Mcdonald'S in Vietnam: by Ayodeji Akin Abiri

MCDONALD’S IN VIETNAM
By Ayodeji Akin Abiri
McDonald’s Enters Vietnam Page 1

Table of Contents
Abstract
1.0 Introduction 3
1.1 Background note 4
1.2 Global Strategy 5
2.0 McDonald’s In Vietnam 8
2.1 Entry Strategy 9
2.2 PESTEL analysis of Vietnam 9
2.3 SWOT analysis of HCM city 11
2.4 Expansion strategy 12
2.5 Franchising in Vietnam 13
2.6 Drive-thru restaurants 13
2.7 Localization strategy 13
3.0 Competition & challenges 14
3.1 Recommendations 15
3.2 Conclusion 15
Exhibit I 16
Exhibit II 18
Exhibit III 29
References 32

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 packed the restaurant. In 1948, they reduced the menu in order to scale down
operations and develop a method to attend to customers rapidly with fewer resources.
The process helped McDonald’s to introduce self-service, serve more customers,
increase speed, eliminated carhops and reduced the price of hamburger by half.
The McDonald’s brothers in 1953 decided to go into franchising as a mandate to

expand their business. A franchisee needed a thousand dollars to receive the
McDonald’s name, one week training from Art Bender, and a basic description of
McDonald’s service system. The role of Bender is to train staff at the franchisee’s

restaurant, make contact with bakeries and butchers for supplies, supervise equipment
installation, etc.
The first McDonald’s franchise was Neil Fox, who started a drive-in restaurant in
Phoenix, Arizona. It became an example for the McDonald’s chain. The franchise
business grew from strength to strength the following years.
Ray Kroc in 1954, a salesman for a company that supplies milkshake mixers to
McDonald’s found out that they used a method similar to an assembly line system. He
sensed an opportunity to sell the milk shake mixers to all the McDonald’s restaurants
that opened and he persuaded the McDonald’s brothers to open more outlets. But the
McDonald’s brothers were content with the present operations and were not interested
in expanding the business. Kroc applied for a McDonald’s franchise and he applied his
experience as a salesman to create an effective franchising business. He retained
McDonald’s formula and shaped the operating principles of quality, cleanliness, service
and value. Under Ray Kroc’s supervision, McDonald’s developed to be the largest fast
food chains in the US. (Refer to Exhibit 1 for a brief note on McDonald’s growth)
1.2 Global Strategy
After attaining success in the US, McDonald’s on June 1, 1967 opened its first
international restaurant in Canada. More restaurants followed in the early seventies with
presence in Germany, France, Australia and England. McDonald’s entered Asia in 1971
by opening a restaurant in Japan through a joint venture with a local partner (Den Fujita)
who is a successful business man.
In 1990, McDonald’s opened a restaurant that was the biggest joint venture between a
food company and the Soviet Union. McDonald’s built a $45 million modern food
processing facility in Moscow to meet the increasing demand in the Soviet Union which
attends to 50,000 customers daily.
In the mid-1990s, McDonald’s was already in 58 countries by operating more than 3,600
outlets outside the United States through joint ventures, franchises and wholly-owned

subsidiaries. McDonald’s had strong presence in Canada, UK, Japan, France and
Australia. These countries accounted for 37 percent of McDonald’s revenue in 1991.
McDonald’s in 1992 opened its first African restaurant in Morocco. It entered the Middle
East in 1993 with the first restaurant in Tel Aviv, Israel. More restaurants followed in
Oman, Saudi Arabia, Egypt, Kuwait, Bahrain, Qatar and UAE. India got its first
McDonald’s in 1996. Afterwards, it opened more outlets in countries like Hungary,
Slovenia and Czech Republic. In 1995, the company had 7,030 outlets in 110 countries
with sales of US$14 billion. A further increase to 11,000 outlets in 114 countries was
recorded in 1998.
McDonald’s recorded a fourth-quarter loss of US$343.8 million in 2002 which was the
first quarterly loss the company will witness as a public company in 38 years. This made
McDonald’s to change its strategy by stopping its plan to open new stores and focus on
developing its current restaurants. McDonald’s closed underperforming outlets, cut jobs,
withdrew from three countries in Latin America and Middle East. This resulted in
opening 600 restaurants in 2001 compared to 2000 in 1996.
As at August 2011, there were a total of 32, 737 McDonald’s outlets of which about 80
percent were franchised. (Refer to Exhibit 2)
The key to McDonald’s international success is franchising. Franchising to local people

helped the company’s operations in foreign countries easy in terms of product and
service. McDonald’s generated US$4.9 billion in 2007 due to growth in global
operations. The company’s entry into new markets showed its flexibility with respect to
customs and local food preferences. McDonald’s adopted a similar strategy used in US
for its international markets, but with some slight variations in the menus offered to suit
local tastes. An operations procedure which focused on quality, service, cleanliness,
and value coupled with a solid local partner with customary McDonald’s menu were the
roots for the company’s international success. The global strategy that was adopted
was called “Plan to win” which focused on the five P’s of marketing- People, Place,
Products, Promotion and Price.

