Market Entry Strategies: Merger and Acquisition
Strategy can be defined as a tactical way of completing any operation to achieve the goal or target. In a business context strategy resemble the combinations of plans and implementation of actions to achieve the goal of the organization. Strategic positioning is the future positioning of the organization that helps the organization in meeting the demands of the customer and to provide them with better service (Shen, Puig and Paul, 2017). Based on the analysis the organization has to build a sustainable plan to enter into the new market and create value for the market. These strategies can be substantive growth, retrenchment, limited growth, etc. after evaluating the growth strategy some various roles and responsibilities need to be developed to implement the strategy and also has to acquire and analyze various sources for making the strategy successful in the market. the following report will analyse the significant strategies that need to be implemented by McDonald’s in the Maldives for business growth and sustainability. The report will also analyse the implementation of future strategies and roles and responsibilities of personnel to make the strategy successful with the use of required resources.
Analyzing different strategies relating to Market Entry, Substantive Growth, and retrenchment for McDonald’s
Various market entry strategies are helpful for organizations in entering a new market. Maldives has other brands operating in the market for example Marry brown, KFC, and Burger King. The following market entry strategies preferable for McDonald’s are:
Merger and Acquisition- Merger is the market entry strategy that denotes the process of two companies getting united and turning into one single entity to operate in the market. this strategy can be helpful for McDonald’s to get the loyalty of the customers by merging with local brands and to launch their products in the market of Maldives. Acquisition on the other hand is the purchasing of another company shares by the main company to gain control over the company. Purchasing more than 50% of the target firm stocks provide the parent company or acquirer to make decisions without the consent of target company shareholders. This strategy will help McDonald’s to get full control over target company business if applied in the Maldives gaining competitive advantage and target audience of the acquired company (Wu et al., 2022).
Franchising: Franchising is a market entry strategy that helps organizations to implement market expansion. In franchising, there are two bodies mainly franchisor and franchisee. The franchisor establishes brand trademark and name and the core business system whereas the franchisee uses the name and trademark of the franchisor to establish a business in the nation paying royalty and fee for the business. McDonald’s can provide franchising in the Maldives as a suitable market entry (Seva-Larrosa et al., 2021).
Strategic Alliance: Strategic Alliance on the other hand is the mutual understanding of two firms in running a business in the given marketplace. The companies have to agree on certain objectives and will work accordingly using the resource of each other firms to get benefit from the market. McDonald’s can use this strategy as a market entry which will be beneficial for both the firm in collaboration and to maximize its resources (Serrat, 2017).
Market Entry Strategies: Franchising
Substantive Growth indicates the goals and objectives of the organization to expand its business and to attain maximize profits bringing efficiency and increase in market performance (Markman et al., 2019).
Horizontal integration: Horizontal integration is the process by which an organization acquires the production facility of complementary or related products. This can happen an organization buys the facility of one of its competitors’ firms in the market. this type of integration can be used by McDonald’s to increase production by entering into the market (Snyman and Kroon, 2015).
Vertical Integration: Vertical integration refers to the substantial growth of a firm when an organization link itself with the partners of the supply chain and in many cases all the partners stay under one parent owner. McDonald’s vertical integration can help the brand to include production processes and various supply chains to gain a competitive advantage (Rosenfeld and Marshall, 2017).
Retrenchment: A retrenchment strategy is a process of cutting down costs of the organization. This can be helpful to establish the budget and operations of the company by laying off certain operations that are putting an impact on the firm’s performance. (Tao, Xu and Liu, 2020).
The best possible strategy for McDonald’s in entering the market of the Maldives is through Strategic Alliance. Strategic Alliance will provide the company the view of the target audience regarding the taste and preferences of the customers in the Maldives and the company can make changes in plans regarding the requirements of the customers. Strategic Alliance can provide McDonald’s to use resources of the other brand and through building a healthy relationship can create a perception on the minds of customers and at the same time increase the brand value and loyalty (López-Duarte et al., 2016). Strategic Alliance can be conducted by the company with local brands doing business in the Maldives. As McDonald’s has a brand name in a global context, local brands can take the help of McDonald’s in earning more profits and at the same increasing their operations capabilities and use of innovation and technology. A strategic alliance will help McDonald’s in getting a new client base in the Maldives and this option is best for new-market penetration. The following growth strategy will help the brand in sharing its expertise of doing business with local brands and at the same time can target local customers of Maldives already loyal to the brand that the company has converted alliance with. This cooperation and collaboration of brands in the market of Maldives are very crucial as the Maldives is a tourist place and has different culture and taste which McDonald’s has to verify through the integration of local brands and based on customer interest the new product and diversification can be introduced to the respective market. A strategic alliance will help McDonald to get a proper market penetration ability and strategical decision-making process to start its business in the Maldives (Martín, Chetty and Bai, 2022).
