McDonald’s in India

Group C-4

Company Overview McDonald’s is one of largest

corporations in the fast food industry. Started in1955 by Ray Kroc The majority of the restaurants are

owned through franchises. They employ 447,000 people. Over 34,000 restaurants Approximately 69 million customers are

served in 118 countries each day. More than 80% are owned and operated by

independent local people. Their primary competitors are other

fast food chains such as Burger King and Wendy’s. The competition can get pretty intense to build customer loyalty to their food.

The McDonalds Brand is one of the most well known Brands in the world.

Understanding the Indian Market

Over 1,2 billion population Over 72% Rural Over 22% under poverty line

29 languages 80% population Hindus revere the cow

Over 150 mil. Muslims do not eat pork

Is there anything that McDonald’s could have done to have foreseen or better prepared itself for the negative publicity associated with the revelation that it used beef extract in its frying oil?

Macdonald would have... Obtained a quality certification for vegetarian

foods, issued by an accepted local body in India. Eg:The Bureau of Indian Standards (BIS)

Displayed the ingredients used on the food label.

Launched effective marketing campaign to educate the new customer base and built the trust.

Timely taken actions to declare the food in Indian market are uncontaminated.

Case study question 1

Case study question 2What lessons does the experience of

McDonald’s in India hold for other foreign fast food chains?

Product adaptation t suit the local market and the culture.

Necessity for adequate and detailed researched before penetrating to new markets.

Identifying factors which affect to attract and sustain a long lasting customer relationship

Understanding the different reactions to the same issue in different cultural backgrounds

Using appropriate marketing strategies. eg.:using local celebrities.

Maintain openness, integrity and transparency in procedures

Case study question 3

How far should a firm such as McDonald’s go in localizing its product to account for cultural differences? At some point might it not lose its advantage by doing so?

Standardization is essential to retain the values and identity of a brand. Therefore the localizing has to be done, preserving the core values of the product.

Excessive localizing of products can jeopardize the brand identity.

New generation’s willingness for experiencing “international” makes a negative impact on localizing

Various range of products in the global market may cause to lose the consistency of the quality.

Localizing incur an additional cost . Therefore, the breakeven point has to be identified.

How cultural differences between U.S.A. and China influence, Business Practices and The cost of doing business in each countries

Critical Discussion Question

CDQ – Q.01  U.S.A China

Social

Culture

Informal and flexible. No

levels in the society and

every person crosses most

of lines in the society

except very few.

Formal and hierarchical. Every

person knows his position and he

will be governed by a code of

rules.

Collective

thinking

More individualism. More

products have been marketed

as individual power or a

person.

Collective thinking is very high.

Chinese are willing to give up or

scarify anything for greater

good.

Business

relationship

The business is more

important and the

socializing will be

sacrificed to get the job

done if needed.

Business becomes secondary as the

parties get to know each better.

If it delays a contract, which is

perfectly acceptable as long as

the correct social time is

assigned.

Time

Sensitivity

Very sensitive therefore

arranging meetings, due

dates are concerned lot.

Time has not been taken as highly

effecting factor which us taken

as a suggestion.

Respect to

other

Not much respect to other

person

It is expected that you will

respect the other person and

treat them well.

CDQ – Q.01(Cont.)  U.S.A China

Styles of

Communicatio

n

Business people often pride

themselves on being tough

or dominant. Eye contact is

important

Slower, less aggressive style is

valued in Chinese Business

people. No eye contacts.

Contracts Contracts are very

important

valued careful examination and

relationships, contracts are less

important

Thinking

Style

Linear & pragmatic

thinking. Lead to

innovations

Non-Linear & pragmatic thinking

Project

initiation

Project can be started

without meet in person

Face – to – Face interaction is

very much needed to successful

business

Friendship

Large collection of

"friends" and acquaintances

which changes over time and

involves only limited

mutual obligations.

Small number of close, lifelong

friends who feel deeply obligated

to give each other whatever help

might seem required.

CDQ – Q.01(Cont.)  U.S.A China

Obligation

People avoid interdependent

relationships and

situations that might

entail long-term

obligations.

Relationships with other people

involve reciprocal obligations.

Religious

impacts

The US is heavily

influenced by Christianity

Mainly influenced through

Buddhism. however Taoism, Islam,

Catholicism and Protestantism

have also playing a main role in

culture

Negotiations Always start with a

reasonable proposal

regardless and expect

multiple rounds of

negotiations.

Chinese deals have a room for

negotiation.

CDQ – Q.02

The saving of production at China reduces year by year

CDQ – Q.02

Reason :

The increase of Cost of Labour at China

Thank You