The key to McDonald’s international success was the ‘think global, act local’ initiative
which helped the company to excel in every region it opened its restaurants. It adapted
its operations based on the home country in which it is operating. An example is
keeping in mind the local sentiments in the Arab countries, Singapore and Malaysia.
McDonald’s did not serve pork, maintained the ‘Halal’ menus and they observed the
Islamic laws for preparing food. In Japan, McDonald’s brand name was changed to
Makudonaldo to make the pronunciation easy for the Japanese consumers.
In Israel, McDonald’s were closed on Saturdays to observe the Jewish Sabbath Day;
restaurants did not serve dairy products; Big Macs were served without cheese in most
outlets. McDonald’s catered for the vegetarians in India by serving the McNuggets; it
also served Maharaja Mac to some religious communities in that are against beef. In
Ireland, the local strategy was a promotion that stated, “Our name may be American,
but we are all Irish”
McDonald’s had to alter its traditional menu to suit the needs of the customers in
different nations. It changed its product offerings to adapt to the tastes of the local
people. Some instances are beer in Germany, guava juices in tropical countries, chilled
yogurt drinks in Turkey, vegetarian burgers in Netherlands, cold pasta and espresso in
Italy, Teriyaki Mac and McGriddles in Japan, McSpagetti in Norway, McHuevo in
Uruguay, Samurai burger in Thailand, and Filet-O-Fish in China.
The additions and variations did not change the basic structure of McDonald’s menu. Its
menu remained the same globally consisting of burger or sandwich, fries and a Soda
drink. Although the main course was slight different in some countries, the main product
of the company ‘the fries ‘were always present in its entire menu globally.
As per prices, the demand in each country determined the price for McDonald’s
services. A Big Mac with fries will cost more in other countries that in the US because
fries are a common food item in the US than some other countries that sees it as a
luxury. By offering variety and locally related menu extensions, McDonald’s has always
been delivering value to its customers.

2.0 McDonald’s in Vietnam
Vietnam is a huge potential to McDonald’s global expansion. Over the years, Vietnam
has enjoyed strong economic growth, a change in spending habits, increasing demand
for western brands, growth in urban population and a major tourist destination. Vietnam
now has a more prosperous population with disposable earnings and a cultural
tendency to expend it on fast food in the large urban centers of Ho Chi Minh (HCM)
City, Danag, Hai Phong, Hanoi, and Can Tho. Vietnam’s two main cities are Hanoi and
Ho Chi Minh City. In the middle of these two cities is the famous shoreline where local
and international tourists visit to adore the remarkable scenery of the beaches and
islands on the South China Sea. These cities are rapidly gaining attractiveness and the
associated fast food service industry is facing increasing demand.
According to the results of a study on fast food consumption among Vietnamese people
conducted by AC Nielson in 2009, there is robust demand and fast food is welcomed as
a model. Seventy percent of persons interviewed said that they liked eating at fast food
outlets because they liked the atmosphere and the service standard. Steady fast food
customers tend to be those earning high incomes, with 27 percent responding that they
eat fast food at least once in a week. Sixty percent of people interviewed said that they
chose fast food because they like the swift service, while 26 percent said that they
considered fast food as a right meal.
Vietnam has a young, dynamic and educated population of over 89 million consumers,
the largest in the South East Asia. The country has a literacy rate of 94 percent and a
population growth of 6% which is expected to reach 100 million by 2024. Vietnam is
currently enjoying one of the highest GDP growths in Asia, a 6 percent per year which is
second only to China.
In 1986, there was a significant change in business when the government introduced a
policy called “doi moi” (‘renovation’) to allow limited private enterprise. The policy

allowed family business to become popular and skilled entrepreneurs from South
Vietnam started to change the country from a dominant government control to a free
market economy.
2.1 Entry Strategy
McDonald’s is going to adopt the ‘Green Field ‘approach in Vietnam. The wholly owned
subsidiary will be the best option for McDonald’s to introduce quality, service and
innovation. A PESTEL analysis of the 8 sub regions shows that the Ho Chi Minh City
has the best conditions to open the first restaurant. HCM city is an area with a growing
middle class who will be the most likely to visit McDonald’s restaurants. The city is also
suitable as a start up due adequate infrastructure, government support, low tax and
convenience.
McDonald’s will take cue from the joint venture success in China by partnering with the
Vietnamese Ministry of Agriculture and its associations to facilitate smooth business
operations. This type of venture will give McDonald’s the ease of receiving agricultural
supplies, buy supplies and build up distribution channels. It will also establish a good
network of local farmers, manufacturers, and other suppliers needed for McDonald’s
business.
2.2 PESTEL Analysis of Vietnam
Political
• Government is paying more attention to the benefits and interests of customers.
• Many laws have been passed to define the responsibilities of business firms.
• Business firms must meet the requirements on product safety, labor laws, truth in
adverts, environmental issues, customer’s interest and so on.
Economic
• Member of WTO.
• Steady economic growth.

