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Analysis McDonald’s Franchise in Viet Nam Essay

McDonalds’s is a business corporation system of fast food restaurants with approximately 31,000 restaurants in 119 countries to serve 43 million passengers a day under its own brand. The McDonalds’s restaurant concept was introduced in San Bernardino, California by Dick and Mac McDonald’s in May 15, 1940. It was modified and expanded by their business partner, Ray Kroc, of Oak Park, Illinois, who later bought out the business interests of the McDonald’s brothers in the concept and went on to found McDonalds’s Corporation in April, 15, 1955.

I.2. Mission and Vision
McDonalds’s brand mission is to “be our customers’ favorite place and way to eat.” Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience – People, Products, Place, Price. We are committed to improving our operations and enhancing our customers’ experience. Vision

“McDonalds’s vision is to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile.”

I.3. Business objective
The business objective of McDonald’s, which is a fast food restaurant, is to be the world’s best quick service restaurant experience. They also aim at being the best establishment by providing outstanding quality, service, cleanliness and value.

II. SWOT Analysis
II.1. Strengths
Strong brand name, image and reputation: McDonalds’s is the leading global foodservice retailer with more than 34,000 local restaurants serving nearly 69 million people in 118 countries each day. The McDonalds’s image is easy recognized everywhere. This brand is in top ten of the most powerful brand name in the world. Large market share: McDonald’ss is considered as the largest player in size and global reach. When Wendy’s or Burgers King are losing market share in 2006, McDonald’ss still increases its market share. Market share of McDonald’ss in the recent time is about 19% while Yum!

Brands is 9% and both Wendy’s and Burger King is 2% Specialized training for managers: McDonald’ss is very serious on training managers. This company has its own program to train managers the most professionally, which is called Hamburger University. As a result, McDonald’ss has many good managers who can help company development well. Locally adapted food menus: The fast food chain is operating in many diverse cultures where tastes in food are extremely different than those of US or European consumers.

Thus ability to adapt to local tastes is one of McDonald’s’s strengths. Partnership with best brands: McDonalds’s offers only most popular brands in its restaurants, such as: Coca Cola, Dannon Yogurt, Heinz ketchup and others. Technology Innovative: McDonald’s’s is keeping at the forefront of technology around the globe

II.2. Weaknesses
Unhealthy food: As we know, there are foods in menu of McDonald’s largely formed of unhealthy meals and drinks. Nowadays, people have trend to be take care them health, they tend to be use healthy food. High employee turnover: Although McDonald’s has many good managers as well as skillful employees, the turnover rate is still high. Every year many of their employees are fired out of the restaurants. Moreover, many others quit their jobs, especially part time employees because of low salary as well as too high working pressure. Problem related to health issue: McDonald’s use Trans – fat and beef oil in their food.

Although it is not illegal, it affects badly on customer’s health because Trans – fat is causes of some kind of cancer. Consequently, a number of customers who care about their health stop eating at McDonald’s restaurants. It makes revenue of company decrease. Price quiet high: Compare with other traditional fast food in Viet Nam, the McDonald’s product’s price quiet high, it’s not suitable with almost personal’s income in Viet Nam.

II.3. Opportunity
Growth of the fast food industry: Fast food market in Viet Nam is a potential market. Demand of people is in big cities are increase. In recent years, growth rate of fast food market continue to increase. Diverse tastes and needs of customers: Customer’s tastes now become more diverse. As a result, they require new format of service in order to satisfy them. Changing customer habits and new customer groups: Nowadays, Vietnamese are more adapt with tastes of West. Almost people are trending use fast food by conveniently, especially majority young people in Viet Nam.

