McDonald's Success Story in Brazil
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Case Code: BSTR408 Case Length: 14 Pages Period: 1979-2011 Pub Date: 2012 Teaching Note: Not Available |
Price: Rs.400 Organization: McDonald's Corporation Industry: Fast Food Countries: Brazil Themes: Localization, International Marketing, Emerging Markets |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
McDonald's Enters Brazil
McDonald's entered Brazil through a JV with Rio De Janeiro entrepreneur, Peter Rodenbeck (Rodenbeck), in 1979. The first store was opened in Rio. In 1981, McDonald's opened its second store in Sao Paulo in a JV with Sao Paulo-based businessman, Gregory James Ryan (Ryan). Both the stores were set up as JVs. In 1987, McDonald's set up its first franchise in Brasilia. According to Rodenbuck, the franchising operations took time because McDonald's wanted to provide its potential franchisees with an interesting package...
Localization
McDonald's Brazil had made some adaptations to the food on its menu. For instance, Brazilians had only coffee and a light roll for breakfast. This was different from McDonald's breakfast menu. The company noted that orange juice, which was part of American breakfast, was served as a daily beverage with sodas in Brazil. Since Brazilians were accustomed to drinking fresh fruit juices, McDonald's offered high quality fruit juices. It also served apples as individual items or in combo with cereal, yogurt, and orange juice. In addition to this, it offered national drinks such as guarana and maracuja, tropical fruit juices...
Marketing
McDonald's when entering any country usually focused more on adapting marketing strategies. The company avoided product adaptation where the products were common with its US menu except for countries such as India and Japan where the culture differed greatly from the US culture. The marketing strategies of McDonald's in any country were primarily targeted at the youth who, the company felt, had an open mind to new, non-traditional foods...
Competition
In 2001, the informal dining sector in Brazil was worth US$ 1.75 billion with McDonald's Brazil capturing 25 percent of the market. Its competitors Habib's and Bob's together garnered 15 percent of the informal dining sector while the remaining 60 percent was held by bakeries, cafeterias, hotdog vans, and other informal eateries...
Addressing Local Concerns
Despite being successful in the Brazilian market, McDonald's Brazil received criticisms from various quarters. One of the major criticisms it faced was from its franchisees in Brazil. The franchisees alleged that the rapid expansion of McDonald's and new restaurants coming up in the vicinity of the old ones cut into their sales. Moreover, opening company-owned outlets violated the essence of franchisees' contracts, they charged...
The Road Ahead
According to McDonald's Brazil, Brazil was its major market in Latin America since it accounted for the major portion of its revenues. For the first six months of 2011, McDonald's Brazil accounted for 52 percent of the revenues recorded by Arcos. Some industry analysts opined that with the growing lower and middle-class consumers in Brazil, McDonald's Brazil served as an entry point to the fast food market. McDonald's Brazil also noted that Brazil was its driver of growth in future...
Exhibits
Exhibit I: Timeline of McDonald's
Exhibit II: Some of the Developments at McDonald's Brazil
Exhibit III: List of Awards and Recognitions for McDonald's Brazil
Exhibit IV: About Arcos
Exhibit V: Master Franchising at McDonald's
Exhibit VI: Four Year Financial Summary of McDonald's Brazil
Exhibit VII: Rock n Fries Print Ad of McDonald's Brazil
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