McDonald's in China
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Case Code: BSTR305 Case Length: 20 Pages Period: 1998-2008 Pub Date: 2009 Teaching Note: Available |
Price: Rs.300 Organization: McDonald's Industry: Food and Beverage Countries: China Themes: International Business, Globalization Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Global Strategy
After achieving success in the US, McDonald's opened its first international restaurant in Canada on June 1, 1967, in Richmond B.C. This was followed by more restaurants in Germany, Australia, France, and England in the early seventies......
Mcdonald's Enters China
As part of its global expansion, McDonald's decided to enter China as the Chinese market had a huge potential. Over the years, China had witnessed a growth in the urban population, a change in the spending habits of consumers, and the influence of western brands...
Expansion Strategies
The success of the Shenzhen outlet acted as an impetus to McDonald's to expand its chain nationwide. The first big McDonald's outlet and its second in China opened in Beijing on April 23, 1992. The 28,000 square foot restaurant was located in one of the city's busiest shopping areas..
Mcdonald's Operational Strategy
McDonald's standardized operations to ensure the quality and consistency of cuisine at all its restaurants across China. In China, it launched a version of its 'Dollar Menu' known as the 'Value menu' that offered sandwiches and other items at a lower price.
It also introduced a smaller version of the 'Value Meal' that offered small fries and a small drink for just twenty cents. As of 2007, McDonald's outlets that offered 24 hour services in China numbered about 240. These restaurants had attached dessert kiosks for pedestrians...
Localization Strategy
Chinese customers were loyal to Chinese cuisine and felt that the fast food chains did not offer much variety to suit their palate. The Chinese preferred the traditional culture of food and drink complete with color, fragrance, flavor, and variety...
Challenges
McDonald's faced intense competition in China, its biggest rival being Yum Brands (Refer to Exhibit VI for a brief note on Yum Brands)
Yum Brands' main products used chicken which was traditionally more popular than beef among the Chinese. Compared to its competitors, it had a well developed distribution system that allowed it to have access to places other than main city centers...
Outlook
According to Schwartz, in future, McDonald's China would concentrate on its business in big cities like Beijing, Guangzhou, Shenzhen, and Shanghai and focus on the eastern and central parts of China. He also wanted to add new variations in the combo meals...
Exhibits
Exhibit I: Growth of McDonald's
Exhibit II: McDonald's International Expansion *
Exhibit III: Fast Food Industry in China
Exhibit IV: Global Comparable Sales (Percentage Increase)
Exhibit V: Dining Habits in China
Exhibit VI: Yum Brands in China
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