International Retail Marketing McDonalds and KFC

Question: Write about theInternational Retail Marketing for McDonalds and KFC. Answer: Comparison of McDonalds and KFC Following is the comparison of McDonalds and KFC on the basis of various different afctors such as why they have chosen internationalization, what are the afctors that have forces them to go global. The second point of difference is the multinational strategy, which will have emphasis on the way of carrying out the operations. The third point of comparison is the expansion strategy, which shows that which expansion strategy is used by KFC and McDonalds for having overseas operations. The fourth point of comparison or difference is the culture and the society for having successful and sustainable business operations, it is essential to understand the societal valise and culture of the host nation. Therefore, this point shows the manner in which KFC and McDonalds have directed their operations to have communal and societal support. The last point of difference and comparison is regulation which shows the various rules, laws and regulation; the companies have to face in order to have su stained global operations. Following is the in-depth analysis of the comparison and differences between KFC and McDonalds on the basis of the above mentioned factors. Why Internationalization KFC In the year 1987, KFC entered into the markets of China by having first global presence in Beijing. The primary reason behind the internationalization of KFC was the saturated and concentrated domestic market. The company has made its recognized presence in the approximately all the regions of America. Thus, the company was restricted and was not able to have further expansion in the country (Wei and Cacho, 2000). The second primary reason behind the globalization and international expansion strategy of KFC was the extensive competition in the domestic market. there were number of strong and renowned brands which have captured the US market with an extensive rate. The companies which give tough competition to the sustainability of KFC were Wendy's, Burger King, McDonald, Subway, Pizza Hut etc. (Phillips, 2006). There was also vast presence of other fast food suppliers in America. All such fast food chains and other domestic suppliers pose a strong competitive threat on KFC and its cu stomer base. Another key reason for having global expansion in China was that the host country did not have such kind of fast food restaurants and suppliers (Ambler, et al., 2008). Therefore, it gave an opportunity to KFC to have its recognized and powerful presence in Beijing. Thus, because of these reasons, the company has taken use of internationalization so that it can further expand its business and can maintain as well as increase its customer base and sales in the overseas regions. McDonalds In the year 1948, McDonalds started its journey in San Bernardino, Calif and from that point of time, the organisation started its expansion and by the year 1960, the company has almost 1000 stores in the entire US. The forts international store of McDonalds was established in the year 1967 in British Columbia. The company started expanding itself globally because of the reason that the domestic market was completely tapped by the organisation (Vignali, 2001). The domestic market became highly saturated for McDonalds which restricts the further growth and development of the organisation. The second major cause of going global was the increasing competition in the markets of US. Because of the high demand for fast food, there were established numbers of local and renowned fast food suppliers (Senauer and Venturini, 2002). The big names in the fast food market which give striving competition to McDonalds were KFC, Subway, Pizza Hut, Burger King, etc. Because of increasing competition a nd market saturation, the company planned to have global expansion (Cavusgil, Ghauri and Agarwal, 2002). The company was attracted towards performing business operations in overseas regions because of the reasons that there were very less fats food companies in the overseas regions as well as the number of competitors were also very low in the international markets. These reasons fetched the attention of McDonalds to have global expansion so that there can be further growth and expansion of the business and the company can attain higher number of customers, sales and revenues (Veseth, 2002). Multinational Strategy KFC KFC have taken use of a multinational strategy for its operations in the global and overseas regions. The company adopted localization under which there has been made several modifications in the food products for targeting the local and domestic individuals of the foreign nations. The reason behind adopting this strategy is that there are diverse consumer groups that have diverse tastes and preferences; therefore it is very much essential to target those customers by catering their needs and preferences (Rugman and Verbeke, 2004). Thus, KFC keeps on making changes in its products in its various international expansions such as laobeijing chicken roll for targeting Chinese market, double fillets burger for targeting the markets of Japan and bulgogi taste chicken for targeting the customers of Korea. Its shows that there is high level of modifications for attracting the customers in diverse overseas regions. McDonalds McDonalds have taken use of regional and localization trade strategy for having global business operations. McDonalds have its presence in almost all the small regions by having multiple numbers of stores. For example, to attract the markets of India and Indian customers, the company has restricted the use of beef in the burgers. This shows its localization strategy of business for having global operations. The company has also recruited local managers so that they can more effectively cater the needs of the domestic customers of international markets. The companies have made changes in its burgers and other products like McKroket for attracting the customers of Netherlands, Matcha Oreo McFlurry for attracting the customers of Japan and Black and White Burger for attracting the customers of HongKong, China. Similar to these, there are various other additions in the menu of McDonalds (Okazaki, 2004). There