The domestic environment condition is additionally answerable for affecting McDonald's operation. If the local economy is critical, people are usually discouraged to spend more cash for his or her food. As a result, the company is affected. The kind of people's life is being changed and also the demand for this modification affects McDonald's.

 

Sociocultural factors in both the US and China have a big impact on McDonald's rate of growth in both the domestic environment and international markets. In the US, consumer's behavior is influenced by the convenience of the sustenance and value of the offered products while in China consumers the cultural practices and cuisine impact customer preferences. Additionally, the differences in the economic process lead to gaps within the prices of the menu in McDonald's shops since the affordability of food depends on the financial status of the target consumers.

 

Such economic disparity influences McDonald's business processes. The adoption of flexible business management techniques enables McDonald's to deal with the various socio-cultural business environments experienced within the domestic and global markets. The understanding of different culture and learning to adapt are the way of McDonald's to maintain their brand reputation.

 

Statement of purpose: McDonald's is the fastest-growing food chain that is enjoying decades-long success, and it owes this to its marketing, thus, researching on McDonald's Marketing strategies on the beverage line is an intriguing topic that can help me learn a lot.

 

Body of Report

The Adaptation strategy is one of the characteristics that help McDonald's achieved their success. The strategy may be compared to localization. With this strategy, McDonald's adapts to the wants of the consumers by the cultures of specific countries. Adaptation works fine for McDonald's. The strategy enables the nutrition chain to possess a wider reach worldwide.

Cultural awareness is the second key to McDonald's global success. McDonald's has clearly done their research before they enter into a far off-market. While the normal American items like the "Big Mac" appear on the menu, they create local adaptations to their menus.

 

What barriers exist within the new Global Country/Environment? Cannot state there are not any barriers.

1.        The Scales of Economy-These are declines within the unit costs of a product because of the absolute volume per period increases.

2.        The Differentiation of Products- Incumbents have brand identification and customer loyalties. This forces entrants to spend heavily to beat these loyalties.

3.        Requirements amount of Capital- These are the financial resources required for infrastructure, machinery, R&D, and advertising.

4.        The Cost Switching- The best examples are the new equipment, retraining of new employees and the product suppliers.

5.        Access to distribution channels-This will be a barrier if logical distribution channels are locked up by incumbents.

6.        Cost disadvantages independent of scale- Incumbents may have cost advantages that can't be replicated by a possible entrant. Some of the factors that might be included are locations, products technology and raw materials.

7.        The Policy of the Government in different Countries- Startups in highly regulated industries will find that incumbents have fine-tuned their business in keeping with regulation.

Conduct a comprehensive strategic management analysis: Analyze industry structure to understand industry performance differentials.

 

Domestic environment condition is also responsible for affecting McDonald's operation. If the local economy is critical, people are usually discouraged to spend more money for their food. As a result, company is affected. The life style of people is being changed and the demand of this change affects McDonald's.

 

Sociocultural factors in both the US and China have a significant impact on McDonald's growth rate in both the local and international markets. In the US, consumer's behavior is influenced by the convenience of the fast food and value of the offered products while in China consumers the cultural practices and cuisine impact customer preferences. Additionally, the differences in economic growth result in gaps in the prices of the menu in McDonald's shops since the affordability of food depends on the financial status of the target consumers.

 

Such economic disparity influences McDonald's business processes. The adoption of flexible business management techniques enables McDonald's to cope with the different socio-cultural business environments experienced in the domestic and global markets. Gaining cultural intelligence requires an understanding of critical cultural differences between various nations and their impact. Through this recognition, McDonald's Corporation has managed to thrive in international markets and consistently maintained brand reputation.

 

IV. Assess a firm's resources, capabilities, and core competences and their potential to create competitive advantage

 

Adaptation strategy. The strategy can be compared to localization. With this strategy, McDonald's adapts to the needs of the consumers as required by the cultures of specific countries. Adaptation works very well for McDonald's. The strategy enables the fast food chain to have a wider reach worldwide.

 

The second key to McDonald's global success is their cultural awareness. McDonald's has clearly done their research before they enter into a foreign market. While the traditional American items such as the "Big Mac" appear on the menu, they make local adaptations to their menus.

 

What barriers exist in the new Global Country/Environment? Cannot state there are no barriers.

There are seven sources of barriers to entry:

 

Economies of scale

These are declines in the unit costs of a product as the absolute volume per period increases. These force the entrant to either come in at a large scale (risking strong reaction from incumbents) or a small scale (forcing a cost disadvantage).

 

Product differentiation

Incumbents have brand identification and customer loyalties. This forces entrants to spend heavily to overcome these loyalties. Startups may bring a different product to market, but its benefits must be clearly communicated to the target customer. Startups must find an effective positioning, which often requires marketing resources beyond their means.

