GBR Mcdonalds In India: Strategic Analysis
| ✅ Paper Type: Free Essay | ✅ Subject: Marketing |
| ✅ Wordcount: 5276 words | ✅ Published: 15th May 2017 |
McDonald’s vision is to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile.”
Our values summarized in “Q.S.C & V”. Provide good quality, services to customer. Have cleanliness environment when customer enjoys their meal .The value of food product makes every customer is smiling.
This documentation is mainly about the business strategies of McDonald’s in India & how it applies their strategies to interact with external environment.
This discussed the following Porter’s models to imply the company’s strategies in detail;
Porter’s Generic Strategy analysis.(Use to identify the strategies to select)
Porter’s Value Chain analysis. (Use to identify the value chain activities to support the strategy.)
As a fast food company, the rivals that it has faced in the Indian economy during the implementation & the strategies they applied, and the strategy changes according to different situations reports from this document.
Porter’s generic strategy analysis of McDonald’s is mainly on its unique characteristic applied in India, company’s commitment & dedication driven to reach the success in the Indian market. It shows McDonald’s Business strategies that took place during the banking crisis which lead to global economy recession & how it affected the Indian economy.
Through Porter’s Value Chain Analysis this document tries to highlight McDonald’s primary activities & support activities of their production process, applied in India. Through this analysis, it shows the factors influencing the company performance, coordination between firms in the industry & their quality support services as well. Also, report tends to discuss the situation of other competitors in the industry, their performance and position in the Indian market.
Finally, this report implies that low cost focus strategy can keep a company to survive in the recession. Also, it can achieve low cost focus strategy through their logistic systems, reducing food wastes and increasing effectiveness of employees.
Mc Donald’s, was originated in USA (California) in 1954, and has become one of the successful fast food chains in the world. Also one of the most recognized and established brands in the world. To such a development it helps some successful business strategies which lined to its external environment (Macro environment) and the industry environment (Micro environment).
This document discussed the success of McDonald’s especially in India and the strategies that they followed to reach the current position. Also, this provides a discussion of an analysis of why the company selects those strategies in response to the changing external environment to reach the goals. The company was able to establish around 30,000 franchising stores in 119 countries, targeting around 47 million people each day and it generates about $ 15 billion revenues annually.
In India, McDonald’s is a 50-50 joint partnership business between McDonald’s corporations [USA] and two Indian businessmen. It took them six years with an investment of 4 billion to build up their supply chain properly in the Indian market. Their first restaurant in India was opened in 1996 at New Delhi.
By introducing differentiated menu products according to the Indian taste, improving logistics systems with better supplier relationships it began to spread all over the country rapidly.
Now the company expanded in 34 cities in India by covering 132 outlets.
N. Jadhav& A.Shaikh 2010, Supply chain management, Perishable products (Restaurant chain)[Presentations], viewed [ 19/12/2010], http://www.slideshare.net/sunilmbsingh/mcdonalds-final (Diagram 1)
Porter’s generic strategies framework provides a major contribution to the development of the strategic management & the company can achieve to their competitive advantages by differentiating their products and services from its competitors through low costs. Mc Donald’s targeted their products and services by a broad target through covering most of the market places. Also, it attains competitive advantage through market segmentation using Porter’s differentiation focus strategy.
In differentiation strategy, fast food chains need to be more selective in which products to offer & more creative in their promotion strategy.
McDonald’s offers specialized (Regionalized) version of its menu. This leads to differentiate the products from other competitor products as well.
Mc Grilled sandwiches in US & Canada.
Mc Chicken Premiere & Zesty chicken in UK, France, Italy & Belgium.
To overcome their healthy issues Mc Donald’s added salads & other lighter options to its menu & encourage people to visit more often.
Product adaptation in India- Vegetarian selections, No beef or pork items, McMasala
Wide variety of menu items according to the Indian menu items;
Vegetable & non vegetable products.
Health conscious items.
Local flavors.
