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STUDY
ON
MARKETING STRATEGIES ADOPTED BYMC DONALDS
SUBMITTED BY:
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ACKNOWLEDGEMENT
I am sincerely thankful to all those people who have given me any kind of assistance in the
making of this project report.
I express my gratitude to Mr. ABC. I would hereby, make most of the opportunity by
expressing my sincerest thanks to all my faculties whose teachings gave me
conceptual understanding and clarity of comprehension, which ultimately made my
job more easy. Credit also goes to all my friends whose encouragement kept me in
good stead. I am also thankful to authority of McDonalds for providing me the
information.
Last but not the least I would like to acknowledge my gratitude to the respondents
without whom this survey would have been incomplete.
(RAVI)
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PROJECT OUTLINE FOR THESIS
A study on Marketing strategies adopted by
Title McDonalds (with particular reference to franchisee
restaurant,)
Name of the CompanyMcDonalds
Chairman
Mr. JACK M.GREENBERG
HARDCASTLE RESTAURANTS PVT. LTD,
Address
Specific Areas of Study
(a) Primary Data
(b) Secondary Data
ASHIANA, 69-C, BHULABHAI DESAI ROAD,
MUMBAI-400026.
MARKETING & INTERNATIONAL BUSINESS
STRATEGIES.
RESEARCH METHODOLOGY
Personal Interview and Structured Questionnaires
Annual Reports & Brochures, Business Magazines &
articles from internet
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INDEX
Sl. No. Topic Page No.
1 Synopsis 1-22 INTRODUCTION 3-4
The Indian Fast Food Market - An Overview
3 INTRODUCTION TO PROBLEM 5-6
4 Objectives & scope of the study
Research ObjectiveScope Of Study
7-8
5 Research methodology 9
Research Design
Sample Design
Data Collection
6 THEORETICAL CONCEPT 10-18
Industrialization Of Services Business Model
Gap Analysis
Gap Analysis And New Products
Usage Gap
Product Gap
Competitive Gap
Market Gap Analysis
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7 DATA ANALYSIS & INTERPRETATION 19-82
Mcdonald's Corporation
Mcdonald's Worldwide
Mcdonald's India
Marketing Strategy
Use Of Sub-Strategies At Mcdonald's
Job Structure
Training And Education
Mcdonalds India Supply Chain
Corporate Social Responsibility
Present Position Of Fast Food Industry
Major Players In This Field
Dominos Diversity Mission Statement A
Brand With Bite
Economical
Porters Five Forces Model With Reference To Fast Food
Joints
Marketing Scenario At Mcdonalds
Segmentation
Customer Relationship Management
International Business Strategies of Mcdonalds
Policy And Functional Strategies
Financial Analysis/Ratio Analysis
Cost Analysis
Environmental Analysis Of Mcdonalds
External Environmental Analysis
8
9
9
10
Data Analysis, Findings And Observations From
Questionnaire
Conclusions
Recommendations
Limitations
83-99
100
101-105
106
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11 Bibliography 107
12 Annexure 108-111
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SYNOPSIS
Over the past few years the Indian economy has undergone drastic changes- changes
that have had the market flooded with multinationals and a variety of products. There
has been a sudden upsurge in the Indian industry and exponential growth in specific
industries. Todays companies work in a war zone of rapidly changing competitors,
technological advances, new laws, managed trade policies and diminishing customer
loyalty.
In todays world of cutthroat fierce competition, customer satisfaction is very
essential to not only exist but also to excel in the market. Todays market is
enormously more complex. Henceforth, to survive in the market, the company not only
needs to maximize its profit but also needs to satisfy its customers and should try to build
upon from there.
Market research study has been conducted in order to bring out the picture of service
quality that exists in this industry and the difference in service quality that exists in the
market. Like what are the customers preferences about the hospitality provided by the
fast food industry.
After this a comprehensive and comparative analysis has been made and conclusion has
been made keeping in mind the detailed analysis of the findings, which has been collected
through the market research.
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INTRODUCTION
The Indian Fast Food Market - An Overview
Up to the year 1995, Indian fast food market was predominantly dominated by the
traditional dhabas, potential restaurants in the customers locality and some
restaurants in a five star hotels. Having fast food i.e., burgers, pizzas etc., was
considered to be an option for eating out. It was not at all synonymous with the
American concept of fast food as a quick takeaway bite or a substitute for lunch.
Apart from this fast food being available at the local restaurants and at some five star
restaurants, Nirulas was the only fast food chain existing in the country with its
restaurants expanding with every passing year since its inception. It has been almost
50 years now since its set up and there is hard ly any one who doesnt know about
Nirulas existence. Nirulas was the first one to bring fast food to India back in the 50s since
then it has evolved into an eating-place with tremendous brand equity and brand
recognition. It proved to be a perfect eating-place for an average middle class who wants
to eat out at an affordable price that cant afford the five-star restaurants and would not
want to go to the local dhabas.
Nirulas almost had a monopoly for decades due to the way it has been positioned. It is
a place where a person from an average middle class group to upper class group can
go to eat out. Its popularity has increased over the decades. With the trends changing
and the incomes rising almost anybody who can afford to eat out could go for snacks
at Nirulas.
However the year 1995-96 witnessed a drastic change. 1996 is considered to be the year
of Indias entry into the world food market. International giants such as
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McDonalds, KFC, TGIF, Dominos, and Pizza Hut all bombarded the Indian fast food
market. Before these, UK-based joint called Wimpys had established its chain in the
country in 1990. By year 1996 it had about three to four joints established in Delhi.
However it did not pose much of a threat to Nirulas reason being lack of variety and that
Wimpys was looked at more of a hangout place rather than eating out with the family.
Each of the foreign food joints that have come into the country have their own strategy lined
up to differ from the rest. Each of these studied the Indian tastes and style and thereby
targeted the Indian customer. An average Indian restaurant goes is no convenience eater,
unlike the Americans.
Customer is paying for food that tastes good (Spicy, soft, savory etc.), not for how
pleasantly the stuff is served or how spotless the windows are, and wants good food for that
can make him come back to the restaurant. An Indian food joint owner would definitely
understand this but an American company, which comes and places itself directly without
knowing the customer, is definitely in for trouble. Customer loyalty in a restaurant
business is essentially low. A customer when comes to a restaurant usually looks at the
quality of food, variety, ambience, speed of delivery and the location. The variety
would influence the frequency of visits since taste is a dominating factor to the Indian
customers.
Almost all the fast food chains both Indian i.e., Nirulas and foreign i.e., McDonalds etc.,
are targeting the families. This serves to be an advantage because the turnaround time is
short and family has higher propensity to spend because different members order larger
variety of dishes. Each of these restaurants delivers quality, value and services in its own
way through its line of strategies. The emphasis is on the value that the restaurant is
delivering to the customers.
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INTRODUCTION TO PROBLEM
In todays era of Privatization and Globalization, as the economy is opening up the
disposable income available per person is also increasing which in turn is increasing
the use of fast good restaurants to get quick and hassle free meal. The fast food
segment has witnessed a sea change over a past few years; virtually every big
corporation in the world is busy tying a knot with the Indian partner. Hordes of
multinationals and a couple of new Indian entrants are rushing headlong into markets.
As a service is any act or performance that are party can offer to another that is
essentially intangible and does not result in the ownership of anything its production may
or may not be tied to a physical product. In Indian Fast food segment there is a Service
gap in Ultimate consumer satisfaction and Fast food service providers. Service gap is
a factor that causes the unsuccessful delivery. These are five gaps that cause the
unsuccessful delivery:
Gap between consumer expectation and management perception.
Gap between management perception and service quality specification and service
delivery.
Gap between service delivery and external communication
Gap between perceived service and expected service.
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PRESENT POSITION OF THIS INDUSTRY IN RESPECT TO
SERVICE GAP
Gap between consumer expectation a management perception: -
While the management of pizza hut perceives that the consumers need better
quality food, but the consumers may a clinically want better ambience, (Like,
light, music) or work floor area.