• More jobs with better salaries.
• High purchasing power.
• Changes in purchasing pattern.
Social
• Vietnamese like to buy at a cheap price.
• Careful in buying decisions.
• Not loyal to one product, but some are likely to choose the products they trust.
• Vietnamese prefer to try products by themselves than to believe salespersons.
Technology
• HCM city has evolved from a traditional agricultural city to a technological

society.
• Modern and high-tech equipment are in use.
• Standard of living has improved due to people living in more convenient

conditions and is offered various products and services on demand.
Environmental
• Monsoon climate with four distinct season with high humidity.
• Environmental problems include water, air and solid waste pollution.
• Slow progress in achieving environmental sustainability due to low awareness in

local departments, weak commitment by sectarian agencies and capacity
challenges at all levels.
• Environmental sustainability is part of Vietnam’s Comprehensive Poverty

reduction and Growth Strategy.
Legal

• Weak and evolving legal system.
• Judiciary is controlled by the ruling party (CPV).
• Vietnam is constantly passing progressive laws that are making it more open for
foreign investors to do business.
• Potential government interference to satisfy their own agenda.
2.3 McDonald’s SWOT Analysis of HCM City
Strengths
• Largest metropolitan city in Vietnam with 9 million people. Majority of the

population is young and literate.
• Economic center of Vietnam- GDP per capital is $2800 compared to Country’s

average of $1042. Fast growing economy that has reduced poverty rate to the
barest minimum.
• Good transport and communication systems.
• Tourism haven
• Huge pool of skilled labor force
• McDonald’s will be able to implement its QSCV Principle
• McDonald’s Quality assurance and good customer service are better than
competitors
• Aggressive competitive strategy
• Low price of products
• Ability to learn from competitors’ mistakes
Weakness

• Late Entry
• Limited Menus than competitors
• Contribution to obesity
Opportunities
• Increase in demand for fast food in Vietnam
• Innovation in product and services
• Fast food penetration still low which is an opportunity for growth
Threats
• More local and foreign competitors rising quickly.
• Government policies on fast food and healthy meal.
• Outbreak of bird flu.
2.4 Expansion Strategies
McDonald’s success in HCM city will act as an impetus to expand to other regions in
Vietnam. The focus of expansion in other regions will be in busy locations like shopping
malls or organized markets. Through the proposed agreement with the Vietnamese
Ministry of agriculture and local farmers, McDonald’s will be able to open 50 outlets
yearly. A food processing plant will also be built at different locations in the country. This
will be an advantage to McDonald’s because Vietnam is country developed in
agriculture. McDonald’s will ready get raw materials like milk, vegetables and potatoes
while the company can export the excess supplies to other countries.
McDonald’s will focus on strategies related to quality breakfast, convenience, menu

additions, value for money, extended hours of service, drive through restaurants and
delivery services.

2.5 Franchising in Vietnam
In the long-term, McDonald’s will franchise some of its restaurants in Vietnam. This is to
reduce the business expansion cost and create more jobs opportunities for the local
people. McDonald’s as a franchising company has three fourth of its stores worldwide
as franchises. Franchising in Vietnam will take place after the McDonald’s business in
Vietnam is refined.
2.6 Drive-Thru Restaurants
During the 2000s, Vietnam witnessed remarkable economic development that

generated a huge market for fast food, consumer goods and cars. The automobile
industry in Vietnam was stimulated by the government’s resolution to reduce tariffs on
imported cars starting January 1, 2006. This resulted in an increase in people’s income,
change in lifestyle, and improved standard of living. According to Vietnam Automobile
Manufacturers Association, in 2010 over 110, 000 manufactured or assembled cars
were sold in Vietnam. Due to the continuous rise in the ownership of cars, McDonald’s
will introduce the drive-thru model in Vietnam. The drive-thru model has always been an
integral part of McDonald’s which has given a brand advantage. The model will thrive in
a residential and business area in the city.
2.7 Localization strategy
Vietnamese customers are loyal to their Vietnamese cuisine with a rich eat out tradition.
Vietnamese food depends deeply on rice grown in water paddies throughout the
country, with cuisines varying from simple everyday meals to complex cuisines
designed for the Monarch. Attaining a balance between meat and fresh herbs; as well
as a careful use of spices to get a fine taste, Vietnamese is said to be one of the
healthiest yet most divine cuisines globally. Peanuts are also used commonly in
Vietnamese cuisine.

