Macdonalds Entry Strategy in India

IntroductionThe McDonald's Corporation is the leading global foodservice retailer with an estimated brand value of about 85.71 billion U.S. dollars (Source: Statista 2015). The Golden Arches are the symbol of McDonald's. The Golden Arches have gone global and among the emerging markets, India is one of the fastest growing areas in the fast food industry. By leveraging its competitive advantages, it is well-positioned to pursue the long-term opportunities.The findings of the report signify McDonalds Corporations penetration to Indian fast food industry with a big preparation extensive training, unbeaten entry strategy and a wide distribution network. The analysis and recommendation of this report will provide a supportive ground for further expansion of the company.

History of global fast food industry with special reference to IndiaThe history of fast food industry began with the opening of fast food restaurants, also known as Quick Service Restaurants (QSR), where fast food cuisine and minimal table service are served. Fast food refers to food that can be prepared and served in shortest time. The demand and trend of fast food differs from region to region. It has its roots in the Popinas and bread and wine stands of Ancient Rome, the ready-to-eat noodle stalls in East Asian cities and in North America where people eat out frequently and have busy life style.The first fast food restaurants originated in the United States with A&W in 1919 and White Castle in 1921. By the 1950s, the fast food industry boom was in full swing, incorporating and perfecting marketing strategies borrowed from earlier days. By 1951 fast food was listed in the dictionary. According to a new market report published by Transparency Market Research, the global fast food market was worth USD 477.1 billion in 2013 and is expected to reach USD 617.6 billion in 2019. The top emerging markets in terms of growth rate are Brazil, China, India, Russia, France, Saudi Arabia, South Africa and Vietnam.The fast food industry in India has evolved with the changing lifestyles of the young Indian population. Estimates suggest Indians are spending a whopping 1.3 billion on eating out and out of that 40 million was at multinational fast food restaurants. This industry is growing, at an accelerated rate, by 40% a year and is expected to generate a billion dollars every year. Anticipating the future growth, many big international players are entering into the market by making deals with the domestic players. And those already present in the Indian market are expanding their presence in different provinces of the country. Several international fast food chains like Kentucky Fried Chicken, McDonald's, Burger King, Subway, Pizza Hut, and Dominos and Barista Coffee have their outlets in major cities. As per a new research report titled Indian Fast Food Market Analysis, currently the Indian fast food industry stands at a massive size of 47 billion, driven by a growing number of working professionals and increasing westernization. History of Mc Donalds CorporationThe McDonald's Corporation began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald. In 1948, they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. In 1967, McDonald's opens its first restaurants outside the US. In 1968, the current Golden Arches logo was introduced resembling an "M" for "McDonald's".Company Profile The McDonalds Corporation is headquartered in Oak Brook, Illinois, United States. Andrew J. McKenna is the present Chairman and Steve Easterbrook is the President and CEO of this Company. The Company franchises and operates McDonalds restaurants. Of the 35,429 restaurants in 119 countries at year-end 2013, 28691 were franchised and 6738 were operated by the Company. It is serving around 68 million customers daily in 119 countries across 35,000 outlets. For the financial year 2013, the company had attained revenues of $28,106, $8764 in operating income and $5586 in net income. Total assets increased $1.2 billion or 4% in 2013. The Companys revenues consist of sales by Company-operated restaurants and fees from restaurants operated by franchisees. This business is managed as distinct geographic segments. Significant segments include the United States, Europe, Asia/Pacific, Middle East and Africa (APMEA). The US, Europe and APMEA segments account for 31%, 40% and 23% of total revenues respectively. The Company considers the trademarks McDonalds and The Golden Arches Logo to be of material importance to its business. McDonalds restaurants offer a substantially uniform menu, although there are geographic variations to suit local customer preferences and tastes. In addition, McDonalds tests new products on an ongoing basis. McDonalds competes with fast food chains like Pizza Hut, Dominos Pizza, Papa Johns, Nirulas and KFC in India. Currently, it is trying to engage with customers on social media and is working on a smartphone app, as well as testing mobile-payment systems such as Apple Pay, Softcard and Google Wallet.Slogan: 'Im Lovin It'Brand Vision: To be the best quick service restaurant experienceMission: To be our customers' favorite place and way to eat and drinkValues: We place the customer experience at the core of all we do. We are committed to our people. We believe in the McDonalds System. We operate our business ethically. We grow our business profitably. We strive continually to improve.

