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INTRODUCTION

McDonald's Corporation (NYSE: MCD) is the world's largest chain of


hamburger fast food restaurants, serving around 64 million customers daily.
Headquartered in the United States, the corporation was founded by
businessman Ray Kroc in 1955 after he purchased the rights to a small
hamburger chain operated by the eponymous Richard and Maurice
McDonald.
A McDonald's restaurant is operated by a franchisee, an affiliate, or the
corporation itself. The corporation's revenues come from the rent, royalties
and fees paid by the franchisees, as well as sales in company-operated
restaurants. McDonald's revenues grew 27% over the three years ending in
2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.
McDonald's primarily sells hamburgers, cheeseburgers, chicken, french fries,
breakfast items, soft drinks, shakes and desserts. In response to changing
consumer tastes, the company has expanded its menu to include salads,
wraps and fruit.
MANAGEMENT PROFILE:
Amit Jatia
Vice Chairman,
Hard Castle Restaurants Pvt. Ltd (HRPL)
McDonald's India (West & South)
It was under Amit Jatia's leadership, that McDonald's entered the West and
South of India. Starting with a single restaurant in October 1996, and as the
youngest JV partner in the McDonald's system, Amit has led HRPL, all the
way, to its 100th restaurant in Dec 2010.
Under his leadership, Amit and the brand have won accolades and awards for
Business Excellence. In 2003, Amit was awarded the "Young Achievers
Award" by the Indo - American Society of India. Amit was also nominated for
"The Economic Times Awards for Corporate Excellence" as "Entrepreneur of
the Year" in 2004 and 2005. Under his leadership, McDonalds has been
awarded Business World's 'Most Respected Company' awards as the 'No 1
Food Services Company' in India, in 2003 and 2004. CNBC has
acknowledged McDonald's as the 'Most Trusted Brand' voted by the
consumers for a record last 6 years.
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Amit is an erstwhile board member of the Young Entrepreneurs Organization


and a member of the Young Presidents Organization
Amit, now the Vice Chairman of the company, continues to play a leadership
and mentoring role at HRPL. Amit has a degree in Business Administration
from the University of Southern California, Los Angeles.
Smita Jatia
Managing Director,
Hard Castle Restaurants Pvt. Ltd (HRPL)
Smita Jatia moved into the role of Managing Director, HRPL, in July 2010.
Prior to this she has played an instrumental role in launching, indigenizing
and building the McDonald's India brand as Chief Operating Officer and the
Head of Marketing.
Under her leadership McDonald's India (West & South) is pursuing an
aggressive growth plan. Her vision is to build and lead a Customer Centric,
Performance Oriented organization.
Smita has a degree in Commerce from Mumbai University. Her other
qualifications include a Management Development Program from the Harvard
University, Boston. An intensive marketing diploma program at the
Hamburger University, USA, rounds off the list.
Smita is a fitness enthusiast and aims to be the best in all aspects of her life
and that is the reason that inspite a busy schedule she balances time for her
kids, family and friends. Her varied interests include reading, vedantic
literature and yoga.
MILESTONES
Milestones In October 1996, McDonald's opened its first restaurant in India.
Today, more than 2.75 lakh customers in India place their trust in the brand,
every day - trusting the brand to provide them with highest quality food
products, absolutely fresh and at a great value. Celebrating over 10 years of
leadership in food service retailing in India, McDonald's now has a presence
of 123 restaurants across the country. In India, McDonald's is a joint-venture
company managed by two Indians. Amit Jatia, M.D. Hardcastle Restaurants
Pvt. Ltd., owns and spearheads McDonald's in west & south India, while the
operations of McDonald's restaurants in North & East India is managed by
Connaught Plaza Restaurants Private Limited.

