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McDonalds Business in Developing countries viz a viz to pakistan
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    McDonalds Business in Developing countries viz a viz to pakistan McDonalds Business in Developing countries viz a viz to pakistan Document Transcript

    • Topic: Mcdonald Business in Developing countriesThe Key of Resaerch: PakistanBy : Mr IremWaseemMsc, University of Sunderland, England MA, University of the Punjab, Pakistan Senior Teacher: City School KharianCantt 2000-2007Introduction:Pakistan is the second largest country in South Asia. It shares the border withIran, India, China and Afghanistan. It’s the country of 4 Provinces and totalarea of Pakistan is 796,095 km2. According to 2011 census its population is177,100,000 and per capita income is $2,787. McDonald’s first restaurantopened its door to the people of Pakistan in September 1998 in Lahore.Karachi opened its first restaurant a week after Lahore. There are now 21restaurants in 7 major cities of Pakistan. Today millions of Pakistanis placetheir trust in McDonald’s every day- trusting the company to provide them withfood of a very high standard, quick service and value for money. The target ofthis work is a research whether or not it would be a good idea to extend a newMcDonald’s branch in Pakistan. The research is based on an analysis thatcovers SWOT and PESTLE aspects. The other factors will also be discussedi.e. demographic, geographic and religious aspects and cultural andcommunicational issues will also be discussed that may affect this businessdirectly or indirectly.McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, MscUniversity of Sunderland UK, MA University of Punjab, Pakistan
    • SWOT analysis1.0 StrengthsMcDonald’s obvious strength is its name. All over the world all McDonaldsfranchises use the same Golden Arches. It’s also interesting thing that it’s thebiggest fast food chain in the world, with 32,000 outlets in 117 countries. So, inPakistan it is also well recognised brand now. The census of 2010 tells us thatunemployment of this country was 15, 4%. The strength of this brand willdecrease this rate of unemployment. The research also shows the young people ofPakistan love to spend their time with friends. “In what feel like hard economiccrises in Pakistan, McDonalds is trying to focus on value. It is a big challenge forus because people come surrounding areas as they know if there is any franchiseof McDonald”. (Amin Lakhani, MD McDonald Pakistan).Some otherits strengthsare that it is cheap, fast, and easy. Some consumers said that McDonald allowsthem to remember the time when they spent their holidays abroad and they likedtheir taste there and they are happy that another franchise will soon start servingus in their city.1.1Weaknesses:According to the culture of Pakistan, most of the people do not like fast food. It isnature of Pakistani people that they prefer to eat spicy food like different currieswith naans or chapaties. McDonald’s burgers are totally different from traditionalfood. It is suggested that McDonald should try to introduce some more products intheir food menu to stay in the competition. It is also a traditional factor thatpeople of this country prefer to spend time with their family. It may also be aproblem that people prefer to eat food made by their mother. Another obviousweakness would be the lack of advertisement on print and electronic media inPakistan.This culture does not allow the marketers to make very bold andnude commercials and signboards for their company because it is consideredas very disgusting and against religion. Some people in the country think thatMcDonald destroys cultures by making people addicted to cheap, fatty foodand bad for their health.1.2 OpportunitiesRecently McDonalds is actively trying to reduce their negative impact on theenvironment by altering their company policies. McDonald’s sponsors ‘Do notLitter, Let Karachi Glitter’ the beach Cleaning Campaign 2009 . The event,Some 1500 school and college students of ages 8 to 16 participated in thebeach cleaning activity on each of the three days and showed that they wereresponsible citizens in the making. McDonald also sponsored the 10thNational Women’s Open Swimming Championship, which was held on April 18McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, MscUniversity of Sunderland UK, MA University of Punjab, Pakistan
