McDonald’s Global Marketing Strategy

Executive Summary

McDonald’s is among the world largest fast food restaurant chains. Currently, the company has operations with thirty two thousand restaurants that serve more than sixty million clients everyday. The key to the company swift and successful global expansion has been allowed by the franchise model. In fact, McDonald recognize the fact that international markets require extremely high level of local receptiveness and the need to manage business all over diverse regions efficiently and effectively that is achievable through “Transnational Strategy”.

Introduction

McDonald is among the world best known and international largest hamburger fast food restaurants. On daily basis, the restaurant has capacity of serving sixty million customers. McDonald was incorporated in the year 1940 in San Bernardino, California, USA. From the extreme modest starting, the company was able to scale up its businesses through selling of higher quality products inexpensively and speedily. Currently, the company has operation in 117 countries with thirty two thousand restaurants all over the world employing more than 1.5 million people. The key toward the company successive global expansion relates with the business model established by McDonald’s. Franchise model has assisted the company in realizing the global rapid expansion (Schlosser 2012).

This paper will explore McDonald’s strategic marketing issue of market entry in Iceland and in Ghana. Nature of the two marketing environments will be explored as well as analysis of the business and marketing implications that may arise for the company when entering the two markets. Finally, recommendations will be provided to justify the marketing entry modes for the target markets.

Nature of the Marketing Environments

Ghana

Ghana country has the fastest growing economy in the African region with approximate US$ GDP of 42 billion. According to World Bank Ease of Doing Business 2013 report, Ghana was ranked:

• Number one on the “Ease of Doing Business in West Africa”
• Number two on the “Ease of Registering Property in the Sub-Saharan Africa”
• Number five on the “Ease of Doing Business in Sub-Saharan Africa

For the aspect of logical understanding the business and marketing environment of Ghana in relation to investment in industries such as fast food, there is the need to take an overview of the country in terms of work and the entire factors that fosters or influence investment in the country. In analyzing the business and marketing environment of Ghana and categorizing the county as attractive place for investing there is utilization of the PESTEL tool. The PESTEL tool comprises of the Political, Economic, Social, Technological, Environmental and Legal forces that have influence to the trade, commerce and investment in a given country. The reason behind analysis of PESTEL is that it is a tool that accounts for the different macro environmental factors to consider when to invest in the Ghanaian market and understanding of market growth or declines, potential direction for operations, and business position (Spillan and King 2017).

Political Environment

According to reports, Ghana has been deemed as the doorway to West Africa. In fact, the merging of the British Colony from the Gold Coast and the Togoland trust territory figured Ghana. In the year 1957, the country was marked as the first sub-Saharan nation within the colonial Africa to have had gained its independence. The country population is estimated to be around 26 million people with wider range of diverse ethnic groups. The official language of the county is English. Conversely, there are some other common languages that are spoken such as the Ewe, Asante, Dagomba, Fanter Bororn (Brong), Akyem, Sagomba, GA, Dagarte (Dagaba), and Akuapem. In Ghana, te indeginous religion that is followed widely by large population tends to be the Christians (63%), Traditional beliefs (21 %), and Muslims (16 %) (Spillan and King 2017).

After the country gained its independence, it was able to conduct its first presidential elections that were held on 27 April 1960. In December 10, 2012, the country conducted its sixth free, fair and credible elections. In comparison to some of its neighbors who are faced with political challenges, the country was capable of conducting remarkable presidential elections full of democracy. This marked dedication for Ghanaians to ensure that there were positive changes in the country political climate. Indeed, the 2012 elections demonstrated commitment of the country to democracy, political actors and the electoral commission commitment to the citizens of the country. A country that has been able to make such progress details that there are remarkable efforts.

According to Economist forecasts, the country economy has been growing with over 8 percent this year, and the Ghana democracy has been extensively honored. With Ghana stable political environments, rich bequest of natural resources and vigorous economic growth Ghana has been attracting significant amount of foreign direct investments in all sectors. In addition, the new government has considered adopting the determined transformational program centered on crucial aspect of social inclusion, job creation, economic diversification as well as macroeconomic stability. Generally, Ghana may be marked as an ideal example of a thriving democracy in the entire African region. With the well-established county administration that has accounted for sturdy economic transformation, Ghana has become an easiest location for carrying out any business in West Africa.

Ghana Economic Profile

Generally, the twenty-five years of proportional health administration, competitive business atmospheres as well as prolonged reduction in poverty levels have enhanced Ghana economy. The country has plentiful natural resources where the agricultural industry accounts for almost one-quarter of the country GDP engaging almost half of the country workforce, especially the small landholders. As well, Ghana service sector is almost 50 percent of the GDP. In addition, the country Gross National Income (GNI) is continuously improving all through the years with a quick raise which is proving a strong and stable economy. Ghana economic growth has been averaging at six percent per year. Additionally, Ghana is among few African countries that are anticipated to meet the Millennium Development Goal (MDG) of having being able to lower the poverty rates (Spillan and King 2017).

