McDonalds in the Indian Market - Case Study Example

Strategic Frameworks Name: University: Date: McDonalds – Case Study Introduction In India, the fast food industry has become very saturated and the market is still facing some concerns regarding the fast foods’ consumption as well as the associated health implications. As mentioned in the case study, McDonald’s has been a market leader not only in India but also globally. Still, the company has found it challenging to retain its position as a market leader due to the level of competition within the fast food industry that is rapidly increasing. SWOT SWOT Analysis Considering that the India fast food market has been growing, tho following is a SWOT analysis of McDonald’s in the Indian market as evidenced in the case study. Strengths The McDonald’s brand image has continually made the company increasingly competitively strong. Besides that, the company’s market diversification is strength considering that the company has outlets in scores of regions across the globe. Market diversification has enabled the company to lessen the market-based risks. Besides that, the company has an all-inclusive standardized processes system that results in product consistency as well as business efficiency. This is considered as a strength because it demonstrates that McDonald’s can effectively maintain its operations. Besides that, the company is an industry leader, not only in India but also globally. As indicated in the case study, McDonald’s is the largest fast food marketer in the world. As of 2000, the company had a presence in over 120 countries operating close to 30,000 restaurants and with more than 1.5 million employees. Furthermore, the company had assets worth over US$21.7 billion and was continually refer to as a savvy marketer. The company’s products’ innovation and flexibility enabled it to meet the Indian customers’ cultural as well as religious demands. As mentioned in the case study, McDonald’s introduced vegetarian products to its menu in order to satisfy the Indian customers’ religion, lifestyle, as well as eating. McDonald’s understands the preferences of its Indian customers and has been able to respond swiftly by means of innovative ways. Supply chain management is one of McDonald’s strengths, which has enabled the company to reduce its cost, leading to improved profits. According to the case study, efforts by the company to create a supply chain structure that is well-organized resulted in major changes in India’s fast food industry since the performance were raised. The supply chain has enabled McDonald’s to meet the needs of its consumers by maintaining nutritional value and freshness of its products. Other strengths include improved customer service and affordable prices. Weaknesses Some of the weakness includes the ability of the competitors to influence McDonald’s pricing strategies. Furthermore, although McDonald’s standardisation facilitates consistency, it also results in reduced flexibility of the company to respond to market variations. A slowdown in the restaurant industry would enormously affect McDonald’s because the company has a low product diversification (focuses only on food and beverage products). Among the internal weaknesses of McDonald’s is the high turnover of its employees. According to Mishra and Dwivedi (2013), McDonald’s benefits and compensation is very poor; therefore, most employees take long to get motivated. Another weakness is attributed to the limited menu since the Indians fast food concept is somewhat different as compared to the Western market; for instance, Muslims do not consume pork while Hindus do not consume cow meat. Other weakness includes home delivery inefficiencies and the need to fulfil social responsibility. Opportunities There are numerous opportunities for McDonald’s; for instance, the company should its expansion strategies to open new outlets in different parts of India. India provides the company with a business growth opportunity thanks to its larger population and customer sophistication. Considering that the majority of Indians live in the large cities and the changing gender roles have increased the desire to have out-of-home breakfast. Therefore, McDonald’s should start serving breakfast in all its outlets located in the cities. Another opportunity is home delivery, which offers the company a chance to improve its customer base. This can be achieved by improving their delivery services and expanding its home delivery services across India. Environmental friendly packaging offers McDonald’s an opportunity to improve its reputation and avoid any form of legal issues with the government and environmental agencies in the future (Greenspan, 2015). Threats Some of the threats to MacDonald’s in India include political and religious confrontation: as mentioned in the case study, the company has experienced numerous challenges. There was some mistrust to the products offered by the company, which some Indians believe were contrary to the religious codes of Muslims and Hindus. Another threat is the changing preferences amongst the customers; for instance, some of the customers have started shifting towards healthy food. MacDonald’s also faces a threat from the increasing number of local companies and other multinational companies like KFC and Domino. Competitor analysis MacDonald’s competitive marketing strategies are considered to be strong because they have positioned the company’s strengths against the weaknesses of the competitors. Still, the Indian fast-food