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
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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)
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& Values.Available [online] http://www.aboutmcdonalds.com/mcd/our_company/mission_and_values.html
(Accessed: April 3, 2012)
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Entrepreneurship: The Engine of Growth.USA:
Greenwood Publishing Group.
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http://www.nationmaster.com/encyclopedia/McDonald’s-legal-cases (Accessed:
April 2, 2012)
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http://nrn.com/article/mcdonald’s-lessons-learned-india (Accessed: April 3,
2012)
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A.L (2011). Globalization: power,
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