Sample Essay on McDonalds Corporation in China and Starbucks Corporation in France

Executive Summary 

          This research work is about international business where two international business organizations that operate in different countries of the world will be considered. The two organizations are the McDonald’s Corporation and the Starbucks Coffee. However, the countries of operation are China and France respectively. In this paper, the strategies that are employed by these two corporations that are responsible for their success of failures will be scrutinized. Moreover, the paper will also take into account the profile of the China.

In summery, McDonald’s Corporation is one of the world’s leading fast food companies. It operates in very many countries including China. In China, McDonald’s Corporation is currently experiencing marketing problems that has resulted into reduction in the volumes of sales. On the other hand, Starbucks Coffee is experiencing a successful spell not only in France but also across the globe. Therefore, this paper will try to find out the reasons behind the success of Starbucks Coffee in France and failures of the McDonald’s Corporation in China.


The McDonalds Corporation is one of the largest hamburger fast food restaurants in the whole world. It has 35,000 outlets in all the 119 countries in which it operates. It is headquartered in the United States of America. Consequently, McDonalds serves a massive 68 million people on a daily basis. A brief history of the corporation reveals its establishment in the year 1940 as a simple barbecue restaurant. The founders of the McDonalds Corporation were the McDonalds brothers – namely Richard and Maurice MacDonald. However, they reorganized it in the year 1948 with the help of the production line principle to a humbugger fast food restaurant. The turning point of this corporation was in the year 1955 when Ray Kroc as a franchise agent joined the two brothers. However, Ray Kroc went ahead, bought the operation, and spearheaded the worldwide expansion of the business.

Currently, McDonalds Corporation is operated by three entities namely the franchisee, an affiliate, as well as itself as a corporation. In addition, the McDonald’s Corporation revenues are derived from rent, fees that are paid by the franchises and sales that are derived from the sales of the restaurant, together with the royalties. Reports from the data of the year 2012 revealed that the corporation had staggering annual revenue of the $27.5 billion and a profit of $5.5 billion. Moreover, a BBC report of the same year ranked the McDonalds Corporation as the second largest private company employer just behind the Walmart enterprise. This is because it boasts of 1.9m employees, of which 1.5m work for the franchises.

The McDonalds Corporation China branch was started in the year 1990, and the first outlet was located in Shenzhen. However, McDonalds’s China has failed to experience the success as other branches across the world. Some of the reasons for its failure include the stiff competition from the Yum. In addition, statistics have revealed that most of the Chinese people prefer more traditional fast food as opposed to the hamburger that has a western appeal. Moreover, the recent food-safety scandal that rocked the chain in China has contributed to the massive failure of the success of the corporation not only in China but also in Asia as a whole (Macfarquhar, 2014).

Particularly in China, reports emerged that accused the enterprise of packing foodstuff that was not fit for human consumption. This was because it was alleged that their foodstuff had foreign objects such as plastics, human teeth, as well as human hair. Amidst all of these allegations, McDonalds China is planning to expand by adding three hundred more restaurants across China. Their chief executive officer – by the name Zeng Qishan – revealed this information (Kamel, 2012).

Starbucks Coffee in France

Starbucks Corporation is an American-based global coffee company. It is a coffeehouse chain house and is headquartered in the Seattle, Washington. In the world, Starbucks Coffee is ranked the first but is followed closely by the Costa coffee enterprise that is based in the United Kingdom. Starbucks Corporation operates in over 64 countries, where it has 21,536 stores. In the United States of America alone, it has 12,218 stores (Jackson, 2012).

Starbucks Corporation specializes in serving hot and cold beverages, full leaf teas, whole bean coffee, pastries, micro-ground instant coffee ice creams, as well as snacks. In addition, most of the Starbucks Corporation stores also sell food items that are pre-packed, sandwiches that are both cold and hot, together with other items such as tumblers and mugs. Furthermore, Starbucks Corporation also has evening locations that stock and sell wines and beers that are of different varieties. Additionally, they also offer appetizers especially after 4pm. additionally; Starbucks Corporation also possesses the entertainment division where they market items such as music, films, and books. It is important to note that the entertainment division is in collaboration with the Hear Music brand. Another point to note is that most of the products offered by the Starbucks Corporation are either seasonal or are based on the location of the store (Gavin, 2011).

