mc donald - india

8/4/2019 Mc Donald - India

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MC DONALDS CASE

Introduction:

What is Mc Donalds?

Its a chain of fast food restaurant introduced in 1940 by Dick and Mac McDonald andexpanded and modified by Ray Kroc. The based values of McDonalds is serving products to itscustomer with good quality, fast, clean and very well controlled from the first part of the

productions chain [Quality, Service, Cleanliness and Value (QSC&V)]. To clear it, as last partof the chain, McDonalds guarantees to the customers that the products served had a series of norms defined by the company in order to quality and food safety satisfaction. For example; TheBig Mac burger is made by a specific process. The bread has to be toasted for 30 seconds at 218degrees and the meat for 43 seconds at 177 degrees. These standards are imposed by thecompany which hires partners to control them. A lab company controls the food safety at twicein a month for each restaurant. A mysterious company checks if the service values are met.

The job of McDonalds is to reach daily the objectives fixed by the company. And these valuesare the same all over the world. In India, in the United States or in France. The only difference

between McDonalds in these countries, for instance, is the adaption of some products relative tothe countrys culture.

History:

Introduced by Dick and Mac McDonald, McDonalds started like a barbeque typical drive -infeaturing a large menu and car hop service. In 1948, the barbeque was closed during 3 months torenovation and the original menu was applied with burgers, French fries and milk-shakes for 15cents. The McDonald's concept was introduced in San Bernardino, California and it wasmodified by their business partner Ray Kroc who later bought out the business interests of theMcDonald's brothers in the concept and went on to found McDonald's Corporation.; for red colorand white tiled building with the Golden Arches reproduced by the architect Stanley Menson in1953; and expanded over the United States. The University of Hamburger was open 1961 in theMcDonalds restaurants basement. Graduates recei ve Bachelor of Hamburgeology degrees.Hamburger University has emphasized consistent restaurant operations procedures, service,


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quality and cleanliness. It has become the companys global center of excellence for McDonaldsoperations training and leadership development.

February 24, 1961, Hamburger University's first class of 14 students graduated

Today, more than 5,000 students attend Hamburger University each year Since 1961, more than 80,000 restaurant managers, mid -managers and owner/operators have

graduated from this facility

At McDonalds, the training mission is supposed to be the best talent developer of people withthe most committed individuals to Quality, Service, Cleanliness and Value (QSC&V) in theworld. Its strong commitment to the training and development of the People has resulted in manyfirsts and honors, including being

The first restaurant company to develop a global training center

The only who has received college credit recommendations from the Ameri can Council onEducation (ACE), the United States oldest and most recognized unifying body for higher education

Continually recognized for excellence in training

Ray Kroc once said, If we are going to go anywhere, weve got to have talent. And, Im goingto put my money in talent. Hamburger University continues to promote that philosophy,everyday.

From its initial roots, today McDonalds is a powerhouse of the food service retailer industry.With over 30,000 restaurants spread around the globe, McDonalds serves in excess of more than52,000,000 people in over 100 countries each day. In addition to this they hold the leading sharein the globally branded quick service segment of the fast food industry.


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Global Environment PESTEL

POLITICAL ENVIRONMENT :

The armed forces have to be kept prepared and well equipped to repel any external threat

Political activists were coming in front of McDonalds to criticize their menu againstvegetarians, as a result, McDonalds added to the menu the tantalizing McAloo Tikki Burger (breaded potato and pea patty) to lure Indias middle class and political activists

Human Right/Trade Union

Availability of real estate is crucial for success in the retail business. Getting quality realestate was an issue. McDonald's either does outright purchase or enters into long lease of 25years. Rent control laws, housing societies unwilling to enter into long term leases and requiredclearances from multiple authorities made acquisition of real estate a difficult proposition

At the federal level, India is the most populous democracy in the world. While manyneighboring countries witness frequent coups, Indian democracy has been suspended only once.

Nevertheless, Indian po litics is often described as chaotic. More than a fifth of parliamentmembers face criminal charges.

