Module Leader: Dr.

Thomas Magede

Module code and title: 7BU027 Strategic Global Marketing

Registration Number: 2304159

8th May, 2023
Introduction

McDonald's first fast-food restaurant opened in 1948, less than a decade after the first draft of the

Company's history was completed in 1940. McDonald's is a global innovation, a global leader in

the food administration industry. McDonald's outlets are currently distributed, and function in

over 119 countries, and a total of 36,059 McDonald's restaurants were franchised at the end of

2019, representing 93% of the chain's total (McDonald, 2019). The McDonald's Company enjoys

worldwide success through the strategic management applied through two vectors: uniformity

and adaptation.

When it comes to marketing, McDonald’s takes care of everything ranging from pricing system

to branding and advertising respectively. McDonald’s competitive strategies involve personnel

training and product innovation. Price, quality, flavours, menu choice, nutrition and ease of

access are the fundamental principles of McDonald’s marketing strategies (Zhang et.al 2019).

Other significant factor behind McDonald’s success is its global vision, which over the years has

led to the company’s prosperity. Globally famous brand McDonald’s recorded a net income of

approximately 6.18 billion U.S. dollars in 2022 (McDonald Annual Report, 2022). Regardless of

the location, McDonald’s menu is made using a standardised method in order to maintain

consistency in quality and efficiency globally (McDonald, 2019)

SCLEPT ANALYSIS

SCLEPT SOUTH AFRICA SAUDI ARABIA SOURCES

Socio-cultural (CIA 2023)
Population Population
58,048,332 35,939,806
Ethnic groups –
Black African
-Ethnic Groups –
80.9%, Colored
Arab 90%
8.8%, White 7.8%, Afro – Asian 10%
Indian/Asian 2.6%
(2021 est.) -Language – Arabic
 Language – Mixed -Religion – Islam
Zulu 25.3% English- (CIA 2023)
8.1%
-Literacy – 97.6%
Religion– Christianity
86%.
Population growth
0.91%

Literacy- 95%

Legal Mixed legal system  Islamic (CIA 2022)

of Roman-Dutch (Sharia) Law
civil law, English
 FDI- foreign
business are
common law, and
not 100%
customary law owned by
foreigners
FDI- Foreign
business are not
100% owned by
foreigners

Economic
GDP/Capi $11,5 -GDP Per Capita -(CIA 2022)
ta 00 $44,300

-Inflation 3.06%
-Inflation 4.1%
(CIA 2022)
-Unemployment
-Unemployment 7.36% of the total
33.56%
population
Household income
41.3% CIA 2021
Household income – GDP Growth: 3.24%
10%
GDP Growth: 0.06%

Political  Stable  Islam shape CIA (2022)

Government government
  Terrorism  It is a
alert is high. Monarchy.

Technology -Electrification 100% -Electrification 100% (CIA, 2022)

-Telephone fixed lines -Telephone 6,594,631
1,472,191 Internet-users:
34,117,590
-Internet users –
41,516,083 -Mobile – 45,427,321

Mobile : -Internet 5G Network

100,328,005
Internet network 3G-5G -Cable – Media
34,000,000 Internet
-Transportation – User
paved: 158,124.

-Transportation
Paved: 47,529.
Unstable Business High level of CIA 2022
Environmental environment pollution and waste
Factors management

The SCLEPT analysis of the two countries above shows how different they are in terms of
culture, economic and other factors. Saudi Arabia is an Islamic country and as such consumers
buying behaviour will be greatly influence in terms of goods and service offerings. South Africa
has several ethnic groups and mixed religion; this will positively impact the buying behaviour of
consumers as well. There will be so many reasons for purchasing a product such demand, social
class and status quo. The buying behaviour of consumers in Saudi Arabia will greatly differ with
that of South Africans in terms preference, religion and other social factors (CIA 2023). GDP
Growth is very crucial factors to be considered in terms achieving business overall objectives.
Unstable business environment can negatively affect organisational profit margin as seen from
the SLEPT analysis. Technology is very vital in any business operations, be it locally or
internationally. The analysis above shows that both Saudi Arabia and South Africa have embrace
technology in terms of business activities. The uses of technology will enhances McDonalds
operation on both countries, making it effective and efficient in responding to customers demand
( CIA, 2023)
Taking into account the differences that occur in the two countries, McDonalds adopted the
geocentric orientation with some standardised components of communication in reaching out to
their various customer bases while the marketing mix was adapted to meet the need of local
consumers. McDonald is seen as geocentric companies because of its transitional strategies
which are based on standardised proven identify and a well communicated values of their
products in meeting the need of different customer base. McDonald’s geocentric orientation is
based upon the assumption that there are similarities and differences in the world that can be
understood and recognised in an integrated world strategy. The geocentric orientation or world
orientation is a synthesis of the ethnocentric orientation (home country) and polycentric
orientation (host country) (Lard, 2021).

