ALLAMA IQBAL OPEN UNIVERSITY

Course Marketing ManagementCode (8511)Semester Spring, 2015Level MBA Marketing (3½ Years)Tutor Sir Imran InamName waQas ilYasRoll # BA 582702

Assignment # 02Topic = Global marketing Strategies

1 | P a g e

ACKNOWLEDGEMENT

All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. I am highly indebted to my course instructor for providing me an opportunity to learn about the “which is vital ingredient” of MBA program. I am very grateful to my teacher (Sir Imran Inam) for providing me guideline for the completion of this report. I feel great pride and pleasure on the accomplishment of this report.

2 | P a g e

ABSTRACT

This report is the Practical part of the most vital practice of our MBA-Marketing program. The sole objective of my activity is to familiarize with the practical manipulation of business organization. This report has been written to know how big organizations like McDonald’s manage their teams to achieve their common goals. In the first phase of the report there is the general introduction about the company and then different terms have been explained, then the mission, values, different services and different strategies of the organization have been explained. In the next part, SWOT analysis of the firm have been done by the help of which it is identified that what are the strong areas of the company and where it lacks so that it can improve, and then in the end most important my experience while visiting in the McDonald’s.

3 | P a g e

DEDICATION This report is dedicated to the greatest man in the world that shows us the right path. Who is the great patron of the mankind that is Holy Prophet Hazrat Muhammad (PBUH). I would also like to dedicate this small effort of extract to my Parents and Teachers. They have always been a shining star to look upon, to give light and to show me the directions whenever I am lost. May Allah give them more strength and long life to guide me forever. Ameen!

4 | P a g e

Table of Contents

Introduction of Topic 06Practical Review of Company 16Vision Statement 18Mission Statement 18Application of Topic 19SWOT Analysis 20 Conclusion 21Recommendations 21References 21

5 | P a g e

Introduction of Topic:

Global Marketing StrategiesA global marketing strategy (GMS) is a strategy that encompasses countries from several different regions in the world and aims at coordinating a company’s marketing efforts in markets in these countries.A GMS does not necessarily cover all countries but it should apply across several regions. A typical regional breakdown is as follows: Africa, Asia, and the Pacific (including Australia) Europe and the Middle East, Latin America, and North America. A ‘‘regional’’ marketing strategy is one that coordinates the marketing effort in one region. A GMS should not be confused with a global production strategy. Outsourcing and foreign manufacturing subsidiaries, common features of a global production strategy, can be used with or without a GMS for the finished products.GMSs can involve one or more of several activities. The coordination involved in implementing a GMS unavoidably leads to a certain level of uniformity of branding, of packaging, of promotional appeal, and so on (Zou and Cavusgil, 2002). This also means that a GMS, in some ways, goes counter to a true customer orientation (see MARKETING PLANNING). The product and marketing mix are not adapted to local preferences, as a customer orientation suggests. This is a potential weakness of GMSs, and leaves opportunities open for local products and brands.

6 | P a g e

As the notion of integrated marketing communications (see INTEGRATED MARKETING COMMUNICATION STRATEGY) suggests, the ensuing consistency can have positive revenue benefits because of reinforcement of a unique message, spillovers between countries, and so on. But the main driving force behind the adoption of a GMS is the scale and scope of cost advantages from such uniform marketing strategies. These cost advantages include elimination of unnecessary duplication of effort, savings on multilingual and same-size packaging, use of the same promotional material, quantity discounts when buying media, and so on. The pros and cons of a GMS are given in Below:

Components of a Global MarketingStrategy

Identical brand names• Uniform packaging• Standardized products• Similar advertising messages• Coordinated pricing• Synchronized product introductions• Coordinated sales campaigns

General pros and cons of global marketing strategies Pros • Revenue side: Reinforced message, unique idea Spillover of brand awareness Enhanced liking (mere exposure)• Cost side: Reduces duplication, waste Uniform product design, packaging, advertising Quantity discounts in media buy. Cons• Revenue side: Culturally insensitive, Anti global target, Vulnerable to gray trade• Cost side: Requires managerial time, Lowers morale in subsidiaries, agencies.