As with many developing nations, corruption is widespread in India (India is ranked 85 outof a 179 countries in Transparency Internationals Corrup tion Perceptions Index). Corruption hastaken the role of a pervasive aspect of Indian politics and bureaucracy

At the federal level, India is the most populous democracy in the world. While manyneighboring countries witness frequent coups, Indian democracy has been suspended only once.


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Nevertheless, Indian politics is often described as chaotic. More than a fifth of parliamentmembers face criminal charges.

As with many developing nations, corruption is widespread in India (India is r anked 85 outof a 179 countries in Transparency Internationals Corruption Perceptions Index). Corruption hastaken the role of a pervasive aspect of Indian politics and bureaucracy

At the federal level, India is the most populous democracy in the w orld. While manyneighboring countries witness frequent coups, Indian democracy has been suspended only once.

Nevertheless, Indian politics is often described as chaotic. More than a fifth of parliamentmembers face criminal charges.

As with ma ny developing nations, corruption is widespread in India (India is ranked 85 outof a 179 countries in Transparency Internationals Corruption Perceptions Index). Corruption hastaken the role of a pervasive aspect of Indian politics and bureaucracy

Problems with real state

ECONOMICAL ENVIRONMENT:

The economy of India is the twelfth largest economy in the world by market exchange rates andthe fourth largest by purchasing power parity.

The gross domestic product (GDP) is a basic measure of a country's overall economicperformance. It is the market value of all final goods and services made within the borders of acountry in a year. It is often positively correlated with the standard of living though its use as astand-in for measuring the standard of living has come under increasing criticism and manycountries are actively exploring alternative measures to GDP for that purpose.

The GDP of India is 1,237,000 (last estimated in 20 08)


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The GDP (Purchasing Power Parity) is estimated at $3.297 trillion U.S. dollars in the year 2008

The GDP - real growth rate in India in 2009 is 6.1%

The GDP per capita in India in 2008 was 1100 Unemployment rate in India: 6.8% in 2008

Inflation rate in India: 8.3%

Foreign direct investment rose to about $16 billion from just $5.5 billion

Indias per capita income is expected to reach 1000 dollars

Corruption in India

Hindu rate of growth is a controver sial and derogatory expression used to refer to the lowannual growth rate of the economy of India before 1991, which stagnated around 3.5% from1950s to 1980s, while per capita income averaged 1.3%The slow India growth rate is betterattributable to India's government regulatory policies (sarcastically called Licence Raj) ratherthan to a specific religion or to the attitude of the adherents of a particular religion.

The economy was characterized by extensive regulation, protectionism, and publicownership, leading to pervasive corruption and slow growth. Since 1991, continuing economicliberalization has moved the economy towards a market-based system. A revival of economicreforms and better economic policy in 2000s accelerated India's economic growth rate. By 2008,India had established itself as the world's second-fastest growing major economy. However, theyear 2009 saw a significant slowdown in India's official GDP growth rate to 6.1%

GDP Composition by sector in 2008 was 53.4% Service, 29% Industry and 17.60%Agriculture and the labor force which was 523.5 million in 2008 was divided into 60%Agriculture, 28% Service and 12% Industry.

SOCIAL-CULTURAL ENVIRONMENT:

India Population: 1,166, 079,217 in July 2009

Age stru cture:

0-14 years: 31.1% (male 190,075,426/female 172,799,553)


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15 -64 years: 63.6% (male 381,446,079/female 359,802,209)

65 years and over: 5.3% (male 29,364,920/female 32,591,030) (2009 est.)

Population Growth rate: 1.548% in 2009

Muslims populate the world, representing 23% of an estimated 2009 world population of 6.8 billion. With 60% in Asia and 20% of Muslims living in the Middle East and North Africa

Muslim people dont eat meat, pork

In India, religions are divided by Hindu which are 80.5% of the population followed byMuslim 13.4%, Christian 2.3%, Sikh 1.9% and others 0.1%.

