McDonald Company in India - Assignment Example

Introduction My research question will be about the evolution of McDonald Company in India. Being a lover of beef burger, I would love to know how the McDonalds Company has survived in Indian market where majority of the population are Indians who are barred by their religion to eat beef products. In addition to that, I will analyze the strategies used by the company to overcome competition from multinational corporations such as KFC. Since 1955 after its incorporation, McDonald Corporation has brought significant changes in the world. For instance, it is not only the swift-service restaurant in the world, but it has also influenced the eating habits of the Americans as well. The company owns more than thirty one thousand restaurants and averagely on a day, forty six million people have their meals at one of the company’s restaurant. In addition to that, its restaurants are located in one hundred and nineteen countries located in six continents (“McDonalds Corporation). Of the 31,000 restaurants, 9000 are owned and operated by the company whilst the others are operated through local business individuals’ joint ventures and franchisees. Its principal markets are located in China, Canada, Australia, Brazil, United Kingdom, Germany, Japan, France and United States (Byrne 1994, p.26). These countries accounts for eighty percent (80%) of all the restaurants and seventy five percent of the sales overall. In its years of operation, MacDonald Company has experienced various pitfalls in its operation. For example, in 2001, the company was sued after finding out that the company used beef flavouring to prepare its French fries to make them tasty. However, it apologized for the mistake done as a result of confusion and accepted to donate a sum of ten million dollars ($10) to the affected vegetarian, Hindus and other groups. Apart from flavouring their French fries with beef, the company also experienced another embarrassment in the same year when fifty one individuals were charged with conspiring to snatch MacDonald its game promotions. These scenarios greatly impacted on the public image of the Company as it was viewed as the promoter of un-healthful and fatty foods. In countering the public arguments the company decided to introduce menu items with low calorie and also switching to French fries with low fat content (Jeanett & Hennessey 2005, p.23). McDonald Evolution in India McDonald Company found India as a market with unique diversity. It is divided into twenty eight states and seven union territories interns of religion, climate, vegetation, varied food types and language. Through combination of spices in a way that was unique, food in various states reflected their culture and traditions (Plummer 1974, p.33). This posed a great challenge to McDonald as an Indian food business in terms of balancing product offerings and diversity (Bigness 1998, p.30). McDonald’s first restaurant became operational in 1996 and worked on developing a long lasting relationship with partners who were local for provision of raw materials. Since then, the company has expanded and opened various restaurants in Tie II and metropolitan towns across India. By September 2008, it had outlets in Baroda, Pune, Bangalore, Mumbai, Nasik, Chennai, Surat, Hyderabad and Ahmedabad (Charturvedi 2008, p.3). This is a clear indication of the rapid growth of McDonalds Company in India. Here is a brief genesis of McDonald in the Indian market. Year Event 1955 The first restaurant is opened by Ray Kroc. The company’s president 1957 The company motto is defined in terms of quality, service, cleanliness and value 1963 A debut is made by Ronald McDonald 1965 The company becomes publicized 1968 Introduction of Big Mac 1974 Launching of Happy meal 1996 Opening of McDonalds in India, the 95th century Problem Statement McDonald Company faces stiff competition which has greatly intensified from various restaurants such as Wendy’s, KFC and Burger Kings which are hamburger chains. This is because the fast-food industry has greatly expanded all over the world making the companies to fiercely battle for the available market share. As a result, the companies have devised various strategies to counter the fierce competition such as price slashing and use of aggressive advertising and marketing campaigns to win the customers. McDonalds also needs to justify its existence, counter the existing criticisms for purposes of integrating itself with communities that are local and also target various sections of the population who needs to identify with their products. Statement of purpose The purpose of the research paper is to document McDonald’s evolution on the Indian market. The company will be analyzed through SWOT, Pestle, corporate social responsibility and its mission statement. Justification of the Research study Unlike its competitors, McDonald Company has been able to shun the image of it being a beef burger store (McDonalds Competitor Analysis 2009, p.1). This has made its food staffs to be more appealing to the Indian population whose majority are vegetarian. It provides the Indian population with varied products with low prices which have not been able to be matched with by the KFC and other competitors. The KFC food products are highly priced in relation to the Indian population. The strong segment of these two companies is the cosmopolitan population which is confined within the malls and have some extra cash to spend (Kulkami, 2008, p.15). Additionally, their age bracket ranges from 18-30yrs. McDonalds has found favour in the low income earners and individuals in the bottom middle class. McDonalds has established its own supply chain making it invest large amount of cash leading to lowering of its prices and costs. Even though the company has its base in United