B. Craig & K. R. Dickson, 11th December 2007, Supply chain management, Mc India ppt[Presentations], viewed [ 19/12/2010],http://www.slideshare.net/KRDickson/McIndia-Final-ppt (Diagram 2)
They have introduced a group of products in early 2000s. It includes McDonald’s larger chicken sandwich, salad line & coffee products. Grilled chicken & sandwiches are targeted different demographic markets. Mc Cafes located in Australia within the McDonalds restaurant.
Counter service & drive through (With indoor & outdoor seating in Delhi.)
McDrive locations near highways offer no counter services or seating.
McCafé restaurants within the same McDonald’s restaurants. (They increased sales by 60% from this strategy.)
Expansion for the following locations as well;
More distribution centers within 500 km radius.
Satellite cities near Mumbai & Delhi.
Cities with tourist appeal and eating out culture.
Petrol stations, railway & bus stations in & around Delhi.
Shopping malls and movie complexes (Delhi & Mumbai)
McDonald’s focused on superior price performance during the time of economic crisis.
Point of sales (POS) promotion programs.
Combo meals. (Customers get more discounts through this.)
Lottery for winning its products.
Sampling activities to taste their products to a discount price.
Internet promotions.
TV and other media promotions.
To differentiate with their competitors McDonald’s tried to focus on its unique campaign.
I’m lovin’ it campaign to attract family.
Feature artists to attract teenagers.
Introduces wireless technology platform, by allowing their customers to access internet by creating an innovative environment.
Under Porter’s competitive strategies, McDonald’s uses an overall low-cost leadership strategy to reduce cost & increase sales.
Higher profits resulting from sales through lower prices than competitors as the unit cost is lower.
Mc Donald’s is having a biggest market share out of completive fast food restaurants. Therefore, they increase sales by reducing price than competitors.
Rs 20- Rs 70
Rs 65- Rs 135
Rs 25- Rs 175
Rs 55- Rs 175
(Regular)
Rs 35-Rs 140
(Regular)
Rs 49- Rs 119
Rs 45- Rs 175
Rs 55- Rs 150
Rs 120- Rs 250
Rs 120- Rs 230
Rs 25- Rs 50
Small- 300ml
Rs 35- Rs 45
Small 300ml
Rs 30- Rs 55
Small 300ml
Pet beverage
MRP 600ml
Rs 30
600 ml
Rs 12-Rs 25
Rs 20- Rs50
Rs 15- Rs 65
Rs 40- Rs 60
Rs 25 100 ml
Cup of Baskin Robbins
(Diagram 3)
Company
Stores
Countries
Market share
McDonalds
31108
120
33.06%
Burger King
11455
58
13.68%
Wendy’s
8811
22
11.69%
Hardees’s
3295
15
2.78%
Jack in the Box
2000
1
3.67%
(Diagram 4)
Company
Outlets (No.)
Cities Covered
McDonalds
132
34
Pizza Hut
137
34
Domino’s
220
42
Subway
131
32
KFC
34
09
(Diagram 5)
Bruce Craig, Keith R. Dickson, International Business Management, Network & competitors [Online], available at: http://www.slideshare.net/KRDickson/McIndia-Final-ppt [20/12/2010]
Through adding 700-900 restaurants annually, McDonald’s enter new markets through lower prices.
It shows a great barrier to entry for competitors to enter the industry.
Through its strong centralized authority & tight control, standardized procedures McDonald’s takes most an efficiency approach.
Adding 700-900 restaurants annually.
Giving low price products, Extra offers through new menu items.
Highly selective in granting franchises.
Selects most convenient places to customers.
Focused on limited product lines through maintaining the quality.
Extensive advertising.
Proper HR management through equitable wage & good training.
McDonald’s cost leadership strategy & growth strategy is based on;
Adding new restaurants.
Maximizing sales & sales in existing restaurants.
Improving profitability (globally)
Success behind their business lies in the maximum of “Think global, act local.”
They ensure that their structure fits with the international environment, but also have internal flexibility geographically.
McDonald’s has twice the market share of its closest competitor, Burger King.
McDonald’s changed their strategies by targeting the family oriented diverse market. Ranging from children to elderly people.
