GROUP ASSIGNMENT
COVER SHEET
STUDENT DETAILS
Student name: Ngô Quỳnh Trang Student ID number: 22003557
Student name: Nguyễn Khánh Trang Student ID number: 22002829
Student name: Hồ Minh Khôi Student ID number: 22003282
Student name: Lê Song Nguyệt Nhi Student ID number: 22003192
Student name: Student ID number:
UNIT AND TUTORIAL DETAILS
Unit name: Principles of Marketing – 3 Unit number:
Tutorial/Lecture: Tutorial Class day and time: Wednesday - 15:30
Lecturer or Tutor name: Ngô Viết Liêm
ASSIGNMENT DETAILS
Title: Final Report
Length: Due date: Dec. 10 at 23:59 Date submitted: Dec. 10
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Group Report Assignment
Nguyễn Khánh Trang
Principles of Marketing
December 09, 2022
Assoc. Prof. Ngo Viet Liem
Group Report
McDonald’s Marketing Strategy in Vietnamese market
Market Overview
Company Profile
Founded in the United States by Ray Kroc in 1940,
McDonald's is one of the largest fast-food restaurant
chain in the world, has more than 35,000 locations and
provides food to 70 million customers per day
throughout 118 nations (McDonald’s, 2017). Over
93% of McDonald's locations across the world are
owned and run by independent local entrepreneurs
(McDonald's, 2022b). It is also the second-largest private employer with 1.9 million employees, 1.5
million of whom work for franchises (IPL, 2022b).
Company Strategic Intent
Mission statement
McDonald’s duty is to "Make delicious feel-good moments easy for everyone.". Their mission is
summed up in four words, which are also their four policies to satisfy customers: Quality- Service-
Cleanliness- Value (McDonald's, 2022c). Specifically, they aim to serve food with high-quality,
along with “superior service, clean and welcoming environment, and great value for money”
(Introduction - McDonald’sTM Vietnam, 2017). These four principles serve as both the foundation for
McDonald's strategy and the guideline for the company's operations.
Vision statement
McDonald’s corporate vision is “to move with velocity to drive profitable growth and become an
even better McDonald’s serving more customers delicious food each day around the world” (Meyer,
2022).
Core value
McDonald’s operates by following their five core values: Serve- “ We put our customers and people
first”, Inclusion- “ We open doors to everyone”, Integrity- “ We do the right thing”, Community- “
We are good neighbors”, and Family- “ We get better together”(McDonald's, 2022).
Business Portfolio
Product Portfolio
McDonald's menu includes burger products, such as Big Mac or McMuffin, McFries, McNuggets,
desserts, pie, soft drinks, McCafé beverages, and other types of beverages (McDonald's, 2019). Their
restaurants also provide a range of additional goods for different short-term promotions, limited
breakfast menus, and special international menu items for each nation they serve. For instance, to
honor Vietnam National Day, McDonald's Vietnam introduced the Phở Burger, which comes with
two beef patties, one egg patty, cilantro, and pho-centric herbs (McDonald's, 2020). And also in
2021, McDonald's collaborated with BTS, and their partnership strategy of "The Famous Meal" set
off a fever not just in the US but also around the world (Hiền Phương, 2021).In order to satisfy the
needs of customers, it can be noticed that McDonald's products and items are becoming more diverse
and changing daily.
Business Performance / Company highlight achievements
With more than 35,000 stores across more than 118 countries and an estimated 1,8 million
employees, McDonald's is the largest worldwide food service retailer. McDonald's delivers a variety
of menu items prepared using high-quality ingredients to almost 25 million consumers each day in
the US. McDonald's promotes a culture of flexibility, opportunity, equality, and diversity (World
Branding Awards, 2022). McDonald's Vietnam received recognition in the Sustainable Development
Category of the most recent Golden Dragon Awards and Vietnamese Excellent Brand Awards 2019
for its future-proof implementation of advanced technologies in operating restaurants and enhancing
service quality (Viet Nam News, 2019). Since 2014, McDonald's has started serving Vietnamese
users, and as of now, there are 18 locations in both Hanoi and Ho Chi Minh City. By operating in
these two essential cities, their customers may get access to innovative technologies and services in
their stores.
