McDonald's was successful in India due to its localization strategy, affordable pricing, and focus on families. It customized its menu to exclude beef and pork and include vegetarian options popular with Indians. McDonald's also adapted its operations, like separate preparation areas for veg and non-veg. Its affordable pricing and frequent promotions helped attract customers. Over time, McDonald's expanded its menu, used aggressive advertising, and introduced home delivery to increase brand recall and market share in India.

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Aniruddh Agarwal[Roll Number : GMAY16IT52 | Global Awareness Reflective Paper
McDonald’s in INDIA
Problem Statement: What are the factors that contributed to the
success of McDonald’s in Indian market?

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Table of Contents
Introduction ......................................................................... Error! Bookmark not defined.
Business Model - McDonald’s entry and expansion strategy in India………………………………
Prahalad and Doz Model……………………………………………………………………………………………2
Upsalla Model................................................................................................................ 3
McDonald’s Pricing Strategy............................................................................................... 6
McDonald's Marketing Strategy……………………………………………………………………………………..7
Conclusion...........................................................................................................................8
References……………………………………………………………………………………………..…………………(8-9)
Appendix………………………………………………………………………………………………………………………9

3. PAGE 1
1. Introduction
McDonald’s -the world’s largest chain of hamburger fast food restaurants entered
into India market in the year 1996 as a joint venture(JV) between Oak Brook III
and 2 local associations - Connaught Plaza Restaurants Private Ltd and Hardcastle
Restaurants Private Ltd when the fast food retail market in Indian was still at
initial stage. Indians consumers are food lovers and have great preferences for new
taste and food items. McDonald’s have very successfully customized their food
items to the taste, likings and preferences of Indian consumers. McDonald’s in
India have designed their menu keeping in consideration the religious sentiments
of people. The menu doesn’t contain any beef related food items as it is not
considered religiously correct to eat cow’s meat in India.
The objective behind the paper is to study, evaluate and analyze the entry and
formation of McDonald’s in India and determine factors that contributed to the
growth of McDonald’s in Indian market. The paper also focuses on how
localization strategy, franchisee business model and low pricing strategy helped
them enter into one of the biggest and complex market in the world and gain
market share (Exhibit 3). Today, McDonald stands at top in Indian fast food
market but still faces tough competition from local fast food retailers and other
multinational companies. The basis of the paper is to evaluate how McDonald’s
maintained its dominant status and factors that led to success of McDonald’s in
Indian market.
2.Business Model:
2.1 International Business Model by Prahalad and Doz Model
High
Low
Global Strategy
Multidomestic
Strategy
Home Strategy
Transnational
Strategy
Need for
standardization and
central location
Pressure for local responsivenessLow High

4. PAGE 2
 McDonald’s has moved from having a Global strategy to adopt a
Multidomestic strategy in India. There is high pressure to adopt to local
responsiveness and low need for standardization.
 In India, McDonalds came up with menu with no beef and pork food items
as its consumption might hurt the religious sentiments of people.
 McDonalds replaced its core product, the Big Mac with the Maharaja Mac.
The Maharaja Mac had a mutton patty instead of beef patty.
 As 40% of Indian population is estimated to vegetarians, the menu included
the low priced McAloo Tikki burger (prepared using potato)
 McDonalds also introduced spicier sauces such as McMasala and McImli
(prepared using tamarind)
 The localization strategy was restricted not only to menu but covered
various other aspects of the restaurant management system.
 In a restaurant McDonalds came up with the idea of having two different
menu boards – green for vegetarian products and red for non- vegetarian
products (Exhibit 2)
 The kitchen in the restaurants has separate dedicated preparation areas for
non-veg and veg dishes.
 To clearly segregate veg from non veg, the Kitchen staff in McDonalds who
is responsible for preparing the veg dishes has different uniform than those
responsible for preparing the non-veg dishes.
 McDonald’s went one extra mile to convince its customers and took them on
kitchen tours
 In 2000, McDonald’s included two new Indianised food products to its menu
one each in nonveg and veg category – The Chicken McGrill and Veg Pizza
McPuff. To give Chicken McGrill an Indian flavor, chicken patty was mixed
with onions and mint flavored sauce. The Veg Pizza McPuff was prepared
keeping in as a substitute of very popular Indian Samosa.

