McDonald's Russia: A Jewel in the McDonald's Emerging Market Operations?
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Case Code: BSTR366 Case Length: 34 Pages Period: 1990-2010 Pub Date: 2010 Teaching Note: Not Available |
Price: Rs.400 Organization: McDonald's Corporation Industry: Fast Food Countries: Russia Themes: Entry and Expansion Strategy, Globalization, Managing across Borders and Culture, Emerging Market |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
International Expansion
McDonald's began its international expansion in 1967 with its first restaurant outside the US coming up in Richmond B.C, Canada on June 1. In July 1971, McDonald's began operating in Tokyo, Japan, in a joint venture with a local partner Den Fujita...
Entering Russia
McDonald's pre-entry plans for Russia started way back in 1976. Cohon, at the time of the Montreal Games in Canada, offered the services of the McDonald's company bus to some of the Olympic officials from the erstwhile Soviet Union. He took the officials to a local McDonald's restaurant and offered them some of its signature dishes...
Expansion in Russia
Right from the early 1990s, McDonald's started to invest in real estate ventures by acquiring various properties in Russia. As there was some difficulty in the conversion of the Russian ruble into any other currency, the company thought of using it for buying farmland and for building an office tower and distribution center in the country...
Results
McDonald's was a huge success in Russia right from the first day of its operations. Thousands of customers queued up for hours to experience it. The restaurant served over 30,000 customers on the opening day. By 1993, the company started making profits in Russia and did not look back after that...
Overcoming Challenges
Analysts felt that the biggest challenge before McDonald's Russia was dealing with the ministries. They felt that these regulators adhered to rigid regulations in doling out supplies. "When we need more sand or gravel for building and go to the department in charge, they say, 'Sorry, you're not in my five-year plan'," said Cohon...
Outlook
With more than two-third of Russia's fast food business, McDonald's was a dominant player. In 2009, Russia was again one of the markets that spurred the company's growth as it was McDonald's fastest-growing market in Europe in terms of restaurant openings...
Exhibits
Exhibit I: Growth of McDonald's Corporation
Exhibit II: Financial Summary of McDonald's Corporation (2004-2008)
Exhibit III: List of Countries Where McDonald's Was Operational, As of 2008
Exhibit IV: A Brief Note on Russia's Economy in the Early 2000s
Exhibit V: Market Share of Fast Food Retailers in Russia between 2003-2006
Exhibit VI: A Brief Note on the Fast Food Market in Russia: 2006-2008
Exhibit VII: Leading Fast Food Chains in Russia
Exhibit VIII: McDonald's Comparable Sales in November 2008 and 2007
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