Gap between management perception Service-quality specification:-
The fast service provided by McDonald goes very well with its customer
perceptions. Here the negotiation has perceived well what the customer wants but
the main area where it lacks is that it has not specified its customer how to serve
or what quality to be served.
Gap Between service quality specifications & service delivery:-
The delivery personnel in McDonald are mainly fresh graduates without a
personal degree in hotel management. If prospective customer visits except who
recognize restaurant will find what have shown in media and what visible here is
not same causing a difference.
Gap between perceived service and expected service:-
The customer of McDonald and Nirulas want free home delivery but presently
they are not providing, whereas Pizza Hut is providing home delivery to these
customers.
After this analysis we will come to know that there is service gap in this industry
and there is ample scope for improvement.
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OBJECTIVE & SCOPE OF STUDY
RESEARCH OBJECTIVE
The primary objective of study was Marketing Strategies adopted by Mc Donalds. This
objective is supported by four secondary objectives, achieving them will lead to the
fulfillment of primary objective. They include:
To find the service quality prevailing at McDonalds:
To find out the service quality of McDonalds in the various areas and finding out
the deficiencies prevalent in expected level of service.
To Compare Service quality of Competitors vis--vis McDonalds:
Comparing the service quality of McDonald along with that of Nirulas, Pizza Hut
and other competitors.
To find out the areas of improvement for McDonalds:
SCOPE OF STUDY
This will lead to certain implications for the company as company can formulate its
future strategies in order to increase their sales. Researcher had tried going in detail
and studying the use of fast foods from different angles so as to analyze the issue from
360 degrees. The research tries to develop an understanding on the aspect on the
whole which will help in understanding the market potential McDonalds in a holistic
view.
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RESEARCH METHODOLOGY
RESEARCH DESIGN
The research process is carried out according to a designated series of steps required to be
taken in a chronological order. Fundamental to the success of any research project is sound
research design. It is the framework or plan for a study that guides the collection and
analysis of data.
The research design used for this project is exploratory in nature. The major emphasis is
on the discovery of ideas. The exploratory study is also used to increase the analyst
familiarity with the problem under investigation.
SAMPLE DESIGN
Target population: Customers who regularly visit the fast food restaurants.
Sampling unit: Mumbai market is treated as sampling unit.
Sample size: 10 Customers
DATA COLLECTION
Primary Data: It will be collected from the customers visiting the restaurants
(McDonalds) with the help of questionnaire, personal interviews of the staff
(McDonalds).
Secondary data: It will be collected from the Newspaper Secondary data has been
collected from the companys information brochure and Internet.
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THEORETICAL CONCEPTS
Marketing is the flow of goods and services from the producer to consumer. It is based on
relationship and value. In common parlance it is the distribution and sale of goods and
services. Marketing can be differentiated as:
1. Marketing of products
2. Marketing of services
Marketing includes the services of all those indulged may it be then the wholesaler
retailer, Warehouse keeper, transport etc. In this modern age of competition marketing
of a product or service plays a key role. It is estimated that almost 50% of the price
paid for a commodity goes to the marketing of the product in US. Marketing is now
said to be a term which has no particular definition as the definitions change
everyday.
Services marketing is marketing based on relationship and value. It may be used to
market a service or a product. Marketing a service-base business is different from
marketing a product-base business. There are several major differences, including:
The buyer purchases are intangible
The service may be based on the reputation of a single person
It's more difficult to compare the quality of similar services
The buyer cannot return the service
Service Marketing mix adds 3 more p's, i.e. people, physical environment, process
service and follow-through are keys to a successful venture.
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INDUSTRIALIZATION OF SERVICES BUSINESS MODEL
The industrialization of services business model is a business model used in strategic
management and services marketing that treats service provision as an industrial
process, subject to industrial optimization procedures. It originated in the early 1970s, at a
time when various quality control techniques were being successfully
implemented on production assembly lines.
Theodore Levitt (1972) argued that the reason the service sector suffered from
inefficiency and wide variations in quality were that it was based on the craft model.
Each service encounter was treated as an isolated event. He felt that service
encounters could be systematized through planning, optimal processes, consistency,
and capital-intensive investments. This model was the foundation of the success of
McDonalds and many other mass service providers in the 1970s, 80s, and 90s.
Unfortunately, the application of assembly line techniques to service provision had
several undesirable consequences. Employees found working under these conditions
disempowering, resulting in low morale, high staff turnover, and reduced service
quality. One of the most difficult aspects of this model for employees to deal with was the
"smile incentives". Employees were instructed to put a smile on their face during the
service encounter. This manufacturing and commercialization of apparent happiness
has been criticised by many commentators, particularly Mundie (1987). Also many
customers prefer the "personal touch".
By the early 1990s most service providers turned their attention back to the human
element and personalized their services. Employees were empowered to customize the
service encounter to the individual characteristics of customers.
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GAP ANALYSIS
In business and economics, gap analysis is a business resource assessment tool
enabling a company to compare its actual performance with its potential performance. At
it's core are two questions:
Where are we?
Where do we want to be?
If a company or organization is under-utilizing resources it currently owns or is
forgoing investment in capital or technology then it may be producing or performing
at a level below its potential. This concept is similar to the base case of being below
one's production possibilities frontier. This goal of the gap analysis is to identify the
gap between the optimized allocation and integration of the inputs and the current
level of allocation. This helps provide the company with insight into areas that have
room for improvement. The gap analysis process involves determining, documenting
and approving the variance between business requirements and current capabilities.
Gap analysis naturally flows from benchmarking and other assessments. Once the
general expectation of performance in the industry is understood it is possible to
compare that expectation with the level of performance at which the company
currently functions. This comparison becomes the gap analysis. Such analysis can be
performed at the strategic or operational level of an organization.
Gap analysis' is a formal study of what a business is doing currently and where it
wants to go in the future. It can be conducted, in different perspectives, as follows:
Organization (e.g., human resources), Business direction, Business processes,
Information technology. Gap analysis provides a foundation for measuring investment
of time, money and human resources required to achieve a particular outcome (e.g. to
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turn the salary payment process from paper based to paperless with the use of a
system).
Note that GAP analysis has also been used as a means for classification of how well a
product or solution meets a targeted need or set of requirements. In this case, 'GAP' can
be used as a ranking of 'Good', 'Average' or 'Poor'.
GAP ANALYSIS AND NEW PRODUCTS
The need for new products or additions to existing lines may have emerged from the
portfolio analyses, in particular from the use of the Boston Growth-share matrix or the need
will have emerged from the regular process of following trends in the
requirements of consumers. At some point a gap will have emerged between what the
existing products offer the consumer and what the consumer demands. That gap has to be
filled if the organization is to survive and grow.
To identify the gap in the market, the technique of gap analysis can be used. Thus an
examination of what profits are forecast to be for the organization as a whole
compared with where the organization (in particular its shareholders) 'wants' those
profits to represent what is called the planning gap this shows what is needed of new
activities in general and of new products in particular. The planning gap may be
divided into four main elements:
USAGE GAP
This is the gap between the total potential for the market and the actual current usage
by all the consumers in the market. Clearly two figures are needed for this calculation:
Market potential
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Existing usage
Market potential: The most difficult estimate to make is that of the total potential
available to the whole market, including all segments covered by all competitive
brands. It is often achieved by determining the maximum potential individual usage,
and extrapolating this by the maximum number of potential consumers. This is
inevitably a judgment rather than a scientific extrapolation, but some of the macro-
forecasting techniques may assist in making this estimate more soundly based. The
maximum number of consumers available will usually be determined by market
research, but it may sometimes be calculated from demographic data or government
statistics. Ultimately there will, of course, be limitations on the number of consumers.
