Mcdonald's in Vietnam

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MCDONALD’S IN VIETNAM

By Ayodeji Akin Abiri

Table of Contents

Abstract

1.0 Introduction3

1.1 Background note4

1.2 Global Strategy5

2.0 McDonald’s In Vietnam8

2.1 Entry Strategy9

2.2 PESTEL analysis of Vietnam9

2.3 SWOT analysis of HCM city11

2.4 Expansion strategy12

2.5 Franchising in Vietnam13

2.6 Drive-thru restaurants13

2.7 Localization strategy13

3.0 Competition & challenges14

3.1 Recommendations15

3.2 Conclusion15

Exhibit I16

Exhibit II18

Exhibit III29

References32

McDonald Enters Vietnam

Abstract

This paper analyzes the globalization options for McDonald’s by going into Vietnam. The paper explores McDonald’s global strategy as well as its expansion strategy. Aside from the globalization evaluation, this study also examines the entry mode in Vietnam. In the concluding sections, I was able to outline the challenges and recommendations for McDonald’s.

Key words: globalization, strategy, fast food, expansion

1.0 Introduction

McDonald’s Corporation is the world’s largest hamburger fast food chains which serves up to 64 million customers daily. McDonald’s annual report in 2007 revealed that it served one billion more customers globally in the previous year because of its reasonably priced menus such as Ein Mal Eins in Germany, the value Menu in China and the Dollar Menu in the US. These menus normally included up to 10 items with desserts, side dishes, entrees and drinks which could be mixed by customers to make a meal or a fast snack.

According to McDonald’s 2010 report, global comparable sales growth was 5%, earnings per share is 11%, average number of customers served per day was 64 Million. The Asia/Pacific, Middle East, and Africa (APMEA) contributed to 21 percent of its total revenues, driven by comparable sales increases in China, Australia and most other markets. Asia is one of the vital markets for McDonald’s as it added significantly to the company’s revenue and operational earnings in the past 30 years.

McDonald’s entered Asia in 1971 with the first restaurant in Tokyo, Japan. Since then it began to expand steadily in Japan and other Asian countries. Honk Kong in 1975, Singapore in 1998, Malaysia in 2001 Taiwan in 2003, South Korea in 1988, China in 1990, and India in 1996. Apart from McDonald’s home market-the US, China was the major growth market with 1000 restaurants and over 60,000 employees as of 2010.

In Asia, McDonald’s became the symbol of modern lifestyle in countries like China, Thailand, India and Indonesia. However it remained American in its services, menu, and administration. McDonald’s brought in difference in its ingredients and products to fit the Asian palate and culture.

McDonald’s entry into Vietnam is certain to bring a new style of fast food service to local people and will no doubt provide strong competition to similar names like KFC (US), Jollibee (the Philippines), Lotteria (Japan), which have been in Vietnam for more than 10 years and Subway (US) which just entered.

1.1 Background Note

The early stages of McDonald’s date back to the 1930s, when the McDonald brothers (Mac and Dick) opened a fast-food restaurant called Airdrome in Arcadia, California, that sold coffee, tea and hot dogs. Stimulated by the decent response to their first eatery, they decided to increase their business. In 1940, they opened a grill restaurant in San Bernadino, California. The grill restaurant had up to 25 items on its menu like pork sandwiches and barbecue beefs. McDonald’s hired 20 carhops to provide fast food service to customers.

The McDonald’s brothers ran the restaurant for eight years until they found it difficult to cope with the large scale of the business with many staff, broad menus huge crowds that...
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