This case was prepared by Dr. Smita Kulkarni (University of Miami) and Dr. Walfried Lassar (Florida International University) with assistance from Chandan Sridhar (Florida International University) and Akhila Venkitachalam (Aditya Birla Centre, London Business School) as a basis for classroom discussion rather than to illustrate either effective or ineffective handling of a management situation.
Copyright © 2009. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without written permission of the authors.
Volume 1, Issue 2 (Jan. 31, 2009) OJICA-Online Journal of International Case Analysis
2
A Story Began…….. It was a busy day at the Mumbai Central Station in India, marked with the usual rush of passengers. A large group of passengers was ready and anxiously awaiting to board their respective trains. Porters in their red uniforms were seen carrying baggage to help the travellers. Food vendors, bookstalls, newspaper sellers... It was a mini marketplace. A family with two kids arrived in an air conditioned car two hours earlier then their scheduled departure. After they entered the train station, the humid weather, the typical odour at the railway station and the crowd made them uncomfortable. With a bored look, the children looked around and suddenly shrieked with joy. Excited, they indicated a sign to their parents. It was the Golden Arch of McDonalds. Smiling, the family entered Ronald’s place, McDonald’s, for a great time before they boarded the train. They were sure that that the experience would be wonderful like the ones they had during their earlier visits to McDonald’s at other locations in India and abroad. In the Indian Railways Food Plaza at Mumbai Central, McDonald’s stood apart from its other competitors. It promised and delivered the customers an entirely different experience. This experience was way different from that of other fast food chains serving in Mumbai and other parts of India. The perceived value of the customers about McDonalds was high as the evidence of cleanliness, quality and sophistication of service made a lasting impression on their minds. They were Indian customers who considered McDonald’s as a symbol of the American culture. Availability of McDonald’s in their country reflected the beginning of globalization which had brought in western brand influences into the Indian markets. The impressive aspect was that the intangibles of the fast food service had made the maximum impact on the customers. The Indian customers had always seen the kitchen doors of the other restaurants with a sign ‘Restricted Area’ or ‘For Employees’ only. Now in McDonald’s, they were able to see the operations and hence the conviction in the QSC – Quality, Service and Cleanliness was quick and lasting. McDonald’s represented America world wide and was an American icon like basketball and Coca cola. The Indian market welcomed western brands. Irrespective of the diversities, Indian culture had always embraced newer cultures and absorbed them within itself. McDonald’s initiative to adopt the burger to meet the Indian taste was widely appreciated. In this case, one could visualize the transformation of Big Mac to Maharaja Mac.
Introduction
McDonald’s restaurant in Delhi In 1996, McDonald's opened in India for the first time, a country where the majority of the population was Hindu and vegetarian, and the cow was sacred. Many saw it as just another example of the relentless spread of Western corporations into every nation, creating a global system in which wealth was drained out of local economies into the hands of a very
Volume 1, Issue 2 (Jan. 31, 2009) OJICA-Online Journal of International Case Analysis
3
few, very rich elite. McDonald’s opened its doors in India in October 1996, demonstrating what the McDonald’s experience was all about. McDonald’s in India was a 50-50 joint venture partnership between McDonald’s Corporation (U.S.A.) and two Indian businessmen. Amit Jatia’s company, Hardcastle Restaurants Pvt. Ltd., owned and operated McDonald’s restaurants in Western India, while Connaught Plaza Restaurants Pvt. Ltd., headed by Vikram Bakshi, owned and operated the North Indian operationsi. These companies signed their joint-venture agreements with McDonald's in April 1995 and along with their Indian management team trained in McDonald's restaurants in Indonesia and the U.S.A. before opening the first McDonald’s restaurant in India. The entry of McDonald’s in India was perfectly timed. The market had begun to open up. The economy of the country was growing stronger. The customer markets were eager to acquire newer products and use newer forms of services. Foreign brands were valued and perceived to be superior in quality. According to a report of AC Neilson, among the world’s consumers, Latin Americans and Asians were the biggest supporters of globalisation and the