    • and 19, 2009, at WAPDA Sports Complex Lahore. These efforts have drawn theattention of local people towards McDonalds successfully that is obviously agood sign for the business.McDonald can beat other fast food companies inPakistan to break the prices in the way to attract many people as Pakistan is adeveloping country and per capita income is also low. If McDonalds do someinnovation it may be fruitful for the business. For example in Pakistan localfood is mostly spicy so McDonald should adopt some recipes that may fulfilthe demands of local people. I think McDonalds operates more playgrounds -designed to attract children (and their parents) to its restaurants - than anyother private entity in Pakistan. There is another opportunity for them to boostof their business in Pakistan if they get the ability to add healthier lines offood.They need to get rid of super sizing because in Pakistani culture supersizing food is not preferred.1.3 ThreatsIf we talk about the threats that may affect the McDonald business in Pakistanwould be the changes in commodity prices. As it has been mentioned earlierthat Pakistan is a developing country. McDonald’s, due to its nature ofbusiness may get affected most by the price fluctuations in chicken, beef andcheese , which are critical ingredients of McDonalds menu.The diet problem isalso an obvious threat. Mostly people don’t like greasy food.2 PESTLE ANALAYSISPolitical:The territorial issues and border conflicts with India, the socio-economicdifferences within the country, the struggle for a share of power between theprovinces, the terrorism issue, The long decades of dictatorshipofYahya,Ayub, Zia and Musharaf and violence in different parties are thenightmares for investors in Pakistan. For long time ago the country knowssome trouble which could prevent investors to invest in Pakistan(Pest analysisfor McDonalds). Political instability is regarded as a serious malaise harmful toa company’s performance. Pin(2009) finds that political instability leads tolower economic growth.Alisena and Perotti(1996) say that socio –politicalinstability generates an uncertain politico-economic environment.It reducessavings, as well as foreign and domestic investmentand also destroysinvestment in Human Capital.2.1 EconomicalPakistan is a developing country where people belong to the middle class.Thehigh prices of McDonald’s products are not cheap for them to buy. People goMcDonald off and on to have their meal. According to Reuters( April21, 2011),McDonalds Corp (MCD.N) forecast higher prices for beef, chicken, dairy andMcDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, MscUniversity of Sunderland UK, MA University of Punjab, Pakistan
    • other items and said it would cautiously raise prices to keep attractingconsumers, who are already struggling with higher grocery and gas billsparticularly in the developing countries. PKR per $ 2006 2007 2008 2009 2010Exchange rate: Pakistani Rupees(PKR) Per US Dollar($) Source: Index Mundi 2011National Income: 4.8%(2010), 3.4%(2009), 1.6%(2008)Inflation rate:13.9%(2010), 13.6%(2009)2.2 Sociological:George Ritz describes that a culture possesses the characteristics of a fastfood(The McDonaldization of Society,1993). Ritzer says thatthe fast-foodrestaurant have become a more representative contemporary paradigm (Ritzer,2004:553). The McDonalds company stops advertising on TV during day timeat Ramadan as Muslim are fasting at day time. McDonald serves Halal food.McDonalds also try to avoid any cultural or ethical trouble.2.3 TechnologicalPakistan is a developing country where it’s not easy for everybody to getaccess to technology managing its day-to-day operations is a major challengeand that the information and communications technology requirements andinfrastructure should be well placed. In this age technology is a key element inensuring a companys success.McDonald’singredients are made by machinebut a good training is provided to all the staff that’s why they are quick andable to serve people quickly.2.4 LegalMcDonalds have been involved in many legal cases in the 70 years history. Inthe country like Pakistan the big issue for them is trademark. Due to lack ofMcDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, MscUniversity of Sunderland UK, MA University of Punjab, Pakistan