Competitive Environment
In Vietnamese, there are two competitors that McDonald’s faces, which are direct and indirect
competitors. In terms of direct competitors, it includes Lotteria, KFC or Jollibee with speedy and
delicious meals. For indirect competition, which is healthier options (e.g local hip salad bars, poke
bars). By offering the aforementioned features and introducing more nutritional meals and wraps for
the health-conscious public, McDonald's has kept the interests of its customers.
SWOT Analysis
1. Strengths
Highly valuable & recognized brand
McDonald's strongest suit lies predominantly in its high brand value and recognition. As a case in
point, Statista Research Department (2022) reported that McDonald's placed sixth in terms of brand
value, at nearly 197 billion U.S. dollars. Furthermore, its global presence is an essential factor
supporting its widespread success. Its brand and logo are easily identifiable in all marketplaces. In
order to raise brand awareness and draw in new customers, the company has produced numerous
successful campaigns and commercials.
Strong international network
There are more than 38,000 fastfood restaurants spread over more than 100 nations, primarily
through franchising (McDonald's, n.d.-a), Mcdonald's is one that possesses widespread coverage
globally and a strong international network. Its leading market is the US, along with numerous
European and Western markets (e.g. the UK, Canada, Australia, France, and Germany).
Innovation and technology acquisition
To improve the customer experience, McD's is continually innovating and incorporating new
technologies (such as kiosks and mobile ordering apps). For instance, McDonald's is reported to be
testing a new restaurant design that implements contactless technology to optimize order speed and
accuracy for customers (Meisenzahl, 2022).
Positive environmental impact
As a leading fast-food organization, McDonald's profoundly influences the environmental situation.
“By the end of 2021, McDonald's was approximately 82.7% of the way toward its goal to source
primary guest packaging from renewable, recycled, or certified sources by the end of 2025”
(McDonald's, 2022d). Additionally, by the end of 2030, McDonald's aims to reduce greenhouse gas
emissions from its restaurants and offices by 36% from 2015. (McDonald's, 2022e).
Strong supply chain management
Mcdonald's supply chain is mainly responsible for the critical success of the fast-food giant. The key
to its supply chain management lies in the organization's effort to build trust and maintain strong
interpersonal relationships among suppliers. Moreover, the company has adopted excellent quality
standards and strict food safety measures (McDonald's Good Agricultural Practices, Supplier Quality
Management System, etc.) to maintain the smooth running of the integrated supply chain
(McDonald's, 2022a).
2. Weaknesses
Heavy reliance on franchising
More than 93% of McDonald's franchises throughout the world are owned and operated by
independent local business owners (McDonald's, 2022b). Henceforth, the system's biggest drawback
is its heavy reliance on each franchisor. McDonald's is under constant pressure to maintain a good
relationship with and effectively manage its franchisees lest they refuse to cooperate and their
financial performance is incompetent. For instance, Haddon (2022) reported that several owners
were caught off guard by and upset with the changes in the ownership rules proposed by CEO Chris
Kempczinski in an attempt to reinvigorate the business after the pandemic. It is vital that top
management at Mcdonald's are cognisant of and handle such occurrences well to ensure the success
and smooth sailing of the global fast-food corporation.
High dependence on the Western market
McDonald's is primarily reliant on markets in the West (UK, US, France, and Canada). On the
contrary, McDonald’s experienced low market share in nations like Malaysia, China, Singapore, and
India, indicating poor market penetration in Asian markets.