Micro Analysis

Saudi Arabia

Every firm is a product of the surroundings in which it operates. Because there are so many
aspects that surround a company, No entity can function in isolation in the business environment.

Business activities are directly influenced by the microenvironment, Small and bigger
environmental factors have a significant effect on the efficacy of marketing actions, thus they
should be thoroughly inspected when establishing a marketing plan. Saudi Arabia is collectivist
country where family, friends, neigbours and the entire community are connected together.
Religion has a great impact on the buying behaviour of consumers in Saudi Arabia. Due to
culture and religion, many consumers preferred shopping online.

South Africa

South Africa is a multi-cultural country. Consumers are not so mindful about eating out.
Introducing different recipes is what attracts customers in South Africa mostly (CIA, 2023).
Standard of living and household income has a great impact on consumers buying behaviour in
the country.

Competitors

Saudi Arabia
Saudi Arabian Market has been experiencing rapid socio-cultural changes over the past few
years, mainly due to the accelerating economy. The market also unveiled a series of significant
tourism initiatives proving that the country is moving towards becoming a world class global
tourism hub. The Saudi Arabian food service market is fragmented and highly competitive
market with presence of several players. Major competitors for McDonald in Saudi Arabia
include Herfy Food Service Co, Albaik Food System Co, Domimo’s Pizza, KFC and burger King
among others (Statistics 2023).

There are stiff competition among foodservice provider in Saudi Arabia based on quality, pricing,
calorie intake per meal, and healthy menu options. Restaurants across the country are adopting
strong partnership, and innovation as key element on combating competition and players in the
food industry are also boosting their sales by venturing into home delivery and online
foodservice segment (Statistics 2023). McDonald’s is the leader in the industry and controls
approximately twenty-five percent of the entire market share. Also, McDonald’s has become
tantamount to quality flavored fast food products. McDonald’s has numerous fast food outlets in
Riyadh, making its products be known by the majority of the consumers (Bradley, 2019)

The company also has effective delivery methods and a distinctive trademark. Additionally,
McDonald's product philosophy places a strong emphasis on quality and customer happiness,
giving them an edge over competitors.

South Africa

Food industry has become increasingly multifaceted and extremely competitive globally. In such
an environment, managers are faced with various competitions from other competitors in the
industry (Mhlanga, 2018). Over the last decades, tourism has been recognised as very significant
components in reshaping South African economy (Statistics South Africa, 2018). Tourism
account for 3.6% to South Africa’s Gross Domestic Product GDP (SSA, 2018)

South Africa is characterized with a high level of competition in the food industry. Despite
serious competition in the local market, there has been continuous increase of international
brands such as Burger King, Domino;s Pizza and Pizza Hut, Starbucks and Dunkin Donuts.
McDonald major competitor in South Africa’s market is Burger King and Pizza Hut. In an
attempt to overcome such stiff competition, McDonalds dropped prices on their burgers,
increased their meal portions and opened new outlets across the country (Sharebox, 2017).
Market Entry

A foreign market entry mode is "an institutional arrangement that makes possible the entry of a
company's products, technology, human skills, management or other resources into a foreign
country" (Root, 2019)

McDonald entered Saudi Arabia in 1993. McDonald is seen as one of biggest food industry in
Saudi Arabia. McDonalds entered Saudi through franchising. The company primary operates
through franchises across various countries. Franchises give McDonalds a cheaper way of
expanding to other countries while also giving them the control needed over the usage of their
brands and operations. Franchising gives McDonald (UK Essay, 2018).