States, today it has become the most accepted company among the world’s citizenry (“McDonald pushing into emerging markets”). This is because of its marketing strategies. Statement of objectives The main objective of the study is to analyze the evolution of McDonald Company in India. In addition to that, the research will analyze the company’s strengths, weakness, opportunities and threats. Its corporate social responsibility will also be documented which includes the creation of a supply chain sustainable strategy and engaging in projects that are community based. Finally the research project will establish how the company utilizes the pestle components and marketing strategies Research questions What are the challenges faced by McDonald Company in the Indian market? What are the existing threats, opportunities, strengths and weakness of the company in the Indian market? How has the culture of the Indian consumers influenced the existing marketing mixes? What are the market entry strategies utilized by the McDonalds company? How effectively has the Pestle model enabled the company to survive in the competitive market? What are the major social corporate responsibilities of the company? Literature Review As observed by Arnold and Thompson (2005, p.868), there are some key factors which manipulates the marketing strategy in any culture. Some of the core constituent required for effectual marketing scheme entails the customers’ production, the expenses of the product produced, the distribution process, the understanding of the customers’ culture as well as the promotion process (Wertenbroch, 2008, p.317). Being one of the largest fast food restaurant in the world, the McDonald’s Cooperation have encountered numerous challenges in venturing into new diverse cultures (Hofstede and Gert, 2005, p. 89). These challenges have affected the marketing strategies of the MacDonald Company. In the recent past, the company has moved and expanded its operations in India (Oliver and Russell 2007, p. 469). The company has opened several branches in the country. However, there are several customers’ culture activities which are daunting its operations (Goering 2005, p.76). The company is at present planning to expand its operation in Southern and Western parts of India. Currently, the company has opened over 200 branches in India (King 2009, p. 90). According to the chairman of the company, the number of its customers has been increasing in the rate of between 10 to 15 percent every month. As he observed, this has been facilitated by their increased effort of understanding the customers’ culture and expectations of Indian citizens (Meyer and Arvind, 2005, p.41). The company promotion team has been able to detect and identify the taste of the Indian citizens. Owing to the fact that, Hindu value and reserve cow for religion purposes, beef is not in the McDonalds menu in India. As an alternative, beef has been replaced by vegetables and chicken burgers which is a common diet in India (Saksena, 2000, p. 45). To be able to venture in India culture, the MacDonald Company employed the seven modern marketing mixers (the 7 Ps). Traditionally, there were four considerations in marketing. These considerations were referred to as the four Ps (promotion, price, place, and product). Due to the raise in the multiplicity of the modern strategies marketing, these considerations increased from 4Ps to seven Ps (Singelis, Harry, Dharm, Michele, 2005, p. 90). These considerations are very imperative and help immensely in any company’s new ventures. Product component of marketing mix has to do with considering the commodity pertinent in the market. It also helps in considering the most relevant quality required in the market. In regard to this, the customers ought to be given what they actually want but not what the company thinks the customer want. The product should be valuable to the expectations of the customers (Wertenbroch, 2008, p. 90). Additionally, product refers to all types of invention available in the company (tangible and non tangible product). To address the needs of customers effectively, frequent market survey is incredibly appropriate to assess the changes in taste among the projected customers. However, the company should not go far beyond the quality required in the market. The second most crucial consideration in marketing is price. The products are valued in reference to what the customer is willing and able to pay. The price should be competitive and adequate enough to attract profit in a company. As observed by Ganesh, (2007, p.132), small businesses can only compete with big company by including additional services to the product which will have monetary value. This is the only marketing mix that brings revenue into a company or a business. The price of a product must be equivalent to the quality of services offered to the customer. Pricing is also known to determine the position of a marketplace. As stated by Luna and Gupta (2001, p.45), the new customer are more sensitive to the price of a product than the existing customers. Pricing is also known to place the company or a business in the market place. As a result, to fit in a new market, a new company must introduce products prices that limes with the product quality as well as the capability of the customer. As observed by Mehta and Belk (2009, P.400), the place where the customers are expected to get a product is one of the most imperative component of marketing mix. The method used to distribute the product to the customer place should be prompt and effective. This is to ensure there is no deficiency of the required product. The product should for that reason be available at the right place, at the right time, and at the right quality. The distribution and storage cost should be at a satisfactory level (Kumar and