Standardization and Adaptation Strategies of Mac Donalds, Pepsi and Toyota Motors - Essay Example

Topic: INTERNATIONAL MANAGEMENT Standardization And Adaptation Strategies Of Mac Donald’s, Pepsi And Toyota Motors In The International Market 1. Introduction 1.1 Background To standardize means to make something adapt or adjust to the set down requirements so that they are similar in comparison to what is acceptable. Adaptation refers to the process of adjustment on something so as to fit the environment. Since the early 90’s globalization has been on the rise leading to the discovery of new opportunities in international markets thus making Standardization and adaptation of goods and services a necessity. Several factors are observed in the standardization and adaptation process. Amongst the factors that play major roles in the standardization and adaptation process include the legal-political climate, social-cultural make-up of the target market technological, economic and demographic factors, etc. (Doyle and Stern P. 35). During a product’s launch into a new international market, multi-national firms can decide to either use their standardized marketing mix or adapt the mix to suit the market. In my study I am going to discuss the different standardization and adaptation strategies employed by different multi corporations like; Pepsi, Mc Donald’s and Toyota motors in the international business market. 1.2 Objectives of the study 1. To establish a relationship between socio-cultural values and its significance to standardization and differentiation 2. To find out the effect of the legal-political environment while operating in an international market and its relevance to standardization and adaptation 3. To establish a relationship between demographic factors in the international market and its relationship to standardization and adaptation 4. To explore on how consumer tastes and preferences acts as a major factor in standardization and adaptation 5. To out its in. 6. To identify the effects of, a product’s country of origin in relation to standardization and adaptation. 2.0 Discussion and Analysis 2.1 Current Scenario in General In several instances, a multi-national firm is forced to adapt its products and services marketing mix strategies to meet the local consumer needs. Also, the company is influenced to apply marketing mix techniques to deal with wants that can’t be altered due to factors such as culture, belief, economic conditions among others. McDonalds is a global producer of fast foods but their burgers, and other foodstuffs are adapted to local needs alongside tastes and preferences. In the Indian market where a cow is a venerated animal, their fast foods contain other meat products in place of beef. In South America McDonalds’ burgers come highly chilled due to the natives love for excessively chilled foods (Learn marketing, Para.2). In the Middle East where Pepsi is the leading soft drinks producer, it’s less sweet as compared to Africa where sweetness is preferred. The locals have a culture of growing sugar cane which tends to affect their consumption tastes and preferences (Learn marketing, para.2). Toyota Motors Corporation is the leading producer of automotive in the world. Its headquarters are situated in Japan decided. The company decided to use its standard production techniques for all its companies in the World with minimal changes to adapt it to the local environment. Over the years, Toyota enjoyed monopoly in terms of cheaper and fuel economic consumption. However, in 2002 it was overtaken by Volkswagen due to the ability Volkswagen to adapt products to existing market needs and wanted (Business improvement, Para.1). 2.2 Current scenario in the Middle East /U.AE In most scenarios when businesses from the West advance in terms of growth to the Middle East, they always carry with them the western culture. In some instances, westernization is positively received but in most cases the corporate have to adapt to the locals’ culture and those who resist the change are phased out of the Eastern market. Adapting to the local culture also entails adapting their products accordingly. Unlike other firms from the west, McDonalds is more flexible at his response and adaptation to local cultures as opposed to trying to export western cultures and values to other countries. During its inception in the U.A.E, McDonalds with similarity to other foreign fast food shops was affected by a boycott of western brands. However, they managed to survive due to its reaction to native culture and willingness to prepare foods that appealed to the locals (Derhally, 2003, para.5). Pepsi a Multi-national U.S soft drinks company are doing better and better in the U.A.E as opposed to the Coca-Cola another leading Coke brand. Coca-Cola, which seems to be doing much better in other parts of the world, has severally attempted to raise its market control along the Middle East through celebrity endorsements and other social responsibilities to no success. On the other hand, Pepsi is doing great in the Arab world and U.A.E. The success of the company is based on its ability to cope with unmet demand of clients in the United Arab Emirates despite its standard production formula. Pepsi, for instance, has its advertisements branded ‘halal’ to mean allowed. Also it goes further to produce coke using lemon oil and vanillin which is the preferred taste in U.A.E. This brand of coke contains less sugar as compared to Coca-Cola’s orange oil and vanilla combination that is detected in U.A.E (Diston, 2011, Paras. 