Lack of employee satisfaction
In recent times, Mcdonald's has faced dissatisfaction from its employees, which stems from unsafe,
poor working conditions and benefits. For instance, on May 2, 2022, employees at a McDonald's in
Los Angeles went on strike in protest of plumbing problems that had recently gotten worse and were
causing sickening odors (Sainato, 2022). In another case, on November 12, 2019, In the UK,
McDonald's employees struck from their jobs to call for higher pay and improved working
conditions (Kolirin & CNN Business, 2019).
3. Opportunities
Digital Marketing
McDonald's increased market share and revenue by integrating with the digitization process.
McDonald's uses a variety of digital marketing tools, including corporate websites and blogs, in
addition to social media platforms to advertise and interact with customers. For supply chain
management, franchise management, employee engagement, and consumer interaction, McDonald's
uses digital technologies.
Healthy innovations in the food menu
Health consciousness is gradually growing among today's young people. They favor low-calorie
diets and wholesome foods. McDonald's should therefore provide a menu that best suits the present
generation in order to attract more health-conscious and diet-appropriate customers and keep its
current ones.
Development in the Asian market
In recent years, Asia has seen significant growth and a surge in the spending power of middle-class
consumers. McDonald's needs to build market entrance plans for Asia that will serve as a reference.
The consumer base and income of the brand will grow as a result. There is a large need for fast food
among the current generation in nations like China, Singapore, Malaysia, and other Asian nations.
Many people like fast food because of its convenience and speed.
4. Threats
Rise of competitors
Many companies are strong competitors of McDonald's. In a global context, McDonald's faces
intense competition from other corporations, such as Burger King, Wendy's, and Subway. In the
Vietnamese Market, the fast-food giant main competition consists of Jollibee, Lotteria, KFC, and
many others. In order to stand out from the competition and attract and retain customers, the business
should prioritize its customers and invest in product and market research.
Market Segmentation and Targeting
Segmentation
McDonald's divides a larger market into smaller consumer groups using various forms of
segmentation. They are given below
1. Geographic Segmentation
McDonald’s Vietnam breaks its business into 2 different geographical segments:
- The Southern Vietnam: Ho Chi Minh City, and Khanh Hoa Province
- The Northern Vietnam: Hanoi City
These are the big cities in Vietnam, and they are also the places McDonald’s choose to open their
branches in Vietnam
2. Demographic Segmentation
McDonald’s mainly segments the market in below demographics, according to Dudovskiy (2022)
- Age: 8-45
- Life cycle stage: Newly married couples, youngest child six or over, young couples, teenagers,..
- Bachelor Stage: Young, single people not living at home
- Employment: Students, employees, professionals
3. Behavioral Segmentation (Dudovskiy, 2022)
- Degree of loyalty: Hard core loyal and switchers
- Benefits sought: Cost benefits, time efficiency
- Personality: Easy going and careless
- User Status: Potential and regular fast food eaters
4. Psychographic Segmentation
“McDonalds has adopted itself according to the convenience and lifestyle of the consumers”
(Dudovskiy, 2022), McDonald’s developes different and new product line which includes items like
Big Mac, Chicken McNuggets, Egg McMuffin. McDonalds also creates as a place to unwind as well
as entertain.
Market Targeting
Target Audience What they want Product/Service they use
Happy Meal with free toys
Kids (3-7 years) Healthier choice of fast food
Drive-thru, Takeaways,
Families Weekend outings or meals
McDelivery, Happy Meal
Students Meals, Outlets, 24
Students A place to hang out or study
Hrs
For quieter ambience, a place to relax or
Cafe-goers McCafe
read or even business entertainments
Drive-thru, Takeaways,
Working Adults Seek Convenience meals, “Grab & Go”
McDelivery, 24Hrs
Source: Huong (2017)
Differentiation Strategy
The model of buying with drive-service makes Vietnamese McDonald’s different from other
competitors such as KFC, Burger Kings, when entering Vietnam. This strategy focuses on busy
people, thanks to drive-through service, customers can order and get their food in two minutes
without parking, which is a big plus for the brand when the Vietnamese economy has long been
considered a "motorcycle" economy. In addition, another service of McDonald’s that distinguishes it
in Vietnam is applying Kiosk technology in ordering products. Before they ever reach the counter,
customers in line are given electronic handheld devices on which to place their order. This approach
saves a lot more time. Generally speaking, it can be seen that the customer services differentiate
McDonald’s from other fast-food branches in Vietnam. (Mai Anh et al., 2014)
Brand positioning
McDonald’s positioned itself on 5 values: Serve, Inclusion, Integrity, Community, and Family.