7 | P a g e

THE ORGANIZATIONAL CONTEXT

Firms typically contemplate adopting a more coordinated GMS, once they have significant presence in several countries and regions. Since local markets will never be exactly the same, a proposed global strategy will generally not be welcomed by the country managers. The existing local operations will have to be convinced to adopt the new global strategy. Thus, a GMS is always top-down, not bottom-up, and it is easy for anti-globalization sentiments to stir even within a multinational company. The typical solution to this problem is to allow country managers to be involved in the formulation of the GMS, and to form cross-national teams to participate in the implementation. It is also common to designate one country the ‘‘lead’’ market for the strategy, and use its current strategy as a starting point for the global strategy. This lead country is typically one of the larger markets and one where the firm has a strong market share. In multi brand firms, it is also common to limit a global strategy to one or two brands, allowing the local subsidiaries to keep control of some of their own brands.

GLOBAL SEGMENTATION AND POSITIONING

The firms most likely to engage in GMSs are those present in global markets. Global markets are those where customer needs, wants and preferences are quite similar across the globe (see MARKET DEFINITION). Typical product categories are technology products, including consumer electronics, cameras and computers, branded luxury products, and also apparel, personal care, and entertainment categories where, for certain segments, globally standardized products are desired by all. By contrast, in multi domestic markets such as food and drink, where preferences are more culturally determined, global coordination is less common (see CUSTOMER ANALYSIS).Global Segmentation. The need to target similar segments in different countries is an attempt to minimize the drawbacks of a coordinated global strategy (see MARKET SEGMENTATION AND

8 | P a g e

TARGETING). A typical cross-national segment targeted with a standardized product is the teenage and young adult segments, where preferences are allegedly very similar even for food and drink categories. Coca Cola uses the same one-word slogan ‘‘Always’’ around the world. Nike is positioned with a rebellious image in many countries, even though the particular sports associated with Nike differ by country. Technology brands such as the iPod have usually even more coordinated global strategies, with synchronized rollouts of new models across countries. Global marketers might use a two-stage approach to market segmentation (see MARKET SEGMENTATION AND TARGETING), first grouping countries into similar regions to increase the chances of finding homogeneous subgroups within each region. Often the first step amounts to selecting a trade bloc, such as the European Union. As research has documented, many global strategies are, in fact, more regional than global (Rugman, 2005). A GMS can also be successful if the firm has managed to change local preferences. A new product entering a local market will usually change preferences to some degree, whether by new features, promotion, or price. This is the basis for the extreme standardization proposed by Levitt in his seminal 1983 HBR (Harvard Business Review) article, where he suggests that ‘‘everybody’’ likes the same products. Examples of this abound. IKEA, the Swedish furniture retailer, has changed the market for furniture in many countries – it uses a very standardized and coordinated marketing strategy, focusing around its simple and functional furniture, annual catalog, and warehouse stores. Starbucks, the American coffee chain, also has re-created and enlarged a mature market in several countries with its new coffee choices, novel store layouts, and wider menu. In other cases, changes in the environment have affected preferences so as to make standardization possible. ‘‘Green’’ products are naturally targeting global segments, as are the lighter beers, the bottled waters, and the shift to wines. Such global segments naturally induce companies to adopt GMSs.Global Positioning. The main issue in global positioning (see POSITIONING ANALYSIS AND STRATEGIES) is whether the product offering should be positioned the same way everywhere or not. Complicating the issue is the fact that even with complete uniformity of the marketing mix, the arrived-at position may still differ between countries. A classic example

