case study of mcdonalds fast food restaurant

McDonalds is worlds taking fast nutrient concatenation with one-year grosss of about $ 23 million. It has more than 1.6 million employees all over the universe with its divisions all over the universe in drinks, bite nutrients, and eating houses. McDonalds ‘s success is due to superior merchandises, high criterions of public presentation, typical competitory schemes and the high unity of our people. McDonalds is still go oning to spread out and present new alternate drinks in the market. About 85 % of McDonald ‘s eating house concerns worldwide are owned and operated by franchisees. All franchisees are independent, full-time operators.

Fast nutrient was non a wholly new thought in China with a plentifulness of eating houses selling typical, light and simple Chinese nutrient and drinks. When the first McDonalds franchise in China was opened by Daniel Ng in 1975, many local rivals did non believe that McDonald ‘s would go successful. They rely on the thought that Hamburgers utilizing beef cakes and staff of life would non be able to boom in a state dominated by rice, fish, noodles and porc. Since so McDonalds have grown in China that as of June 1999, there were already 235 McDonalds eating house in China. McDonalds have so much penetrated China that even in the recent struggle when NATO by chance bomb the Chinese embassy in Belgrade during the War in Kosovo, when it became the primary hit list for boycott of American nutrient and drinks, that the McDonalds eating house remained busy with local Chinese clients Mac Donald became so popular in China that by 2001 Chinese people owned 60 % of the assets of the Mc Donald ‘s shops, by 2002 McDonald ‘s opened 130 mercantile establishments, wholly 560 mercantile establishments in 94 metropoliss in 19 states and at nowadays ( 2010 ) there are 1194 McDonald ‘s eating houses in China, 200 and more are planned for the following old ages.

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Critically analyse how the general environmental forces may hold influenced mc Donald ‘s development in China

McDonald ‘s first opened its operations in China in 1990.In 2006 ; McDonald ‘s signed an understanding with the Chinese province oil company, Sinopec in which it granted Sinopec the right to open McDonald ‘s shops at any of its new and bing gas Stationss. This in nutshell was Mc Donald ‘s cardinal enlargement scheme in China.

( Watson/mighty pupils 2010 )

When McDonald ‘s started its first shop in 1990, its ultimate rival KFC was stat mis in front of Mac Donald holding opened more than 1000 shops in China. At present there are about 2000 KFC shops in China which is about dual than megahertz Donald. McDonald ‘s has a batch of competition in China, non merely from U.S. trade names like KFC but besides little trade name like Mom and Pop.

Jobber, ( 2006 )

Mac Donald ‘s development in China was affected by assortment of factors which can be elaborated in item by PEST analysis and measuring the porters 5 forces scheme. PEST analysis helps measure the political, enviormental, societal and technological factors that may impact an administration when it decides to come in its concern operations into new markets or new states.

Kotler ( 1998 ) stated that PEST analysis is a strategic tool to analyze the present market status of a concern, understanding market growing or diminution, possible and way for operations. Harmonizing to porter ( 1985 ) Plague ensures that company ‘s public presentation is aligned positively with the powerful forces of alteration that are impacting concern environment.


Jobber, ( 2006 ) ,

Main Aspects of PEST Analysis

( Google image 2010 )


Political factor plays a major function in any administrations concern enlargement in new markets. The political status of the state, part or the market has direct consequence on the company ‘s result at that place. When Mac Donald ‘s started its operations in china China ‘s authorities wanted set up its ain fast nutrient market and felt that western companies like McDonald ‘s could botch its programs. In 1990, the entry of McDonald ‘s into China resembled the same acrimonious experience it had in Russia but later it moved on really swimmingly in China, as it has moulded itselff so nicely with Chinese civilization that Macdonald ‘s opened 96 eating houses in China, numbering 430 eating houses wholly in the by first six months of 2001.

A ( 2010 )


Harmonizing to Thompson ( 2002 ) economic conditions impinge on how easy or hard it is to be successful and profitable at any clip because they affect both capital handiness and cost, and demand. McDonald ‘s as a planetary fast nutrient concatenation had a great impact on the Chinese economic system. McDonald ‘s, harmonizing to official statistics have about the 32,000 eating houses all over the universe in which 75 % is operated by franchising, McDonald ‘s have about 1200 eating houses in Chinese market out of which merely 6 is operated by franchising. McDonald ‘s chief purpose at nowadays is to develop its franchises in China to set up their concern all over the state.

( Pearce and Robinson 2005 )


The societal environment demonstrates demand and gustatory sensations, which changes with manner and disposable income which can supply both chances and menaces for peculiar companies

( Thompson, 2002 )

Many societal factors affected mc Donald ‘s operations in China. for e.g. in April 2007 a Chinese owned newspaper revealed that megahertz Donald ‘s have underpaid their employees in Guangzhou, Again four months subsequently in the same twelvemonth a province backed all china federation of trade brotherhoods called megahertz Donald ‘s to allow its workers unionise and adjust the wage. Many societal critics besides pointed out that megahertz Donald ‘s have non applied the same wellness and environmental criterions in China as it have done in other topographic points.


