McDonald’s knows how to locate its restaurants strategically and is aware the location is the means of getting the product to the target customers. McDonald’s has placed its stores in key locations accessible to consumers and attractive to passers-by. In Beijing, McDonald’s restaurants are commonly located at central business districts, residential areas and large shopping malls like in the Beijing New World Centre, COFCO Plaza, and Anzhen Plaza while in Hong Kong McDonald’s restaurants are located at busy areas such as the Causeway Bay, Quarry Bay and mostly on malls and near schools. Weaknesses
Compared to other local Chinese-style fast-food restaurants in China, McDonald’s price is still higher that it needed to lower the price of some of its products. However, McDonald’s products are still considered pricey that the working class parents needed to save up first before they can afford to bring their children at McDonald’s. According to Watson (2000), most Chinese adults do not like the taste of fried beef patties which are the main ingredients of McDonald’s burgers. Burgers are known to be the specialty of McDonald’s but at China, the company’s burger market is not very reliable.
Opportunities China has a population of over 1. 3 billion while its economy is improving. This means that China is a good place where McDonald’s can open more outlets and still expect to have a better market share. The rising incomes in China’s major cities increase the number of Chinese middle class, the market segment McDonald’s usually target and who are willing to spend money for entertainment and leisure including dining out, opening opportunity for McDonald’s to have increased numbers of visitors and consequently increased profits.
The changing lifestyles and eating habits of Chinese today opens the possibility that more and more Chinese will embrace or adopt to the American culture including its foods which are offered at McDonald’s. The Communist Party in China implemented the single-child family system. This means that parents can bring their child more often to McDonald’s. China’s population is aging, posing opportunities to target the market of the elderly who will usually like teas and coffee, opening the opportunity for McDonald’s to pursue McCafe in key locations across China.
Threats In the past years, KFC has been the only close competitor of McDonald’s. However, Burger King, the number one rival of McDonald’s in the worldwide market of fast-food chains, has entered the Chinese market in 2005 by opening its first outlet in Shanghai (AP, 2005). There is great probability that Burger King will soon open more outlets in locations where McDonald’s restaurants are also located. Consequently, Burger King may take on some of the market share of McDonald’s, decreasing the profit of McDonald’s.
Like McDonald’s, Burger King also has a strong brand identity and is also known for its innovative products and services not very far behind McDonald’s. This means that the competition in the fast-food segment in the country is expected to be more intense. China is a communist country, and as an American company, McDonald’s is prone to protest and criticisms of militant groups. Aside from that, McDonald’s everywhere including that in China is always criticize for offering meals that can cause obesity and for exploiting the young workforce which are allegedly said to received very low salary.
Such criticisms and accusations may cause mistrust and negative images to McDonald’s.
Associated Press (2005) Burger King opened its first Chinese outlet in China Fast-food chain follows McDonald’s with restaurant in Shanghai, Retrieved online on February 25, 2007 http://www. msnbc. msn. com/id/8375389/ China Economic Net, McDonald’s offers 24-hour services in Beijing, Retrieved online on February 24, 2007 http://en.ce.cn/Business/Enterprise/200604/06/t20060406_6621134.shtml