Do you think McDonald’s has performed well in India, and why? A General Environment Analysis Is used to determine the liabilities and threats that McDonald’s faced when entering India and its ability to overcome them. This will also reveal opportunities that McDonald’s had, Indicating success If It was able to capitalize on them. Demographic Being the second most populous country In the world, India Is expected to be the only country where population growth will continue for the next 50 years.
In addition, the trend of increasing arbitration and the rise of the middle class with higher exposable income and greater demand for higher quality goods, provide a huge potential customer base to be tapped on. However, the trend of increasing income inequality may limit the expansion opportunity. Coloratura The increasing number of working wives resulted in lesser time to prepare meals helped to shape the eating habits of Indians towards more outside food than home- cooked food.
Furthermore, there is also a shift in attitude towards embracement of the American culture within the rich and middle class Indians. This has not only helped McDonald’s to overcome its allowably of “foreignness” but further provide an opportunity for It to exploit In Its marketing and positioning, Conversely, diverse food habits purposes (e. G. 83% do not eat pork or beef) due to religious purpose proved to be a challenge for McDonald’s.
Political/Legal The economic liberalizing in the sass provided an excellent opportunity for foreign Macs to enter the once pro-national market when the India government started to adopt a more market-based economy approach. These include the prevarication of some state-owned companies, providing a more competitive business field in India. Incentives such as lower corporate tax, amendments to the Foreign Exchange Regulation Act and lower import duties on machinery also pointed towards more foreign-friendly policies.
Technological Lack of the advanced agricultural technology had limited the total amount of yield Indian’s farmers were able to achieve. Food processing technology was also deficient In India, resulting In lower-quality food being manufactured. Inferior distribution systems and channels also caused wastage of roughly 20% of Indian’s food production. These posed a challenge to McDonald’s as its reputation rely on clean, high quality and timely delivery of its raw materials to all its branches. Economic The growing GAP per capita for the recent decade presented an opportunity for McDonald’s to enter the market.
Economic liberalizing coupled with the growing proportion of working population will likely increase the overall production capability of India, allowing India to maintain or exceed the current economic growth of 6% annually. Global Increasing globalization had forced India to acknowledge the importance of foreign Investments and to reduce Its reliance on policies of economic nationalism. Efforts to attract Macs and foreign Investments had paid off as evidenced In Its Improving economic growth.
Physical Environment Poor transportation facilities and storage infrastructure affects the distribution of agricultural Ana Too products Walton IANAL, resulting In oho wastage. As sun, TN poses a threat to McDonald’s supply chain system which required high quality raw materials to be delivered in a timely basis. With its entrance into the India market in 1996, it was able to expand to 58 outlets in Iambi and New Delhi by 2004. Even though much lower than China (26. 11) and Japan (123. 9), the average number of stores opened annually in India is still higher Han most other countries.
McDonald’s had performed well entering the India market namely through its detailed planning and its’ ability to capitalize on the various opportunities and mitigate the threats or liabilities of operating as a foreign company. “Initialization” of McDonald’s McDonald’s was able to “localize” its menu to fit the eating habits of Indians by eliminating pork and beef and even its flagship product, The Big Mac. This also helped to project its image of “Initialization” instead of Nationalization (cultural imperialism) which is welcomed by the Indian consumers.
Constant innovation to expand its product line and adjustment to festive seasons by introducing special vegetarian burgers enabled it to capture a larger market share. The careful market testing before product launch and separation of utensils for vegetarian and non- vegetarian food are some of the examples of McDonald’s emphasis on cultural sensitivity. The positioning of a family restaurant further portrays McDonald’s as a place for family, with services and products for all age groups in India. This helped McDonald’s to expand its customer base especially after these children turned adults.
Location and Supply Chain Management Choosing to open and expand in the urban cities of Delhi and Iambi allowed McDonald’s to tap on Indian’s largest concentration of rich and middle-class population. The western exposure and metropolitan cultures also enable McDonald’s to exploit its core competency – Branding. Other cities with tourist attractions or eating-out cultures are being expanded into due to the higher probability of success. McDonald’s supply chain management was carefully planned, with the company and its international suppliers collaborating with the local suppliers even before
McDonald’s arrived in India. Food processing and agricultural technology was transferred to these local companies to ensure that they produced high quality goods for all McDonald’s outlets. While the company responsible for the distribution of supplies to different outlets employed Enterprise Resource Planning software and advanced transportation trucks to help complete the well-integrated supply chain system. All these helped McDonald to reduce costs while ensuring the highest quality of products which are both vital for a foreign company like McDonald’s to compete ND grow in India.
Gaining Public and Governmental Support With its strategy of localization, McDonald’s choose to enter India via Joint ventures with 2 local entrepreneurs. This allowed McDonald’s to tap on their governmental relationships. Together with Indian’s new policies to attract foreign Macs in place, McDonald was able to enter India with much ease. Furthermore, with each outlet hiring more 100 personals, McDonald’s is able to create long term and quality employment opportunities for the locals, gaining support from the government and the local community.
McDonald’s also tried to build its image of socially responsible company Dye Notating Ana sponsoring Tort community Ana environmental causes. I Nils generated public as well as governmental goodwill, helping McDonald’s to reduce retaliation from the local community which is essential for its growth currently and in the future. Conclusion In conclusion, McDonald’s was able to perform well in India due to its’ well planned strategy of providing its products with cultural sensitivity while gaining governmental and public support through various donation and sponsorship program.
Its outlet locations and advanced supply chain management further helped to reduce its cost factor, enabling it to grow at such a fast pace. However, its current performance doesn’t necessary equate to future success and with the need for McDonald’s to tap on the increasing middle-class population in other smaller cities, it will have to invest in its distribution channels as well as its pricing mechanism. The perception of McDonald’s being expensive should also be altered if McDonald’s is to successfully expand throughout the entire India.