9 | P a g e

are Levi’s jeans, whose rugged outdoors image places it in mainstream American lifestyle segment, but becomes a stylish icon in other countries. Also, as this example illustrates, even if a brand wants to be seen as ‘‘global,’’ its position is typically affected positively or negatively by its country of origin. A fundamental factor affecting transferability of a position is the actual use of the product. A food product such as apples might be consumed as a healthy snack in the West (‘‘An apple a day keeps the doctor away’’ as the saying goes).But in Japan, apples are a favorite item in the gift-giving season, placing a premium on color, packaging, and price – hardly the same positioning. Even without such dramatic usage differences, differences in economic development and cultural distance, in general, are main factors influencing the potential for an identical position? AFord carmay be positioned as a functional value product in Europe, but might be a status symbol in a poor country. First-time buyers in emerging markets rarely view products the same way as buyers in the more mature markets, where preferences are well established. For example, the successful Buicks offered to new customers in China offer quite different benefits from those offered Buick customers in the United States, even though the product is largely the same. The strength of local competition (see COMPETITIVE ANALYSIS) is also likely to vary across countries, affecting the positioning. Where domestic competitors are strong, a foreign brand that is a mainstream brand at home will typically attempt to target a niche abroad. This applies to many European brands including Heineken, Illycaffe, and Volvo. In other cases, a company with a niche position at home may target a more mainstream position in another market – an example is Japanese Honda in the US auto market. In global markets, where often the same global players compete in the major foreign markets, positioning is more likely to remain constant across the mature markets. Examples include automobiles, with the global players occupying very similar positions in most markets. This is less true for new product categories that are still in the growth stage in many countries and the brands are not equally well known everywhere. Cell phone makers Nokia, Samsung, and Sony-Ericsson occupy quite different positions in each market. The stage of the life cycle (see STAGES OF THE PRODUCT LIFE CYCLE) is also likely to vary across countries, affecting how well a particular position can be transferred. In the early stages,

10 | P a g e

with preferences still in flux, a strategy based on the positioning in a lead country may not be very effective in a new country. Thus, the first automatic single-lens reflex camera was introduced by Canon as a mainstream product in Japan, but a specialty product for more professional photography overseas. In emerging countries with their pent-up demand, however, even new consumers aspire for the best products in the leading markets. This is why some Western companies (such as Electrolux, the home appliance manufacturer) will position themselves at the top of the market even in a country like Russia. The typical strategic assumption is that a globally uniform positioning requires similarity of culture, of competition, and of life cycle stage. However, even in countries where one or more of these requirements are not met, a standardized global positioning may still work.

THE GLOBAL MARKETING MIX

Global products and services. Standardization of the product or service is usually a major feature of a global MARKETING MIX. ‘‘Product Standardization’’ means uniformity of product or service features, design, and styling. There are several advantages to such standardization.

Advantages of Product Standardization.

Cost reduction Improved quality Enhanced customer preference

Disadvantages of Product Standardization.

Off-target Lack of uniqueness

Global Brands

11 | P a g e

Keeping the same brand name everywhere has become the signature feature of a global marketer, and ‘‘global branding’’ has become an obsession among many multinationals.Global brands have received increased attention from top management in many multinationals because of the importance of brand equity as a financial asset (see PERCEPTION OF BRANDEQUITY). Expanding into new markets is an obvious way of building further financial equity, which is usually calculated by simply aggregating projected revenues across country markets. Not surprisingly, most top brands in terms of financial equity are global. But a strong brand not only needs reach across countries, it also needs allegiance from local customers. As global brands have stretched further to build financial equity, local brands have been able to defend their turf by staying closer to their customer and building affinity, or what may be called soft equity (seeCUSTOMER EQUITY). Recognizing this, many global companies not only market their global brand in a country market but might also buy up a successful local brand and retain its brand name – and customers. The most clear-cut advantages of global brands are the cost efficiencies from scale and scope. The typical benefits to global brands are several. The cost efficiencies tend to come from the ability to produce identical products and packaging in long series, and also because global brands can draw on uniform global promotions (more on this below). Demand spillover is a result of the increased exposure to the same brand in many places, especially useful when customers are global. The growth of international tourism has been a strong driver of global brands. The status and esteem advantages have been shown by researchers, especially prominent in less-developed countries. While some research has demonstrated a high quality perception for global brands, the more firmly established finding is that global brands tend to have a more consistent quality than local brands.The disadvantages of global brands become advantages for local brands. Of course, none of these advantages come without effort and disciplined application by the firms, whether global or local.

