McDonalds one of the largest fast food selling restaurant chains in the world was established in 1940 by two brothers Richard and Maurice McDonalds. This restaurant started its business as a barbeque restaurant but latter specialized in making ham burgers, the restaurant got the attention of Ray Kroc an American businessman who became the franchising agent of McDonalds in 1955 and took McDonalds to its international growth. Ray Kroc made the McDonalds Corporation and added certain training facilities for employees which made McDonalds a divine training institution for student. McDonalds Corporation also introduced the Hamburger University which laid the very sole of quality management in students and provided scholarships to excel students and student employees of McDonalds.
1) International And Domestic Marketing Principles Of McDonalds:
McDonalds, the global fast food giant with more than 34,000 local eating joints serving nearly 69 million people in 119 countries each day, has a substantial presence in Pakistan. Though McDonalds insists on a universal standard the fast food behemoth still allows customization of its products and services meeting a particular business need. Yet the company’s franchisees across geographies have a similar approach to business in multiple parameters.
A marked compatibility with regard to quality and service between McDonald restaurants, even they are far apart from each other in terms of geographical location, is the hallmark of the fast food giant.
McDonalds Pakistan recognizes its socio-cultural context, hence has replaced traditional hamburger for halal food free of pork. The fast food chain also prefers to procure meat from local halal abattoir.
The product promotion strategies, one of the key areas of marketing principles, always need to be agreed upon in order to optimize the market performance of McDonald. The US based company’s expansion in Pakistan would require working on commercials that can appeal to the local customers under the guidelines of Pakistan Electronic Media Regulatory Authority (PEMRA).
2) Growing Global Market Environment Of McDonalds:
McDonald together with Lakson Group has incorporated Siza Foods (Pvt) Ltd to own a chain of 22 restaurants in Karachi, Lahore, Islamabad, Hyderabad & Faisalabad. McDonald relies on franchisee, or affiliated or organic expansion as a model for its growth. McDonald’s overseas growth plan including its Pakistan market must be in line with its current revenue, if not more. Also, the food chain would like its primary products to top its menu such as cheeseburgers, chicken, French fries, breakfast items, soft drinks, milkshakes and desserts. However, certain regional markets such as Pakistan must adapt to local demand for halal meat which would require hamburger to be replaced by halal meat. Also, the company should always remain prepared to changing consumer tastes – many regional customers forced McDonald to include salads, fish, wraps, smoothies and fruit. The local delicacies of Pakistan such as grilled Tandoori chicken may in the future menu of McDonald.
Acquisition of rival businesses
In this era of development and innovation McDonalds USA being highly flourished in its domestic market is spreading its business internationally. In growing globally McDonalds USA considered franchising as their mean, which is a safe, less costly and easy method with minimum legal obligations. McDonalds opened its first franchise in 1955 by Ray Kroc, who also established the McDonalds Corporation. Since then McDonalds is growing its business and now operates in 119 countries.
In Pakistan McDonalds has given franchising rights to Lakson Group of Companies headed by Mr. Amin Lakhani. McDonalds Pakistan opened its first franchise in September 1998 in the city of Lahore, a week later it opened another franchise in Karachi and thus it went on increasing its franchises in 8 big cities of Pakistan.
McDonalds USA however has taken over few small scale fast food retailers, who were facing difficulty in competing with competitors in the business.
3) Practical Marketing Cross Cultural Implication Of McDonalds Operation Abroad:
McDonalds USA being in its domestic market is well aware of the cultural implication prevailing in USA, which tends the growth of McDonalds as it knows the language, culture, society and laws of the country. In case of McDonalds Pakistan there are barriers to McDonalds USA on various grounds like power distance, individualism, uncertainty, masculinity and long term orientation.
In Pakistan the society is based on certain social and cultural grounds that does not allow people will less experience to participate in decision making, in this way there is an unjust power distribution were people are feel bound and limited as to decisions made by elders.
In Pakistan in all most all fields of business individualism is observed where task are being created by directors which are then followed by managers and carried on to subordinates, in a way were the directors take all stress of creating the idea rather than considering a group discussion on the point.
In Pakistan the uncertainty element is high due to lack of security issue in the country and unstable law and order prevailing in the country, which tends businesses to be very cautious when taking certain business decisions.
The socio-culture environment in Pakistan is based on a male dominant society, were the decision making is restricted to male members of society and there is a lack of equality of thoughts as women mostly are not allowed to part in decision making.
Pakistan being one of the underdeveloped countries is far from looking at long term orientation as country faces many financial and economic crises which restricts businesses to look at long term orientation and compels them to take part in short term goals.
4) Current And Potential Cultural Differences:
Food industries wither prevailing in its domestic or international market has to follow cultural trends of the country in which it is to operate. In the context of McDonalds USA and McDonalds Pakistan both prevail in countries with entirely different cultural grounds.