2008
City Launch: Chennai, Kolhapur
2007
Ranked 19th out of 25 top companies in the Hewitt Best Employers 2007
Survey 1st "Made For You" format restaurant launched in Bombay
McDelivery service launched in Hyderabad Winner of CNBC Awaaz
Consumers Award 2007 in the 2nd consecutive year
2006
City Launches: Surat, Hyderabad Oil Alliance (HPCL/BPCL)
2005
City Launches: Nashik, Indore
2004
Launch of Happy Price Menu, McDelivery, Kiosks Launch of 1st Global
campaign: "I'm lovin' it" City Launches: Bangalore
2003
New Product Launch: Veg Pizza McPuff
2002
New Product Launches: Chicken Mexican Wrap, Paneer Salsa Wrap City
Launches: Ahmedabad, Baroda
2001
1st Drive Thru launched at Kalamboli
2000
New Product Launches: Chicken McGrill, McCurry Pan, Potato Wedges. First
TV Ad launched City Launches: Pune

1997
Launch of Happy Meals
1996
McDonald's launches its first store in india:
Delhi : 13th October, 1996
Mumbai : 21st October, 1996
New Product launches : Maharaja Mac, McVeggie, McAloo Tikki
VALUES
Everyday Value at McDonald's
Value as the corner stone of McDonald's strategy
McDonald's, worldwide, stands for QSC&V, where "V" stands for value and
therefore the value proposition assumes special significance. Explaining this,
Mr. Amit Jatia, Joint Venture Partner & Managing Director, McDonald's
(Western India) says, "McDonald's success has been built on commitment to
the delivery of QSC&V (Quality, Service, Cleanliness and Value) to
customers, the expansion of restaurant numbers to improve convenience
and large scale investment in supplier development, training and people.
Getting QS&C consistently, and overwhelming appreciation of Value keeps
our customers satisfied and maintains our competitive edge."
The value initiative at McDonald's is all - pervasive. Our strategy is to
achieve best value by enhancing experience (offering best quality), while
keeping prices reasonable. This applies to products we serve our customers
and to every other aspect of the way we do business. At McDonald's, costs
are kept low by increasing efficiency and cutting wastage at all levels. This is
possible by advanced operations, management and human behaviour skills
tested over time in around 120 countries across the world.
It is important to understand that delivering top quality doesn't come easily.
Customers, who walk into a McDonald's restaurant, expect to be served food
that is hot and fresh, made from the highest quality ingredients, served
within minutes of placing their order and at a price, which is affordable. Such
is the strength of the brand that they rely on McDonald's to do all this,
without thinking about how it is actually achieved.

This is accomplished through attention to the minutest details and doing


things the right way. Whether it is the McDonald's unique cold chain
network, which ensures that food products move from farms to restaurants
absolutely fresh, at the lowest possible cost; or, the reverse osmosis water
treatment plant at every restaurant to provide water, which is the ultimate in
purity, McDonald's in India has invested heavily in achieving quality.
McDonald's Value offers
Though all McDonald's food products offer tremendous value, we continually
review and improve our menu offerings to make sure that we not only meet
our customers' expectations, but also exceed them. As a result, we have
introduced a series of ongoing value options to enable our customers to
appreciate this aspect of the brand even more strongly.
McDonald's Spotlight
There's more to life than just academics. Children should have an
opportunity to take part in something besides studies. In order to bridge that
gap, McDonald's started an inter-school performing arts competition McDonald's Spotlight, open to student from standards 5 - 10, from Mumbai,
Navi Mumbai, Thane and Pune.
There are 4 events in this:
* One-act Plays - English and Hindi
* Group Dancing - Indian Classical, Indian Folk and Western Contemporary
* Solo Singing - English and Hindi
* Impromptu Speaking - English and Hindi
Beginning with 26 schools in its maiden year, McDonald's Spotlight grew to
120 schools in 2003, its sixth year. McDonald's introduced two rotating
trophies in 2000 for the Best School' & the Runner-up School' based on a
point system. The competition opened to Pune schools in 2001 and in 2003,
for the first time in the competition's history, there were 2 Grand Finals held
in Mumbai and Pune.

SWOT ANALYSIS
Strengths

McDonald's has been a thriving business since 1955 and 20 of the top
50 corporate staff employees started as a restaurant level employee.
In addition, 67,000 McDonalds restaurant managers and assistant
managers were promoted from restaurant staff. Fortune Magazine
2005 listed McDonald's as the "Best Place to Work for Minorities."
McDonalds invests more than $1 billion annually in training its staff,
and every year more than 250,000 employees graduate from
McDonald's training facility, Hamburger University.

The business is ranked number one in Fortune Magazine's 2008 list of


most admired food service companies.

One of the world's most recognizable logos (the Golden Arches) and
spokes character (Ronald McDonald the clown). According to the
Packard Children's Hospital's Center for Healthy Weight children age 3
to 5 were given food in the McDonalds packaging and then given the
same food without the packaging, and they preferred the food in the
McDonald's packaging every single time.