Ghana economic score is currently at 61.3 and has been ranked at position seven out of forty six in the Sub Saharan Africa region which make the overall score of the country to be above the world average. Ghana government has been taking into consideration significant strategies to attract FDI to the country. To motivate foreign direct investment, the Ghana legislation has replaced the prior unwelcoming regulations with welcoming investment laws. Generally, the Ghana Investment Promotion Center Act of 1994 (GIPC) (ACT 478) administer all investments of the economy apart from mining and minerals, Free Zones, and Oil and Gas. As well, the Sector-specific legislations control the banking, non-banking organizations, fishing, energy, insurance, telecommunications, mining, securities, and real estate (Spillan and King 2017).

Despite this, the process of starting a business in the county tends to be complicated and widespread since all investors are expected to comply with list of policies, procedures and regulations for approximate five government authorities such as GIPC, Ghana Revenue Authority (GRA), Registrar General Department, Social Security and National Insurance Trust (SSNIT) and Ghana Immigration Service. Nonetheless, with the new changes, the average time for setting up business in the country has been reduced to almost 12 days.

In summary, Ghana has wealth of resources, political system that is democratic and vibrant economy, that have made the country one of Africa leading in terms of attraction to investment. Ghana has gained world confidence due to its stable political conversion as well as strong commitment toward democracy that has aided in expanding the country growth in FDI. In fact, Ghana has in the recent times attracted the attention of international businesses that are ready to invest in all economy sectors. All these investors are approaching the country since there is an understanding that Ghana has magnificent favorable political, social and economic environment where businesses can invest, grow and develop. Structuring on the significant natural resources, the country has been devoted toward developing the physical infrastructure (Spillan and King 2017). Recently, Ghana has focused on achievable reform ideas that would improve on the investment climate for the international and domestic investors. Such efforts have extremely paid off making Ghana been positioned as the best place for carrying out businesses. As well, the financial sectors and the telecommunication services have been gaining ground, offering vibrant and inventive services to the diverse clients worldwide.

Iceland

Iceland is located in the Mid-Atlantic edge where the Arctic and the North Atlantic Oceans convene. It is a volcanic island in the Nordic Europe with estimated population of 320,000 citizens in an island of around 103,000 km2. The business and marketing environment in Iceland is extremely well-organized since there is business flexibility, flexible labor market and business friendly regulations. In the small society, there is easier access to the government official bodies and departments. In fact, the government has set policies directed toward provision of fair, efficient and competitive-fostered operational environment for firms in the market economy and encouraging foreign direct investment (Hilmarsson and Hafliðason 2011).

Iceland economy widely depends upon fishing activities. In fact, fishing activities offers 40 percent of the country export earnings employing the country 8 percent of the workforce. Conversely, due to the declined fishing inventories, the country has considered diversification in other economic sectors such as service and manufacturing industry such as biotechnology, software production, and financial services. The tourism sector has been one of the most growing sectors which have been fostered by the latest ecotourism and whale-watching.

Iceland is not part of the European Union and it is not a member of EMU but it has its own currency, the Iceland Krona. However, the country is a member of the EEA and has made application of EU membership with strong link with the EU in relation to trade. Iceland is a small developed country with small economy. However, the country has not been well protected from the economic instability. In fact, the country economy is marked by sturdy government involvement as well as higher levels of free trade in comparison to other Nordic countries. Main trading partners of the country are the EFTA, EU, the USA and Japan (Hilmarsson and Hafliðason 2011).

Iceland is a world-renown country due to its social stability, economic advancement, and technological advancements and has been ranked as the most prominent society. Quality of life in Iceland is high, modern, growing economy, political stable and globally competitive. The country is young, multilingual, educated and enjoys higher standards of living with prospering cultural scene. In fact, labor market in the country is highly flexible with citizens will to acclimatize to the new technologies (Mundial 2013).

Marketing and Business Implications

The fast food industry wilted into 2017 with frustrating similar-store sales outcomes and declined traffic questioning whether the industry was directed toward recession. Despite this, the industry is not ready to enter recession but will continually evolve. There are lifestyle changes and new generations that are turning to consumers with changes on ways purchase and consumption of food away from home are continuously changing.

The two countries have stable economies and continuous job growth with expectations that the economy will grow at modest average rate of 6 to 8 percent. With slow economic growth combined with changes in consumer preferences and purchasing behaviors, McDonald will be expected to compete greatly with other sectors to ensure it gain its share of disposable income. Within the two marketing environment, aspect of growth will be achieved at the price of competition. In fact, McDonald will be expected to consider ways of developing creative strategies that would connect with the clients and fostering traffic (Vaiman, Sigurjonsson and Davidsson 2011).

On the other hand, aspect of preference has been evolving with changes in the society influenced by oscillating demographics, spending patterns, lifestyle choices among others. In fact, changes in the consumer preference will have to impact every segment of the company. Generally, the fast casual perception will have to benefit from the increased demanding lifestyle and increased numbers of young consumers are dining more that the prior generation. However, this consumer group tends to spend less than the old generation but they dine with superior frequency (Vaiman, Sigurjonsson and Davidsson 2011). McDonald needs to pay closer attention to such demographic group in these countries with ability to address the demand for health and creative menu option that would be prepared with local organically sources products. In addition, McDonald must understand that aspect of convenience is crucial to the customers. There is the need to have efficient flow which will be achieved through effective technology. In addition, mobile ordering process and mobile payment choices have been the norm and original loyalty initiatives and efficient social media course directed toward fostering the brand (De Mooij 2013).

