INTERNATIONAL BUSINESS ASSIGNMENT

Submitted by Group 9
MCDONALD’S IN INDIA

Given the challenging country context of India,

why has McDonald's done well in India?
• They emphasize on local management: McDonald’s India hired local resource in their team and
emphasised on local talent because they are more aware of the local taste and preferences.

• Indian- zed menu: They customised the menu according to the Indian taste and culture by taking
out beef out of the menu and introducing vegetarian options.

• Supported Green movement in Delhi

• Sponsored various community and sports related activities

• Lowered their prices for the Indian market: Prices were slashed down according to Indian
income to target the middle income group and not only keeping to the affluent. The cheapest
option on the menu started at Rs. 19

• Culture change (research shows that in 2003, of 100 meals that people ate in a month, only
three were eaten out)

• Fast competition (with Domino's Pizza and KFC)

• A Restaurant Management System (RMS) was created for efficient management of the
operations.

• The vegetarian menu was printed in green and the non-vegetarian menu in
purple to clearly distinguish the menus
How did McDonald's tackle the cultural, political
and economic issues in its Indian operations?
POLITICAL:

 The company’s emphasis on local management: The Company’s localization strategies

clearly manifest in the critical areas of management.
 They decided to set up two joint ventures on a 50-50 basis with 2 local entrepreneurs in
Mumbai and Delhi.
 It was not their backgrounds that won the confidence of the Big Mac’s management,
but their business plan, that emphasised on India-centric management strategies and
their easy access to bureaucracy, so critical to effective government relation building.
 McDonald’s typically employs local people and the average McDonald’s restaurant in
India employs more than 100 people in all kinds of positions. This generated a huge
support from the government side
 Collaborating with the local farmers that has served as an important catalyst for
increasing farmers income , so this has scored very well on political front and won the
government’s goodwill

CULTURAL:

 McDonald’s took a series of politically correct strategies to deal with the initial
challenges of the Indian market since India’s population was Hindu majority. Hindus
consider cows as sacred and 150 millions of Indian Muslims do not eat pork. Thus beef
and pork have been a complete no-no from the start. Instead, they introduced a
mutton based Maharaja Mac in India.
 Separate utensils were used for cooking vegetarian and non-vegetarian food
 It has also introduced several new products specifically for Indian consumers in order to
get accepted and successfully blend into local market

ECONOMIC ISSUE:

 Due to India higher import duties and foreign exchange fluctuation , McDonald’s
decided early on to source its raw materials from local suppliers to the maximum extent
possible, It has also used technologies like ERP(Enterprise Resource Planning) for the
timely delivery of goods at the minimum price
 It has managed to reduce its per store investment cost , as it is being clearly mentioned
in the case that it has reduced its per-store investment by 33% in 2003-2004 as
compared to 1996
As a part of its corporate citizenship strategy, McDonald’s has been involved in many community related
projects in India, most of them directed toward children.

What are some of the important lessons

of McDonald's operations in India?
Some of the important lessons of McDonald's operations in India are:

 McDonald’s continuous product innovation and customer satisfaction

through greater customer reach. In order to sustain in a very competitive
market McDonald’s has to continuously think of bringing in new
concepts into all its operations especially in marketing.
 Balance between business and religious harmony: Political influence
could have destroyed the business as majority of the Hindu worship cow
and Muslims were prohibited from eating pig meat. So Mutton Mac
Maharaja came into being. The menu was Indianised.
 Avoid Confrontation with government and political parties: Acceptance
of the American culture with the Indian culture. McDonald’s as
America’s premium FFS restaurant fits well with India’s modernizing
Socio-Economic and cultural Equity.
 McDonald’s had to bring in something that would help in long
sustainability and that unrivalled position on market as the “foodtailer”.
The result of a spontaneous thought led to the introduction of the
breakfast outlets and a chance encounter with a technology specialist
ended up with online booking orders and birthday parties and signature
outlets.
 These are signature products of McDonald’s and this will in the long run
help McDonald’s to improve it already ace services with better customer
service and great shopping experience.
 Politically Correct Strategy.
 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.