Starbucks Corporation was founded in the year 1971, just as a Seattle retailer and coffee ban. However, the corporation has experienced rapid growth since its establishment up to the present date. The period that marked a rapid growth of the corporation was between the years 1987 and 2007 (Starbucks Coffee Company, 2014, March 14). These were two memorable decades for the organization because the corporation experienced a remarkable rapid expansion rate. Specifically, Starbucks Corporation opened at least two stores each day during this period. However, there was a time when Starbucks Corporation experienced hard times because they were always were making losses. This was from 1980 to 1990. The reason for their loss was the expansion in the Midwest and British Colombia (Gavin, 2011).

In France, Starbucks Corporation started its operations in the year 1983, when they opened their first store in Paris. During the initial years in operation in France, Starbucks Corporation had trouble because of low sales of their products. As a result, Starbucks Corporation France made many losses. However, after 1992, there was a change in fortunes, where they started making profits. The turn of fortunes was because of a change in managerial and marketing strategies. Starbucks Corporation started embracing the locals and their products that made them appealing to the locals. In addition, they started diversifying into other products and services that they were not offering previously. In terms of marketing, they engaged in vigorous advertisements and competitive pricing for their products. Their pricing policy made them compete favorably with the local products (Macdonald, 2011).

Profile of the McDonald’s in China

McDonald’s in China offers the fast food services. As a fast food provider, McDonalds’ offers the following products: soft drinks, breakfast, salads, coffee, milkshakes, and hamburgers, together with the French fries. It is important to note that McDonald’s in China has a strategy of bringing the western appeal and civilization to the people of China. This strategy can be argued to be the mastermind of its recent downfall because the Chinese people have a special preference for the local products (Molloy & Scott, 2013).

Currently, McDonald’s in China is targeting a broad range of customers of all the age groups and locations. This strategy has made the management plan of opening more stores in China. The company currently has a strong market in urban areas of the China society. In the urban centers, the majority of customers are the young Chinese and the foreign-based individuals mostly from the European market (Qihua, 2012). Specifically, more than three hundred new stores are planned for opening in different regions of the China society. However, the majority of these stores are set to be opened in the rural areas of China to attract the Chinese rural population. Moreover, the chief competitor of the McDonald’s in China is the Yum enterprise (Kamel, 2012).

Yum experiences an advantage over the McDonald’s in China because of its local appeal. As a result, McDonald’s in China has decided to improve the qualities of its products, as well as offer competitive prices for its products so that it can compete favorably. Apart from offering competitive prices, McDonald’s in China has also decided to diversify in the products that they offer. In regards to the promotion strategies, McDonalds in China has adopted several strategies such as advertisement, sponsoring some of the local events, as well as carrying out exhibitions.

Country-Based Research- China

China is a sovereign state in the Asian continent. It is the most populous country in the whole world, where it boasts of over 1.35 billion people. Moreover, the country is a single party state. China has 3 regions of domain; namely the 22 provinces, five municipalities that are directly controlled, and 5 autonomous regions. Examples of the municipals that are directly controlled are Shanghai, Beijing, Tianjin, and Chongqing. In addition, China has two regions that are under self-governing special administrative bodies. Such areas include Macau and Hong Kong (Gupta, 2010).