value that it added to the various aspects of their livesii. It was a favourable situation for McDonald’s because at the time when they entered, India, the Asian Tiger was awakening to the global call. The Indian customer was enthusiastic about the market situation which provided them with numerous choices to choose and pick. In a way McDonald’s revolutionized the food retailing business in India. It introduced the Indian customers to service standards which were available in the western world for years. These service standards were visible and noteworthy and hence triggered quick acceptance within the customers. McDonald’s positioning in India as a family restaurant further fuelled its success. India as a market was a unique example of diversity. Divided into 28 states and 7 union territories, the vegetation, climate, religion, language, clothing, and food varied from one state to another. With the combination of spices in a unique way, food of these states reflected their traditions and culture. Hence the biggest challenge to any food business in India definitely was about balancing the diversity and the product offerings. McDonald’s got clearance from Foreign Investment Promotion Board (FIPB) of India in 1991. But it was only after five years of preparation, that the first restaurant became operational in 1996. It worked on developing local relationships with local partners to facilitate the raw material. Indian companies for their operational convenience had divided the Indian subcontinent into four zones, the progressive West, the powerful North, the traditional and culturally rich, South and East. McDonald’s opened their first restaurant in the capital of India which is Delhi. The second restaurant was opened in the financial capital of India, Mumbai. McDonald initially concentrated in the West and North regions. Later the company exhibited ambitious plans for expansion in Eastern and Southern regions.
History McDonald's expansion worldwide was mind boggling. It operated over 31,000 restaurants worldwide and employed more than 1.5 million people. With their presence in more than
Volume 1, Issue 2 (Jan. 31, 2009) OJICA-Online Journal of International Case Analysis
4
119 countries in six continents a global traveler saw them everywhere3iii. This perception was the result of the most extensive, expensive and systematic mass marketing strategy of recent times. The first store opened near Chicago on April 15, 1955. McDonald’s since then has expanded phenomenally. McDonald's real influence had been in establishing organizational systems of complete control at every stage from raw product to factory, from worker to consumer - backed by incessant media hype. McDonald's had been a successful global food corporation at refining, co-coordinating, standardizing and developing such processes into a total system. It had set up these practices in every country it had moved into, and many other companies followed their suit. What Ford Motor Company did for cars, travel and the urban environment; McDonald's had done for food and eating habits. McDonald's expansion was criticized and resisted by trade unionists, local residents, nutritionists and many others in almost every town and country where they planned a new store - despite their highly developed and expensive marketing effort about being a benefit for the community. They were resisted for what they represented, and remained a focus of controversy.
Challenges for McDonald’s in India:
Vegetarianism: The major issue was beef. Cow being sacred and worshipped, beef could not be served. Muslims did not eat pork. The challenge was to change the form of the worldwide popular Hamburger to make an entry into India. With 25-30% of the population being lacto vegetarian and a large majority eating meat, an alternative to beef and pork was necessary.
The population of a billion was undoubtedly a promising opportunity for an international company. McDonald’s accepted the challenge and created the Aloo – Tikki Burger known as McAloo TikkiTM especially for the Indian vegetarian customers. Aloo- Tikki was a potato patty with spices. It also made a chicken and fish option available for the non vegetarians. McDonald’s even separated the non vegetarian cooking process and the vegetarian cooking process to convince the customers of the “Shudh Shakahari Experience’ which means pure vegetarian experience. In addition, the crew cooking vegetarian food were asked to wear green apronsiv. McDonald’s in India was one of its kinds as it did not offer beef at all. In order to convince and change the perception of the customers about the burgers they offered, McDonald’s made attempts to clarify their stand about beef in India. So the world famous hamburger was without meat. This was indeed a classic case of product adaptation, to gain foothold in a new market.