market has become very competitive and filled with multinational fast-food companies like Domino's Pizza, KFC, Domino's Pizza, Burger King, and many others. According to Kannan (2014), some MacDonald’s competitors such as Burger King opened their outlets in India very recently, but are planning to open many other outlets across the country. Akin to MacDonald’s, these competitors have also dropped beef and pork from their menu (Kannan, 2014). Clearly, the substitutes in the Indian Fast food industry is exceedingly high since the customers can customers can select various products from different companies like MacDonald’s, Indian restaurants, KFC, Burger King, or other outlets. As cited by Kashyap, Kashyap, and Sarda (2013), both Domino's Pizza together with McDonald's have exhibited that the Indian consumers are becoming accustomed to the Western fast food. In order to offer the customers more value, MacDonald’s and other competitors have introduced low priced products while others have increased promotions as well as discounts. For instance, the Domino's Pizza has been offering combo offers, buy-one-get-one-free offer, free gifts and discounts in order to lure customers from its competitors. After Indian economy was liberalised in the early 1990s, the country became a target of many fast food giants such as KFC, McDonald’s, Pizza Hut, Burger King, as well as Domino’s Pizza. In addition, the favourable demographics and changing consumer behaviour made India to experience an enormous economic growth, especially in the fast food industry. The Indian fast food market has become very attractive to an extent it attracted different brand identities and even though it is easy to enter, gaining a substantial market share like the one McDonald's is holding is very challenging. Considering that McDonald's was among the first entrants, the company according to the case study has already adapted the Indian beliefs, culture, tastes, values, and lifestyles. Although the company is recognized globally because of its pork and beef burgers and hamburgers, it introduced fish, lamb, and chicken burgers In India in order to survive and gain market share. However, other competitors such as Domino’s and Pizza hut introduced similar products; thus, making the market more competitive. International strategy McDonald’s is considered as the most successful company in the fast food industry. This is attributed mainly by its effective global expansion strategies, which they use to penetrate new markets as well as achieve significant market share. The company has adopted a transnational strategy to facilitate global integration and local responsiveness. As evidenced in India, the company understands that the foreign markets need a very high local responsiveness level and because McDonald’s business has grown tremendously, they use global strategies to manage their expansion across the globe. More importantly, the company has created the value chain in a way that it considers the economic and legal-political environments and also local culture. To become successful in the new market, the company focuses on local management by hiring locals. As a result, this enables McDonald’s to effectively address the employees’ issues with the view to the local culture. By mean of the franchise model, the company has been able to cut the costs associated with starting a new business in a new country. Furthermore, McDonald’s has priced its products according to the population’s income distribution, currency exchange rate, and local inflation. The company’s growth strategy is based on improving profitability at international level, increasing the number of outlets, and maximizing profits and sales at existing outlets. The growth strategy is based on the company’s core competencies, which includes affordable prices, fresh food, a limited menu as well as fast service. Conclusion In conclusion, it has been argued that McDonald’s integrated supply chain and its continuous focus on the needs of customers are some of its key core competencies. Besides that, customer friendly prices have differentiated McDonald’s from its competitors in the Indian market. Still, the company’s has been forced to change its limited menu because the eating preferences and habits as well as demands of the Indian customers have been changing. In addition, McDonald’s products’ innovation as well as flexibility has enabled the company to meet the Indian customers’ cultural and also religious demands. Still, the increasing competition and changing customer preferences pose some threats to MacDonald’s. References Greenspan, R. (2015, October 15). McDonald’s SWOT Analysis & Recommendations. Retrieved from Panmore: http://panmore.com/mcdonalds-swot-analysis-recommendations Kannan, S. (2014, November 19). How McDonald's conquered India. Retrieved from BBC: http://www.bbc.com/news/business-30115555 Kashyap, M., Kashyap, K., & Sarda, D. A. (2013). Study of Growth of Fast Food Industry with Reference to Shift in Consumer’s Buying Habits in Nagpur City. International Journal of Application or Innovation in Engineering & Management, 1-7. MinalKashyap, KomalKashyap, & Sarda, D. A. (2013). Study of Growth of Fast Food Industry with Reference to Shift in Consumer’s Buying Habits in Nagpur City. International Journal of Application or Innovation in Engineering & Management, 1-7. Mishra, B., & Dwivedi, S. (2013). Success Story of Macdonald’s in India: Story of It’s Struggle in Indian Market. Asian Journal of Science and Technology, 4(7), 66-70. Read More