International Business Strategies in Action Assignment - 2

International Business Strategies in Action - Assignment Example McDonald’s decided to penetrate the Chinese fast food market in the year 1992 by establishing the company’s store in Shenzhen and later in Beijing which was the world’s largest fast food retail outlet owned by the company. The objective of McDonald’s in expanding internationally was evidently to attain competitive advantage in the international market gaining the opportunities rendered by other economies such as China. For instance, China has been witnessed to be one of the fastest growing economies in terms of population, customer demand and technology since the 1990s. It is in this context that DeWit & Meyer stated the organisational purpose or mission to play a significant role in influencing the internationalisation strategies of a company. The organisational purpose of McDonald’s is depicted through its mission statement, i.e. â€Å"Plan to Win†. Through its mission statement, the company has always focused on deriving superior customer satisfaction, sustainable growth, along with the continuous development of its operations and enhancement of customers’ experiences as competitive advantages.... atement, the company has always focused on deriving superior customer satisfaction, sustainable growth, along with the continuous development of its operations and enhancement of customers’ experiences as competitive advantages (McDonald’s, 2011). However, in relation to McDonald’s entry in China, the prime objective of the company can be witnessed to attain a competitive advantage in terms of differentiation with due concern to the increasing competition of the global market. For instance, McDonald’s in its entry strategies fundamentally focused on the consumer demand of China in relation to American fast food items with the sole intention to differentiate its products from that of its competitors not only in the Chinese market but in the global market as well (Luo, 2000). Therefore, it was quite likely that the entry strategies adopted by the company were likely to be influenced by the external environmental factors of the then Chinese economy. 3.0 Situa tional Analysis: PESTLE Analysis of China 3.1 Political Environment In the early 1990s, the political system of China was recorded to be under significant change from the Confucian statecraft towards Marxism point-of-view. It was during this period that the Chinese economy was concentrating on mobilisation and was opening up to the external world that in turn gave rise to various political issues (Shambaugh & Et. Al., 2000). 3.2 Economic Environment China’s growth during the period was observed as outstanding in the global market. During the 1990s, China witnessed rapid growth in terms of its Gross Domestic Product (GDP) earning as depicted in the chart below. Figure 1. China’s GDP in 1990s Source: (Flores & Et. Al., 2003). However, the GDP growth rate of the economy was observed to be highly fluctuating