To be profitable in Vietnam, McDonald’s will need to localize its products like its
competitor KFC which added some local products on its menu. A balance between local
cuisines and McDonald’s traditional products will be very important in the Vietnamese
market. McDonald’s will introduce dishes like ‘McThai’ that will combine a variety of
herbs, vegetables and meats.
3.0 Competition and Challenges

McDonald’s will face intense competition in Vietnam local and foreign competitors. Its
biggest rival is KFC (Yum Brands) which has 77 outlets and has operated for 14 years
in Vietnam. Vietnamese customers are already familiar with their brand and they have
been expanding by the year. KFC has a well-developed distribution system that
permitted it to gain access to places other than the main city locations. KFC marketing
policies focus on the young population and children with special marketing programs.
KFC is also planning to launch their drive-thru restaurants.
Lotteria is one of the most successful restaurant chains in Vietnam, with 67 restaurants.
Lotteria offers a range of promotions such as discounts of fifteen percent to twenty
percent to make their restaurants more attractive to Vietnamese customers. With a
steady expansion strategy, Lotterria has vowed to continue to conduct research and
develop products and services to make them suitable with Vietnamese customers.
Jollibee with 30 restaurants has seen Vietnam as a key market to its growth
Subway with one restaurant is planning to open 25 restaurants in 5 years. Its entry into
the Vietnamese market will make it more vibrant and create more choices for the
Vietnamese customers
There is also a risk of new small scale competitors in the fast food market because of
minimal capital requirements, lack of managerial complexity, and low entry barriers.

McDonald’s can also face products imitation from Vietnam’s local restaurants. However,
the biggest threats can come from food safety and disease outbreak such as bird flu
3.1 Recommendations
• McDonald’s should use a scheme that will satisfy their Vietnamese employees
through a benefits program that will energize, attract, retain and reward talented
staff who will be able to generate superior results and boost the corporations
leadership position in the fast food industry.
• McDonald’s should conduct a comprehensive market survey of competitors’ store

locations in Vietnam combined with demographic data that will help McDonald’s
management discern market gaps, improving profitability and overall efficiency.
• McDonald’s should continue to have the right products at the right price.
Consumer taste inclinations are changing daily and McDonald’s must respond by
providing a variety of taste and price preferences in order to maintain their
competitive advantage alongside other fast food companies
• McDonald’s should ensure their outlets are showplaces. The “green field” entry
strategy should be used to build restaurants that will always look fresh and
contemporary.
• McDonald’s must keep promoting their brand in Vietnam. This should include
motivating the employees to work for the brand, taking the lead on environmental
issues and promoting consumer health matters.
3.2 Conclusion
McDonald’s will encounter some tough challenges as it grows to new markets.
Fundamental to its prospective success will be maintaining its core strengths—a
persistent emphasis on consistency and quality—while prudently testing with innovative
options. These new initiatives could include identifying more with the local market and

introducing sophisticated restaurants under novel brands that wouldn’t be burdened with
McDonald’s fast-food image. McDonald’s could also look into growing more
aggressively in other Asian and African countries where the prospects for substantial
growth are greater.
Exhibit I: McDonalds International Expansion

YEAR COUNTRY YEAR COUNTRY
1940 USA 1988 South Korea
1967 Canada 1988 Hungary
1967 Puerto Rico 1990 Russia
1971 Japan 1990 China
1971 West Germany 1991 Greece
1971 Australia 1992 Poland
1972 France 1993 Israel
1974 UK 1993 Saudi Arabia
1975 Hong Kong 1994 UAE
1976 New Zealand 1995 South Africa
1976 Switzerland 1996 India
1978 Belgium 1998 Pakistan
1979 Brazil 1998 Sri Lanka
1979 Singapore 1999 Georgia
1981 Malaysia 2001 Mauritius
1984 Taiwan 2003 Kazakhstan
1985 Italy 2008 Algeria
1986 Argentina 2011 Bosnia and

Herzegovina
*The list is not exhaustive and compiled from various sources

Exhibit 2: Countries with McDonald’s Franchises
Number of
currently
# Country Date First outlet location Notes
operating
outlets
United May 15 , San 13,381 (source:

1
States 1940 Bernardino, California. May 2000)
June 1, Richmond, British 1,400 (source:

2 Canada
1967 Columbia. March 2007)
Novembe First McDonald's

3 Puerto Rico r 10, in Latin America and in
1967 the Caribbean.
Septemb
U.S. Virgin
4 er 4,
Islands
1970
Third country (not U.S.