Positioning Maps (compare competitors’ value proposition)
It can be seen in the map, two criteria chosen are the price and other things (service, location,
variety). As in the map, McDonald’s sells their products with the highest price compared to other
competitors. Moreover, in comparison with KFC, which is also a Western fast-food branch, it is
more successful than McDonald’s in providing a lower price for Vietnamese customers as well as the
better service, location and variety. However, compared to local competitors, McDonald’s is ahead
of them in meeting the need in services, accommodation or variety.
Recommendation: Due to the STDP model we can see that McDonald's has been able to reach each
of its consumers by offering the services they require. Furthermore, McDonald's distinguishes itself
from rivals by using modern technology into their sales process. In addition, the diversification of
dishes in the menu also helps McDonald's attract potential customers. With its campaigns,
McDonald's needs to further promote the above strategies to compete with Vietnamese fast-food
competitors.
McDonald's 4Ps of Marketing
1. Price
McDonald’s main pricing strategy is value-based pricing. Their objectives are to pay attention to
consumer feedback, put a lot of work into products that customers are certain to desire and charge
appropriately, and avoid spending money on less important items that customers might like (Wells,
2019).
For the economy pricing, McDonald's operates on a cost leadership philosophy. And as a result, its
meals and beverages are sold at reasonable costs. Customers of the fast food establishment can enjoy
a meal for a portion of what most other eateries charge (John, 2022).
Psychological pricing strategy is also placed at the core of McDonald's pricing strategy. The fast food
chain specifically employs a Price Point Perspective (PPP) of 99,000 VND rather than
100,000 VND (IPL, 2022a).
Overall, in addition to attracting customers with its pricing promotions, which can be successful in the
short term, McDonald's could face failure in the Vietnam market if it continues to adopt Western
pricing to the country along with the average Vietnamese income level.
2. Place
In each of the nations they serve, McDonald's uses a different distribution strategy. In various nations,
the restaurant offers home delivery in addition to technology driver platforms. This service has given
their customers more options by signing delivery contracts with companies like UberEats, or Baemin,
Grab, Be, and ShopeeFood in Vietnam. Many McDonald's restaurants are open 24/7, which serve as
an illustration of intense distribution, and refer to making things available for purchase through all
available channels. This service also aids the restaurant in boosting earnings and sales.
Other channels of distribution are also used by McDonald's. Their drive-thru service is one of their
most well-known offerings. The McDonald's restaurants are usually located on the busiest streets with
the intention of capturing the volume of customers entering and exiting the building both during
business hours and after hours.
Additionally, McDonald's is accessible online. They appear on Facebook, one of the most popular
social media platforms in Vietnam, which has a big online community and potential audience, many
of whom are young. The target market for the fast food sector is therefore between the ages of 15 and
30, as well as the group of potential customers between the ages of 5 and 14. Advertising over the
Internet thus has a concentrated audience that is suitable for both of these age groups.
