Business strategies of McDonald’s in Vietnam

a. Corporate-level strategies.
Concentration:
McDonald’s corporate level strategy is concentration in a single business. This will help the
business to concentrate on a single task and gain power, market share and consumer loyalty in
result. This is because they will run many strategies, plans and researches to find the best
solutions of the consumer needs and preferences. However this can be very risky if
the business fails to meet the right needs of consumers and therefore will not be
profitable and as a result will close down due to bankruptcy.
Diversification:
MC Donald’s diversifies its operations in many ways. The firm uses related diversification
which is to produce similar products which are burgers and salads mainly but in variety of
choices e.g. Big Mac or Mac chicken, different kinds of salads, and also they operate in more
than one geographical area but still performing the same task. In Vietnam, the menu includes
McPork sandwiches, pioneered for the pork-loving country.
Moreover, it has opened MC cafes all around the world. McCafé is a coffee-house-style food
and drink chain, created and launched in Melbourne, Australia in 1993 by McDonald’s
Licensee Ann Brown. The chain reflects a consumer trend towards espresso coffees. In
Vietnam, McCafé opened in 22th March. McDonald’s gains many advantages by doing related
diversification build a synergy by co-operating and coordinating the food and the coffee
together to enjoy the same facilities such as the advertisements, supplier and the location.
c. Business-level strategies
Creation of a business-level strategy builds on functional-level strategies and involves two
steps: (1) selecting the domain(s) in which the company will compete, a decision that should
be based on where the company’s core competencies can be best leveraged; and (2) for each
domain that is selected, deciding whether to compete using a low cost strategy, a
differentiation strategy, or both.
Internationally, McDonald’s has successfully executed a combined differentiated and low-cost
business-level strategy in its chosen domain—the fast food industry. Using its functional core
competencies in marketing McDonald’s has had a long-standing practice of creating and
disseminating sophisticated advertising and marketing messages that have established the
company as a unique brand name in the industry and successfully differentiated it from its
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competitors. At the same time McDonald’s has developed legendary core competencies in
supply chain management, including manufacturing and distribution, to carefully control
its costs.
McDonald’s Vietnam shares the same core competencies with other McDonald’s franchises in
the world. Moreover, with a high internet penetration and a fast information transfer,
McDonald’s in Vietnam relies on its brand strength of its parent company, even though
people who haven’t been to McDonald’s still know its reputation. However, instead of
emphasizing on a low cost strategy, because of its late entrance into Vietnamese fast food
market, McDonald’s Vietnam uses a differentiation strategy to compete with its competitors
such as KFC, Burger King, etc….. McDonald’s differentiation strategies are product, place and
customer service.
Product Differentiation Strategy
Quality: This is the foundation in which McDonald’s wants to encourage consistency among
restaurants. Like other McDonald’s franchise all over the world, McDonald’s Vietnam commits
to give customers the highest quality products. Because of the low and inconsistency quality of
ingredients from Vietnamese suppliers, McDonald’s only uses two Vietnamese ingredients –
tomato and lettuce from Da Lat. All beef is imported from Australia, pork and potatoes from the
US, and paper boxes and cups from China or Malaysia.
Local Product Development: As McDonald’s has expanded internationally, it has created
several products to meet consumer demand in the local markets. In the Netherlands, for
example, they have developed the McKroket, a burger featuring a typically Dutch kroket, a
deep-fried, ragout-filled patty. In the Canadian province of Quebec, McDonald’s offers
poutine, a traditional dish of french fries, gravy and curd cheese. And in Vietnam, the menu
includes McPork sandwiches, pioneered for the pork-loving country.
Place Differentiation Strategy
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Position: To many people’s surprise, the fast food giant from the US has not chosen a place in
the central area of HCM City for its first shop. McDonald’s has placed its first restaurant in Dien
Bien Phu Street, the strategic road which leads to northern provinces and links to the other
southern localities – the important economic and tourism centers – such as Dong Nai, Binh
Duong and Ba Ria – Vung Tau. With McDonald’s introducing the drive-thru service, which
allows customers to purchase products without leaving their cars, for the first time in Vietnam,
the customers who possess cars will surely want to try McDonald’s products and services,
including the drive-thru service. As such, by setting up a shop on the position, McDonald’s
would be at the “center” of the car flow from the south to the north.
Internal Design: The first shop of McDonald’s in Vietnam would cover a very large area of
1,300
square meters. Designed in accordance with McDonald’s standards, the shop would have a
sophisticated world – standard playground for children, a café, serve clients 24/24 and
comprises a parking lot.
McDonald’s has every reason to set up its first shop at the traffic gateway of HCM City, a
dynamic economic center. McDonald’s has taken a “bold, but feasible step” in its way to
conquer the Vietnamese market, when the downtown has become too crowded with hundreds
of shops bearing other fast food brands. McDonald’s is now building its second Vietnam
restaurant near Ben Thanh Market, at the heart of Ho Chi Minh City, for a near future opening.
Customer Service Differentiation Strategy
In Vietnam, McDonald’s promotes efficiency service. Before opening, over 50 members of the
staff spent at least seven months training in the Philippines to learn appropriate operational
and management skills. This training is standardized for all McDonald’s employees globally.
They have trained both in theory and practice on how to perform the best customer service.
And the company locates restaurants just off of highway exits and in well-traveled business
districts. This factor makes it easier for cars and motorbikes to stop in. Additionally, McDonald’s
Vietnam stresses its fast ordering process. The branch seems to be utilizing new technologies
that haven’t caught on yet in other countries to expedite the process of ordering food.
Customers waiting in line are handed an electronic handheld device on which to place their
McDonald’s Vietnam Strategic Management 24
order before they even reach the counter. This method saves much more time. Moreover,
McDonald’s restaurant operates 24/7 and offer car and motorcycle drive-thru with a three
minute per customer service plan. These services are all introduced in Vietnam for the first
time.

Recommendation
McDonald’s should continue using a scheme that satisfies their Vietnamese employees through
a benefits program that energizes, attracts, retains and rewards talented staff who are 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 must keep promoting their branch in Vietnam. This should include motivating the
employees to work for the brand, taking the lead on environmental issues and promoting
consumer health matters