Decembe San José, 4th street, possession) and first
36 (source:
5 Costa Rica r 28, between 1st and Central outlet outside Northern
March 2011)
1970 Avenue. America where
McDonald's opened.
First outlet
June 10, in Oceania and first
6 Guam
1971 outlet outside
the Americas.
July 20, 3,598 (source:

7 Japan Tokyo First outlet in Asia
1971 2004)
August 225 (source:

8 Netherlands Zaandam First outlet in Europe.
21, 1971 2011)

Septemb
37 (source:
9 Panama er 1,
2009)
1971
First outlet in West

Novembe Germany: outlets in the
1,361 (source:
10 Germany r 22, former East
February 2010)
1971 Germany opened in
1991.
First outlet
May 30, Yagoona, New South
11 Australia 780 (Sep 2011) in Oceania (in a
1971 Wales[5]
sovereign state)
First outlet in Créteil in

1972 even though
1,161 (source:
June 30, McDonald's officially
12 France December
1972 recognizes the first
2009)
outlet in Strasbourg in
1979
July 20, 11 (source:

13 El Salvador
1972 Sept 2009)
230 (source:
October Kungsgatan First outlet
14 Sweden December
27, 1973 4, Stockholm in Scandinavia.
2009)
June 6, 80 (source:
15 Guatemala
1974 2011)
August
16 Curaçao
16, 1974
1,250 (United
United October
17 Woolwich, London Kingdom-wide,
Kingdom 1, 1974
source: 2006)

Paterson
Hong Kong/ January 200 (source:20
18 Street, Causeway
Hong Kong 8, 1975 09)
Bay,Hong Kong Island.
August 4,
19 Bahamas
1975
Founded in New
Zealand by Wally
and Hugh Morris
First South
New June 7, Porirua Central, Wellingt
20 152 (Sep 2011) Island restaurants
Zealand 1976 on
opened
atLinwood and Merivale
, both Christchurch, on
3 November 1987
October 148 (source:

21 Switzerland 20, 1976 March 2010)
May 9, 79 (source:
22 Ireland Grafton Street, Dublin
1977 February 2009)
July 21, Schwarzenbergplatz, Vi 168 (source:

23 Austria
1977 enna. 2009)
March 64 (source:
24 Belgium
21, 1978 2004)
February 560 (source: First outlet in South

25 Brazil Rio de Janeiro
13, 1979 2009) America.
October Liat Towers, Orchard 121 (source:

26 Singapore
20, 1979 Road 2004)
27 Spain March 276 (source:

10, 1981 2004)
83 (source:
April 15,
28 Denmark December
1981
2009)
Septemb
Morayta, Sampaloc, Ma 320 (source:
29 Philippines er 27,
nila 2011)
1981
April 29, Jalan Bukit Bintang, 194 (source: First outlet in a Muslim-
30 Malaysia
1982 Kuala Lumpur[10] 2009) majority country.
Novembe 68 (source:
31 Norway r 18, Nedre Slottsgate, Oslo December
1983 2009)
January 338 (source:

32 Taiwan Taipei City, Taiwan
28, 1984 2004)
June 29, 3 (source:

33 Andorra
1984 2009)
Decembe
34 Wales
r 3, 1984
Decembe
93 (source:
35 Finland r 14, Tampere
2004)
1984
February 88 (source:
36 Thailand
23, 1985 2004)
April 4,
37 Aruba
1985

Luxembour July 17, 7 (source:
38
g 1985 2009)
August 197 (source:

39 Venezuela
31, 1985 2009)
October near Piazza di Spagna, 392 (source:

40 Italy
15, 1985 Rome 2009)
October 500+ (source:

41 Mexico
29, 1985 2011)
April 24, 1 (source:

42 Cuba Guantanamo Bay Guantanamo Bay
1986 2009)
First outlet in
43 Turkey Istanbul the Greater Middle
24, 1986 2010)
East.
Novembe
187 (source:
44 Argentina r 24, Belgrano, Buenos Aires
2009)
1986
Then Portuguese territo

ry; McDonald's would
Macau/ April 11,
45 only open a restaurant
Macau 1987
in Portugal itself 4
years later
Second store
Novembe was Kirkcaldy. It took
46 Scotland r 23, Dundee[13] over 13 years since
1987 McDonald's first
appeared in the UK.
March 15 (source: First outlet in a

47 Yugoslavia/ 24, 1988 2011) communist country and
first outlet in the

Balkans.
Serbia
March 243 (source:

48 South Korea Seoul
29, 1988 2011)
Second communist
country, first Warsaw
49 Hungary Budapest[14] Pact member, thus first
1988 2009)
outlet behind theIron
Curtain.
Soviet
January 270 (source:
50 Union/ Russi
31, 1990 2010)
a
October 850 (August

51 China Shenzhen
8, 1990 2010)
Novembe
69 (source:
52 Chile r 19,
2009)
1990
February 110 (source:

53 Indonesia Sarinah, Jakarta
23, 1991 2009)
May 23, CascaiShopping, Cascai 91 (source:

54 Portugal
1991 s 2004)
United
October 32
55 Kingdom North Belfast
14, 1991 (source:2006)
ern Ireland
Novembe
48 (source:
56 Greece r 12,
2004)
1991
Novembe
57 Uruguay r 18, Montevideo
1991
Decembe
58 Martinique r 16,
1991
Czechoslov March 72 (source: First outlet in Czech

59
akia 20, 1992 2006) Republic.

