McDonald case analysis
History and growth of McDonald across Globe : McDonald Corporation is the world's leading food service retailer with more than 31,000 restaurants in 120 countries serving more than 50 million customers each day. Origin of this US based company can be traced back in 1940 as a barbecue restaurant operated by the Richard and Maurice McDonald . Ray Kroc another business man joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers .
McDonald's first filed for a U.S. trademark on the name "McDonald's" on May 4, 1961, with the description "Drive-In Restaurant Services,". In the same year, on September 13, 1961, the company filed a logo trademark on an overlapping, double arched "M" symbol. McDonald serves some of the world famous favourite food like French fries ,Big Mac, hamburgers, soft drinks ,desserts, shake etc .

Mc Donald focus on global expansion strategies .McDonald’s first opened stores outside the United States in 1967 in British Columbia and Puerto Rico . Currently it has made its presence in 120 countries . McDonald Business model is based on Franchises . Almost 85% of its restaurant is based on franchise model only 15% is owned by company. In India, McDonald's is a joint-venture company managed by two Indians. While Amit Jatia, M.D. Hardcastle Restaurants Pvt. Ltd. owns and spearheads McDonalds in west & south India, McDonald’s restaurants in North & East India are owned and managed by Vikram Bakshi’s Connaught Plaza Restaurants Private Limited.
Celebrating over the years of leadership in food service retailing in India, McDonald’s now has a network of over 160 restaurants across the country, with its first restaurant launch way back in 1996. Prior to its launch, the company invested six years for market research , Indian consumer taste preference , Indian culture values and ethics study , planning for develop its unique supply chain which has brought about a veritable revolution in food handling, immensely benefiting the farmers at one end and enabling customers to get the highest quality . It was their careful planing and studying the Indian consumer which gave huge success to Mc Donald in India . Not only in India Mc Donald registered great success in all over world . Now if we look at the revenue stream Mc Donald is generating More revenue are coming from outside US . In year 2008 US contribution was 65% which is now below 50%. US based company is earning more from its operation outside US . In US its business is on saturation and is in tough competition with Strabuck , KFC .
Market share of McDonald Vis-a-Vis other fast food giant in US over the period 2005-2010 are shown in the graph.

(Source : Rediffbusiness)
Its market share is dipping in US can be explained because of recession prevailing in us market from the longer period of time . However Its total net Income keeps on rising over the same period .
Net Income Shown in the graph below :

(Source: wall street journal)

This is because Mc Donald is doing extremely good in other part of globe and more in Asia Pacific Region specially in emerging economy . McDonald made first entry in Asian Market in Japan in Year 1971 then it moved to other Asian countries like HK, malasia , Tiwan , south koria . In china it made its entry in 1991 . Even after liberalisation of India in year 1991 McDonald took six year time in analysing the diversity of Indian culture , Political scenario , consumer taste preference . Mc Donald did complete PESTEL analysis before entering to the market.
Factor contributing to rise in market share and acceptance of US based company Mc Donald in developing nation like India are because of its adaptation to local culture , market , consumer taste preference : 1. The basic Ideology of Mc Donald “Think global and act local” gives an edge in the developing economy . As entry of Mc Donald in to the developing economy not only brings the concept of eating out Its bring quality and long term Employment opportunities . Average no. person who gets employment in one Mc Donald restaurant is 100 . Which are mostly local people . 2. Its also give benefit to the India’s Agriculture work force by providing them business for its raw material ,educating them scientific method of farming which can give better yield . As Samar gupta of Trikaya Agriculture says “Mc Donald not only provide them study business they also taught it professionalism in the business of farm supplies” (Sorce : Economic times Dated 20th January 2012 ) . 3. Mc Donald sensitivity to the local culture , its contribution towards society by way of communities related project like promotion of girl child education , pulse polio programme, save environment appeal shows it acts social .That’s why it get even welcomed by political parties . 4. Price Strategies keeping developing economy middle income group gave increased market share .

Why Mc donald choose India : After globalisation and liberalisation India posted 6% to 8% GDP growth rate this shows India is growing economy with large working population . Income are growing . Urban population are growing . Graph Shows the rise in Urban population in the country from 19% (1971) to 30%(2011) .

High income growing urbanisation have contributed a shift towards International cuisine from traditional food . The Indian economy is the fourth largest economy of the world on the basis of Purchasing Power Parity (PPP). It is one of the most attractive destinations for business and investment opportunities due to huge manpower base, diversified natural resources and strong macro-economic fundamentals. Future prospect of Indian economy are very good as as predicted by Goldman Sachs, the Global Investment Bank, by 2035 India would be the third largest economy of the world just after US and China. It will grow to 60% of size of the US economy. Not only McDonald India has been able to attract other fast food giant like KFC , Pizza Hut ,Domino’s pizza .

