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Localization Strategy of McDonald

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1.0 Introduction

Making a business product or content more accessible to a new audience entails

localizing your business for presentation to a new target market, usually in a new region. The

term "localization" in the context of business refers to carrying out the manufacture of goods

locally utilizing local labor to cut down on transportation and other production costs (Dalibor,

2022). The products are designed to satisfy the community's local demands through localization

policy and the transplantation of the production process into the host nation. Employing

nationalized labor forces can help a commercial enterprise win over the government of the host

country because it gives locals more employment opportunities (Tanahashi, 2008). By avoiding

hiring expatriates, the company may build strong relationships with the local authorities. It is

because local staff hiring and retention aid businesses in lowering labor costs, which Mcdonald's

is planning to do in China, Malaysia, Kenya and Singapore.

It is only right that wea are able to understand well how localization works by using

China, Malaysia, Kenya and Singapore as the case area of McDonald's company localization

strategy. Through doing this, the analysis will be able to look at how a USA-based company is

able to operate in a country that has a different culture, business operation policies, and high

population. McDonald's China, Malaysia, Kenya and Singapore have been successful, and in a

Globalized world, localization has played an important role in making success more possible.

The strategy of using localization has been instrumental in the operations of McDonald’s as it

makes use of globalization and expand it business to other countries apart from the USA.

1.1 Backgrounds

This report aims to look at different countries which McDonald’s operates in. It tries to

make use of the localization strategy when it comes to putting up new outlets in different parts of
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the world. To better comprehend how the business has been able to achieve this, some the

international market that the company has been able to work in include it operations in China,

Malaysia, Singapore and Kenya. To start, the first McDonald's restaurant in mainland China

opened its doors in 1990. More significantly, on April 23, 1992, Beijing welcomed the opening

of the biggest McDonald's in the world. It served more than 40,000 customers on its debut day

and featured 700 chairs and 29 cash registers. In Beijing alone, 29 McDonald's had opened by

1996 (Ayana, 2017). McDonald's entered China from the south, launching in Shenzhen, a tiny

city close to Hong Kong, as opposed to KFC, which built its first location in the country's

capital, Beijing. Shenzhen was the first area to welcome foreigners after being designated a

special economic zone in 1979.

The McDonald's "M" logo is viewed as a sign of modernism in China. Chinese students

thought McDonald's was modern because of its cleanliness, freshness, and brightness. Ronal

McDonald is a symbol for children's birthday parties, which are also marketed at McDonald's

(Carter, 2021). Even though McDonald's had a 20-year lease on the property, the Chinese

government tried to close down every outlet to make room for a massive shopping center.

Foreign investments in the country were quite concerned about this issue, and then McDonald's.

The president of China proclaimed a reconciliation and stated that the Chinese government

agreed to pay a $12.3 million fine and provide an outlet 150 meters distant from the previous one

(Carter, 2021; Ayana, 2017). By 1996, McDonald's had only opened 29 outlets in Beijing, and

what had first been a huge success had become a failure.

In the case of Kenya, the company is looking to put up a franchise. They intend to enter

Nairobi at a time when its rivals, like Subway and Kentucky Fried Chicken (KFC), are speeding

up their growth ambitions. McDonald's arrival into Nairobi adds to the expanding number of
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multinational franchises setting foot in Kenya, among them. One of the biggest restaurant

businesses in the world, McDonald's serves almost 69 million people every day (Caesar, 2018).

The world-famous fast-food business McDonald's has issued the clearest indication yet that it

intends to open a location in Nairobi by inviting investors to submit applications for a Kenya

franchise. When rivals like Subway and Kentucky Fried Chicken (KFC) are speeding up their

business ambitions, McDonald's is looking to enter Nairobi. The reason for this is because the

localization strategy shows that the county has a potential and is distinct. Due to the tremendous

rivalry from the smaller local businesses, it is difficult for foreign brands to establish a

dominance (Njeka, 2014). Kenyans are "peculiar" because, in contrast to what one might

anticipate, large brands like McDonald's do not draw customers due to their absurdly

exaggerated pricing regimes.

