McDonalds in India
McDonalds in India
There is no doubt that McDonalds is the largest fast food marketer. The company is known for its fries and burgers sold in more than 33,510 restaurants in 119 countries as of 31st December 2011 (Marketline Report, 2012). It also serves a range of beverages in their breakfast menus. The restaurants are either company operated on franchised. McDonald’s restaurants offer a standardized menu with some situations various across variations (Marketline Report, 2012).
McDonalds in India
McDonalds entered India in 1996 using a similar model it employs to enter other geographical markets. Joint ventures or franchising models is the major model used by McDonalds to enter international markets (Pangarkar, and Subrahmanyan, (U.d). The joint venture with Hard Castle Restaurants and Connaught Plaza restaurants enabled India to enter the Indian market. Connaught Plaza Restaurant chains operated restaurant outlets in North India while Hard Castle Restaurants had operations in Western India. These joint ventures enabled India to increase its operations into Pune and Jaipur. Nonetheless, the entry into the Indian market brought increased challenges to the Indian market. The major challenge involved socio-cultural challenges due to the differences between western cultures with those of the Indian Culture (Pangarkar, and Subrahmanyan, (U.d)). Traditionally, McDonalds often adopted a standardized menu for its food and beverage offerings.
Socio-cultural Challenges
The first challenge entailed the international recognition of McDonald in the production of hamburgers, pork burgers, and beef burgers. The production of such foods is contrary to the India religion because the consumption of pork of beef is prohibited in the Indian culture. The Indian culture is diverse with a mixture of the population belonging to the Hindu and the Muslim religion. To Muslims, consumption of pork is prohibited in the Muslim religion because pigs are considered unclean creatures. On the other hand, the Hindus belief that cows are sacred and consumption of beef was considered consumption of symbols of worship. Such cultural considerations meant that the standardized McDonalds menu had to be changed to suit the needs and diversities of the Indian Culture. Critical specifications were needed to take of the sensitivity of the Indian market. Secondly, the Indian population largely composed of vegetarians who were conscious of their health. Developing products to meet the needs of the lacto vegetarian. With such cultural diversities, selling beef in a country where more than 85% of the population did not consume beef lacked a common sense approach.
Political challenges
India is a democratic country. The government plays an important role in the control of entry and exit of foreign firms into the market (Pangarkar, and Subrahmanyan, U.d). The Indian operating environment has an active companies that fights for the rights of animals. McDonalds being a heavy producer of animal products had to face oppositions to its marketing strategies. Politics from activist companies called for the need to develop products to satisfy these needs.
Environment challenges
Competition from local companies that had adopted to the operating environment in India meant that McDonalds encountered channels during establishment efforts. This partly explains the reasons that made McDonalds to adopt the joint venture approach as the major market entry approach. Expansion of operations to other major cities required major capital inputs. To succeed, an organization needed to have a strong capital base and break-even point took more than seven years to realize profits.
The Decision
Engaging in customer-friendly operations both in terms of market orientations and customer orientations were the only strategies that McDonalds had to use to succeed in the Indian market. A situational analysis showed that McDonald’s had to alter its management and operational activities. Globally, McDonalds is known for innovativeness in terms of food variety and consistent delivery of quality products through their standardized menu (Smith, 2007).. However, such strategies failed to fit the Indian market in part due to the failure to appeal to the needs of the wider population and in part due to the diverse cultural backgrounds of users. Introduction of new products to suit the needs of the Indian market seemed to be the only workable strategy. Another major reason that McDonalds made was the need to expand its product delivery system to increase its level in satisfying customers. Efficiency in the retail food industry is critical to ensure that no congestions occur during peak hours.
Based on these analysis, McDonalds adopted mechanisms that were certain to enable it to achieve success in the Indian market. The first mechanism was the localization mechanism where McDonalds adhered to the no beef policy in India. This mechanism involved the introduction of no beef menus consisting of lamb, fish, chicken, and vegetarian products. The second mechanism was encouraging a family-dining experience because majority of the Indian preferred consuming foodstuffs with friends and families. TV commercials and other adverts urged the residents to consider rushing to the McDonald’s to have a meal. This positioned McDonalds as a family restaurant in the Indian market.
Introducing meals at affordable prices is another winning mechanism. McDonalds was known across the region for the premium prices of its foods. In order to change the premium image of the company within the Indian population, the company had to adopt a mechanism to enable it eliminate the premium image. Pricing strategies such as the lowering of prices and offering promotions enabled it to fight competitions from established restaurants such as the Kentucky Fried Chicken (KFC) that had already established itself in the Indian market.
What I could have done differently
First, the entry into the Indian market could have been guided by the need to experiment the possibility of hitting a breakthrough in the Indian market. Before deciding on the entry level, McDonalds could have considered the adoption of new growth opportunities to strengthen its market control share. Equally, the aspect of entering into joint partnerships with other companies should have been an informed decision to avoid entering into ventures with unsuccessful companies (Kotler, & Keller, 2009). Just like McDonald’s did, I would have conducted a market survey and analyzed the needs of the customers before deciding on foods to be included in their food menus. Introduction of increased food offerings enabled McDonald’s to register success and attract more clients from the target market.
Conclusion
McDonald’s entry into the Indian market might have been faced by a plethora of challenges such as the incompatibility of food products and opposition from cultural diversities. However, the change of the standardized menu depending on the geographical location enabled McDonald’s to revive its success globally through the introduction of foods at affordable prices, introducing the family dining experience, and sensitivity to the no beef approach, and adoption of innovative ways. An analysis of the operating environment enabled the company to reach a decisive option.
References
Kotler, P., & Keller, K., (2009). A Framework for Marketing Management (4th ed.). Pearson Prentice Hall.
Marketline Report (2012). McDonald’s Corporation. Marketline
Pangarkar, N. and Subrahmanyan, S. (U.d). Beefing up the beefless Mac: McDonald’s expansion strategies in India.
Smith, A. F. (2007). The Oxford companion to American food and drink. Oxford University Press
