1. Topic: Mcdonald Business in Developing countries
The Key of Resaerch: Pakistan
By : Mr IremWaseem
Msc, University of Sunderland, England
MA, University of the Punjab, Pakistan
Senior Teacher: City School KharianCantt 2000-2007
Introduction:
Pakistan is the second largest country in South Asia. It shares the border with
Iran, India, China and Afghanistan. It’s the country of 4 Provinces and total
area of Pakistan is 796,095 km2. According to 2011 census its population is
177,100,000 and per capita income is $2,787. McDonald’s first restaurant
opened its door to the people of Pakistan in September 1998 in Lahore.
Karachi opened its first restaurant a week after Lahore. There are now 21
restaurants in 7 major cities of Pakistan. Today millions of Pakistanis place
their trust in McDonald’s every day- trusting the company to provide them with
food of a very high standard, quick service and value for money. The target of
this work is a research whether or not it would be a good idea to extend a new
McDonald’s branch in Pakistan. The research is based on an analysis that
covers SWOT and PESTLE aspects. The other factors will also be discussed
i.e. demographic, geographic and religious aspects and cultural and
communicational issues will also be discussed that may affect this business
directly or indirectly.
McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, Msc
University of Sunderland UK, MA University of Punjab, Pakistan

2. SWOT analysis
1.0 Strengths
McDonald’s obvious strength is its name. All over the world all McDonald's
franchises use the same Golden Arches. It’s also interesting thing that it’s the
biggest fast food chain in the world, with 32,000 outlets in 117 countries. So, in
Pakistan it is also well recognised brand now. The census of 2010 tells us that
unemployment of this country was 15, 4%. The strength of this brand will
decrease this rate of unemployment. The research also shows the young people of
Pakistan love to spend their time with friends. “In what feel like hard economic
crises in Pakistan, McDonald's is trying to focus on value. It is a big challenge for
us because people come surrounding areas as they know if there is any franchise
of McDonald”. (Amin Lakhani, MD McDonald Pakistan).Some otherits strengths
are that it is cheap, fast, and easy. Some consumers said that McDonald allows
them to remember the time when they spent their holidays abroad and they liked
their taste there and they are happy that another franchise will soon start serving
us in their city.
1.1Weaknesses:
According to the culture of Pakistan, most of the people do not like fast food. It is
nature of Pakistani people that they prefer to eat spicy food like different curries
with naans or chapaties. McDonald’s burgers are totally different from traditional
food. It is suggested that McDonald should try to introduce some more products in
their food menu to stay in the competition. It is also a traditional factor that
people of this country prefer to spend time with their family. It may also be a
problem that people prefer to eat food made by their mother. Another obvious
weakness would be the lack of advertisement on print and electronic media in
Pakistan.This culture does not allow the marketers to make very bold and
nude commercials and signboards for their company because it is considered
as very disgusting and against religion. Some people in the country think that
McDonald destroys cultures by making people addicted to cheap, fatty food
and bad for their health.
1.2 Opportunities
Recently McDonald's is actively trying to reduce their negative impact on the
environment by altering their company policies. McDonald’s sponsors ‘Do not
Litter, Let Karachi Glitter’ the beach Cleaning Campaign 2009 . The event,
Some 1500 school and college students of ages 8 to 16 participated in the
beach cleaning activity on each of the three days and showed that they were
responsible citizens in the making. McDonald also sponsored the 10th
National Women’s Open Swimming Championship, which was held on April 18
McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, Msc
University of Sunderland UK, MA University of Punjab, Pakistan