For guidance one can look to the numbers using similar products. Alternatively, one
can look to what has happened in other countries. The maximum potential individual
usage, or at least the maximum attainable average usage (there will always be a spread
of usage across a range of customers), will usually be determined from market
research figures. It is important, however, to consider what lies behind such usage.
Existing usage: The existing usage by consumers makes up the total current market, from
which market shares, for example, are calculated. It is usually derived from marketing
research, most accurately from panel research such as that undertaken by A.C. Nielsen but
also from 'ad hoc' work. Sometimes it may be available from figures collected by
government departments or industry bodies; however, these are often based on
categories which may make sense in bureaucratic terms but are less helpful in marketing
terms. The 'usage gap' is thus:
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USAGE GAP = MARKET POTENTIAL - EXISTING USAGE
Many, if not most marketers, accept the 'existing' market size, suitably projected over the
timescales of their forecasts, as the boundary for their expansion plans. Although this is
often the most realistic assumption, it may sometimes impose an unnecessary limitation
on their horizons. The original market for video-recorders was limited to the professional
users who could afford the high prices involved. It was only after some time that the
technology was extended to the mass market.
In the public sector, where the service providers usually enjoy a `monopoly', the usage gap
will probably be the most important factor in the development of the activities. But
persuading more `consumers' to take up family benefits, for example, will probably be
more important to the relevant government department than opening more local offices.
The usage gap is most important for the brand leaders. If any of these has a significant
share of the whole market, say in excess of 30 per cent, it may become worthwhile for the
firm to invest in expanding the total market. The same option is not generally open to the
minor players, although they may still be able to target profitably specific offerings as
market extensions. All other `gaps' relate to the difference between the organization's
existing sales (its market share) and the total sales of the market as a whole. This difference
is the share held by competitors. These `gaps' will, therefore, relate to competitive activity.
PRODUCT GAP
The product gap, which could also be described as the segment or positioning gap,
represents that part of the market from which the individual organization is excluded
because of product or service characteristics. This may have come about because the
market has been segmented and the organization does not have offerings in some
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segments, or it may be because the positioning of its offering effectively excludes it
from certain groups of potential consumers, because there are competitive offerings
much better placed in relation to these groups. This segmentation may well be the
result of deliberate policy. Segmentation and positioning are very powerful marketing
techniques; but the trade-off, to be set against the improved focus, is that some parts
of the market may effectively be put beyond reach. On the other hand, it may
frequently be by default; the organization has not thought about its positioning, and
has simply let its offerings drift to where they now are. The product gap is probably
the main element of the planning gap in which the organization can have a productive
input; hence the emphasis is on the importance of correct positioning.
COMPETITIVE GAP
What is left represents the gap resulting from the competitive performance. This
competitive gap is the share of business achieved among similar products, sold in the
same market segment and with similar distribution patterns - or at least, in any
comparison, after such effects has been discounted. Needless to say, it is not a factor
in the case of the monopoly provision of services by the public sector. The
competitive gap represents the effects of factors such as price and promotion, both the
absolute level and the effectiveness of its messages. It is what marketing is popularly
supposed to be about.
MARKET GAP ANALYSIS
In the type of analysis described above, gaps in the product range are looked for.
Another perspective (essentially taking the `product gap' to its logical conclusion) is
to look for gaps in the 'market' (in a variation on `product positioning', and using the
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multidimensional `mapping'), which the company could profitably address, regardless of
where its current products stand.
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DATA ANALYSIS & INTERPRETATION
McDonald's CORPORATION
McDonald's is the largest and best-known global foodservice retailer with more than
30,000 restaurants in 121 countries. Yet on any day, even as the market leader,
McDonald's serves about one billion people, which is less than one percent of the
world's population. It claims to open on an average of three outlets every 24 hours at
some place or the other in the world. Their outstanding brand recognition,
experienced management, high-quality food, site development expertise, advanced
operational systems and unique global infrastructure position the company to
capitalize on global opportunities. More than 70% of McDonald's restaurants
worldwide are owned and operated by independent local men and women. Is one of the
worlds most well-known and valuable brands and holds a leading share in the globally
branded quick service restaurant segment of the informal eating-out market in virtually
every country in which they do business. Serves the world some of its favorite foods -
World Famous French Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg
McMuffin.
McDonald's WORLDWIDE
History: Two brothers V Richard and Maurice McDonald pioneered McDonald's in
the year 1948 at California, USA. They converted their bar-be-cue drive in with
carhops into limited menu, self-service drive in. Later on seeing the success, the two
brothers were having in running the outlet, Raymond Albert Kroc (1902-1984), also
known as Ray Kroc, at the age of 52 years bought the exclusive franchising rights for
USA in the year 1954 and hence came the McDonald's Corporation into existence.
Ray Kroc opened the first McDonald's restaurant in Des Plaines, Illinois in 1955 now
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no longer a functioning restaurant, but the building is now a museum containing
McDonald's memorabilia and artifacts. The company, since then, has been built
worldwide on the concept of franchisee having about 70 percent of its outlets owned and
managed by people who are its franchisees. About 14 percent of McDonald's $14.2
billion worldwide sales for the year 2006 came from Asia alone. Presently, the company
plans to expand their leadership position through great tasting food, superior service,
everyday value and convenience. This is gauged by the fact that the company's
efforts to increase market share, profitability and customer satisfaction have produced
good return to shareholders - a total compounded annual return of 12 percent for the ten
years ended December 31, 2006.
CORPORATE VISION McDonald's vision is To be the world's best quick service
restaurant experience. Being the best means providing outstanding Quality, Service,
Cleanliness and Value, so that every customer in its every restaurant smiles. To
achieve this vision, the company is focused on three worldwide strategies:
Be the Best Employer: The Company believes that to give its customers, the best quick
service restaurant experience it is necessary for them to first give its employees the best
experience. So to pursue its belief, McDonald's has put down in writing its people's vision
and peoples belief:
1. People's Vision to be the best employer for our people in each community
around the world. Peoples Promise we value you, your growth and your
contribution.
2. Deliver Operational Excellence: Deliver operational excellence to our
customers in each of our restaurants.
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3. Achieve Enduring Profitable Growth: Achieve enduring profitable growthby
expanding the brand and leveraging the strengths of the McDonald's system
through innovation and technology. This helps in expanding the range of
opportunities for all the people - employees, owner operators and suppliers - to
freely invest human capital, ideas, energies, expertise and time.
CORPORATE MISSION: To leverage the unique talents, strengths and assets of our
diversity in order to be the World's best quick service restaurant experience.
McDonald's INDIA
1. A locally owned Company: McDonald's started its Indian operation in the
year 1996 under the franchisee ship method. It has two joint venture partners in
India:
Connaught Plaza Restaurants Pvt. Ltd. a Delhi based 50:50 joint venture with
McDonald's for its operations in North India. It is headed by Mr. Vikram Bakshi. Till
date it has 100 outlets in and around Delhi, including one each in Noida,
Delhi-Mathura highway, and Delhi-Jaipur highway.
Hardcastle Restaurants Pvt. Ltd. a Mumbai based 50:50 joint venture with
McDonald's for its operations in West India. It is headed by Mr. Amit Jatia. The
company sources all its food products from the local suppliers. It also has a
research and development department, which tries to incorporate the new and
innovative food product into its menu after intensive research catering wholly to
the taste of the local customers. Like in India, the company has renamed its world
famous Big Mac burger to Maharaja Mac and incorporated major changes to its
contents by using mutton instead of beef for its Indian customers.
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2. Local Sourcing is Key for Truly Indian Products: Around the world,
McDonalds traditionally operates with local partners or local management. In
India too, McDonalds purchases inputs from local suppliers. McDonalds
constructs its restaurants using local architects, contractors, labour and - where
possible - local materials. McDonalds hires local personnel for all positions
within the restaurants and contributes a portion of its success to communities in
the form of municipal taxes and reinvestment. Nearly 98% of the inputs are
sourced from the domestic market. McDonalds sources food products from local
companies. Mutton patties are supplied by Al-Kabeer Hyderabad, fresh lettuce
comes from Pune, Ooty, Maharashtra and Dehradun; cheese from Dynamic
Dairies, Baramati, Maharashtra; sesame seed buns and sauces from Cremica
Industries Phillaur, Punjab, and pickles from VST Natural Foods, Hyderabad,
Andhra Pradesh.