At present clip Technology plays a major function in about every administration to derive sustainable competitory advantage from its rivals. While set uping its Chinese operations MacDonald ‘s partnered with popular Chinese online shopping site taobao.

Com in Sep 2007 to give online shoppers vouchers and other promotional points to advance its trade name in China. To derive more competitory border over its chief rival KFC it besides started home bringing service from some of its mercantile establishments.

( Capron and Glazer, 1987 )

( Johnson and Scholes, 1993 ; Jan, 2002 )

Porter ‘s 5 Forces

Porter ‘s 5 forces analysis trades with the factors outside an industry which influences the nature of the competition within it. The competitory forces theoretical account proposed by Porter identified five forces which has a direct impact on an organisation ‘s behavior in a competitory market.

Main Aspects of Porter ‘s Five Forces Analysis

aˆ? The competition between bing Sellerss in the market.

aˆ? The power exerted by the clients in the market.

aˆ? The impact of the providers on the Sellerss.

aˆ? The possible menace of new Sellerss come ining the market.

aˆ? The menace of replacement merchandises going available in the market.

( Google image 2010 )

Force 1: The Degree of Rivalry

The strength of competition between the rivals helps find the extent to which the value created by an industry will be dissipated through tete-a-tete competition. McDonald ‘s has a batch of competition in China, examples may include Kentucky Fried Chicken ( KFC ) and Mom and Pop nutrient bases etc.

Force 2: The Threat of Entry

The menace of new entrants is normally based on the market entry barriers. Many new companies tried to come in the Chinese market like Burger male monarch, a strong rival of MacDonald ‘s, but it lagged behind Mac Donald due to its trade name consciousness and mercantile establishment Numberss.


Force 3: The Threat of Substitutes

The menace of permutation depend on the shift costs i.e, the costs in the countries such as retraining, revising and redesigning which takes topographic point when a client switches to a different type of merchandise or service. Many eating house ironss like metro, rainforest cafe etc entered the Chinese market and won favors of many Chinese people but due to hapless trade name consciousness they have n’t been able to set up themselves in demanding Chinese market.

Jobber, ( 2006 )


Force 4: Buyer Power


Buyer power is one of the two horizontal forces that influence the appropriation of the value created by an industry. The size and the concentration of clients are the two most of import determiners of purchaser power. Turning income in urban China has pushed clients to put higher outlooks on eating houses assorted facets like design of their mercantile establishments, the innovativeness of their bill of fare and nutritionary quality of their nutrient i.e, the stairss good covered by MacDonald ‘ in China.

Force 5: Supplier Power

Supplier power is a mirror image of the purchaser power. By using its huge capital and technological knowhow MacDonald has developed its ain internals supply web in China including farms to sell both domestic merchandises and export markets.

( 2010 )

Based on the external environmental analysis what are the chances and menaces confronting MacDonald ‘s operations in China?

Globalization is altering the face of the concern universe at present clip. Companies operate in a really hard environment and face legion challenges when viing in planetary markets. Now a yearss pull offing planetary operations requires knowledge about assorted schemes and intercultural accomplishments and that expand beyond traditional direction rules and techniques. SWOT analysis is a strategic planning tool used to analyse the strengths, failings, Opportunities and menaces of an administration. The key to a SWOT analysis is placing the internal and external factors which are of import to accomplish the ends of the organisation. The internal factors include strengths and failings of the organisation and the external factors are the chances and menaces. SWOT analysis is popular among the directors for its simpleness as a planning tool and its flexibleness to accommodate in any state of affairs or undertaking. The strengths and failings of a company depend on its internal elements like resources, operational plans, and sections like gross revenues, selling and distribution. An chance is a attractive status which can be exploited to beef up a strategic place, such as increasing demand for a new merchandise. A menace is a status which creates uncertainnesss which damage an administration ‘s public presentation and market portion.

( International strategic direction 2010 )

( Marketing teacher. 2010 )

( 2010 )


McDonalds is universe ‘s greatest fast nutrient concatenation with more than 31,000 eating houses functioning Burgers and french friess in about 120 states but it was still short in footings of figure of mercantile establishments in China from its closest rival kfc.

Good invention and merchandise development. It continually innovates to retain clients in the concern. While developing its concern in China it emphasised more on Chinese civilization and the Chinese penchants for nutrient other than lodging to the traditional western bill of fare.

More consumers ‘ pick, sensible value and great service provided to the clients.

Loyal staff and strong direction squad

Open door policy to the imperativeness

Strong internal supply chain- Mac Donald ‘s has developed its ain supply concatenation web in China including local husbandmans by hammering joint ventures ties with powerful Chinese cooperation ‘s and developing local farms in China.

