Mcdonald in India Essay
Case Study Individual Report – International Management 15/02/2012 McDonald’s in India by Kishore Dash Until late 1980s, India was a very closed and protective country in terms of economic, political and social perspectives. However, after this period dramatic changes happened in all of these areas. At the time, the political leaders pursued policies of economic nationalism but these policies were inefficient and by 1990, India was facing a severe economic crisis.
In response, the government introduced a series of liberalization policies designed to decrease the government control. The Indian social values also start changing in the late 1980s, there was an increasing acceptance of foreign culture. With this wide range of reforms in the 1990s combined with the large consumer market there were enough incentives for McDonald’s to enter in the Indian market. Before opening their first restaurant, McDonald’s spent many years planning and researching Indian market.The fast food company had a very well defined entering strategy, it wanted to get accepted and blend into local Indian cultural. To succeed in this objective, the restaurant developed a variety of strategies with especial focus on Indian consumers.
McDonald’s was very concerned with Indian religious sensibilities, consumer’s food habits and with potential confrontations with the government and political activists. Most people do not eat beef and pork and prefer vegetarian foods, so McDonald’s created a menu that is specifically designed to Indian consumers introducing local products.Although trying to appeal all ages, the company positioned itself as family restaurant, in order to meet the changing family system and Indian social values, since is a country in which children are the family priority. Regarding the Indian Government, as long as the company pursues the purpose of creating employment opportunities and meet the government’s standards for regulation on food, health and hygiene, the support would follow.Concerning the possible confrontations with activists, McDonald’s has created many green and community programs in order to increase awareness of an active and healthy life and to promote and increase solidarity in India. McDonald’s set up a well-established supply chain in order to operationalize its practiced QSCV (quality, service, cleanliness and value), to enjoy flexibility in pricing since Indian consumers were very price sensitive and to launch a new product when necessary.
McDonald’s and its international suppliers worked with local companies to develop products that meet the restaurant quality tandards and at the same time to help them to improve their ability to compete in international markets. In terms of Location, McDonald’s decided to set up two joint ventures in Mumbai and Delhi. Logistics plays a very important role on the location strategy and so McDonald’s decided to establish restaurant closed to their two distribution centers in India. Despites these efficient and good strategies, McDonald’s has to face many challenges such as high costs, constant pressure to introduce new products and the need of extensive investments to expand the business.One of the possible solutions could be to arrange a partnership with the Indian Government in order to get the funds necessary to expand since the restaurant is giving so much to the country and contributing the development of Indian economy. McDonald’s could also try to utilize existing facilities instead of create everything from “scratch” as a way to reduce costs in the expansion for other Indian cities.
Ana Filipa Conduto, n? 10175