MCDONALD'S

Mài dāng láo

CASE STUDY
 INTRODUCTION
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.
 BACKGROUND
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.
 BACKGROUND
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.
 ALTERNATIVES
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.
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.
 ALTERNATIVES
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.

 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.
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.
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.
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.
 Timeline

1980 1982 1984 1990

The first McDonald’s in Two years later, the second The first McDonald’s (also Businessmen were also curious
mainland China opened in McDonald’s restaurant in known in China as about McDonald’s management
Shenzhen, in the southern part mainland China opened in Màidāngláo) opened in mode. NBC news observed
of the country. As the first Beijing and was, at that Taipei in 1984. “when McDonald’s first opened
Special Economic Zone in China time, the largest in China in 1990, these streets
was established in 1980, newly McDonald’s restaurant in were clogged with bicycles”
implemented liberal reforms the world. On its opening (Griffith, “McDonalds has a big
allowed Western brands to day, a thousand workers appetite for China”).
open stores in China. served over forty thousand
customers.
 Timeline

1996 2001-2005 PRESENT

First McCafé in China was opened in 2001, and the McDonald’s Corp plans to nearly
By 1996, McDonald’s
first McDrive – in 2005. As McDonald’s popularity double the number of stores in
had opened twenty– grew, all restaurants in China were open 24/7. Due to mainland China by 2022. In line
nine restaurants in its rapid expansion in the Chinese market, McDonald’s with the popular statement “a
Beijing alone. restaurants became an integral aspect of the small step for us, is a large step
Chinese cities’ landscape. To gain more patrons, for the world.” McDonald’s in
McDonald’s started employing a new strategy in China is now focused on serving
China. The brand reduced American symbolism in organic and sustainably grown
China and incorporated more menu options with a food, following the “green”
Chinese twist. trends in the world.
 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
 REFERENCES

Bloomberg. (2010). McDonald’s Raises China Prices on Higher Costs. Retrieved from:
http://www.bloomberg.com/news/20101117/mcdonaldsincreaseschinapricesonhigherrawmaterialcostsfromtoday.html
Crireport.com (2011). RESEARCH REPORT ON CHINA FAST FOOD INDUSTRY, 20112012. Retrieved from:
http://www.crireport.com/240researchreportonchinafastfoodindustry20112012.html
Leadership. (2017). McDonald’s Corporation. Retrieved from:
http://www.aboutmcdonald.com/mcd/our_company/leadership.html#steveeasterbrook
ExamineChina.com Blog. (2021, May 12). McDonald’s in China – Success of a Western Brand in China. Retrieved from
https://www.examinechina.com/blog/mcdonalds-in-china/
Team, T. (2022, September 9). McDonald’s Faces Declining Sales in Asia after China Food Scandal. Forbes. Retrieved from
https://www.forbes.com/sites/greatspeculations/2014/09/11/mcdonalds-facesdeclining-sales-in-asia-after-china-food-
scandal/?sh=431685f36de1
Ayana. (2017, December 12). The History of McDonald’s in China. Retrieved from https://blogs.transparent.com/chinese/the-
history-of-mcdonalds-in-china/
Fortune. Why McDonalds’ supplier failed in China. Retrieved from https://fortune.com/2014/09/02/why-mcdonalds-
supplier-failed-in-china/
LaowaiCareer. Why is McDonald’s So Popular in China? Retrieved from https://www.laowaicareer.com/blog/mcdonalds-
popular-china/
Xièxiè nǐ
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PRESENTED BY:

DE GUZMAN
MURILLO
PRADILLADA

CBET-20-501P