3. Setting Up of an Extensive Food Chain: For three years before the opening
of the first McDonalds restaurant in India, McDonalds and its international
supplier partners worked together with local Indian companies to develop
products that meet McDonalds vigorous quality standards. These standards also
strictly adhere to Indian Government regulation on food, health and hygiene. Part
of this development involves the transfer of state-of-the-art food processing
technology, which has enabled Indian business to grow by improving their ability
to compete in todays international markets. For instance, Cremica Industries
worked with another McDonalds supplier from Europe to develop technology
and expertise, which allowed Cremica to expand its business from baking to also
providing bread and batters to McDonalds India and other companies. Another
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benefit is expertise in the areas of agriculture, which allowed McDonalds and its
suppliers to work with farmers sharing, advanced agricultural technology and
expertise like utilization of drip irrigation systems, which reduce overall water
consumption, and agricultural management practices which result in greater
yields.
4. Respect for the Indian Customers and Culture: McDonalds worldwide is
well known for the high degree of respect to the local culture. McDonalds has
developed a menu especially for India with vegetarian selections to suit Indian
tastes and culture. Keeping in line with this McDonalds does not offer any beef or
pork items in India. McDonalds has also re-engineered its operations to address
the special requirements of a vegetarian menu. Vegetable products are prepared
separately, using dedicated equipment and utensils. This separation of vegetarian
and non-vegetarian food products is maintained throughout the various stages of
procurement, cooking and serving.
5. Community Partnership: McDonalds believes in giving back to the
communities it serves. Wherever McDonalds goes it becomes a part of the
community it operates in and contributes towards the development of the locality.
McDonalds has introduced the concept ofLitter Patrol - McDonaldss
employees go around the immediate vicinity of the restaurant every day, packing up
garbage left behind not only by customers from McDonalds restaurants but also by
other visitors to the area resulting in a cleaner neighborhood.
6. Quality, Service, Cleanliness and Value: The McDonalds philosophy of
QSCV is the guiding force behind its service to the customers. All its suppliers
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adhere to Indian government regulations on food, health and hygiene while
continuously maintaining McDonalds own recognized standards. All McDonalds
products are prepared using the most current, state-of-the-art cooking equipment to
ensure optimal level of quality and safety. Working on Customer first policy
McDonalds India provides fast and friendly service - the hallmark of McDonalds which
sets its restaurants apart from others. McDonalds restaurants provide a clean,
comfortable environment especially suited for families via McDonalds stringent
cleaning standards, carefully adhered to. McDonalds menu is priced at a value that the
largest segment of Indian consumers can afford. McDonalds does not sacrifice quality
for price - rather McDonalds leverages economies of scale to minimize costs while
maximizing value to customers.
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MARKETING STRATEGY
The first step in developing a marketing strategy is to understand your customers,
enabling reaction to their changing needs and the changing dynamics of the market. To
this end, McDonalds conducts several stages of in-depth customer research and audits
of its brand. The research involves both quantitative and qualitative research methods.
This research tells us a lot about how McDonald's is perceived and about trends that are
taking place in the market. They also conduct research into the local area of their
restaurants, into the general market environment, and into specific areas of their business
(children for example).
1. Competitive Pricing: Being in touch with the pricing of its competitors allows
McDonald's to price its products correctly, balancing quality with value.
2. Competitive Promotion: Before McDonald's communicates with it's customers it
must be aware of what its competitors are communicating so that it can create a
beneficial difference between itself and them.
3. Competitive Place: Distribution is key to any retailer or brand.
4. Competitive Product: Quick Service Restaurants are constantly expanding their
menus. This can be done on a short-term promotional basis or as a long-term
expansion strategy. Innovative marketing strategies clearly drive a business such
as McDonald's. But the marketing program is not simply about food. They use it
to enhance the customers experience, build the overall perception of McDonald's
in the market place as the eat out restaurant of first choice and to let people, who
perhaps have not yet experienced McDonald's, know what the company can do for
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them and how the McDonald's experience continues to evolve to satisfy what the
customers are asking them for.
5. Operational Mission: To provide product and service to the customers,
maintaining the:
Quality: Only the best ingredients
Service: Friendly, pleasant, fast and efficient
Cleanliness: The highest standard for all the family
Value: Great food at great prices, combined with the unique
McDonald's
For this McDonald's Corporation has provided each franchisee with a detailed
operations manual and the latter are supposed to adhere them strictly. The
operations manual consists of:
1. Pre-opening procedures
2. Supplies and inventory
3. Supplier
4. Administration
5. Quality
Besides this the franchisees are supposed to go through the course at Hamburger
University, USA that helps them prepare for the operation in their part of the
world. Every minute detail is given in the menu items, exacting measures for all
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recipes and the way it is to be served is also mentioned in the manual. McDonald's
puts a great stress on the cleanliness and the quality of the food and takes care that
the franchisee is strictly following to the operations manual. For this purpose, a
team of people from McDonald's international meets all the outlets once in 4
months.
6. Back end operations at the outlet: The back end operations at the McDonalds
restaurant are similar to the shop floor of a factory with separate spaces allocated
to the various operations. It is basically divided into two parts - the basement level
and the floor level.
The Basement level: the floor space at the basement level is divided into a walk-in
chiller used for storing ice creams; a walk-in freezer maintained at 0 to -10F is used
for storing vegetarian and non-vegetarian food items; a coke dispensing machine
consisting of the cylinder spaces for the syrup and the gas cylinders; a dry store used
for storing the items such as cup, glasses, coffee syrup, and sauces, etc.; and the
locker rooms for the employees. The raw materials are replenished every three days
from its distribution center in Noida after rigorous quality checks. At every outlet, an
inventory stock of three plus one day buffer stock is maintained to meet all
exigencies.
The Floor Level: the company has designed its kitchen like a shop floor of a factory where
the different products made on different lines and one operation is conducted at one place. At
the floor level, separate lines are followed for vegetarian and nonvegetarian food
products to the extent that separate equipment's are placed at separate locations to avoid any
contact between the two products.
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People working on the two lines are identified by the different colored aprons they
wear, like green apron for vegetarian products and black apron for non-vegetarian
products.
Every work in the kitchen is according to the clockwork and the time machine tells when
to keep the burgers on the pan and when to pick them up. These and many more procedures
are well laid down in a kitchen code book and followed at the outlets with same belief. No
wonder that the burgers in every outlet of the McDonald's taste the same. The employees
trash a burger not sold in ten minutes. Bin level charts are made for every day of the
month, which is based on the actual sales on the same day of the same week in the
previous month. The expected customers to arrive at the outlet are divided into hourly
time slots starting from 1000 hours to 2300 hours and depending on the volume of the
customers, the burgers are made. Also the volume of the customers are divided into six
categories:
Low: 0 - 30 persons
Medium: 30 - 60 persons
High: 60 - 90 persons
Ultra : 90 - 120 persons
Ultra 1: 120 - 150 persons
Ultra 2 : 150 - 180 persons
Almost 95 percent raw materials are sourced from around the country. Since some
products have very short life like peas loose half their sweetness in 24 hours after
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harvesting, so to maintain the same taste and freshness, the products are frozen
straightaway. The company uses cold trucks for transporting the raw materials to the
distribution center in Noida, where they are stocked until distributed to the whole of North
India wherever the outlets are after a rigorous quality checks to ensure the quality of
the raw materials. Other than this every outlet has three sub divisions training,
ordering, and scheduling, which takes care of the various needs of the production
volume, capacity and the sales target at each outlet.