 

Capital requirements

These are the financial resources required for infrastructure, machinery, R&D and advertising. Startups may get around capital requirements by outsourcing parts of the operation to companies that can leverage existing investments.

 

Switching costs

These are one-time costs the buyer faces when switching an existing supplier's product to a new entrant (for example, employee retraining, new equipment, technical support).

 

Access to distribution channels

This can be a barrier if logical distribution channels have been locked up by incumbents.

 

Cost disadvantages independent of scale

Incumbents may have cost advantages that cannot be replicated by a potential entrant. Factors include the learning or experience curve, proprietary product technology, access to raw materials, favourable locations and government subsidies.

 

Government policy

Governments can limit or prevent entry to industries with various controls (for example, licensing requirements, limits to access to raw materials). Startups in highly regulated industries will find that incumbents have fine-tuned their business according to regulation.

 

What response can new entrants expect?

The expected reaction of industry incumbents towards a new entrant influences the prospect or threat of entry by a new competitor. A number of conditions indicate the likelihood of retaliation to entry:

 

A history of strong retaliation to entrants

Established firms with substantial resources to retaliate (for example, excess cash, distribution channel leverage, excess productive capacity)

Established firms with commitment to the industry and highly illiquid assets

Slow industry growth

How will McDonald's overcome those barriers (strategies)?

 

McDonald's Generic Strategy (Porter's Model)

McDonald's primary generic strategy is cost leadership. In Porter's model, this generic strategy involves minimizing costs to offer products at low prices. As a low-cost provider, McDonald's offers products that are relatively cheaper compared to competitors like Arby's. McDonald's Keys to Success is their Focus on Customer Satisfaction. McDonald's Operations Competitive Strategy focuses on cost, speed, and nutrition. They prioritize making the customer "happy."

 

V. Explain functional, business, and corporate level strategies

 

Five Elements that make Corporate Level Strategy more relevant for firms today

 

1.        Increased Affluence: The wealth is in line with the consumption of each person in the population. A common proxy to measure consumption is through the gross domestic product or GDP per capita. While GDP per capita measures production, it is often assumed that the consumption will increase when production increases. CSR is extra applicable, as the economies develop and stabilize. Therefore to observe the greatest interest in CSR in the developed countries. Stable work and the protection of the amenities of luxury, desire and socially responsible activism. No such luxury is available when the primary desires in question.

 

2.        Environmental sustainability: the change is probably most clearly and most talked about the driving force, the expenditure on the pollution, waste, natural resources depletion, local weather, and as more gas the CSR discussion and lift the expectations for proactive corporate action. After all, it's within the high-quality pastime of the corporate, the guard for the sustainable future, the long-term availability of resources on which they depend.

 

3.        Globalization: globalization has had a substantial impact. First, the advanced wealth and strength of the multi-national company have led to ask, on a reduced authority of the nation-state, particularly in growing areas. Some of the cultural differences and religion are one of the conflicts but CSR manage the expectation. With enhanced strength, increased responsibility and globalization has fueled comes the necessity to filter all strategic selection through a CSR lens to make sure, the foremost suitable outcomes for varied stakeholders.

 

4.        Free flow of information: Yes, blame the bloggers, but through the web and other electronic media shifted the drift of the knowledge has back to the stakeholders, especially within the case of three important groups: consumers, NGOs, and therefore the typical media. Easy on the hand and cost-effective communication applied Sciences have permanently changed the game and just true and transparent groups benefit within the future.

 

5.        The Power of the Brand: Brands are lately the focal factor of corporate success and many of the fitness of the brand relies upon the general public appreciation of the corporation. In other words, reputation is vital and sincere CSR maybe thanks to defending that reputation and thus the brand. As stated through the aforementioned text, Malcolm Glad well mentioned the tipping factor because the point of important mass after which a thought spread widely and turns into typically regularly occurring and widely implemented. I argue that CSR has reached such a tipping point, pushed there by way of the five above factors. I further argue that CSR will emerge as a more mainstream and additional part and parcel of everyday enterprise strategy

 

How will McDonald's overcome those barriers (strategies)?

McDonald's Generic Strategy (Porter's Model)

McDonald's primary generic strategy is cost leadership. In Porter's model, this generic strategy involves minimizing costs to supply products at low prices. Because of their low cost products that are cheaper than Arby's (competitors) and their quality foods they maintained their success naturally. McDonald's Keys to Success is their target Customer Satisfaction. The competitive strategy of McDonald's about their speed, nutrition, and the speed are loved by their customers. The most important thing for them is the "Happiness" of their customers.