On the other hand, fine dining in this core industry in the two countries is defined by the food. In fact, top chefs must come up with ways of developing innovative menus that would attract new guests who wish to experience the complex flavors within lively and fashionable environment. Aspects of small plate menus are allowing diners to have sampling of the menu and sharing the food experience have driven the shift in this industry. As well, the casual segment has been widely impacted by changes. Casual segment in the two countries have been impacted by the declined customer traffic. Shift in demographic, change in lifestyle and overbuilt segment has made competition severe epically for brands that are challenged in differentiation. In fact, many operators are having the same menus and are creating the same experience for the guests, hence being forced to compete on aspect of price only. In addition, the operators are implicated by client focus toward local products, extending to locally founded products. Value has been a significant aspect in this sector whereas attentive services and food quality are part of value proposition (Viswanathan and Dickson 2007).

Chances are that aspect of competition would deepen since there are developing brands that are entering the new markets and attacking the well-established brands. In general, successive champions will surface from the fast casual room. Such restaurants perceptions are capable of connecting excellently with the customers and attraction of young customers who are attracted to the healthier options and fresh foods. Casual dining are experiencing continuous struggle of differentiating themselves. In fact, many tend to have similar menu items, competing in the same environment making it more relevant about convenience, location and low process for consumers.  Profit for the casual dining restaurant will be an issue since the average unit volume decrease at faster rate that the price structure (Zou and Cavusgil 2002).

Conversely, labor issue in the two countries characterizes a significant cost to the restaurant. There are regulatory legislative adjustments related to minimum wages and payable overtime that will have noteworthy impact to the industry. Labor cost will be an impact despite decreased unemployment rate. Suggested immigration procedures, policies directed toward promotion of new opportunities and planning ways of modernizing the countries infrastructure will result to increased competition for labor which may drive up the costs (Vaiman, Sigurjonsson and Davidsson 2011).

Market Entry Mode

Within the two markets, McDonald may consider market entry mode that entail franchising. Franchising is considered as form of licensing where the company does not only sell an independent franchisee or use of intangible property (trademark) crucial for the business and operational to support the business on continuous basis such as through training and sales promotion. McDonald needs to spread its operations to the global markets as a way to attain more profits and market shares due to higher level of competition. Due to this, the business must come up with strategies directed toward better adaption of company goals and structure. Hence, franchise is the best option for McDonald since it has the wish to attain equilibrated relation on the control risks and returns and the powerful business model all over the world (Armstrong et al. 2015).

Franchising comprises of contractual connection between the franchisee and the franchisor and must be legally independent businesses. Franchise format may take different constituents:

Product and service deliverable: in this case, there are unique characteristics of this format that create the concept of the business (for example having unique menu in the fast food restaurant) and giving the format competitive niche within the marketplace.

Benefit Communicators: these entail unobservable and intangible benefits to the consumers such as reliability, quality, and professionalism that create aspect of confidence with the products and services (such as clean uniforms within the fast food outlets). This benefits tend to be auditory and visual elements linking individual unit in the chain or system (such as trade mark or trade name, color schemes, de’ cor, uniforms and architectural characteristics) (Armstrong et al. 2015).

Format Facilitators: these entails procedures and policies that enable the franchise function effectively and efficiently within the individual unit level and the system level. As well, there is the consideration of the managerial and operational infrastructure essential for formatting implementation, covering the store level aspects such as design plan, layout, and specification of equipment. In addition, the system-level element is accounted for such as financial report systems, training procedures, and royalty payment methods. In fact, format facilitators are principally imperceptible to the clients excluding the indirect effect on any other components but crucial since it comprises the operational and managerial infrastructure for the whole franchise system (Armstrong et al. 2015).

As argued by Armstrong et al. (2015), franchising together with other form of global cooperative techniques tends to allow geographic diversification and promotion of firm growth. Franchise business requires few resources commitment and allows great tactical flexibility. For capacity to attain the required expansion, McDonald needs to consider the fact that success in the foreign markets has to be sustained in the analysis and pursuit of the market conditions like the saturation and the growth expectations (Armstrong et al. 2015). In summary, franchising business is an interesting business model that has benefit to the franchisor business that have wider opportunities of growing and developing with few risks than if the business invested in new business. Investing in other business may entail need for “Good Will” of the franchisor businesses supporting the licensing and cooperative strategies.

Bibliography:

Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. London: Pearson Education.

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Hilmarsson, Þ.H. and Hafliðason, K., 2011. Doing business in Iceland.

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Schlosser, E., 2012. Fast food nation: The dark side of the all-American meal. Houghton Mifflin Harcourt.

Spillan, J.E. and King, D.O., 2017. Introduction to Doing Business in Ghana. In Doing Business In Ghana (pp. 1-12). Palgrave Macmillan, Cham.

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