McDonald’s strategy and global expansion through customer and brand loyalty in japan
Introduction
Problem Statement
For most multinational companies, going to international markets is the norm. An internationalization strategy is necessary, especially with globalization. According to Khan (2017), globalization has brought with it both opportunities and challenges. The opportunities from globalization are about the liberalization of markets, substantial bringing down the barriers of entry. All these have therefore made the entry to foreign markets for these MNCs relatively easier. On the flip side, it has increased competition for the MNCs in their home markets, leading to stagnation or even reduction in profits. McDonald’s is one of the multinational companies which has a presence both in the USA and abroad. McDonald’s has always been on a global expansion strategy, looking to penetrate new markets. Its market expansion strategy is mostly helped by the company’s strong brand, which has, in turn, led to an increase in customer loyalty. Over the years, however, it has also faced stagnation in some of these international markets, with no growth in sales, profit, or market share.
Purpose Statement
The research looks to investigate McDonald’s strategy of global expansion. Specifically, the focus goes to the company. Expansion strategy in Japan. Though the company entered the Japanese market by opening its first McDonald outlet in 1971, it underwent some problems in 2014 that dented the company’s operations in the country. The core issues were one of the suppliers providing chicken that had gone bad, and a tooth being found in one of the company’s foods by a customer. All these led to the closure of many of McDonald’s outlets in the country. Though these stores have since reopened, the company has not achieved the heights it wants to achieve in the country, especially with regards to market share. The purpose of this research is to provide McDonald with an in-depth information and data on how it can use its customer and brand loyalty in japan as a centerpiece of its expansion strategy and open more outlets.
Research Objectives
The main objectives of the research are:
- To determine the current market share of McDonald’s in the market.
- To determine how customer loyalty by Chinese consumers can be leveraged to expand its market in Japan.
Research Questions
The research questions that will be used in the research are:
- How highly do you regard the brand of the company?
- How loyal are you to the company?
- What should things be abandoned by the company to increase you lately?
What improvement, if made, would improve your loyalty of the company ad elevate its brand?Don't use plagiarised sources.Get your custom essay just from $11/page
Rationale and Significance of the Research
The research is important for MacDonald’s in many ways. First, it will help the company to get an in-depth knowledge on how it can leverage its customer and brand loyalty to increase the number of outlets it has in Japan. It is important to note that increasing the number of outlets is not in itself an end. Instead, these new outlets should be profitable enough to warrant they are staying open. The research is also significant and rational for the company because it gives it the platform and a plan with which it can also use in other global markets that have the same characteristics as japan. In all these, it also benefits the customers because of these global expansion strategies, and more so in China, are geared towards increasing customer satisfaction.
Literature Review
Introduction
McDonald’s is one of the biggest brands in the world. It is an American company and is the largest fast-food company in the US by market share. According to Schmid & Gombert (2018), the company can also refer to itself as a multinational company. McDonald’s has outlets in most countries all over the world. The international strategy by McDonald’s began many decades ago. For example, the company’s first outlet to open in Japan was in 1971. Since then, the company has gone on the open more stores in the country, as well as in other countries around the world.
The Ease of McDonald’s Strategy of Global Expansion
McDonald’s global expansion strategy has been relatively easy. Aitalieva & Panasyuk (2016) point out that before it ventured into the global market, McDonald’s first built a reputation for itself in the USA, where it is brand image grew substantially. It became a brand with which everyone wanted to be associated. With time, however, the local market in the USA became stagnant, with little growth and an increase in the number of competitors. One of the ways McDonald sought to not only survive but to also maintain its competitive advantage was to go into the international market.
The entry into foreign markets was, however, easy because of the company’s brand. Joe, Ham, & Lee (2018) argues that McDonald’s has created a brand as having delicious fast foods at affordable prices for consumption on the go. Business people, families, and people from all walks of life, therefore, flocked the company’s stores both in the US and overseas. The brand image of the company created loyalty among the customers. The customers in the overseas markets, therefore, abandoned their local fast-food restaurant in favor of McDonald’s outlets. The situation has become even better for McDonald’s with the continued advancement in technology, which has, in turn, increased internet penetration. Over 50% of the people around the world have an internet connection, with the Asian market being at the forefront in the rapid increase in internet access. More people are, therefore, more aware of the western brands and want to be associated with them. It, therefore, explains why there is excitement when a McDonald store opens shop in Asia as people want to embrace the western mannerisms, culture, and way of life.
Franchising
McDonald’s has, however, been strategic in the way that it enters these foreign markets. The company’s foreign market entry strategy aims at maintaining its key features that have led to the development and growth of the company’s brand image, leading to high levels of customer loyalty. Franchising was the best method to enter these foreign markets. Franchising refers to a market foreign entry strategy where an MNC looks for local partners who will provide the company’s services and products (Dittfurth, Gerhardt, & Joiner, 2019). The local partners will have all the rights to use the brand name, have access to trade secrets, its menu, processes, and activities, among other inclusive. The key aim of franchising is to have the same business model in the home market and the international market.
The franchise should, therefore, provide technical expertise, specialized sales and service strategy, support, and even initial funding. McDonald’s has adopted this strategy in its foreign market entry and global expansion strategy. Therefore, McDonald outlets in any part of the world operate in the same way as those in the home country in the US. McDonald’s chose this strategy; it is easy to run and manage while optimizing its brand image and huge customer loyalty. The franchisees then pay some fees and royalties from its profits, as agreed by the contracts signed and the agreements made when entering into the contract.
