Mcdonald’s: Is China Lovin’ It?
CASE: MCDONALD’S: IS CHINA LOVIN’ IT?
Mc Donald’s has established itself as number two fast food chain in China through its strategies like localization approach, tier pricing, backward integration of suppliers and unique design stores and innovations. The question now is about sustainability as to whether McDonald’s will be able to keep pace with the rapid transformation of China from a closed country to an open and dynamic society?
General Environment of Mc Donald’s * Demographic - There is growing appetite for Western food and nightlife with teens’ and young adults’. There is an increase in middle class. * Economical - Chinese food culture and lifestyles were changing due to surging economic growth and massive urbanization. The average income varied greatly between regions and between rural and urban areas and hence used of a tier pricing model in China to sell products at a range of prices for consumers with different purchasing power.
* Socio-Cultural - Different experience they offered to Chinese consumers: efficient self-service, standardised servings, less reliance on eating utensils, a clean environment and a comfortable atmosphere. McDonald’s were considered trendy places to socialize with friends even though the food was more expensive than at local restaurants. * Global - As part of its localization strategy, McDonald’s China demonstrated the company’s commitment through its Olympic 2008 campaign. However it was criticized heavily especially in USA as they believed that McDonald’s was an US company after all. * Technological - There was a growing popularity of internet shopping among China’s younger generation. To increase its exposure and attract these internet users, McDonald’s China partnered with a popular Chinese online shopping site, Taobao.com * Political/ Legal - Due to the legal restrictions McDonald’s did not follow its franchisee model as in other parts of the world and operates under direct investment model.
Mc Donald’s has established itself as number two fast food chain in China through its strategies like localization approach, tier pricing, backward integration of suppliers and unique design stores and innovations. The question now is about sustainability as to whether McDonald’s will be able to keep pace with the rapid transformation of China from a closed country to an open and dynamic society?
General Environment of Mc Donald’s * Demographic - There is growing appetite for Western food and nightlife with teens’ and young adults’. There is an increase in middle class. * Economical - Chinese food culture and lifestyles were changing due to surging economic growth and massive urbanization. The average income varied greatly between regions and between rural and urban areas and hence used of a tier pricing model in China to sell products at a range of prices for consumers with different purchasing power.
* Socio-Cultural - Different experience they offered to Chinese consumers: efficient self-service, standardised servings, less reliance on eating utensils, a clean environment and a comfortable atmosphere. McDonald’s were considered trendy places to socialize with friends even though the food was more expensive than at local restaurants. * Global - As part of its localization strategy, McDonald’s China demonstrated the company’s commitment through its Olympic 2008 campaign. However it was criticized heavily especially in USA as they believed that McDonald’s was an US company after all. * Technological - There was a growing popularity of internet shopping among China’s younger generation. To increase its exposure and attract these internet users, McDonald’s China partnered with a popular Chinese online shopping site, Taobao.com * Political/ Legal - Due to the legal restrictions McDonald’s did not follow its franchisee model as in other parts of the world and operates under direct investment model.