MCDONALD'S

Mài dāng láo

CASE STUDY
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Introduction CHINA

McDonald's Corporation is a well-known American fast food restaurant chain and one
of the biggest in the world. It is famous for its hamburgers, particularly its Big Macs.
Chicago houses the corporate headquarters.

McDonald's made the decision to enter China in 1990 as part of its global expansion
since the Chinese market had enormous potential. China had seen a rise in the
number of urban residents, a change in consumer buying patterns, and the influence
of western brands over time. Since then, it has gradually grown to become the most
prosperous. The success of the Shenzhen location gave McDonald's the push it
needed to grow its franchise nationally. On April 23, 1992, a large McDonald's
restaurant opened in Beijing, becoming the chains second in China and it was situated
in a popular retail district of the city.
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Background CHINA

In China, McDonald's is a favored Western restaurant of both children and adults.

Although McDonald's has slowed the process of expanding its branches in China, it still
provides customers with reasonable prices and excellent service.

PROBLEM: In July 2014, a reporter in Shanghai recorded a video footage contains the
employees processing substandard meat as well as expired meat products.
The Shanghai Municipal Food and Drug Administration was compelled to look into the
processing facility after the video went viral around the nation. Following an
investigation, the authorities discovered that 3,000 cases of tainted beef had already
been distributed, along with expired animal items (chicken and beef) that had been
packed and processed with new expiration dates.
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Background CHINA

Following the incident, McDonald's in China experienced a three-week meat and

chicken shortage. Their description of what went wrong tells the tale of a
U.S. corporation that, in certain situations, was unable to understand what local
Chinese management were doing. Even if local plant rules and paperwork had been
translated from Chinese to English, OSI's American managers rarely visited.

China's authorities immediately prohibited the import and sale of goods processed by
Husi Food Group after the problem came to light. The popular chicken nuggets and
chicken fillets from McDonald's were no longer being sold as a result of the ban in
several of their Shanghai locations. Furthermore, because the Husi Food Plant supplied
the Japanese branch of McDonald's, it was also impacted by this controversy.
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Alternatives IN
IN CHINA
CHINA

CNN Money reports that the renowned international fast-food chain

McDonald's has legally changed its name in China. Jingongmen,
which loosely translates to "Golden Arches," has replaced the company's
former name in the nation, Maidanglao, which is a Chinese translation of
"McDonald's." The "Golden Arches" term has been used by McDonald's for
many years, so it doesn't seem like the upgrade will have a significant
impact on the company's Chinese operations. This decision is an alternative
solution for the brand’s scandal to start a new and meet the needs of
business development.
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Alternatives IN
IN CHINA
CHINA

Second alternative is the marketing managers at McDonald's Meat must

comprehend the basic needs and factors that influence those needs, conceptualize
products and services that can satisfy those needs and are within the realm of
the company's financial and intellectual capabilities, and finally create a marketing
mix for the whole market strategy.

Third alternative, discuss a new McDonald’s Meat offering in terms of goods or

services. Launching a new product and promoting its characteristics, superior value
proposition, and distinctiveness is the classic marketing mix function.
Boost McDonald's Meat's market share. Marketing initiatives can be used to boost
market share either by encouraging higher sales to existing customers or by
encouraging higher sales to new customers.
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CHINA
Proposed Solutions

McDonald's could leverage its innovation capabilities to better meet the

demands of the Chinese market.
The staffs and management must double the security of the products as well
as the production of it especially the expiry date and manufactured date.
A day to day inventory of the products must be strengthen its focus.
McDonald’s in China must produce burgers and other products that will fit
to the tradition and culture of Chinese.
Recommendations
McDonald's strategy in China may include prioritizing the development of
products with novel or differentiated characteristics to meet the local
market's needs better. Thus, the product development strategy is advocated
as a more suitable option.
To begin, the organization has the means and ability to produce the
necessary wares. To better suit the needs of the Chinese market,
McDonald's, as one of the leading fast-food firms, may be able to
manufacture new goods with new tastes.
Recommendations
Considering the size and growth potential of the industry, it would be
wise for the company to invest extensively in R&D to create innovative
products, with the expectation that some of them may prove to be
commercially successful and reap incalculable rewards.

McDonald's China is under increased pressure to adapt to local tastes

rather than rely on international standards because of cultural
differences between China and the West regarding culinary preferences.
Recommendations
Throughout China's long history, regional differences in food preferences
have emerged, with them favoring rice dishes. Given these differences,
catering to the specific tastes of each region's consumers would
necessitate tailoring products to meet the demands of each region's
market.

McDonald's China has moved its attention to burgers, although many

consumers will resist the change due to cultural preferences.
Recommendations
As a result, customers in China would view McDonald's China as
separate from McDonald's locations in New York or Kuala Lumpur,
as well as from other vital rivals, due to the restaurant chain's tailored
new menu that would stockpile services to meet the demands of
customers and carry peculiarity within.