USE OF SUB-STRATEGIES AT McDonald's
1. Technology Strategy: McDonald's on the technology front has been a forerunner.
The equipments used by the company at its outlets are latest state of the art and
specifically designed for the perfect use. Take the example of ketchup dispensers;
these are designed to fill the plate adequately in just one stroke downwards. Other
than this the filling of the cheese and other ingredients is done by especially
designed dispensers so that each time the layering on the burger spreads the same
amount as has been calibrated.
There are set procedures laid down in a code book of the McDonald's, the booklet
contains the details of how to prepare the food products, to the methods of quality
checks, to the manner in which the employees are supposed to behave in front of the
customer, and various other such procedures.
The people at McDonald's go through a rigorous training schedule before they are
inducted in the company as crewmembers. The trainees are taught how to prepare
food products, to the general kitchen manners and also service delivery
techniques.
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Use of Electronic Data Interchange (EDI) to link to the distribution center,
inventory management systems, and various other production and sales
forecasting techniques are just some of the things the outlets use to serve the
customers better.
2. Capacity Strategy: Since McDonald's is into the business of fast food restaurants
located in the market places and expects to cater to the customer's orders in flat
60-90secs. The capacity planning of each outlet should be designed in such a way
to cater to the crowds coming in the outlet. Each of the outlets has to be
independent on its own for serving the customers coming in, and hence the
production capacity should be large enough to meet all the situations.
3. Facility Location Strategy: McDonald's restaurants buy vegetable supplies
directly from the farmers and other supplies from the suppliers, who sell them at
incredibly low prices. This difference in prices is something in the range of 40-55
percent cheaper than the market price. This is possible because McDonald's have
reached an understanding with the suppliers about the future business prospects
and because since each product is produced at a single place or factory the
economies of scale permit the suppliers to sell the produce at the lower rates. On
the front of the company, it is very encouraging to have the raw materials at such
cheaper rates as this helps the company to price its products at lower rates. This
helps the company in following its slow cost, high volume strategy and hence gain
customers.
4. Process Strategy: At McDonald's there are different production lines for the
vegetarian and the non-vegetarian food products. The production of these food
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products is decided upon, based on the data collected on the previous days. The
chart used for this purpose is the Bin Level Chart, which contains the data
collected on the same day of the same week of the previous month, and contains
details of the burgers to be produced depending upon the crowd rush and the time of
the day. Besides different production lines for different classes of burgers, each
operation is done only at one point. Hence the design of the production line is a mix
of product layout and process layout.
Further more the flexibility of the company to adapt to the local conditions and
hence produce the products which are according to the taste and preferences of the
customers. For this the company follows a mantra Think Global, Act Local and is
able to position itself in the minds of the customers as a brand. Example: In India
majority of population do not eat beef products, the company identified this much
earlier and hence changed all the products containing beef products to products
containing either mutton or chicken. In India, McDonald's after thorough research
and development came out with its first egg less mayonnaise and it even offers
complete vegetarian food products during the navratri festival.
5. Quality Strategy: McDonald's on the quality aspect is very strict. This can also
been seen in the quality handbook which McDonald's has given to the franchisee.
McDonald's claims that any typical burger undergoes about 54 different types of
quality checks before served to customer. Nowhere, not even in the raw state, is
any of the food touched by hand. Even after the raw food is harvested from the
fields, it is taken care that none of the nutrition value of the food is lost due to the
time factor and for this reason the company has employed Airfreight limited to
take care of its logistics. Before the perishable products are sent to the outlets
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another set of quality checks are conducted to make sure the quality of the raw
materials.
6. Human Resource Strategy: For McDonald's its employees are its internal
customers. To make sure that its external customers are satisfied to the fullest, it is
imperative on the part of the company to see that its internal customers are
motivated and encouraged to serve the customers well. For this the company
employees full time trainers to make their employees competitive.
Job Structure
Employees of McDonald's fall into three groups: restaurant workers, corporate staff,
and franchise owners. The first group is the biggest - a local McDonald's restaurant
usually employs between 20-40 people. In the restaurants, crewmembers constitute
the entry-level position and are by far the most numerous. A large majority are part-
time workers, roughly three-quarters whose wages are low. Swing Managers
constitute the first managerial position in the hierarchy, although their hourly wages
are only slightly higher than crewmember wages. Assistant Managers and higher
hierarchy are salaried. There is one Restaurant Manager per McDonald's restaurant.
Wages are low partly because the company plays a major role in the recruitment of
the newly or first-time employed. Turnover at the crew level is thus high. But it is
important to point out that only about half of crew-level employees are teenagers. The
remaining includes seniors, working mothers, and "transitional" workers in the 20-25-
age range. The prevailing image of promotion/appraisals at McDonald's is negative -
get a job as a crew person, and you are in a dead-end job. Company emphasizes that a
majority of McDonald's restaurant management started as crew: 95% of swing
managers, 70% of assistant managers, and 67% of restaurant managers. As well,
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nearly 50% of franchisees started as employees in the restaurants. Appraisal rates to
higher positions are likely to be much lower than movement into store-level
managerial positions.
Training and Education
Employee training at McDonald's is highly structured. Entry-level workers are first
taken through the basic Crew Training System. The program consists of on-the-job
training and is largely vocational. Each stage of advancement beyond the crew level
then entails a new training program, with the skills becoming more complex and
generalized.
Training at McDonalds begins immediately with a one-hour orientation on the
company. Each restaurant has 25 stations from the grill area to the front counter.
Trainers use a series of checklists as new crewmembers move through the restaurant. A
level of competency is demonstrated and the activity is checked off on the SOC -
Station Observation Checklist. There is a follow-up SOC to get certified on the
station. The goal for each crew person is a 3/30 plan: in the first 30 days, a crewperson
learns 3 stations, and so on until all the stations are mastered.
Large or complex organizations usually need to break the planning process down into
manageable units. McDonald's developed its future scenarios around three
strategiescustomer convenience, customer value, and optimal operations. For each of
these strategies, there was already a full-time team that included both operations and
systems development personnel from Carl Dill's organization. The digital strategy
project team worked through these teams to generate the bold new ideas that Dill
instinctively knew were there to be discovered.
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7. Information in Operation Strategy: For various uses and to disseminate
information at various levels the company uses a number of forms, charts and
computer-aided systems. For billing and inventory management level check, the
company uses point of sale systems. This system consists of:
Cash Drawer
Central Monitoring Unit
Printer
PAR
The various reports generated are: Daily Sales Report, Monthly Sales Report,
Daily Product wise Report, Monthly Product wise Report, Hourly Sales Report. Other
than this Bin Level Chart, as already explained above, is produced daily to inform the
production in-charge of the production schedule. Another report, Daily Product Safety
Checklist, is produced three times a day for checking the quality of the food served duly
signed by the restaurant manager.
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McDonalds INDIA SUPPLY CHAIN
A taste of freshness from all over India: Did you know that every year, Rs. 50,000
crore worth of food produce is wasted in India? This is mainly because of the lack of
proper infrastructure for storage and transportation under controlled conditions.
McDonald's is committed to providing quality products while supporting other Indian
businesses. And so, McDonald's spent a few years setting up a unique Cold Chain.
The cold chain is necessary to maintain the integrity of food products and retain their
freshness and nutritional value. It refers to the procurement, warehousing,
transportation and retailing of food products under controlled temperatures. Setting up the
cold chain has involved the transfer of state-of-the-art food processing technology by
McDonalds and its international suppliers to pioneering Indian entrepreneurs, who have
now become an integral part of the cold chain.
CORPORATE SOCIAL RESPONSIBILITY
A Socially Responsible Company: McDonalds founder Ray Kroc built the company on
the principle of giving back to the communities in which they do business which holds true
at McDonalds today. A McDonalds franchisee and his/her team can be found
supporting various local schools, youth athletic teams, senior citizens groups, safety
awareness campaigns, literacy programs, environmental projects and other local
fundraising initiatives in their communities.
