McDonald's - Business Strategy in India

Case Study Abstract
This case study discusses how McDonald's 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 McDonald¶s adapted to local culture in India, its localization and entry strategy, its strong supply chain and pricing strategy.

Table of Contents
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. Introduction McDonald¶s entry into India Exhibit I: McDonald¶s ± Country ± Entry Year The Indian Market ± Top 10 per cent of the busiest markets globally Localization Strategy McDonald's JV in India Initial Challenges - 'Culturally Sensitive' Food Understanding Indian Customs and Culture An Indianized Menu, Re-engineered operations and no beef burger Competition ± Major Competitors in India and Globally McDonald¶s ± Quick Facts Timeline of McDonald's in India Pricing Strategy - The Rs-20 trap and µPurchasing Power Pricing¶ Kiosks at store entrances for customers in a hurry Home Delivery - McDonald¶s Delivery Service or McDelivery Out-of-home Breakfast - International McDonald¶s format with local taste McDonald¶s Supply Chain Management (SCM) Unique cold chain Cutting costs Exhibit II: McDonald¶s Suppliers in India Exhibit III: The Menu at McDonald¶s India Exhibit IV: McDonald¶s ± Early History and Growth Exhibit V: Principles to McDonald¶s business success Questions for Discussion

Case Study Keywords: Fast-food Retailing, McDonald's 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 McDonald¶s 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 McDonald¶s efforts to adapt to the local culture in India. What challenges did McDonald¶s face in India?

com/doc/13142703/Marketing-MixMcdonalds-India . Have you ever visited a McDonald¶s store? Compare and contrast your experience with another quick-service restaurant or fast-food joint you visited earlier. How can McDonald¶s improve? Should it alter its strategy? http://www.scribd.3.

the first thing an outsider will notice is that the signature snack and probably the most recognizable symbol of this Fast Food Giant is nowhere to be found in an Indian McDonald's. there is no beef on the McDonalds' menu in India.. They do serve chicken burgers and still have the one Fish Burger. it is also the only Country in the World. Hindu believers consider the cow scared and holy. don't eat pork.. What You Can Order at McDonald's in India. where McDonald's doesn't serve any beef or pork in any's just that.... there is no pork or pork byproducts in any McDonalds restaurant in India..No Hamburgers.I'm talking about the Hamburger! You heard me right.then you'll be outnumbered with their vegetarian options. if not most of it vegetarian at McDonald's in India. with a little Indian spice thrown in. That's not to say the Indian McDonald outlets don't sell patties on buns. isn't really a hamburger.. the McDonalds Menu in India may come as a bit of a surprise..Now who doesn't know McDonald's? That unmistakable red logo with its golden-yellow arches of the 'M' is a familiar sign to the world of fast food eaters in a lot of countries around the world.... While India is one of the biggest markets in the World.let alone eating its meat is considered a grave sin. not found in the United States or any other countries with the food chain. But for most Westerners. That's not to say that McDonald's doesn't serve any non-vegetarian products in their Indian restaurants.whether or not you are vegetarian! Here's a glimpse of what you can order at McDonald's in India: The Vegetarian Fare at McDonalds India: . and carrots. peas. Diets in India have been impacted by the many different religions in India for centuries now.. it makes a good choice for diners who want some healthy options . Hindu's and Muslims (also a prominent religion in India).. There's No Beef or Pork in Any McDonald's in India. in ANY of their 123 outlets (and counting) across the country! Instead of ground beef and pork patties. so harming a cow... The international menus of McDonald's offer some interesting and varied menu items. Among other differences. so the McDonalds Corporation in India is quick to point out on their website (mcdonaldsinindia. Hindus don't eat beef. With almost most half the menu. So what most Indian kids grow up to know as a hamburger. the McDonald's Menu in India features Indian burgers that are 100 percent vegetarian burger look-a-likes of potatoes. Since a majority of the population are followers of Hinduism...but if you're a meat eater..and India is no stranger to that not only is there no beef. to whom McDonald's may signify the familiar taste of the Big Mac or the Double Cheese Beef Burger.