McDonald's opened its first restaurant in South Africa in November 1995. Today, we operate
over 300 restaurants in nine of South Africa's provinces. McDonald entered South Africa entered
South Africa through franchising. South Africa is one of the most successful markets in
McDonald's international history. A record was set when South Africa opened 30 restaurants in
just 23 months, at one stage opening 10 restaurants in 78 days. McDonald's has already invested
more than R750-million directly into the South African economy and we are committed to the
success of the South African market (Statistic, 2019).

Segmentation

In today’s global and competitive business environment with varying demands from consumers,
companies cannot appeal to all buyers in the market place. There is need for companies to design
customer –driven marketing strategies that brings about right relationship with the right
customers (Armstrong 2018).

Market segmentation refers to “dividing a market into smaller segments of buyers with distinct
needs, characteristics, or behaviors that might require separate marketing strategies (Kotler
2019).

Targeting

Targeting is defined as “evaluating each market segment’s attractiveness and selecting one or
more segments to enter (Kotler, 2019). Targeting is a vital tool for companies in achieving
effectiveness and efficiency in terms of planning overall marketing strategies.
McDonald in Saudi Arabia offers a friendly, fun environment for group consumers to enjoy their
products and services (McDonald 2023). The company seeks to appeal to a wide range of people
from families who love their extra value meals, to workers grabbing breakfast on the go or
youths who wants to hang out with friends. McDonalds maintains a positive relationship with
customers by maintaining the quality of their food and service in a clean hygienic and relaxing
atmosphere. The company has a great reputation for providing fast, reliable service and
consistent quality.

Saudi Arabia

From the SCLEPT analysis, it clearly shows that Saudi Arabia is mono-ethnic country
characterized with 90% of Arab/Muslim (CIA 2023). McDonald target market in Saudi Arabia is
greatly influenced by social and religion respectively. This shows that flexible variables can be
used to identify the organisation’s target market in the country.

Segmentation Variables Target consumers

Demographic Families
Age: All groups
Gender: Male , Female
Muslims/ Afro – Asian
Middle and upper income class
Professionals , students
Psychographic Social class: Upper class, Upper Middle class, Middle class and
Working class.
Personality: youthful, compulsive, flexible, innocent & gullible (kids)
Lifestyle: Achievers, sophisticated, believers, strivers, outdoor-
oriented.
Behavioural Occasions: Parties, birthdays and other get-to-gathers.
Loyalty status: Strong & medium loyalty towards the brand
Attitude toward products: Positive, content, enthusiastic &
knowledgeable

Source: (Statistics 2023)

South Africa
From the SCLEPT analysis, South Africa is a multi-ethnic country characterised by various
cultures, and religion. Migration levels in South Africa are very high and as the result,
McDonalds recognises this diversity in their segmentation by taking into account religious
affiliation and cultural diversity (CIA 2023). Despite the level of household income as indicated
in the SCLEPT analysis, greater numbers of consumers in South Africa are conscious about
health and as such prefer healthy products offerings.

Segmentation Target 1 Target 2 Target 3

Demographic 18-50 years Families Religion
Christians
Muslims
Families and individuals
Psychographic Fun and enjoyable Families Culture shapes buying
behavior
Income shapes
consumptions
Behavioural Weekly Monthly Occasionally

Positioning strategy

Over the past ten years, positioning has drawn a lot of attention and grown to be a powerful
marketing management paradigm. It is widely acknowledged that positioning has emerged as one
of the most important elements of contemporary marketing management, both from an academic
perspective and practically (Boatswain, 2015). Effective positioning is essential to the success of
a brand in today's over-communicated and product-saturated consumer world (Marsden, 2019).

Saudi Arabia

McDonald positioning strategy has help in establishing products within the minds of the
consumers in Saudi Arabia. Quality and pricing systems has placed McDonalds in an
advantageous position in the country. The company ultimately achieved their growth and success
by focusing on offering low costs meals that tastes great (Percy, L. 2017). McDonald positioned
their products based on the demand available in the market in Saudi Arabia and this yielded
positive returns for the company over the years.
They made their items broadly accessible and set their prices in line with the purchasing power
of their target market. They have employed persuasive advertising to draw in both new and
returning clients.

