BUSINESS AND MANAGEMENT
“To what extent has McDonalds affected the Food and Beverage Industry of India”
McDonald's is known to be world's largest chain of burgers, hamburgers and fast food restaurants, which serve approximately Sixty-Nine million customers on the daily basis in 119 countries across more than thirty six thousand outlets around the world. It was founded in the United States in 1940 and It began as a barbecue restaurant which was operated by Richard and Maurice McDonald.
The chain grew when businessman Ray Kroc joined the company as a franchisee agent in 1955. He subsequently purchased the chain from McDonald brothers and oversaw its worldwide growth.
It primarily sells hamburgers, cheeseburgers, chicken, French fries, McCafe Breakfast items, shakes, desserts, and drinks. In response to changing consumer tastes the Company has expanded its menu to include salads, fish, wraps, smoothies, seasoned fries.
Rationale for making this IA:
However, when McDonald's made its entry in to India, Fast food did exist India but the pricing segment was for the premium clientele, with McDonald's entry in to India, it came with image of American Fast Food chain with the hint, tinge and taste of predominant Indian Fast Food such as Aloo Tikki etc.
India being a very traditional market with highly conservative consumers has seen a tremendous change off-lately. The diverse Indian consumption patterns are slowly converging with the impact of globalization. Today India has the youngest population profile very significant when compared with other world countries. It is the young people who are influencing their parents spending or spending their own money. Entertainment, clothing and restaurant dining are categories that are witnessing maximum rise in consumer spending.With increase in disposable income there is an active shift towards consumerism. The habit of more eating out has set in and women are changing and re organizing their house hold chores. Ready to eat food and family food service restaurants are becoming popular. Therefore opening this food chain in a country like India was a brilliant idea.
In making the research paper the data will be obtained from online sources as it will help in understanding the market share of McDonalds in the Market, the IB Business and Management course book will also form a part of the secondary research.
Commentary 1- Market Analysis
McDonald's Corporation carries one of the world's most well- known valuable brands and dominates the global market in quick service restaurant. As the company started expanding into other countries each country posed a new challenge for the company in maintaining and improving its position. The biggest challenge for the company in India was to maintain its global strategy in the stint of diversity and strong customs and culture. The main focus points for the company in India were to tackle customers, suppliers, Joint venture partners and Government along with maintaining its global brand image.
Think Global Act Local strategy was adopted by the company to customize their marketing strategies based on cultural, economic and socio political factors in India. Adaption and execution of this strategymade the company capable of adjusting their products according to the preference of the local customers in India. Beef being the integral part of the menu for McDonalds in the West it was difficult for the company to formulate a menu without beef in India.With lot of efforts the company offered a menu for India that did not have beef and pork items. Added to this, all the vegetarian products, even the mayonnaise in vegetable burgers, were egg-less and 100% vegetarian. To adapt to the cultural differences between religions, the company classified the cooking tools and employees for the vegetarian and non-vegetarian sections.
The company's introductory products were burgers, fries, vegetable nuggets, beverages and nuggets. It was in 2001 the company came out with a unique product for India which has the highest sales among all McDonald's products the Aloo tikki burger.It was the effort of the Indian Research and Development Team which put the Aloo Tikki a traditional Indian food into a bun and created a trade mark product for McDonald's the McAloo Tikki. The company describes the product as a combination of a potato and peas patty with special Indian spices coated with breadcrumbs, served with sweet tomato mayo, fresh onions, tomatoes in a regular bun.This McAloo Tikki outsells every other McDonald's product in India.The success of the McAloo Tikki in India motivated McDonald's to introduce the product in the Middle East and in Singapore.
This is how McDonald's re-engineered its operations in India to address the local taste and also the special requirements of vegetarians. McDonald's further reinforced the branded affordability mantra via the introduction of the Happy Price Menu, which starts at Rs. 25 only. The company also ensures vegetable products are kept separate throughout the various stages of procurement, cooking and serving. The other products in the product line are Filet-O-Fish, Chicken McGrill, McVeggie, Veg Pizza McPuff and Chicken Mc nuggets. Chicken nuggets were introduced in 2008 and McEgg was introduced in 2012. The company also serves Wraps, Fries, an assortment of Sundaes, Soft Serve and refreshing beverages such as Ice Tea & Cold coffee.
But the outlet understudy has other competitors eating away into its 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 consumers. On the higher end, the KFC has become potent competitor in the quick service field, taking away customers from McDonald's. Perhaps in the new environment, fast, convenient service is no longer enough to distinguish the firm. At this time, a new critical success factor may be emerging: the need to create a rich, satisfying experience for consumers. This brings us to
Service and experience based competition
Which McDonald's can use for competitive advantage against Jumbo King or the Burger King. Keeping in mind the demographics of the area, McDonald's has Wi-Fi enabled the outlet to cater to the student community. It is for this overall “Food, Fun & Folks” experience that customers pay a premium over the other competitors.
Competition also reduces product lifecycle; inducing firms to revise their products portfolios
and to revisit their product market to understand changing needs, expectations and perception of different market segments.
ANSOFF MATRIX ANALYSIS
The SWOT of McDonald's discusses the reasons that the firm has been able to achieve this height of fame, and why, be it breakfast, lunch or dinner, people may prefer the local McDonald's.
Strengths in the SWOT analysis of McDonalds
• Brand Equity…world-wide
• 42% of US fast-food hamburger business
• Consistency of food
• Successful items: Fries, Happy Meal, Big Mac, Egg McMuffin, Promotions
• Overseas market
• Balance sheet position
WEAKNESSES in the SWOT analysis of McDonalds
• Declining market share
• Weak product development
• Disgruntled franchisees
• Quality and taste of products
• Slowed revenue and income growth
OPPORTUNITIES in the SWOT analysis of McDonalds
• International expansion
• Only serving 1% of the world's population
• Growing dining-out market
• Joint ventures with retailers (e.g. supermarkets).
• Consolidation of retailers likely, so better locations for franchisees.
• Respond to social changes – by innovation within healthier lifestyle foods. Its move into hot baguettes and healthier snacks (fruit) has supported its new positioning.
• Use of CRM, database marketing to more accurately market to its consumer target groups. It could identify likely customers (based on modeling and profiles of shoppers) and prevent brand switching.
• Strengthen its value proposition and offering, to encourage customers who visit coffee shops into McDonalds.
THREATS in the SWOT analysis of McDonalds
• Mature/overstored industry
• Strength of competition
• More health-conscious consumers
• Changing demographics
• Fluctuation of foreign exchange rates; Economies
• Recession or down turn in economy may affect the retailer sales
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Maria Minniti, Andrew Zacharakis, Stephen Spinelli, Mark P. Rice, Timothy G. Habbershon (2006), “Entrepreneurship: The engine of growth”
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McDonalds (2012),”Standards of Business Conduct” (https://www.aboutmcdonalds. com/content/dam/AboutMcDonalds/ Investors/Standards_of_conduct/ 9497_SBC_International_EN-US%20final%20August%202012.pdf)
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1.“Marketing Management” – Dr. Rajan Saxena
2.“McDonalds – Behind the Arches” – John S Love
3.www.Mcdonaldsindia.com4.Outlet Manager – McDonald's Vile Parle
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