McDonalds in IndiaEntering McDonalds into the Asian market has had a long history. It entered the Indian market in 1996 following Japan, Singapore, and Hong Kong, China etc. It received extensive training from its Indian management team in Indonesia and US before launch. McDonalds in India was a 50 50 joint venture partnership between McDonalds Corporation (U.S.A) and two Indian businessmen. The brand is managed by two business entities: Connaught Plaza Restaurants Private Limited, led by Mr. Vikram Bakshi, JV Partner and Managing Director, North & East India Hardcastle Restaurants Private Limited, led by Ms. Smita Jatia, Managing Director, South & West India90% of McDonalds business is owned and run by independent franchisees in India.McDonalds opened their first restaurant in the capital of India, Delhi. The second restaurant was opened in the financial capital of India, Mumbai. India is the first country in the McDonald's system where it serves non-beef and non-pork products. McDonalds is Indianized by 75% while serving over 320 million Indians annually. McDonald's regular mouthwatering menu includes wide range of products like McAloo Tikki, Filet-O-Fish, Spicy Range, Chicken McGrill, McVeggie, Veg Pizz a McPuff, Chicken Mcnuggets, Fries, Wraps, an assortment of Sundaes, Soft Serve and refreshing beverages such as Ice Tea & Cold Coffee with outstanding service in a vibrant and lively ambience. McDonald's philosophy of QSCV (Quality, Service, Cleanliness and Value) is the guiding force behind its service to the customers in India.

At present, there are 300 McDonald's restaurants in India. It is continuing with the rapid expansion of its restaurant network in India. Busy life schedule, standardized food, and less time consuming processes are triggering effect of the demand from domestic consumers in the industry. Objectives To discuss the main strategy and management issues that McDonalds had to consider to enter into India; To critically analyze its entry strategy in the Indian growing fast food industry; To identify the functional strategies that McDonalds pursued to establish its strong foothold and make India as an export base for cheese, lettuce and other products.

Main BodyQuestion-1: Discuss the main strategic and management issues that McDonald's had to consider to enter into India.Quality is the mirror of any organization, customers could judge about the organization based on the level of the organization quality, therefore the first step to attract customers is through quality objective which is in somehow is to guarantee that customers will return back again, in this part McDonalds provided high quality products and services though standardize all its branches, and therefore McDonalds obtained customers satisfaction additional to made the operation more easy for the staff.Internal & external analysis is very important for an organization. It helps an organization to enter in a profitable market. Internal analysis is important to know their inner capabilities to compete with their rivals and external environment analysis helps us to know the market potential and situation that a company has.

Target Market Segment

McDonalds has segmented their products according to 3 different bases. The 3 bases for segmentation are: Demographic Segmentation Psychographic Segmentation Behavioral Segmentation.

Demographic Segmentation: (family, Kids and students.) McDonalds offers different products like Happy Meal which includes a free toy for kids. For family it has made different outlets and meals which are suitable for takeaways and drive-thru. McDonalds has made its environment suitable for school/college students to hang out with their friends and grab their lunch at McDonalds.

Psychographic Segmentation:(Convenience and lifestyle )McDonalds has adapted itself according to the convenience and lifestyle of the Indian consumers, as India has a huge vegetarian population so McDonalds came up with a different and new product line which includes items like Mc Veggie burger and Mc Aloo tikki Burger.

Behavioral Segmentation: (Occasions, e.g. Birthday parties for kids). McDonalds at several outlets also provides facilities like Play Place where children can play arcade games, air hockey etc. This helps McDonalds to attract the young urban families wanting to spend some quality time while their children have fun at the outlet.The environmental factors in India

Internal AnalysisThe internal Environment is the environment that has a direct impact on the business. It is a combination of a factors like as Resources, capabilities, core competencies, competitive advantages of the business. It includes the organizations mission statement, leadership style and it a organizational culture etc. Internal analysis is the process of identifying and evaluating an organizations specific characteristics, including its: Resources Capabilities Core competencies Competitive advantages