Happy meal for children.
Egg McMuffin for elderly.
McDonald’s paid a considerable attention to the children in every country through;
Building ‘Happy land’
Offering fantastic ‘Happy meals’ with attractive toys.
Also, they just launched computerized games according to children’s inspiration and imaginations.
It has implemented a family & child centric strategy through their “family restaurants”.
Provide clean, comfortable & stress free environment.
Provide relaxing environment for young busy parents and children to play.
Provide facilities for children’s celebrations.
Meeting place for teenagers.
Promotions for young adults and senior citizen lounges.
images (3).jpg1271079061212.png
Bruce Craig, Keith R. Dickson, International Business Management, [Online], available at: http://www.slideshare.net/KRDickson/McIndia-Final-ppt [20/12/2010]
(Picture 1)
Children are the biggest consumer group to McDonald’s.
They believe that it is a suitable business to focus children as they can bring the whole family to McDonald’s.
Through making a brand loyalty with the children they can make a successful future as well.
Through targeting different customer demographic groups it was able to increase their market share rapidly.
Low calorie food
Healthy food
McDonald’s has done backward vertical integration.
Improving logistic systems & maintaining good relationships with suppliers. (Through maintaining the operational costs, they were able to get low pricing products.)
It has done through using more computer services.
Minimizing inventory costs.
Unique supply chain management.
McDonald’s has a unique supply chain that processes unique products exclusively for them. (In India, Vista Processed Foods and Radhakrishnan Foodland )
Withdraw unprofitable products; lead the McDonald’s to focus its products within the economy through durability & functionality.
Differentiating product variety. Their offers focus on multipurpose goods than specialized products.
Introduces new food products to maintain the strength over their competitors. (Chicken McNuggets)images (6).jpg
Bruce Craig, Keith R. Dickson, International Business Management, [Online], available at: http://www.slideshare.net/KRDickson/McIndia-Final-ppt [20/12/2010]
(Picture 2)
During the economic recession, McDonald’s introduced low pricing products.
They focused on some products to discount prices to keep customers coming to their stores often.
They make strategies to reduce waste, through reducing over-ordered for fresh food products, better equipments to handling, transporting products & utilizing all their stores according to the FIFO methodology.
Increasing effectiveness of stores through training sessions for employees.
http://htmlimg1.scribdassets.com/5f5vx6aytcljzub/images/44-035817a158/000.jpg
(Diagram 7)
Support activities.
Primary activities.
Value chain is a sequential process of activities which creates value to the organization. This concept was described by Michael Porter in his 1985 best seller “Competitive advantage”. It defines all the primary & support activities of the firm from the starting point of the process to the end user. This shows McDonald’s market chain from input (suppliers) to end users (buyers) & the relationship among them.
(Diagram 8)
Production in huge plants denoted exclusive to McDonald’s control food distribution and packaging system.
McDonald’s has a dedicated delivery service which meets their schedules and restaurant needs.
There are 2 centralizes distribution centers at Mumbai and Kochi. (Catering to 25 outlets.)
Quality storages with quality inspection programs.
http://www.mcdonaldsindia.com/images/lettuce.jpghttp://www.mcdonaldsindia.com/images/milk.jpghttp://www.mcdonaldsindia.com/images/vista.gifhttp://www.mcdonaldsindia.com/images/foodland.gifhttp://www.mcdonaldsindia.com/images/cheese.jpg
(Picture 3)
Bruce Craig, Keith R. Dickson, International Business Management, [Online], available at: http://www.slideshare.net/KRDickson/McIndia-Final-ppt [20/12/2010]
Receiving and warehousing raw materials to restaurants and organizing third part logistic operators effectively.
McDonald’s Food procurement, warehousing, retailing & transportation happen under controlled temperature.
It allows to cut down wastage, protects food freshness & nutrition value.
Trikaya Agriculture:
Supplier for iceberg lettuce with advanced agriculture practices & specialized farm infra structure. (Have a specialized nursery, agriculture experts, pre-cooling room, cold room for handling, and refrigerated truck for transportation.)
