The macro environment of Wal-Mart in Mexico and McDonald in China
Foreign businesses of the Wal-Mart and the McDonalds
Wal-Mart store, Inc. is the worlds largest public corporation in terms of revenue. The corporation runs a series of big discount department enterprises. The Mexican Wal-Mart operates under the name Walmex. Wal-Mart operates in nine retail lines food and drugs, supercenters, general merchandise, cash and carry stores, bodegas, apparel stores, restaurants, membership warehouse clubs and soft discount stores (Fishman, 2009). McDonald Corporation is on the other hand among the largest fast food chains in the world. The major menus for McDonald China include bread, beef, chicken, milk and potatoes (Anonymous, 2009).
The changes in the macro environment affecting individual firms
The Wal-Mart Stores, Inc which began its business operations in Mexico in 1991 created a joint venture with an adequately established similar retail chain called the Cifra. The company introduced its pricing strategy in Mexico selling high quality, popular products at the lowest prices affordable in the market. The drive for lowered prices attracted majority of the Mexican consumers and a great backup from the government. The demand for products in the Walmex stores grew within no tine, drawing mass protest from both the suppliers and the small vendors in the Mexican market since their profitability was highly declining as a result of a great shift of customer to the Walmex Stores (Los Angeles Times, 2009).
Reporters said that the protests against the effects of the Walmex on the demand and profitability of the local firms were forwarded by the small traders who had been greatly affected by the price competition strategy of the corporation. In addition to the changes in the pricing policies in Mexico, the producers and suppliers to the Walmex store also enjoyed a benefit since Walmex does not charge any slotting charges on its suppliers for putting their products on their shelves, unlike other retail dealers in Mexico. As a result, the cost of production has also decreased among the major suppliers of the Walmex stores in Mexico (Los Angeles Times, 2009).
The McDonald Corporation also entered the Chinese market in 1990 and since that time, the firm has been steadily and rapidly expanding in the country because it introduced new, quality and outstanding services as well as high value to customers. The firm did not only transform the fast food industry but also made huge profits that are credited to its current growth and development in China. Today, McDonald China is the largest overseas subsidiary under the management of McDonald Corporation. The changes in the Chinese economic macro environment were felt after the corporation entered the market and become the symbol of modern and sophisticated lifestyle among the residents (Yang, 1998).
To outstand and win the demand in the local Chinese market, the company came with variations of its American products to suit the Chinese culture and palate while at the sometime maintained the American services in menu, management and services. The major competitor was Yum Brands Inc. The McDonalds blend of Chinese culture and the American sophisticated menus blew off the entire market since the customers to the local Chinese restaurants felt that the local restaurants were not offering enough variety that suited their palate. As a result, the McDonald corporation has continually improved in profitability and demand for its products in the Chinese market since it not only provides variety but also gives offers such as the dollar menu which sells sandwiches as well as related products at much lower prices (Yang, 1998).
MacDonalds strategies in China and Wal-Mart strategies in Mexico
Both companies used low pricing strategy in the two markets. They offer their products at the lowest prices affordable in the market to win the customers from the competitors. In addition both companies specialized in high quality services and high value for the customers which the local dealers failed in. Other than pricing and customer value strategy, the Wal-Mart Corporation now is engaged into banking in Mexico. This is one of the strategies that have helped the Corporation to outdo the McDonalds restaurants on a global scale in the food supply sector. The
Wal-Mart also does not include the slotting fee charged by retailers to the suppliers for displaying their commodities in the stores. Instead, the corporation engages with the major performing products from the suppliers (Fishman, 2003). In china, the McDonald strategy comprised blending the America product with the Chinese culture while the Wal-Marts strategy in Japan entailed a joint venture with a well established retail dealer in Mexico which enabled them to be familiar with the tastes of the Mexican population (China Daily, 2001).
Role played by the governments
In both cases, the companies received adequate support for the government that helped in fighting back protests from the local suppliers. For instance, mass protests were organized by the local suppliers in Mexico to oppose the low price strategy by the Walmex stores, but through the support of the government and the customer who were benefiting from lower prices, the protests failed. On the other hand, the McDonald Corporation worked together with the Chinese government which hallowed the company to carry on business in the country on the condition that they would recruit the local residents into the labor force of the company (Hakim, 2007).
Other variables that affect the demand of the McDonalds products
Other than price, the other variable responsible for the high demand of the McDonalds products in China include the quality of the services, the variety of its menus as well as the good relationship between the company, general public and the Chinese government. The company influences these factors simply by focusing on the, convenience, value and major menu extensions in addition to abiding with the laws and regulations of the country and contributing towards corporate social responsibility in the community it inhabits (Anonymous, 2009).