After four consecutive months, inflation is rising tremendously in India. Inflation rose marginally to 6.84% in February, 2013 as food items such as rice, wheat, onions and fruits became costlier. Most notably the inflation rate in egg, meat and fish category was at 12.85%. McDonalds currently has over 100 outlets in India and are planning to double it by end of 2013. The inflation rate will cause huge issues as a majority of McDonalds products consist of egg and meat and with the huge inflation rate the materials will become increasingly costly. Furthermore, since India's inflation rate is so high, it will result in an extremely high cost of living, and when a country has a cost of living that is too high, it will result in instability and unrest.

Link to Article:

http://www.thehindu.com/business/Economy/inflation-moves-up-to-684-in-feb/article4508246.ece

On January 4th, 2013, President Obama has signed the law of "Food Safety Modernization Act", these laws give the "Food and Drug Association" more power in order to prevent disease outbreaks such as "Salmonella". These laws dictate that produce such as meat and egg must now be handled in systems that are geared to prevent any type of contamination. Furthermore, if any of the produce has found to be contaminated the information must be immediately relayed to the FDA. The FDA also has the right to conduct lab reports on the foods of restaurants such as McDonalds. Recently, on October 2012 employees from a McDonalds restaurant in Bloomington were found to be diagnosed with salmonella, leading to the McDonalds being shut down. Cases of food poisoning from McDonalds also occur regularly all around America. McDonalds needs to start examining their food (especially meat) sources more carefully and where they come from. These laws, though it may force McDonalds to use part of its profit to reinforce or re-new their hygiene systems all around America, may help rebuild the confidence of consumers in McDonalds.

Links to Article:

http://www.examiner.com/article/new-food-safety-laws-as-of-today

http://foodpoisoning.pritzkerlaw.com/archives/cat-mcdonalds-lawsuit.html

Political Factor Analysis:
Political concerns for McDonalds restaurants currently operating in Hong Kong are the strict labor laws and the rise of minimum wage to $30. The strict labor laws will make McDonalds hiring process more challenging as there are maximum working hours for days and weeks for specific age cohorts, therefore McDonalds will need to hire more workers to fit this law requirement. Furthermore, paying the increased amount of workers will also be difficult as the shift of minimum wage to $30 is a constraint for McDonalds. But taking these factors into account, McDonalds is a billion dollar multi-national company and these factors will not have a significant impact on McDonalds. McDonalds will definitely be able to keep up with the amount of increased workers and their wage in Hong Kong.

Socio-Cultural Factor Analysis:
McDonalds has been operating in Hong Kong for over 30 years and the market of Hong Kong is one that McDonalds is familiar with. The international language of “English” and “Cantonese” are both of experience to McDonalds and it’s relatively easy to hire employees who are competent in both these languages in Hong Kong. Furthermore, Hong Kong citizens are quite keen on the “doubling” of McDonalds burgers. Over these years, McDonalds have had “double cheeseburgers”, “double McFillet”, “double quarter pounders” etc and the market of Hong Kong has been responding positively to these “burgers”. Therefore, McDonalds can consider doubling more of its burgers to earn more profit and cater to the markets wants.

A major socio-cultural threat to McDonalds operating in Hong Kong, would be that Hong Kong citizens are now more aware of health and food related issues thanks to the government and advertising from NPO’s. This is a major threat as McDonalds will be losing a significant amount of customers due to this developing trend as McDonalds portray a strong image of unhealthy foods and obesity. Furthermore, a large part of McDonalds target market is made up of children and parents bring children to McDonalds. If this developing trend continues, parents may start to steer their children away from McDonalds which will lead to a significant decline in sales and profit.

Evaluation:

Taking the political and socio-cultural opportunities and threats into account, McDonalds should not change its international marketing strategy in Hong Kong. Looking from a political perspective, the situation in Hong Kong is relatively stable and the government is extremely open to direct foreign investment, making it easy for McDonalds to expand in Hong Kong as it is doing now. The minimum wage and strict labor laws will pose as a disadvantage but it will not create a significant impact on a well equipped, well resourced company like McDonalds. The fast paced lifestyle of Hong Kong citizens and the relatively high income will also ensure that McDonalds have a steady amount of customers. Though it is true that Hong Kong citizens are shifting to a more healthy diet, but if McDonalds were to cater to the demands of healthy eaters, they would alter their brand image entirely. Also, they would need to spend a lot of money on product research to develop healthy products that cater to the markets wants. Furthermore, if people were to eat healthy, they would never look to McDonalds as their first choice, making it futile for McDonalds to develop healthy products in the first place. McDonalds has built up brand loyalty over the 30 years operating in Hong Kong and customers will not switch so easily, therefore McDonalds does not need to frantically develop healthy products in fear that consumers might move away from them. In conclusion, McDonalds should keep its international marketing strategy of Hong Kong as it is.

Recently there have been a huge scandal over the topic of "beef products" and what is really in the "beef". The EU has found specimens of horsemeat in beef after conducting tests all over Europe. This scandal initially started after the discovery of horsemeat in Irish burgers. The EU is drastically launching DNA tests over beef products for the presence of unlabelled horsemeat and tests found 1% of horsemeat in samples undertaken in the study. These "horsemeat" containing beef products are finding their way into shelves in supermarket and schools are having their meat pies removed. This will affect McDonalds because a majority of their products contain beef, and now that this scandal has occurred consumers will be less likely to purchase beef produts, as they will be skeptical and doubtful about where their meat comes from and what it contains, more so from McDonalds as they already have a poor reputation regarding their meat quality. Though horsemeat has yet to be found in McDonalds burgers and Warren Anderson, Vice President of McDonalds UK supply chain remains confident in positive results. People are more aware of what goes into their food now and some are choosing to eat more healthy. According to the American Dietetic Association (ADA) the recent food trend is that Americans are eating more vegetables, chicken and whole grain foods. This scandal certainly poses as an issue for McDonalds and will affect the consumer behavior in a negative way.

