Competitive Environment and Entry Strategy
The successful entry of Mc Donald in Japan can be attributed to localization. This involves modifying products and services to the demands of the market. For example, McDonald’s has specific food that can be found in Japan only, such as the Teriyaki Burgers below.
The company had to shift from centralized to decentralized decision structure in Japan. This implies that the daily operations and decision making were transferred from the top management to the lower level. The strategy eased the efficiency of decision making in MacDonald, Japan. It was necessary because of the variation in the market environment between the U.S and Japan. The decentralization strategy gave the management of McDonald Japan greater autonomy for better customer service.
McDonald Japan has centralized financial operations. The company has two major financial streams. One is the sales from restaurants, and the other one is income from royalty and rental from franchised restaurants. The senior management is responsible for reinvesting the profits. It implies that all profits made in Japan are transferred to senior management in the U.S. However, McDonald’s in Japan makes orders and pay suppliers independently. The financial management of the company is done by McDonald’s Business Strategy & Intelligence department. This team focuses on investment strategies such as opening new outlets in Japan and reinvesting in the existing one. The customer target market for McDonald Japan is women. The company understands that according to Japanese culture, women make the dinning decision. It is the reason why market research of the company focuses on this market target.
The two-stage model involves a combination of the characteristics of a firm and product application in decision making. The characteristics include the industry and size of a firm. The first approach is micro-segmentation. It entails the categorization of similar firms and all small customers into different groups. McDonald Japan considered factors like family size, population, and per capita income of consumers before making investment decisions. The strategy enabled the company to adjust its operations and improve the efficiency of logistics. The second stage of the model is micro-segmentation, which is the analysis based on the characteristics of consumers. It focuses on lifestyle choices, attitudes, values, and cultural preferences of the market. This strategy enabled the company to modify its foods according to the demands of the market.