Mc donalds india

ASSIGNMENT # A 619

Course Code: 50121619Course Name: Retail ManagementRetail Chain: McDonald’s India Roll No: 489

McDonald’s India

Introduction• The McDonald’s Corporation is the world’s largest

chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries.

• Headquarters in the United States, the company began in 1940 as a barbecue restaurant opened by Richard and Maurice McDonald. In 1948 they reorganized their business as a hamburger stand using production line principles.

• McDonald’s operates over 34,000 restaurants worldwide, employing more than 1.7 million people.

McDonald’s IndiaGrand Opening: McDonald's opened its doors in India, the 95th country, in 1996 and was the first country to serve non-beef and non-pork items. Its authority on non-beef and non-pork products still remains unchallenged.

Ownership: McDonald’s India is a locally owned company managed by Indians;

- Vikram Bakshi, under Connaught Plaza Restaurants Pvt. Ltd in Northern and Eastern Region (Headquartered in New Delhi) through a joint venture

- Smita Jatia, under Hard castle Restaurants Pvt. Ltd. in the Western and Southern Region(Headquartered in Mumbai) which is a DL (Development Licensee)

McDonald’s IndiaMcDonald’s Philosophy: McDonald’s philosophy of QSCV (Quality, Service, Cleanliness and Value) is the guiding force behind it’s service to the customers in India

The Scorecard: The first McDonald's restaurant in India opened on October 13, 1996 at Basant Lok, New Delhi.

Today, McDonald’s has 242 restaurants operating in India serving over 5, 00,000 customers’ everyday and has completed more than 10 years of unparalleled in the country.

Vendor Development; McDonald’s spent more than 5 years (from 1990 onwards) on developing the first beef-less and pork-less menu in McDonald’s history.

Key Landmarks - McDonald’s India

Journey 1996:

• The first McDonald’s restaurant opened on Oct. 13, at Basant Lok, Vasant Vihar, New Delhi. It was also the first McDonald’s restaurant in the world not serving beef on its menu.

1997:

• The first Drive–Thru restaurant at Noida (UP)

• The first disabled friendly store at Noida (UP)

1999: The first Mall location restaurant at Ansal Plaza (Delhi)

Key Landmarks - McDonald’s India Journey

2000 : The first highway restaurant at Mathura (UP)

2001: The first thematic restaurant at Connaught Place (Delhi)

2002 :

• The first restaurant in a food court at 3C’s, Lajpat Nagar (New Delhi)

• The first restaurant at the Delhi Metro Station at Inter State Bus Terminus

• The first fundraiser in association with ORBIS and Dr. Shroff’s Charity Eye hospital.(Delhi)


2003: The first Dessert Kiosk – Faridabad (Haryana)

2004: McDonald’s Delivery Service (McDelivery) introduced in New Delhi.

2003-04: Indigenous products like McAloo Tikki, McVeggie and Pizza McPuff exported to Middle East countries.

2006:

• McDelivery on Bicycles flagged off at Chandni Chowk (Delhi)- another first initiative by McDonald’s India

• 100th McDonalds Restaurant in India, 10th year Anniversary.


2007:

• The first McDonald’s open in Eastern Region at Park Street, Kolkata.

• The first restaurant opened at Airport (Domestic Airport, New Delhi).

• The first MFY restaurant opened at Greater Noida, Uttar Pradesh

2008:

• The first restaurant to start Breakfast Menu at Janpath, New Delhi


2008: The First restaurant to start extended hours procedure at Cyber Greens, Gurgaon and Saket, New Delhi

2009: The first McDonald’s Restaurant opens at Old Delhi Railway Station.

2010: The first reimaged new look restaurant opened at Ambiance mall, Vasant Kunj.

2011:

• Introduces premium products in it is menu – McSpicy range of products


2011:

• Introduces Mcflurry (premium desserts) in Oreo and chocolate crispy flavors.

• Wi-Fi services in its restaurants.

2012:

• Spicy Fest – Introducing new spicy variants for a limited time period

• New product launch in the Happy Price Menu – McEgg – Rs. 25.


2012:

• Launch of employee engagement program – Voice of McDonald’s & Olympic Crew Championship.

• MDS through web in Delhi.

McDonald’s currently has 300 restaurants in India of which 145 are in North & East India and 155 in West & South India.

Fast Food Industry In India

• As per new research report “Indian Fast Food Market Analysis”, India is blessed with one of the fastest growing fast-food markets in the world. The Indian fast food market is growing at an annual growth rate of 30-35%.