Vista processed foods:
Have a world class infrastructure plant for frozen chicken & vegetable foods. Separate processing lines for chicken and vegetables.
Dynamix diary, Baramati (Supplier of cheese)
Amrit food (Supplier of milk and milk products for frozen desserts)
Radhakrishna Foodland:
They are specialized in handling large volumes of food, storage, inventory management, deliveries, data collection and reporting. Maintained an effective, minimum distribution cost with dry/cold facility.
Cremica Industries, Philaur, Panjab.
They supports in technological development.
B. Craig & K. R. Dickson, 11th December 2007, Supply chain management, Mc India ppt[Presentations], viewed [ 19/12/2010],http://www.slideshare.net/KRDickson/McIndia-Final-ppt (Picture 4)
This is about warehousing and distribution of fined goods.
Temperature controlled movement of all products from suppliers to distribution centers. (AFL is responsible in that)
Those logistic services use quality material handling equipments.
McDonald’s maintain an efficient plant layout and & a work floor design according to their low volume & high variety production output.
Materials are organized according to the requirement.
They maintained efficient plant operations with separate kitchens for vegetarian & non vegetarian food with efficient staff and separate preparation & wrapping areas.
Having a quality assurance team to maintain the intrinsic & extrinsic quality of McDonald’s.
Forward integration through enhance process improvement and franchisees with a control.
They have short term marketing objectives derived from long term objectives. (mile stones)
Advertising is outsourced. (Mudra agency in India)
Community partnership through many promotional programs in India.
Marketing & promotional strategies according to the Indian adaptation.
Made special promotions during their festival seasons.
Get-lucky promotional scheme with collaboration with Indian companies. (MTV, Coca cola etc.)
This relates with the services provided by McDonald’s to enhance or maintain the value of the product.
Adherence to the Indian Government regulations, it benchmarked the food quality, health & hygiene according to the international standards.
Maintains standard quality assurance procedures all over the process.
Fast & friendly service with stringent cleaning standards.
Introduced many menu items for vegetarians in India. (McVeggie, McAlooTikki)
For the Indian restaurants, food is made locally. Therefore the investment goes to Indian infrastructure.
Maintaining community parks to the public.
McDonald’s corporate relationship.
Green Movements (special funds for cities, Sponsor of community related programs)
Sponsorship for sports activities, spotlight performing arts, world’s children’s week etc.
Conducting health programs.
Unique supply chain process.
Effective value pricing.
N. Jadhav& A.Shaikh 2010, Supply chain management, Perishable products (Restaurant chain)[Presentations], viewed [ 19/12/2010], http://www.slideshare.net/sunilmbsingh/mcdonalds-final (Diagram 9)
Procurement is the functionality of purchasing inputs used in the company.
Procurement of raw material inputs.
McDonald’s get their raw materials from the experts in the areas of agriculture with better agricultural management practice.
They incorporated with international food processing technology suppliers to obtain good quality, service, cleanliness & value. (QSCV)
Using cold chain process on raw materials to get their immense benefits.
McDonald’s follows effective strategies on advertising and media services.
Development in quality assurance.
Lower cost and faster delivery chain.
Process control equipments. (Fry master, Grillers, toast master, Non veg. freezer, Veg. freezer, chiller and sanitizer.)
Decreased consumption of fried food & red meat through microwave oven.
Proper recycling system.
They recycled more than 98% of the waste that they produced from their restaurants. (paper, cardboard, plastics, frying oil)
This reflects that McDonald’s sustainable effort.
McDonald’s is maintaining an effective recruiting, development & retention mechanisms for employees.
It has quality relations with trade unions.
Specified quality work environment with maximum employee performance & minimum absenteeism.
Reward & incentive programs to make thee employees motivate.
The managerial & organizational process should have a good integration and coordination.
Presently they concentrate the managerial & organizational integration, as they suffered a massive loss previously by considering only on expansion of its outlets over the world than strengthening its core advantage.
E-learning programs for training of staff.
It is important to sustain the family and child centric strategy further.