    • technology in Pakistan, it is very hard to trace out the trademark of a companythere.2.5 EnvironmentalAll the restaurants in Pakistan operate very much as a part of their localcommunity and quite naturally. People love to eat a healthy place.Environmental issues are one of the most important factors as it is related tothe health of the people. As well as Pakistan is concerned it is an importer ofexhaustible and renewable natural resources. According to the OxfordUniversity Press (2010), The Ministry of Environment of Pakistan’s governmenttakes responsibility to conserve and protect the environment. 3 Demographic, Geographic and Religious Aspects 3.0 Demographic Aspects :The total population is177,100,000(http://www.geohive.com/cntry/pakistan.aspx)A bigger population means more consumers, more workers to work infactories. A bigger population is always a good thing for an economy. Thisnumber of population is a quite high number. There are some problems inworking class as mostly women want to be a house wife whereas theirhusband works. Pakistan is the luckiest country as most of its population isyoung.The age structure is as follow:0-14 years: 35.4%15-64 years: 60.4%65 Years: 4.2%(Pakistan Demographic 2011-12)3.1 Geographic Aspects:Pakistan is also good country as well as its geographical place is concerned.There are 4 weathers in a year. Most of the season is hot there that is an idealfor business. July and August are rainy season there. Many times floods andfrequent earthquakes are also happened there. In some remote areas ofPakistan, drinking water is a big problem for the people there. Most of thepopulation concentrate on agriculture. The demographic of Pakistan alsoknows some deforestation, desertification and erosion. (Pakistan Geography2011-2012).McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, MscUniversity of Sunderland UK, MA University of Punjab, Pakistan
    • 3.2 RELIGIOUS AND CULTURAL ASPECTS:Majority of Pakistani population is Muslim. Almost 95% of its population isMuslim and 5% or others (mostly Christian and Hindus). They have their ownidentity and tradition, like the way of peoples’ dress, Islam is practised all overthe Pakistan. As well as food are concerned Muslims eating only the Halalfood. McDonalds in Pakistan keep an eye not to sell or present any of theirproducts that are against the religion and culture. Pakistani shows a greatrespect especially for women and elders. Hospitality is their speciality. It’s achallenge for McDonalds Pakistan not to display any rude, nude or anti-Islamicsign -boards to display their products.4 Competitors Analysis:McDonald has a lot of competitors. In the food sector there is a huge growthpotential in emerging markets, leading chains like Subway, Burger King, andWendy’s have redoubled their focus on growth in these markets. Thistranslates to increased competition for McDonald’s. Denny’s plans to forayinto India and has announced plans to expand with up to 50 units. Starbucksand Dunkin Donuts have also announced plans to enter the country. (U.S. fast-food chains bet on India to drive growth, Reuters, April 11, 2011). Subwayrecently surpassed McDonald’s in total number of restaurants worldwide.However, McDonald’s is still the leader in terms of revenues. (Subway passesMcDonald’s in global presence, MSNBC, March 8, 2011). The big challenge forMcDonalds in Future will be to maintain their food quality and providingexcellent service to attract more peopleAs many other companies are improving their advertisement and alsointroducing the local food. KFC, Pizza Hut has also improved their salesthrough impressive marketing in Pakistan.Conclusion:McDonalds started its operation in 1998 and now it is a leading fast foodservice retailer in Pakistan for its valued customers. There are manychallenges for this company to do business in Pakistan regarding religious,cultural and political aspects. Mostly people belong to the middle class, sofood prices are also a bit problem there.The strategy of the company focuseson offering different products and services compare to its competitor. Theproject of extending the business should not be done unless they bring astronger marketing plan that focus on the prices of McDonald’s menu.McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, MscUniversity of Sunderland UK, MA University of Punjab, Pakistan
    • References:Burns, P. (2001-2007). Entrepreneurship and small business.PALGRAVEMACMILLAN.Internet:http://home.comcast.net/~nelson1397/mcdonaldscase.htmhttp://www.antiessays.com/free-essays/75059.htmlhttp://mcdonaldsstock.org/mcdonalds-competitors/http://www.writeworkhttp://www.businessspectator.com.au/bs.nsf/Article/CEO-Pulse-pd20100427-4VTBA?OpenDocument.com/essay/case-study-mcdonald-s-including-swot-analysishttp://en.wikipedia.org/wiki/Pakistanhttp://www.allvoices.com/news/6601016-mcdonalds-strengths-weaknesses-opportunities-threatswww.oppapers.com/subjects/mcdonalds-threats-page1.htmMcDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, MscUniversity of Sunderland UK, MA University of Punjab, Pakistan