ResourcesResources are the assets that an organization has for carrying out whatever work activities and processes relative to its business definition, business mission, and goals and objectives. A business' resources are its assets, which may be tangible assets, such as equipment or technology, or intangible assets such as brands, knowledge and expertise. McDonalds uses several types of resources for running its business in India. McDonalds spent much money to improve its supply network, distribution centers and logistic support which covered its financial capabilities. McDonalds management sector are highly trained up and knowledgeable. McDonalds maintain its product quality as well as brand goodwill by providing customer tested product. CapabilitiesCapabilities that lead to a competitive advantage today may not continue to do so as market conditions and competitors change. Organizational capabilities are the complex and coordinated network of organizational routines and processes that determine how efficiently and effectively the organization transforms its inputs (resources) into outputs (products and/or services). McDonalds uses effective logistics management techniques in its functional areas. It also promotes its brand name, quality product, effective customer services by home delivery, McDonalds subsequently introduced several new products, such as the Veg Pizza McPuff, vegetable burger etc. Core competenciesCore competencies are the organizations major value-creating skills and capabilities that are shared across multiple product lines or multiple businesses. McDonalds design its products in a unique way thats why they adapt the market change of Indian fast food industry. McDonalds used innovative own manufacturing system which is less cost efficient. Competitive AdvantagesSustainable competitive advantage is the prolonged maintenance of competitive advantage. Competitive advantage is what sets an organization apart. Without a sustainable competitive advantage, the organizations long-run success and survival are uncertain. McDonalds success in India lies in its utilization of technology, routine wise work. McDonalds maintains its competitive advantage by constantly creating new items to add onto its menu. The introduction of healthy food with overview of consumed calories (salads, wraps, fruit, etc.) in the "junk food" chain has captivated the 'calorie counting" consumers and created an image of socially and environmentally responsible company.

SWOT Analysis for McDonalds in India

SWOT analysis is a strategic planning method used to evaluate strength weaknesses, opportunity and threats involved in a project or in Business. SWOT analysis will give us a quick review of an organization current status.

StrengthMcDonalds is a market leader in the fast food industry. McDonalds has a very strong brand image. McDonald has expanded its business to more than 125 countries with more than 33000 outlets throughout the world. McDonalds has one competitive advantage and that is Strategic location. In India they are located in busy shopping malls, Airports and etc.

WeaknessesMcDonalds has created very successful brand image but the market segment is too focused on Kids. McDonalds is often related to unhealthy food and obesity. Employee turnover rate is so high. These all are weaknesses of McDonalds in the world and India in particular.

OpportunityMcDonalds can introduce healthy food consisting of low calories items. They should put more efforts in Research and Development. Management should try finding ways to reduce food wastage which leads to cost control. New products with different variety should be introduced to capture the market.

ThreatsMcDonalds is facing major competition from its rivals KFC and Burger King all over the world. In India local curry shops are offering great challenge to McDonalds. Company rapid growth has made McDonalds very vulnerable to other countries economic slowdown. Press associating McDonalds with obesity destroys McDonalds image. McDonalds in the past has been sued for its unhealthy products. McDonalds should try and solve these problems by investing heavily and effectively in research and development.

External Environment AnalysisIn reflecting the macro environment, it is vital for us to identify the factors that might affect the number of variables which can influence the organizations supply and demand levels and the costs as well. The variables of macro environment are discussed below:Political: The business operation of an organization is always influenced by the policies of state and its government. In India, McDonalds business is also under the control of governments rules and regulations. The main issue of controlling food business is health and other issues are license, employee laws, tax issues etc. Political instability of local state is also affects McDonalds business. Economic: All companies are affected by ongoing global economic slowdown. McDonalds India faces different scale of tax and revenue measurement. McDonalds also faces difficulties because of international currency fluctuations especially in its global food distribution. Local economical condition is also responsible for affecting McDonalds operation. Social: The life style of people is being changed and the demand of this change affects McDonalds. In India, Hindu people prefer vegetable, Muslim people avoid pork. To fulfill the customers expectation, McDonalds needs to research the market and also needs to provide effective food menu. Technological: The impact of technological innovation is also considerable to meet the customers expectation. As all existing food chains for instance, KFC, Pizza Hut etc, compete each other, McDonalds has to ensure the all technological access to influence the customers. Modern and speedy distribution channels, easy and quick payment facility, customer entertaining equipment in store, wireless internet facility in all stores etc. can help McDonalds to keep on its success.