Link to Articles:

http://www.euronews.com/2013/02/16/still-more-horse-meat-found-in-european-beef-products/

http://youngevity.com/news-events/ada-consumers-eating-more-healthy-foods-but-we-still-have-a-long-way-to-go/

http://www.guardian.co.uk/uk/2013/feb/28/mcdonalds-free-horsemeat-link-farmers

This article talks about an astounding scientific breakthrough, and that is the applications of neuro-marketing. The process involves wearing an electroencephalogram (EEG) cap with electrodes placed all over the consumers head, along with goggles that track eye movement. The cap is able to measure electrical impulses and the goggles are able to track where the consumer is looking when examining a product, hence researchers can immediately tell if the consumer is attracted to the product or not. This can be really useful for McDonalds as they can change their marketing strategies to properly capture the consumers attention. E.g. The use of different colors and ingredients in the advertisements of burgers.

Link to Article:

http://www.cbc.ca/news/technology/story/2012/12/20/inside-your-brain-neuromarketing.html

As mentioned in a previous post, Japan currently has the second most number of McDonalds in its country with over 3600 restaurants, just falling behind USA, making it a vital part in McDonalds chain of restaurants all over the world. Japan's economy is currently in a recession with deflation and other issues occurring. Recently, the Japanese government has approved a $116 billion dollar stimulus package to revive the economy. The package is estimated to boost Japan's economy by 2%,create 600,000 jobs and raise income levels in Japan. This will impact McDonalds greatly because this package will increase the consumer confidence level in Japan. The economy of Japan is in a recession and thus people will be less likely to eat out or spend money on fast food restaurants such as McDonalds. With this $116 billion dollar package, more jobs will be created and income levels will rise, when the consumers have increased amount of income and they have more confidence in the economy, they will be more willing to spend in on McDonalds instead of just eating home and being conservative.

Link to Article:

http://www.bbc.co.uk/news/business-20981874

The "Labour Party" in UK are urging governments to introduce legal limits on sugar, salt and fat content in food. The Party says the "Department of Health's" voluntary agreement with food companies to make their products healthier is not working. Their argument is that NHS data indicates that one third of children in UK are either overweight or obese by the time they leave primary school. If governments do introduce legal limites on sugar, salt and fat content in food it will be a great impact to McDonalds, as all their products either contain one of the three ingredients mentioned. Brand taste is extremely important, and if McDonalds were to redesign their products according to these laws, customers may switch out or even quit McDonalds as they may not like the taste anymore. Sugar, salt and fat content are extremely important elements in McDonalds products, therefore if there are legal limits, McDonalds will need to find other ingredients to replace these so that they can make a product that satisfies the demands of the market, and that may boost production cost or research cost.

Link to Article:

http://www.bbc.co.uk/news/health-20914685

The Japanese economy is on a downhill and Japan has been battling with deflation and falling consumer prices for years. According to the latest data, the core consumer prices index fell 0.1% in November 2012. This means that the prices of goods are dropping. The way the Japanese government intends to solve this is to spur domestic demand and boost domestic consumption, but this is not working as deflation is occurring, and prices of goods are dropping, therefore consumers are putting off prices to hope for a cheaper deal later on, Japan also has the highest saving rate in the world, therefore consumers are less likely to spend money in the first place. This affects McDonalds in a major way as Japan has the second most number of McDonalds in their country, just after USA with over 3600 restaurants. Since deflation is occurring/ the economy is on a downhill and Japan having such a high saving rate, people will be less likely to spend money on things such as fast food and they will be less likely to eat out. Therefore McDonalds will have a consumer drop. Furthermore, McDonalds can't appeal to consumers by lowering their prices because they still have to pay their workers, and the material they use to make their product will still be the same price and if they lower the price on their product, they will lose profit. On the other hand, they can't raise the price on their products to earn profit as the economy is under such pressure.

Link to Article:

http://www.bbc.co.uk/news/business-20855924

A food scientist at Indiana’s Purdue University has created a “radiant fryer” that results in fried food with all the flavour, but up to half the fat and fewer calories. Foods sold at fast-food restaurants are first partially cooked at a factory and quickly frozen. Then restaurant workers typically use an oil immersion fryer to finish the process. Which is extremely unhealthy. But the "radiant fryer" does not require oil to finish off the process, which results in 30-50% less oil. This affects my company because this technological advance can help McDonalds reduce the amount of oil they use, which not only can slightly enhance its image of promoting a healthy lifestyle but also reduce its production cost. Statistics have shown that there is a rare decline in McDonalds sales recently, and this may be due to McDonalds losing its customers. There can be a lot of reasons for that, but one of them may be that they are now more aware of health issues. The US has the most McDonalds restaurans in the world (18,590) and facts have shown that customers are indeed choosing to eat more healthy there now. Over 5 years ago, over 25% of Americans eat McDonalds or consume fast food everyday but now it dropped to 6%. This radiant fryer may help McDonalds win these customers back with the reduced amount of oil used to produce their food. But, the people who choose to eat at McDonalds may already be well aware that its unhealthy and not care about the health related issues, also McDonalds already projects a strong image of unhealthy and low quality materials. Therefore, this PEST factor may have a minimal impact.

Link to article:

http://www.foodstuffsa.co.za/news-stuff/food-science-and-technology-stuff/2537-purdue-technology-can-fry-food-with-minimal-oil