are several benefits of localization because of which the organisation have cho sen this strategy such as there is high availability of skilled and competent workforce which can understand the tastes and preferences of the local customers. Other advantages of localization include growth of facilities, low cost of labour, economic gains, effect market analysis, etc. Expansion Strategy KFC For going global and to have successful entry in the overseas markets, KFC have taken use of franchising. This international strategy can be explained as the arrangement of the one association i.e. franchiser gives another association i.e. the franchisee the rights for taking use of the business name, trademark or the various business processes and systems for producing and marketing the services and goods as per the certain specifications. (Koh, Lee and Boo, 2009). There has been paid a franchisee fee to the franchisor in return for the continuous support for the products upgrading and promotions, continuous training to the workforce, techniques for promoting and running the business operations, for standard dcor and design, for the product testing and for fast brand recognition. There were numerous reasons because of which KFC have chosen franchising as its international market expansion strategy. It comprises of the lower cost labor as in China there is extensive number of populat ion and so that the need for employment. Thus, the Chinese markets offer low cost labour to KFC. Another reason for franchising agreement for KFC was innovation challenge as the market of China does not have much fast food chains like KFC, so it gives an initial benefit of innovative food products in the Chines markets (Combs, et al., 2011). McDonalds For going global and to have successful entry in the overseas markets, McDonalds have also taken use of franchising. The company takes use of franchising because the overseas regions support the business operation initiated by the means of franchising as a foreign direct investment rather than acquisitions or merger. There were several advantages of franchising which McDonalds attained in its global expansions such as to capture a fresh and new market. Earlier, except US there were very fewer countries which have string presence of such renowned fast food chains (Nyadzayo, Matanda, Ewing, 2011). Thus, it offers an opportunity to the company to have its brand recognition in such markets which are deprived of such things. Another thing associated with franchising of McDonald was easy and flexible support from the financial institutions and banks. As the franchising agreement can have flexible support from these organisations. Therefore, by franchising, McDonalds maintained its brand va lue in numerous nations across the globe (Gillis and Combs, 2009). Culture and society KFC As per the Hofstede's cultural dimensions theory, there are six main factors or dimensions of the culture of the society. From, the power distance dimension, China ranks very high i.e. almost at 80 which indicates that there is increased level of power distance among the subordinates and the superiors which shows that there are clearly established hierarchy in the society (McSweeney, 2002). From collectivist and individualistic dimension, KFC has its expansion in China where there is presence of collectivist culture. But in the home market of KFC i.e. United States there is more of individualistic culture. Therefore, KFC have to adopt a different culture so that it can have better and improved business operations in China. From masculinity and femininity dimension, the America and China ranked somewhat equally. China ranks 66 at this dimension which shows that the individuals are highly driven by achievements, competition and success. There is a tendency of keeping work before family and personal work. From uncertainty avoidance dimension, China ranks at 40, this shows that there is high acceptance of various ideas and thoughts (Hayton, George and Zahra, 2002). The society of China imposes huge rules and regulations but then also according to the situations, they are ready to have changes and modifications in the cultures, rules and regulations. Last i.e. from the long term or short term orientation, China ranks at 118 and it demonstrates that there is extremely long term orientation. There is a lot of time consumed in negotiation processes. The focus is over the long term results only (Stone, 2012). McDonalds To attract the collectivist culture of China, McDonalds have offered several combo meals in the restaurants so that there can be the interests of the societies and the individuals can be fetched. McDonalds also take use of appropriate hierarchy in its restaurants where there is clear lines of power distance is there among the superior and the subordinates (Michailova and Hutchings, 2006). The company takes use of a mix approach i.e. little standardization and localization so that the uncertainties can be avoided of diverse tastes and preferences. As there is masculine society in China, so the company offers effective and vast opportunities of employment to the Chinese people to have jobs in restaurants. People are more and highly concerned with the success and accomplishments, thus there are effective operations of McDonalds taking place in China (Pan and Zhang, 2004). Regulation KFC In international expansion through franchising, KFC had to face a number of FDI regulation and other related legal laws and rules related to labour laws, taxes, business regulation, ownership regulation, traffic and transport regulation etc. China has always been supporting towards the foreign direct investments (Hoffman and Preble, 2004). Therefore, the entrance of KFC in Chinese market was beneficial. There are also establishment of special economic zones in China, which are governed by several policies and regulations. Therefore, KFC regulate according to the laws and business regulations governing in China (Lee, 2003). McDonalds The operations of McDonalds in the international markets such as in China are governed by CCFA i.e. China Chain Store and Franchise Association. When McDonalds entered Chinese markets, it was initially functioned as company-owned and operated and later on as a franchisee. 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