Many Hindus embrace vegetarianism to respect higher forms of life. Vegetarianism ispropagated a satvic (purifying) lifestyle. Estimates of the number of lacto vegetarians in India(includes adherents of all religions) vary between 20% and 42%.The food habits vary with thecommunity and region, for example some castes having fewer vegetarians and coastalpopulations relying on seafood. Some Hindus avoid onion and garlic, which are regarded asrajasic foods. Some avoid meat only on specific holy days. Observant Hindus who do eat meatalmost always abstain from beef. The cow in Hindu society is traditionally identified as acaretaker and a maternal figure and Hindu society honors the cow as a symbol of unselfishgiving.

ENVIRONMENTAL:

The rapidly growing population and economic development are leading to the

environmental degradation in India through the uncontrolled growth of urbanization andindustrialization, expansion and massive intensification of agriculture, and the destruction of forests.

Water shortages, soil exhaustion and erosion, deforestation, air and water pollution afflicts many areas.

Downstream, the untreated water is used for drinking, bathing, and washing.

Indian cities are polluted by vehicles and industry emissions. Road dust due to vehicles alsocontributing up to 33% of air pollution

TECHNOLOGICAL ENVIRONMENT:

The effect of the technologically inclined services sector which includes the IT industryin India accounting for 40% of India's GDP and 30% of export earnings as of 2006, whileemploying only 25% of its workforce.


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The share of IT (mainly software) in total exports increased from 1 percent in 1990 to 18percent in 2001.

LEGAL ENVIRONMENT:

Cow -slaughter is legally banned in almost all states of India except in two states: thestates of West Bengal and Kerala. Cows are routinely shipped to these states for slaughter, eventhough it is illegal to transport cows for slaughter across provincial borders. However, manyillegal private slaughterhouses also operate in big cities such as Mumbai. While there areapproximately 3,600 slaughterhouses operating legally in India, there are estimated to be over30,000 illegal slaughterhouses. The efforts to close them down have so far been largelyunsuccessful.

Licence Raj, also the Permit Raj refers to the elaborate licen ces, regulations and theaccompanying red tape that were required to set up and run businesses in India between 1947

and 1990.The Licence Raj was a result of India's decision to have a planned economy where allaspects of the economy are controlled by the state and licences are given to a select few. Up to80 government agencies had to be satisfied before private companies could produce somethingand, if granted, the government would regulate production

Protectionism is the economic policy of res training trade between states, throughmethods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictivegovernment regulations designed to discourage imports, and prevent foreign take-over of localmarkets and companies

BEEF FRIES CONTROVERSY

One person decided to ask the manager of McDonalds in India if the was some beef in theoil for making the french fries, and the manager said yes, there is a little bit

Mc Donalds french fries contained beef (7% co ttonseed oil and 93% beef tallow)

Use vegetable oil to make the fries in the future

Unique flavour

How to keep the customers who were accustomed to beef -flavoured fries?

SUPPLY FORCES:

McDonalds had been working on its supply chain even before it opened its first joint in thecountry


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Special system: Cold Chain

Local sourcing

Suppliers :

Trikaya Agriculture: iceberg lettuce

Vista Processed Food: chicken and vegetable

Dynamix Diary: cheese

Amrit Food: UHT milk and frozen dessert

Radhakrishna Foodland: distribution and cols storage(for Delhi and Mumbai)

Mc Cain: French Fries

SWOT ANALYSIS:

STRENGHTS

World known brand & logo

Easily adapted products to different c ultures

Hamburger University/Training

Global locations

Assembly line style

Serve well known brand name (like Nestl, Heinz)

Nutrition information (The first restaurant of doing that)

Inspections checks for its food safet y (more than 2000)

Certified Suppliers

WEAKNESSES:

Less able to compete with fast food pizza chains

High employes turn over led to money spent in training

Capitalize on organic food

Problems with fluctuations in operatin g and net profits


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Low product awareness and absence of infrastructure and supply chain

OPPORTUNITIES:

Top order & delivery system (Delivery based on computer less or more products)

Upscale restaurant design (Same design everywhere, less money spent with architect)

Allergen free food

Possibility for workers to obtain stock options (every month employees can put 300 Euroswith interests which goes to McDonalds and they can have it for their marriage)

Organic food (Big Mac with complete bread, 10% less calories)

THREATS:

Parents criticism

Sued for having unhealthy food

Documentary Super Size Me & M6

Any contamination of the food supply

Competitors

High investments and population couldnt pay high prices

No availability of real state

MARKETING MIX 4 Ps

PRODUCT:

Menu especially for India with vegetarian selections to suit Indian tastes and culture

Vegetarian and non-vegetarian burgers

Committed to source almost all of its products from within the country.

