Case Study about McDonald´s in India

1. MCDONALD’S IN INDIA
International Marketing

2. GROUP 6
 José Morales

3. SITUATION PRESENTED IN THE CASE

4. INDIAN FACTS - DIVERSITY

5. INDIAN FACTS – BIG OPPORTUNITIES
 India added 181 million people between 1990 and 2001.
 India is the only country where the population will continue growing for
the next fifty years.
 Most high-income Indians prefer to live in the urban areas.
 Over the 70% of wealthy urban Indian consumers live in the most
populated and cosmopolitan cities in India
 India is part of the BRIC (annual average growth of more than 5%, and
by 2032 its GDP will be bigger than Japan’s).
 High income residents are seeking variety in their choice of foods and
are willing to spend more in international cuisine including fast foods.

6. INDIAN FACTS - INDUSTRIAL REFORM
 Abolition of industrial licensing.
 Removal of control over capacity operation.
 Participation of foreign firms in new projects
 Privatization
 Price liberalization

7. INDIAN FACTS – CAPITAL MARKET REFORM
 Liberalization of foreign invests
 Access to global capital markets
 Rupee convertibility on current account

8. INDIAN FACTS – OTHER REFORMS
Tax Reform
 Reduction of Income tax rate.
 Abolition of wealth tax.
Labor Market Reform
 Exit Policy
EXIM Policy Reform
 Reduction of tariff structure

9. PROBLEM(S) PRESENTED IN THE CASE

10. PROBLEMS
 Indian diversity.
 Religion/Cultural constraints.
 Environmental and animal activists opposed the entry of fast food
(like KFC and McDonald’s).
 The Idea than this type of junk food destroy the ecological
balance and cause several behavioral disorders because of the
fatty and unhealthy foods.
 Perception that McDonald’s was a food for rich people.
 Poor transportation and storage infrastructure.
 Lower-quality agricultural products.

11. INDIAN FOOD PREFERENCES

12. POSSIBLE ALTERNATIVE SOLUTIONS

13. ENTRY STRATEGY
 McDonald’s spent about six years in planning, extensively
researching Indian consumer tastes, product development and
supply change management before opening its first outlet in 1996.
 Emphasis on Local Management (Glocalization), “Think global, act
local”
McDonald’s, decided to set up 2 joint ventures on 50:50 basis with 2 local
entrepreneurs:
In Mumbai : Amit Jatia (background in real state development) owns
Hardcastle Restaurants Private Limited (West and South)
In Delhi: Vikram Bakshi (vegetarian with background in chemical and textile
business)owns Connaught Plaza Restaurant (north and east)
Both (Amit and Vikram) were helpful to access bureaucracy and for building
relationship with government.

14. LOCATION
McDonald’s opened its first outlets in
Mumbai and Delhi due to:
 These 2 cities have metropolitan culture
and wide Western exposure.
 There live the most of the Indian’s rich
and upper middle class inhabitants who
were aware of McDonald’s food.
 There were the 2 distribution centers of
McDonalds.
Due to logistics play a critical role in
McDonald’s location strategy, the first outlets
were opened only within a 500Km radius of
its main distribution centers.
McDonald’s also made some partnerships in
order to opened outlets besides the
petroleum stations, railway stations and
drive-through in Delhi and along national
highways.

15. “POLITICALLY CORRECT” STRATEGY
How to avoid hurting
religious sensibilities of
Indian consumers?
(80% Indians revere cows as sacred
and 150 million of Indian Muslims do
not eat pork and beef.)
Adaptation
McDonald’s adapted itself to
the Indian market
introducing a mutton-based
“Maharaja Mac” in India as
opposed to its flagship beef-
based Big Mac.

16. GREEN SENSITIVITY
A vocal group of environmentalists, raised campaigns against
junk food, saying that McDonald’s and KFC destroy ecological
balance and cause behavioral disorders because of their fatty
and unhealthy foods, which have excessive levels of
monosodium glutamate. Also they said this food is anti poor.
To face up this campaigns McDonald’s:
 Instituted a special fund to support Green movements.
 Has sponsored various community-related activities, such as
“keep your city clean” to promote environmental
consciousness.
 Adopted the slogan “We love Green”.
 Has sponsored and promoted several sports activities in order
to attempt a healthy lifestyle like the “Olympic Day Run”.
 Is focusing on fine tuning its fast food image adding health
food options to its product.

17. CORPORATE CITIZENSHIP
McDonald’s has:
 Understood than “giving back” to society gain benefits
and reputation. (like community projects for the children,
for example: McDonald’s Spotlight a interschool
performing art competition).
 Sponsored children programs as the Millennium Pune
Festival (search talents for children between 8 to 15
years) in collaboration with UNESCO and Disney World
Resort.
 Sponsored the Pulse Polio program that aims to make
India polio-free country until 2005.
 Participated in celebrating days like World Children’s
Day and in their own initiative known as the “Blue Dot”
that supports educational programs for the girl child.

18. PRICING – UP SELLING
McDonald’s strategy has been to increase sales
volume of its products by making it products
available at an affordable price. They started
cutting off some prices and offering value meals
in a range of prices: Rs29, Rs39, Rs49, Rs59,
Rs79 and Rs89.

19. PRICING – CROSS SELLING
McDonald’s offers different Add-Ons and
Bundles:

20. EMPLOYMENT OPPORTUNITY
McDonald’s typically employs
local people:
• Each restaurant in India
employs more than 100
people:
 Cashiers
 Cooks
 Managers
 Attendants
• Also every expansion brings
additional employment
opportunities to India’s
agricultural work force.

21. SUPPLY CHANGE MANAGEMENT
Objectives:
1) To operationalize its globally
practiced QSCV (quality, service,
cleanliness and value).
2) To enjoy flexibility in pricing.
3) To launch a new product when
necessary.

22. FAMILY AND CHILD CENTRIC STRATEGY
To attract families, McDonald’s
Offer:
• A clean, comfortable and
stress free environment
• For young busy working
parents: A safe place for
Children to play while parents
can eat and relax.
• For children: Birthday
celebrations, cakes, candle,
toys.
• A meeting place for teenagers
• Lounges for Senior Citizens

23. PROMOTIONS TO ENGAGE CUSTOMERS
 “Lucky Itch”,
instant scratch-
win prizes
 "Music Meal“,
created to attract
young adults.

24. RECOMMENDED SOLUTION

25. RECOMMENDATIONS
 Expand to other Cities to increment profits:
 Development of new distribution centers.
 Additional Adaptation Cost/New product development (due to different
regional preferences)
 Reinforce the family engagement
 Due to the “American Dream” is important in India, maybe they can open
some outlets near to the most important universities.
 Use Social Media Marketing to be in touch with Loyal Customers/Fans.
 Create contests to create to get consumers feedback, something similar
than Peruvian Fast Food Chain called Bembos, which created a contest
called “Create your Bembos (Burger)”. So, each consumer is able to
submit his own recipe and he can won a Prize if his recipe is the one
selected by the jury.
 Due to there is a growing fitness culture in the world, maybe, some
vegetarian products could be adapted to other markets.
 Due to there are some places as New York, California and Florida with a
high population of Indian immigrants , maybe, some of the product
developed for India could be offered there.

26. QUESTIONS