Global marketing strategies of McDonald’s Corporation (with Reference to Hungary and Russia)

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Introduction

McDonald's is the world's largest chain of hamburger fast food restaurants. It serves in more than 100 countries. With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility. The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. This characteristic gave me a scope to study on McDonald's concerning 2 countries that is Hungary and Russia where all the taste & preferences are different. This Research paper include the global operation, marketing strategies with product, pricing, promotion, menu food variation in both the countries and further future plans that company have in both the countries. The Technique is used that is SWOT analysis with field survey. Conclusions and suggestion are drawn from the analysis

World's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries across 36,525 outlets. Founded in the US in 1940, the company began as a barbecue restaurant operated by Richard and Maurice McDonald. Ray Croc was the founder of McDonald's Corporation. McDonald's success today is rooted in the work of all three. The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees and marketing fees, which are calculated as a percentage of sales, McDonald's may also collect rent, which may also be calculated on the basis of sales. As a condition of many franchise agreements, which vary by contract, age, country, and location, the Corporation may own or lease the properties on which McDonald's franchises are located. In most, if not all cases, the franchisee does not own the location of its restaurants. The company currently owns all of its property - valued at an estimated $16 to $18 billion. However, in recent times, there have been calls to spin off the company's US holdings into a potential real estate investment trust. The company earns a significant portion of its revenue from rental payments from franchisees. These rent payments have risen 26 percent over the past five years, and currently account for one fifth of the company's total revenue.

The company announced at its investor conference on November 10, 2015 that it would not spin off its property into a real-estate investment trust. The CEO, Steve Easterbrook discussed that pursuing the REIT option would pose too large a risk to the company's business model. The United Kingdom and Ireland business model is different from the U.S, in that fewer than 30 percent of restaurants are franchised, with the majority under the ownership of the company. McDonald's trains its franchisees and management at Hamburger University in Oak Brook, Illinois in other countries, McDonald's restaurants are operated by joint ventures of McDonald's Corporation and other, local entities or governments.

As a matter of policy, McDonald's does not make direct sales of food or materials to franchisees, instead organizing the supply of food and materials to restaurants through approved third party logistics operators. According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at some time been employed by McDonald's. Employees are encouraged by McDonald's Corp. to maintain their health by singing along to their favourite songs in order to relieve stress, attending church services in order to have a lower blood pressure, and taking two vacations annually in order to reduce risk for myocardial infarction. Fast Food Nation also states that McDonald's is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, potatoes, and apples. The selection of meats McDonald's uses varies to some extent based on the culture of the host country.

1. History

1940 - Opened Restaurant by Richard and Maurice McDonald in California, 1953 - I-st McDonald's with arches opened in Phoenix, Arizonian, 1955 - Businessman Ray Kroc joined the company as an franchise agent, 1961- company first filed for U.S. trademark on the name McDonald's with “Drive - In Restaurant Service”, 1967 - company first filed a U.S. trademark on a clown-like man having puffed-out costume legs, 1968 Introduction of Big Mac and shift to Network Television, 1970 - 1600 restaurants, 1980- 6000 McDonald's Restaurants,1990- record sales, 1994 - Kuwait City, Kuwait. 2001 - Faced with a class-action lawsuit for advertising its fries and hash browns as vegetarian, even though they include beef flavouring.

2. Profile

Founded - McDonald's: May 15, 1940; 76 years ago, San Bernardino, California.

McDonald's Corporation: April 15, 1955; 61 years ago Des Plaines, Illinois.

Founders - McDonald's: Richard and Maurice McDonald McDonald's Corporation: Ray Kroc.

Headquarters-Oak Brook, Illinois, U.S. (Moving to Chicago in 2018).

Number of locations-36,525(2015).

Key people - Andrew J. McKenna (Chairman), Steve Easterbrook (President and CEO) Products - Hamburgers, chicken, French fries, soft drinks, milkshakes, salads, desserts, coffee, breakfast.

Number of employees - 420,000 (2015).

Slogan- I'm Lovin' It.

3. Global operation

McDonald's has become emblematic of globalization, sometimes referred to as the "McDonaldization" of society. The Economist newspaper uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these currencies' purchasing power parity. Switzerland has the most expensive Big Mac in the world as of July 2015, while the country with the least expensive Big Mac is India (albeit for a Maharaja Mac--the next cheapest Big Mac is Hong Kong).

