Mexican Fast Food Industry - Case Study Example

Essay on International Marketing Table of Contents Essay on International Marketing Table of Contents 2 Introduction 4 Product Category and Countries Assessed 4 Assessment Factors 6 Country Comparison 7 Market Potential 7 GDP per Capita PPP 7 GDP Growth Rate 7 Population 8 Size of Middle Class 8 Market Size 9 Growth Rate 9 Political, Legal and Financial Environment 10 Market Support Infrastructure 11 Ownership of TVs 11 Cable and Satellite Subscribers 12 Number of National Channels 12 Internet Users 12 Growth of Total Adspend 13 Conclusion 13 References 15 Introduction The project aims at evaluating the rationale for expansion of a fast food restaurant company to international markets like Brazil, Mexico and South Korea. It would tend to analyse the feasibility of the different regions based on conducting a thorough analysis of the political, economic and also the market situation of the nations before generating final recommendations for expansion. Product Category and Countries Assessed The fast food chains to gain an international market are observed to potentially focus on customising the product offerings based on the consumption preferences and practices of regional people. Fast food restaurants are reflecting greater flexibility in adapting to the local tastes and cultures and also in generating price ranges for the products through evaluation of the economic potential of the people. Global fast food companies like McDonald’s, Taco Bell, KFC, Pizza Hut and Dunkin Donuts to name a few are observed to take resort of the localization strategy to help gain an effective penetration in the local markets. Fast food restaurants pertaining to America are observed to produce food products of hybrid varieties relating to the different countries in which they have opened up their branches. Customization and localization are generated in the food products by the fast food restaurants like that of McDonald’s that produces McKroket a beef and bun product for the Netherlands market while selling shrimp with cocktail sauce in Germany. For Greece and Israel, McDonald’s has its own set of Greek Burger and McKebab respectively. KFC operating in the Chinese market aims to produce food products for the breakfast menu catering to regional preferences and tastes. Similarly, Dunkin Donuts operating in the South Korean market is observed to market breakfast foods like bagels and doughnuts which contribute in attracting potential customers (Sten, 2010). The countries to be assessed relating to the category of fast food restaurants are like Brazil, Mexico and South Korea. Background information relating to the countries is generated as follows. Federal Republic of Brazil is identified as the largest nation compared to other Latin American countries measured in terms of population and also the size of its geographical territory. Brazil tends to attract potential tourists from different nations owing to its natural and social diversity. Cities like Sao Paulo and Rio de Janeiro reflect a larger population mix owing to the growth of urban and industrial development. Brazil also reflects to be the sole country in the whole of America that has a Portuguese speaking population. The continuous inflow of tourists in the Brazilian region owing to the existence of social, cultural, ethnic and biodiversity is observed as a significant contributor to the Brazilian economy (Brazil, 2014). Mexico, a North American nation situated between the geographical units like Pacific Ocean and the Gulf of Mexico is home to a significant Spanish speaking population. The country is governed by a President that is elected after a period of six years. Mexico in terms of population is observed to rank the second after Brazil.. In terms of the economic potentials, the Mexican government is observed to operate based on effective macroeconomic policy frameworks that in turn contribute in helping the country to counter the emergence of financial volatility and also the impact of policy changes in different developed countries (The World Bank Group, 2014). After the event of partition that occurred in 1948, South Korea is observed to have emerged as an effective affluent country. Large industry houses like Hyundai and Samsung emerged as family-owned units that were backed up by financial and industrial development schemes of the South Korean government. These two industry houses are observed to help in enhancing the economic potential of the country such that it gradually emerged as one of the leading free economic systems in the Asian landscape. The total population of South Korea estimated along 2012 amount to 48.6 million that communicate based on the Korean language (BBC, 2014). Assessment Factors The definition of the different assessment factors can be generated as follows. Gross Domestic Product (GDP) relates to the sum of the whole value of the different types of goods and services that are produced by a nation related to specific period to be marketed within the borders of the country’s territory (Hall and Lieberman, 2009). The concept of Purchasing Power Parity (PPP) reflects that particular merchandise is required to be traded at a certain specified price along different locations. The concept of Purchasing Power Parity is observed to work based on the system or law of one price which in turn contributes in reducing the chances of exploitation of profits pertaining to price changes (Mankiw, 2011). GDP Per Capita PPP Rates relates to the conversion of GDP of a country to currency of a foreign country based on the use of