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.