McDonald's Success Story in Brazil
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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.
McDonald's Enters Brazil
McDonald's Brazil had made some adaptations to the food on its menu. For instance, Brazilians had only coffee and a light roll for breakfast. This was different from McDonald's breakfast menu. The company noted that orange juice, which was part of American breakfast, was served as a daily beverage with sodas in Brazil. Since Brazilians were accustomed to drinking fresh fruit juices, McDonald's offered high quality fruit juices. It also served apples as individual items or in combo with cereal, yogurt, and orange juice. In addition to this, it offered national drinks such as guarana and maracuja, tropical fruit juices...
McDonald's when entering any country usually focused more on adapting marketing strategies. The company avoided product adaptation where the products were common with its US menu except for countries such as India and Japan where the culture differed greatly from the US culture. The marketing strategies of McDonald’s in any country were primarily targeted at the youth who, the company felt, had an open mind to new, non-traditional foods...
In 2001, the informal dining sector in Brazil was worth US$ 1.75 billion with McDonald’s Brazil capturing 25 percent of the market. Its competitors Habib's and Bob's together garnered 15 percent of the informal dining sector while the remaining 60 percent was held by bakeries, cafeterias, hotdog vans, and other informal eateries...
Addressing Local Concerns
Despite being successful in the Brazilian market, McDonald's Brazil received criticisms from various quarters. 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. Moreover, opening company-owned outlets violated the essence of franchisees' contracts, they charged...
The Road Ahead
According to McDonald's Brazil, Brazil was its major market in Latin America since it accounted for the major portion of its revenues. For the first six months of 2011, McDonald's Brazil accounted for 52 percent of the revenues recorded by Arcos. Some industry analysts opined that with the growing lower and middle-class consumers in Brazil, McDonald's Brazil served as an entry point to the fast food market. McDonald's Brazil also noted that Brazil was its driver of growth in future...
Exhibit I: Timeline of McDonald's
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