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PRESENT POSITION OF FAST FOOD INDUSTRY
GLOBAL: - Globally this industry is witnessing erosion of customer base. This is due
to the fact fast food contain and surplus amount of fats, oil, cholesterol, which increase
the health related problems and the customers are becoming more and more Health
Conscious and are becoming more conscious in there food habits.
IN INDIA: - The consumer ignore the above mention factors provided if you added to
this people tendency to adopt westernized culture, customers have helped fast food MNCs
to increase there markets.
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MAJOR PLAYERS IN THIS FIELD
These day working executives are busy a lot they dont have the spare time to cook food,
due to their high income and ever increasing aspiration levels they prefer to it out at this
fast food outlets (McDonalds, Nirulas, Pizza Hut) where they find the match according to
there aspirational level.
SUBWAY DOMINOS
NIRULAS WIMPY
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KFC PIZZA HUT
1. PIZZA HUT
Pizza Hut is the largest pizza restaurant company in the world. It has 12700 outlets in
90 countries. Pizza Hut has an aggressive expansion plan for India. Pizza Hut is one of the
flagship brands of Yum! Brands, Inc., which also has KFC, Taco Bell, A&W and Long
John Silvers under its umbrella. Pizza Hut is the worlds largest pizza chain with over
12,500 restaurants across 91 countries.
In India, Pizza Hut has 139 restaurants across 36 cities, including Delhi, Mumbai,
Bangalore, Chennai, Kolkata, Hyderabad, Pune, and Chandigarh amongst others.
Yum! is in the process of opening Pizza Hut restaurants at many more locations to
service a larger customer base across the country. Pizza Hut will consolidate its
presence in cities where it is already existing as an endeavor to create a major share of
these profitable markets first before spreading to other markets. Pizza Hut is one of
the largest pizza brands. Further, all new outlets in India would be franchisee owned
resulting from the smooth functioning of the existing stores which are all franchisee
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owned. Hence, the same arrangement will be followed in the future to ensure
growthoriented results. The data written below represent what Pizza Hut is all about
and gives a brief profile of the company. Their main quote:
"Customers are the reason that we are here."
No customers
No Pizzas
The 5 secret principles:
Employees are our secret ingredients
Show your "care"
Say "yes" to customers
Satisfied, capable teams create satisfied customers
Satisfied customers create profit and growth
Today, Pizza Hut serves over a million pizzas a day in more than 12,689 restaurants in
88 countries making it the No.1 pizza brand in the world. The reason behind Pizza
Hut's success all over the world is its steadfast belief and uncompromising drive in
providing customers the best in terms of product quality, service, cleanliness and
value.
Pizza Hut pizzas are made with fresh dough baked daily and smothered with our very own
Pizza Hut special tomato sauce, tender meat toppings, crunchy vegetables and a double
layer of 100% pure imported Mozzarella cheese.
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Service is an attitude in Pizza Hut. Crew members are trained to make customers feel
appreciated. Customers are treated with courtesy, attentiveness, respect, and
enthusiasm. Cleanliness is a must in Pizza Hut as much as giving customers the best value
for their money.
Today, Pizza Hut has a total of 22 DELCO, 39 RBD, 61 Restaurants, 1 Bistro and 1
Express. Another creation of Pizza Hut is the slice unit that caters to customers who want
to avail of quick food service. This was conceptualized precisely for people on the go,
individuals who want to eat pizza without the usual waiting time.
2. NIRULA'S
Nirulas today is a well-known name in the hospitality industry. Nirula family was the
first to offer western style fast food in India. It came to Delhi in 1928. They realised
the paucity of good eating places in and around New Delhi, and started Hotel India
in 1934 with 12 rooms and a restaurant with a bar license. They also specialised in
catering to parties and soon Nirulas catering became famous. Meanwhile, Nirulas had
set up the India Coffee Shop in Janpath on request of the Coffee board. A few years later,
the Coffee Board of India seeing the success of the international decided to run the
business itself.
It 1939, when the Second World war had started, Nirulas rented more space in
Connaught Circus (what is currently the ground floor of Nirulas, L-block) and opened
a Restaurant with music and serving a six course dinner for only Rs. 1. The restaurant
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proved to be popular with both Indian and foreign guests. It also started serving Indian
food and introduced ballroom dancing and cabaret. However, business fluctuated
widely since it was dependent on the quality and reputation of that evenings
performer. Hence, in 1950 the restaurant with the cabaret was given up in favour of
the Brasserie.
The Brasserie was a popular self-service restaurant serving beer and liquor with a limited
menu of Indian and Western food. The Brasserie gave way to the Cafeteria, the first of its
kind in India with a variety of Dishes and the guests could help themselves to whatever
they fancied.
Before 1947, Nirulas had also opened the first fruit preservation unit in Delhi. The
jams and squash and other preserves were marketed under the name of Nirulas and
had an all India distribution. With the partition of India in 1947, the supply of raw
material was disrupted and this unit was stopped. In 1950, Nirulas started the
Chinese Room which was the first restaurant of its kind in India. Nirulas created history
by being the first Indians of non-Chinese origin to have a Chinese food restaurant in
India. In 1954, Nirulas were the first ones to introduce espresso coffee in India. Gaggia,
the inceptors of espresso coffee machines gave Nirulas sole distribution rights for their
machines and Nirulas sold these to the luxury hotels and first class restaurants. Nirulas
Hotel was started in 1958 and was the first modern 3-
star hotel in India. In 1960 two specialty restaurants were opened.
Nirula's Production Facilities: The fact that on an average over 40,000 people visit
Nirula's 3 hotels, 31 Family Style Restaurants, 4 Fine-Dine Restaurants, 1 speciality
restaurant, 14 pastry shops and 4 bars every day is a matter of pride for everyone at
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Nirula's. It also proves that their efforts to maintain high quality standards at their
production facilities have been recognized and commended.
The logistics are staggering - 6.5 lakh kg of flour, 20 lakh litres of milk, 12 lakh eggs,
85 tonnes of meat, 210 tonnes of chicken, 200 tonnes of cream, 230 tonnes of sugar,
47 tonnes of milk powder, 55 tonnes of butter and 2 lakh litres of oil are used in a year at
Nirula's. Despite these huge quantities, quality has never been compromised.
Working round the clock are 20 food and dairy technologists and other management
personnel who ensure that only the best reaches the consumers.
Quality Assurance Department: The Quality Assurance Department (QAD) has 18
qualified and experienced Food Technologists/Chemists and Microbiologists for
monitoring the quality systems at Nirula's. The QAD reports to the Managing Director
for his personal review. The department has a well-established laboratory with
modern testing facilities at each Production Centre (Okhla and Noida). Various tests
of raw materials, under-process material and finished products on the lines of ISO
9000 and HACCP standards are carried out to ensure that all the products fulfill the
desired standards.
Raw Material Specifications: Nirula's QAD has formulated stringent quality
standards for all raw materials conforming to the regulatory requirements. The
products are checked at every stage:
Analysis of Raw Material
Analysis of Under-Process Material
Analysis of Finished Product
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Monitoring During Production
Recipes and Manufacturing Procedures
The Quality Assurance Staff monitors production and ensures adherence to the
approved recipes and procedures. This is done through regular Recipe Audits at all the
Production levels.
B. Hygiene and Sanitation
Periodic Audits are conducted at all production centres, the report of which is sent to the
production heads for compliance. The hygiene of individual workers is examined on a
daily basis, apart from their regular medical check-up. Quaity Assurance Department
(QAD) conducts fortnightly audits at the service outlets covering following
parameters:
Restaurant Sanitation Audit
Storage Temperature
Food Safety Audit
Regulatory Requirements
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3. SUBWAY
In the year 2008, the SUBWAY chain entered its 43rd year of operation. It is the
worlds largest submarine sandwich chain with more than 28,121 restaurants in 86
countries. As a matter of fact, the SUBWAY chain operates more units in the US,
Canada and Australia than McDonalds does. Countless awards and accolades have
been bestowed upon Fred DeLuca and the SUBWAY chain over the past 40 years.