South Africa

McDonald in South Africa uses quality to differentiate themselves with competitors in the food
industry. In their pricing methods, McDonalds takes into account different income levels, low
class, middle class and upper class. Because of quality and low price, McDonalds has more
consumer base than all its competitors. The company follows a comprehensive framework of
training and monitoring of its franchises to that they adhere to the Quality, Service, Cleanliness
and Value propositions offered by the company to its customer. Developing a sophisticated
supplier networked operation and distribution system, the company has been able to achieve
consistent product taste and quality across the country (Pri Dhavale 2018).

Positioning Perceptual Map for McDonald in Saudi Arabia and South Africa

Perceptual map from the two countries shows McDonalds competitive advantage in terms of
price, quality, brand name and other factors as indicated in the table below.

Positive
Price
Image
Quality
Features

Performance Brand
Competitive
name
Advantage
Safety

Marketing Mix
There are several issues associated in doing business globally in the 21 st century which can either
affect organisations positively or negatively. The need to choose to adapt or standardize products
by companies forms the basis for meeting different market needs. Standardization is seen as a
framework of agreements to which all relevant parties in an organisation must adhere to ensure
that all processes associated with the creation of good performance of a service are performed
within set guidelines (Cambridge Dictionary, 2017). Standardization enables organisations to
maintain products in terms of quality and standards in domestic and international market without
any alteration (Davis, 2018). Standardisation is when a brand’s product or service is identical
globally. The cost and administration benefits of product standardisation have made the global
marketing approach of the 21st century easier (Ghantous, 2018). Standardisation of a brand’s
product offering creates a consistent image of the organisation’s products and services offered
worldwide.

Standardisation assures a unique, secure and consistent brand image across global markets,
ultimately assisting the organisation in adding consumer value. Implementing standardisation
throughout an organisation, brand’s international communication strategy, mission, proposition,
the concept and the execution is as easier as it is generic throughout all markets.

Adaptation is a flexible process associated with the creation of products or performance of

service according to various factors (Dontigney, 2013). To think global, multinational companies
uses adaptation to gain competitive advantage.

Product

culture has an important role in determining customers’ buying behaviour in Saudi Arabia, a
mixed approach study by Alghamdi and Ahmed (2021) showed that Saudi customers did not
show such an effect when multinational brands tried to give an Islamic appeal to their products.
This means, there is no need for MNCs to adjust their marketing strategy for religious beliefs of
Saudi customers and provides a favourable business environment. The need for a distinct
Islamic branding of products and services offered by MNCs in Muslim countries like Saudi
Arabia, was stressed by Kamran (2019).

As identified from the SCLEPT, McDonalds adapted to the socio-cultural values and norms in
the country. McDonald's Saudi Arabia is proud to be a model for quick-service restaurants that
serve the finest types of 100% pure and halal beef. Saudi Arabia being an Islamic country,
McDonald ensured that their products adapt Muslim culture prevailing in the country. From the
SLEPT analysis, it clearly shows Saudi Arabia is made up of 90% Arabs (CIA, 2023). Pork is
prohibited by Muslims.

McDonald's Saudi Arabia is constantly keen to adhere to the ideal and completely error-free
principles in the field of beef by providing the finest products that meet the highest local and
international quality standards. It uses the best types of 100% pure beef slices without adding any
preservatives, artificial additives or antibiotics And all McDonald's meat comes from certified
suppliers who are committed to applying strict standards that guarantee quality and food safety in
the various stages of the meat production, transportation and preparation processes, McDonald's
also works with a number of Islamic inspection bodies that directly supervise and monitor to
ensure halal practices and that the slaughtering operations are carried out in accordance with
Islamic law. All meat used in McDonald's is halal and subject to strict standards, inspections and
control. It offers its lovers 100% pure and halal beef.

McDonald's Saudi Arabia is proud to offer many and varied products that impress and satisfy its
valued customers of different tastes, and always look forward to gaining consumer confidence
through complete transparency in conveying all the correct information about its products
(McDonald, 2023). Glocalisation is the method used in Saudi Arabia for product labeling.
According to Ghauri and Cateora (2014), Glocalisation occurs when a company employs both
standardization and adaptation in its marketing strategy. Including Arabic language in
McDonalds product labelling is vital since 90% of citizens speaks Arabic. McDonalds uses
English in their labelling since Saudi Arabia is considered a tourism country (CIA, 2023).