3. and 19, 2009, at WAPDA Sports Complex Lahore. These efforts have drawn the
attention of local people towards McDonalds successfully that is obviously a
good sign for the business.McDonald can beat other fast food companies in
Pakistan to break the prices in the way to attract many people as Pakistan is a
developing country and per capita income is also low. If McDonalds do some
innovation it may be fruitful for the business. For example in Pakistan local
food is mostly spicy so McDonald should adopt some recipes that may fulfil
the demands of local people. I think McDonald's operates more playgrounds -
designed to attract children (and their parents) to its restaurants - than any
other private entity in Pakistan. There is another opportunity for them to boost
of their business in Pakistan if they get the ability to add healthier lines of
food.They need to get rid of super sizing because in Pakistani culture super
sizing food is not preferred.
1.3 Threats
If we talk about the threats that may affect the McDonald business in Pakistan
would be the changes in commodity prices. As it has been mentioned earlier
that Pakistan is a developing country. McDonald’s, due to its nature of
business may get affected most by the price fluctuations in chicken, beef and
cheese , which are critical ingredients of McDonalds menu.The diet problem is
also an obvious threat. Mostly people don’t like greasy food.
2 PESTLE ANALAYSIS
Political:
The territorial issues and border conflicts with India, the socio-economic
differences within the country, the struggle for a share of power between the
provinces, the terrorism issue, The long decades of dictatorship
ofYahya,Ayub, Zia and Musharaf and violence in different parties are the
nightmares for investors in Pakistan. For long time ago the country knows
some trouble which could prevent investors to invest in Pakistan(Pest analysis
for McDonalds). Political instability is regarded as a serious malaise harmful to
a company’s performance. Pin(2009) finds that political instability leads to
lower economic growth.Alisena and Perotti(1996) say that socio –political
instability generates an uncertain politico-economic environment.It reduces
savings, as well as foreign and domestic investmentand also destroys
investment in Human Capital.
2.1 Economical
Pakistan is a developing country where people belong to the middle class.The
high prices of McDonald’s products are not cheap for them to buy. People go
McDonald off and on to have their meal. According to Reuters( April21, 2011),
McDonald's Corp (MCD.N) forecast higher prices for beef, chicken, dairy and
McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, Msc
University of Sunderland UK, MA University of Punjab, Pakistan

4. other items and said it would cautiously raise prices to keep attracting
consumers, who are already struggling with higher grocery and gas bills
particularly in the developing countries.
PKR per $
2006
2007
2008
2009
2010
Exchange rate: Pakistani Rupees(PKR) Per US Dollar($) Source: Index Mundi 2011
National Income: 4.8%(2010), 3.4%(2009), 1.6%(2008)
Inflation rate:13.9%(2010), 13.6%(2009)
2.2 Sociological:
George Ritz describes that a culture possesses the characteristics of a fast
food(The McDonaldization of Society,1993). Ritzer says thatthe fast-food
restaurant have become a more representative contemporary paradigm (Ritzer,
2004:553). The McDonalds company stops advertising on TV during day time
at Ramadan as Muslim are fasting at day time. McDonald serves Halal food.
McDonalds also try to avoid any cultural or ethical trouble.
2.3 Technological
Pakistan is a developing country where it’s not easy for everybody to get
access to technology managing its day-to-day operations is a major challenge
and that the information and communications technology requirements and
infrastructure should be well placed. In this age technology is a key element in
ensuring a company's success.McDonald’singredients are made by machine
but a good training is provided to all the staff that’s why they are quick and
able to serve people quickly.
2.4 Legal
McDonalds have been involved in many legal cases in the 70 years history. In
the country like Pakistan the big issue for them is trademark. Due to lack of
McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, Msc
University of Sunderland UK, MA University of Punjab, Pakistan