Product pricing should focus the consumers of middle class and lower middle class people in India as well.
Put a considerable effort for selecting the product range for;
Indian regional food preferences &
Regular product development.
Need for expansion into other cities;
New outlets & distribution centers.
Sustain the cost leadership strategy.
Make future plans for the next five years.
Provide delivery services to every potential consumer in every potential segment.
Stabilize more drive through branches.
Remove U.S. branding concept.
In 1990’s, KFC and Pizza Hut placed a main role in fast food industry, India. After introducing McDonald’s at the very first time in India (1996) it took six years to do the initial planning of;
Researching Indian consumer suitable tastes,
Product development &
Supply chain management.
They have used a good strategy to enter to the Indian market through the concept of “Think global, Act local” to develop their;
India-centric business strategies,
Easy access to local people.
McDonald’s focused on religious sensitive consumers (Hindu & Muslim) & they avoid political confrontations. They tend to provide a lot of long term high quality employment for Indians, in their restaurants and in agriculture sector. They were able to have a corporate citizenship through different social activities.
Green movements.
Sponsorships for youth programs
Improving fast food image (Adding healthier food items) &
Health programs in India (Pulse Polio, Polio Free India)
Through their family restaurants they develop a family & child centric strategy in India. By maximizing out sourcing, flexibility in pricing & applying global QSCV principles McDonald’s was able to generate a good supply chain management within the country. McDonald’s was
Using their location strategy, McDonald’s was able to expand their outlets from initial locations to other locations as well, through partnerships. They looked ahead & pre-planned their product range to various menus. Also, they introduced a special delivery service for the customers those who were unable to visit their restaurants.
Finally, McDonald’s was able to make a stable picture of a fast food industry in the Indian consumer mind set.
We place the customer experience at the core of all we do
We show our gratitude our customers by providing them high quality food and service, in a clean, welcoming environment.
We drive high levels in our business through a team of well-trained experienced individuals by providing opportunity, talent, develop leaders and reward achievements to our success.
McDonald’s business model consists of three categories; owner/operators, suppliers and employees.
We are individually accountable for our business standards such as fairness, honesty and integrity and also we collectively responsible.
As a responsible business leader of the world we take care of our customers to build a better community and a better world.
As a public traded company we provide a sustainable profit growth for our shareholders, by focusing on our customers and the health of our system.
We always try to learn the changing environment and try to innovative products and services.
Organizations operate within a competitive industrial environment. By analyzing its competitors enables an organization to identify its own strengths, weaknesses, opportunities and threats. Business level strategies are mainly concerned with core competencies.
Competitors, social concept and uncertainty situation was highly influenced in McDonald’s strategies.
One of the largest food chain companies in the world. Number one fast food chain stores with 40 million customers visiting per day.
Have over 30,000 branches in 120 countries.
It derives 80% of its revenue from Canada, Brazil, Germany, France, Japan, UK, Australia and US.
Introduced the fast food culture to the world.
Excellent delivery speed, customer care and cleanliness.
Corporate symbol and successful advertising campaigns.
Product value (Gives great emphasis to employees and customers)
Product diversification into other product lines according to the new trends.
The managerial & organizational process should have a good integration and coordination.
Presently they concentrate the managerial & organizational integration, as they suffered a massive loss previously by considering only on expansion of its outlets over the world than strengthening its core advantage.
Technological, structural and financial assets of McDonald’s identified & implemented the assets in the proper direction to get its greatest advantage.
McDonald’s was able to sustain their vision over the years. (Quick service, cheap products & quality satisfaction)
To analyze the competitive positioning of the organization, we use Porter’s five forces, generic strategy and value chain analysis models. Therefore it is important to consider the following model (Porter’s five forces) for McDonald’s corporation as well.
Burger King corporation
Wendy’s International
Hardees’s (CKE Restaurants)
Jack in the Box
Sonic
New firm should have a big capital to invest to build physical restaurant locations.