Competition from Local Food
This case was prepared by Dr. Smita Kulkarni (University of Miami) and Dr. Walfried Lassar (Florida International University) with assistance from Chandan Sridhar (Florida International University) and Akhila Venkitachalam (Aditya Birla Centre, London Business School) as a basis for classroom discussion rather than to illustrate either effective or ineffective handling of a management situation.
Copyright © 2009. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without written permission of the authors.
Volume 1, Issue 2 (Jan. 31, 2009) OJICA-Online Journal of International Case Analysis
2
A Story Began…….. It was a busy day at the Mumbai Central Station in India, marked with the usual rush of passengers. A large group of passengers was ready and anxiously awaiting to board their respective trains. Porters in their red uniforms were seen carrying baggage to help the travellers. Food vendors, bookstalls, newspaper sellers... It was a mini marketplace. A family with two kids arrived in an air conditioned car two hours earlier then their scheduled departure. After they entered the train station, the humid weather, the typical odour at the railway station and the crowd made them uncomfortable. With a bored look, the children looked around and suddenly shrieked with joy. Excited, they indicated a sign to their parents. It was the Golden Arch of McDonalds. Smiling, the family entered Ronald’s place, McDonald’s, for a great time before they boarded the train. They were sure that that the experience would be wonderful like the ones they had during their earlier visits to McDonald’s at other locations in India and abroad. In the Indian Railways Food Plaza at Mumbai Central, McDonald’s stood apart from its other competitors. It promised and delivered the customers an entirely different experience. This experience was way different from that of other fast food chains serving in Mumbai and other parts of India. The perceived value of the customers about McDonalds was high as the evidence of cleanliness, quality and sophistication of service made a lasting impression on their minds. They were Indian customers who considered McDonald’s as a symbol of the American culture. Availability of McDonald’s in their country reflected the beginning of globalization which had brought in western brand influences into the Indian markets. The impressive aspect was that the intangibles of the fast food service had made the maximum impact on the customers. The Indian customers had always seen the kitchen doors of the other restaurants with a sign ‘Restricted Area’ or ‘For Employees’ only. Now in McDonald’s, they were able to see the operations and hence the conviction in the QSC – Quality, Service and Cleanliness was quick and lasting. McDonald’s represented America world wide and was an American icon like basketball and Coca cola. The Indian market welcomed western brands. Irrespective of the diversities, Indian culture had always embraced newer cultures and absorbed them within itself. McDonald’s initiative to adopt the burger to meet the Indian taste was widely appreciated. In this case, one could visualize the transformation of Big Mac to Maharaja Mac.
Introduction
McDonald’s restaurant in Delhi In 1996, McDonald's opened in India for the first time, a country where the majority of the population was Hindu and vegetarian, and the cow was sacred. Many saw it as just another example of the relentless spread of Western corporations into every nation, creating a global system in which wealth was drained out of local economies into the hands of a very
Volume 1, Issue 2 (Jan. 31, 2009) OJICA-Online Journal of International Case Analysis
3
few, very rich elite. McDonald’s opened its doors in India in October 1996, demonstrating what the McDonald’s experience was all about. McDonald’s in India was a 50-50 joint venture partnership between McDonald’s Corporation (U.S.A.) and two Indian businessmen. Amit Jatia’s company, Hardcastle Restaurants Pvt. Ltd., owned and operated McDonald’s restaurants in Western India, while Connaught Plaza Restaurants Pvt. Ltd., headed by Vikram Bakshi, owned and operated the North Indian operationsi. These companies signed their joint-venture agreements with McDonald's in April 1995 and along with their Indian management team trained in McDonald's restaurants in Indonesia and the U.S.A. before opening the first McDonald’s restaurant in India. The entry of McDonald’s in India was perfectly timed. The market had begun to open up. The economy of the country was growing stronger. The customer markets were eager to acquire newer products and use newer forms of services. Foreign brands were valued and perceived to be superior in quality. According to a report of AC Neilson, among the world’s consumers, Latin Americans and Asians were the biggest supporters of globalisation and the value that it