April 8,
60 Guadeloupe
1992
June 17, 249 (source:

61 Poland
1992 2010)
Novembe
62 Monaco r 20,
1992
Decembe
1 (source:
63 Brunei r 12,
2004)
1992
First outlet in Africa -

Decembe McDonald's is now
64 Morocco r 18, Casablanca present in all
1992 continents
except Antarctica.
First outlet opened on

2
Northern March the island of Saipan -
65 (source:August
Marianas 18, 1993 Along with the a second
2011)
outlet in 1997

66 Israel
14, 1993 May 2010)
Decembe In Čopova Street, 16 (source:

67 Slovenia
r 2, 1993 Ljubljana 2009)
Saudi Decembe 60 (source:

68
Arabia r 8, 1993 2009)

70 Kuwait
1994 2007)
New July 26,

71
Caledonia 1994
July 30, 9 (December

72 Oman
1994 2009)
October 50 (source
73 Egypt
20, 1994 2003)
74 Bulgaria Decembe 36 (source:

r 10,
2011)
1994
Decembe
14 (source:
75 Bahrain r 15,
2010)
1994
Decembe
8 (source: First outlet in
76 Latvia r 15,
January 2011) the Baltics.
1994
Decembe
United Arab
77 r 21,
Emirates
1994

78 Estonia
1995 2011)

79 Romania
1995 2010)
8 (7 in Malta, 1
July 7,
80 Malta in Gozo,
1995
source: 2009)
78 (source:
July 14,
81 Colombia Centro Andino, Bogota November
1995
2009)
October 25 (source:
82 Slovakia
14, 1995 2011)
Novembe
129 (source:
83 South Africa r 11,
2009)
1995
Decembe
7 (source:
84 Qatar r 13,
2003)
1995
Decembe
85 Honduras r 14,
1995
Decembe
86 Saint Martin r 15,
1995

19 (18 opened,
February
87 Croatia Zagreb 1 opening)
2, 1996
(source: 2011)
Western March 2,
88
Samoa 1996
May 1, 3 (source:
89 Fiji Islands
1996 2001)
Liechtenstei May 3, 2 (source:

90
n 1996 2009)
May 31, 9 (source:

91 Lithuania
1996 2011)

92 Cyprus
1996 2004)
October
192 (source:
93 India 13, Delhi
2010)
1996[18]
October 22 (source:
94 Peru
18, 1996 2009)
Novembe
95 Jordan
r 7, 1996
Novembe
6 (source:
96 Paraguay r 21,
2009)
1996
Novembe
Dominican
97 r 30,
Republic
1996
Decembe
French
98 r 10, Tahiti
Polynesia
1996
99 Belarus Decembe Minsk 6 (source: The company claimed

r 10, 2011) this as McDonald's
1996 "100th country"
although this
calculation included
many non-sovereign

territories even though
McDonald's shut down
in Iceland in 2009 it is
the 99th country as of
November 1, 2009.
10 May 28, 72 (source:

Ukraine Kiev
0 1997 2011)
10 August
Yemen
1 22, 1997
Septemb
10 Republic of 6 (source:
er 6,
2 Macedonia 2010)
1997
10 October 10 (source:
Ecuador
3 9, 1997 2007)
Decembe
10
Réunion r 14,
4
1997
Decembe
10
Isle of Man r 15,
5
1997
Decembe
10 2 (source:
Suriname r 18,
6 2010)
1997
10 April 30,
Moldova
7 1998
McDonald's outlets
ceased operation
during the Nicaraguan
10 July 11, 6 (source: June civil war and re-
Nicaragua
8 1998 2010) established a presence
in 1998 after an
absence of two
decades.
Septemb
10
Lebanon er 18,
9
1998

