McDonalds Moves into the Halal Food Market

The platform to overcome uncertainty and complexity in an adjacency expansion rests upon the foundation of blending the targeted niche within the familiar formula of one’s core businesses. It demands logical mirroring of the customer adjacency through continual tracking of the clientele behavior to anticipate their needs. In this regard, searching new opportunities upon which a multinational, including Kraft Foods and McDonalds generates new business, demands mapping out the emerging customer segments by following familiar paths. The practical accomplishment in the move demands monitoring beyond the anticipated growth in demand, to include a strategic focus on how expanding to the adjacency translates to a source of value to the growth of the organization year after year (Zook & Allen, 2009). For this reason, McDonalds should diversify to flanking strategies to capture the Halal market segment currently unsatisfactorily served by rival organizations including KFC, Johnny Rockets ad Es Teler 77. Despite its market leadership in satisfying the increasing appetite for the western products, the multinational requires a strategic clarity to tap into the exponential demand for Halal products across the Muslim dominated markets.

While constituting the largest population of Muslim believers, India, Indonesia and Pakistan illuminate a lifetime value to multinationals embracing fast moves to incorporate halal products in their portfolio. For instance, the rapid emergence of the middle-income earners among the Muslim population is a leading element behind the increased appetite for halal products. Additionally, increased consumer awareness of halal products obligates an adjustment to the business strategy to offer an inclusive marketing perspective that meets the exclusive needs of consumers towards the halal products (Gabriel, 2009). Besides prior scrutiny to the market data revealing the increased appetite will readily support its move, McDonald must manage the complexity of marketing the certified halal products despite its prowess in the fast food sector. Islam presents one of the largest religions with the fastest growth commanding a quarter of the world’s population. The global presence of this religion poses a profitable opportunity for organizations retailing food products that satisfy the strict Islamic dietary regulations (Amanullah, 2011). The statistical evidence of the economic leadership rests upon the global halal food market emerges in the worth of its contribution estimated $632 billion. Perhaps the striking perspective of its worth emerges in the remarkable economic growth of the countries hosting the largest Muslim populations, alongside the increasing per capita incomes. This fuels the increased appetite luring retailers to diversify into the halal products as the consumers are affording higher price levels (Gabriel, 2009). Equally, consumption of halal products seems beyond the limitation of Muslim religion as other believers seek it for its excellent reputation for healthier living, as well as, the humane treatment of slaughtered animals. As observed, the global halal market remained unaffected from the global recession, thus a cushion for McDonalds whose overall global sales stalled in the financial crisis. Finally, the changing lifestyles allowing higher income earnings in the Asian market comprising Indonesia, India and Malaysia, alongside the Gulf nations, offers substantial growth, unlikely for a local retailer to curb any soon.

The most promising strategy for McDonalds will obligate it to recognize the countries, revealing a lifetime value for the lucrative market and how to navigate successfully through its repeated formula that it captures its market leadership in fast food. Initially, venturing in the Asia Pacific region rolls out McDonalds to sustained growth rates characterized by increased purchasing power, affluent consumption and growing consideration for humane treatment for animals (Amanullah, 2011). Despite the potential of the market, the organization faces a huge challenge with the potential to generate a dysfunctional experience among the targeted clientele owing to its global criticism of unhealthy dietaries from leading fast food outlets. In particular, diversifying into the halal market seems a shift from the overly criticized fast food meals owing to the huge expenditure attributed to promoting unhealthy food products (Campbell, 2010). Consequently, embracing consumer segmentation would offer a practical entry structure for McDonald to illuminate the customer purchasing decisions that are primarily influenced by the Islamic beliefs.

Winning the Indonesian market for halal products necessitates McDonalds to wrestle down rival organizations, including KFC and Es Teler 77, as they form the prominent brands commanding 53% fast foodmarket value. However, outperforming the former seems easier given McDonald’s previous triumphs through its international expansion strategy in over 118 countries. The latter presents a challenging task as the leading local-chained brand in the fast food market and its rejuvenations through heavy below-the-line advertisements. Moreover, McDonald faces fierce competition for the same consumer segment readily familiar with the menus offered in Es Teler 77 outlets across the country (Chandra, 2011). Although tapping into the Indonesian halal market comprises a blend of its international expansion strategy, it varies from imposing a universal recognized brand to a segment valuing the Islamic approach to ethical consumerism. For instance, the recent awareness of Muslim beliefs has seen a rapid change in the definition of halal foods by what they mean rather than the ritual slaughter (Amanullah, 2011).

Although the methods upon which the halal foods were prepared remained relatively unchallenged in the prior generations, increased quest for heightened transparency during their production is on the rise. This arises from the increased awareness of the Muslim beliefs and cultural practices that align with their faith-based way of living. For example, the Muslim consumers in America suggest a more brandconscious and a declining sensitivity to the price levels, unlike the past. It implies that as the Muslim identity gel into their way of living, it exerts huge influence among the Indonesians in reaching their purchasing decisions (Amanullah, 2011). This explains why the majority prefers to purchase brands that support their Islamic cultural identity, thus leaving them with a feel of valued as an essential part of a wider consumer community.