The culture prevailing in USA is quiet broad minded, where they consider freedom of speech, less religious resistance and equality of gender. Being so McDonalds USA enjoys many privileges due to freedom of speech and less religious resistance, where they can sell their products without any regards of being halal or haram, they can make advertisements keeping away from certain explicit materials which are exempted by American law. In American society equality of gender allows women to work for their living which has helped McDonalds USA to recruit female staff in their stores.
The culture of Pakistan is narrow minded as compared to USA , where freedom of speech is limited within social, moral and religious grounds, religion plays a vital role in almost every expect of life and gender equality is not observed as women are not encouraged to work and participate in career building activities. In this case McDonalds Pakistan has to work in limitation of Islamic Sharia and has to make its products with halal ingredients. McDonalds Pakistan also has to make advertisement of its products in limitation of rules set by PEMRA. In Pakistan women are not allowed by their families to work in an environment where they would be serving men or dressed in an uncultured manner which restricts women to work in a food chain like McDonalds.
First and foremost, according to a Hadith in Al-Tirmidhi, it has been narrated by Hadhrat Abu Darda (Radi Allah Anho) that alcohol is the key to all evil; this is consuming it or selling it. It is totally Haraam to sell alcohol and the income earned is also Haraam.
It is Haraam for a Muslim to sell something that is Haraam for him to eat or use. The Holy Prophet, Hadhrat Muhammad-ur Rasullullaah (Sallallaahu Alayhi Wasallam) said, “If Allah Taa’la makes Haraam the consumption of something; He also makes Haraam its transaction.” (Musnad Ahmad, Hadith no. 2546)
(2.1) Project Management Techniquesof McDonalds:
McDonalds USA a company form by merger of two companies initiated its project with a franchise selling burgers and milk shakes. The company followed the traditional approach of project management techniques were they planned and designed their production, quality, distribution, staffing criteria and location. After the planning and designing of these ideas by McDonalds USA they started execution of these ideas and concentrated on further construction of these ideas. McDonalds USA after putting its ideas in action worked on ways to control and monitor it by making certain software that would allow it check its sales, inventory and financial summary in real time. This project development technique used by McDonalds USA has made its business successful in USA to a great extent and has also created an image in the international market which is spreading its business across the globe.
Pakistan’s market being a complex and unfamiliar market for McDonalds USA has led to providing franchising authority to Lakson group of companies a leading business group in Pakistan, which knows the business trends in the country and how to act in according to it. This group has helped McDonalds Pakistan to grow in a flourishing manner as most elements in the country are against American commodities.
(2.2) Different Stages of McDonalds international marketing development including:
– Polycentric and
These different stages were introduced Howard V in 1969. These stages indicate the staffing preferences of any firm in an international market. The Domestic stage refers to allocating or recruiting staff from within the country of the company. The Ethnocentric stage is similar to domestic stage in terms of staff recruitment but the country in which the company recruits staff is not its own country. The Polycentric stage refers to employ staff from the country in which you are doing business.
The Geocentric stage refers to employ staff throughout the globe in order to achieve the objectives of the firm by using skillful people of the world. These stages have emerged due too certain aspect prevailing in the world, which tends multinational companies to adopt these stages. McDonalds being a multinational fast food chain has adopted different stages in different countries. In Pakistan McDonalds has adopted Polycentric view of staffing. This is due to many reasons like language barrier, religious aspect prevailing in the country, lack of security reasons for foreigners and high ratio of unemployment of the locals in the country. As compared to McDonalds in America where there are both domestic and geocentric views of employment. This is due to the difference in their countries environment, thinking and political condition.
(2.3) Market Research Process of McDonalds in International Marketing:
McDonalds being world famous in its fast food chain and delivering its best in making delicious and unique burgers has to go through certain market research process for the international market. This marketing research process has to be worked out by following a range of steps in order to accomplish tasks which curtail the research. These tasks are related to problem identification, setting objectives, data collection and analyses and finally preparing the report of the research.
Before entering the Pakistani market McDonalds had to do a thorough market research in which they firstly highlighted the areas of problem they will have to work on, secondly they made objectives to solve these problems, for this purpose they started collecting data through both primary and secondary sources which would provide helpful information to them regarding their problems and after collection of the data through public serves, various economist, external sources and advertisement, they analyzed these collected data and got solutions through their problems. Due to the through market research by McDonalds it is now successfully flourishing its business in Pakistan.
(2.4) Market Choice and Market Entry Strategy Options Used By McDonalds:
When deciding to start a fast food chain of the west like McDonalds in a country like Pakistan who follows and practices Islamic Laws and Sharia McDonalds will have to face many Barriers of its entry, to overcome these barriers McDonalds will have to make certain strategies. The first and foremost barrier is socio cultural barrier which states to the religious aspect in the country that allows to deal only in Halal commodities, to overcome this McDonalds will have to provide its franchise Halal meat and ingredients. The second barrier is the source of capital for running its business, to see through this problem McDonalds has started subscribing its Franchising to the locals of Pakistan and does not have to invest on its own and enjoys loyalty from them. The third barrier is the terms and tariffs prevailing in Pakistan, to face this barrier McDonalds will have to organize its business in the prospective terms and tariffs of the country.