added to the various aspects of their livesii. It was a favourable situation for McDonald’s because at the time when they entered, India, the Asian Tiger was awakening to the global call. The Indian customer was enthusiastic about the market situation which provided them with numerous choices to choose and pick. In a way McDonald’s revolutionized the food retailing business in India. It introduced the Indian customers to service standards which were available in the western world for years. These service standards were visible and noteworthy and hence triggered quick acceptance within the customers. McDonald’s positioning in India as a family restaurant further fuelled its success. India as a market was a unique example of diversity. Divided into 28 states and 7 union territories, the vegetation, climate, religion, language, clothing, and food varied from one state to another. With the combination of spices in a unique way, food of these states reflected their traditions and culture. Hence the biggest challenge to any food business in India definitely was about balancing the diversity and the product offerings. McDonald’s got clearance from Foreign Investment Promotion Board (FIPB) of India in 1991. But it was only after five years of preparation, that the first restaurant became operational in 1996. It worked on developing local relationships with local partners to facilitate the raw material. Indian companies for their operational convenience had divided the Indian subcontinent into four zones, the progressive West, the powerful North, the traditional and culturally rich, South and East. McDonald’s opened their first restaurant in the capital of India which is Delhi. The second restaurant was opened in the financial capital of India, Mumbai. McDonald initially concentrated in the West and North regions. Later the company exhibited ambitious plans for expansion in Eastern and Southern regions.
History McDonald's expansion worldwide was mind boggling. It operated over 31,000 restaurants worldwide and employed more than 1.5 million people. With their presence in more than
Volume 1, Issue 2 (Jan. 31, 2009) OJICA-Online Journal of International Case Analysis
4
119 countries in six continents a global traveler saw them everywhere3iii. This perception was the result of the most extensive, expensive and systematic mass marketing strategy of recent times. The first store opened near Chicago on April 15, 1955. McDonald’s since then has expanded phenomenally. McDonald's real influence had been in establishing organizational systems of complete control at every stage from raw product to factory, from worker to consumer - backed by incessant media hype. McDonald's had been a successful global food corporation at refining, co-coordinating, standardizing and developing such processes into a total system. It had set up these practices in every country it had moved into, and many other companies followed their suit. What Ford Motor Company did for cars, travel and the urban environment; McDonald's had done for food and eating habits. McDonald's expansion was criticized and resisted by trade unionists, local residents, nutritionists and many others in almost every town and country where they planned a new store - despite their highly developed and expensive marketing effort about being a benefit for the community. They were resisted for what they represented, and remained a focus of controversy.
Challenges for McDonald’s in India:
Vegetarianism: The major issue was beef. Cow being sacred and worshipped, beef could not be served. Muslims did not eat pork. The challenge was to change the form of the worldwide popular Hamburger to make an entry into India. With 25-30% of the population being lacto vegetarian and a large majority eating meat, an alternative to beef and pork was necessary.
The population of a billion was undoubtedly a promising opportunity for an international company. McDonald’s accepted the challenge and created the Aloo – Tikki Burger known as McAloo TikkiTM especially for the Indian vegetarian customers. Aloo- Tikki was a potato patty with spices. It also made a chicken and fish option available for the non vegetarians. McDonald’s even separated the non vegetarian cooking process and the vegetarian cooking process to convince the customers of the “Shudh Shakahari Experience’ which means pure vegetarian experience. In addition, the crew cooking vegetarian food were asked to wear green apronsiv. McDonald’s in India was one of its kinds as it did not offer beef at all. In order to convince and change the perception of the customers about the burgers they offered, McDonald’s made attempts to clarify their stand about beef in India. So the world famous hamburger was without meat. This was indeed a classic case of product adaptation, to gain foothold in a new market.
Competition from Local Food
การแปล กรุณารอสักครู่..
