How Big Mac's Made it to India

The Golden Arches Strikes Back

How Big Macs made it to India

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Today’s Goal

To Identify and Explain challanges that made McDonald’s capable to succeed in a marketplace with

substantial differencies in:

•cultural approach to food consumption

•low spenditure available

•religious constraints

•Anti-American behavior

•poor logistics infrastructure


Let’s frame the organizational Growth Opportunity

Strengths

Weaknesses }Opportunities

Threats }

internal

external


Growth Opportunity

A good mix between

INTERNAL CAPABILITIES

(Strengths & Weaknesses)

and

EXTERNAL ENVIRONMENT

(Opportunities & Threats)


Growth Opportunity

Strenghts What the organization is good at doing or a characteristic that gives it an important capability

Weaknesses What an organization lacks or does poorly relative to competitors

Opportunites Developments or conditions in the environment that have favorable implications for the organization

Threats Pose dangers to the welfare of the organization


McDonald’s SWOT Analysis

Strenghts Excellent Supply-Chain Management

Weaknesses High Employee turnover rate

Opportunites Worldwide Brand recognition, Overseas Expansion

Threats Competition from Burger King


World’s Leading Food Service Retailer

•1937: Richard and Maurice McDonald’s open the first drive-in restaurant in California•1954: a distributor for milkshake machines, Ray Kroc, finalized a deal with the two founders.

He established a franchising company, the McDonald System Inc. and appointed franchisees•1961: Ray Kroc bought out the McDonalds brothers’ share for $2.7 mil and changed the name of the company to McDonald’s Corporation.

•1965: McDonald’s Corporation went public


A World’s Leading Food Service Retailer

•Over 32,000 restaurants

•53 mil. customers each day

•121 countries

•400,000 employees

•Over $24 bil. revenues (2010)*

•$15,9 bil. foreign sales

•$8,1 bil. domestic sales

•$4,9 bil. net income * Auditor: Ernst & Young LLP


India: an amazing challange

•Over 1,2 bil. population

•Over 72% Rural

•Over 22% under poverty line

•2.72 children born/woman

•29 languages

•80% pop. Hindus revere cows

•Over 150 mil. Muslims do not eat pork

•Median age 25.1 yrs.


Challanging India


A journey started far ago

•Early 90s few US-based fast food chains entered the Indian market (KFC & Pizza Hut)

•1996: After researching various aspects of the Indian market, planning, studying Indian consumers’ tastes, product evelopment, and supply chain, McDonald’s opens the first outlet in Bombay (now Mumbai - India’s financial capital and its largest fast food market, where competitng outlets are often a few feet apart)


The Golden Arches keys to success

•McDonald’s strategy is to think global and act local

•McDonald’s invest in strengthening back-end supply chain to ensure uninterrupted supply of inputs

•McDonald’s employs local people in its restaurants, purchases from local suppliers, and constructs its restaurants using local architects, contractors, labor and - where possible - local materials.


The Golden Arches keys to success

•India requires more efforts...

•An ‘Indianized Menu’, re-engineered operations, and no beef burger. RESPECT FOR LOCAL CULTURE.

•McDonald’s introduced a menu which completely excluded beef or pork. The largest re-designed menu for the whole chain (75% of it).

•The flagship beef-based Big Mac replaced by a lamb-based ‘Maharaja Mac’ that later became chicken-based

•For the middle class (300 mil consumers), the menu include McAloo Tikki Burger (breaded potato and pea pattie)


A 75% re-designd menu


The Golden Arches keys to success:Restaurant Management System (RMS)

•2 separate menues: green = veg; purple = non veg

•Separate veg/nonveg kitchens with dedicated staff, preparation and wrapping areas

•Different uniforms for kitchen crew to distinguish roles

•Printed brochures of RMS to customers

•Customer kitchen tours to assure

•Workers to cross fromveg/nonveg kitchen must take shower first


The Golden Arches keys to success:winnining cleanilness/hygien standards

•India’a local suppliers provide highest quality, freshest ingredients

•Adherance to Indian Government regulations on food, health and hygiene, benchmarking with own int’l standards

•Fast, friendly service - the hallmark of McDonalrd’s restaurants wolrd over

•Meticulous attention to cleanliness beyond lobby, kitchen to pavement & outside areas

•Stringent cleaning standards, trays sanitized several times each hour


The Golden Arches keys to success:international standards

•100 Rupee (Rs) ± € 1.44 ± $ 1.92

•KFC Rs 59-79 (Burger/KFC, Drink); Chicken, rice, gravy meal for Rs 39

•Pizza Hut Family meal (2 medium pizzas, Pepsi) Rs 350;

•McDonald’s Vlue meals Rs 39; Quick bites 25 Rs, Soft serve ice-cream Rs 8.

•Even these low prices afforded a 40% margin


The Golden Arches keys to success:community partnership

•Children’s painting competition across cities

•Maintaining gardens, parks, heritage structures

•Effluent treatments, recyclable paper bags

•Huge donations to Latur / Bhuj / Gujarat hearthquakes


The Golden Arches keys to success:marketing strategy

•Promotional strategy to convey world class expansion, Indian adaptations, freshness, nutrition & value•Shift from worldwide positionning of drive-in convenience and speedy service

•Segments- The young family (<30 y/old)

•Target- The young family who eats out

•Focus- attracting children so family follows

•Positionning- ‘McDonalds mein hai kuch beat’ - A place where for the entire family to enjoy.

•Differentiation- highlighting brand, food & variety


The Golden Arches keys to success:supply chain investment

•Critical for Success

•Local network for supply chain & distribution

•Local suppliers, distributors to match int’l quality

•Invested Rs 50 crore (1 Rs crore = 10 mil Rs) ± $10 mil.

•By 2000 Investment in supply chain reached Rs 300 crore!


The Golden Arches move on

•$111 investment in the next 3 yrs

•2011: opening of 30 more restaurants in South & West

•Hardcaslte, licensee of McDonlad’s will open 250 McDonald’s restaurants in the next 3-4 years.


The Golden Arches Strikes Back


Business

How Big Mac's Made it to India