(2.5) Impact Of Cost Leadership, Differentiation and Focus On Branding, Brand Strength and Recognition in Country Specific Markets of McDonalds:
Cost leadership is a process through which a company focuses on producing commodities or product at lowest cost. This process is dependent upon the companies prospective of its performance, size, scale and experience. A fast growing worldwide food chain like McDonalds also focuses on branding, brand strength and recognition of it brands in country specific markets. Branding refers to making an indication of a specific company in terms of logo, picture, mark or delivering a certain look of a commodity. McDonalds also make certain analysis on its brand strength in terms of its competitors by making Qualitative and Quantitative analysis on its customers. The outcome from these researches helps McDonalds in making any changes to its products for gaining strength of its brand and also making its recognition in the country specific market.
The restaurant industry is known for yielding low margins that can make it difficult to compete with a cost leadership marketing strategy. McDonald’s has been extremely successful with this strategy by offering basic fast-food meals at low prices. They are able to keep prices low through a division of labor that allows it to hire and train inexperienced employees rather than trained cooks. It also relies on few managers who typically earn higher wages. These staff savings allow the company to offer its foods for bargain prices.
(3.1) International Product Strategies ofMcDonalds:
In international product strategies McDonald USA uses different strategies as compared to its international market in McDonalds Pakistan. In USA the company produces its product in a standard manner, where commodities are prepared as per the standard of the people in the country. The America food cuisine mostly consists of burgers with western mild spices and a preference of tender burger patties not considered overcooking the meat and removing its flavors. In McDonalds Pakistan the taste preference of the people is different as compared to the American society. In Pakistan people follow the Indian cuisine of curries, tempting spices, rich flavored food, and nicely cooked meat.
In this case McDonalds USA cannot adopt the same standards of taste in McDonalds Pakistan as it would not satisfy the customers in the country, who are not familiar with the taste of western community. In this case McDonalds Pakistan will be on a different verge of innovation rather than extending on the same methods of production of USA.
(3.2) Pricing Strategies For Market Penetration Used By McDonalds:
McDonalds USA has adopted a reasonable pricing strategy for its market, which makes McDonalds USA affordable for the people with different level of income. McDonald’s is using Value-Pricing Strategy whereby its offer just the right combination of quality and good service at a fair price to their consumers. This shows McDonalds USA competitive pricing strategy, which is keeping it above its competitors and helping it to become people’s choice.
In McDonalds Pakistan the same Value Pricing strategy is being adopted by Lakson group, but the company is not prospering in the same capacity as McDonalds USA as the level of income of population in Pakistan is low and a majority of people cannot afford a quality meal. This has limited the market penetration of McDonalds in Pakistan as people expect low prices on food products, which the company cannot beer.
(3.3) Objectives of International Communication Campaign:
McDonalds being recognized by the world as a great food retailer has to maintain an international communication campaign, which tends to keep in touch with customer feedback as well country or region feedback, but this international communication campaign has laid certain issues when concerned with McDonalds Pakistan and other such country were polices are similar to Pakistan. In Pakistan the national language is Urdu, the country is an Islamic state, target audience is completely different from USA or other countries and it has a different culture and feedback of the people for the communication campaign. Hence McDonalds follows different communication campaign in different country and is making progress towards it development. McDonalds however has raised a slogan which say “I’m lovin’ it” is set on international standard and is being followed in all the countries were McDonalds is operating.
(3.4) Elements of Marketing Mix In Relation to International Markets:
McDonalds being spread around the globe on the basis of franchising has less to do with international delivery as its main purpose is to monitor the standard it has set for its product. McDonalds however uses different packaging, storage and delivery procedures in USA and Pakistan.
In Pakistan the storage and packaging standard are being checked and prepared by Lakson Group, this group is also responsible for sending the supplies to the franchises prevailing in the country and making shore that these supplies come from a halal source. The delivery of the products to the customers are being monitored by a call center who checks the availability of the products and sends the order to most nearest franchise of the corresponding customer, that can deliver the product in a reasonable amount of time. In USA the same procedure is being followed however the regulatory body is the McDonalds organization itself.
(3.5) Importance of E-Services to Other Countries:
In this new era of innovation of and improvement e services has played a major role by making sharing of information, transaction and techniques easy, simple and quick. McDonalds USA being a spread across the globe has made its mark by these services by aware people of their products and deals. These e service has helped McDonalds USA in many ways, firstly by transmitting its idea to the public, secondly by gaining feedbacks from its customer through their website, thirdly by collecting data from its operating franchises and fourthly by collecting information from different sources for new potential markets and their requirement.
McDonalds Pakistan has also made benefits of these e services and provided various useful information on its website and certain suggestion and feedback form for inquire of their customer. This e services also make customer aware of their future events and new products and deals to be offered.