Case 3-6: McDonald\'s and KFC PC 3-59 ing KTC outlet which was already in profit

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Case 3-6: McDonald's and KFC PC 3-59 ing KTC outlet which was already in profit. The French fries e chan 6,000 RMB in per capita annual consumption of its total number of outlets in China. ising strategy was limited to townships with a popu company in Beijing in 1993, surveying of between 150,000 and 400,000, and which achieved potatoes to McDonald's, had founded a joint venture entry; McDonald's vegetable locally, and 100% of before McDonald's supplier set up a branch in Guangshou in he end of 2007, there were 228 franchised KPC outlets, satisfy McDonald's intention to soure its facility ed froa Likewise, the global suppliers of McDonald's buns and seasonings had all set up branches in China to strengthen McDonald's in China Entry into China the supply chain network for McDonald's in China. Why did McDonald's insist on bringing, their global partners to China? Peter Tan, former Senior Vice President and President of McDonald's Greater China, summed it up n sth October 1990, nearly three years after KFC set first outlet near Tiananmen Square, McDonald's its first outlet in China in Shenzhen0 and it was warmly welcomed by the local consumers. It continued to extend in the southern cities of China, and in April 1992, Golden Arches could finally be seen in McDonald'is Wangfujing outlet in Beijing. This outlet was formed with d investment unit of the Beijing municipal gov mment. Overtaking the Moscow outlet in size, it became the largest McDonald's restaurant in the world, attracting McDonald's in China today reflects the attitude that they are a global brand, hence the raeed to set standards that are globally consistent, be it in Oakbrook, LUSA, or Xian, Chin... McDonald's is saying that "soe are in this emerging country. but because we are a global up its brand, we nond to gize them first world standards McDonald's had fewer than fixve chicken suppliers up in the rnovtheast, and the reasoe for this is that McDonald's is very concerned about quality consistency 13,000 customers on its very first day. By September 2003, McDonald's had 566 outlets in 94 cities across 19 provinces and China had become Catching Up with Cautiously Aggressive Expansion McDonald's third largest Asian market behind Japan and Although McDonald's came in late, its expansion in China Australia. In 2004, China became one of its top ten marketswas still aggressive, especially in the earlier years. Its strat making the country McDonald's Corp's fastest-growing egy was to start in the foreign influenced and economically affluent southern cities and then expand to cities in north market worldwide However, although the number of McDonald's out and oentral China. However, compuned with KFC, Mconald's did not lets was on a par with that of KFC in the first six years after its entry, it had started to lag behind KFC since 1997. While successfully penetrate as many third and fourth tier cit KRC celebrated the opening of its 1,500th outlet in China ies as its rival (see Exhibits 2 and 3) By September 2003, (Shanghai) in 2005, McDonald's had around 600. What had McDonald's done differently in China to explain this? McDonald's had 566 outlets in 94 dities across 19 provinces. The bulk of the restaurants were concentrated in over 40 cities on China's east coast where incomes were higher. The bulk of Consistent Global Supply Chain Partners Exhibit 2 KFC's penetration in China in the first ten years its supply chain with its global business growth. HAVI Food, its global lo- gistics partner, would enter any new market to invest and Coverage set up the logistics system even before the first McDonald's Year of Entry outlet opened in that market. In China, HAVI Food also 198% Beijing Shanghai Nanjing Suzhou, Hangzhou, Wuxd, Guangzhou, Oingdao, Xian (franchised) Fuzhou, Tianjin, Shenyang Chendu, Dalian, Wuhan Shenzhen, Xiamen Changsha, Chongging established a logistics centre exclusively for McDonald's, and there were three major distribution centres in Beijing, Shanghai, Guangzhou, and satellite dispatch centres in 1992 1993 1994 1995 1996 1997 other smaller cities. McDonald's also tried to work with its global food suppliers as much as possible. There were 43 suppliers for McDonald's in China, 70% of which were its global part- 19% Source: Warren K Liu. KFCCiu-Secret Recipef"Succes! bnwi Sons (sia hers. For example, J.R. Simplot Co, which supplied frozen

Explanation / Answer

Chinese Market is highly vulnerable regarding fast food chains and implementation of such a specific restaurants in China would require proper assessment of the local choices and impact on the local restaurants. Buy successfully modifying the overall food menu according to the local culture would be the most appropriate way of McDonald's to enter the Chinese Market. Improving their overall availability of revenue generation would be totally based on focusing on creating paste that is directly related to the taste buds of Chinese people. Deflection of their culture in the man you would enable McDonald to capture large amount of market as McDonald's already have a large operating structure in China. By collaborating with the local forms for better understanding of the market as well as having transparent and clear supply chain for mitigating the risk of accusation regarding food safety standard would also be one of the major factors that have to be implemented by McDonald's in Chinese market for improving its overall availability as well as impact on the specific market segment.

As the markets are quickly changing, every organisation is facing speech competition due to the new entrants in the same market. McDonald's is one of the biggest food chains in the world which serves globally and have a huge customer base as well as contributing a very large amount of the economy in the Fast Food Industry of United States of America from the international market.
McDonald's should not look beyond its operating structure as it already has a very vast to reach of food chain outlets across the globe and changing the business would definitely require enormous amount of investment in changing their preexisting stores.
Looking for the political, environmental, sociocultural as well as other technological factors are essential to consider while assessing the business climate opportunities and challenges in the for environment. Assessment of Giza specific factors would definitely enable a company to be more productive and efficient in the specific market and would also increase the level of compatibility of the company.
McDonald's have been facing anonymous competition in the foreign market as different local brand are now also pushing up there stores in competition to this international food chain. Other international food chains are also direct competitors for McDonald's in the foreign environment as the competition is increasing McDonald's has to improve their market position by creating a differentiation strategy of the products and differentiating itself from other food chain service providers.

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