McDonalds does not offer any beef or pork items in India


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The sauces and cheeses are also 100% vegetarian

Serves onlu Chicken and Fish in India

PRIC E:

McDonalds menu is priced at a value that the largest segment of the Indian consumers canafford.

Price lower than Pakistan and Sri Lanka and 50% lower than the US

PROMOTION:

Prime focus is on targeting children with happy meals and toys

Used Medias like TV Advertisements, hoardings, bus shelters, billboards

Sponsor many TV programs like: kaun Banege crorepati, Children shows

Uses 80-20 Menu boards (80% visual and 20% descriptive)

Descriptions of the burgers on paper mat

Collaboration by Coke, MTV, Hungana, Sony music

Very cachy punch line Aap ke zamane mein, baap ke zamane ke daam to attractmiddle and lower class consumers

PLACE:

McDelivery system

MARKETING PLAN:

McDonald's plans to open another 40 restaurants across India, bringing the total to close to200

Expands its segmentation as it tries to lure the middle and low -income class


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Invests to renovate its restaurants that customer can surf web, download email, image aswell as listen to music while they are enjoying their McDonald

Try to roll out new products at gain more new customers

CONCLUSION:

McDonald brand has a strong position in India market with the appearance in 30 cities.

McDonald India is the leader in the fastfood market in India.

McDonald has succeeded in adapting to India culture.

RECOMMENDATIONS: MCDonald should primarily focuses on pricing in India. Try to cut price as much as

possible to attract more customer from middle and low income class.

Focus on the social and charity activities to help the children in India.

Open Ronald McDonald House Charities in India.

New products that adapt culture and taste of Indian

Becaref ul with what you eat

Try to eat less grease, less salty and make exercises often

Worlds leading food service retailer McDonalds has more than 32,000 restaurants serving over 50 million

customers each day in more than 119 countries.


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McDonalds competitors in India McDonalds competes with fast food chains like Pizza Hut, Dominos Pizza,

Papa Johns, Nirulas and KFC in India.

McDonalds Supply Chain McDonalds has a dedicated supply chain in India and sources 99% of its products

from within the country. The company has strong backward integration right up to the farm level.

Quick service restaurants in India By October 2009, McDonalds India had more than 170 quick service

restaurants in India. Dominos Pizza, which began operati ons in India in January 1996, has over 275 stores

across 55 cities in the country. KFC has 46 restaurants across 11 cities in India. (KFC is one of the 5 brands

owned by Yum!. KFC is a $12 billion global brand and a leading quick-service restaurant (QSR) in many

countries.) Nirulas, one of Indias oldest food chains (completed 75 years in service in March 2009), has a

network of around 62 outlets in five states across Northern India. Nirulas, established in 1934 has interests in

hotels, restaurants, ice c ream parlours, pastry shops and food processing plants. Nirulas was the first to

introduce burgers in India.

Food Industry in India In India, food industry and particularly informal eating out market is very small. In India,

over quarter of a million cu stomers visit McDonalds family restaurants every day. The Indian fast food market is

valued at $1-billion (Rs 4,547 crore) aprrox.

MFY (Made for You) food preparation platform MFY is a unique concept (cooking method) where the food is

prepared as the cu stomer places its order. All new upcoming McDonalds restaurants are based on MFY. This

cooking method has helped McDonalds further strengthen its food safety, hygiene and quality standards.

McDonalds has around 10 MFY restaurants in its portfolio.

How M cDonalds manages to keep its prices down? Fast-food chains face a tough time balancing between

margin pressures and hiking prices which can hurt volumes. Consequently, the chains have to increase rates or

rework their strategies. Affordability has been the cornerstone of McDonalds global strategy. Some of its

measures to achieve this include Bulk buying, long-term vendor contracts, and manufacturing efficiencies .