• Although the market has witnessed robust growth in the past couple of years, it remains largely under penetrated and concentrated in the metropolitan cities.

• In 2013, the global fast food market is forecasted to have a value of $200 billion, an increase of 29.3% and a volume of 94.7 billion transactions, an increase of 10.4% since 2008.

Fast Food Industry In India

• It is estimated through credit Suisse Emerging Consumer Survey, that the average Indian spends just $11 as compared to his Chinese counterpart who would ideally spend $20 on fast food. Yet, if we see the Indian spending on food in totality, they spend 23% of their earnings on the same while the Chinese spending is 20%.

• Almost all big fast food brands of the world have succeeded in making their presence felt in the country and most of them are posting appreciable growth.

McDonalds Business Model

Franchise Model :- Only 15% of the total number of restaurants are owned by the Company. The remaining 85% is operated by franchises. The company follows a comprehensive framework of training and monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value propositions offered by the company to its customers.

Product Consistency :- by developing a sophisticated supplier networked operation and distribution system, the company has been able to achieve consistent product taste and quality across geographies.

McDonalds Business Model

Act like a retailer and think like a brand :- McDonalds focuses not only on delivering sales for the immediate present, but also protecting its long-term brand reputation.

Target Market Segment

McDonald’s has segmented their products according to 3 different bases. They have segmented their products and positioned their products according to kids, students and family. But they haven’t segmented their products according to the Adult target group.

The 3 bases for segmentation are :

• Demographic Segmentation

• Psychographic Segmentation

• Behavioral Segmentation

Target Market Segment• Demographic Segmentation :- (Kids, family and

students.) McDonalds offers different products like Happy Meal which includes a free toy for kids. For family it has made different outlets and meals which are suitable for takeaways and drive-thru. McDonalds has made its environment suitable for school/college students to hangout with their friends and grab their lunch at McDonalds.

• Psychographic Segmentation :- (Convenience and lifestyle )McDonalds has adapted itself according to the convenience and lifestyle of the Indian consumers, as India has a huge vegetarian population so McDonald’s came up with a different and new product line which includes items like Mc Veggie burger and Mc Aloo tikki Burger.

Target Market Segment

• Behavioral Segmentation :- (Occasions, for e.g. Birthday parties for kids). McDonalds at several outlets also provides facilities like “Play Place” where children can play arcade games, air hockey etc. This helps McDonalds to attract the young urban families wanting to spend some quality time while their children have fun at the outlet.

Customer Perception and Customer Expectation

Customer perception is a key factor affecting a product’s success. Many potentially revolutionary products have failed simply because of their inability to build a healthy perception about themselves in the customers minds. McDonalds being an internationally renowned brands brings with it certain expectations for the customers. Target Segment

What is McDonalds for me?

A Family with children

A treat to children, a fun place to be for the children.

Urban customer on the move.

Great taste, quick service without affecting the work schedule

Teenager Hangout with friends, but keep it affordable.

Challenges in Entering Indian Markets

• Regiocentricism : Re-engineering the menu – McDonald’s has continually adapted to the customer’s tastes, value systems, lifestyle, language and perception. Globally McDonald’s was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the Indian sensitivities. So McDonald’s came up with chicken, lamb and fish burger to suite the Indian palate.

• The Vegetarian customer – India has a huge population of vegetarians. To cater to this customer segment, the company came up with a completely new line of vegetarian items like Mc Veggie burger and Mc Aloo tikki.

McDonald’s Marketing Mix

The 5 P’s used by McDonald’s are :-

1. Product

2. Place

3. Price

4. Promotion

5. People

Product

McDonalds has intentionally kept its product depth and product width limited. McDonalds studied the behavior of the Indian customer and provided a totally different menu as compared to its International offerings.

It dropped ham, beef and mutton burgers from the menu. India is the only country where McDonalds serves vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian.

McDonalds continuously innovates its products according to changing preferences and tastes of it customers. The recent example is the introduction of the Chicken Maharaja Mac. McDonalds bring with it a globally reputed brand, world class food quality and excellent customer specific product features.

Product Mix

Place

The place mainly consists of the distribution channels. It is important so that the product is available to the customer at the right place, at the right time and in right quantity.

There is a certain degree of fun and happiness that a customer feels each time he dines at McDonalds. There are certain value propositions that McDonalds offer to its customers based on their need. McDonalds offers hygienic environment, good ambience and great service.