Geographically, China is located in the East Asia region and bordered in the east by the East China Sea, the Yellow Sea, South China Sea, Korean Bay, and Taiwan Strait. Moreover, China also shares a border with 14 countries to its south, west, and north. China is further subdivided into five different macro-regions namely Mongolia, Eastern China, Tibetan highlands, Xinjiang, Northern Plains, and Southern Hills. China is rich in physical diversity where the eastern and northern regions of the country comprise fertile lands and foothills. These areas contribute to the agriculture of the Republic of China. However, the western and northern parts of China have sunken basins, towering Massifs, as well as rolling plateaus. Moreover, the highest plateau in the world is found in China, and it is called Tibetan plateau (Macfarquhar, 2014).

In china, judicial branch is one of the three branches of the government. The other two branches are the executive as well as the legislative. The system of the Chinese courts is based on the civil law where it exercises their judicial power independently and free from any interference from other administrative organs. Though the Chinese court exercises the will of the people and the constitution, the Communist party controls much of its verdicts (McDonald’s Corp 2014).

In China, education is run by the state. Particularly, public education is under the management of the ministry of education. In addition, China has a compulsory nine years education for all the citizens. According to the government reports, China receives a massive 99% attendance rates for primary school and a further 80% attendance for both the primary and middle schools (China Education, 2010). China is also offering quality tertiary education for the colleges and universities. In fact, the number of foreign student that seek tertiary education has remarkably increased over the years. Moreover, the laws that regulate education system in China include compulsory education laws, the education laws, the laws of the higher education, as well as academic degree laws (Overview of Education in China, 2014).

China has a dynamic family structure where the primary family consists of mother, father, and children. However, there are Chinese people with very strong extended family ties, where the majority live together with their older parents. In rural areas, families are usually prominent because of the large number of the children that they have. As for the cultural values, China has one of the oldest cultures where the traditions and customs do vary depending on the cities, provinces, and towns. The major components of the China culture include music, martial arts, visual arts, ceramics, cuisine, architecture, and literature (Gupta, 2010).

In terms of the living conditions, China has both sides with some of the population experiences and suitable living conditions, although some sections also have destitute living conditions. However, it is important to note that the living conditions always depend on the economic status of the individuals. In regards to the economy, China boasts the second biggest economy in the whole world by nominal GDP. By the year 2013, China had a GDP by expenditure that was in the region of the 56.88 trillion Chinese Yuan. This translated a 9.2 trillion when converted to the US dollar (Chung, 2014).

However, it boasts of being the world leading economy when it comes to the purchasing power parity. In addition, China also has the world’s fastest growing economy with an average growth rate of 10% growth rate for the past thirty years. Moreover, the public sector has a bigger share of the national economy as compared to the private sector. Furthermore, China is also the world largest when it comes to the manufacturing and exporting of the goods (Zhufu, 2011). In regards to the pursuance of the recreation, China is one of the countries in the world that is ranked highly. Most of the Chinese citizens are always pursuing different types of recreations such as exercises, sports, and tourism. In tourism, China is one of the countries that perform wellness and tourism. Other events that are exercised in China for recreational purposes include yoga and massages (Zaccheus, 2013).

Media showing marketing strategy of the McDonalds China

Kamel, S. (2012). McDonalds China. In Regional development concepts, methodologies, tools

and applications (6th ed., Vol. 2). Hershey, PA: Information Science Reference.

In this media outlet, Kamel explains how the McDonald’s China has used a strategy of exclusiveness to achieve to overcome its inadequacies. Through this article, the author has stated that McDonalds China has decided to diversify into their operations and product in order to overcome the stiff level of competition. Moreover, this media source has also covered alternative strategies that were available for the McDonalds China making it more exclusive.

Mcpitze P. (2011). McDonalds, Confucian foundations to leadership: A study of Chinese business leaders across Greater China and South-East Asia. Asia Pacific Business Review, 465-487.

In this article, various business organizations that operate in China are reviewed. As a result, the author has given a comparative approach of expressing his ideas. Moreover, the author has granted the readers with an opportunity of comparing different strategies that various business organizations apply in China. Consequently, it gives the readers an opportunity of deciding the best strategy for China and selecting the strategies that have contributed to either the success or the downfall of an organization.

