McDonald's Success Story in Brazil

            
 
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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : BSTR408 For delivery in electronic format: Rs.400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Localization / International Marketing / Emerging Markets
Case Length : 14 Pages
Period : 1979-2011
Pub Date : 2012
Teaching Note : Not Available
Organization : McDonald's Corporation, McDonald's Brazil, Arcos Dorados
Industry : Fast Food
Countries : Brazil

Abstract:

The case focuses on the strategies adopted by the world's leading fast food restaurant chain, McDonald's Corporation (McDonald's) in Brazil. McDonald's entered Brazil in 1979 in a joint venture (JV) with Rio de Janeiro entrepreneur, Peter Rodenbeck.

In 1981, the company opened another restaurant in Sao Paulo in a JV with a businessman, Gregory James Ryan (Ryan). In 1995, both Rodenbeck and Ryan sold their shares to McDonald's and the JVs were merged to form a single entity, McDonald's Brazil. From then on, McDonald's Brazil operated as a wholly-owned subsidiary of the parent company, McDonald's.

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Since then, McDonald's had been expanding steadily in Brazil by providing quality, service, and value to its customers. In August 2007, it entered into a 20-year master franchise agreement (MFA) with Arcos. Under the MFA, Arcos operated all of McDonald's-branded restaurants in Latin America and the Caribbean. The case details the various strategies adopted by McDonald's in Brazil including its localization and marketing strategies.

The case concludes by identifying the challenges faced by McDonald's in Brazil. One of the major criticisms it faced was from its franchisees in Brazil. The franchisees alleged that the rapid expansion of McDonald's and new restaurants coming up in the vicinity of the old ones cut into their sales. McDonald's Brazil was also charged with exploitation of its workers at the workplace. It was alleged that workers were asked to be available at the food chain constantly without adequate remuneration. McDonald's Brazil was also criticized for releasing advertisements targeting children.

Despite McDonald's Brazil facing several challenges, industry observers pointed out that going forward, the fast food chain had tremendous potential to tap in Brazil since the country was touted to be the fastest growing consumer market in the world.

Issues:

Examine some of McDonald's efforts to localize its offerings in Brazil.
Understand McDonald's marketing strategies in Brazil.
Examine how McDonald's tackled competition from leading brands and continued to be the undisputed leader in the quick service restaurant chain industry in Brazil.
Understand the issues and challenges faced by McDonald's Brazil.
Explore future strategies that McDonald's Brazil can adopt.

Contents:

  Page No.
Introduction 1
Background Note 2
McDonald's Enters Brazil 3
Localization 5
Marketing 5
Competition 6
Addressing Local Concerns 6
The Road Ahead 8
Exhibits 9

Keywords:

McDonald's Brazil, Arcos, marketing strategies, localization, store layout, promotional campaigns, brand recognition, franchisee, franchising, master franchise agreement, joint venture, wholly owned subsidiary, fast food market, Quick Service Restaurant industry, Habib's, Bob's, Latin America, Caribbean

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