Benefits to Global Brands

12 | P a g e

Scale and scope economies Demand spill over Global customers High esteem, status Consistent quality

Advantages for Local Brands

Local brand affinity Motivated local employees Prodomestic (and Anti-globalization) sentiment

Global Pricing and Distribution

In GMSs, pricing, and distribution are more closely connected than at home. The reason is not that the costs involved in distribution (transportation but also insurance and custom duties) necessarily raise the final price to the customer. Such straight ‘‘price escalation’’ does not usually occur except in one-time transactions. Many multinationals have strong home market ‘‘cash cows,’’ and when faced with more intense competition in foreign markets they reduce prices by lowering transfer prices to their subsidiaries. Some firms also use foreign markets as an easy way out of overcapacity, applying marginal cost pricing procedures (although these can run afoul of dumping laws). And the improved efficiency of global transportation, thanks to global express carriers and consolidated shipment procedures, means that geographic distance is no longer the trade barrier it once was. Transportation costs are typically a small proportion of the total price paid (see MARKETING CHANNEL STRATEGY). The strong connection between pricing and distribution rests more directly on another phenomenon. The ease of transportation, coupled with differing local prices and currency fluctuations, are what provide the margin that allows for arbitrage opportunities for customers to buy branded products cheaper abroad. This is an instance of so-called ‘‘Gray Trade’’ – the importation of branded products through other than authorized channels (see MULTICHANNEL MARKETING). It is the rise of gray trade that force multinationals to decide pricing and distribution strategies

13 | P a g e

jointly – and even multinationals that would otherwise not contemplate a global strategy, have to find a way to align prices to avoid such trade.

Selected Drivers of ‘‘Gray Trade.’’

Transportation is global and efficient Trade barriers are low Products and brands are standardized Communication is global

Why Global Coordination of Prices is Difficult

Currency exchange rates fluctuate Local distributors are independent Import prices to subsidiaries have to consider tariffs,

taxes. Local competition varies across countries

Global Marketing Communications

Next to global brands, the most visible aspect of a GMS is perhaps global advertising.Global advertising can be defined as media advertising that is more or less uniform across many countries, often, but not necessarily, in media vehicles with global reach. Although global appeals had been used previously in promotions. With increasing globalization and the stress on global brands, the momentum behind global advertising has been sustained despite anti-globalization and Prolocalization sentiments around the globe. One contributing factor has been the rise of the Internet and the availability of many commercials on sites such as YouTube, where even local advertisement campaigns potentially have global reach. There are several forces behind the need for integrated global communications (see INTEGRATED MARKETING COMMUNICATION STRATEGY). One can distinguish between supply-side drivers and demand-side

14 | P a g e

drivers. On the supply side, the emergence of consolidated global advertisement agencies has played a significant role in generating more global advertising. Although in many ways, the agency globalization has been a response to the globalization of the client firms – global managers find it useful to deal with the same agency in different parts of the world – once established, the global agency will naturally want to leverage its global capabilities. The global agency can also claim superior production values with a global campaign, since more resources can be used for one television commercial that is going to be shown around the world.

Major Drivers of Global Advertising

Supply Side• Global ad agencies• Global mediaDemand Side• Global customers• Preference convergence

Advantages of Integrated Global Communications

Consistency of brand communications Media spill over Cost savings Improved production Leveraging a great idea

The Disadvantages of Integrated Global Communications

Images and symbols might not be locally acceptable Appropriate media might not be available Product usage is not the same Local creativity can be stifled

15 | P a g e

Practical study McDonald’s

The McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries across 35,000 outlets. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald. In 1948, they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. A McDonald's restaurant is operated by a franchisee, an affiliate, or the actual corporation itself. The McDonald's Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. In 2012, the company had annual revenues of $27.5 billion and profits of $5.5 billion. According to a 2012 BBC report, McDonald's is the world's second largest private

16 | P a g e

employer behind Wal-Mart with 1.9 million employees, 1.5 million of whom work for franchises. McDonald's primarily sells hamburgers, cheeseburgers, chicken, French fries, breakfast items, soft drinks, milkshakes, and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, fish, wraps, smoothies, fruit, and seasoned fries.