The emphasis for value-based foods and ethical consumerism portray a divergent necessity that any organization would ignore to their self-made downfall. Importantly, a scrutiny to the ethical consumerism demonstrates an actual convergence between Islamic identity and Western values. These include environmental stewardship, natural ingredients, socially responsible corporations and sustainable production practices. Increasingly, their lifestyle converges to influence their purchasing decisions based upon organic foods, without preservatives and addictive. As McDonald experiences a rejuvenated American consumer segment compelling healthy processing, recycled packaging, and priority for ethical enterprises, a stringent measure lies inevitable amongst the affluent Indonesian consumer (Phillips, 2012).

Tracking the recent Indonesian consumer trends reveals that the pioneering manufacturers and retailers of halal foods embraced an emphasis on faith-based operation alignment. This considers the stress on prioritizing products that preserve beyond the customary rule-basis for religious slaughter. In view of this, the Indonesian population seeks the restoration of sacredness by prioritizing products that nurture their spiritual connection. It underscores establishing and sustaining the emotional connection with their culture through foods that appeal to their religious beliefs. For example, their cultural values trace to the frame of reference generated by tayyib as outlined in the Quran, as a directive to determine what is permissible from haram (Amanullah, 2011).

Exploring the tayyib through broadly demonstrates a set of cultural values translated to define the business ethics that every operator must exceed within the mainstream industry. Firstly, this arises in the application of Islamic principles to safeguard justice in social and economic platforms of transparency and empowerment. Secondly, the tayyib approach mandates consumers to demand more attention to the fundamental rituals of slaughter. Although this has attracted a controversial debate over the mechanical slaughtering, leading to an increased preference for halal products prepared through the traditional slaughtering method. It is for this reason that Muslims prefer brands whose halal products portray the commitment to hand-slaughtered meat (Amanullah, 2011). The cultural essence in the present ethical consumerism emerged from the spiritual connection with the Islamic tradition emphasizing humane treatment of animals.

The effective translation of the coveted values for the emerging audience in the halal food market, advocates for certification of halal product lines. This embodies the search for retailers exercising similar ethos and tayyib values in their halal products. As the Indonesian market for halal product matures, organizations must incorporate tayyib values in their brands to meet the demand for products that sustain the deeper spiritual connection (Amanullah, 2011). This suggests the entry of McDonalds into the Indonesian halal market, befits its global-but-local approach. Repeating the formula upon which the organization has continually adapted its global business, will allow it to incorporate menus that suit the tayyib values in the Indonesian market. For instance, changing the menus to offer vegetarian diets and non-beef meal in India has sustained the McDonald brand despite selling beef in other countries (Phillips, 2012).

The clearest demonstration of the willingness to pay for brands satisfying their spiritual connection, conveys a strong message that McDonald can barely ignore to cull the source of its product lines that seek to tap the growth of halal foods market. This places the task to implement its repeated global strategy of transplanting its core capabilities,and systematically upgrading them to mirror the expectations of consumers evident in their cultural values (Zook & Allen, 2009). Similar to other American companies moving global, the organization requires generating a platform that integrates a functional design to source and managing the preferred halal exports from Australia and India. Sourcing the halal products from the latter, would bring McDonald closer to the reputed exporters as most Islamic countries demonstrate huge confidence in the standards portrayed in the strict compliance with halal values (Kumar, 2014).

Besides the emphasis of transplanting their core capabilities in foreign cultures with minimal adjustments, American companies need a flexible strategic focus that blends with the regional environment. Initially, acquiring other local players would allow them to initiate an impressive network of subsidiaries that replicates AXA internationalization strategy. Furthermore, they may cull their home-built capabilities and deploy the transferable features that would allow them to capture the foreign potential without excessive sacrifice to their value creation. Equally, they could create new strategies that translate to overall enhancements to their existing features while generating additional value through their global competitive position. Lastly, starting joint ventures with overseas organizations would allow the American companies gain from the quick integration. This would enable them recombine the complementary capabilities to enhance their international value creation similar to the Tata Group expansion strategy. Nevertheless, they should evaluate their chosen strategy against its appropriateness, transferability and complimentary prior conclude it enhances their existing capabilities and advantages.

References

  • Amanullah, Z. (2011, June 8). Halal foods: An Islamic approach to ethical consumerism. Retrieved September 10, 2014, from http://www.patheos.com/blogs/altmuslim/2011/06/an_islamic_approach_to_ ethical_consumerism/
  • Campbell, D. (2010, August 12). ‘Statins with your Burger?’ Doctors Want Heart Pills on Menu. The Guardian.
  • Chandra, S. (2011, July). Franchising in Indonesia. Commercial Service.Jakarta
  • Gabriel, A. (2009). World Halal Business and Food Expo Held in Jakarta. . Jakarta: Kompas.
  • Kumar, K. (2014, March 14). Subcontinent seeks slice of halal market. Retrieved September 10, 2014, from http://www.chinadailyasia.com/asiaweekly/2014-03/14/content_15125416.html
  • Phillips, S. (2012, January 31). 10 Secrets of McDonald’s success. Retrieved September 10, 2014, from http://www.fool.com.au/2012/01/31/10-secrets-of-mcdonalds-success/
  • Zook, C., & Allen, J. (2009). Growth Outside the Core. Havard Business Review, 66-73.
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