PRODUCTS AT GLOBAL - Hamburgers, various types of chicken, chicken Sandwiches, French Fries, Soft drinks, Breakfast items and desserts Some McDonald offerers salads and vegetarian items, wraps and other localized fare on seasonal basis-McRib Sandwich.

India - veg nuggets and big macs (Maharaja Burger).

Germany - beer and McCroissants.

Turkey - Chilled yogurt drinks.

Italy - cold pasta, espresso.

Japan - teriyaki Burger.

Netherland -Vegetarian Burger.

Philippines - McSpaghetti.

Norway - McLake (grilled salmon sandwich).

Uruguay - McHuevo (poached egg hamburger).

Thailand - Samurai Pork Burger with sweet sauce.

3. Pricing and promotion

Pricing - Regional pricing and periodic low-price with high price on new taste menus.

Promotion - Television, radio, customer mailing, point of scale display, direct mail and frequent sales promotion.

4. Research methodology

The study is taken with the field survey and interview to get the SWOT analysis of McDonald as an over view and secondary data is used for the research study.

Table 1

5. Strategy in Hungary

A new concept that is being quickly adopted by McDonald's chains internationally, “Experience of the Future” focuses on incorporating digital tech solutions into the ordering process. Significant changes that guests will experience include the introduction of self-service digital kiosks to order meals, optional payment available by means of online or mobile devices, customizable product options and guest preferences on table service. As the American burger chain plans to continue developing its modernized guest-friendly technology worldwide, McDonald's Hungary says it will introduce five technologically renovated restaurants in the upcoming year. Coming out of 2016, a successful business year for the 89 restaurants bearing the Golden Arches in Hungary, the company says it still has plans to open additional restaurants in the country.

McDonald's starting in Hungary.

The first McDonald's in Hungary was opened on the 29th of April, 1988 in Rйgiposta street, downtown Budapest. The following is a recollection by the Ekkoriban blog of what people experienced during the early McDonald's days.

Logistic.

From the farmers given to the suppliers, then processes and distributed to the distribution Centers. The quality of supplies is maintained by using customized multi-chamber temperature controlled trucks. Then dispatched to the restaurants depending their requirements Cold, Clean and on time delivery based logistic through warehouse.

6. McDonald's in Russia

It was George Cohen, head of McDonald's Canada, who started an almost impossible dream of introducing a McDonald's hamburger in Russia. It took 12 years of efforts and finally in April 1988, he convinced the officials of Moscow that McDonald's can be set up in Russian culture. After 14 years of intense negotiations; McDonald's finally entered into the Soviet Union on January 31, 1990 the first day of McDonald's in Russia broke the record for inaugural sales in McDonald's history serving more than 30,000 customers on the first day itself.

Strategy in Russia.

McDonald's Russia have included potato wedges, cabbage pie and cherry pie. In the year 2005, McDonald's initiated breakfast menu and stronger coffee at different locations in Moscow that enabled commuters who left early for work, to avoid traffic and eating out. The pricing of the beverages have been kept within the Russian budget and their competitors Starbucks. This includes cabbage pies, potato wedges and cherry pie. The Pushkin Square McDonald's as well as the Arbat are two of the locations where the McCafe was introduced. The Pushkin Square McCafe serves an average of 600 transactions per day and it is seen that 6 out of 10 people prefer to have beverages at McCafe than other restaurants

Supply chain management in Russia.

Suppliers - When McDonald's first opened in Russia, a majority of the raw materials used were not grown in Russia whereas as of now over 75% of raw ingredients needed for McDonald's are supplied by over 130 independent Russian suppliers. Many agricultural experts are of the view that McDonald's had changed the way Russians ate and now the “Corporation” is also deciding what should be grown in the country is imported from Germany, Lithuania and Brazil which is mixed with Russian beef to meet the McDonald's standard of 18-22% fat.

Quality and Safety: The facilities at McDonald's Russia are modern, clean; the processes are streamlined and efficient whereas there is a clear evidence of the quality and customer satisfaction.

Logistics: Supplying the raw materials in McDonald's Russia is a significant challenge in itself due to its geographical features. McDonald's Russia purchases raw materials from more than 130 local suppliers. Due to poor road networks and diverse geography of the country, it is a big challenge to transport raw materials.