Porters five forces Analysis

Porters five forces model is founded on the idea that strategy of an organization should be according to the threats and opportunities in the external environment of the organization. The five competitive forces, together, shape competition and its intensity, therefore industry attractiveness and its profitability. An analysis of the industry to help McDonalds management to benefit from the industry has been provided below. CompetitionThis industry is very competitive. Many large and small companies exist in this industry, fighting for improving the customer base by offering a range of products and services. Same is the situation with McDonalds in all over the world and India is not an exception. Presence of Dominos, Pizza corner, KFC, Barista and many of the local food companies in India are the threat for McDonald in India. High exit barriers, and low switching costs are also the part of the factors that increase the threats because high exit costs, on one hand, can force the companies to compete and survive in the same industry. On the other hand, low switching costs for consumers in the industry is a serious threat for McDonald because availability of choices can mean more buyer power and loss of customers.Entry

It is tough to come into this industry as it is difficult to create a distinctive brand name. Further, cost of entry associated with high research and development cost makes it difficult for the new entrants. Large reputable names in the industry such as McDonald make it hard for the new companies to enter and succeed in a given market. Similarly, high fixed and storage costs for perishable also are barriers to entry of the new firms in the industry. However, in case of McDonald in India, it can be seen that though new entrants are not the major threat, yet expansion of existing local restaurants such as Nirulas, are amongst the threats.Substitutes

Though as discussed earlier, McDonald has its own ways of surviving and growing in the markets including India, yet many substitutes from local and other multinationals are available in form of traditional Indian food including North-Indian and South-Indian, other Asian and Western. And this can result as a threat for McDonald and these foods can be replaced with MDC Burgers, Beverages, dairy products, and others or with some new foods, low in calories and fats.Strength of Suppliers

As discussed earlier, focus of McDonald on supply chain and its current supply chain structure and its relationship with suppliers of various ingredients of food are the factors which can be believed as strengths for the company. Seen this way, company does not seem to have any such challenge from the strength of suppliers.Strength of Buyers

Relatively strength of buyers is less threatening, but it does not mean that it is not there. Increasing competition and increasing substitute pose a threat for McDonalds. As already stated the presence of Domino, Pizza corner, Pizza hut and local food companies, competition and threat of substitution is increasing. Hence, the strength of the buyer is also on increase.

Competitors Analysis

McDonalds has been a leading fast-food outlet. But the outlet understudy has other competitors eating away into the market share. In addition to its traditional rivals KFC, Dominos, Pizza Hut- the firm encounters new challenges. Jumbo King competes using a back to basics approach of quickly serving up burgers for time-pressed consumer. On the higher end, the KFC has become potent competitor in the quick service field, taking away customers from McDonalds. At this times, a new critical success factor maybe emerging; the need to create rich, satisfying experience for the consumers. This brings us to service and experience based competition which McDonalds can use against Jumbo King.

McDonald's Entry to India In order to capitalize on the highly price sensitive economy, and the Indian mentality of liking anything that is foreign, McDonalds 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. McDonalds survived only due to keen understanding of the Indian economy. The massive and aggressive expansion strategies that McDonalds 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 McDonalds 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 McDonalds and almost every Indian has tasted McDonalds 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.McDonalds 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 McDonalds priced product in India. Their quick turnaround times made new inroads into the fast food industry. (Mathur, S., 2011)As providing value to the customer is the key, price sensitivity studies are conducted before determining the pricing. The rate of inflation is also reviewed. McDonalds definition of value was far broader than of most of the restaurants in its competition.

Question-2: Critically analyze its entry strategy in the Indian growing fast food industry.

Critical analysis of McDonald's entry strategy in the Indian growing fast food industry is given below-Emphasis on Local ManagementMcDonald's has given the adage of "think global, act local" a concrete shape in India. The company's localization strategy is clearly manifest in the critical area of management. Both Amit Jatia and Vikram Bakshi are responsible for running McDonald's in India. Vikram Bakshi has extensive background in real estate development in Delhi, while Amit Jatia, a vegetarian, has a chemicals and textiles business background in Mumbai. It was not their backgrounds; however that won the confidence of the Big Mac's Management. Rather it was their business plan emphasizing India-centric management strategies and their easy access to bureaucracy so critical to effective government relations building.

"Politically correct" Strategy In the beginning, McDonald's was faced with two challenges of the Indian market: (1) How to avoid hurting religious sensibilities of Indian consumers; and (2) How to avoid political confrontation with Indian government and political activists.McDonald's managers were well aware of the fact that political activists can create trouble for foreign-based fast food chains. The two local managing directors (Bakshi and Jatia) of McDonald's took a series of politically correct strategies to deal with the initial challenges of the Indian Market. Since India's majority of Hindus (80% of India's population) revere cows as scared and 150 million of Indian Muslims do not eat pork, beef and pork have been a "complete no-no" from the start. Instead, McDonald's introduced a mutton-based "Maharaja Mac" in India, as opposed to its flagship beef-based Big Mac elsewhere. 14 other items-such as the tantalizing McAloo Tikki Burger (breaded potato and pea Pattie)-were added to the menu to lure India's middle class. Approximately 75% of the menu available in McDonald's In India is Indianized and specifically designed to woo Indian customers.

