Case II Marketing “McDonald's: is China Lovin it”
1. What are the general environmental forces that could influence or have influenced McDonald's development in China?
a. Demographic Environment
• There was massive urbanization in China, captured in graphic bellow: (Opportunities)
• In China there was significant economic growth, which reflected from per capita annual income growth. (opportunities) [pic]
• Affluence people in China was increasing (opportunities) • In China’s there was rapidly growing middle class (opportunities) • In China there are many lower income consumers that could not afford at Western fast food chains, which charge $3 for a basic meal. (threat) b. Sociocultural Environment
• Chinese customers are eager to try out burgers and fries, which were vastly different from local Chinese quick service restaurants. (Opportunities) • Big curiosity of Chinese about foreign brands and their-in-store experience that enable Western fast food and restaurant companies to set relatively high price for their food (Opportunities) • Chinese food tradition. Chinese meal, dishes were served on communal plates, which were placed at the center of a table for everyone to share. That different from what McDonald’s offers as western food, which serve on individual serving. (threat) • China’s rapidly growing middle class was also demanding higher standards. (Opportunities) • Fast food is already known in China, such as noodle and dumpling stalls. (Opportunities) • In the late 1980’s and early 1990’s the emerge of Western fast-food chains had change restaurant landscape in China through the different experience they offered to Chinese consumers: efficient self-service (threat), • Standardized servings, less reliance on eating utensils, a clean environment and a comfortable atmosphere. (Opportunities) • Young Chinese customers had a different view about Western restaurant: they don’t mind paying more expensive food to enjoy and socialize with friend and relax. (Opportunities) • Breakfast market in China: 80% of Chinese consumers are eating breakfast, among which 68% ate breakfast away from home. (Opportunities) • Chinese consumers have a preference tea then coffee. (Threat) • Social critic about health improvement and environmental standard in China: Mc Donald’s doesn’t do the same campaign about health and environment as they do in US. (threat) • McDonald’s in developing nations had been targeted by anti Americans Activist. (threat)
• American News Anchor Brian Sulivan said that McDonald should respect US since McDonald was American Company as a impact of tag “I’m Lovin it when China win” (threat)
• While the booming economy of China offered the environmental conditions corresponding to fast-food culture, the environment also posed challenges to McDonald’s. The prevalence of Mc’Donalds restaurants in China seemed suggests the Chinese were lovin’ it. (opportunity)
• In 1987-1990, the KFC, McDonald, Pizza Hut have a service that comparable to high class Chinese Restaurant. Many Chinese in those early considered dining at KFC, McDonald’s or Pizza Hut as Luxury. (opportunities)
• There were cases in china of other franchises signing on as partners just to learn trade secrets and recipes and then open their own stores under different names. (threat)
• Malan Noodles emphasizing the nutritional values of its noodles and ingredients that it used, it also promotes wide selection of Chinese dishes to customers, unlike western fast food, which lack variety. (threat)
• McDonald’s rival, KFC, was the first foreign company to bring the concept of fast food to the country in 1987 (threat)
c. Economic Environment
• The competitive environment was also intensifying as local a foreign restaurant sought to capitalize on China’s...