Septemb
11 25 (source:
Pakistan er 19,
0 2005)
1998
11 October
Sri Lanka
1 16, 1998
11 July 6, 1 (source:
San Marino 1999 Borgo Maggiore.
2 2010)
11 August
Gibraltar
3 13, 1999
11 Novembe 7 (source:
Azerbaijan Baku
4 r 6, 1999 2011)
11 French February
5 Guiana 22, 2000
Septemb
11 American
er 29,
6 Samoa
2000
11 July 4, 2 (source:
Mauritius Port Louis
7 2001 2011)
11 May 1,
Mayotte
8 2003
A McDonalds restaurant
was opened in Budva in
12 June 1, 1 (source:
Montenegro Budva 2004,but it has been
0 2004 2006)
closed in 2007 due to
the lack of location.
One location
in Baghdad for the U.S.
12 August 1 (source:
Iraq Baghdad Army, but there is also
1 10, 2006 2006)
a knockoff
called MaDonal.
12 Bosnia and July 20, Sarajevo 2 (source: After 10 some years of

2 Herzegovina 2011[21] 2011) trying to enter the
Bosnian market with no
success, McDonald's
opened its first
restaurant in BiH on

07/20/2011. Days later
construction started on
the first drive-thru,
while ongoing planning
is wrapping up for
outlets in Banja Luka
and Mostar.
Currently slated to re-

open at The Falls At
West Mall. McDonald's
12 Trinidad & August Westmoorings, Port of 1 (source:
previously had stores in
3 Tobago 2011 Spain 2011)
Trinidad (May 6 1997 -
October 25 2003) but
closed due to low sales.
Source: www.wikipedia.com
Exhibit III
The Food of Vietnam - Vietnamese Food

Increasingly famous worldwide with restaurants
sprawled over the globe, yet no Vietnamese food abroad
can equal in flavor or quality to that made in Vietnam
itself. In brief, Vietnamese cuisine depends heavily on
rice grown in water paddies throughout the country, with
dishes varying from simple everyday meals to most
complex dishes designed for the King. Reaching a
balance between fresh herbs and meats; as well as a
selective use of spices to reach a fine taste, Vietnamese
food can be considered one of the healthiest yet most
divine cuisines worldwide.
Spices and ingredients
Vietnam’s ingredients reflect its geography and climate.

Rice (grown in water paddies throughout the country) is
the main starch used in everyday meals, and is also
made into different kind of cakes and noodles. Besides
a number of Buddhist vegetarian dishes, most
Vietnamese dishes or meals are a combination of a
variety of vegetables, herbs and meats.
Common herbs may include lemon grass, lime or kaffir.

Popular meats are pork, beef, chicken, prawn and
various fish. Lamb, duck, birds, and even dog or other
wild animals are also used but not widely. Fish sauce
and soy sauce are used as both flavorings and dipping
sauces for nearly every dish.
Peanuts are also used widely in Vietnamese cuisine.
Vegetarians and those with allergies should be careful

and ask beforehand while enjoying Vietnamese cuisine.
Style of cooking
The Vietnamese cook their food in a variety of ways:

deep fry, stir fry, boil, steam. Unlike the Chinese, the
Vietnamese use a minimal amount of oil while cooking.
Vietnamese cooks aim to preserve the freshness and
natural taste of food as much as possible. Hence
Vietnamese cuisine is often considered as one of the
healthiest foods in the world.
Food of three regions
Like everything else, Vietnamese food also differs

geographically from location to location. North
Vietnam’s food uses soy sauce, fish sauce and prawn
sauce and has many stir fried dishes.
With harsh weather and less developed agriculture than

the South, North Vietnamese tend to use less meat, fish
and vegetables; and black pepper (instead of chili) to
create spice. The taste is strict and less sweet, but more
salty than in other regions.
Central Vietnam is distinct in its extreme spices and

color of food. Hue’s cuisine, affected by royal cuisine
once created for kings and queens, emphasized on
quality and quantity – A meal constitutes of many
complex dishes served only at small proportions.
Southern Vietnamese are heavily affected by Cambodia,

Thai and Chinese cuisines (due to trade and
immigrants). Southerners prefer sweet tastes (created
by adding sugar or coconut milk) and spicy tastes

(created by chili peppers).
A variety of dried fish and sauces originate from the

South. Southerners prefer seafood and use simple
cooking methods with larger and less servings.
Customs
Influenced by the Chinese, chopsticks and spoons are

used in Vietnam. Many foods (such as cakes) are
wrapped in banana or coconut leaves. When eating with
elders, younger Vietnamese always ask the elders to eat
first.
A typical family meal
A typical Vietnamese meal (lunch or dinner) will include

steamed rice; a soup dish to eat with rice, a meat or fish
dish and a vegetarian dish (either stir fried or boiled).
Vietnamese do not eat in separate servings, but the food

is placed in the middle. Each member of the family has a
small bowl and chopsticks with which they take food
from the table throughout the meal.
Vietnamese noodles and cakes
Besides the typical meal with rice, Vietnamese cuisine

has many different types of noodles and cakes (mostly
made from rice). To name a few: beef soup noodles
(pho), crab noodle (bun rieu), spring rolls (nem), sticky
rice cake (chung cake)
Source: www.guidevietnam.com