and has mayonnaise made without eggs spread thickly on the bread.McVeggie: The McVeggie sandwich starts with the oh-so-familiar sesame seed bun. but don't want a tomato-based sauce.Crispy Chinese: McDonald's in India's Crispy Chinese sandwich is crispy. This vegetarian burger is garnished with lettuce. It is fried and the paneer patty is wrapped in flatbread and topped with a salad mixture that includes lettuce. baby corn. rice. red bell pepper. carrots. .Veg McCurry Pan: If you are in the mood for something similar to pizza. onions. It starts with a rectangular shaped crust that is topped with a creamy sauce (made without eggs). but very China. It's more an Indianized Chinese. peas. McDonald's in India's McAloo Tikki sandwich includes a patty made out of potatoes. . . green beans. potatoes. It is then baked until the crust is crisp and the toppings are hot . mushrooms and red bell pepper. you'll find a vegetarian patty that is made from peas. McDonald's Paneer Salsa Wrap starts with a small slab of paneer that has been dredged in a coating that is a cross between Mexican and Cajun in flavor. red cabbage and celery and then is finished off with vegetarian mayonnaise. and seasoning. salsa and cheddar cheese. and spices. this vegetarian patty is topped with a creamy Schezwan sauce and lettuce which makes it a nice addition to the Indian vegetarian menu. McDonald's Veg McCurry Pan is a good choice.McAloo Tikki Potatoes (aloo in Hindi) are a popular filling food item in India. In between the bread. and vegetables including broccoli. .Paneer Salsa Wrap: Paneer is referred to as cottage cheese in India.. onions. Nevertheless. and vegetarian mayonnaise. It also includes tomato slices.

is the Chicken Maharaja Mac sandwich which is made with 2 grilled chicken patties and is topped with onions. It is similar in size (but not taste) to the spicy chicken sandwich on the dollar menu at McDonalds restaurants in the U. onions and tomatoes and is served on a toasted bun.and bubbly. but instead of a creamy sauce is flavored with a tomato-based sauce and then is topped with carrots. . beans.McChicken: The McChicken in India is almost the same as its cousin by the same name in other McDonalds around the world.Chicken McGrill: The Chicken McGrill sandwich starts off with a thin grilled chicken patty that is embellished with cilantro mayonnaise. onions. bell peppers. . cheese and a spicy mayonnaise. .Filet-O-Fish: The Filet-O-Fish sandwich at McDonalds in India is the only sandwich item on the menu that is exactly the same as the Filet-O-Fish sandwich you might eat at a McDonalds in the U. . peas and mozzarella cheese. It contains one breaded and fried chicken patty and is topped with lettuce and vegetarian mayonnaise.S.S. .Chicken Maharaja Mac: The Indian version of the Big Mac at McDonalds in India. The Non-Vegetarian Fare at McDonalds India: .Pizza McPuff: The vegetarian Pizza McPuff also starts with a rectangular shaped crust. tomatoes.

both sundaes and cones. shakes. and cheese and is baked till crisp and bubbly. spiced with thyme. It starts off with a rectangle of dough and is topped with a tomato-curry sauce.. and oregano. or anywhere else. And that's McDonald's famous fries.Chicken McCurry Pan: Chicken McCurry Pan is the same as its vegetarian version. It is finished off with chicken. bell peppers. And of course soft drinks are available as well! . Apart from these specials that appear mainly in the Indian McDonald's here there are a couple of things that are exactly the same in India as what you would consume at a McDonalds in the U. and soft-serve ice-cream.S. basil.

with an idea from brothers Dick and Mac McDonald. While. met the brothers and pitched the idea of opening a chain of fast-service restaurants. some 46 million people turn to McDonald's for their instant satisfaction..1 billion* in 2003. but they have yet to open a fast food restaurant in Antarctica. in 2003. serving 47 million customers a day. Sources: Company reports.Oak Brook. Sales and earnings . Everyday. up from $894 million. Net income $1. Here are key facts about the company. the choices they make may vary from country to country. who ran a fast-service hamburger outlet in San Bernardino. you can bet that people are happy with the choices McDonald's has to offer.FACTS NEW YORK (CNN/Money) . Headquarters . Illinois Restaurants . *System-wide sales. Calif. and is one of 30 stocks in the Dow Jones industrial average. Stock performance .More than 30.The company went public in 1965.Total revenue $17.15 a share. making it the second-best performer in the Dow Jones industrial average. then a milkshake machine distributor.McDonald's Corp. has named a new CEO after Jim Cantalupo died of an apparent heart attack Monday. includes franchisee owned locations. Illinois. or $1. Another fun fact is that Ronald McDonald speaks 25 different languages in order to entertain all those people. The stock is up about 10 percent year-to-date. History . the world's biggest restaurant chain. or 70 cents a share. Kroc. up from $15.000 in 119 countries. . They have made their mark on six continents. in 1955.Ray Kroc opened the first McDonald's in Des Plaines.4 billion in 2002. in 2002.5 billion. Reuters McDonald's has locations across the world.