Capability to create novel products with top-notch features to acquire

the preferred wants of Chinese consumers.
Conclusions
McDonald's has a highly centralized corporate structure, which allows the
company's upper echelons to have considerable influence over all restaurants
operating under McDonald's name. The level of individualism in China is
minimal when compared to Western countries. The Chinese are fascinated
by and eager to absorb the customs of other cultures. The Chinese
McDonald's emphasizes familiar American staples like chicken, potatoes, milk,
and bread. American fast food is more prevalent among Chinese people
than Chinese fast food.
Conclusions
On the other hand, McDonald's promises that its products will meet the
standards of Chinese consumers, including a reduced calorie count and an
emphasis on vegetables and cereals, without compromising the quality of the
chain's signature dishes. The Chinese, for instance, eat chicken,
so McDonald's gives their chicken more of a Chinese twist. McDonald's in
China is ahead of the competition because of its innovative strategy for
recruiting and retaining top talent.
 1980
The first McDonald’s in mainland
Timeline
China opened in Shenzhen, in the
southern part of the country.
As the first Special Economic
Zone in China was established in
1980, newly implemented liberal
reforms allowed Western brands
to open stores in China.
1982
Two years later, the second
McDonald’s restaurant in mainland
China opened in Beijing and was, at
that time, the largest McDonald’s
restaurant in the world. On its
opening day, a thousand workers
served over forty thousand
customers.
1990
Businessmen were also curious
about McDonald’s
management mode. NBC news
observed “when McDonald’s
first opened in China in 1990,
these streets were clogged
with bicycles” (Griffith,
“McDonalds has a big appetite
for China”).
1984
The first McDonald’s
(also known in China as
Màidāngláo) opened in
Taipei in 1984.
 1996 Present
McDonald’s Corp plans to nearly
By 1996,

Timeline
double the number of stores in
McDonald’s had mainland China by 2022. In line with
the popular statement “a small step for
opened twenty–nine us, is a large step for the world.”
restaurants in Beijing McDonald’s in China is now focused
alone. on serving organic and sustainably
grown food, following the “green”
2001-2005 trends in the world.

First McCafé in China was opened in 2001, and the first

McDrive – in 2005. As McDonald’s popularity grew, all restaurants in
China were open 24/7. Due to its rapid expansion in the Chinese market,
McDonald’s restaurants became an integral aspect of the Chinese cities’
landscape. To gain more patrons, McDonald’s started employing a new
strategy in China. The brand reduced American symbolism in China and
incorporated more menu options with a Chinese twist.
 Measurement of
Success
ULTIMATE OBJECTIVE
McDonald’s growth in China When McDonald’s made their first debut in the Chinese
market; their target audience was middle-class Chinese citizens. At the beginning of
the XXI century, McDonald’s began appealing more towards a younger audience due
to increased marketing and rising pop-cultural impact.

INDEX IMPROVEMENT
One of the main reasons for the popularity of McDonald’s in China was its high
quality. The media commended its standardized procedures of food production,
recipes, and modern management techniques. McDonald’s repeatedly emphasized
that its suppliers in China followed the same standard as the suppliers in the US
and other countries.
 Measurement of
Success
POSITIVE COMMENT
McDonald’s consistently makes delicious burgers, crispy French fries and icy shakes,
which meet popular demand in China. The menu has been adapted to include foods
tweaked for local tastes and to satisfy customers. McDonald’s created recipes
according to the Chinese taste, which make it more marketable in China.

NEW IDEAS AND ACTIONS

As a part of the plan, its markets were reorganized and China became a part of the
high growth market. This signified that China had strong growth potential. To develop
these markets, franchising was important as franchising was not well developed there
and there were several opportunities to grow. McDonald’s planned to grow its share in
the informal eating out sectors in these markets. As part of reorganizing the business.
 Measurement of
Success
SERVICE, EXCELLENCE AND WORKSHOP
McDonald’s is good customer service because it is known all over the world
for its fast service and smiling workers. They believe in serving their
customers above anything else. McDonald’s also do regular quality control
inspections in stores to make sure they are taking care of food safety. In
addition, their restrooms are kept clean. Maccas takes care of every single
detail to make sure local customers are looked after.
 Appendices

APPENDIX A
McDonald in China – Success of a Western Brand in China

These appendices consist of to gain more patrons; McDonald’s started employing a new
strategy in China. The brand reduced American symbolism in China and incorporated more menu
options with a Chinese twist. As of 2020, there are around 3,300 McDonald’s restaurants in
China, 150 thousand employees. By 2017 McDonald’s had served over 1.3 billion customers.
 Appendices

APPENDIX b
McDonald's Faces Sales Decline in Asia

Soon after the issue came to light, China's government issued a ban on import and sales of
products processed by Husi Food Group. As a result of the ban, sales of McDonald's popular
chicken nuggets and chicken fillets were suspended in many Shanghai branches.
 Appendices

APPENDIX c
The History of McDonald's in China

McDonald’s (Màidāngláo) was a late entrant into the foreign fast food industry in China. KFC,
for example, opened in Beijing in 1987, while McDonald’s opened its first outlet in China only
three years later. Unlike KFC who opened its first Chinese branch in the capital, Beijing,
McDonald’s advanced from the south, opening in Shenzhen, a small city near Hong Kong.
 Appendices

APPENDIX d
Why McDonald’s Popular in China?

This appendix consists of variety why McDonald’s is popular in China, because today China is home to around
800 McDonald’s restaurants. There are several reasons that McDonald’s is one of the most popular food
restaurants in China because of their great quality foods which the menu has been adapted to includes foods
tweaked for local tastes and to satisfy customers. McDonald’s created recipes according to the Chinese taste,
which make it more marketable in China. McDonald’s is known all over the world for its fast service and smiling
workers which they have a good customer services. McDonald’s franchise business model has spread through
China by selling franchises which McDonald’s operational capability and current management has made it a
popular investment in China.
 Appendices

APPENDIX e
Why McDonalds' Supplier Failed in China?

The supplier was exposed by local media for mishandling food in China. McDonald’s had to ship
to these restaurants through alternate product sources. This took its sources
“less than 60 days,” but the company lost significant time and sales.
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