McDonald’s Supply Chain

An Overview

• McDonald's unique 'cold chain', on which the QSR major has spent more than six years setting up in India, has brought about a veritable revolution, immensely benefiting the farmers at one end and enabling customers at retail counters to get the highest quality food products, absolutely fresh and at great value.

• McDonald's, through its unique cold chain, has been able to, both cut down on its operational wastage, as well as maintain the freshness and nutritional value of raw and processed food products. This has involved procurement, warehousing, transportation and retailing of perishable food products, all under controlled temperatures.


Supply Chain Process

• A McDonald's burger is not just a burger but an outcome of dedicated efforts by farmers, its suppliers, distribution center and a firm promise by McDonald's.

• McDonald's contributes a great back end process which enables you to enjoy your favorite burger fresh & hot, and for that, the supply chain truly acts as a backbone of the business.

• The supply chain begins at the grass root level, with the suppliers receiving the crop from the farmers. The crop is then processed and dispatched to the Distribution centers in special temperature controlled trucks, which ensures that the quality of the items is not compromised.


Supply Chain Process

• These items are stored in rooms with different temperature zones and are finally dispatched to the McDonald's restaurants on the basis of their requirements. McDonald's expectation of 'Cold, Clean, and On-Time Delivery' plays a very vital role in maintaining the integrity of the products throughout the entire 'cold chain'.


Sourcing and Storage

Setting up this extensive cold chain distribution system has involved the transfer of state-of- the-art food processing technology by McDonald's and its international suppliers to pioneering Indian enterprises who, today, are an integral part of the McDonald's cold chain.

McDonald's Supply Chain's distribution partner ensures that all requirements ranging from liquid products coming from Punjab, to lettuce from Pune, is received from different parts of the country.


Sourcing and Storage

McDonald's India has around 40 suppliers and all the suppliers are HACCP certified, ensuring highest level of quality. They work cohesively to ensure that the final product reaches the customer consistently each time and every time

McDonald's India has ensured that this dedicated supply chain enables the Indian supplier an accesses to latest in food processing technology, management practices and advanced agricultural inputs with significant investment at the back end. This has proved to be a great advantage in serving the customers better.


Supply Chain: Cost Management

The tremendous value benefit is enabled by McDonald's renowned supply chain management system and by leveraging economies, which helps minimize costs while maximizing value to customers.

McDonald's strong back ward integration connects it directly with various aspects of the business right up to the farm level, which helps in increasing the productivity in terms of yields and helps the brand manage costs.

A well entrenched process driven production system ensures high levels of standardization and quality, which also keeps wastage and costs in check


Supply Chain: Menu Management

• Menu innovations are a constant practice at McDonald's. McDonald's introduced global core products like McNuggets and have also re-engineered the product range to suit the Indian palate. This menu innovation has been possible due to robust supply chain network right up to farm level.

• Every new product requires a special treatment and the backend process needs to be upgraded to meet the requirements.

McDonald’s India; Suppliers

Pricing Strategy

Success of McDonalds has been mainly due to its value for money offering to the Indian Consumers. The prices offered are in the range of lower middle section of the society. Moreover it customization in accordance with the taste of Indian consumers has also worked in its favor. McDonalds Pricing Strategies are as follows:-

• Value Pricing.

• Product line Pricing.

• Promotional Pricing.

• Penetration Pricing.

Pricing Strategy Value Pricing

McDonalds came with the concept of value pricing for Indian consumers where in it came out with various combos in form of

• Happy meals comprising of small burgers, coke + toy.

• Medium meal combo that consisted of burger, medium fries and medium coke with the price of Rs. 75

• Maharaja Mac Meal – Rs. 94

• Famil Dines under Rs. 300.

Pricing Strategy Product line Pricing

McDonalds has a unique price strategy which falls soley on many of their product lines. Their Value Meals fall into the category of Product Line Pricing. “where there is a range of product or services the pricing reflect the benefits of parts of the rang”. For example, you can order Two Cheeseburger Value Meal that comes with a medium drink and fries for around Rs. 75 (prices may vary). You can Super size this meal to get a large drink and fries for a little money or you can go with another value meal that might include different items for different price.

Pricing Strategy Promotional Pricing

If you have driven past a McDonald’s, you will notice that somewhere on their property, whether it is a banner on their building or spelled out on their sign, they are always offering some sort of promotional pricing. This promotion can be seen as a large banner draped across the building on many restaurants. This promotion changes weekly and may consist of different menu items packaged together

Pricing Strategy Penetration Pricing

When McDonald’s first began to break into the coffee market, they ran a large marketing campaign in order to gain some market share in the industry. For a limited time frame, you could get a free small coffee every morning from 4-7 am. This was to promote their new coffee partnership with Green Mountain coffee and helped spread the word that McDonald’s was now offering coffee.