3-7). Pepsi’s major cotitor Coca-Cola had kept a secret formula that was standardized in all its production companies around the world. The formula was not liked in some countries hence its inability to do well in the local market (Thunderbird, 2012, Para. 11). Toyota motorson their part have over the years had a secret formula of manufacturing auto motives that had been standardized for all their production plants globally for a very long period. For a long time, Toyota enjoyed massive revenues and was ranked the leading producers of automotive. However, towards early 2000’s since their production technique is well engineered while the local plant works on its adaptation to the local community (Rapp, 2000, pp. 14-20). According to autoevolution.com, an automotive review site states that the Toyota corolla model is the leading automotive in terms of sales in the U.A.E. This was observed within a six-month period and revealed a 44% increase. Other top selling auto motives include Camry, Rav4, and Yari. The corolla’s success has been influential in developing Toyota’s disposal transaction. It also helps Al-Futaim Motors maintain its role as a market leader in the United Arab Emirates automotive market. The reason for its growth and sharp development in the recent years is the establishment of Al-Futtaim motors. This is a subsidiary of Toyota Motors that is concerned with the manufacture of trucks and buses that are adapted to the local society’s needs and wants (Brindusesu, 2013, paras. 1-3). 2.3 Challenges and Problems Since Muslims view pigs as ritually unclean animals; MacDonald’s had to outsource food from Halal suppliers that were much more expensive. He also had to adjust his food variety in the Menu so as to ensure local food was served as well as adjustment in the preparation processes to accommodate locals. Also during this period McDonalds had to introduce Mc Arabia, that was chicken grilled sandwich to the preference of Arabs. This meant that McDonalds had to incur extra costs in adjusting to the new method of preparation. During the month of Ramadhan Muslims fast and change in food tastes and preference forcing him to change from his mainstream burgers and meat product to dates, milk and cookies (Doyle and Phillip, p.52-54). During its inception in the United Arab Emirates, Pepsi had difficulties in adapting its products to suit the locals’ needs and wants. The large fraction of the population was used to hot drinks as compared to Pepsi’s cold drinks. Pepsi has also served massive products boycott as a result of the global political situation. During the Israel invasion of Iraq, there were huge boycotts of pro-American products including Pepsi hence allowing Arab descent brands to blossom in sales revenue. Since the company operates in a foreign Market, they are highly taxed as well incur high production in a bid to adapt their products to the local market tastes. This in turn means high prices for their commodities that make gives the local brands like Mecca-Cola a pricing advantage since its easily accessed even by the low-class citizens (Diston, 2011, Paras. 1-8). Most recently as a result of adapting its vehicles to fit the local tastes and wants alongside other factors like demographic and economic ones Toyota had to recall approximately 95,000 vehicles. In a measure to fix safety defects not discovered earlier. The recall number was highest in the middle as compared to other places as it was a historical figure (Basit, 2014, paras.1-2). 2.4 Solutions to the Problems McDonalds would have avoided problems related to standardization and adaptation by entering the market through franchising or buyout of a local popular food production brand since it would have been cheaper and risk averse. Martin Dewhurst the director at Mc Kinsey’s office explains that he would have avoided market entrance barriers. Since Pepsi was also a new entrant into the U.A.E, they should have also tried franchising from Mecca-Cola or Partnership as a way of being risk averse (Dewhurst, Harris, and Heywood). Toyota Motors would have avoided the much costly safety defects incurred as a result of adaptation by doing a thorough research on the products functionality followed by a further keen product testing of the sample product. It would have been a little costly unlike having to recall almost 95,000 automotive which is also a dent on the company’s global image as people will develop trust issues with the company (Basit, 2014, Para. 8). 3.0 Conclusion McDonalds is known for its success in the global market in terms of food chains because of its ease to adjust to local cultures as well as maintaining its standard quality method of preparation. This serves as a perfect model for other corporations when entering a new country and their quest to conquer the foreign market. Although they have never been 100% successful, but its ability to adapt has made it succeed in areas where companies that were unable to adapt failed. On the hand, Pepsi continues to enjoy brand preference and market control in the United Arab Emirates. As a result of adapting its core brand marketing strategies to the locals needs, it has managed to obtain a large market share. The competitor Coca-Cola has over the years struggled to gain entry to Arab world because of its failure to adapt appropriately. On the other hand, the immense growth experienced by Toyota Motors can be attributed to its defective free engineering in design and production coupled with slight modifications in product adaptation. The strategy has been able to establish them as a market leader. Work Cited "International Marketing Mix: Pricing." International Marketing Mix. Web. 26 Nov. 2014. . "Toyota Returns to the Roots of the Toyota Production System after Recalls."Toyota Returns to the Roots of the Toyota Production System after Recalls. Web. 26 Nov. 2014. . Basit, Abdul. "Toyota Recalls 95, 00 Vehicles in U.A.E to Fix Safety Issues." Khaleej times 10 Apr. 2014. Print. Brindusescu, Gabriel. "Toyota Corolla Registers High Sales in the UAE." Autoevolution.com. Toyota blog, 22 Aug. 2013. Web. 26 Nov. 2014. . Derhally, M. (2003, March 5).McDonald’s rolls out McArabia. Retrieved Dec 26, 2014, from http://www.arabianbusiness.com/475954 Dewhurst, Martin, Jonathan Harris, and Suzanne Heywood."Mc Kinsey Quarterly."The Global Company’s Challenge (2012).Web. Diston, Sarah. "Cola Giants Continue Battle for Middle East Market." Cola Giants Continue Battle for Middle East Market. 6 Apr. 2011. Web. 26 Nov. 2014. . Doyle, Peter, and Philip Stern. Marketing Management and Strategy. Harlow (England: Financial Times/Prentice Hall, 2006. Print. Read More