The purpose of this paper is to examine the entry and establishment

| November 24, 2016

The purpose of this paper is to examine the entry and establishment of McDonald’s in the emerging market of India. For research purposes, I will utilize diverse sources such as journal articles, books, websites and peer review articles.

Introduction

McDonald’s has a new corporate mission statement – They focus on providing consumers with tasty and nutritious food and beverages that is consumed from morning to night. They want to be for their customers

the ‘favorite place and way to eat. Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers experience” (McDonalds, 2012)

This was the concept that attracted students and office goers of all ages to patronize it. The other and singularly most important item was the soft drinks, milk shakes and their irresistible desserts. The quality standards of McDonalds’s have become stringent and towards the rise. This has attracted more customers to their operations across the globe. In March 1998 the company has introduced a new food processing platform “Made for You” – McDonald’s’s intention to preserve the food safety, freshness, hygiene and quality standards (Smith, 2011). However, this also meant a bit “slower” fast food.

McDonald’s’s International Strategy

The “think global and act local” strategy brought McDonald’s competitive advantage in the fast-food industry. They customized their marketing strategies based on the cultural, economical and sociopolitical factors of different nations (Cooper & Edgett, 2009). Adapting and executing this strategy, the company is capable of adjusting their products and services to the preference of their local consumers. This is also why you see difference in their global branches in prices, atmosphere, advertisement tools and even the architecture.

The localization strategy is beneficial for anticipating the changing needs and preferences of the consumers within the industry. It also creates such operational efficiency, which enables to absorb changes frequently (Barnes, 2008). If any changes occur one country – McDonald’s has to adjust only that country specific strategy rather than entire global strategy.

The franchise business model brought structure and organizational unity as it provides a platform for business opportunities for individuals in emerging markets. It creates new employment opportunities and personal growth for local people. The local employees assist in establishing a friendly and “local” corporate image and adding to the success of the company. This model also provides significant help and assistance in formulation of marketing plan for local market (Minniti, Zacharakis, Spinelli, Rice, 2007).

McDonald’s’s Entry to India

McDonald’s’s entered the Indian market in 1996 as a joint venture (JV) between Oak Brook III. and 2 local partners – Hardcastle Restaurants Private Ltd. in western India, and Connaught Plaza Restaurants Private Ltd. in northern India. (Chaturvedi, P.)

To enter a market where consuming beef is “off limits” was very challenging and ambitious. McDonald’s objective was to be inspired by the culture of India and to deliver the greatest of food experiences to the customers in India bringing in the splice of life. They were aiming for to change the local perception of the new product being “American” and remove the fear of unknown, where family “dining in” was a custom for centuries. The management wanted to advertise McDonald’s as a stimulator and advocate of family and culture values. The diversity in language and communication is one of the greatest components of the culture. Until 2000, McDonalds advertised their brand mainly by putting the main focus on the outlet design and tailor made food menu for the needs and desires of the diverse Indian population. (Chaturvedi, P.)

McDonald’s entry into India was met with stiff opposition. Members of the Hindu organization, the Bajrang Dal, the militant arm of one of the dominant fundamentalist political parties in India, the Bharatiya Janata Part (BJP) openly protested against the company by attacking it’s branches across India on May 4th, 2001. The members of the Bajrang Dal demolished the restaurant in Thane, a northeastern Bombay suburb. In southern Bombay, a McDonald’s store was besieged by protestors from the leading Bharatiya Janata Party, who shouted slogans and stained the restaurant’s mascot with cow dung. SHIV SENA – another Hindu alliance also threatened to protest outside the McDonald’s corporate office after reports of a lawsuit being filed against McDonald’s in Seattle. (NationMaster.com)

The environmental factors in India

As India being a very ancient country and one of the lands of the ancient river valley civilizations, McDonald’s had to consider the cultural, economical and sociopolitical factors in India. The Indian population is very diverse and complex as nation is split between different communities, religions (e.g. Hinduism, Buddhism, Sikhism, Islam, Jainism and Christianity), beliefs and value systems. All these factors play a significant role in nations’ preference for food and dining in general.

80% of the entire population of India practice Hindu which forbids non-vegetarian food (Indian Mirror, no date). Because of this, McDonald’s initially only offered a vegetarian menu. Later they understood that this wasn’t the correct approach. To honor the cultural differences between religions, the company categorized the cooking tools as well as employees in vegetarian and non-vegetarian category. The cultural factor had to be taken into consideration in such market, as any omission can destroy the reputation globally which may limit the chances of business expansion (Rappa, A., 2007). The change in menu came also because of competitors like KFC, whom entered the market first with non-vegetarian products.

