McDonald’sEntry to Kenya
McDonald’sis a world leading fast food franchise. The business began in Americain 1940. It currently has operations in 119 countries. The companystarted as a barbecue restaurant and it quickly became a hamburgerrestaurant. The franchise was started by two brothers who later soldit to Ray Kroc (Derdak108).He is responsible for making it an international brand, which earnsits revenues from royalties, rent, sales, and fees. The restaurantsells hamburgers,chicken,cheeseburgers,breakfast,milkshakes,frenchfries,wraps,softdrinks,smoothies,desserts,salads,fish,and fruit. Most of the foods sold are in response to market demandand they are often based on the taste and preferences of the countryof operation (McDonald’sCorporation 1).The proposal is in the food industry, which is always growing andchanging.
Thecompany would like to venture into Kenya, as a way of penetrating theEast African market. The company has no major operations in EastAfrica, a region that has experienced exponential growth of themiddle class over the past ten years. This is the main target marketfor the McDonald’s franchise. Kenya has a few fast foodrestaurants, but there is no major franchises operation in thecountry. KFC recently entered the Kenyan market through its SouthAfrican franchise (Malinda2).McDonald’s stands a chance to penetrate the Kenyan market throughits South African of Egyptian franchises. The company can sell all itproducts in the Kenyan market as the market has no cultural orreligious restrictions on food.
Kenyais a good market to penetrate the east African region as it producesfoods that are used to prepare most of the foods sold at McDonald’s.The nation has a young population and the country is experiencingrapid urbanization, which means that McDonald’s would have a greatadvantage if it entered the country now. The franchise would expandwith the increasing urban population. The country has increasedconsumer expenditure and it has friendly investment policies thatwould favor McDonald’s (Malinda1).Fast food franchises are successful as Kenyans embrace the culture ofeating out. The country ranks first in terms of economic performancewithin the east African region.
Someof the challenges that McDonald’s may face include a lack of astable supply of food products. The country relies heavily on rain-fed agriculture and this means that sometimes, there could be ashortage of food substances (Malinda1).Additionally, the urban population is located in Nairobi, Mombasa,Nakuru and Kisumu majorly. This limits the market, in addition to thealready existent completion. The market may also be limited as themiddle class mainly eats out in smaller fast food restaurants thanMcDonald’s.
Thecountry recently established a total of forty seven countries withcounty headquarters. These headquarters are bound to be big towns andthey thus hold opportunities for fast food outlets such asMcDonald’s. Additionally, the country has one of the fastestgrowing economies in the region, coupled with a young population(Malinda2).This means that the middle class with a lot of spending abilitieswill comprise a big percentage of the population and thus, there is ahuge market for McDonald’s. The fast food sector lacks seriousplayers with world class standards to serve the demand. The availableoutlets do not have much competition and thus, McDonald’s, whichalready has an established name stands a chance to enter an unclaimedmarket. This means that is McDonald’s enters the market, it has agood chance of growing with the country and become a launching basefor the east African region.
Theentrance of McDonald’s into Kenya would be a good idea because thecountry’s economy is growing and it would grow with the country.Additionally, the country’s middle class, which is the targetmarket for McDonald’s and this would be perfect for the company.The country also has a huge young population, who are also thebiggest spenders on fast food restaurants. The availability of amarket and the lack of a serious company for in the fast food sectormeans that there are is a ready market for the company.
Malinda,Catherine. “Country: Kenya- Franchising” UnitedStates Department of Commerce. Nairobi:TheU.S. Commercial Service in Kenya, May 2013. Web.
McDonald’sCorporation. "CorporateFAQ."McDonald`spublication.Illinois: McDonald`s Corporation, 2014. Web.
Thomas,Derdak and Jay, P, Pederson, ed. "McDonald`s."Internationaldirectory of company histories67(3rd ed.). London: St. James Press, 2004. Print.