business strategic management-case study on McDonald’s in India

Topics: Fast food, Strategic management, Fast food restaurant Pages: 21 (3403 words) Published: April 27, 2014
1.1 McDonald Corporation worldwide
McDonald‟s Corporation, headquartered in Oak, Brook, US, is a fast food chain established by Maurice and Richard McDonalds. Since its establishment in 1940 when the company operates as a barbecue with customers queuing up for a limited service, the company has grown to become the world‟s largest hamburger food chain serving 68 million customers daily in over 119 countries. The company attains its international recognition following the purchase of a franchise right by Ray Kroc in 1955 who establish the presence of the company in other regions (Gilbert, 2009; Business Education, 2011).

1.2 McDonald’s India
McDonalds entered India in 1996 through a joint venture with local firms such as Hardcastle Restaurants Private Limited and Connaught Plaza Restaurants Private Limited. However, contrary to the company‟s expectation, McDonalds faced some tough time been accepted by the consumers due to perhaps cultural mismatch between the locals culture and what McDonalds represent – the American culture (Habib, et al., 2011). Through its localization strategy (Times Magazines, 2011; The Start Newspaper 2011), McDonalds changed its product menu from beef burger to lamb and vegetable burger given the large vegetable consuming population, altered its store design, reduce the product price by 10-15% so as to suit the customer‟s taste and preference. This localization strategy has paid off because McDonalds has over 300 restaurants in various parts of India serving over 500,000 customers on daily basis.


2. Macro environment analysis in India
After years of economic dwindling, the Indian economy is fast growing in recent years, thus impacting positively on the fast food industry. For example, Subramanian, (2013) notes that Indian economy grows at 6.4% annual rate from 2002 to 2011 with an average rate of 7.7%. This has enhanced the rise of the middle class group after years of wide gap between the rich and poor. This rising middle social class opens more investment potential for companies especially fast food companies because the more income people earn, the more likely they would spend such on food. Also, another prevalent concept in India is the tendency to eat outside which has increased from 2-4 times a week to 4-8 times. Goyal and Singh, (2007) assert that food diversity in India is characterized by India‟s diversified culture comprising diverse states. Although Indians like to have homecooked meals – a concept supported religiously as well as individually, recent years has witnessed a slight shift in food consumption patterns among urban Indian families toward eating outside owing to increasing awareness and influence of western culture. The rising middle class group and consumer‟s tendency to eat outside has affected the fast food industry positively in that Nayak, (2013) notes that the India fast-food industry grows at 40% rate and the market value is expected to reach 70 billion rupees ($1.1 billion) by 2016.


3. Micro business environment in India using PESTLE
The political, economic, sociocultural, technological, legal and the environment factors influencing the India fast food market is discussed here.
3.1 Political factor
McDonald‟s and other fast food chain are expected to obey labeling and packaging regulations and health and safety guidelines as stipulated by the Indian government and its food regulatory bodies. This is because of the growing concerns of the health effect of consuming fast food (Ali, et al. 2011). For example, the fast food consumption has been shown to increase calorie intake, weight gain which exposes consumers to the risk of facing diabetes. Given this, fast food is been criticized by health practitioners and consumers activists for high calorie content and Trans fat.

3.2 Economic factor
India‟s increasing income level per month which was Rs5130 in 2011 and Rs5,729 in 2012-2013 (The Economic Times, 2013) gives McDonalds and other fast food...

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Business Wire, (2011) Research and Markets: The fast food market in India: Indian fast food
market is growing at the rate of 30-35% Per Annum, 04 August [online] [Accessed: 7 October, 2013]
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Grant, R.M. and Jordan, J. (2012) Foundations of strategy, 1st edn. West Sussex: John
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The Start Newspaper (2011) McDonald’s: “Think Global, Act Local the Marketing Mix
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The Economic Times, (2013) India 's per capita income rises to Rs 5,729 per month, 7
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