McDonalds is a community oriented, socially responsible company.


They run Ronald McDonald House facilities, which provide room and
board, food and sibling support at a cost of only $10 a day for families
with children needing extensive hospital care. Ronald McDonald
Houses are located in more than 259 local communities worldwide,
and Ronald McDonald Care Mobile programs offers cost effective
medical, dental and education services to children. They also sponsor
Olympic athletes.

They are a global company operating more than 23,500 restaurants in


109 countries. By being spread out in different regions, this gives them
the ability to weather economic fluctuations which are localized by
country. They can also operate effectively in an economic downturn
due to the social need to seek out comfort foods.

They successfully and easily adapt their global restaurants to appeal to


the cultural differences. For example, they serve lamb burgers in India
and in the Middle East, they provide separate entrances for families
and single women.

Approximately 85% of McDonald's restaurant businesses world-wide


are owned and operated by franchisees. All franchisees are
independent, full-time operators and McDonald's was named
Entrepreneur's number-one franchise in 1997. They have global
locations in all major airports, and cities, along the highways, tourist
locations, theme parks and inside Wal-Mart.

They have an efficient, assembly line style of food preparation. In


addition they have a systemization and duplication of all their food
prep processes in every restaurant.

McDonald's uses only 100% pure USDA inspected beef, no fillers or


additives. Additionally the produce is farm fresh. McDonald's serves
100% farm raised chicken no fillers or additives and only grade-A
eggs. McDonald's foods are purchased from only certified and
inspected suppliers. McDonalds works closely with ranchers, growers
and suppliers to ensure food quality and freshness.

McDonalds only serves name brand processed items such as Dannon


Yogurt, Kraft Cheese, Nestle Chocolate, Dasani Water, Newman's Own
Salad Dressings, Heinz Ketchup, Minute Maid Juice.

McDonald's takes food safety very seriously. More than 2000


inspections checks are performed at every stage of the food process.
McDonalds are required to run through 72 safety protocols every day
to ensure the food is maintained in a clean contaminate free
environment.

. McDonald's was the first restaurant of its type to provide consumers


with nutrition information. Nutrition information is printed on all
packaging and more recently added to the McDonald's Internet site.
McDonalds offers salads, fruit, roasted chicken, bottled water and
other low fat and calorie conscious alternatives.

Weaknesses

Their test marketing for pizza failed to yield a substantial product.


Leaving them much less able to compete with fast food pizza chains.

High employee turnover in their restaurants leads to more money


being spent on training.

They have yet to capitalize on the trend towards organic foods.


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McDonald's have problems with fluctuations in operating and net


profits which ultimately impact investor relations. Operating profit was
$3,984 million (2005) $4,433 million (2006) and $3,879 million
(2007). Net profits were $2,602 million (2005), $3,544 million (2006)
and $2,395 million (2007).

Opportunities

In today's health conscious societies the introduction of a healthy


hamburger is a great opportunity. They would be the first QSR (Quick
Service Restaurant) to have FDA approval on marketing a low fat low
calorie hamburger with low calorie combo alternatives. Currently
McDonald's and its competition health choice items do not include
hamburgers.

They have industrial, Formica restaurant settings; they could provide


more upscale restaurant settings, like the one they have in New York
City on Broadway, to appeal to a more upscale target market.

Provide optional allergen free food items, such as gluten free and
peanut free.

In 2008 the business directed efforts at the breakfast, chicken,


beverage and convenience categories. For example, hot specialist
coffees not only secure sales, but also mean that restaurants get
increasing numbers of customer visits. In 2009 McDonald's saw the full
benefits of a venture into beverages.

Threats

They are a benchmark for creating "cradle to grave" marketing. They


entice children as young as one year old into their restaurants with
special meals, toys, playgrounds and popular movie character tie-ins.
Children grow up eating and enjoying McDonalds and then continue
into adulthood. They have been criticized by many parent advocate
groups for their marketing practices towards children which are seen
as marginally ethical.

They have been sued multiple times for having "unhealthy" food,
allegedly with addictive additives, contributing to the obesity epidemic
in America. In 2004, Michael Spulock filmed the documentary Super
Size Me, where he went on an all McDonalds diet for 30 days and
wound up getting cirrhosis of the liver. This documentary was a direct
attack on the QSR industry as a whole and blamed them for America's
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obesity epidemic. Due in part to the documentary, McDonalds no


longer pushes the super size option at the dive thru window.