Local Menu Variations
In its global expansion strategy, McDonald’s initially had a harmonized menu in its restaurants all over the world. According to Peloza, Merz, & Chen (2015), the buzz created by the McDonald brand made this a success as people wanted to be associated with the company’s products and brand. Predictably, this excitement has since waned, forcing MacDonald to also introduce local variations. One of the main reasons for this is the increase in completion in these foreign markets. The foreign and local competitors in these local markets introduced local variations, forcing McDonald’s also to do the same. A good example is in Japan, where despite offering the food that is synonymous with McDonald’s, such as the Big Mac or the Happy Meal, it has local variations. They include Teriyaki McBurge, Ebi Filet-o, and Mega Potato, among others.
Methodology
Introduction
The research aims at finding out how Macdonald can come up with a global expansion strategy that leverages its brand and customer loyalty. All these are meant to increase the company’s market share in Japan. This chapter gives a detailed description of the procedures in use in the research.
Research Design
The qualitative research design will be in use in the research. A qualitative research design focuses on descriptive data, which is exploratory and looks to explain the reason behind certain phenomena (Tetnowski, 2015). The research, therefore, looks to find an explanation of how the company can use its high customer and brand loyalty to increase its market presence in China.
Target Population
The target population in this research is the people of Japan. The picking of the target population for the research will draw basis from the following factors:
- Should presently be in japan.
- Should be a consumer of fast foods.
- Is a citizen of Japan.
The ideal participant of the research:
- Should be a Japanese citizen.
- Should be a believer in and practices the Japanese culture.
- should have resided in China for the last 15 years
- should be an avid consumer of fast foods
- Should have been a regular customer of McDonald’s and other fast-food restaurants.
- Should be willing to share information objectively, and not provide biased information that may mislead the study.
Sampling Method
A stratified sampling method will come into use in picking the sample population for the research. Stratified sampling is a method ideal for a heterogeneous population. It first involves picking the population apart and divide them into different strata (Jing, Tian, & Huang, 2015). From there, random sampling can be done from all the different strata, hence ensuring that the sample is as representative of the entire population as possible. For the research, there will be a creation of 3 strata: men, women, and children. Each stratum will have 200 participants, from which 30 will be picked from each, bringing the final respondents for the study to 90.
Data Collection
Primary Data
The main primary data collection method for research surveys through emails. The survey questions will have minor variations depending on the strata for easy understanding. The survey will be both open-ended and close-ended. The close-ended part is important to ensure that the respondents do not veer off the main research. It is, however, important also to make it partly open-ended. The open-ended part gives the respondents the leeway to give honest and personalized responses.
Secondary Data
Secondary data on the issues mainly focuses on past research conducted on the topic. The secondary data will mainly come from databases, journals, books, and case studies that directly address the topic at hand. To obtain the secondary data, search engines such as Google Scholar will be in use. The secondary data will be gauged based on two criteria.
Time – the researcher will ensure that all the secondary data sources used are not older than five years, hence eliminating the possibility of using outdated information.
Relevance – the secondary sources that will be used will be those that directly address the topic at hand.
Data Analysis
In the analysis of the data, the thematic data analysis method will be in use. Thematic data analysis categorizes the collected data into themes (Castleberry, & Nolen, 2018). The categorization then makes their understanding and use easier for McDonald’s in Japan.
Ethical Considerations
Ethics will be of utmost importance in the research. The research will focus on ethics because only then can the research be credible and reliable. Non-disclosure agreements will be signed with the respondents. The NDAs will protect the information and data as has been disclosed by the respondents. The results will also be analyzed and released in a summarized version. These summarized results ensure that no personally identifiable information of the respondents is released.
References
Aitalieva, V. V., & Panasyuk, M. O. (2016). The Specifics Of Corporate Culture Management In A Foreign Subdivision Of McDonalds Company. Business Strategies.
Castleberry, A., & Nolen, A. (2018). Thematic analysis of qualitative research data: Is it as easy as it sounds?. Currents in Pharmacy Teaching and Learning, 10(6), 807-815.
Dittfurth, E., Gerhardt, S., & Joiner, S. (2019). FAST FOOD CHICKEN: TO FRANCHISE OR NOT?. ASBBS Proceedings, 26, 172-181.
Jing, L., Tian, K., & Huang, J. Z. (2015). Stratified feature sampling method for ensemble clustering of high dimensional data. Pattern Recognition, 48(11), 3688-3702.
Joe, M., Ham, S., & Lee, S. (2018, July). NUTRITION INFORMATION DISCLOSURE: WHICH BRAND SHOULD BE MORE NERVOUS? MCDONALD’S OR SUBWAY?. In 2018 Global Marketing Conference at Tokyo (pp. 1407-1408).
Khan, H. A. (2017). Globalization and the challenges of public administration: Governance, human resources management, leadership, ethics, e-governance, and sustainability in the 21st century. Springer.
Peloza, J., Merz, M. A., & Chen, Q. (2015). Standardization Vs. Localization of Firms’ Corporate Philanthropy Strategies when Entering Foreign Markets. In Proceedings of the 2008 Academy of Marketing Science (AMS) Annual Conference (pp. 295-295). Springer, Cham.
Schmid, S., & Gombert, A. (2018). McDonald’s: Is the Fast Food Icon Reaching the Limits of Growth?. In Internationalization of Business (pp. 155-171). Springer, Cham.
Tetnowski, J. (2015). Qualitative case study research design. Perspectives on Fluency and Fluency Disorders, 25(1), 39-45.