Maqbool 2007, p.296). Supplier of the required product to the required destiny must be selected on the bases of their performance in service delivery (Sharma 2001, P. 90). Promotion is another component of marketing mix. It is the only way of communicating the company’s product to the prospective customers. It has to do with activities such as advertising, branding, cooperate identity, exhibitions and special offers. Promotion approach should be appearing, have a consistence message, and persuade the customer on the reason to choose the preferred product. As observed by Rook (2005, p.255), people who interact with the customers are exceptionally imperative in deciding marketing direction. Individuals who are involved in promotion and marketing of the company’s products must be proficient enough to handle the customers’. The process applied in service delivery is also important in enhancing customers’ satisfaction (Spreng, Scott, MacKenzie 2006, and p.67). Waiting time and the information given to the customers are very critical in enhancing customers’ satisfaction. Adequate and attractive physical services for service delivery are as well indispensable in enhancing customers’ satisfaction. It is therefore the responsibility of the company to provide attractive services to the customer (Kopalle and Donald 2005, p.280). Proper combination of the marketing and adequate understanding of the customers’ culture is the core determinant for effective customer satisfaction (Baron and David 2006, p 54). Methodology The research has employed qualitative method in the analysis of data. Relevant literatures have been reviewed to find about the evolution of McDonalds Company in the Indian market. Both primary and secondary sources have been reviewed to acquire adequate information concerning the Company and how it has established itself in the Indian Market that is characterized by diverse cultures and multinational competitors. Various articles in the website have been reviewed for purposes of analyzing the strengths and weaknesses of the company. In addition to that, a n open ended questionnaire helped in getting the needed information about the company from the Public and other customers of the company. Data analysis The research tries to expound on the impact of the Indian culture to the MacDonald’s company in the Indian market. The MacDonald Company has several strengths which have helped it to counter the cultural complication in India market. The company have very effective competent and flexible administration (Singelis, Harry and Dharm 2005, p. 240). The company is very flexible it is production line. According to the research, the company excluded from their menu any cow product. This was with the intension of meeting the customers need. Instead, they replaced the beef with chicken and vegetable products. This was because, according to the Indian culture, cow and its product have religious implications and therefore they are not supposed to be consumed by human beings. Vegetable and chicken are some of the most preferred products in the Indian culture. The company therefore prospered in the Indian market since it fulfilled the customers’ expectation. As observed by Aaker and Durairaj (2007, p.328), satisfying the customer expectation is one of the mainstay aspect of attracting customers into the product. According to Briley and Jennifer (2006, P.395), the Indian belief on Karma have an impact on the purchasing decisions. This was evidenced in the research. There is some specific time in Indian culture in which the customer is supposed to purchase consumable products (Hofstede 2001, p. 45). As part of the strengths of the MacDonald Company it was flexible to change their menu to meet the demands of the customers. They also ensured their products are ready at the most appropriate times for the customers. The cultural belief has an implication on the customers’ expectation in the product in the market (Higgins, Ronald and James 2007, P.515). The MacDonald Company conducted very severe market survey in order to understand the cultural expectation of the product they were intending to market in the market (Oliver 2007, P.67). Products that have long term effect to the customer are highly valued in the Indian culture as compared to the products which have short lifespan (Dempster 2006, p. 89). According to the research findings, the MacDonald Company had a well structured mechanism for satisfying the customers need and expectations. In reference to the research findings, the Indian customers have the most complicated customers’ culture. As stated by Churchill (2009, P.64),) the relationship between the customers’ expectations and the company have a profound impact to the marketing process of a company. As defined, expectations have to do with the belief inculcated in a product or a service. In the study, the MacDonald Company has managed to bridge the gap between the customers’ culture and their expectation. According to Craig and Douglas (2006, p.342)), the purchasing power are influenced by cultural factors. The understanding of the company culture was as a result very imperative in initiating new company in Indian culture (Bernard 2001, p. 78). Conclusion After introducing itself in the Indian market, McDonald Company was perceived to be targeting the upper class individuals in the urban area. In the current market, it has positioned itself as a restaurant that is affordable for anyone to eat without it compromising on the food quality, hygiene and service (Adams 2007, p.297). McDonald commitment to producing food with high quality, relaxing atmosphere and hygiene has made it maintain a customer positive relationship. McDonald’s success has been attributed to its continued adaptation in providing food that meets the value system, customer taste, language, lifestyle