Employment OpportunityIndia has come a long way from opposing the entry of MNCs to encouraging them to expand their business operations in India. Today, every expansion move McDonald's makes is received well by government officials. An important reason for this shift in attitude is the ability of the company to generate quality and long-term employment opportunities for Indians. McDonalds typically employs local people, and the average McDonald's restaurant in India employs more than 100 people in all kinds of positions-cashiers, cooks, managers, etc. Besides, every expansion also brings additional income and employment opportunities to Indian's agricultural workforce, which is very pleasing to government officials.Green SensitivityIn India, there is a vocal group of environmental and animal activists who oppose the entry of fast food chains like KFC and McDonald's. Maneka Gandhi, former environment minister in the central government, and Dr. Vandana Shiva, director of the Research Foundation for Science, Technology and Ecology, are the prominent leaders of this group. According to this group's campaign, junk food chains Like McDonald's and KFC destroy ecological balance and cause severe behavioral disorders because of their fatty and unhealthy foods, which have excessive level of monosodium glutamate (MSG). Besides, they also campaign that these food chains are anti-poor and cater only to the rich segment of the Indian society.To counter such negative campaigns, McDonald's has instituted a special fund to support in green movements in Delhi. In Mumbai, in addition to financial contributions, it sponsors various community-related activities-such as "keep your city clean"-to promote environmental consciousness. It was the first fast food restaurant chain in Delhi to withdraw the use of polythene bags in restaurants, replacing them with recyclable paper bags. It was playing a leading role in a campaign to detoxify one of Indian's major rivers.

Corporate Citizenship: Giving Back Is Good BusinessThe executives of McDonald's understand it well that giving back to society is not just a one-way street. It's also a critical element of a company's brand and reputation. Giving back to the community brings benefits that far exceed any costs-whether it's in terms of strengthening the brand name or generating positive political capital that translate into more official support for company's expansion strategy. Thus, as a part of its corporate citizenship strategy, McDonald's has been involved in many community-related projects in India. Most of its projects are, however directed toward children. One of its most popular community programs in 2002 children painting competition across all its outlets in Delhi. In 2000, McDonald's launched a massive Get Lucky promotional scheme in collaboration with MTV, Sony Music, Coca-cola, Hungama.com and General Motors. Another successful program sponsored by McDonald's is the Pulse Polio program that aims to make India polio-free by the year 2005.Needless to say, such community-related programs have earned official support for McDonald's and have helped its brand and reputation.Pricing Much of the McDonald's growth in India can be attributed to its pricing strategy. Since on an average, each household spends about 50% of income on food and beverages in India, food prices are always a sensitive issue. Even the Indian middle class, despite their much improved income level, remains very price sensitive. Accordingly, McDonald's has pursued what Amit Jatia, managing director in the Western region calls the consumers ability to pay. The adoption of such a pricing strategy in India offers a useful-country specific insight on possible price differences of the company's products on the basis of purchasing power parity (PPP) calculations across countries as provided by the so-called Big Mc Index.

McDonald's have been offering value meals in a range of prices-Rs 29, Rs 39, Rs 49, Rs 59, Rs 79, and Rs 89. McDonald's has employed this value-ladder strategy to ensure affordability and thus attract the widest section of customers. As Vikram Bakshi managing director of northern region in India explains, "our clear strategy is to bring the consumers in initially and provide a range of entry level products so that they can try new items and graduate to the higher rungs. Thus if a customer starts with a McAloo Tikki Burger what he graduates to finally is a vegetarian burger". So such strategy has helped its volume business.Another strategy that seems to have gone well with Indian customers is what the company calls the 80-20 menu board-80% visual and 20% descriptive. The main objective of the company is to make it easier for customers to understand what the 29, 39, 49, 59, 79, and 89 rupee options are. Coupled with the pricing range, McDonald's quick service, convenience, and no-tips environment have attracted many school and college going customers, as well as young middle class families. The most important reason for McDonald's pricing flexibility is its well-established supply chain arrangements, which ensures efficiency and speed in distribution. Besides, huge increases in volume sales and food processing technology have been helping the company to offset its cost.