The SUBWAY name and its products have even appeared in numerous television and
motion picture productions.
Subways mission is to provide the tools and knowledge to allow entrepreneurs to
successfully compete in the QSR industry worldwide by consistently offering value to
consumers through providing great tasting food that is good for them and made the
way they like it.
This pamphlet is meant to serve as an ingredient guide to help consumers make better
informed food choices. This information includes the use of what are currently the
most commonly used products, approved by Doctor's Associates Inc., for SUBWAY
sandwich shops in cases where there is more than one brand of approved products
available to the franchisee. Therefore, formulas may vary from region to region.
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4. DOMINO'S
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Vision: Exceptional people on a mission, to be the best pizza delivery company in the
world
Domino's Pizza India Ltd. was incorporated in March 1995 as the master franchisee
for India and Nepal, of Domino's Pizza International Inc., of USA. Moreover, the
company holds the master franchisee rights for Sri Lanka and Bangladesh through its
wholly owned subsidiary. Mr. Shyam S. Bhartia and Mr. Hari S. Bhartia of the
Jubilant Organosys Group were the promoters of the company. Since inception,
Domino's Pizza India Ltd. has proceeded to become one of the largest and fastest
growing international food chains in South Asia. The first Domino's Pizza store in
India opened in January 1996, at New Delhi. Today, Domino's Pizza India has grown
into a countrywide network of over 180 outlets in 34 cities and is the leader in the fast
food delivery segment.
Dominos Diversity Mission Statement
Domino's Pizza is committed to an inclusive culture, which values the contributions of
their customers, team members, suppliers, and neighbors. Domino's Pizza uses only the
freshest, highest quality ingredients available.
In 2004, Super Bowl Sunday was one of the busiest day of the year. Domino's sold
close to 1.2 million pizzas, which is about 42 percent more pizzas compared to a
normal Sunday. Super Bowl Sunday ranks among the top five days for pizza
deliveries annually. The three dots in logo represent the first three Domino's Pizza
stores. The plan was to add a dot for every new store, however, with Domino's current
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store count more than 8000 in 54 countries (as of 2007) that would have been quite
impossible to continue.
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5. WIMPY
Wimpy is the brand name of a chain of hamburger restaurants based in the United
Kingdom. The restaurants were originally called Wimpy Bars and many people still
refer to them by this name, despite the fact that the name "Wimpy Bar" was dropped
in favour of "Wimpy" many years ago. The current owners of the Wimpy brand
operate in several countries under the name of Wimpy International. The Wimpy
brand was created by in the 1930s. In 1977 the business was acquired by United
Biscuits. Wimpy was beginning to lose ground to McDonalds, who had opened their
first UK restaurant in 1974 and so the new management of Wimpy began to
streamline the business by converting some of the traditional "table service"
restaurants to the "counter service" operation style of McDonalds. Another difference
between Wimpy and McDonalds was that Wimpy had lacked branches that had a drive
through format.
Wimpy Awarded In Best Breakfast Category, Wimpy, one of South Africas leading Quick
Service Restaurant brands was recently voted number One in the Best Breakfast
category in the Pretoria News - Best of the Best competition.
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According to Hele, Wimpys success can be attributed to a number of factors
including friendly and comfortable atmosphere, tasty food, good service and
accessibility. With over 400 Wimpy stores nationwide, diners are sure to find a
Wimpy nearby. Innovation and product development have also been cornerstones in the
successful track record of the group. Product development is not seen as making change
for the sake of change but rather enhancing the quality of the menu. We listen to our
customers, says Hele. We truly believe that Wimpy is a peoples restaurant where
diverse communities enjoy the Wimpy experience and benefit from our commitment
to freshly prepared food.
A Brand With Bite
What does it take to make a name stand out from the rest? Why does the WIMPY
name leap out with a sizzling promise of a delicious and fresh food experience? It's all
in the branding. WIMPY has established a powerful image that, along with its values
of quality, cleanliness, service, value and friendliness, reflects the brand's innovative
and welcoming personality. WIMPY continues to build on the brand's strengths by
retaining its core values and enhancing its image with inventive changes and
evolutions. It's this energy that constantly uplifts and refreshes the brand, positioning
it way ahead of the rest.
Awake. Aware. Alive
Contemporary trends. Shifts in food, dcor and lifestyle tastes. WIMPY is always
aware of exactly what's going on out there.
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THE MARKET ENVIRONMENT PEST ANALYSIS OF FAST
FOOD MARKET POLITICAL / LEGAL
In India, there are a number of political parties having their own set of policies
that has introduced a level of uncertainty and unstable government. As a result of
this, the peoples and organizations are hesitant towards promoting FDI in India.
The increase in prices of Petrol & Diesel (because of crude oil crossing
$100/barrel mark) will increase transportation costs and net effect will be
reduction in the profit margin of the organization.
The unexpected change in government policies has always been of great concern
for the industry.
Also with the Swadeshi message spreading all around. It is acting as a sword that
is hanging over the head of the management of the players in fast food segment.
Case of pesticides level more than permitted in Cola brands poses threat to MNCs
credibility.
Legislation related to manufacturing and taxation should be made more
investment friendly.
The industry suffers from multiple taxes like excise, sales tax and in certain cases
even a mandi tax, leads to a cascading impact.
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ECONOMICAL
U.S economy going towards recession is affecting the multinational firms
anywhere associated with United states.
Expected rise in Global Food prices will affect the cost-benefit equation of food
products.
With the rise in inflation, the cost of production rises due to increase in the prices
of raw materials, which have an adverse effect on the profits of the organization, if
they dont increase the price or reduce their overheads.
SOCIAL
The relevances of the social environment to a particular business will depend on
the nature of business. The impact of the social environment on a consumer
products company is much more than any other company.
Over 40% of all packaged goods consumed in urban India are foods and
beverages, while that in rural India is over 20%. This trend will deepen because of the
changing profile of the consumer. Education, employment and media will make the
consumer more discerning and demanding.
TECHNOLOGY
Technology developments come out of the R&D effort.
Players in fast food segment are continuously trying to come out with new
products and variants and flavours that will fit in the Indian palate. The companies
are trying to offer better value to their customers and are also trying to deliver
superior product at competitive price.
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PORTERS FIVE FORCES MODEL WITH REFERENCE TO
FAST FOOD JOINTS
Threat of New Entrants high
Unorganized sector has low
entry barriers and low initial
investment
Threat of FMCG majors
entering fast food with
established distribution
Power of suppliers - High
Expensive, hard to procure
ingredients
Pries determined by
suppliers to maintain quality
Lack of single supplier on a
contract basis to ensure
fixed rates
Fluctuation in supply of
seasonal products offerings
studied, making
Success dependent on
maintaining low costs
Intensity of rivalry high with
both national (Dominos,
Pizza hut, McDonalds with
deep pockets and rapid
expansion plans
Regional level chains
(Nirulas, Pizza Corner, US.
Pizza)
Industry dominated by the
unorganized sector with low
entry and exit barriers
Consumer-Low switching
costs
Highly unpredictable
consumer perceptions
Higher purchasing power
Large number of fast food
options
Low brand loyalty
Demand quality at a low
price
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Highly deal prone cust.
Fast food suffers competition
from the well established
ready to eat snack food
segment
Indians most comfortable
with home made food
Ready to cook foods
category growing at a rapid
pace in India
Dine in joints dominate as
pizza is still not considered.
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Marketing Scenario at Mcdonalds
The first step in developing a marketing strategy is to understand the customers,
reacting to their changing needs and the changing dynamics of the market. To this end
McDonalds conducts several stages of in-depth customer research and audits of the
McDonald's brand. The research involves both quantitative and qualitative research
methods. This research describes how McDonald's is perceived and about changes that
are taking place in the market. Research is also conducted into the local area of their
restaurants, into the general market environment, and into specific areas of their business.
