Mcdonalds India Analysis.docx

1、Mcdonalds India AnalysisMGX 5171Managing the Multinational Enterprise Cases and IssuesIndividual Report McDonalds in India Table of ContentsExecutive Summary .21 Introduction .3 1.1 Company Overview .32. Attractive Market Features in India .4 2.1 Macroeconomic Environment .4 2.1.1 The “Ignored” Indi

2、an Food Service Industry.4 2.1.2 High Growing Economy since 1990s .5 2.1.3 Economic Liberalization Reforms 5 2.2 Social Environment .5 2.2.1 Indian Society Overview 6 2.2.2 Population Growth and Urbanization 6 2.3 Indian Political Environment 6 2.3.1 Decreased Government Control 6 2.4 National Compe

3、titive Advantage of India . 73 “Localization”-McDonalds Diverse Multinational Strategies 9 3.1. “Effective Localization” Strategy .9 3.2 “Politically Correct” Strategy .9 3.3 “High Integrated” Supply Chain Management 10 3.3.1 Local Sourcing with Local Suppliers .10 3.3.2 The Unique “Cold Chain” .10

4、3.4“Cultural Sensitive” Strategy .12 3.4.1 “Changing Faces”-Big Mac to Maharaja Mac .12 3.5 “Effective Market Positioning” Strategies .12 3.5.1 Market Segmentation and Positioning .13 3.5.2 Product Adaptation .13 3.5.3 Pricing Strategies 144. Future Challenges for McDonalds in India 14 4.1 When Conf

5、ront the Dispute Voices .15 4.2 When Confront the Logistical Bottleneck 15 4.3 When Price Still Increase .15 4.4 SWOT Analysis of McDonalds India .165. Key CSR Issues for MNE in Cultural Diverse Country like India and China .17 5.1 Some Conceptual CRS Issues .17 5.2 Key CSR Issues for MNE when opera

6、te in India and China 176. Conclusion .187. References.19Executive SummaryThis report proceeds on a case study of McDonalds in India, and four research questions are analysed with detailed theoretical frameworks and models. The report discusses the market attractiveness for McDonalds to enter India,

7、 relating to Porters national competitive advantage model, and illustrates reasons why McDonalds chose and entered the India market. Secondly, this report critically discusses the diverse multinational strategies and practices that McDonalds adopted which enabled them to make inroads into the India

8、market and add value to its Indian operation. Then it further explains and discusses the challenges McDonalds may face in a fast growing Indian market. Last, the critical CSR issues are stressed for an MNE operating in a culturally diverse Asian country like India and China. 1. IntroductionMcDonalds

9、 in India case is a classic and case used in strategic management, international business, marketing and other relevant areas either academic study or business practical trainings. It explaining the importance of a multinational enterprise in understanding a host countrys market features and precise

10、ly evaluate the attractive factors that encourage the MNCs to entry a new market, in particular the country with distinctive cultural diversity as India; and accumulate good multinational strategies for McDonalds to build and emphasize on localization, it including: effective local management, “poli

11、tically correct”, it strong supply chain management, “culture sensitive”, and “family oriented”, and the effective marketing strategies; the importance of future challenges of McDonalds and significant CSR issues in cultural diverse Asian country like India and China are also stressed later. Before

12、analyze the case, the report gives a brief overview about McDonalds below:1.1 Company OverviewMcDonalds doing global business and their restaurants around the world. By 2003, the company had 30,000 restaurants in 121 countries. In the late 1990s, McDonalds entered in India. Although India is poor na

13、tion, there are 150 to 200 million prosperous middle class population was attracted McDonalds. However, there are unique challenges for McDonalds. For thousands of years, Indias Hindu culture has revered the cow and do not eat the meat of the scared cow, also there are some 140 million Muslims in In

14、dia, who reject to eat pork.The report analyses four required questions: the market features that attracted McDonalds to enter India, how has McDonalds devised and implemented its multinational strategy to add value to its Indian operation, the challenges McDonalds may face in a fast growing Indian