The average standard of living is rising. It stands to reason that the two locations in Ho Chi Minh City
and Hanoi, where the GDP per capita is substantially higher than the national average, will be put into
action first. With higher income, customers in these cities may afford to spend between 4 and 6 USD,
which is around VND 96,000 to VND 144,000 on a McDonald's dinner. Furthermore, as a result of
urbanization, Vietnamese people's spending patterns and lifestyles change, especially those of young
people. Their fast eating or fast drinking habits, and industrial life all contribute to the rapid growth of
fast food. If eating fast food in the US is considered to be a common practice, then the concept of "fast
food" in Vietnam has undergone significant changes due to cultural differences.
3. Product
McDonald's is one of the successful fast food franchises in the world. “Their main products include
breakfast, burgers, fries, chicken, munchies, desserts & shakes, salads, and beverages” (Rahman,
2017). They offer customers a range of choices, which could be analyzed through the product portfolio.
The core customer value is the most fundamental level, which addresses the question: " What is the
buyer really buying?". For McDonald’s, people who buy food or drink are buying much more than.
They are buying convenience, quality of food, and connectivity with friends and family.
At the second level, product planners must turn the core benefit into an actual product. They need to
develop product and service features, a design, a quality level, a brand name, and packaging. In this
case, McDonald’s burger- Big Mac is an actual product. For the quality of food, its ingredients include
the burger buns with 2 layers of beef, cheese, fresh vegetables and Big Mac sauce, creating a big size
burger for one person. The Big Mac is then wrapped with paper and served to the customer.
Finally, by providing extra customer services and benefits, product planners must create an augmented
product around the primary benefit and actual product. Big Mac and other McDonald's items are more
than just meals. They offer nourishment to consumers as well as a means of social interaction. As a
result, customers who eat the Big Mac or any other item from McDonald's will receive a warm
welcome, a welcoming setting in which to communicate, and the assurance that the food is safe each
time it is purchased by customers, should there be any issues with the company's products. They also
connect convenience through their ordering apps, websites, restaurants or drive-thru services as well
as packaging, and eating areas.
4. Promotion
Mission-Communication Objectives: With the mission of “To make delicious feel-good moments
easy for everyone.” McDonald’s Vietnam communication objectives focus mainly on buyers who
are in the “liking-preference-conviction” stages.
Promotion Mix
Advertising
McDonalds is the brand that spends the most amount of money out of all fast food chains on
advertisement. The firm employs a variety of advertising techniques, especially Out of home (OOH)
advertising. McDonald’s displays great creativity in their OOH advertising, through billboards and
other mediums, to make their products and other activities more memorable in the minds of
consumers.
Sales promotion
McDonald's employs techniques for promoting sales such as menu upgrades, gift cards, marketing
campaigns targeted at particular demographics, digital initiatives, and a concentration on breakfast
sales (Reference, 2020). McDonald's is renowned for its toys, scratch cards, and other extras that
come with combo dishes like the Happy Meal. Specifically, scratch cards are another promotional
strategy that is used to advertise combo meals. Additionally, Mc Donald's also offers value meals
and econo-meals.
Organic food and healthy eating are becoming more and more important in today's consumer society.
McDonald's has therefore developed a strategy to keep their current consumers while also attracting
new ones by releasing Meals intended for Healthy Eating. Happy Meals were created by the firm with
the goal of encouraging kids to eat healthily. Additionally, the group has partnered with DreamWorks
Animation to promote a line of toys featuring characters like Shrek, Donkey, and Puss in Boots to
promote fruit, vegetables, low-fat dairy, and fruit juice. They also have meals on the menu for this
campaign that have less than 400 calories (UKEssays, 2018).
McDonald's has attempted to break through the consumer base that purposefully avoids fast food
because they believe it to be unhealthy and fatty by encouraging healthy eating. This is a creative
advertising strategy that will help the business by adding a new consumer base segment to the
company's existing database.
Personal selling
Good customer relationships are built through personal selling. The best illustration of human
engagement in personal selling is provided by McDonald's salespeople who operate in distinctive
outlets. In a straightforward manner, the employees provide client services with face-to-face
interactions, which are more convincing and effective (IPL, 2020). This strategy also helps
McDonald's to keep their consumers going back to dine at their locations. Since a variety of customers
are happy with the service received, it is evident that personal selling is done very effectively overall
at McDonald's.
