Strategic frame work — macdonald 5 Essay Example

  • Category:
    Management
  • Document type:
    Case Study
  • Level:
    Masters
  • Page:
    2
  • Words:
    944

Strategic Frame Work – McDonald’s

Introduction

The popularity of fast foods in the 21st century has seen many companies across borders to capitalize on the opportunity and maximize their profits. In 1996, McDonald’s intensified its expansion plans to target Indian market, which was experiencing potential economic and demographic growth (Pangarkar and Subrahmanyan 121). In fact, Pangarkar and Subrahmanyan stated that in 1999, Indian economy was the fifth largest in the world and the second largest emerging economy after China (121). Despite its success, McDonald’s has several environmental challenges which are rooted in the Indian market. To highlight the successes and challenges of operations in this market, the report will conduct SWOT analysis, competitor analysis and international strategy based the company’s operation in India.

SWOT Analysis

Strength

  • McDonald’s is the leading fast food brand in terms of marketing in the world.

  • McDonald’s is a strong brand with a global presence in 30,000 restaurants in 120 countries across the globe.

  • The company has a large customer base of more than 45 million people.

  • The company has a solid financial base. McDonald’s had created a great financial muscle of up to $40.2 billion through global sales. International expansion is expensive and highly strong financial support.

  • McDonald’s had a highly diversified products including Big Mac, McAloo Burger, McChicken kebab sandwich, McMasala, McImli, chicken nuggets, sodas, fries, fillet fish and milkshakes.

  • Effective supply chain systems.

Weaknesses

  • McDonald’s has greatly expanded not only in Indian cities but across the globe. Currently, the company has large a network, making it hard to control its operations. For instance, in Indi, the company has outlets in Mumbai, Delhi, Bangalore, Pune, Jaipur and Delhi-Agra highway.

  • Most of the company outlets are operated as franchise which is complex to manage.

  • McDonald’s sales high junk food which is considered unhealthy.

Opportunity

  • McDonald’s has great opportunities in product innovation. For instance, in India the company had to replace some ingredients in the Big Mac like a beef patty with mutton patty to resonate with Indian culture.

  • Opportunities also lie in adding healthier foods such as vegetable. Research has shown that 40 of the Indian population are vegetarian.

  • Expansion of its operations into various cities to increase brand presence.

  • Targeting middle class population, which was significantly increased in India and other Asian countries.

  • Consumer health concerns about high fat content foods.

  • Competition from major market players such as KFC, Pizza Hut and Wimpy’s.

  • Rising environmental and health activists opposed to fast-food companies.

  • Economic downturn.

Competitor Analysis

The research has shown that McDonald’s India faces stiff competition from both direct and indirect competitors. From 1991 when India government opened its borders for international trade, numerous multinational has been scrambling for market (Pangarkar and Subrahmanyan 124). The foreign investments had been attracted by the growing middle class in India. Pangarkar and Subrahmanyan claimed that McDonald’s India faces competition from KFC, Pizza Hut and Wimpy’s (126). KFC expanded and settled in Bangalore in1995, one year before McDonald’s had the market experienced than the latter. The competition in India was based on positioning, pricing strategies and menu. McDonald’s entered in India with an image of premium restaurant while its rivals positioned themselves as low cost fast foods restraint. The truth is that McDonald’s were offering lower prices and accompanies by special promotion. For instance, Pangarkar and Subrahmanyan opined that in India, McDonald’s price ranged from Rupees 76 while that of KFC varied from Rs 59 (126). The competitor prices and promotion influenced McDonald’s to lower prices so as to remain competitive. McDonald’s rivals also compete on menu. Pangarkar and Subrahmanyan pointed out that KFC was offering a menu which included gravy, rice and of chicken for Rupees 39 (126). In addition, Wimpy’s was offering super meals just for Rs 35. These menus were lower than that of McDonald’s.

International strategy

McDonald’s has used three types of international strategies to survive in global markets. The international used by McDonald’s are multidomestic global and
global Strategies. With multidomestic strategy firms often attempt to attain local responsiveness by modifying marketing strategy and products to be in line with various national conditions and culture. Due to the fact that Indians and Muslim view beef and pork sacrilege hence McDonald’s had to replace its main offering, the Big Mac, with Maharaja Mac. Big Mac was made of beef and pork while the new Maharaja Mac has mutton patty (Pangarkar and Subrahmanyan 125). A research by Pangarkar and Subrahmanyan reported that McDonald’s sold up to 350,000 Maharaja Macs in its first year hence indicating success (126). Since 40 percent of Indians are vegetarian, the company modified its menu to accommodate the need. Pangarkar and Subrahmanyan posited that one of the company successes is that around mid 2000, McDonald’s used to generate 50 percent of its profits from vegetable sales (127). However, the company also used global product that is offering the same products it offers in other markets. For instance, the company continued to sell the same burger, fish sandwiches, fries, Coke and Pepsi to the Indian market just like in any other market. Generally, the company has had success of 70 percent growth rate in India (Pangarkar and Subrahmanyan 125).

Conclusion

McDonald’s India enjoys great market share and dominance in both India and globally in fast food segments. The company takes the lead through its marketing such as pricing, diversification and product innovation. However, McDonald’s India had experienced bad perception of premium restaurant and selling of junk foods. As it continues to operate it neutralize this perception by offering competitive prices and healthy fast foods.

Works Cited

Pangarkar, Nitin, and Subrahmanyan, Saroja. Beefing up the beefless Mac: McDonald’s

expansion strategies in India.
Thomson Learning, 2011, pp. 120-127.