Headquarters

McDonald's Plaza, located in Oak Brook, Illinois is the headquarters of McDonald'sThe McDonald's headquarters complex, McDonald's Plaza, is located in Oak Brook, Illinois. It sits on the site of the former headquarters and stabling area of Paul Butler, the founder of Oak Brook. McDonald's moved into the Oak Brook facility from an office within the Chicago Loop in 1971.

Board of directorsAs of November 2014, the Board of directors had the following members:

Andrew J. McKenna, Chairman Susan E. Arnold, Operating Executive, Global Consumer &

Retail Group of The Carlyle Group Robert A. Eckert, Operating Partner of Friedman Fleischer

& Lowe Enrique Hernandez, Jr., President and CEO of Inter-Con

Security Jeanne P. Jackson, President, Product and Merchandising

for Nike, Inc. Richard H. Lenny, Operating Partner of Friedman Fleischer

& Lowe Walter E. Massey, President of the School of the Art

Institute of Chicago Cary D. McMillan, CEO of True Partners Consulting LLC Sheila A. Penrose, Non-executive Chairman of Jones Lang

LaSalle John W. Rogers, Jr, Chairman and CEO of Ariel Investments

17 | P a g e

Roger W. Stone, Chairman and CEO of KapStone Paper and Packaging

Donald Thompson, President and CEO Miles D. White, Chairman and CEO of Abbott Laboratories

On March 1, 2015, after being chief brand officer of McDonald's and its former head in the UK and northern Europe, Steve Easterbrook became CEO, succeeding Don Thompson, who stepped down on January 28, 2015.

Vision of the Foundation McDonald's Brand vision is "To be the best quick service restaurant experience". Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile.

Mission of the Foundation “McDonald's brand mission is to be our customers' favorite place and way to eat and drink. Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers' experience.”

18 | P a g e

Review of theoretical and practical situation with respect to topic Why is McDonalds Successful in many countries around the world?

We can point out following points for McDonald’s Marketing Strategy around the world.

◦ Quality, Service, Cleanliness & Value (QSC&V).◦ Innovative way of presenting itself among

people.◦ Welcoming all category’s people.◦ Regional taste and menu.◦ Various kinds of ventures in market.◦ Increasing demand of fast food over the world.◦ Increase foreign capital inflows

Example of Global Marking Strategy

Whereas in Asia, the trend is different. The people in Asia want food as per their taste, which McDonalds served them. They prepared their menus, which included regional taste of people. For Example, In India McDonald does not serve beef as Hindu culture does not accept it. Whereas it serves chicken in India.

19 | P a g e

SWOT AnalysisStrength

Home Delivery Services Children Targeting Heavy Advertising Largest Customer Community

Weaknesses Local Competition Varies across countries Negative Publicity New Innovations

Threats

Lawsuits against McDonald’s Trend towards Healthy Eating Local fast food Restaurant Chains

Opportunities

Increasing Demand for fast food Availability of Mass Media for Advertising is important. Enhance the Global Transfer of Communications

20 | P a g e

Conclusion

GMSs have become increasingly important with the internationalization of business and globalization of markets. Even though they are characterized by centralized coordination and streamlining to achieve scale and scope economies, localization, and adaptation are becoming increasingly important as emerging markets rapidly manifest culturally and ethnically differentiated consumer demand. Global success depends crucially on striking the right balance between uniformity and local adaptation. This balance, as we have seen, involves both top-down leadership and sensitivity to local markets – a true managerial challenge.

Recommendations A comprehensive communication policy and strategy

should be designed. Company must exchange ideas regarding communication

with consumers. Internal communication policy and strategy must be

modified according to the changes in business.

References: www.mcdonals.com.pk www.facebook.com/ McDonalds PK www. twitter.com/McDonalds Personal observations Wikipedia Relevant text book of AIOU Discussion by McDonald’s Branch Manager Teacher discussion

21 | P a g e