Supply Chain ManagementAnother critical strategy was to set up a well-established supply chain in India in order to achieve three objectives-1. To operationalize its globally practiced QSCV (quality, service, cleanliness, and value) principle;2. To enjoy flexibility in pricing; and3. To launch a new product when necessary.To achieve these three objectives McDonald's decided to source its raw material from the local suppliers to the maximum extent possible. The company sources 95% of its raw materials from 38 local suppliers. Setting up a well-coordinated supply chain McDonald's and its international suppliers worked together with local Indian companies to develop products that meet the rigorous quality standards McDonald's demands. McDonald's entire supply distribution in India is the responsibility of AFL Logistics Ltd, a joint venture between Airfreight and Coughlin in the U.S, and Radhakrishna Foodland (P) Ltd. in Thane Maharashtra.Such meticulous planning in setting up a well-coordinated supply chain system has paid rich dividends to the McDonald's operations in India. It has minimized costs, optimized quality control, and ensured higher customer satisfaction, which is very essential for the company's growth.

LocationThe initial openings of McDonald's outlets in Delhi and Mumbai were driven by affordability and brand recognition factors. Logistically play a critical role in mcDonald's location strategy. Besides, Delhi and Mumbai, other places where McDonald's has opened up restaurants are satellite cities located near at the inter-state bus terminal in New Delhi; at airports and railway stations; on busy highways and in petrol stations; in malls, multiplexes and cinema halls; Places with tourists appeal, such as- Jaipur, Mathura and Shimla. One advantage of these outlets was that they required lower investment per outlet versus a traditional format.

Cultural SensitivityMcDonald's has also introduced several new products specifically for Indian consumers in order to get accepted and successfully blend into local Indian culture. Majority of Indians do not eat beef or pork, the introduction of the Maharaja Mac (a mutton based burger) by McDonald's seems to be an appropriate cultural fit. McDonald's has sought to enforce strict standards in product development and cooking so as not to ruffle cultural sensitivities of the vegetarian consumers of the Indian society. All foods are strictly segregated into vegetarian and non-vegetarian lines and separate utensils are used for cooking vegetarian and non-vegetarian foods.

Family-Centric and Child-Centric strategyIn India, McDonald's has positioned itself as a family restaurant. Family has become the cornerstone of its strategy. McDonald's restaurants provide a clean, comfortable and stress-free environment especially suited for working families. McDonald's has become an attractive place for working and busy young parents on weekdays. On weekends, residents of Delhi and Mumbai bring their children to McDonald's so that they can relax, while their children play in McDonald's hugely popular play place.Local adaptation, no doubt has contributed to McDonald's business growth in India. As Vikram Bakshi sumps up, "Good planning is absolutely necessary when you go into any country. Very clearly you have to understand the culture; you have to understand how you intend to be relevant to the consumer in that country. I don't think any brand, no matter how big it is, can take the market lightly and I think the biggest mistakes is when you think you have a big brand and that everyone is overwhelmed by it. Because, whatever the brand, it has to be relevant to the consumer of that country.By providing country-specific relevant products-Maharaja Mac and about 75% Indianization of its products-McDonald's has been able to triumph over its last great frontier.