McDelivery Online In India, McDonalds first launched home delivery of meals in Mumbai in 2004. McDonalds

now has plans to launch web-based delivery service in India (across 75 McDelivery cities) in 2010, a pilot for

which has already been tested by it in Hyderabad. The company hopes to add 5 per cent to sales via Web

delivery. McDonalds w eb-based delivery model will be based on serving the customer quickly wherein the drive

time does not exceed seven minutes because its food has to be eaten within ten minutes of preparation. The

footfalls in India are amongst the highest in the world, but the average bill is amongst the lowest. At present

(March 2010), Dominos Pizza (operated by Bhartia Group -promoted Jubilant Foodworks under a master

franchise agreement) has a 65% market share in the home delivery segment .

Most Preferred Multi Brand Fast Food outlets : In 2009, McDonalds India won the CNBC Awaaz Consumer

Awards for the third time in the category of the Most Preferred Multi Brand Fast Food outlets.


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McDonalds India in 2010 In 2010, McDonalds India plans to open 40 more outlets. The compa ny has also

earmarked a budget of Rs 50-60 crore to market its new products and initiatives for consumers. Its new marketing

campaign is titled Har Chotti Khushi Ka Celebration in other words celebrate little joys of life where it

positions McDonal ds as a venue for enriching life of consumers. In South India, McDonalds has 29 outlets and

plans to add 10 more by end of 2010.

Taco Bell in India In March 2010, Taco Bell, the Mexican specialty chain owned by US-based fast food brands

operator Yum! Restaurants launched its first outlet in Bangalore, India. The company which also operates brands

like Pizza Hut and KFC plans for contract farming to open up to 100 outlets by 2015 and also expand into Tier-II

and -III Indian cities eventually.

Local Vegetarian Menu : In India, McDonalds does not offer pork or beef -based products. Its menu is more than

50 per cent vegetarian. The fast food retail chain has separate production lines and processes for its vegetarian

and non-vegetarian offerings.

High Real-Estate costs in India : In many countries, in a Quick Service Restaurant (QSR) a customer comes in,

buys and then leaves. This is known as a revolving door concept . But an Indian customer believes in a dine-in

culture . This adds to the real estate costs which goes as high as 20-25 per cent as compared to 10-15 per cent

globally.

The most important meal for QSRs- Morning Meals (Breakfast) :According to market research company, the

NPD Group, breakfast accounted for nearly 60 per cent of the restaurant industry s traffic growth over the past

five years in the U.S. Quick service restaurants sold 80 per cent of the over 12 billion morning meals served at US

restaurants for the year ending in March 2010.

OOH Branding : According to Rameet Arora, senior director mar keting, McDonalds India (West and South),

McDonalds India may be the largest out -of-home branding (OOH) in the country. McDonalds India has restarted

OOH (out-of-home branding) after a 7 to 8 year break to reach to their target group.

Employees and Customers : In India, McDonalds employs 5,000 people and serves half a million customers a

day via its 169 family restaurants. McDonalds has 85,000 employees and serves 2.5 million customers a day in

the UK.

KFC New Menu Streetwise In February 2011, KFC, the fast food retail chain announced a new menu

called Streetwise to offer products at more affordable prices to attract the college crowd. KFC has around 108

stores in India and Streetwise would help it compete better against McDonalds youth brand of fering in India

(products priced at Rupees 20). KFCs products were typically priced between Rs 65 and Rs 500 but with the new

menu between Rs 25 and Rs 100.

The Indian fast food culture is here to stay, and its getting bigger each year, says Shubhrans hu Pani, Managing Director Retail, Jones Lang LaSalle India.


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The American fast food brands such as McDonalds, Pizza Hut and various others have latched on to the heightenedlifestyle aspiration of a young, cash-rich and not necessarily fastidious younger generation. The demand from thisretail segment for prime space in Indian malls and high streets continues with little signs of slowing down.