In Singapore, the new Laksa Burger and other items on McDonald's Singapore's limited-

time menu reflect regional flavors. The new Laksa Burger is available in two flavors: Laksa

Delight Chicken and Laksa Delight Prawn. Both come with lettuce on a toasted butter bread, a

round egg (as in an Egg McMuffin), and creamy Laksa sauce (Brandeating.com, 2022). The

Prawn Burger has a crispy-fried shrimp patty, while the Chicken Burger has a crispy-fried

chicken patty, which is where they diverge. Despite how swiftly Singapore has developed and

changed over the years, the restaurant's popularity among locals has not changed (Ker, 2019).

This is due to McDonald's careful localization of the brand, which has made it a distinctively

Singaporean experience even though it has American roots. Consumers and marketers have

acknowledged its efforts everywhere besides simply in Singapore. It makes sense for a fast-food

restaurant to locate in areas where people urgently require meals (Chan, 2017). They are a

constant in higher institutions because of this, especially on large university campuses where
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hungry students congregate. They are also frequently encountered in the heartlands, where they

have developed into well-liked gathering places for students with nearby schools, as well as for

hungry locals with sporadic cravings for fries and chicken nuggets (Chan, 2017). By doing this,

they have created a sense of familiarity that Singaporeans can rely on when they are in

unfamiliar neighborhoods, cities, or even nations. As a result, they have made sure that

Singaporeans can easily satisfy their appetites wherever they are.

McDonald's enters a new international market, like Malaysia, through franchising as a

strategy. Franchises entail the franchisor, McDonald Corp., giving the franchisee with the

majority of the resources required to operate in Malaysia or any other foreign market. The

franchiser frequently has authority over management. Because it tailors its products to each

nation in which it conducts business, McDonald employs a multi-domestic strategy. As part of

the localization plan, the product features are adapted to the local domestic context, taking into

account various dietary habits, religious practices, and other elements that help to identify the

region. McDonald decides to use this method in the hopes that local consumers will accept its

products more favorably than they would if they were made by a foreign corporation. McDonald

decides to employ a localization strategy in Malaysia because it aims to increase profitability by

tailoring the company's products or services to closely match local consumers' interests and

preferences.

The concept of localization has been making a difference in the business world. This has

not been different for McDonald’s as it operates in China, Malaysia, Kenya and Singapore.

McDonald's is one of the most valuable brands in the world today, with a value of over $30

billion and a daily customer base of 47 million. In total, McDonald's operates 31,886 locations

around the world, with around 70% of those being independent. The majority of its eateries
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include drive-thrus, and some also have kids' play areas (Njeka, 2014). It is now recognized as a

landmark among travelers to China. Following the establishment of a restaurant in Beijing for

two years, a legal case involving a land dispute pitted the global firm against the Beijing

government. The McDonald's "M" logo is viewed as a sign of modernism in China. Chinese

students thought McDonald's was modern because of its cleanliness, freshness, and brightness.

Ronal McDonald is a symbol for children's birthday parties, which are also marketed at

McDonald's (Dixon et al., 2017). Even though McDonald's had a 20-year lease on the property,

the Chinese government tried to close down every outlet to make room for a massive shopping

center.

The largest chain of hamburger fast food restaurants in the world is McDonald's. It

provides services in more than 100 nations. McDonald's has entered numerous foreign markets,

and as a result, the Corporation has come to represent globalization and the spread of the

American way of life (Wu & Jia, 2018). Due to its popularity, it is also frequently brought up in

discussions in the media regarding issues like business ethics, consumer responsibility, and

obesity. The business strategy of The McDonald's Corporation differs slightly from that of the

majority of other fast-food companies.