the Purchasing Power Parity rates. Estimation of GDP Per Capita is made without generating deductions in terms of depreciation or reduction in the value of goods based on depletion in the natural fashion (The World Bank Group , 2014). Political Freedom relates to the level of political rights or the different amount of civil liberties that are generated by the government of a country. Like political freedom, the use of economic freedom relates to the growth of transparency in the trade and business climate pertaining to a region. Growth of economic freedom is conducive for growth of opportunities in the economy and also in enhancing the quality of life through the monitoring of the resource allocation and the production activities. Economic freedom is also observed to enhance the quality of life through evaluating and honouring the rights and interests of others in conducting the task entrusted. A high political and economic freedom thus signifies on the contribution of the above parameters in reducing unemployment and also poverty that acts as a social evil (Charles Koch Institute, 2011). Country Comparison The comparison between the countries like Brazil, Mexico and South Korea would be carried out based on the different parameters outlined as follows. Market Potential GDP per Capita PPP Brazil Estimates made around 2013 reflect that the GDP of Brazil in terms of per capita Purchasing Power Parity (PPP) is observed to amount to $12, 100 (CIA, 2014). Mexico 2013 estimates reflect GDP per Capita PPP to be $15,600 (CIA, 2014). South Korea GDP Per Capita during 2013 is $33,200 (CIA, 2014). GDP Growth Rate Brazil GDP in terms of Real Growth Rate measured along the 2013 period is observed to increase by around 2.3 percent (CIA, 2014). Mexico Real Growth Rate of GDP in 2013 amounted to 1.2 percent (CIA, 2014). South Korea GDP in terms of Real Growth rate is 2.8 percent based along the 2013 estimates (CIA, 2014). Population Brazil The total population of Brazil based along the 2014 estimates is observed to amount to 202,656,788 (Brazil, 2014). Mexico Estimates made in July 2014 reflect total population at 120,286,655 (CIA, 2014). South Korea Population of South Korea during July 2014 is estimated to be 49 million (CIA, 2014). Size of Middle Class Brazil Estimates made along 2012 reflect that the size of Middle Class consumers in Brazil amount to one-third of the total population of 190 million people (The World Bank Group, 2012). Mexico Middle class consumers in Mexico amounted to 39.2 percent of the total population of around 44 million people in 213 (Flannery, 2013). South Korea Estimates made around 2010 reflect that around 90 percent of people residing in South Korea are middle class in nature (Schiffman and Kanuk, 2007). Market Size Brazil The market size of fast food market in Brazil estimated during the 2013 period is observed to amount to $2.17 billion (Kharpal, 2013). Mexico During 2012 the total market for fast foods amounted to Mexican $84.4 billion (Companies and Markets, 2012). South Korea The market for fast food restaurants in South Korea amounted to $1.5 billion during 2013 (Sten, 2010). Growth Rate Brazil Thus, currently it is expected to rise by around 18 to 20 percent on an annual basis. Mexico Market for fast food in Mexico is taken to rise by around 10 percent from 2013 to 2014. South Korea The growth rate for the fast food industry in South Korea is taken to be around 22 percent. Political, Legal and Financial Environment Brazil In terms of Political Freedom, Brazil is observed to rate at 2.0. In terms of Civil Liberties and Political Rights the country scored 2 while it has earned a ‘Free’ status (Freedom House, 2014). Mexico Relating to Political Freedom, Mexico reflects a Freedom Rating of 3, with also Civil Liberties and Political Rights rating at 3. It status is Partly Free (Freedom House, 2014). South Korea South Korea in terms of political freedom is observed to be a free nation. It scores 1.5 in Freedom Rating while in terms of civil liberties and political rights it tends to score 2 and 1 respectively (Freedom House , 2014). Brazil Relating to economic freedom, Brazil is observed to earn a score of 56.9. On the global front, the country rated the 114th freest country owing to free trade and labour conditions (The Heritage Foundation , 2014). Mexico In terms of economic freedom Mexico tends to score at 66.8 which ranks the country as the 55th freest nation in the world (The Heritage Foundation , 2014). South Korea South Korea tends to score 71.2 in terms of economic freedom while ranking the 31st freest nation in the world. The country encourages the growth of global trade and investments activities through fostering a market for innovation (The Heritage Foundation , 2014). (The Heritage Foundation , 2014) Market Support Infrastructure Ownership of TVs Brazil Television ownership in Brazil amounts to 209.2 television sets for every 1000 people (Advameg, Inc. , 2014). Mexico Total number of television sets is 25.6 million while television sets owned per 1000 is 251.3 (Advameg Inc. , 2014). South Korea The total number of television owners in the country is around 16 million while around 332 televisions owned for every 1000 people (Advameg Inc. , 2014). Cable and Satellite Subscribers Brazil The total number of satellite subscribers in Brazil amount to 1,195,000 which amount to 6.8 for every 1000 people (Advameg, Inc. , 2014). Mexico Total number of cable subscribers is 2.263,800 while cable subscribers for every 1000 people are 23.1 (Advameg Inc. , 2014). South Korea Total number of cable subscribers