McDonalds in Cameroon - Essay Example

McDonalds in Cameroon Executive Summary McDonald’s company is a centralized international corporation which engages in the fast food production. It distributes French fries, hamburgers, and other consumable goods using consistency, branding, and heavy expansion as its motivating power. McDonald’s runs in over 121 states and has over 30,000 restaurants globally. McDonald’s made use of a strong and rapid growth into foreign states through three key methods, namely, franchising, joint ventures and company owned restaurants (MacDonald 2). A number of internationally renowned restaurants owe their recognition to franchising accords. McDonald’s management also relied on this method to assist them in coming up with new ways of diffusing into foreign markets. With a token of risks and upper limit gains, franchising continues to add enormously to McDonald’s global triumph (Huber 2). With the use of a centralized, international set up, McDonald’s maintains a firm grip on cost, operations, and value. With the use of an ethnocentric management policy, McDonald’s looks to the domestic based attitudes and logic, and links them to its foreign restaurants and outlets. In order to control its overseas operation, McDonald’s uses a combination of two approaches. Most of its control would fall under meaning and rules approach that control lies with headquarters generating policies and procedures for the internationals to track (Huber 4). Nevertheless, there is also a little of the cultural approach that has come about and is being exploited judging by the adaptation that has taken place in some of the foreign restaurants. This has come about even with the tight internalized values that are continuously spelt out and enforced by headquarters (Huber 5). The paper entails a research to set up McDonalds in Cameroon, a country in Central Africa. The research consists five parts. It will begin with an introduction of McDonalds, and then Cameroon. The paper will then research on the size of market of Cameroon that will likely follow the product. The third part of this paper will research on socio-cultural acceptance of McDonald’s products and the required adaptations that are necessary. The fourth part contains details on the legal and bureaucratic factors that include taxation, local manufacture, and imports. The paper will end with some recommendations concerning the project, and cite sweeping conclusions. Introduction to Cameroon and McDonalds McDonalds’ idea is to offer the world’s finest and fast service restaurant experience. This means opening and running vast restaurants and providing outstanding service, quality, value and cleanliness so that they make every consumer in every restaurant worldwide to smile. Usually, local managing groups, which recognize their marketplace in firsthand, dictate the market strategies and run their product. As a result, the approaches applied to the African market will be reviewed. McDonalds looks to a value plan that will give out its products at fairly low prices. McDonalds aims mainly at children to build its market. It has introduced happy meals, adverts, toys in anticipation of setting up a future brand allegiance and an enduring customer affiliation. McDonalds mainly focuses on preserving a commanding brand to distinguish its main products the Big Mac, French Fries plus set up barriers to diffuse into the marketplace. McDonalds has been rising in nature, with fresh restaurants being located in many foreign countries. They have ventured in the food court concepts, roadside developments and shopping centers and leisure parks (Howard 24). Cameroon is a state found in the central part of Africa. It falls below the Gulf of Guinea. The state covers a surface area of 475 650 km2. It takes the shape of a triangle that extends from Lake Chad, right up to the south close to 1 300 km. Its base stretches from East to West for about 900 km. It enjoys, at the Southwest, a coastal region of 430 Km along the Atlantic Ocean. It is bordered, in the South by Gabon, Congo and Equatorial Guinea, in the West by Nigeria, in the East by Central African Republic, and in the North by Chad. Finally, at the peak of the triangle, stands Lake Chad. It is an affiliate of many international organizations. The leading one being the United Nations, then the Bank of Central African States, African Intellectual Property Organization (OAPI), and Central African Customs and Monetary Union (CEMAC). Cameroon is a nation with assorted inhabitants that in reality makes it tremendously lively. In 2010, the inhabitants of Cameroon stroked 19.4 million. The citizens follow many customs. About 30% are at least Christian, of whom roughly half are associated with Protestant denominations, and half are Roman Catholics. As many as 20% are at least supposedly Muslim, and about 50% apply traditional native religions or miss a religion at all. Most of the native religions are local religions practiced mainly in rural places. Citizens use several languages in the state, but English and French stand as the official ones. The literacy rate in the country stands at 73.6%. These people have a rich way of life, which is entrenched in their practice. Above all, its citizens are welcoming and sociable (Howard 34). Size of the market The financial position of Cameroon has been on an upward rise as of 2007. Regardless of the fall in the recent financial predicament and the Oil production industry, the nation has maintained a GDP development rate of 3.9% and 5.2% between 2008 and 2009 and an estimate of 4.6% in 2010. The country profits from rising trade opportunities. This is between Asia and Africa and a financial system rich in main commodities with the better part of its trade dealings backed by cash securities and a lack of difficult derivative deals. After the civil fighting in March 2008, the government took tough measures to ease import tax on consumer products, which in turn pulled down the price of foodstuff sold in the country’s market, a move backed by the European Union and commenced in 2008 to open trade. Politically, the electoral structure has been enhanced by the creation of a self-governing regulatory body, Elections Cameroun (ELECAM), whose administration stands unbiased from any local political group relations. Openness to basic services and utilities like electricity, water, education, sanitation are some serious ministries. These ministries follow as Telecommunications, Forestry, Agriculture and Construction. Trading events in Africa have seen increasing numbers. This is with the rise of import volumes going up more than 260% and export volumes rising in excess of 250% as of 2002. Forestry and Agriculture cater for 20.4% rise if the GDP, but the region still experiences a development rate of import numbers greater than exports till lately. In April 2008, a presidential ruling was put out after a meeting from a council of ministers. The ministers sat down to discuss ways of making the cost of living easier for the countries citizens. Together with the