The business strategy of The McDonald's Corporation differs slightly from that of the

majority of other fast-food companies. McDonald's may also charge rent, which may also be

based on sales, in addition to regular franchise costs and marketing expenses, which are also

calculated as a percentage of sales. The Corporation may own or lease the properties on which

McDonald's franchises are located as a requirement of various franchise agreements, which vary

by contract, age, nation, and location (Ordorica, 2022). Most of the time, if not always, the

franchisee does not own the property where its restaurants are located. The business currently
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owns all of its assets, which are believed to be worth $16 to $18 billion. The income has been a

result of Mcdonald's having localized operations in all its global operations, as it has in China,

Malaysia, Kenya and Singapore. The new burger joint gained popularity as a destination where

visitors could sample American cuisine and culture (Ayana, 2017; Racoma, 2019). The western

cuisine, setting, and dining style drew both locals and domestic tourists. The brand name and

trademark of the business were well-known and sparked a lot of interest among young

consumers. Although eating at McDonald's was expensive, new eateries kept popping up in

Beijing because it had turned into a cultural and social activity.

The fundamental component of a globalization plan is cross-cultural communication.

Businesses must offer goods and services that satisfy the requirements and expectations of

various client groups in order to win over customers on a global scale. Any business' ability to

succeed depends on how well its products and services incorporate client input. Proper

communication is required to comprehend the requirements and cultural backgrounds of many

groups across various countries (Moonesar & Thibaud, 2018). The biggest hindrances to cross-

cultural communication are social and cultural variance. Interaction with many communities and

the development of strong customer relationships are required to gain access to the cutthroat

global market and achieve successful growth (Maumevičienė, 2018). Learning the local language

and having a greater knowledge of cultural variety is essential for effective cross-cultural

communication.

According to Maumevičienė (2018), depending on the local culture, the quantity of ex-

pats, the business language, and other factors, conducting business in the B2B sector varies by

location. As a result, culture can be referenced and investigated as a diverse phenomenon and

idea by looking at the values, traditions, beliefs, attitudes, behavioral patterns, and
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communication skills that its participants have. Effective communication is now of utmost

significance (Maumevičienė, 2018). In the context of localization, one of the essential concepts

is the process of adapting a product to the linguistic, cultural, and legal needs of the target market

(Tien et al., 2020). Therefore, when addressing the importance of the communication problem,

the essay focuses on the immediate communication of cultures as the element that is essential to

the effective execution of the localization of the business.

To conclude, the expansion and sales efforts at McDonald's continue to increase with the

business. The company's activities have been globalized and localized at the same time, which

has enabled it to expand its operations and achieve significant growth, leading to its success in

the fast-food services sector. The company has been able to provide a bigger selection of fast-

food items and services that are accessible to a larger population in numerous geographical

places throughout the world because of the globalization of its operations (Tanahashi, 2008).

Because Mcdonald's has embraced the process that comes with localization, customers can

receive what they want quickly and to their desire.

1.2 Problem

Currently, many western companies are expanding internationally. The initial decision of

the important market entry mode in a foreign market can have significant effects on a company's

successful entry as well as its survival in the global market. Therefore, it may be argued that

choosing a company's survival strategies in other countries is a major decision that must be made

before allocating resources to establishing a presence there. This is achieved by the existence of

globalization and the companies having a good working localization strategy (S. Wu & Ma,

2021). In the case of McDonald’s in China, it started with a single outlet, which has greatly

grown to be a huge business with many outlets throughout China. The company, due to its ability
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to provide quality service, needed to expand even more and be able to utilize the available

resource in China.

This was a result of being able to understand local demands is essential in the age of

globalization since only locally based businesses with customer support can survive over the

long run in this rapidly evolving business environment. In order to give customers, the things

they expect, local customer demands must be determined. Localization policy makes it simple to

resolve the important issue of incorporating local culture in the globalization program of

international business (S. Wu & Ma, 2021). Cultural fusion occurs in locally owned businesses.

Understanding the local way of life improves relationships with customers and makes

communication easier. Through efficient communication, which the localization strategy

facilitates, business enterprises can ascertain the wants and intentions of the customer.

