Economic Analysis Exercise

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ECONOMIC ANALYSIS EXERCISE 1. Compare and contrast McDonald’s strategies in China with those of Wal-mart in Mexico. McDonald’s strategy was to expand its operations in China by promoting drive-through restaurants. In order to expand, it formed a deal with China’s largest gas retailer, Sinopec Group to build drive-throughs at filling stations. Its biggest competition was Yum Brands Inc’s KFC. McDonald’s strategy was based on the changing tastes of Chinese consumers. McDonald’s strategy included tailoring food to Chinese preferences. When income increased, McDonald’s decided to emphasize its American roots by preparing foods made from beef. Demand for McDonald’s products was influenced by tastes and preferences and income. Growth in the middle class segments of the Chinese economy had a stimulating effect on the demand for beef, which was considered a luxury good. Once more people in China have more disposable income they started purchasing McDonald’s products made from beef. They also appealed to customers by offering a clean, brightly lit environment. McDonald’s was an alternative for consumers with lower incomes. People did not feel like they had to compete because everything on the menu was of similar value. Another strategy they used was to market to kids. McDonald’s has been expanding steadily by providing outstanding quality, service, and value. McDonald’s saw a huge potential to enter the Chinese market as the urban population grew and customers spending habits changed. McDonald’s standardized operations to ensure the quality and consistency of cuisine of all its restaurants across China. In China, it launched a version of its Dollar Menu known as the Value Menu that offered items at a lower price. McDonald’s marketing campaign for the 2008 Olympics enhanced McDonald’s brand image in China. McDonald’s strategies included

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