What the statistics say According to a study by the McKinsey Global Institute, India's 300-million-strong middle class will grow to a whopping583 million by the year 2025. India's youth, which have emerged as the major economic drivers on the heels of theIT/ITeS and BPO culture, are spending enormous amounts of time and money on ex-home lifestyle activities.

Nor is the action confined to the metros alone though, with thirty-five cities housing over a million people ascompared to Americas nine, these are still the primary catchments.

Nonetheless, Tier II/III towns are catching up. International software companies, which are not necessarily CBDoriented, are setting up shop in Indias smaller cities, bringing along the legendary Indian Retail Mania. And fast foodis an inalienable component of this trend that is sweeping every corner of the nation. In fact, in a period where theeconomic slowdown had put a damper on most retail space-related transactions, many fast food chains continued tosnap of prime space for their expansion plans.

The psycho-sociological aspect Foreign and domestic fast food franchis es are targeting the Indian yuppies yen for everything American everythingthat spells life in the fast lane and reflects a break from the traditional partisan mindset of the previous generations.

Thanks to a decisive break from traditional family formats and the birth of the Indian Dual- Income Family, Indiasmiddle class is rapidly turning into a eating out lot. In fact, the money that this component is spending on eating outis growing at an annual rate of 20 percent. There has also been an exponential rise in urban working women jugglinghome and job situations found fodder for fast food chains capitalizing on the available time crunch. Satellite TV,print glossies, the radio and focused advertising in glitzy malls and shopping complexes pitch in to

feed the craze for glamorous and convenient foreign and domestic fast food products.

Hardcore marketing There is scientific marketing psychology at work here. The Indian versions of foreign fast food brands cannot survivewithout adapting to the hi ghly individualistic Indian palate. The Indianized versions of Italian and American fast foodproduct lines reflect a scientific process of adaptation. To illustrate, witness the McAloo Tikki and the tandoori pizza.Witness how a major fast food chain knuckles under when certain segments of Indian society protest against aforeign food-production process or ingredient.

The message is on the wall in broad paint-strokes of mustard and Tabasco sauce: global fast food brands are takingIndia seriously. Very seriously indeed. And why not? In the final analysis, India Shining is all about increasedspending power and an increasingly globalized scenario. The increased demand for foreign fast food brands is drivenby higher disposable incomes, higher aspirations and a fundamental shift in overall mentality. Moreover, iconic fastfood chains like McDonalds earn the largest part of their overall revenue outside.

Indian Malls the ideal platform Indian mall developers have zeroed in on the fast food juggernaut and refined their marketing strategies for foodcourts. In the early days, malls developers established and managed their own food courts. At that phase, food courtswere just a low-profile component of the overall mall experience. Today, since these have become specialty areas,mall developers ask professional restauranteurs and established fast food brands to take the allotted space over.

These, in turn, have turned food court visits into stand-alone experiences in their own right. The result is increasedcompetitiveness among fast food brands resulting in saturation advertising campaigns that further whet the Indianappetite.


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In fact, the collective food and beverages industry in India has evolved from being retail's poor cousin to being thesector with t he dominating edge. As the Indian populations taste for fast food evolves along with its spending power,the industry can only thrive.

However, India may still have some way to go in understanding all the parameters involved. Indian consumers tend to

lac k the level of awareness prevalent in these fast food chains countries of origin. While American consumers requirequite a bit of accountability for adherence to nutritional and food safety norms, fast food chains sometimes capitalizeon the fact that Asian parameters are not nearly as exacting.

There is a lot more involved than glamour, after all. Indian consumers need to learn to look beyond the seductivepower of multinational food chains. In fact, this is already happening. The latest trend in fast food chains is towardsnutritional food that excludes potentially harmful ingredients such as sodium glutamate, refined sugar/artificialsweeteners, preservatives and trans fats, as well as deleterious processes such as deep frying. For example,Subway - though technically another American fast food franchise - distinguishes itself from the rest by placingcomplete emphasis on wholesome ingredients. The response from Indian consumers is heartening, proving that weare no longer given to predictable knee-jerk responses to foreign goods and concepts.

mc donald - india

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