populations (Schumacher, 1967).
Consider, for example, McDonalds: as an organisation, it is an incredibly large company

which has put branches in many areas and across several different countries. But as they
have continued to grow, there has been an increase in resistance against such large scale
corporate food chains, as they are seen to ruin the character of a neighbourhood and drain
it of culture, as well as providing food which is perceived to be substandard and
unhealthy. They have therefore had to modify their business practices so as to instil
practices which are more welcoming to the local populations, for example by focusing on
foodstuffs which are popular amongst the local neighbourhoods and providing healthier,
more upscale types of foods on their menu (Towers, 2004).
Standardized and adapted approaches to communication are two dichotomous approaches
to an advertising or marketing campaign which rely upon two very different methods and
achieve differing results. A standardized approach to communication is based upon using
the same marketing strategies and techniques regardless of where the campaign is being
publicised. This would mean, for example, that the slogans and marketing materials are
the same whether the global organisation is approaching a target audience in the United
Kingdom or in India (DePalma 2004). A good example of this would be a company like
McDonalds, whose campaign slogan I'm lovin' it remains the same no matter what
country it is inthe slogan may be translated out of English and into the local language,
but the concept and execution remain the same. The campaign was first launched in
Germany in September 2003 as ich liebe es and followed in the United Kingdom and
the United States soon after with I'm lovin' it. The benefits of a standardised marketing
plan is that it is cost effectiveas it does not require multiple marketing strategies to be
drawn up and implementedand that it helps to create a cohesive global branding
concept (DePalma 2004). McDonalds, to continue the example, is easily recognisable the
world over for the same branding concepts as any other country.
McDonalds has grown from an organisation which had a few branches in the United
States to an international phenomenon that has stores in nearly every country in the
world. Known for reasonably priced meals with fast food and service, they have pushed
even harder to become both a recognisable brand that draws customers in on the strength
of their name and brand, but also to adapt to local mores and traditions in such a way to
incorporate themselves into neighbourhoods in a strong fashion (Azarya, 2004).

McDonalds has had a greater impetus to modify their business practices on a local scale
as they are serving food products which are not always locally acceptable. In India, for
example, where the Hindu religion prohibits the eating of beef, McDonalds has changed
their menu to be primarily chicken and vegetable based, with several items being
seasoned in similar ways to the local tradition (McDonalds India, 2010).
McDonald's was different in China in comparison with the rest of the world.
McDonald's made a foray into China in 1990. In China of the 90's ancient belief systems
rooted in Confucianism and Taoism were intermingling with Western ideologies, through
the narrow window opened up by the Communist government at the helm. This was
especially true with regards to thoughts on consumption, consumerism and brands.
Although, the hurdles faced by McDonald's in China, like lack of quality supplies and
distribution difficulties, were very similar to the Russian experience, it found a more
accommodating and efficient bureaucracy and government in the Chinese. The Chinese
government wanted to develop its fast food market and wanted McDonald's to take the
risk in paving the way. Thus there was mutual interest involved and consequently, on the
cultural acceptability front, McDonald did not have to labour as much as it had to in the
Soviet Union where it had to stave off an ideological backlash before finding its feet.
The interactions between the McDonald brand (and all that it stood for), and the Chinese
cultural value system, combined to provide a synergy that resulted in some interesting
developments. While in some cases McDonald's became an upholder of traditional
values, while in other situations, McDonald's became an appropriate medium for
consumers to explore new beliefs and ways of acting. This apparent paradox epitomized
the fact that Chinese society was making a transition and elements of McDonald's value
orientation were slowly being imbued by the Chinese masses. Two instances are cited to
highlight this:
McDonald's made a departure from the hierarchical set up of the dining experience in
traditional Chinese restaurants, based on considerations of age. In McDonald's the seating
arrangements were open, and everyone having equal access as to where to sit and what to
order. In this case McDonald's encouraged the Chinese to make a departure from
tradition.

The lack of alcohol served in McDonald's led some consumers, primarily Chinese
women, to embrace being able to be on a more equal footing with men while eating. In
this case McDonald's upheld a traditional Chinese custom.
In retrospect, in Russia, McDonald's has come a long way from the days of communism
inspired anti-globalization backlash. Today, the McDonald's brand is a sign of quality for
Russians, so being seen to work for it or supply to it is a highly regarded stamp of cultural
approval. By investing in a strong local supply chain and teaching local producers,
McDonald's has earned itself an almost unassailable position in the minds of the Soviet
people who now view McDonald's as an international brand, run by local people and
supplied by local people. It is little wonder that there are as many as 137 McDonald's
restaurants in 37 cities with 500,000 customers a day. In a cultural milieu qualitatively
different from that of the Americans, McDonald's has done remarkably well in China
over the last 15 years. Analyzed from the cultural perspective, today McDonald's does not
always denote Westernization in the minds of the Chinese consumers and the interactions
are more subtle than that with the result that McDonald's has absorbed elements of the
traditional value system and the Chinese people have imbued elements of Western culture
from McDonald's producing a powerful synergy in the process. (answers.com, 2011)

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