doing away with custom duties on some food stuffs like wheat, rice and oil, a 20% raise in Civil workers allowances was introduced and a 15% raise in housing allowances that will put out the greater spending capacities and a healthy economy (Van 25). Socio-cultural acceptance of the product Franchising refers to the means that an individual requires in setting up a business. The means that will set up a business and make the franchiser get into a market with a recognized brand name, means that will assist this individual to develop. An association of privately owned businesses, working under a solitary brand, to replicate a homogeneous working model, under the same management and supervision, for a high level of service, utilizes economies of scale to rationalize operations. The socio-cultural organization of Cameroon is highly concentrated to the western culture, and this would make it easy for McDonalds as a franchise to peruse into the market. Basing on the fact the McDonalds was established with the westerners, it will be easier for the Cameroonians to accept its products because they are more acquainted to the western culture. This is because Cameroon was colonized the British and speaks a bit of French, both of which fall as western languages. It is proven that colonies normally are an image their colonial administrators. In order for McDonalds to be viewed as a franchise, various adaptations ought to be put in place. A contractual association with a right approved to the franchisee to function under a system approved by the franchisor. Operation of the franchisees business connected with the franchisors brand and payment by the franchisee of a franchise bill. To relate the franchisors business approach and franchisee has to obey the standards (Lahore 23). They have to follow financial responsibilities, responsibilities that improve the ideas of how to acquire supplies of referenced goods from referenced distributors and responsibilities set in the agreement. The duty of the franchisee follows as replicating an idea that belongs to the main franchise, which is McDonalds. The idea has been set by the franchisor to draw customers and must be appreciated. The part that comes to play here is how the franchisee could help the product to diffuse into the Cameroonian market. It is the duty of the franchisee to put out products that favor the majority of the society with a view of their tastes and preferences. It would be easier for them to sell meat products because the only religion, which has meat, issues is the Muslims. They ought to be alert of the fact that the Muslim religion only covers a small portion of the Cameroon population (Keri 45). The legal and bureaucratic environment The Global Franchise Organization stated that franchising is accountable for 880,000 companies, 19 million employments, 20% of the private division employment, and more than $550 Billion in payroll and most recent statistics approximate there are more than 4,000 franchises available in 60 different industry groupings. A U.S. Small Business Management research carried out from 1980 to 2007 found that 58% of non-franchised organizations stopped within the first 5 years of their operation as a result of bankruptcy, failure among others. The charts that follow below show the percentage of Exports in Cameroon that has occurred over the past decade. 95 % of franchise businesses involved in the exports are still in service while only 29% of sovereign businesses are functional (Keri 56). Cameroon Trade: Exports Imports Cameroon imports include transport, machinery, equipment, food, fuel and electrical equipment. France falls as the prime import associate to Cameroon. It caters for more than 30% of the whole imports. China, Nigeria and Belgium also take noteworthy share in Cameroon imports. In 2008, Cameroons import level fell at US $4.3 billion, as against US $3.7 billion in 2007. McDonalds should take advantage of these statistics and be aware that they stand to benefit from trade with the recent upward trend of imports into Cameroon. The government of Cameroon encourages imports to the country hence it is vital for them to be part of the goods imported into Cameroon. McDonalds specializes in foodstuffs and toys that are readily available in the Cameroonian market (Lahore 23). Recommendations In order for the global sector of McDonald’s, to go on with the success that it has attained in the earlier periods, two key areas of worry have to be tackled. The growing level of diffusion in most of the major marketplaces around the globe and the struggle over autonomy between businesses and the franchises ought to be tackled. They ought to be tackled with acute urgency and by assigning the resources needed (Lahore76). As talked about earlier, rivalry in the fast food business is becoming extremely saturated. As soon as McDonalds first began to expand into the global markets, they stated that their main focus was changing eating behaviors (MacDonald 43). This was because there was a lack of substantial challengers in the foreign market. However, over the past ten years, the global market is starting to copy that of the deeply saturated United States market. Earnings are decreasing same store vending are heading down, and the general market growth has been dawdling tremendously. This has driven McDonald’s to go on to with cutting its costs by announcing the close of 175 under performing outlets in nine states (MacDonald 65). As the global markets become more aggressive and saturated, McDonald’s must keep on analyzing and setting adjustments accordingly. For a market like Cameroon, it would be easier for McDonalds to diffuse because not many renowned restaurants have started up a base in Cameroon. This will put them on the fore ground as the citizens of Cameroon look ready to welcome initiatives like McDonalds (Lahore 23). In conclusion, with the constant social revolutions in the Cameroonians, cases that include the improved health-awareness of humanity should be introduced. In the long term, key menu diversification to include new and healthy foods could be termed as necessary if McDonalds looks forward to their customers to enjoy their foodstuff with clear principles. The fact that McDonald’s will begin to vend fresh fruit with the traditional Happy Meal is a leading step towards a menu more appropriate to the changed surroundings. This will certainly help them set up in Cameroon without any opposition. Works Cited Howard, Lisa. “Suppliers.” 19 Jun. 2003. Web. 20 Apr. 2012. Huber, Amy. “Big Mac, Big Value: McDonald’s to Lower Prices;” 10 Dec. 2001. Web. 20 Apr. 2012. Keri, Richards. Marketing (7th Edition). Boston: McGraw- Hill Irwin Publishers, 2003. Print. Lahore, Lynn. “Annuals Report.” McDonalds Corporation. (2009): 1-15. Print. MacDonald, Gayle. High Stakes in Burger Bargains. Toronto: The Toronto Globe and Mail, 1997. Print. Van, Thuy. “STAT 2800 Survey of Operations Management Project II Dr. Rotimi Aderohunmu” McDonald’s Restaurant (2004): 1-36. 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