- McDonald’s future strategy after entering into the Maldives market is Franchising. The franchising method of market entry provides growth to the performance of the organization and it is also one of the most successful methods for cross-border market entry. Franchising is a market entry option that provides brands to enter a new market with minimal risk. Franchising helps the companies in capitalizing on an already successful strategy. After covering the market entry through Strategic Alliance by McDonald’s and creating a position in the Maldives Market, McDonald’s can provide licensing and trademark value to franchisees for better profits. McDonald’s franchising strategy will help circulate more franchisee stores in the market of the Maldives catering to the needs of the customers (Alon, Apriliyanti and Parodi, 2020). Franchising helps brands to enter into the new overseas market and at the same time increase the expansion of products and services in the given market lowering the risk of failed business and loss in operations management. The main disadvantage of Franchising is that the main parent company under which the franchisee is operating earns revenues in terms of sales, not from profits. The main criteria that is very much significant in performing franchising business are building a strong relationship between two parties to avoid conflict in the future perspective (Singireddy, 2020).
- The proper explanation and justification of Using Franchising as an appropriate strategy in the Maldives by McDonald’s are the benefits the strategy is going to provide to the brand. The biggest advantages of this strategy for market entry in the Maldives are:
- Less capital and risk will be included for the brand is operating its business in the Maldives market. The operation cost will be produced by Franchisee not the Franchisor helping the brand in lowering costs and at the same time, the outlets of McDonald’s will be operated by the franchisees themselves (Adeiza, 2019).
- Better Staffing will be executed while doing Franchising as lean management will be followed in this business growth strategy and McDonald’s can delegate most of the management and staffing work to the franchisees which they can work upon on their terms and can manage the outlets (Rajawat et al., 2020).
- The continuous flow of revenues will be generated by the brand McDonald by applying this strategy as Franchisee will provide royalties to the brand regularly and this is continued on monthly basis depending upon the performance of sales happening in the provided region where the outlets are operating.
- Franchising will also help McDonald’s in making future strategies by creating the brand development of the company. Franchisees, to increase sales of the outlet, will apply local and regional advertisement will indirectly help the brand to create its value in the market of Maldives and at the same time expand the brand recognition of the company in the marketplace of Maldives to provide a competitive advantage (Rajab et al., 2017).
- McDonald’s implementation of multi-unit expansion in franchising will help to increase the volume purchases and leverage with business vendors and suppliers. The proper implementation of multi-channel expansion will help the brand in increasing its efficiency in the market and will also help the brand to get more customers base and reach for future advantages (Koh et al., 2018).
Franchising is the best possible future strategy of the brand in the market of Maldives to compete with other big competitors. The formulation of the strategical alliance for building a brand name in the market and to create a target base customer and gaining experience of local taste and culture will help the brand in establishing its long-term plan in market and after alliance, Franchising will provide brand to lower its capital and risk in the market and at the same time increasing its brand equity in the market of Maldives (Ghani et al., 2021).
- A strategy has to be implemented by the top authority of the organization. The stakeholders are the main body of personnel in any organization. The roles and responsibilities of personnel include:
- Top Management: The main strategical decision of entering into a new market comes under the shoulder of top management and authorities. The top management has to ensure the funds for investing also has to provide permission for running up a new store. The board members have to convince the government of the Maldives about the business of McDonald’s following standards and regulations and the benefits the company is going to provide to the nation like job opportunities and growth opportunities in the economy. the board member also takes the deciding factor of CSR activities that the company is going to perform for the welfare of society (Lin and Huang, 2020).
- Employees: employees have to be ready to face the challenges of new problems going to arise when venturing into a new country. Experienced employees should share their values and feedback with new hires about handling crises and the implementation of knowledge to bring productivity to the organization (Wienkamp, 2021).
- Human Resource: HRM has to implement a strategy for acquiring new hires and a compensation strategy for the new employees in the new country. HRs has to ensure that planning and recruiting of proper candidates have to be conducted to ensure organization better performance in the new region. HRs should also motivate employees through perks and incentives for increasing the value of the brand through a proper work environment safe and suitable for employees (Greer et al., 2017).
- Sales and Marketing Team: Sales and marketing team will have to ensure that the product and service of the brand are properly reached to the target market and proper information and transparency should be provided to the customers. The marketing team should increase the customer base by promoting brand advertisements and handling traffic management of customers to ensure the best methods to attract Maldives locals.
- Middle management: This key personnel has to ensure daily operation handling, has to ensure system processes and a seamless business environment can be created. Financing of the McDonalds has to be handled for effective cost and budget planning and to ensure that proper infrastructure is provided to clients for better functioning of the company’s management (Ciszewska-Mlinari? and Tr?pczy?ski, 2019).