Promotion

The various promotion channels being used by McDonalds to effectively communicate the product information are given below. A clear understanding of he customer value helps decide whether the cost of promotion is worth spending.

Promotion

There are 3 main objectives of advertising for McDonalds -to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right audience through the right media. McDonalds does its promotion through television, hoardings and bus shelters. Some of the most famous marketing campaigns of McDonalds are:

• “You deserve a break today, so get up and get away- To McDonalds”

• “Aap ke zamane mein, baap ke zamane ke daam”

• “Food, folks and fun.”

People

McDonalds understands the value of both its employees and its customers. It understands the fact that a happy employee can serve well and result in a happy customer.

McDonald has been one of the most prominent in the global hospitality for many years. The continuous growth of the company in a global market addressing various issues regarding the Human resources hailing from countries with different culture is really an interesting matter of study. Generally a HR strategy involves the careful development of various components of the HRM.

Human Resource Strategy

A general discussion of the HR strategy of McDonald has been made as follows:

1. Organizational Structure.

2. Job Analysis and Job Evaluation.

3. Recruitment and Selection Process.

4. Management development (Training and Development).

5. Motivation Performance management and Appraisal.

6. Reward and Employee Benefits.


1) Organizational Structure

McDonald has 3 different categories in their structure:

• The corporate staff controls the company and manages the franchises worldwide.

• The Franchisees are given restaurants to manage them following the standard of practices set by McDonald.

• Restaurant workers are the lower-level wage based employees who are paid in hourly basis.


2) Job Analysis and Job Evaluation

• Job Analysis method of the McDonald is developed by the human resource department in consultation with various other departments. After job description, job restructuring is performed on the basis of observations of the senior employees.

• In McDonald’s, Job evaluation involves deciding the wages and salaries of the employees on the basis of job analysis. Job evaluation is also referred as compensation in McDonald. The organization has its predefined standards for the evaluation of its employees based on their skills, knowledge and experiences.


3) Recruitment and Selection Process

McDonald screens the applications submitted by the individual applicants. A well devised recruitment policy is formulated for the selection process. The screening of the applicants is based on the merit, institute of previous employment, experience and so on. Candidates passing through this are further processed for selection.


4) Management Development

Training and development of employees is of vital concern for a globalized company like McDonald. McDonald has a Management Development Program (MDP) designed to develop the potential leaders. For example, each year, McDonald trains about 55,000 employees. It also invests more than $10 million to ongoing employee trainings, providing valuable skills and knowledge to its franchisees all over the globe. It has a designated Hamburger University as a management training center for its valued employees.


5) Performance Appraisal

The performance of the employees is appraised on a regular basis. Absence of appropriate performance appraisal leads to employee dissatisfaction and frustration. McDonald makes use of various performance appraisal methods like Graphical rating scale and 360 degree feedback.


6) Compensation and Employee Benefits

Compensation in McDonald includes:

• Direct financial payments: wages, salaries, bonuses and commission.

• Indirect payments: financial benefits like paid insurance

Employee Benefits in McDonald includes perks and benefits like:

• Free life insurance after 3 years of employment,

• Medical and hospital facilities,

• Provident fund, etc.

Competitors Analysis

McDonalds has been a leading fast-food outlet. But the outlet understudy has other competitors eating away into the market share. In addition to its traditional rivals – KFC, Dominos, Pizza Hut- the firm encounters new challenges. Jumbo King competes using a back to basics approach of quickly serving up burgers for time-pressed consumer. On the higher end, the KFC has become potent competitor in the quick service field, taking away customers from McDonalds.

At this time, a new critical success factor maybe emerging; the need to create rich, satisfying experience for the consumers. This brings us to service and experience based competition which McDonalds can use against Jumbo King.

Competitors Analysis

Keeping in mind the demographics of the area, McDonalds has Wi-Fi enabled the outlet to cater to the student community. It is for this overall “Food, Fun & Folks” experience customers pay premium price over the other competitors.

Competition also reduces product lifecycle; inducing firms to revise their product portfolios and to revisit their product market to understand changing needs, expectations and perception of different market segments. The new McBreakfast woud be introduced between 6 to 11 am as a pilot project. This would open up a whole new revenue stream for McDonalds by tapping into student an working population.

SWOT Analysis