References
Hill, W.L. (2011). International business: competing in the global marketplace, 8th edn,
McGraw-Hill companies
Daniels, J. and Radebaugh, L. (1998) International Business: Environments and
Operations, 8th edn, Reading, MA: Addison-Wesley.
Porter, M.E. (1985) Competitive Advantage, New York: The Free Press.
Vignali, C. (2001) ‘McDonald’s: “think global, act local” – the marketing mix’, British
Food Journal, Vol. 103, No. 2, pp.97–111.
Porter, M.E. (1980) Competitive Strategy, Techniques for Analysing Industries and
Competitors, New York: Free Press.
Whalen, J. (1995) ‘McDonald’s cooks worldwide growth’, Advertising Age International,
July/August, p.5.
http://en.wikipedia.org/wiki/List_of_countries_with_McDonald's_franchises. Accessed
Oct. 2, 2011
http://www.doingbusiness.org/data/exploreeconomies/vietnam/. Accessed Sept. 20,
2011.

http://news.vneconomy.vn/2010041603283251P0C1/for-your-dining-pleasure.htm
http://www.guidevietnam.com/travel/vietnamese-food-cuisine.html. Accessed Oct.3
2011
http://vietnambusiness.asia/112000-cars-sold-in-2010-down-6/ Accessed Sept 30, 2011
http://www.guidevietnam.com/travel/vietnamese-food-cuisine.html. Accessed Sept 30,
2011
http://www.business-in-asia.com/vn_automobile_industry.htm. Accessed Sept 30, 2011
http://www.eoincostello.ie/pdf_doc/Global_Marketing_and_Competitiveness_Assignmen
t.pd0f. Accessed Sept 23, 2011
“McDonald’s Grows with the Country,” www.en.ce.cn, October 2, 2011
Annual Reports, McDonald’s
www.mcdonald’s.com

Mcdonald'S in Vietnam: by Ayodeji Akin Abiri

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MCDONALD’S IN VIETNAM

By Ayodeji Akin Abiri

McDonald’s Enters Vietnam Page 1

McDonald’s Enters Vietnam Page 2

Key words: globalization, strategy, fast food, expansion

McDonald’s Enters Vietnam Page 3

1.1 Background Note

The McDonald’s brothers in 1953 decided to go into franchising as a mandate to

McDonald’s Enters Vietnam Page 4

1.2 Global Strategy

McDonald’s Enters Vietnam Page 5

The key to McDonald’s international success is franchising. Franchising to local people

McDonald’s Enters Vietnam Page 6

McDonald’s Enters Vietnam Page 7

McDonald’s Enters Vietnam Page 8

2.1 Entry Strategy

2.2 PESTEL Analysis of Vietnam

• Government is paying more attention to the benefits and interests of customers.

• Steady economic growth.

McDonald’s Enters Vietnam Page 9

• High purchasing power.

• Changes in purchasing pattern.

• Vietnamese like to buy at a cheap price.

• Careful in buying decisions.

• Vietnamese prefer to try products by themselves than to believe salespersons.

• HCM city has evolved from a traditional agricultural city to a technological

• Modern and high-tech equipment are in use.

• Standard of living has improved due to people living in more convenient

• Monsoon climate with four distinct season with high humidity.

• Environmental problems include water, air and solid waste pollution.

• Slow progress in achieving environmental sustainability due to low awareness in

• Environmental sustainability is part of Vietnam’s Comprehensive Poverty

McDonald’s Enters Vietnam Page 10

• Judiciary is controlled by the ruling party (CPV).

• Potential government interference to satisfy their own agenda.

2.3 McDonald’s SWOT Analysis of HCM City

• Largest metropolitan city in Vietnam with 9 million people. Majority of the

• Economic center of Vietnam- GDP per capital is $2800 compared to Country’s

• Good transport and communication systems.

• Huge pool of skilled labor force

• McDonald’s will be able to implement its QSCV Principle

• Aggressive competitive strategy

• Low price of products

• Ability to learn from competitors’ mistakes

McDonald’s Enters Vietnam Page 11

• Limited Menus than competitors

• Increase in demand for fast food in Vietnam

• Innovation in product and services

• Fast food penetration still low which is an opportunity for growth

• More local and foreign competitors rising quickly.

• Government policies on fast food and healthy meal.

• Outbreak of bird flu.

2.4 Expansion Strategies

McDonald’s will focus on strategies related to quality breakfast, convenience, menu

McDonald’s Enters Vietnam Page 12

2.6 Drive-Thru Restaurants

During the 2000s, Vietnam witnessed remarkable economic development that

2.7 Localization strategy

McDonald’s Enters Vietnam Page 13

3.0 Competition and Challenges

McDonald’s Enters Vietnam Page 14

• McDonald’s should conduct a comprehensive market survey of competitors’ store