- Drawing on the conclusion of various roles and responsibilities, proper implementation of roles and responsibilities by each person will help McDonald’s in completing three major responsibilities. The first major responsibility that will be covered is implementing future strategies. This includes gathering information and mentioning the technique to the inside and outer gathering. Proper information sharing within management will ensure smooth processing of work transparency and bring productivity to the organization. the second responsibility is to bring change in the system as every organization has different strategies in different markets and depending upon the requirements (Kee et al., 2021). Maldives market has many competitors that are successfully implanting new strategies in the market for better prospects. McDonald’s implementation of personnel roles and responsibilities will help the brand to get a positive insight about new market changes, proper management handling, completion of target and new leads acquisition, and fulfilment to increase the brand value in the market. the implementation of roles and responsibilities will help the brand in developing innovation and technology for the marketplace changing the course of the restaurant industry in the Maldives both for locals and tourists (Ghazali et al., 2019).
Market Entry Strategies: Strategic Alliance
For implementing the strategy, it is very much important to create assets designation. McDonald’s out to execute intelligent procedures to face the future challenges and rivalry of the business in the Maldives. Assets are an important resource for any brand while implementing a growth strategy into a new market. the resource which is required to successfully implement a new strategy are people, capital, infrastructure, system, and culture. Before onboarding to a new market, the company should ensure that the right people are on board to take action. Employee training and skills development will help the company eventually in conducting the market entry. The second is resources that determine the capital and funds required to implement the strategy. The strategic alliance requires monetary transactions from both ends to enable the development of products in the market. costs are also required in handling true processes managing employees and expenses handling regarding promotion and distribution channel. (Varadarajan, 2020). Proper structure is the third resource that the company requires to have clear and transparent communication between management and employees for fluid performance and creating value for the firm. the fourth resource is Human resource management for conducting, planning, and recruiting candidates helping the company in implementing its strategy and at the same time managing critical situations for the company. the fifth important resource requirement is a system in strategy implementation. The system helps to track the planning of the management and bring adaptation faster to changes. Various tools have to be implemented to build a suitable system that can provide a suitable timeframe in which plans can be executed. Culture is the most crucial step as this requires the building of a relationship between employees and company management and also creating value propositions to consumers in the market. Culture resembles the brand image in the market and also helps in attracting new customers through brand loyalty (Dawson, 2020).
Analyzing the resources to the selected organization McDonald’s can create a new system of experienced people as a crucial resource to implement the entry strategy in the Maldives. Experienced people can face challenges and provide innovative ideas to the brand. McDonald’s has a global name and is also has one of the highest profitability in terms of business revenues in the restaurant chain market. proper allocation of funds and cost-effective method of operation of the company has helped the brand is entering a new market and the same strategy can be applied here for mitigating risk. On the other hand, the company can invest in the Strategic Alliance entry method to gain more market capture and enable more resource capabilities (López-Duarte et al., 2016). McDonald’s system approach is to create a proper infrastructure of handling processes and implementation of new plans and executing new tools for better research providing benefit to alliance parties. The proper infrastructure of lands and buildings and allocation of the proper marketplace has to be adopted by the brand using resources for getting a competitive advantage. The culture of the organization identifies the relationship between parties in a Strategic alliance which will help the brand in the extension of resources, providing better visibility to the customers and also creating future bonding providing diversified ideas and techniques in the market (Ciszewska-Mlinari? and Tr?pczy?ski, 2019).
Growth Strategies: Substantive Growth
Conclusion
The above report analyses different market entry and growth strategies to enter into the new market and in this case, it is the Maldives. McDonald’s best strategy to enter into the new market is through Strategic alliance as this strategy will help the brand to get more experience and knowledge about the target market and at the same time will provide target base and loyalty to the brand in the Maldives. The company is planning to launch new outlets in the Maldives for attracting tourists and local consumers and for that it is very much important to know the reflection of Maldives customers’ tastes and preferences. McDonald’s after implementing its plan and entering into the market should consider Franchising as a growth strategy as it will help the brand to lower its operational cost and at the same time, expand and awareness of the brand will be created in the market. The company to successfully implement strategy need to establish internal responsibilities to cater to situations and implement seamless action plans. All the stakeholders of McDonald’s have roles and responsibilities that need to be catered to separately by each department for successful outcomes. McDonald’s proper planning, recruiting, and providing value to the market through performing corporate responsibility will help the brand in implementing its alliance strategy in the market (Orgonáš, Paholková and Drábik, 2020). The proper use of resources and maintaining culture with the partner company will help McDonald to capture the market reach and will also provide a challenge to competitors. Through Strategic Alliance McDonald’s can create a new line of products for attracting customers of Maldives and providing diversification of choices to its audiences increasing loyalty, equity, and value at the same time. McDonald’s new strategic alliance entry will provide growth to the company and will ensure sustainability through long-term planning and bringing excellency in management.
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