McDonald's Capstone Project For A Ba 490: Business Policy And Strategy Class (Research Paper Sample)

MCDONALD’S CAPSTONE PROJECT
Student Name
BA 490: Business Policy and Strategy
University affiliation
Abstract
This final report for the McDonald’s Capstone Project I will present all the information that was discussed throughout the course. This will incorporate together both executive summary, introduction, cultural exchange and marketing strategy. It shall also have strategic audit containing information on environs that will enhance the expansion of McDonald’s into Kenyan market.
Executive summary
Based on McDonald’s great strategies to operate business both locally and internationally, a sign of globalizing the business era, their organization structure have made to conquer the global world countries and ensures that its business activities are run all over the continents.
As stated in part one of the project, McDonald’s is fast food industry. This company majors on foods which are high quality and lower price. This final part of the project shall address this issues while all sections are combined together, presenting issues regarding McDonald’s fast foods and expansion strategies to overseas.
Parts 1 of this capstone project identified the McDonald’s as the company of choice and Kenya as the country of focus for extension overseas, while part 2 of the project outlined the strategic audit of the company through cultural difference analysis. Part 3 of the project performed a strategic audit on issues of concern that affect the company’s vicinity.
Therefore, the whole this paper shall cover all the sections addressed in the previous parts, while lengthening the whole discussion.
Part 1
McDonald’s Kenyan expansion strategy
McDonald’s establishment history dates back to 1940s, as it started as a just a barbecue restaurant which used to be owned by both Richard and Maurice McDonald. The company was visited by Kroc in 1954, who visualized the opportunity in the restaurant and made use of it as he founded McDonald’s System, Inc. in 1955. The company grew fast and rapidly, and by 1958, the company recorded high sales of over 100 million hamburger sold. McDonald’s operates globally including countries in the Asia, Africa, North America, Europe and other parts of the world (Gilbert, 2009).
McDonald’s have extensively expanded their business globally with famous restaurants being operated in countries like Malaysia, Indonesia, Australia, and much more. Their operations are based on the approaches which were developed by Ray Kroc in his partnership in this industry. That is why one shall see most of those operating business and suppliers in the McDonald’s sector started through the handshake from Ray Kroc (Kroc & Anderson, 2016).
Overview of McDonald’s growth opportunity
McDonald’s was very keen of analyzing the business market before making any step ahead in implementing a new idea. They had to determine the factors which affect the fast food industries and from there; they access on their solutions. Therefore, the following were the major factors that McDonald’s had to use as pillars of their success.
The first factor was Economic Downturns. The company considered different classes of people before procuring any activity ahead. They noted that people would always consider running for foods in fast food industries considering their bad economic status.
The second factor was mergers. Considering the example of both Arby’s and Wendy’s who merged in 2008 as a result of rising rates of unemployment from most of the people, who opted to dine out. Companies decide to merge to increase their customer service and lengthen the operation hours. This was an idea from Ray Kroc, as stated in his business philosophy.
The third factor was based on economic recovery. As countries tend to regain and make economic rebounds, some of the food consumers do not view food prices as their concern. Therefore, McDonald’s being a fast food industry took advantage of this factor to expand its business globally.
The last factor was on commodity prices. The presence less priced foods like meats and vegetables make most of the fast foods industries to cut the prices their meals without going on profit loss (Burks, 2017).
Country of choice (Kenya)
Reasons for choosing Kenya
McDonald’s company has extensively expanded globally, covering significant percentages of countries in the world. This is a concern to most African countries, where the company has not greatly invested in it. In 1992, McDonald’s opened its first restaurant at Casablanca, Morocco. The company opened another outlet in Cairo, Egypt in the year, 1994. In 1995, Johannesburg also experienced the importance of McDonald’s foods as another branch was opened there.
According to Frontier Strategy Group, an organization which collects data to track the emerging markets delivered a report on 2014 which placed Kenya at the top most countries that multinational corporations would need to set up their business in Africa.
Since Africa’s economy has been a challenge to the company business, McDonald’s has considered putting plans in place for opening another outlet at Nairobi, Kenya. Over the recent years, Nairobi has been ranked to be world’s fast growing city as far as business activities are concerned. The city forms a hub for the Eastern Africa region, with most of its population being middle-income consumers (KLM, 2017).
According to the business daily Africa (2017), McDonald’s had previously made a statement to invite the investors to take charge as it plans to open its outlet in Kenya. The entrance of McDonald’s will impose more competition to the existing companies like Subway and Kentucky Fried Chicken, who have highly dominated the market of the city whose economy is rapidly growing high. The CEO had signaled that they would expand their markets in Africa but failed to state the exact period for the commencement of their work in Kenya.
Kenya is preferred since the research contacted by McDonald’s regarding this approach to investing in Kenya, the Africa’s big food chain supplier, Domino’s Pizza had greatly highly attracted a huge population of middle-class consumers creating more demand for fast foods in the city and other parts of the country (Wafula, 2017).
Mode of Entry for Kenya
In the business arena, there is a need for companies to be too innovative to survive in the global business competition. That is the reason why McDonald’s decided to consider expanding their business to Kenya, targeting to avoid limited growth and development. The strategy adopted for the entry mode would decide on the relevance, and good the business would be at overseas, considering the crucial strategic decision on expanding the foreign market. This is governed by some existing factors that influence the entry modes.
The following factors govern the entry modes of McDonald’s to Kenya’s market.
* Internal Factors
Here, McDonald’s is a bigger firm controlling very many outlets globally. Therefore, its vast experience in the international market will make it easily adopt the Kenyan market and easy to control any risk and profit.
Also, the products for the company plays a big role in the foreign market. McDonald’s is Fast Food Company. Therefore, it would have attracted more investors while entering into the Kenyan market.
* External factors
McDonald’s has to understand first the sociocultural, government policies of the Kenyan people before venturing into its business, which we believe it has already done that. Again, since we had earlier stated that Kenya is already invaded by both Subway and Kentucky Fried Chicken companies, McDonald’s has to take these local competitors into consideration before venturing into business and perform franchising.
* Desired Mode Factors
McDonald’s have ensured that it remains an owned company and their standards shall remain the same while in Kenya. The company has to ensure that it shares its risks with other branches globally and commit to their resources.
* Partnership with local companies.
McDonald’s have to honor the local companies with the same vision in Kenya and partner with them when necessary. This will increase their trust among their customers and ensure no monitoring of other companies with similar services (Kroc & Anderson, 2016).
McDonald’s global marketing strategy.
The entry modes to other regions are very necessary. McDonald’s had to analyze the challenges in the foreign regions before venturing into long term business. McDonald’s has made a dramatic impact on the global market image as it has gained a lot of experience in sustaining its business. Working on ensuring the existence of franchisees in all their restaurants has made it a great marketing strategy for growth.
Part 2
Cultural differences
As stated in Part 1 of the project, the focus was on identifying the company and its expansion to overseas. Here, we shall address the company’s home culture in comparison to the chosen country, Kenya. According to McDonald’s, they have formed a presumption that American corporate system will succeed in the Kenyan market, especially in the Nairobi city.
Most Kenyan population does not treasure much on fast foods, with the majority believing on their traditional food, ugali. Kenyan love most energy giving foods, and that is the reason why most of them would prefer taking ugali than burgers. In Kenya, ugali and nyama choma are their main dishes. With the entrance of fast food from Subway and Kentucky Fried Chicken companies has helped to synthesize them on the importance and need for fast foods regarding the rapidly increasing population in the city. ...