Question-3: Indentify the functional strategies that McDonald's pursued to establish its strong foothold and make India as an export base for cheese, lettuce and other products.Functional Strategy A course of action or set of decision rules making a pattern and creating a common thread. Functional Strategy is that type of approach where functional areas take initiatives to achieve corporate and business unit objectives and strategies by maximizing resource productivity.Mc Donalds operating and expanding its business in India with using various functional strategies. They have successfully created a very standard supply chain and have done an excellent job in setting up a restaurant system with vegetarian/meat areas distinctively differentiated. Their overall business initiatives were very responsive in INDIA. In terms of its functional strategy theory Mc Donalds focuses on its Marketing strategies (pricing, selling, distributing) as well as production function to establish a strong foothold in Indian market.While conducting research it is founded by, Mc Donalds that about 12.5 billion worth of food produce was wasted in India mainly due to lacking in infrastructure for storage and transportation under controlled conditions. In its commitment to providing quality products while supporting Indian businesses. They started sourcing its requirements from local farmers and suppliers and always maintained an adherence to Indian government regulations on food, health and hygiene. McDonalds spent a few years in setting a unique supply chain, before opening the restaurants for the first time in India. McDonalds purchased more than 96% of its products and supplies from Indian suppliers. McDonalds described the relationship between itself and its suppliers as mutually beneficial, reasoning that McDonalds expanded business in India, suppliers would get a chance to expand their business as well.The cold chain was necessary to maintain the integrity of food products and retain their freshness and natural value. This cold chain was established by Mc Donalds to facilitate the transfer of food processing technology to Indian entrepreneurs, who had become the integral part of the supply chain. The new projects had the following facilities:Trikaya Agriculture: Supplier of ice berg lettuceTrikaya firms in Telegaon, Maharashtra with help of Mc Donalds started to grow various crops such as iceberg lettuce, specific herbs and various Asian vegetables throughout the whole year. They also initiated to supply these crops to a number of hotels, flight kitchens, clubs as well as offshore catering companies all over the India. Mc Donalds was assisting in selecting high quality seeds, exposed the firms to advance drip irrigation technology and helped to develop refrigerated system with a motive to provide high quality lettuce in the urban branches of Maharashtra specially. Not only had this Trikaya also planned to expand business outside the local boundaries including Middle East, gulf success fully and also on Australia (frozen peas).Vista process foods LtdBy signing a joint venture ship contract with (ISO) Inc, USA & Mc Donalds India Private Ltd, Vista Process food limited started to supplying their processed items to various institutions: such as hotels, schools, hospitals, caterers, canteens, food service establishments and coffee shops. This new infrastructure situated with mentioned benefits: Separate processing lines for chicken and vegetable foods; Able to produce frozen food at -35 degree Celsius to retain freshness; International standards, procedures and support services.Dynamix Dairy: supplier of cheeseA new network of milk supply center was established to enable farmers to augment their income called DYNAMIX including the following facilities: Fully automatic international standard quality; Capacity to convert milk into cheese, ghee, skim milk powder, lactose, humanized baby food.Later they introduced business with USA, (Schreiber foods, Erie foods) in order to grab improvements in quality and manufacture ring capabilities in producing value-added milk products.AMRIT Food (ISO 9000)This company introduced two established brand Gagan milk and Nandan Ghee in Uttar Pradesh, Tehy provide: Capability to produce 600liters/hour Ultra High Temperature (UHT) processed milk and milk products; State of the art fully automatic machinery without any human contact-total hygiene; Equipped quality control laboratory-ensuring strict control.

RadhaKrishna Foodland-Distribution CenterMc Donalds expanded local supply network through Radhakrishna Foodland which used to operate distribution center for restaurants in Delhi and Mumbai. They also introduced Foodland to F.J Walkers in Australia later. This Foodland center was specialized in handling large volumes, providing the entire range of services including procurement, quality inspection, storage, inventory management, deliveries, and data collection, recording and reporting. They included: A one stops shop for all management services; Day and clod shortage facility to store and transport perishable items at -22degree Celsius; Effective process control for minimum distribution cost.

The distribution center used to maintain integrity of the products throughout the entire cold chain-ranging from liquid products coming from Punjab to lettuce from Pune. Buns were sourced from Cremica in Phillaur ,Punjab and Mrs. Bector & Sons in Khopoli, Maharashtra . Cremica started working with one of the Mc Donalds suppliers from Europe to develop technology and expertise ,which allows to expanded business from Baking to Breading and batters to Mc Donalds and others. Sauce came from Bector, Phillaur, Punjab and Hindustan Lever limited. The distribution centers received and stored in rooms at different temperature zones, items coming from different parts of the country and dispatched to the Mc Donalds restaurants on basis of requirement.Potato Firm: GujratFrom 1991 Mc Donalds was looking for a particular variety of potato to make it French fries, which required to have a certain length, high solids content and low moisture content. With this motive Mc Donalds and its supplier partner ,Mc chain Foods private Ltd(worlds largest French fries company) worked closely with farmers of Gujarat and Maharashtra to develop process grade potato varieties.

