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The two companies have similar strategies that they used in their overseas markets. First, both companies used price leadership strategy, whereby they sought to lead in low prices. Wal-Mart achieved this by being efficient in their costs management. As a result of low costs, they were able to charge low prices for their products compared to their competitors.
McDonald’s also used low-price strategy. For instance, for only twenty cents, one can buy a small drink and small fries. In addition both companies used expansion strategy to create demand, whereby they open their branches in various locations to stimulate demand.
For instance Wal-Mart has been opening retail stores all over Mexico with an aim of creating convenience to shoppers (Tilly, 2005). On the other hand, McDonald’s has opened stores in high traffic areas in China, which has made customers to easily walk in for a meal (China Daily, 2004).
Differences in Strategies
McDonald has embraced localization strategies, whereby it has designed its services and products in line with the cultures of the Chinese people. For instance, McDonalds in 2004 changed the interiors of some of its restaurants to have a Chinese appearance. In addition, it introduced some Chinese foods in to its menus such as corn soup and vegetable soup (China Daily, 2004).
However, Wal-Mart concentrates on selling standardized products which are either obtained from Mexican suppliers or from the US. Another difference is that. Although McDonalds focuses on low prices it puts more emphasis on quality and value. For instance it has a dollar menu which is also referred to as value menu. This is contrary to Wal-Mart which focuses more on reduced prices than on quality (Tilly, 2005).
Influence of government policies on expansion strategies
The implementation of China’s open-policy was an impetus to McDonald’s expansion strategies. This is because restrictions against foreign firms were reduced; as a result the company was able to open up more restaurants in the country (Punithavathi & Rajakumari, 2008).
On the other hand, by the year 1991, when Wal-Mart entered Mexico the North American Free trade agreement was about to be passed. This was a motivation to Wal-Mart as trade barriers between the US and Mexico would be reduced. This therefore encouraged the company to continue with its collaboration activities with Cifra. In fact by 1997, Wal-Mart had bought the majority share of Cifra (Tilly, 2005).
Other factors affecting demand
Culture is one major factor that is facing McDonalds, whereby the Chinese people prefer traditional foods that have extensive cuisine, color and flavor. Therefore the company has no option, as it is forced to come up with products and services that represent their culture.
The other factor that affects demand is competition, whereby there are other established competitors in the Chinese fast food market. There is KFC which has expansive distribution networks, compared to McDonalds. Therefore McDonalds has been forced to differentiate itself as having the best beef products in the Chinese market (China Daily, 2004).
Macro and micro environment factors
Toyota has been able to beat its competitors in the automobile industry by selling the most number of cars in 2010. This is because as fuel prices and global production costs went up, the company was able to produce quality vehicles at a relatively lower price than its competitors (Toyota Motor Corporation, n.d).
Microsoft Corporation has innovations that it has used to stay ahead of its competitors in the technology industry. Its capacity to develop innovative application packages, has given it an edge over its competitors for more than three decades (Kalakota & Whinston, 1997)
China Daily, (2004). KFC and McDonald’s-a model of blended culture. Web.
Kalakota, R. and Whinston, A. B., (1997). Electronic commerce: a manager’s guide. Upper Saddle River, NJ: Addison-Wesley.
Punithavathi, S. and Rajakumari, D. J., (2008). McDonald’s in China. Web.
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Tilly, C., (2005). Wal-Mart in Mexico: The limits of growth. Web.
Toyota, (n.d). Innovation. Web.