McDonald’s formulated a suitable pricing strategy that can facilitate the high volume of consumers, targeting mainly the lower and middle class. The majority of the Indian population falls into this category.

Market share of MacDonald’s in India

The market in India is totally different from that of the USA. Here the family dining concept works. This led to concept of breakfast combos. The restaurant was also projected this as a fine dining restaurant.

This became the USP of McDonald’s in India. The television commercials of ‘Toh Aaj McDonald’s Ho Jaye’ and ‘McDonald’s Mein Hai Kuch Baat’ and the happy price menu is what attracts Indian people to McDonald’s. The new advertising of Prices of the Yesteryears, attracted the teenager crowd too. (Mathur, S., 2011)

Strategies in India

In order to capitalize on the highly price sensitive economy, and the Indian mentality of liking anything that is foreign, McDonald’s strategy was market penetration and the three circles strategy. This led to localization ND branding of the company. The entry of almost all the international brands into India happened at the same time, while others closed down due to various strategies. McDonald’s survived only due to keen understanding of the Indian economy.

The massive and aggressive expansion strategies that McDonald’s took up in India was with the sole objective of establishing its presence indelibly in the sub continent and to prove to the world that if anything can sell in India it can sell anywhere. Today McDonald’s has become a household name and finds its kiosks in almost many schools colleges and corporate. It can be said that there is no food court without a McDonald’s and almost every Indian has tasted McDonald’s fast food. This is indeed a great breakthrough for a very orthodox community that has very rigid and fixed eating habits and traditionally very Indian.

McDonald’s had to make it clear to the authorities that their products in India neither contain beef nor pork in it. They had to suit their burgers to Indian taste and Indian market which was a hyper price sensitive market. The introduction of breakfast combos and budget meals made market penetration possible. “Aloo Tikki Burger” was McDonald’s priced product in India. Their quick turnaround times made new inroads into the fast food industry. (Mathur, S., 2011)

Conclusion

McDonald’s continuous product innovation and customer satisfaction through greater customer reach. In order to sustain in a very competitive market McDonald’s has to continuously think of bringing in new concepts into all its operations especially in marketing. McDonald’s had to bring in something that would help in long sustainability and that unrivaled position on the market as an “foodtailer”. The result of a spontaneous thought led to the introduction of breakfast outlets and a chance encounter with a technology specialist ended up with online booking orders and birthday parties and signature outlets. These are signature products of McDonald’s and this will in the long run help McDonald’s to improve it already ace services with better customer service and great shopping experience. The success of McDonalds in India could be measured by its continuous growth in Indian fast-food market with 210 branches across India (Nation’s Restaurant News, 2011)

References:

Barnes, D., (2008). Operations management: an international perspective. UK: Cengage Learning EMEA.

Cooper, R.G., Edgett, S.J. (2009). Product Innovation and Technology Strategy. USA: Stage-Gate International.

Chaturvedi, P., (no date) How McDonald’s evolved its marketing in IndiaAvailable [online] http://ipm.ge/article/How%20McDonald’s%20evolved%20its%20marketing%20in%20India_ENG.pdf (Accessed: April 2, 2012)

Indian Mirror (no date) Hinduism Available [online] http://www.indianmirror.com/religions/reli1.html (Accessed: April 2, 2012)

Mathur, S., (2011) McDonald’s Spices Up Products for Indian Vegetarians Available [online] http://www.buddingmarkets.com/?p=39 (Accessed: April 3, 2012)

McDonalds (2012) Mission & Values.Available [online] http://www.aboutmcdonalds.com/mcd/our_company/mission_and_values.html (Accessed: April 3, 2012)

Minniti, M., Zacharakis, A., Spinelli, S., Rice, M.P. (2007) Entrepreneurship: The Engine of Growth.USA: Greenwood Publishing Group.

NationMaster (no date) Encyclopedia – McDonald’s legal cases Available [online] http://www.nationmaster.com/encyclopedia/McDonald’s-legal-cases (Accessed: April 2, 2012)

Nation’s Restaurant News (2011) McDonald’s: Lesson learned from IndiaAvailable [online] http://nrn.com/article/mcdonald’s-lessons-learned-india (Accessed: April 3, 2012)

Pride, W.M. & Ferrell, O. C. (2008). Foundations of Marketing. 3rd ed. USA: Cengage Learning

Rappa, A.L (2011). Globalization: power, authority, and legitimacy in late modernity. 2nd Edition, Singapore: Institute of Southeast Asian.

Smith, A.F. (2011). Fast Food and Junk Food: An Encyclopedia of What We Love to Eat. USA: Greenwood ABC-CLIO, LLC

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