McDonalds In Moscow Essay, Research Paper
Describe at least 5 American Marketing Techniques, utilized by Russians that you
believe enhanced the productivity of the enterprise . 1. McDonalds in Russia was
a joint Canadian-Russian venture, in which the appointed president was a Russian
person. It was done first of all because Russian businessmen know all the
specific aspects of doing business in Russia, and second of all in order to show
the public that Russians play a major role in this venture. 2. Moscow was chosen
for its favorable location and for being the capital-cultural center of Russia,
where people are more informed and educated. 3. The opening of the first
McDonalds in Russia was greatly advertised and promoted, not only by local
media, but also by the biggest national and world media. Many world reporters
were invited to the grand-opening of McDonalds so that they could show this
event in a favorable way to the company. 4. At the grand opening orphans and
children were served first and free. 5. Many high positioned officials from city
and national government, and other celebrities took part in the opening. 6.
Despite its foreign belonging McDonalds accepted only national Russian currency,
Rubles. Question #2: Identify and describe at least 5 (five) obstacles or
problems on a corporate level, and how they were solved and overcome. 1.
Production problems. There was no manufacturer or producer in Russia who could
produce products needed for the business. One of the solutions was to bring all
the products from different countries, but that would be too expensive, so the
management decided to build a huge food processing plant size of 3 football
fields in order to produce all needed products under one roof, instead of
shipping it from somewhere else. 2. Lack of Trust. At that time (we are talking
about the end of Cold War) there was a great lack of trust between Russian and
Canadian partners. That problem had to be overcome by establishing a good and
friendly personal relationship between top executives of both sides. 3.
Technology problem. Despite its status as a Super- Power, Russia was far behind
United States and Canada in technological development. All the equipment for the
restaurant had to be brought from outside of the country, even the equipment for
the food processing plant. 4. Political problem. Not every Russian political
leader would understand the opening of a representative of not long ago hated
?capitalism system? in the heart of Russia. The management had work closely
on the McDonalds? s image in Russia. They had to introduce their restaurant
not as a ?Capitalism? intruder, but as a business that will serve people?s
needs when they are in hurry. 5. No local managers. There were no local people
who could qualify for the manager?s position, so McDonalds had to hire a few
Russian men and send them to Canada, where they would learn all necessary
skills. 6. Hiring employees. When McDonalds first announced its plans to hire
new employees, they started receiving thousands of applications every day. They
had to find, select and interview lots of people, in order to hire best possible
candidates. 7. Harsh Russian Winter. As we all know, winter in Russia can be
very cold, so McDonalds Corp. had to establish supply of ingredients for their
products from the companies, which do not depend on weather conditions. Some of
the supplies were produced by local farms, and some had to be imported.j 8.
Communicational problems. Despite its size, Moskow did not have any phone books,
or business directories, this made it very hard for company to find or locate
anything or anybody in capital of Russia. It was also very hard to establish
good communication between McDonalds in Moskow and its executives in Canada. 9.
Ingredients problems. Some of the ingredients that McDonalds uses ( such as
potatoes) could not be produced by local farmers. Russian potatoes were to big
in size, and could not be used to make a french fries. McDonalds had to ship
potato seeds from Europe to reproduce them in Russia Question #3 Do you believe
that McDonalds will succeed in a long term in Moskow ? Answer: It has been ten
years since McDonalds opened its restaurant in Moskow, and so far it has proved
its ability to do a profitable business in Russia. However, I do not believe
that McDonalds will succeed in Moscow in years to come. In order to prove my
point of view, I will provide my 5 reason . 1. After August 98 economical crisis
in Russia, the population was divided into two groups. One group: about 15 % of
population who have enormous amount of money, and another group: people who have
almost no money at all. As we know prices in McDonalds compared to Russian
standards are fairly expensive, so the majority of people can not afford
McDonalds, and those who have money, will not eat at McDonalds because they see
it as ?junk food? and inexpensive. 2. When McDonalds first opened, it had no
competition in this industry, however nowadays it has to compete with many
relatively small Russian-oriented fast food restaurants and cafes. These
businesses offer Russian food, food that the majority of population is used to
and admires. This food is cheaper, healthier and much more tastier than food at
McDonalds. 3. Political problems. As we all know, after Kosovo crisis, the
United States and Russia have entered a stage of ?cold? relations. Mass
media has launched a huge propaganda campaign aimed against all American
oriented or manufactured products and services. They would like the population
to see the United States and its allies as enemies of Russia. Therefore at this
time the number of people who regularly ate at McDonalds decreased drastically.
4. After the crisis, the cost of doing business in Russia was raised by the
state and local governments. It was done in order to promote Russian owned and
operated businesses, so that the profit will stay in the country. Foreign and
joint ventures such as McDonalds was given unfavorable tax brackets. 5.
Nationalism is one of the greatest factors which plays a major role in Russian
political life. Every day many political leaders are trying to play with young
people?s feelings of patriotism. They are asking the population not to buy or
use American products, unfortunately McDonalds falls into this category. Based
on the factors mentioned above, I strongly believe that until economical and
political crisis in Russia is not over, McDonalds will be loosing is market
share in Russian fast food industry. Unfortunately I can not predict any future
changes in the situation in Russia. Stable Russian economy equals stable
business for McDonalds. As long as the situation remains unchanged, McDonalds
has no clear future.