however there is a fee of Rs. if they are unable to come to our restaurants. Currently. McDonald¶s is further set to pamper the city of Nawabs with its successful home delivery service. Mr. 20 per order as delivery charges. the service will be available to the neighborhood which is up to 10 minutes away from the restaurant. the service is available in City Centre.McDonald's has sold well over 100 billion hamburgers. On an average two dedicated delivery bikes will be provided to both the stores. one of the walls of this location dates back to the 13th century. the world¶s leading food service retailer.000 locations. After an overwhelming response to the launch of all its restaurants. Amit Jatia. McDonald¶s India (West & South) said. announced the commencement of the McDelivery service in the city of Hyderabad allowing McDonald¶s lovers to relish their favourite menu at their very doorstep. you will find a McDonald's location that is housed by an extremely old building. Even the location that housed the first McDonald's drive thru was tore down and rebuilt. All you have to do is dial McDonald¶s Home Delivery number . At McDonald¶s. irrespective of the size of the order. our priority has always been customer service and convenience and the launch of this new initiative in Hyderabad will allow our customers to enjoy McDonald¶s meals at the convenience of their homes / offices. there are over 30. That's a lot of burgers being served up everyday In England. Keeping in mind. MD & JV Partner." . "Convenience is the key to business models in McDonald¶s. Americans are known for building bigger and better things. From the veggie¶s favourite McAloo TikkiTM to the mouth watering Chicken McGrillTM customers will be able to indulge in all of their favourite McDonald¶s delights by simply dialing 66 000 666. Banjara Hills and at Rainbow Mall on Karkhana Road. This fact really isn't all that shocking when you think about all the locations around the world.6600 0666 and place your order. Commenting on the McDelivery launch. McDonald¶s commitment to quality. There is no restriction on the minimum order for home delivery. In fact. The mapping of the delivery area is such that even during peak hours customers receive orders that are hot and fresh. Hyderabad is the first city in the south where the service has been launched. Mc delivery y McDelivery Launched in Hyderabad Dial 66000 666 to order your favourite McMeals right at your doorstep Hyderabad:McDonald¶s Family Restaurant. McDonald¶s ensures that the quality of food is not compromised. In fact. It's rare for McDonald's to have historic locations here in America.

this service is currently available in Mumbai. all under controlled temperatures. This has involved procurement. on which it had spent more than six years to get the system into place. as well as maintain the freshness and nutritional value of raw and processed food products. transportation and retailing of perishable food products. The following list of suppliers. Cold Chain was one of the unique concepts of McDonalds supply chain in India. absolutely fresh and at great value. Pune & Gujarat market enabling McDonald¶s lovers to enjoy their favourite meals in the comfort of their home.India is one of the few countries where McDonald¶s provides home delivery service. This system brought about a veritable revolution. immensely benefiting the farmers at one end and enabling customers at retail counters get the highest quality food products. who build up the major supply chain of McDonalds. McDonalds has been able to both cut down on its operational wastage. Through its unique cold chain. reveal how this Cold Chain works and contributes towards the efficiency of McDonalds . warehousing. In Western India.

How McDonald s manages to keep its prices down? Fast-food chains face a tough time balancing between margin pressures and hiking prices which can hurt volumes.Case Updates/Snippets y y y y World s leading food service retailer McDonald s has more than 32. Nirula s was the rst to introduce burgers in India. Some of its measures to achieve this include Bulk buying. Food Industry in India In India. Domino s Pizza. a pilot for which has already been tested by it in Hyderabad. McDonald s India in 2010 In 2010. McDonald s India plans to open 40 more outlets.) Nirula s. Affordability has been the cornerstone of McDonald s global strategy. has a network of around 62 outlets in ve states across Northern India. McDonald s India had more than 170 quick service restaurants in India. The company has strong backward integration right up to the farm level. McDonald s 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 company hopes to add 5 per cent to sales via Web delivery. McDonald s has around 10 MFY restaurants in its portfolio.000-crore. Nirula s. The fast-food industry in India is valued at Rs 3. McDonald s competitors in India McDonald s competes with fast food chains like Pizza Hut. ice cream parlours. The footfalls in India are amongst the highest in the world. This cooking method has helped McDonald s further strengthen its food safety. established in 1934 has interests in hotels. Consequently.000 restaurants serving over 50 million customers each day in more than 119 countries. long-term vendor contracts. The company 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 McDonald s as a venue for enriching life of consumers. McDonald s now has plans to launch web-based delivery service in India (across 75 McDelivery cities) in 2010. 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. KFC has 46 restaurants across 11 cities in India. McDelivery Online In India. the chains have to increase rates or rework their strategies. has over 275 stores across 55 cities in the country. All new upcoming McDonald s restaurants are based on MFY. one of India s oldest food chains (completed 75 years in service in March 2009). over quarter of a million customers visit McDonald s family restaurants every day. In India. (KFC is one of the 5 brands owned by Yum!. but the average bill is amongst the lowest. McDonald s Supply Chain McDonald s has a dedicated supply chain in India and sources 99% of its products from within the country. food industry and particularly informal eating out market is very small. pastry shops and food processing plants. hygiene and quality standards. McDonald s rst launched home delivery of meals in Mumbai in 2004. Nirula s and KFC in India. Papa John s. which began operations in India in January 1996. Domino s Pizza. Quick service restaurants in India By October 2009. and manufacturing ef ciencies. restaurants. y y y y y . KFC is a $12 billion global brand and a leading quick-service restaurant (QSR) in many countries.

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