5. technology in Pakistan, it is very hard to trace out the trademark of a company
there.
2.5 Environmental
All the restaurants in Pakistan operate very much as a part of their local
community and quite naturally. People love to eat a healthy place.
Environmental issues are one of the most important factors as it is related to
the health of the people. As well as Pakistan is concerned it is an importer of
exhaustible and renewable natural resources. According to the Oxford
University Press (2010), The Ministry of Environment of Pakistan’s government
takes responsibility to conserve and protect the environment.
3 Demographic, Geographic and Religious Aspects
3.0 Demographic Aspects :
The total population is
177,100,000(http://www.geohive.com/cntry/pakistan.aspx)
A bigger population means more consumers, more workers to work in
factories. A bigger population is always a good thing for an economy. This
number of population is a quite high number. There are some problems in
working class as mostly women want to be a house wife whereas their
husband works. Pakistan is the luckiest country as most of its population is
young.
The age structure is as follow:
0-14 years: 35.4%
15-64 years: 60.4%
65 Years: 4.2%
(Pakistan Demographic 2011-12)
3.1 Geographic Aspects:
Pakistan is also good country as well as its geographical place is concerned.
There are 4 weathers in a year. Most of the season is hot there that is an ideal
for business. July and August are rainy season there. Many times floods and
frequent earthquakes are also happened there. In some remote areas of
Pakistan, drinking water is a big problem for the people there. Most of the
population concentrate on agriculture. The demographic of Pakistan also
knows some deforestation, desertification and erosion. (Pakistan Geography
2011-2012).
McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, Msc
University of Sunderland UK, MA University of Punjab, Pakistan

6. 3.2 RELIGIOUS AND CULTURAL ASPECTS:
Majority of Pakistani population is Muslim. Almost 95% of its population is
Muslim and 5% or others (mostly Christian and Hindus). They have their own
identity and tradition, like the way of peoples’ dress, Islam is practised all over
the Pakistan. As well as food are concerned Muslims eating only the Halal
food. McDonalds in Pakistan keep an eye not to sell or present any of their
products that are against the religion and culture. Pakistani shows a great
respect especially for women and elders. Hospitality is their speciality. It’s a
challenge for McDonalds Pakistan not to display any rude, nude or anti-Islamic
sign -boards to display their products.
4 Competitors Analysis:
McDonald has a lot of competitors. In the food sector there is a huge growth
potential in emerging markets, leading chains like Subway, Burger King, and
Wendy’s have redoubled their focus on growth in these markets. This
translates to increased competition for McDonald’s. Denny’s plans to foray
into India and has announced plans to expand with up to 50 units. Starbucks
and Dunkin Donuts have also announced plans to enter the country. (U.S. fast-
food chains bet on India to drive growth, Reuters, April 11, 2011). Subway
recently surpassed McDonald’s in total number of restaurants worldwide.
However, McDonald’s is still the leader in terms of revenues. (Subway passes
McDonald’s in global presence, MSNBC, March 8, 2011). The big challenge for
McDonalds in Future will be to maintain their food quality and providing
excellent service to attract more people
As many other companies are improving their advertisement and also
introducing the local food. KFC, Pizza Hut has also improved their sales
through impressive marketing in Pakistan.
Conclusion:
McDonalds started its operation in 1998 and now it is a leading fast food
service retailer in Pakistan for its valued customers. There are many
challenges for this company to do business in Pakistan regarding religious,
cultural and political aspects. Mostly people belong to the middle class, so
food prices are also a bit problem there.The strategy of the company focuses
on offering different products and services compare to its competitor. The
project of extending the business should not be done unless they bring a
stronger marketing plan that focus on the prices of McDonald’s menu.
McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, Msc
University of Sunderland UK, MA University of Punjab, Pakistan

7. References:
Burns, P. (2001-2007). Entrepreneurship and small business.PALGRAVE
MACMILLAN.
Internet:
http://home.comcast.net/~nelson1397/mcdonaldscase.htm
http://www.antiessays.com/free-essays/75059.html
http://mcdonaldsstock.org/mcdonalds-competitors/
http://www.writeworkhttp://www.businessspectator.com.au/bs.nsf/Article/CEO-Pulse-
pd20100427-4VTBA?OpenDocument.com/essay/case-study-mcdonald-s-including-swot-
analysis
http://en.wikipedia.org/wiki/Pakistan
http://www.allvoices.com/news/6601016-mcdonalds-strengths-weaknesses-opportunities-
threats
www.oppapers.com/subjects/mcdonalds-threats-page1.htm
McDonalds Business in Developing Countries, Key research area Pakistan by IremWaseem, Msc
University of Sunderland UK, MA University of Punjab, Pakistan