They also believe in having a thorough understanding of their competition, which is
considered, at three distinct levels:
Total Eating out Market gives the broadest competitive context and includes all
restaurants, hotels, pubs, and any other outlet where people eat. This category
contains the entire gamut of eating outlets ranging from the mom-&-pop outlet
to the most exclusive five star hotels.
Quick Service Restaurant sector includes any outlet where food is served quickly
and the process is usually self-service. Example: Dominos, Nirulas.
Burger House Sector includes those restaurants that serve different varieties of
burgers as their primary menu item. This is the narrowest sector in consideration.
Having an in-depth understanding of all aspects related to the competition allows
McDonalds, to monitor the competitive environment to exploit the opportunities
and check threats in time.
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This is achieved through the following:
Competitive Pricing: Being in touch with the pricing of their competitors allows
them to price their products correctly, balancing quality with value.
Competitive Promotion: At McDonalds it is believed that before they
communicate with their customers, they must be aware of what the competitors
are communicating so that they can create a beneficial advantage.
Competitive Place: Distribution is the key to any retailer or brand; McDonald's
prides itself on its superior delivery process.
Competitive Product: Quick Service Restaurants are constantly expanding their
menus. This can be done on a short-term promotional basis or as a long-term
expansion strategy.
MARKETING MIXESMcDonalds over the past seven years has been successful to place itself in the
mindset of the Indian customer as an affordable outing compared to the initial
impression of Americanized Indian Richies. With their Flag Ship product Big
Mac absent from India it seems the Maharaja Mac comes to be the Indian Flag Ship
Product. They consider service as one of their key selling points and focus on four
dimensions with a lot of thrust. These are Quality, Value, Service and Cleanliness. It
has tried to reach out to the entire Indian market of middle as well as the upper class.
McDonalds has been co-branding with some very well known brands. Apart from
serving Coca-Cola at all its outlets the McSwirl was introduced as a co-branded Ice
cream with Cadburys.
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Looking through the marketing mixes context through which McDonalds has tried to
position itself in the Indian market:
1. PRODUCT
McDonald's menu internationally is based on five main ingredients: beef, chicken,
bread, potatoes and milk. Their main products are hamburgers, chicken sandwiches,
French fries and beverages. In addition it serves a variety of breakfast items and
desserts.
The original McDonald's menu was simplicity itself -hamburgers, cheeseburgers,
fries, soft drinks, coffee and shakes. This limited menu concept triggered the "fast
food" concept, because focusing on just a few items that were prepared with
standardized procedures made food service a model of efficiency. And buying food
supplies in quantity As the restaurant chain grew larger enabled it to keep prices low.
Finally, because the menu was limited, it was able to deliver a consistent product, no
matter which restaurant a customer visited. And this consistency has remained a
hallmark of McDonald's even as its menu has expanded over the years. Customers
know they can count on being served the same Big Mac whether they're at a
McDonald's in Moscow, Idaho, or Mumbai, i.e. the same world famous fries whether
they're in Dallas or Delhi.
Mc Donald's India representative says, "We take the hamburger business more
seriously than anyone else." Surprisingly, in India McDonald's has been particularly
successful at catering to local tastes. The global giant is often criticized for
standardizing tastes by serving the same burger the same way everywhere in the
world. Though the core menu--hamburgers, Big Macs, fries, etc.--is available in all
McDonald's restaurants, it's complimented with an array of localized choices. Usually
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in Asia, about a third of the menu is made up of dishes you won't find anywhere else, like
Pizza McPuffs in India. In fact, the McDonald's in India feature a menu that is over
75% locally-developed.
India has been the biggest inspiration for McDonald's fusion chefs. With a population
that is mostly Hindu, the restaurant chain can't serve its mainstay-beef. So most of the
standard menu had to be thrown out, down to the "special sauce" that goes into Big
Macs elsewhere. Many Hindus, who are strict vegetarians, eschew mayonnaise, the
sauce's main ingredient. McDonald's India developed a special egg less mayonnaise
for the burgers; instead of eggs it used a large amount of mint. In place of the Big
Mac, McDonald's India developed the Maharaja Mac--a mutton burger. All these
extra steps have been taken to assure Indian customers of the wholesomeness of both
products and their correct preparation. So intense is the idea of Indianization that
McDonald's has opened an all- vegetarian outlet in Ahmedabad, which is
predominantly a vegetarian city.
2. PRICE
Aimed at luring the Indian middle class, the ice cream cone was started with zero
margins to pull in crowds. McDonald's has always strived to offer quality products at
an affordable price. Its bulk purchasing capabilities have given it the cost advantage.
It thus strives to be an optimum-cost producer -not the lowest cost -since quality
comes first for this restaurant chain. The products are priced keeping in mind the
target group. Since the people targeted belong to the Socio Economic Classification
Grid A & B, the company refrained from excessive or premium pricing. An
interesting piece is that the company claims to have a margin of 40 percent on its soft
cone, which is a big hit among the people. Most of the meal combinations i.e.
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including burger, French fries and a coke, prices are nominal. This could also be the tactics
of psychological pricing. McDonalds has also introduced McHappy Hours, to increase
customer visits during the lean time (3 pm to 6 pm). This is also in tune with the school and
college goers.
3. PLACE
McDonalds is ever expanding and due to this its presence is felt by 3.5 million
customers in India alone and more than a billion people worldwide every day. It has
excellent networking capabilities with its suppliers and ensures quality from them.
McDonalds India's outlets are generally located near community centers (some also
have small parks adjacent to them) to provide the complete family experience.
4. PROMOTION
The emphasis is on projecting McDonald's as a global brand relevant to the local
community. The positioning of McDonald's as a family restaurant is being carefully put
across to the consumers.
1. Advertising: McDonalds advertising in India is being handled by Mudra
Communications. McDonald's spends over 5.5crores each year on advertising: the
Golden Arches are now more recognized by kids in metros than their favorite super
hero. McDonald's is recognized as one of the best marketers of the world, investing
some hundreds of millions of dollars every year for advertising and promotion of its
image. Get them in. Trade them up. Get them back. These are the three basic steps
of McDonald's marketing strategy, as defined internally at Mudra Communications,
the agency handling the account. Shorn of jargon, this simply means objective number
one is to make consumers' step into McDonald's outlets, the second objective is to
shift the consumer to McDonald's core products (the Vegetarian Burger with cheese,
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the McChicken Burger with cheese and Fillet-o- Fish) by increasing sampling and
showcasing the value aspect of McDonald's. Thirdly, increase the frequency of visits
by making the McDonald's brand experience unique and memorable. The Indianised
items like McAloo tikki burger and pizza McPuff are instrumental in bringing in the
traffic into the store.
Mc Donalds marketing efforts go far beyond advertising, including special food
promotions, games, videos, cassettes, tapes, videos, CDs that customers couldn't get
anywhere else for the value. Because of the diversity of customers that go to
McDonald's, they have developed segmented marketing programs as various key
audiences.
2. Public Relations: McDonald's public relations in India are being handled by
Corporate Voice Shandwick, a subsidiary of Weber Shandwick Worldwide. This begins
with franchisee involvement in their communities and extends to other national passions like
cricket (McDonalds invites young and successful cricketers like Yuvraj Singh to
inaugurate their restaurants). This means a well organized psychological bombing
aimed at all kind of people, from every race and social class where the golden arches
result to be the overall winner.
3. Promotions: Using collectable toys, television adverts, promotional schemes in
schools and figures such as Ronald McDonald the company bombards their main target
group: children. Happy meal combine wholesome food with a toy; Ronald McDonald
is a special friend; play places (like in McDonalds, Priya Complex) provide safe and
fun recreation and the alliance with Walt Disney Company let the children's shout even
more.
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4. Market Research: McDonald's strategy for communication relies he