5. PAGE 3
 In 2000, the 75% of the menu in India was unique and different from rest of
the standardized McDonald’s system.
2.2 Upsalla Model
McDonald’s Expansion Strategy is Indian market is explained with the help
of Upsalla Model.
 Experience in Domestic Market (USA)
 McDonald’s founded 76 years ago, in its early days (in 1940’s) made most
of their profits selling only hamburgers, cheeseburgers, potato chips,
coffee, soft drinks and apple pie.
 In 1952, the McDonald’s brothers start seeking for franchises. Neil Fox, a
distributor for General Petroleum Corporation was their first franchise.
Today, the Business model of McDonald’s is based on franchise based
model coupled with strong corporate branding.
 By 1958, McDonald’s had 34 restaurants across the nation. In 1959, 68 new
restaurants opened, bringing the total to 102 locations
 In 1965, McDonald’s corporation went public for the first time. Common
shares were offered @ $22.50 per share. In 1968, McDonald’s opened its
1000th restaurant.
 McDonald’s continued to grow in 1970’s. In 1975, McDonald’s came up
with its first drive-thru window in Sierra Vista, Arizona to provide
Experience in
Domestic
Market (USA)
Move to Global
Market
Start operations
in culturally
similar countries
(Indonesia)
Intensive
demanding
operation mode
in India

6. PAGE 4
American consumers a quick way to grab a quick meal. The Happy Meal, a
combo meal featured with a toy introduced in 1979 was a great hit.
 During the 1980’s, McDonald’s further diversified its menu to changing
tastes and preferences of the customers. McChicken was introduced for
the first time in 1980 which was later replaced with Chicken McNuggets a
year later due to sale disappointment.
 The company made several notable blunders in the United States in the
1990’s due to which it has to cut back on its US expansion.
 Move to Foreign market:
 After McDonald’s went public in 1965 in USA, they made efforts to enter
into the international markets as well. The first international franchise
opened was in British Columbia which was followed by another in Costa
Rica in the same year.
 Hereafter, within the six-month period in 1971, restaurants were launched
in Japan, Holland and a suburb of Sydney
 In 1979, a Brazilian McDonald’s was opened, introducing Ronald
McDonald to the South America for the first time
 In 1992 McDonald’s reached its 6th continent with the opening of
restaurant in Casablanca, Morocco
 After that there was no looking back for McDonald’s and they claimed to
be opening a new restaurant every 3 hours in some part of the world.
 Start foreign operations and experience from culturally similar
countries (In Indonesia):
 McDonalds entered into Asian markets knowing the fact that Asians are
food lovers and Asian economy was rapidly growing. While establishing
the stores in Asian market McDonald’s took special consideration of
tastes, likings, preferences, customs, cultural and emotional values.

7. PAGE 5
 In 1991, McDonald’s established its first store in Indonesia with one of the
restaurant becoming one of the highest generating monthly gross revenue
McDonald’s in the world. There are currently about 150 locations in
Indonesia.
 Formed the joint venture with Bambang Rachmadia (one who established
McDonald’s in Indonesia in 1991) to further expand the business.
 McDonald’s has done product adaption to suit to the local taste and
cultures such as introduction of rice dishes and chill sauce.
 The experience gained in the Indonesian market helped McDonald’s setup
the business in similarly cultured country India.
 Intensive demanding operation Mode (In India):
 McDonald was launched in India in 1996 in New Delhi as a joint venture.
 Although McDonald’s had the experience of product adaptation in the
past but the level of product adaptation required in Indian market was
significantly much higher
 India is the first McDonald’s market with no beef and pork food items on
its menu. All sauces are egg less and preparation is done keeping in mind
the vegetarian crowd
 McDonald’s in India initially targeted metro cities, tourist rich and
business centers. (Exhibit 1)

8. PAGE 6
3. Pricing Strategy of McDonald’s in India
 To fight its premium image in the Indian market and attract consumers to
the store, the company ran periodic offers and reduced price selectively.
 In early 2000’s, the company greatly reduced the price of soft serve ice
cream cone from Rs. 16 to Rs. 7 and still managed to earn healthy margin of
40% on cones.
 McDonald’s Happy meal, which contains a complimentary toy as well was
priced as low as at Rs. 46.
 The prices of McDonald’s in India were lower in comparison to other Asian
economies like SriLanka and Pakistan.
 The price of Maharaja Mac was half than the equivalent product in the
United States.
 In 2009, McDonald’s reduced the price of it lunch and dinner menu by 25%
 The low price strategy at McDonald’s can be explained by two factors: 1)
The pricing strategies of competitors and 2) Low cost and dedicated Supply
chain network.