Rigorous nutrient safety criterions

MacDonald ‘s plants hard to guarantee its high nutrient safety criterions are met through strict preparation, nutrient, safety and quality and bill of fare development in each eating house in China

Low-cost monetary values and high quality merchandises

McDonalds Annual Report ( 2008 )


Difficult to happen and retain employees

MD has had hostile relationships with workers rights brotherhoods and although this has been controlled, the company does happen it hard to happen and retain good employees. Harmonizing to a study by a Chinese owned newspaper in April 2007 megahertz Donald ‘s have underpaid their employees in Guangzhou which caused many jobs between the workers and the direction squad with in the administration.

Promote unhealthy nutrient

Many societal critics pointed out that megahertz Donald ‘s have non applied the same wellness and environmental criterions in China as it have done in other topographic points.


Joint ventures i.e, with powerfull Chinese cooperation.

Strengthen its value proposition and offering, to promote clients who visit java stores into McDonalds.

Continued focal point on corporate societal duty, cut downing the impact on the environment and community linkages.

Attractive & A ; flexible employment

Positive environmental committednesss

MD incorporates environmental committednesss in its day-to-day operations, from keeping day-to-day drive-thru cleansings to supplying sustainable fish beginnings to utilizing recycled packaging.

McDonalds Annual Report ( 2008 )


Competitive force per unit areas on the high street by new entrants like kfc ( biggest rival of Mac Donald ‘s in China, subway, malan noodles etc.

Unhealthy nutrients for kids

Mac Donald ‘s had non applied the same wellness and environmental criterions in China like it did in USA. For illustration its happy repasts targeted at kids offered better for you substitutes in USA non in China.

Health concerns environing Beef, Poultry & A ; Fish

Labor development in China

Chinese makers exploit labour in their production of ‘Happy Meal ‘ playthings. Mac Donald ‘s could utilize its buying power to its advantage to demand that makers provide playthings without working labour.

Local fast nutrient eating houses

local eating houses like daniang dumplings, yonghe male monarch, kungfu catering has given good competition to Mac Donald in Chinese markets.

In drumhead, a SWOT analysis provides a ideal model for measuring an organisation ‘s internal and external place in its environment and their possible impact on public presentation. The McDonald ‘s SWOT analysis in China highlighted many menaces and failings and its strengths highlighted its strong buying power which could potentially be used to demand socially responsible production from its Chinese makers and meat providers. It besides showed how a more proactive and longer-term attack to its schemes can assist it to expect altering consumer gustatory sensations and demands.

William hoovers ( 2008 )

McDonalds Annual Report ( 2008 )

What are the strategic groups in the fast nutrient industry in China? In which strategic group does Mac Donald ‘s China compete most?

The fast-food industry of the universe worth ‘s more than a billion with multiple and diverse participants. Most of the strongest trade names are American which by direct investings, joint ventures and by franchising have spread their mercantile establishments all over the Earth. The most demanding market in the universe at nowadays is that of China due to its emerging economic system. Many fast nutrient ironss like kfc, wendys, pizza hut have opened their mercantile establishments in China.McDonald ‘s, which leads the industry in gross revenues, profitableness, figure of retail shops and overall trade name acknowledgment all over the universe besides has legion mercantile establishments in China but is still dawdling behind from its tufa rival in Chinese market.KFC has about 2,000 shops, dual that of McDonald ‘s. in China.

The fast-food industry in China is composed of national concatenation trade names due to which there are merely a twosome of strategic groups associated with the fast-food market. The major national concatenation trade names in China are McDonald ‘s, kfc, and daniang dumplings. These organisations chief scheme is to supply a merchandise to the client that is based on low-price convenience. Their strategic group is associated with many geographic locations and low monetary value and quality. In competition with these big transnational houses are local fast-food eating houses in China like yonghe male monarch, kungfu providing etcwhich focal point on supplying their clients with a quick, inexpensive option to the national trade names. These concerns offer a low monetary value and low quality merchandise in few vicinities. etc.

Employee development became a nucleus topic during Mac Donald ‘s enlargement in China as Operating McDonald ‘s in Nebraska is wholly different than runing one in the bosom of Guangzhou or Shenzen. McDonald ‘s saw their function upon come ining China as a accelerator to acquire the concern started, so fostering local endowment to take over the long-run leading functions

Introduction of the drive-through.- In the US drive-through is a valid and servable option but this construct when started in China was wholly new and fresh until late in 2005. Before, the streets were filled with motorcycles. But with China ‘s high and rapid economic growing within the past few old ages, motorcycles evolved into bikes which evolved into autos. At present with a partnership with Chinese province oil company Sinopec, McDonald ‘s has the right to open McDonald ‘s shop at any of Sinopec ‘s new and bing gas Stationss.

( Metal development group 2010 )


McDonalds has seen many alterations during its class of concern enlargement all over the Earth. Despite the downswing the company has seen in China its fiscal state of affairs is that the company is easy mounting out of a low period and doing a turnaround.

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