and perception of its customers. Worldwide, McDonald is known for its beef, hamburgers and pork burgers. Majority of the Indian population are prohibited by religion to consume pork or beef (Plummer 1974, p.33). In surviving in the Indian market, McDonald has been able to response to the sensitivities of the Indians (Ghosh et al 2009, p.354). As such, the company introduced lamb, chicken and fish burgers to fit in the Indian palate. The India population is composed of vegetarian population. For purposes of meeting the needs of this customer segment, the company introduced in its menu a new set of products such as McAlooTikki and McVeggie. The company has been able to segment the population into non-vegetarian and vegetarian. In addition to that, the success of the company is attributed to its target market which is composed of youth, children and young families in the urban environment (Bison 2010, p.1). The perception of the customer is the principal factor that affects the success of a product. Many revolutionary potential products have not succeeded in their new markets because they lack the ability of building a perception that is healthy about themselves in the minds of the customers. McDonalds being renowned brand in the international markets has created some expectations to its customers as shown in the table below Target segment McDonald customers expectations Families having children Provides a fun place and treat to the children Urban customers Quick service, great taste without interfering with the work schedule Teenagers A place to hang out with friends and extremely affordable Recommendation The seven Ps are very essential in addressing in the marketing strategy of any product. Adequate understanding of the market determinant should therefore be a matter of concern before starting any business in a new culture. For the MacDonald Company to prosper and expand in the Indian market, it had to conduct frequent market survey to understand the customers’ requirement. Culture has been identified by the study has a significant effect in marketing. Culture determines customer expectation and taste. The customer culture directs the demand in the market. In this regard, sufficient understanding of the culture before starting a company or a business is very important. The understanding of the Indian culture by MacDonald Company necessitated its success. The study in customer culture has not satisfactorily been covered in the previous studies. There are awfully limited studies conducted in the area. There is therefore need for further research on the level in which culture influences the marketing of different culture. Bibliography Aaker, J. and Durairaj M. (2007), “The Effects of Cultural Orientation on Persuasion,” Journal of Consumer Research, 24, 315-328. Adams, R. (2007). Fast Food, Obesity and Tort reform: An examination of industry responsibility for public health. Business and Society review, Vol.110, no.3, pp. 297-320. Arnould, J. and Thompson, J. (2005), “Consumer Culture Theory (CCT): Twenty Years of Research”, Journal of Consumer Research, 31, pp. 868-882. 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(2005), “Horizontal and Vertical Dimensions of Individualism and Collectivism: A Theoretical and Measurement Refinement,” Cross-Cultural Research, 29 (3), 240-75. Spreng, R., Scott B. Mackenzie, R. (2006), “A Re-examination of the Determinants of Consumer Satisfaction,” Journal of Marketing, 60 (July), 15-32. Wertenbroch, K. (2008), “Consumption Self-Control by Rationing Purchase Quantities of Virtue and Vice,” Marketing Science, 17 (4), 317-37. Wertenbroch, K. (2008), “Consumption Self-Control by Rationing Purchase Quantities of Virtue and Vice,” Marketing Science, 17 (4), 317-37. Appendix Research questions What are the challenges faced by McDonald Company in the Indian market? What are the existing threats, opportunities, strengths and weakness of the company in the Indian market? How has the culture of the Indian consumers influenced the existing marketing mixes? What are the market entry strategies utilized by the McDonalds company? How effectively has the Pestle model enabled the company to survive in the competitive market? What are the major social corporate responsibilities of the company? Are the products in McDonalds adequate? What are the main challenges faced in McDonalds? Which of its operational area needs improvement? What is the stricking thing about McDonalds? PROJECT GANTT CHART PROJECT GANTT CHART   planning phase   implementation   concluding phase Date run: 26/4/13 Week beginning 26/4/12 2/5/12 9/5/12 6/5/12 13/5/12 20/5/12 26/5/12 3/6/12 10/6/12 16/6/12 23/6/12 No. Task / activity     1 Discussion and finalization of the research hypothesis Summarize of the Research Hypothesis   2 Compile the complete the proposal form Proposal form   3 get consent of proposal from the tutor Approval   4 develop action plan and get approval from the tutor Action Plan   5 access and analyze secondary literature Review literature   6 validate the available primary research methodology Justify Primary study   7 Revisit the action plan Revise action plan   8 develop sampling interviewees frame Plan sampling frame   9 sketch research questions, examine and re-draft Draft of research Q's   10 get tutor authorization of final questions Tutor Approval   11 take primary research Primary research   12 construct worksheet to analyse results Create spreadsheet Create Spreadsheet   13 Enter findings in spreadsheet Enter Results   14 Analyse results, develop a charts & write up Analyse results   15 Draft conclusion & evaluate them with secondary literature Draft Conclusions   16 present the complete draft report Submit final report   17 Make changes to the recommended parts and them submit final report consider comments for improvements   Read More