9. PAGE 7
4.McDonald’s Marketing Strategy in India over a period of time
(1997 -2016)
Time period - (1997-2000)
Objective: Brand Building
 Introduce themselves as
an Indian restaurant and
not as a foreign
restaurant
 Regular connect and
interaction with the
consumers with the
intent to educate them
about their products
 Emphasis on separate
installation of veg and
non veg preparation area
 Smart use of famous
mascot - Ronald
McDonald to connect
with the kids
Time period - (2000-2009)
Objective: Increase Brand
Recall
 Use of aggressive
television advertising
with a humor appeal
 Introduction of Happy
price menu as a cost
leadership strategy move
 Targeted Indian youth
more than Indian family
 Introduction of the
delivery service to further
expand their service
model
Time period - (2010 onwards)
Objective: Create brand
differentiation
 Current advertisements
have an emotional appeal
to connect with the Indian
consumers
 Expansion of menu
offerings is their current
strategy
 Brand reinforcement
through advertisements
with the classic
McDonald’s “I’m lovin it”

10. PAGE 8
5.Conclusion
McDonald’s in India is one of the most successful franchise and growing
consistently over the period of time (Exhibit 3). The main reasons for McDonald’s
success in the Indian market can be summed up as below:
 High sensitivity towards local taste, preferences and likings of Indian
consumers.
 Affordable pricing was another key factor behind their success considering
the fact people are very price sensitive and going out for lunch or dinner is
not that a common practice as compared to west.
 Promoting the family dining experience worked in their favor as people in
India love to eat with their friends and families.
 Time to time Innovation practices like home delivery, introduction of
breakfast menu served from 7.00 am to 11.00 am has always keep them
ahead in the competition.
 McDonald’s strong dedicated supply chain network, quick service
restaurants, MFY (Made for You) food preparation, cluster wise expansion
strategies all played crucial role in determining success of McDonald’s.
If McDonald’s can continue to overcome all it challenges, make proper use of
advantages and opportunities and employ right strategies at the right time and
innovate, it will continue to be ahead of its competitors (KFC, Burger King,
Subway etc.) and grow in the Indian market for the next share 10 years at least.
With people becoming more health conscious, McDonald’s should consider to
launch healthy products in their menu like soup, salads, whole wheat breads,
honey oat breads and convert their image to healthy food provider.
6. References
 Pangarkar, N., & Subhramanyan, S. (n.d.). Beefing up the Beefless Mac:
McDonald’s expansion strategies in India. Retrieved from
http://www.mi.rei.ase.ro/Site MI/AI/Studiu de caz 4_McDonald's.pdf

11. PAGE 9
 S., & Kaur, S. (2012, September). Strategy and Repositioning the Brand
McDonald’s in India. International Journal of Scientific and Research
Publications, 2(9). Retrieved from http://www.ijsrp.org/research-paper-
0912/ijsrp-p0935.pdf
 Essays, UK. (November 2013). McDonald Adaptation in India Marketing
Essay. Retrieved from
https://www.ukessays.com/essays/marketing/mcdonald-adaptation-in-
india-marketing-essay.php?cref=1
 Kanan, S. (2014, November 19). How McDonald's conquered India.
Retrieved from http://www.bbc.com/news/business-30115555
 Gordon, A., Deshmukh, A., Gupta, D., Hung, S., & Baek, C. W. (n.d.).
McDonald's adapts to India. Retrieved from
http://connect.mheducation.com/connect/hmStudentSectionHomePortal.
do?sectionId=61147440.
7 Appendix
Exhibit 1 - Profile of the Indian Cities targeted by
McDonald’s in Initial days (around year 2000)
City Remarks
Delhi Capital of India, seat of the central
government and a metropolitan city
Bangalore India’s Software hub/Silicon Valley
of India
Mumbai Financial Capital of India
Ahmedabad A major Business center of western
India
Pune Manufacturing center and satellite
town of Mumbai
Jaipur A major tourist place

12. PAGE 10
Agra Tourist place; home to one of the
seven wonders of the world- Taj
Mahal
Exhibit 2: Vegetarian (In green) and Non vegetarian menu
(in Red) at McDonalds
A-LA -CARTE MENU
VEG Non-Veg
Veg Pizza McPuff Rs 25/- Chicken Mcgrill Burger Rs 44/-
McAloo Tiki Rs 29/- Masala Grill Chicken RS 56/-
Masala Grill Veg Rs 51/- Filet-o-Fish Rs 96/-
McVeggie Burger Rs 67/- Chicken Maharaja Mac Rs 100/-
McSpicy Paneer Rs 116 BigSpicy Chicken Wrap Rs 149/-
Exhibit 3: Comparative study of McDonald’s India with
other competitors (KFC India and Dominos India)