II.4. Threats
High competitive with other brand: McDonald’s will be high competitive with other big brand stay in Viet Nam in long time such as; KFC, Lotteria,
Jollibee, Pizza Hurt, Buger King, etc. Differences culture: Differences culture also a threat with McDonald’s when come to Viet Nam. Trend towards healthy eating: Due to government and various organizations attempts to fight obesity, people are becoming more conscious of eating healthy food rather than what McDonalds’s has to offer in its menu. III. Advantage and disadvantage of MacDonald franchise

III.1. Advantage
First of all, fast food has become part of daily life of young people, because of the speed of urbanization increase rapidly, consumer demand enhances, qualities of life are also stability, and it ensures that piece of fast food market constantly enlarged. Surveyed fast-food industry made ​​by Nielsen Vietnam in 2010 shows that 86% of consumer this product under the ages of 20-35. So as a latecomer, McDonalds’s will also benefit from the achievement that KFC has efforts to build fast food habits for the Vietnamese. McDonalds’s will not meet too many difficulties to complete a supply chain standards system for their restaurant in Vietnam, because the domestic producers now have plenty of experience coordinating with system fast food before.

In additions, Food Culture of McDonalds’s has existed in 118 countries around the world so convincing taste of Vietnam is probably not too difficult problem for this giant. About Place, the latecomer these positions favorable are occupied, but beautiful place to McDonalds’s developing restaurant will not too scare if they active spending. Besides that, infrastructure in Viet Nam are developing, system buildings, supermarkets and modern commercial centers are rising steadily, and trend urbanization has created more beautiful space for fast food chain in Vietnam. GDP per capita is currently at 1,500 USD / year is low compared with the other area, but look at GDP per capita in two biggest cities Hanoi and Ho Chi Minh City higher than the national average pretty much (2012, Ha Noi at around $2,200 /person is Ho Chi Minh City is $3,600 / person).

This income is sufficient to will sufficient to consumer willing spend from 4 – 6 dollars for a meal. Certainly two locations will be first place McDonalds’s open restaurant. Although McDonald’s is a latecomer but not likely other fast food brand, McDonald’s has special advantage of their own. That is the advantage of who hold the number one position fast food in the world.

III.2. Disadvantage
Besides there are advantages, McDonald’s have disadvantage when come to Viet Nam, they will fail if they do not understand Vietnam. First off all, the difference culture, culture of Vietnamese cuisine is rich and varied, taste of East difference taste of West. Thus, McDonald’s should consider this problem when offer food on menu. In addition, strengths of McDonald’s in the U.S. market are breakfast (accounting for one quarter of total revenue) is not applicable in Vietnam.

Because the habit of Vietnamese considered breakfast is snacks. McDonald’s will be face fierce competition with other brand such as KFC, Lotteria, Jollibee, and these competitors has existent more than 15 years and has significant market share of the fast food market. One thing important franchisee of McDonald’s in Viet Nam will face that is place rental costs are very expensive. One the other hand, there are conveniently local are occupied by other brand. Thus, franchisee in Viet Nam will effort find out local put McDonald’s restaurant.

The problem about price also an obstacle with McDonald’s, compare with other country Viet Nam’s GDP per capita is still low. Thus, fats food brands are still being compete on price. Thus McDonald’s should consider this problem if they want to competitive with other brands.

IV. Investment decision
Consider all aspects of McDonald’s franchise in Viet Nam, I see that although a latecomer they have some difficult and challenge but fast food market is still potential. McDonald’s has competitive advantages compare with other brands, especially with the position of World No. 1, McDonald’s already challenge with any competitors on fast food market in Viet Nam. If I have a chance I will investment franchise McDonald’s brand in Viet Nam.

V. Summary

Viet Nam is the next destination when McDonald’s has officially announced they will open their first store in Viet Nam at beginning 2014 year. This is good news because when fast food tycoon comes to Viet Nam, fast food market will compete more fierce and meanwhile the biggest beneficiaries none other
than will be the consumer. Because of the presence of McDonald’s will make all other fast food chain must work harder if they do not want to be ‘swallowed’ market share.

VI. References list

Jerome Katz / Richard Green, Entrepreneurial Small Business – 4th Edition,Graw-Hill International Edition. Essentials of Services Marketing – 2nd Edition, Vochen Wirtz, Patricia Chew, Christopher Lovelock. Principle of marketing – fourteenth edition- Philip Kotler and Gary Armstrong http://www.aboutmcdonalds.com/mcd/our_company.html

http://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swot-analysis.html http://www.dna.com.vn/vi/tinh-huong-thuong-hieu/s/mcdonalds-se-that-bai-neu-khong-hieu-viet-nam/

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