Being collectivist society, family unions and reunions often takes place occasionally where eat

together.
South Africa

McDonald’s restaurant chain is well known for their globally standarsised products. They

standardised their product to meet consumers need at all level in all markets. McDonald’s

decision for standardisation primarily is to differentiate their products in terms of quality, values

and gain competitive advantage over competitors in South Africa (McDonald’s website, 2019)

McDonald's Menu is customized to reflect consumer tastes in their respective countries.

McDonald‘s sells a wide range of fast food products with the aim of satisfying their target

market. McDonald South Africa has been associated with scandals concerning healthy issues

surrounding their products. in line with government and consumer complaints, McDonalds

concentrate on health concern of their customer by preparing healthy meals (Statistic 2019)
Price

Saudi Arabia

Price is fundamental component of marketing mix. Pricing is a key strategy McDonalds uses in

seeking and appealing to customers and retaining them. McDonald uses right pricing, brands

offer value that brings about customer satisfaction leading to customer loyalty (Davis, 2018).

Given the diverse nature of the market that the McDonald brand targets as well as the various

categories and bundles of products that the business has, it is capable of charging prices

depending on items, bundles and their quality (Rohani, 2017). Price to the middle and upper

income class in Saudi Arabia means quality. From the SLEPT analysis GDP per capita in Saudi

amount to 44. 3%, while the household income amount to 41.3% (CIA, 2023). Majority of

customers who patronise McDonalds in Saudi Arabia are from Middle and Upper Income Class.

Low income class also patronise McDonalds product is McDonalds pricing system

accommodates all classes of consumers. The image below shows the price of the products in

Saudi Arabia.
South Africa

McDonald adapted a fairly pricing strategy to suit the challenges that vast consumers are facing
in South Africa. From the SLEPT analysis, it clearly shows that South Africa is not economically
stable and this definitely affects consumers buying power (CIA, 2023). McDonald’s uses the
pricing approach, ‘think global, and act local’. They have proven to be affluent at using cost
leadership pricing strategy by offering meals at low prices. The standard of living is high in
South Africa and very low household income. From the SLEPT analysis, GDP per capita is $11,
500 while household income amount to $10 (CIA, 2023). Pricing systems set by McDonald in
South Africa is flexible to accommodate different classes of consumers
Place

In the case of Saudi Arabia, culture is an important additional factor of the business environment.
(Al-Ghalayini 2019). McDonalds operating in Saudi Arabia has to deal with home, host countries
workers and apply practices developed in their home country. However, not adapting the policies
of host country leads to conflict between managers and local employees. In Saudi Arabia,
policies are guided by Saudisation and the regulation requires the appointment of only Saudi
nationals as Human Resource heads (Adham 2021)

McDonald needs to take into account, culture and religion in the host country (CIA, 2023).
Understanding host country culture and religion is vital in achieving business success. McDonald
also used the concept of Glocalisation in naming their restaurant in Saudi Arabia. This entails the
significance of culture and language to McDonald group of company engaged in international
business operations.

Additionally, the larger population in Saudi Arabia has access to mobile phones and internet.
Technology plays a vital role in online shopping and placing of orders across the country (CIA
2022). Business environment is Saudi is highly competitive and dynamic. Young people
constituting the larger percent of the population, entails enhanced purchasing power and
changing life styles. McDonald need to utilised the opportunity in Saudi Arabia business
environment by offering customer delivery options

South Africa

McDonald South Africa uses standardisation strategies in reaching out to their customers. The

South Africa’s capital and other big cities in the country where McDonald is predominantly

found have access to paved road across the country (CIA, 2023). The introduction of 5G

network across the country places McDonald on the advantageous position in reaching out the

different customer base. Home delivery is made possible through the use of internet services,

access to internet connections, and change in consumer’s lifestyles.

Promotion

Saudi Arabia

Social cultural factors in Saudi Arabia have great effect on promotional activities. McDonald has

modernised their advertisement, pamphlets, and website to include information and addressing

diet issues. They use Glocalisation strategy in Saudi Arabia and also take into account socio-

cultural factors that might negatively affect their promotional activities (Doole, et al, 2019). To

carry effective and efficient promotional campaigns, McDonalds use languages that are well

understood by many. From the SCLEPT analysis, the official language in Saudi Arabia is Arabic

90% and as a result, McDonald uses Arabic in promoting their products (CIA, 2023).

in an attempt to reach out to other non-Arabic speakers, McDonald also standardised their

promotional campaigns using English Language; targeting expatriate community that visits or

stays in the country. The picture below shows McDonald products with Arabic inscription.
Promotional strategies adapted by McDonald is primarily aimed at meeting the need of their

target market. Being a collectivist society, McDonald promotional campaigns are directed to

families mostly.