Public relations (PR)
Within public relations, McDonald's has also taken part in significant occasions that convey a
positive message. “McDonald's has been a long-standing sponsor of the Olympics and the World
Cup, with its exclusive deals ensuring it is the only branded restaurant on site” (Gibson, 2011). For
instance, throughout the Olympic Games Rio 2016, on-site lunches were given by McDonald's for
the players, coaches, and officials in its International Zone Restaurant, alongside a Dessert Kiosk for
spectators in the Olympic Park (International Olympic Committee, 2016). In another story,
“McDonald's has initiated the McDonald's Player escort program, giving more than 1,408 children
from 69 countries a chance to walk hand-in-hand with their football heroes at the 2010 FIFA World
Cup in South Africa” (Shout-Africa News, 2010).
By collaborating with such well-known global events, McDonald's intends to generate buzz to
promote a firm brand image that closely identifies with the youth, attracting new customers from all
over the world to encourage higher sales growth and form meaningful consumer relationships with
them.
Direct and digital marketing
In an era of rapid advancement in digital marketing, McDonald's has used a variety of innovative
approaches, including social media marketing and email marketing.
Social media marketing
McDonald's is a well-known organization with a significant reputation throughout the world, and it is
active on several social media networks. Due to their prominence as a recognized global brand, they
benefit from using social media to concentrate on keeping current followers and brand aficionados.
As of November 2022, McDonald's accumulated 81 million likes on Facebook, 251k followers on
Twitter, and 4.5 million followers on Instagram. On its social media channels, McDonald's portrays a
friendly, humorous persona to facilitate a relatable image with consumers worldwide (Giraffe Social
Media, 2021). Furthermore, McDonald's routinely responds to online complaints and concerns from
disgruntled customers and offers assistance to fix the problem.
Setting Brand Strategies
According to the product Life-Cycle Strategies, McDonald's is demonstrating common
characteristics in the decline stage - low profits and low growth rates - due to high competition from
other fast-food chains locally. For example, a piece of Big Mac in Vietnam currently costs about
69,000 VND (~3 USD). While this price is often considered reasonable and fair for the Western
market, it is quite expensive and unsuitable - often regarded as premium food - for daily purchases
with the current level of income in Vietnam. Meanwhile, KFC and Jollibee's most expensive
hamburgers only cost 50,000 VND. Given these price discrepancies, KFC and Jollibee have a
significant competitive edge over McDonald's in captivating customers to frequent their restaurants
and generating higher profits. To alleviate this problem, McDonald's needs to decide on an
appropriate marketing strategy for its product to convince consumers that the benefits and values
accompanying the products justify its high price.
Market-Target Market and Customer Insight
Customers/Partners Relationship Management
Build engagement and strong relationships with chosen customers: McDonald's always has great
deals for its customers. For new customers, they give them Free bonuses and points for first
purchase. And for loyal customers, redeem points for rewards is bonused.
Build strong relationships with marketing partners: McDonald’s Vietnam partners with timo
delivery apps, such as Grab, Gojek, Shopeefood,.. They build strong relationships with their partners
by promoting their partners and bringing new customers value (increase convenience for customers,
give customers more choices,...)
Conclusion
Overall, McDonald's uses effective marketing strategies to introduce a distinctive fast food brand to
the Vietnamese market. With marketing efforts, McDonald’s has runned their advertising campaigns,
cooperated with brand partnerships, used cutting-edge, specialized equipment, and services in major
Vietnamese cities in order meet the customer’s need, demand, and want. However, the problem of
higher prices is one of the biggest reasons for McDonald's failure in the Vietnamese fast food market
compared to local brands. Therefore, an appropriate price policy should be applied by McDonald’s
as soon as possible.
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