Any contamination of the food supply, especially e-coli.

Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's,


KFC and any mid-range sit-down restaurants.

McDonald's is the leading global foodservice retailer with more than 31,000
local restaurants serving more than 58 million people in 118 countries each
day. More than 75% of McDonald's restaurants worldwide are owned and
operated by independent local men and women.
BUSINESS STRATEGY IN INDIA
Case Study Abstract
This case study discusses how McDonalds India managed to buck the trend
in a struggling economy, its early years and business strategy to get more
out of its stores in India. The case also briefly discusses how McDonalds
adapted to local culture in India, its localization and entry strategy, its strong
supply chain and pricing strategy.
Table of Contents
1. Introduction
2. McDonalds entry into India
3. Exhibit I: McDonalds Country Entry Year
4. The Indian Market Top 10 per cent of the busiest markets globally
5. Localization Strategy
6. McDonalds JV in India
7. Initial Challenges Culturally Sensitive Food
8. Understanding Indian Customs and Culture

9. An Indianized Menu, Re-engineered operations and no beef burger


10.

Competition Major Competitors in India and Globally

11.

McDonalds Quick Facts

12.

Time line of McDonalds in India

13.

Pricing Strategy The Rs-20 trap and Purchasing Power Pricing

14.

Kiosks at store entrances for customers in a hurry

15.

Home Delivery McDonalds Delivery Service or McDelivery

16.

Out-of-home Breakfast International McDonalds format with local


taste

17.

McDonalds Supply Chain Management (SCM)

18.

Unique cold chain

19.

Cutting costs

20.

Exhibit II: McDonalds Suppliers in India

21.

Exhibit III: The Menu at McDonalds India

22.

Exhibit IV: McDonalds Early History and Growth

23.

Exhibit V: Principles to McDonalds business success

24.

Questions for Discussion

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Case Study Keywords: Fast-food Retailing, McDonalds India, Joint venture,


Amit Jatia, Vikram Bakshi, localization strategy, pricing strategy, McIndia,
quick service restaurants, cultural adaptation, local culture, supply chain
management, SCM, McDelivery, unique cold chain
Case Questions for Discussion
1. McDonalds has become the poster brand for recession-resilient
business. What is McDonalds doing right in India? What elements of
its business strategy are working for it and how does it manage to get
more out of its stores?
2. Does local adaptation contribute to business growth in a country?
Explain McDonalds efforts to adapt to the local culture in India. What
challenges did McDonalds face in India?
3. Have you ever visited a McDonalds store? Compare and contrast your
experience with another quick-service restaurant or fast-food joint you
visited earlier. How can McDonalds improve? Should it alter its
strategy?
Case Updates/Snippets

Worlds leading food service retailer McDonalds has more than


32,000 restaurants serving over 50 million customers each day in
more than 119 countries.

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
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Pizza, which began operations 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 cream
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 customers 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 customer
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 McDonalds 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
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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 web-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.

McDonalds India in 2010 In 2010, McDonalds India plans to open


40 more outlets. The company has also earmarked a budget of Rs 5060 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 McDonalds 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.
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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 industrys
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


marketing, 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 offering 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.
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Mcdonalds Outlets in India


CITY

NO.

CITY

NO.

CITY

NO.

Ahmedabad

Agra

Jodhpur

Bangalore

21

Allahabad

Kanpur

Baroda

Ambala

Karnal

Chennai

Amritsar

Kolkata

Hyderabad

Chandigarh

Kota

Indore

Dasuya

Lucknow

Kolhapur

Dehradun

Ludhiana

Mumbai

33

Delhi

51

Manesar

15

Nasik

Faridabad

Mathura

Pune

10

Gajraula

Meerut

Surat

Ghaziabad

Noida

Vapi

Gurgaon

Panipat

Gwalior

Patarsi

Jabli

Patiala

Jaipur

Varanasi

Jalandhar

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COMPETITION WITH OTHER COMPANYS

Dominoes
Queries are welcomed
Pro active suggestions
Not so clean and tidy stores
Chilled beverages and hot food served

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BIBILIOGRAPHY:

www.wikipedia.com
www.google.com
McDonald outlet

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