Zaccheus, W. (2013). New Insights from China on the Efficacy of ECT in Schizophrenia. The

Journal of ECT, 2(5), 203-204.

In this article, the author has explored the current state of the business operations in China. However, he emphasizes the current strategies that McDonalds is using in China. Moreover, the author has also covered the level of the competition in China with particular emphasis on the fast food industry. Therefore, this source of media is of great importance to this study because it provides an insight on the status of the McDonalds China.

Molloy, S., & Scott, G. (2013). Advertising – How Apps Are Changing The World (4th ed., Vol.

3). Cork: BookBaby.

In this media source, the author has explored the modern forms of product promotions that exist in China. Specifically, the author has cited the need for the online advertisement in this era of online usage. Specifically, the author has quoted the need for the fast food industry to embrace online advertisements as a way of promoting their products. Moreover, the author in this article has recommended the online advertisement to the McDonalds China.

Pride, W., & Ferrell, O. (2013). Foundations of Marketing (Sixth ed., Vol. 2).

In this source, Pride, who is also the author, has identified the main factors that determine the marketing environment of the China. The author has also focused on the foreign-based organizations in regards to the challenges they face as they operate in China. In addition, he has also recommended some of the strategies that they can employ to assist them in overcoming such challenges. The main problem the author has a focused on is the cultural difference. Evidently, the author has put it very clearly that for a foreign organization to succeed in China; it has to embrace the culture of the Chinese people. However, he has also pointed out that China is a multicultural country, therefore; it is very difficult to satisfy all the cultures of the Chinese people.

Individual reflection

From my own analysis, McDonalds China has not succeeded in its operation in China. This is because it has been marred by series of marketing scandal of late. The most recent scandal was the notion that they are selling outdated products. In addition, reports have also emerged that some of its products especially the humbuggers have some funny foreign items such as a human tooth, plastics, and human hairs. These allegations have done little in the marketing the image of the company that is already tainted (Zaccheus, 2013).

Apart from the scandals that have rocked the products of the McDonalds Corporation in China. Another scandal has emerged, but this time it is facing the senior officials in the management portfolio. This was after the news that rocked not only China but also the rest of the world where one of the top management officials was accused of being a cult member. This accusation has actually affected the operations of the McDonalds Corporation in China. Consequently, the Corporation has experienced a steady decline in the sales of the products that has in return reduced the profit and the overall revenue of the company (Valax, 2012).

Another reason that explains the failure of the McDonalds Corporation in China is their failure to embrace the culture of the Chinese people. Study about the Chinese people reveals that they strongly value their culture. As a result, they can be described as conservatives. In China, the citizens associate humbuggers with western civilization. Therefore, they tend to view McDonalds Corporation China as a source of Western influence that is trying to derail their rich cultural heritage. Consequently, the people who are also the consumers tend to prefer consuming Yum products that they consider local and cultural. In this regards, McDonalds China has failed to overcome the stiff competition from the local products (Stutz-McDonalds, 2013).

On the other hand, Starbucks Corporation has experienced a massive success in France. The success can be attributed not only to the well-orchestrated management strategy but also to the ideal environment in France that has enabled the flourishing of the business operations. In regards to the business environment, France has offered dynamic and more liberal citizens that have no cultural alignments. In addition, France is also a western country. Therefore, they quickly embrace the western products that are offered by the Starbucks Corporation. Moreover, Starbucks Corporation also offers a diverse product that caters for the needs of most of the people. Therefore, they can satisfy large number of customers (Macdonald, 2011).

Though the two corporations have different ideologies and strategies, they are similar in certain aspects. The first aspect that is evident in both of the corporations is their ability to overcome the challenges facing them. This aspect can be contributed from their able leadership with visionary capabilities. Another, aspect that is also common in both of the two corporations is their burning desire to expand and reach new markets. This is evident in both cases especially in the case of the McDonalds China where they still plan of opening new three hundred new stores despite the problems facing them (Stutz-McDonalds, 2013).


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