Mc Donald in India compromise over their famous beef based Big Mac to local veggie burger and mutton based burger . This was in order to make McDonald a perfect culture fit to the country like India . India is a culture of diversity . Most of the population are Hindu never eat beef . Even cow has got holy place in the mind of the people . Muslim does not eat pork . In India people are both vegetarian and non vegetarian . Distribution of people Vegetarian vs non vegetarian varies state to state . Even people who eat meat Beef is Taboo it is something which is considered very bad . People are very sensitive to beef . To get acceptance in India and to show respect to the local culture Mc Donald came up with Veggie burger and burger based on chicken . Introducing new product as per local people need is common for McDonald in other country also but what make difference in India that they replace its core product Beef Based Big Mac to Indian localised product . This shows how Mc Donald respect Indian people values and how much Mc Donald was sensitive to Indian culture .

Supply chain Management : McDonald core principles of operation is based on its global practiced QSCV(quality ,service, cleanliness, and values ) . McDonald often use outsourcing model . In India before it set up its first restaurant in the country it infused Rs 400 Crore to set up its delivery mechanism. McDonald's initiative to set up an efficient supply chain and deploy state-of-art technology changed the entire Indian fast food industry and raised the standards of performance to international levels. McDonalds developed its Indian partners in such a manner that they stayed with the company from the beginning. The success of McDonalds India was achieved by sourcing all its required products from within the country. To ensure this, McDonalds developed local businesses, which can supply it highest quality products. Cold Chain was one of the unique concepts of McDonalds supply chain in India, on which it had spent more than six years to get the system into place. The following list of suppliers, who build up the major supply chain of McDonalds are 1. Dynamix Dairy Industries (Supplier of Cheese) 2. Trikaya Agriculture (Supplier of Iceberg Lettuce) 3. Vista Processed Foods Pvt. Ltd. (Supplier of Chicken and Vegetable range of products including Fruit Pies) 4. Radhakrishna Foodland (Distribution Centres for Delhi and Mumbai) 5. Amrit Food (Supplier of long life UHT Milk and Milk Products for Frozen Desserts)
All suppliers adhere to Indian government regulations on food, health and hygiene while continuously maintaining McDonald's recognized standards. As the ingredients move from farms to processing plants to the restaurant, McDonald's Quality Inspection Programme (QIP) carries out quality checks at over 20 different points in the Cold Chain system. Setting up of the Cold Chain has also enabled it to cut down on operational wastage .
Initially as McDonald started its operation mainly concentrating in Delhi and Mumbai set up Distribution centre near to this place Noida and Mumbai latter on in 2004 it set up Distribution centre in Bangalore and in year2007 in Kolkata .

Pricing strategies : In India an average household spend nearly 50% of income on food and beverage Food price is always remain concerned for the mass . Initially McDonald was able to attract only upper middle class and higher income group as it was viewed as expensive by middle class . In India middle class people even having good income level have always been price sensitive . To attract middle class McDonald have come up with price sensitive strategies cuts its price brought product like McAloo tikki , Happy price menu etc to attract middle class customer . I think Mc Donald in India is price sensitive .

Initially in India McDonald Business model started with 50 : 50 Joint venture partner with Amit Jatia, M.D. Hardcastle Restaurants Pvt. Ltd. owns and heads McDonalds in west & south India and by Vikram Bakshi’s Connaught Plaza Restaurants Private Limited who manage restaurants in North & East India are owned and managed. Latter on to get better penetration in India Transformed in to Franchise model like other prt of the world . Especially in North India Restaurant are running and new restaurant are getting opened up under franchise model .
Competition and market share : * McDonald’s competes with fast food chains like Pizza Hut, Domino’s Pizza, Nirula’s and KFC in India. When Mc Donald entered to the market in India Organised fast food chain india based was mainly Nirula , Udapi etc out of that Nirula’s, one of India’s oldest food chains (completed 77 years in service in March 2011), has a network of around 62 outlets in five states across Northern India. Nirula’s, established in 1934 has interests in hotels, restaurants, ice cream parlours, pastry shops and food processing plants. Nirula’s was the first to introduce burgers in India. But Current scenario is very different Market share of Indian based fast food company have fallen and it has been taken over by McDonald , Dominos,KFC .

Future Prospect of McDoanald in India (Challenge and Stratgies ) : IF we apply porter’s five force analysis to strategies for market growth in India for McDonald .
Porter’s five force analysis with respect to food chain business Thereat of New Entrant : Very High
Substitution of goods /product : Very high
Bargaining power of customer : Very high
Bargaining power of supplier : Low (As they are being developed and supplying to large company which is the prime buyer of their product)
Competitors rivalries : Very high(Presence of KFC,Domino,Pizzahut with announcement of Starbuck coming to India to set up business)
McDonald is competing in the business where law barriers to entry exist , customer bargaining power is very high , Competitors rivalries are high . So Mc Donald have to continuously renovate their product Strategies their operation around their strength to remain No.! in position . Mc Donald strength Lies in Its unique supply chain and distribution model , keeping price suiting to Average Indian customer . To beat the competition they require to increase their penetration in Tier II cities while maintaining QC concept. To remain successful in the Indian Market it required to creat the barrier for new entrant by raising Economy of scale , Unique distribution channel , reaching to deeper market .