E-Business Plan for McDonald Corporation (Part Two)
Strategic Analysis and Market Justification
An international opportunity
Companies of all sizes go international for different reasons, Deresky (2011) stated that the threat of their own decreased competitiveness is the overriding reason many large companies want to move fast to build strong positions in key world markets (p. 198). Deresky (2011) also suggested many multinational corporations (MNCs) have developed their global operations to the point it becomes fully integrated, often vertically, and horizontally, including suppliers, productive facilities, marketing, and distribution outlets, and contractors around the world. McDonald’s Corporation has become globally integrated with worldwide sourcing and a fully integrated production and marketing system. The company’s competencies and strength have lied in operational excellence, customer intimacy, and product leadership. McDonald’s corporation has approximately 70% of its restaurants franchised, although in Asia, joint ventures are preferred so as to take advantage of partners’ contacts and local expertise, and their ability to negotiate with bureaucracies such as the Chinese government. The company continues with its current horizontal growth strategy of expanding the restaurants throughout the world, as international opportunities are still available.
An international opportunity for the McDonald’s Corporation to consider is a merger and acquisition with other “local based” food chain internationally. E-market segmentation approach could be considered in this process. Conklin (2011) agreed that customers can be targeted more precisely with a set of offers geared directly to their previous consumption patterns and their individual interest, rather than a traditional uniform presentation to all customers. Customers entering the new merger of McDonald restaurant can be offered what each customer wants by collaborating with the other local food chain to build a stronger team. These new realities require that the firm significantly change its advertising and marketing strategy (Conklin, 2011). This will increase sales and reduce cost in every area and also will broaden more alliances, and collaboration in the country as a result will enhance product portfolio of the organization. An example is Yum, owner of chains like KFC, Pizza Hut, Taco Bell, and Long John Silver’s bought a 20% stake in Little Sheep in 2009 and increased that to 27.2% in 2010. In April 2011, Yum increased its stake to 93% at the market price, in a deal valued at over US$580m, by buying out the existing shareholders of the Hong Kong-listed company. China’s commerce ministry approved the buyout in November 2011 under China’s anti-monopoly law. Little Sheep, which operates hot-pot concept restaurants, became a subsidiary of Yum. The two original Little Sheep founders remain minority shareholders, providing strategic advice, and working with Yum.
Another international opportunity for McDonald’s Corporation to adopt is a Corporate Social Responsibility (CSR) strategy to increase sales, profit, and maximize shareholders value. According to Conklin (2011) if management considers only the short-term maximization of shareholders value, it may feel justified in limiting CSR activities. However, if management is concerned with long-term shareholder value maximization, management may see a much larger array of CSR activities as being appropriate. Deresky (2011) postulated that McDonald’s international strategic formulation requires a long-term perspective. McDonald’s company’s vision states a “commitment to our customers, to our owner and operators, to our suppliers, and to the communities we serve” (McDonald’s Operation Resource Center, 2007). This demonstrates management’s commitment to treat all its external and internal stakeholders in a reliable and dedicated way. Their stated goal...
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