7. SWOT analysis

global marketing customer promotion

SWOT analysis is not free from its limitations. A truly successful SWOT analysis should extend beyond a simple list of strengths, weaknesses, opportunities and threats. A detailed SWOT analysis should also look at an opportunity or threat's size in order to see how it is related with the company's strength and weaknesses. While useful for reducing a large quantity of situational factors into a more manageable profile, the SWOT framework has a tendency to oversimplify the situation by classifying the firm's environmental factors into categories in which they may not always fit. The classification of some factors as strengths or weaknesses, or as opportunities or threats is somewhat arbitrary. For example, a particular company culture can be either a strength or a weakness. A technological change can be a either a threat or an opportunity. Perhaps what is more important than the superficial classification of these factors is the firm's awareness of them and its development of a strategic plan to use them to its advantage.

Strength:

· Strategy-” THINK GLOBAL ACT LOCAL”.

· Largest food market share in the world.

· Quality control.

· Brand Recognition in.

· Weak Product Development.

· Qualities issues un Franchise Network.

· Few Seasonal Product Shortage.

· Transport Challenges in Logistic.

· Low Differentiation In the products.

Opportunities:

· Deeper Expansion at International in Asian Market.

· Increase profitability by opening joint ventures branches.

· Proper Advertising strategy.

· Have Healthy line of Food.

Threats:

· Competitors are there.

· Encouragement in Balanced Meal with Fruits.

· Kid- Focus Marketing Strategy.

· Meeting Food taboos of Different Countries.

Conclusion

McDonalds's Expansion In International Market gave a symbol of GLOCALISTAION. This make the company to become emblematic for the title”McDonalization” of society on Globalisation. In Hungary and Russia company want to use attractive and affordability proposition for their customer along with taste and preference.

Suggestions.

Focus on Healthy food menu and do Innovations on it. Have quality Control to avoid issues. Try to maintain proper supply chain management. Go for more expansion to the Emerging economies for earn profit margin. Go for Easy Customisation and Affordability.

Questionnaires:

The number of respondents is 50 people. There are 11 question. The questions are divided into: Basic (age group) Quantitive (brand awareness) Qualitative (attitude and opinions) I will show the main Questions of the questionnaire.

1. Are you male or female? (full response)

50% males (25)

50% females (25)

2. What is your age group? (49/50)

61.2% age 19-24 (30)

30.6% age 25-32 (15)

4.1% age 33-40 (2)

Only 1% for the age groups 12-18 (1), 40+ (1,1)

3. How often do you have fast food in an average month?

36% 1-2 a month. (18)

20% hardly eat junk food (10)

16% 5-6 times a month (8)

12% 3-4 times a month (6)

10% more than 5-6 times a month (5)

6% don't eat fast food.

4. Please rate your priority when choosing fast food (1 low-5 high)

5. What is your usual order in Burger king? (46/50)

6. What's your favourite main meal in Burger king? (46/50)

58.7% with 27 votes goes to Mr. Whopper

15.2% with 7 votes is the Chicken Burger.

10.9% with 5 votes goes to Big King.

6.5% equally to Angus Burgers and the old-school Cheeseburger with 3 votes each.

7. What will make you go often to Burger King? (35/50)

Quality/ taste - 9/35

Price- 6/35

Availability- 5/35

Health- 3/35

Social - 2/35

(others) - 10/35

8. What is the first that comes to your mind when you hear the name "Burger King"?

55.31% name a product that the company offers.

- Out of the total 55.31%, 10 votes (21.2%) where driving directly to the grand “Whopper “.

- positive: childhood memories, delicious, pleasure, lunch

- Negative: slow service, good place to use W.C but not eating, disgusting, junky

Competition of McDonalds in both countries.

The biggest competitive rival in the Fast food, hamburger franchised services, is the well know McDonald's.

Both, Burger king and McDonald's were trying to top each other, having a quick service restaurants, serving quality burgers soft drink and fries for decent prices offered to young people (18- 35 main target).

The two brands are offering their own classic menus with small differences in order to attract local audience according to food preference and culture.

Using many kinds of methods to draw consumer's attention:

- Internet (Facebook, twitter, official website, banners & ads).

- Television commercials.

- Billboards.

- Playground areas for children by the restaurants.

- Online delivery apps.

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