New firm will find difficulties to establish a customer base & profitable as Mc Donald’s is already saturated
Re-Heat able pre-prepared foods
Delivery foods (Pizza)
Local grocery stores
Availability of healthy food (Fruits, Salads)
Low switching cost
Customers likely to look for other places which serve healthy food.
Buyer can select any fast food restaurant which is convenient to them.
Low bargaining Power (Many suppliers for the same product)
images1.jpg
(Diagram 10)
B. Craig & K. R. Dickson, 11th December 2007, Supply chain management, Mc India ppt[Presentations], viewed [ 19/12/2010],http://www.slideshare.net/KRDickson/McIndia-Final-ppt (Diagram 11)
Wheat
Dough
Warehouse
Refrigerated truck
Retail outlet
F:AssignmentsMainDominosDominos.gif
B. Craig & K. R. Dickson, 11th December 2007, Supply chain management, Mc India ppt[Presentations], viewed [ 19/12/2010],http://www.slideshare.net/KRDickson/McIndia-Final-ppt (Diagram 12)
(Diagram 13)
B. Craig & K. R. Dickson, 11th December 2007, Supply chain management, Mc India ppt[Presentations], viewed [ 19/12/2010],http://www.slideshare.net/KRDickson/McIndia-Final-ppt
Bruce Craig, Keith R. Dickson, International Business Management, [Online], available at: http://www.slideshare.net/KRDickson/McIndia-Final-ppt [20/12/2010]
Dr Amit Rangnekar NMIMS, Golden Arches, viewed [10/12/2010], http://www.scribd.com/doc/2303069/Case-McDonalds-India-Launch
Eric Kenny,Ekta Shah, Rachel Sigley, George Tsakanicas & Mariemir Viruet, 2010, Mcdonald’s internationally, pg 1-41, viewed 11th December 2010, http://www.scribd.com/doc/27068591/%EF%81%AC-We%E2%80%99re
Joe Thomas & Scott B. Droege, 2010, Reference for Business, 2nd edition, viewed [11/12/2010], http://www.referenceforbusiness.com/management/Sc-Str/Strategy-Levels.html
McDonald’s, 2010, McDonald’s Over View, pg
Values.
Executive Summary.
Introduction.
Porters Generic Strategy Analysis:
8.1 Differentiation strategy of McDonald’s:
Food preferences – India
Mc Donald’s premium line:
Types of restaurants:
Differentiating promotion programs:
8.2 Cost leadership strategy:
Food Items
McDonalds
Subway
KFC
Pizza Hut
Domino’s
Burgers & Pizzas
Combo Meals
Beverages
Deserts
Market share (worldwide):
McDonald’s India: Network & competitors
Key elements of McDonald’s business strategy;
8.3 Differentiation focus strategy:
Reasons:
“Happy children” & “Happy family”
8.4 Cost focus strategy:
Porters Value Chain Analysis:
HR Management
Technical Development
Procurement
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Services
Firm Infrastructure
Firm Infra Structure
9.1 Primary activities:
9.1.1 Inbound Logistics:
Distribution:
Cold chain.
Supply chain.
9.1.2 Outbound Logistics:
9.1.3 Operations:
9.1.4 Marketing & sales:
9.1.5 Services:
9.2 Support activities:
9.2.1 Infra structure:
9.2.2 Procurement:
9.2.3 Technical development:
9.2.4 HR Management:
Recommendations:
Conclusion:
Appendix
12.1 Mc Donald’s Values:
We are committed to our people
We believe in the McDonald’s System
We operate our business ethically
We give back to our communities
We grow our business profitably
We strive continually to improve
12.2 External analysis of Mc Donald’s:
12.2.1 Core competencies of McDonald’s:
12.2.2 Competitor advantage of McDonald’s:
12.2.3 Competitive Environment:
Major Rival Firms:
Treats of new entrants:
Threats of substitutes:
Bargaining power of buyer:
Bargaining power of supplier:
Mc Donald’s
13. Comparison with other competitors and their processors.
13.1 Supply chain of McDonald’s:
13.2 Supply chain of Domino’s:
13.3 Supply chain of Pizza Hut:
14. References:
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