15、market, the CSR issues that you find significant for an MNE operating in a culturally diverse Asian country like India and China, by some relevant theories and theoretical models in below:2. Attractive Market Features in IndiaHeng and Wen (2005) states that whether an MNC can successfully enter a ne

16、w market embody its aptitude to understand the external macroeconomic, political and social environment of the host country. MNCs must modify their competitive stance, perceive adequate market potential to gain operational success. For McDonalds to strategically identify the attractive market featur

17、es of India, this section is divided into four major catalogues on evaluating Indias macroeconomic, social, political environment, and Indias national competitive advantages (by utilizing Porters Diamond Model) in which attract McDonalds to enter market there.2.1 Macroeconomic Environment2.1.1 The “

18、Ignored” Indian Food Service Industry In 1990s, owning to Indian consumers distinct dietary habits and food preference, majority Western fast food chains had ignored Indian markets. Besides, nearly 20% of Indias food production is desecrated on account of poor intermediaries, infrastructure and tran

19、sportations, and created inefficiency between the Indian farmers and consumers of the food chain. However, for instance, a great number of 22,000 registered restaurants plus 100,000 road side food stalls verify that Indians enjoy consuming restaurant foods. Regarding to worldwatch (2009), Indian fas

20、t food industry has been growing at more than 40% per year. Since the concept of fast food chain is comparatively new for Indian, it has a great potential for growth. 2.1.2 High Growing Economy since 1990sSince the 1990s, there was significant growth of Indias economy contributed via the countrys hi

21、gh growing GDP and high skewing income distribution. The “Hindu rate of growth” was from average 3.5% GDP in 1972-1982 to 6% from 1992-2002, and is likely to reach 7% by 2010. Besides, the number of households with an annual has grown by 26% since 1995-96 to 2001-02, and was estimated to increase co

22、ntinuously. The middle class households of the country in both urban and rural households with higher disposable income and have shown superior tendency to consume fast foods. This made Indias food service sales in dramatic progress that further open a window to McDonalds to enter its industry marke

23、ts with large potential. Figure 1: 2.1.3 Economic Liberalization ReformsIn response to the countrys macroeconomic crisis of the financial growing budget deficits from late 1980s, Indias new government introduced a series of economic reforms to create more market-based economy. Such economic liberali

24、zation policies did build a market-friendly environment to attract MNCs and foreign direct investment. Since, the potentially large consumer market (with 300 million consumers, almost as big as China) was opened to MNCs like McDonalds which would provide enough incentives for McDonalds to enter into

25、 the Indian market (Kishore, 2005).2.2 Social Environment2.2.1 Indian Society OverviewIndian social section indicated that their fairly diverse population, unique regional food traditions and preferences (e.g. Muslim do not eat beef and pork, and large vegetarian proportion), demographics through in

26、come distribution, rural-urban segmentation and centres of prosperity, these are key elements that MNCs considered for launching business in this society.2.2.2 Population Growth and UrbanizationGrowing urbanization and high income has shifted traditional Indian food habits. High income people are no

27、w more open towards trying different variety of foods such as, international cuisine, including fast foods. This change in perception has resulted in growing numbers of American fast-food chains in India. (Later statistics proved that companies like McDonalds and Pizza Hut has opened over 100 restau

28、rants each in last ten years.)2.3 Indian Political Environment 2.3.1 Decreased Government Control In 1980s, economic nationalism policy was still demonstrated in India. Dirigiste- heavy state intervention and autarkic- domestic companies were considered as strong government control. Severe constrain

29、ts for MNCs via protective trade policies, price control, licensing requirements in terms of relocating facilities, establishing new plants, expanding production, and introducing new technology strongly hinder the in-flow of foreign capital and market activities. Until the 1990s newly formed Indian government, under the leadership of Prime Minister Narasimha Rao of the Congress, a series of economic reforms aimed to improve the market-based economy by lowing governm