South Africa

South Africa being a multi-cultural country, McDonald promotional campaigns are done in

English targeting the general market. In carryingout campaigns, McDonald has taken into

consideration household income and inflation rate in the country (10%) (CIA, 2023). In order to

reach to groups of consumers, McDonald have designs inclusive promotional strategies that

reflects lower income class , middle income class as well as upper income class category. Prices

forms major constraint in South Africa in terms of buying power of consumers. The image below

shows different sales promotions by McDonald.

McDonalds carry out promotional campaigns with broader perspective in addressing social
responsiblities issues. They encourage healthy eating habit for target consumers.

Conclusion

The assignment shows that McDonald understand consumers behaviour and they must be
treated based on their culture other demographic characteristics. Despite cultural differences ,
this assignment has shown that various micro and macro factors in business environment had
made McDonald to pursue geocentric orientation in operating in Saudi Arabia and South Africa
effectively.

.
Bibliography
Adham. (2021). Adham, A. (2021). Managing labour in multinational corporations in Saudi
Arabia. International Journal of Advanced Research in Management and Social Sciences,
10(8), 11-29. Retrieved December 30, 2021, from
https://garph.co.uk/IJARMSS/Aug2021/G-2913.pdf.

Al-Ghalayini. (2021). Al-Ghalayini, B. M. (2019, April 27). Business environment in KSA.

Retrieved December 29, 2021, from Arab News:
https://www.arabnews.com/node/1488966.

Alghamdi. (2021). Alghamdi, G., & Ahmed, M. (2021). The effect of Islamic appeal promotional
strategies used by multinational brands in Saudi Arabia. PalArch's Journal of
Archaeology of Egypt/Egyptology, 18(12), 270-279. Retrieved December 30, 2021, from
https://www.archiv.

Budhwar. (2021). Budhwar, P., Pereira, V., Temouri, Y., & Do, H. (2021). International business
research and scholarship in the Middle East: developments and future directions.
International Studies of Management & Organization, 51(3), 185-200.
doi:10.1080/00208825.2021.1.

Dhavale, P. (2018). Pri Dhavale (2018): McDonald’s marketing strategy. Slideshares Publications
www.google.com.

Essay, U. (2018). UK Essays. (November 2018). The International Market Strategy of

McDonald's. Retrieved from https://www.ukessays.com/essays/marketing/the-
international-market-strategy-of-mcdonalds-marketing-essay.php?vref=1.

I.Lowe, D. (2019). Doole, I. Lowe, R. and Kenyon, A. (2019) nternational Marketing Strategy :
Analysis, Development and Implementation. 7th edition, Cengage Textbooks.

L, P. (2017). Percy, L. and Elliot, R. (2017), Strategic Brand Management, Oxford University
Press, New York, NY.

McDonald. (2019). McDonald's."2019 Annual Report, Nahman, A. (2011). Pricing landfill

externalities: Emissions and dis-amenity costs in Cape Town, South Africa. Waste
Management, 31(9-10), 2046-2056.
P, M. (2019). Marsden, P. (2019), “Brand positioning: meme’s the word”, Marketing Intelligence
and Planning, Vol. 20 No. 5, pp. 307-312.

Sharebox. (2017). Sharebox. (2017). Growth of the Fast Food industry. Available from
sharebox.co.za. [Accessed 25 August 2018]. .

Statistic. (2023). Statistics for the 2023 Saudi Arabia Foodservice market share, size and revenue
growth rate, created by Mordor Intelligence™ Industry Reports. Saudi Arabia
Foodservice analysis includes a market forecast outlook to 2028 and historical overview.

Zhang. (2019). Zhang, S., Pauwels, K., & Peng, C. (2019). The impact of adding online-to-
offline service platform channels on firms' offline and total sales and profits. Journal of
Interactive Marketing, 47, 115-128.