RecommendationAccording to the analysis, McDonalds should apply differentiation strategy by providing stand-out services. It will protect McDonalds against rivalry from its competitors in a very strong competitive industry such as KFC, Wendys, and Pizza Hut. First, McDonalds will have to make their products differentiate from their competitors by offering new healthier foods and beverages for consumers. For example, they can offer new kind of foods that their competitors have not done yet such as milkshake, fresh breads and cookies in their McCafes. They can offer new menu to new targeted customers such as customers who are vegetarians or those who likes eating low-carb. They also need to improve the delivery and customer service to become the best in delivery and customer service. The faster delivery speed is, the higher customer loyalty is. Throughout the analysis, it is found that the major ongoing issue in McDonald as well as in the Indian fast food market is the increasing concerns about the unhealthy foods containing more oil and calories and the rising obesity, which has become a major ethical issue. Hence the need to increase the customer perceived value through adding unique features with superior quality and competing based on perceived value. The recommendations for the McDonalds in Indian market are as follows: Add more healthy items in to the value menu. Foods such as fruit and maple oat meal are very famous among customers in USA, where these need to be added in the Indian menu too; Focus on changing its existing products to discourage unhealthy eating habits; Come up with better names for the healthy dishes to encourage customers to eat them; Charge higher price for the products to increase perceived value; Getting the products endorsed by a famous celebrity; Explain behind the scenes value of the people and processes; Invest more on R& D to innovate new ways of producing healthy foods; Set targets and agree on the acceptable oil & calorie usage in each dish in the menu throughout all the outlets in India and evaluate on a continual basis; Establishment of League tables of oil & calorie usage by each outlet should be introduced and linked to monthly awards for achievements; Increase CSR activities to show McDonalds commitment towards the wellness of the public; Use of technology to introduce new features &increase variety for vegetarians; Improved customer service.ConclusionMcDonalds in India faces some difficult challenges. Key to its future success will be maintaining its core strengths. They still need to improve some areas on the basis of which they can even become more successful. The most important thing is that they need to focus more on their competitors and upcoming market fast food companies that because they are big threats for the company. Otherwise their will lots of issue they will have to face.

References1. Bhanu Pande and Aarti Dua, "Big Mac's Appetite for Growth," Business Standard, August 29, 2000, p.4.2. Cooper, R.G., Edgett, S.J. (2009).Product Innovation and Technology Strategy. USA: Stage-Gate International.3. Chaturvedi, P., (no date)How McDonalds evolved its marketing in IndiaAvailable[online] http://ipm.ge/article/How%20McDonalds%20evolved%20its%20marketing%20in%20India_ENG.pdf (Accessed: April 2, 2012)4. David, Fred R., 2010-2011, Strategic Management: Concepts and Cases, 12th edition, Pearson Education, Inc, New Jersey.5. David, Fred R., 2011, Strategic Management: Concepts and Cases, 13th edition, Pearson Education, Inc, New Jersey 07458.6. Mathur, S., (2011)McDonalds Spices Up Products for Indian VegetariansAvailable [online] http://www.buddingmarkets.com/?p=39 (Accessed: April 3, 2012)7. "Seema Shukla,"McIndia,"Business Today, November 25, 2001, p 58.8. Thompson, A.A, Strickland, A.J & Gamble, J.E (2010), Crafting and Executing Strategy: The Quest for Competitive Advantage, 17th edition, McGraw-Hill/Irwin, New York.9. Related visited website address: http://en.wikipedia.org/wiki/Fast_food_restaurant http://en.wikipedia.org/wiki/Indian_fast_food http://www.mcdonaldsindia.net/home.aspx http://www.mcdonalds.com/us/en/home.html http://www.economist.com/node/16380043 http://www.eiu.com/industry/article/311021215/india-food-fast-growth-for-cheap-eats/2013-10-03 http://www.calypso.co.uk/news/the-history-of-the-fast-food-industry https://libcom.org/history/fast-food-industry-how-it-was-built http://www.globalthen.com/qsr/pdf/Indian%20Fast%20Food%20Industry.pdf http://www.foodserviceconsultant.org/region/asia-pacific/india-a-fast-food-nation https://www.franchisehelp.com/industry-reports/fast-food-industry-report/ http://www.forbes.com/sites/saritharai/2014/11/06/in-indias-crowded-fast-food-market-newest-entrant-burger-king-pre-sells-burgers-online/ http://blogs.wsj.com/indiarealtime/2013/09/19/indias-fast-food-market-set-to-bulge/ http://articles.economictimes.indiatimes.com/2014-10-01/news/54516715_1_domino-south-indian-pizza-brand/2 http://www.qsrmagazine.com/reports/9-fast-food-trends-2015 http://www.economist.com/news/business/21638115-after-long-run-success-worlds-largest-fast-food-chain-flounderingand-activist http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-7 http://www.theguardian.com/business/2015/jan/23/mcdonalds-reports-profits-plunge-report http://www.transparencymarketresearch.com/pressrelease/global-fast-food-market.htm http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/Investors/McDs2013AnnualReport.pdf http://www.statista.com/statistics/273057/value-of-the-most-valuable-fast-food-brands-worldwide/

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