In addition to the localization approach, the economical use of regional resources is put

into practice, which lowers the cost of manufacturing. Conflicting issues can be resolved more

readily thanks to greater ties with the rulers of the host nation. A localized labor force is helpful

for enhancing communication with the host community, which can further improve business

performance (S. Wu & Ma, 2021). For the effective localization of business operations, there are

various factors that might act as the driving force. Some of these factors include; the expansion

of a c company's market, increasing the growth of the company's sales, looking to reduce risks,

and also the need to satisfy the company's customers (Vnlocalize, 2017). Understanding that

localization is an important part of the globalization of business operations, it becomes essential

to have a good, effective localization strategy in place, which is not different from McDonald's

move in China.
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For McDonald's to be able to be as successful as it is, it has been able to incorporate the

culture of the country in its opening brands. With this approach of localization, McDonald's

responds to consumer demands as dictated by the national cultures of other nations. Innovation

and adaptation are the main drivers of McDonald's fast food restaurants' success around the

world. The business develops a wide range of services and goods to meet the demands of a very

diverse consumer market, basing its offerings on customer demographics and local and economic

considerations. For McDonald's, adaptation works really well. The plan enables the fast-food

company to reach more people throughout the world. The tactic does result in greater production

and communication expenses. In addition to its successful techniques, the business's marketing

mix is adaptable, allowing it to be tailored to the needs of the regional market in terms of

distribution hubs, promotion schedules, and price. As a result, McDonald's strategies as a

worldwide business brand also include additional strategic marketing techniques, including

segmentation and experimentation/product testing.

Therefore, McDonald's marketing strategy in the Chinese, Malaysian, Kenyan, and

Singapore markets, through the use of localization, is inextricably linked to the company's

continual improvement in the foreign markets. The author will go deeper into McDonald's

marketing approaches, as well as the distinctive approaches used by other fast-food companies,

and offer some recommendations for the company's upcoming advertising campaigns in the

future.

1.3 Purpose

Organizations looking to launch operations in the global market must take a number of

actions. Some of these include analyzing potential business opportunities in international

markets, choosing the best market strategy, developing creative marketing strategies,
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standardizing various global operations, and conducting analysis to the extent that a firm may be

able to determine potential opportunities for growth in other countries. Hence the purpose of this

report is to clearly analyze the success of China McDonald's Localization strategy, which has

been instrumental in making the company successful. It also shows the effects of businesses can

efficiently increase their potential consumer base and avoid the dangers of cross-cultural

marketing by using localization solutions. Furthermore, it is necessary to realize that localization

is a key component of becoming global. It also seeks to demonstrate how difficult it may be to

provide local customers with a familiar and welcoming customer experience when a company

enters a new foreign market. By developing localization strategies for each individual country, in

this case, China, Malaysia, Kenya and Singapore, the business can guarantee that their

international consumers receive the same high-quality service they would receive in their home

country.

1.4 Definitions and Limitations

The definitions and limitations of this report are several as it is an area restricted to China

as the case area. It is because the company of choice has localized tremendously in China,

Malaysia, Kenya and Singapore, hence the need to analyze it. A good example of this is, in 1990,

McDonald's opened its first location in Shenzhen, a city close to Hong Kong, as part of its

expansion into the global market. Due to its potential, which is fueled by a quickly expanding

economy, this market was and continues to be of significant importance to many multinational

corporations. Additionally, the large population meant that there were many people buying

McDonald's items. McDonald's cannot enter a new market unless it is certain that there is a

strong likelihood that there would be significant demand and, as a result, higher profit. China,

Malaysia, Kenya and Singapore were capable of achieving this. However, a further examination
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reveals that McDonald's has a certain approach to selecting its locations even after opting to

travel to foreign nations. The plan involves picking a big city and making sure that people there

fully understand its presence.

On the other hand, the major limitations of this report are a result of the various factors

which have to be considered, especially on the matters of bias in cultural matters, longitudinal

impacts, and access to information needed for formulating the report. When we look at culture,

using this strategy (localization), McDonald's adapts to client needs as dictated by regional

cultures. McDonald's has had a lot of success adapting. The strategy enables the fast-food chain

to increase its global footprint. The plan necessitates higher production and communication

costs. The company's marketing mix is also flexible, enabling it to be customized to the needs of

the local market in terms of distribution, promotions, and pricing, in addition to successful

approaches.
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