is around 8.4 million while it is 177.4 for every 1000 people in the region (Advameg Inc. , 2014). Number of National Channels Brazil Number of national channels relating to Brazil is observed to be 138 (Advameg, Inc. , 2014). Mexico Total number of national channels is 236 (Advameg Inc. , 2014). South Korea The number of national stations is 121 (Advameg Inc. , 2014). Internet Users Brazil Total number of people with access to internet is 5 million while internet access for every 1000 people amounts to 28.7 users (Advameg, Inc. , 2014). Mexico The total number of users accessing the internet is 2,712,000 while for every 1000 people the same stands at 26.6 (Advameg Inc. , 2014). South Korea Total number of internet users is around 19 million while around 398 people tend to access the internet for every 1000 in the total population (Advameg Inc. , 2014). Growth of Total Adspend Brazil The growth of ad-spend relating to Brazil is observed to rise by around 29 percent from 2013 to 2014. Mexico The growth of ad-spend in Mexico is evaluated to be 13.80 percent along the year 2013-14. South Korea The advertisement expenditures relating to South Korea is observed to gain an increase by around 40 percent along the period ranging from 2013 to 2014. Conclusion In terms of international expansion the market of South Korea can be effectively chosen such that it reflects both enhanced GDP Per Capita and GDP Growth Rate estimates. South Korea also reflects a free political and economic environment such that the country ranks higher compared to the other nations like Brazil and Mexico related to freeness. Similarly, South Korea attracts the business organizations and customers owing to generating greater accessibility in terms of growth of television viewers and internet users. Fast food chain companies thus can effectively conduct business in South Korea in terms of using the different mediums like television, internet and cable for communicating with customers and also in expecting greater revenues and profitability through growth of demand for the fast food products. References Advameg Inc. . (2014). Mexico. Retrieved September 20, 2014, from http://www.pressreference.com/Ma-No/Mexico.html Advameg Inc. . (2014). South Korea. Retrieved September 20, 2014, from http://www.pressreference.com/Sa-Sw/South-Korea.html Advameg, Inc. . (2014). Brazil. Retrieved September 20, 2014, from http://www.pressreference.com/Be-Co/Brazil.html BBC. (2014, May 15). South Korea profile. Retrieved September 19, 2014, from http://www.bbc.com/news/world-asia-pacific-15289563 Brazil. (2014). Brazil. Retrieved September 19, 2014, from http://www.brazil.org.za/ Charles Koch Institute. (2011). What is Economic Freedom? . Retrieved September 20, 2014, from http://www.economicfreedom.org/about/what-is-economic-freedom/ CIA. (2014, June 23). Brazil. Retrieved September 19, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/br.html CIA. (2014, June 20). Korea, South . Retrieved September 20, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/ks.html CIA. (2014, June 20). Mexico. Retrieved September 20, 2014, from https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html Companies and Markets. (2012). Mexican fast food industry increased by 6% through 2012. Retrieved September 20, 2014, from http://www.companiesandmarkets.com/News/Food-and-Drink/Mexican-fast-food-industry-increased-by-6-through-2012/NI8103 Flannery, N. P. (2013, July 23). Whats The Real Story With Modern Mexicos Middle Class? Retrieved September 19, 2014, from http://www.forbes.com/sites/nathanielparishflannery/2013/07/23/whats-the-real-story-with-modern-mexicos-middle-class/ Freedom House . (2014). South Korea . Retrieved September 20, 2014, from http://www.freedomhouse.org/report/freedom-world/2012/south-korea#.VBxtUVc0_w4 Freedom House. (2014). Brazil. Retrieved September 20, 2014, from http://freedomhouse.org/report/freedom-world/2014/brazil-0#.VBxXKlc0_w5 Freedom House. (2014). Mexico. Retrieved September 20, 2014, from http://freedomhouse.org/report/freedom-world/2014/mexico-0#.VBxXEFc0_w5 Hall, R., & Lieberman, M. (2009). Economics: Principles and Applications. United States : Cengage Learning. Kharpal, A. (2013, November 8). Fast food giants locked in battle for Brazilian market. Retrieved September 20, 2014, from http://www.cnbc.com/id/101182151#. Mankiw, N. (2011). Principles of Macroeconomics. United States : Cengage Learning. Schiffman, L. G., & Kanuk, L. L. (2007). Consumer Behavior. New Delhi: Pearson Education India. Sten, S. (2010, April 8). Fast-food chains adapt to local tastes. Retrieved September 19, 2014, from http://edition.cnn.com/2010/LIVING/homestyle/04/08/fast.food/ The Heritage Foundation . (2014). Brazil. Retrieved September 20, 2014, from http://www.heritage.org/index/country/brazil The Heritage Foundation . (2014). Mexico. Retrieved September 20, 2014, from http://www.heritage.org/index/country/mexico The Heritage Foundation . (2014). South Korea . Retrieved September 20, 2014, from http://www.heritage.org/index/country/southkorea The World Bank Group . (2014). GDP per capita, PPP (current international $) . Retrieved September 19, 2014, from http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD The World Bank Group. (2012, November 13). In Brazil, an emergent middle class takes off. Retrieved September 20, 2014, from http://www.worldbank.org/en/news/feature/2012/11/13/middle-class-in-Brazil-Latin-America-report The World Bank Group. (2014). Mexico Overview. Retrieved September 19, 2014, from http://www.worldbank.org/en/country/mexico/overview Read More