FREE ESSAY ON MCDONALDS IN MOSKOW

MCDONALDS IN MOSKOW

Question # 1: 
Describe at least 5 ( five) American Marketing Techniques, utilized by Russians that you
believe enhanced the productivity of the enterprise .
1. McDonalds in Russia was a joint Canadian-Russian venture, in which the appointed
president was a Russian person. It was done first of all because Russian businessmen know
all the specific aspects of doing business in Russia, and second of all in order to show
the public that Russians play a major role in this venture.
2. Moscow was chosen for its favorable location and for being the capital-cultural center
of Russia, where people are more informed and educated.
3. The opening of the first McDonalds in Russia was greatly advertised and promoted, not
only by local media, but also by the biggest national and world media. Many world
reporters were invited to the grand-opening of McDonalds so that they could show this
event in a favorable way to the company. 
4. At the grand opening orphans and children were served first and free.
5. Many high positioned officials from city and national government, and other
celebrities took part in the opening.
6. Despite its foreign belonging McDonalds accepted only national Russian currency,
Rubles. 
Question #2: 
Identify and describe at least 5 (five) obstacles or problems on a corporate level, and
how they were solved and overcome.
1. Production problems. There was no manufacturer or producer in Russia who could produce
products needed for the business. One of the solutions was to bring all the products from
different countries, but that would be too expensive, so the management decided to build
a huge food processing plant size of 3 football fields in order to produce all needed
products under one roof, instead of shipping it from somewhere else.
2. Lack of Trust. At that time (we are talking about the end of Cold War) there was a
great lack of trust between Russian and Canadian partners. That problem had to be
overcome by establishing a good and friendly personal relationship between top executives
of both sides.
3. Technology problem. Despite its status as a Super- Power, Russia was far behind United
States and Canada in technological development. All the equipment for the restaurant had
to be brought from outside of the country, even the equipment for the food processing
plant.
4. Political problem. Not every Russian political leader would understand the opening of
a representative of not long ago hated "capitalism system" in the heart of Russia. The
management had work closely on the McDonalds' s image in Russia. They had to introduce
their restaurant not as a "Capitalism" intruder, but as a business that will serve
people's needs when they are in hurry. 
5. No local managers. There were no local people who could qualify for the manager's
position, so McDonalds had to hire a few Russian men and send them to Canada, where they
would learn all necessary skills.
6. Hiring employees. When McDonalds first announced its plans to hire new employees, they
started receiving thousands of applications every day. They had to find, select and
interview lots of people, in order to hire best possible candidates.
7. Harsh Russian Winter. As we all know, winter in Russia can be very cold, so McDonalds
Corp. had to establish supply of ingredients for their products from the companies, which
do not depend on weather conditions. Some of the supplies were produced by local farms,
and some had to be imported.j
8. Communicational problems. Despite its size, Moskow did not have any phone books, or
business directories, this made it very hard for company to find or locate anything or
anybody in capital of Russia. It was also very hard to establish good communication
between McDonalds in Moskow and its executives in Canada.
9. Ingredients problems. Some of the ingredients that McDonalds uses ( such as potatoes)
could not be produced by local farmers. Russian potatoes were to big in size, and could
not be used to make a french fries. McDonalds had to ship potato seeds from Europe to
reproduce them in Russia 
Question #3
Do you believe that McDonalds will succeed in a long term in Moskow ?
Answer: It has been ten years since McDonalds opened its restaurant in Moskow, and so far
it has proved its ability to do a profitable business in Russia. However, I do not
believe that McDonalds will succeed in Moscow in years to come. In order to prove my
point of view, I will provide my 5 reason . 
1. After August 98 economical crisis in Russia, the population was divided into two
groups. One group: about 15 % of population who have enormous amount of money, and
another group: people who have almost no money at all. As we know prices in McDonalds
compared to Russian standards are fairly expensive, so the majority of people can not
afford McDonalds, and those who have money, will not eat at McDonalds because they see it
as "junk food" and inexpensive.
2. When McDonalds first opened, it had no competition in this industry, however nowadays
it has to compete with many relatively small Russian-oriented fast food restaurants and
cafes. These businesses offer Russian food, food that the majority of population is used
to and admires. This food is cheaper, healthier and much more tastier than food at
McDonalds.
3. Political problems. As we all know, after Kosovo crisis, the United States and Russia
have entered a stage of "cold" relations. Mass media has launched a huge propaganda
campaign aimed against all American oriented or manufactured products and services. They
would like the population to see the United States and its allies as enemies of Russia.
Therefore at this time the number of people who regularly ate at McDonalds decreased
drastically. 
4. After the crisis, the cost of doing business in Russia was raised by the state and
local governments. It was done in order to promote Russian owned and operated businesses,
so that the profit will stay in the country. Foreign and joint ventures such as McDonalds
was given unfavorable tax brackets.
5. Nationalism is one of the greatest factors which plays a major role in Russian
political life. Every day many political leaders are trying to play with young people's
feelings of patriotism. They are asking the population not to buy or use American
products, unfortunately McDonalds falls into this category.
Based on the factors mentioned above, I strongly believe that until economical and
political crisis in Russia is not over, McDonalds will be loosing is market share in
Russian fast food industry. Unfortunately I can not predict any future changes in the
situation in Russia. Stable Russian economy equals stable business for McDonalds. As long
as the situation remains unchanged, McDonalds has no clear future.