McDonalds in India, Coursework Example

What are the main macro-environmental factors a fast food retailer needs to consider when entering the Indian market? (STEEP or PESTEL Analysis)?

When entering the Indian market, McDonald’s company should perform Political, Environmental, Social, and Technological analysis. This will help them know its environmental challenges, how to operate the company in the present, and help McDonald’s company to prepare itself for the future. This analysis will help McDonald’s company to match its resources with its activities and move it in the right direction.

Political Analysis

Since McDonald’s company operates in approximately 10 countries around the globe, the company needs to adhere to the rules and regulations of that country in which it operates. McDonald’s company needs to work with various special interest groups within the company and the market as well.

Environmental Analysis

McDonalds as a company is extremely committed and responsible to the environment. The current policy of the company follows all environmental regulations and promotes cleanliness in their surroundings. McDonald’s company should perform environmental analysis to ensure that it is clean and tidy. A proper system of garbage disposal should be available for the company.

Social Analysis

The social term in the analysis refers to the developments within the society: culture, behavior, the expectations of the customer, the attitude of the company towards the society etc. McDonald’s company has introduced McDonaldKids Programs as part of the McDonald’s company Foundation. McDonaldkids is for children below 10 years of age. It contains a variety of organizations, for example, Restaurant Tours and Incentive Awards for outstanding accomplishments to Fundraising Events and Sports Team Partnerships. McDonald’s company maintains a relationship with their communities.

Technological Analysis

The technological term refers to the development, such as, processing of the products, and how the machines are programmed and operated. With the use of technology in the operation, McDonald’s should perform technological analysis to ensure that it reduces the cost of production. This analysis will assist the organization assess its performance and supply chain operations. The assessment will assist McDonald’s determine whether there is a need to introduce multinational development teams. With the help of parallel development developed through technological analysis, McDonald’s will be able to assign different parts of the system to different subsidiaries of the business. The manager will be able to listen to the ideas of employees by performing technological analysis. The technological analysis will assist the company to review any possible changes in the departments to fulfil the communication needs.

Which competitive forces does McDonald’s need to consider when entering the Indian market? (Porters 5 forces)

Bargaining Power of Suppliers

McDonald’ should consider supplier power with respect to the availability of suppliers within the areas of operation. It is important for McDonalds reconcile the needs of the suppliers with regard to the company demands.

Bargaining Power of Customers

McDonalds has to be careful and aware of customers wants and needs because of the customer’s influence over a company. McDonalds must continue to monitor the tastes and preferences of customers in order to cater for their needs. For example, when Pizza Hut opens a new franchise in a new location, a product adaptation is completed. This determines what suits the local population and therefore should be conducted by McDonalds, to stay competitive, and give the customers what they want.

Rivalry among Competitors

There is a great deal of competition between two similar companies in the same industry. For example, the biggest rival among the competitors of McDonalds is Pizza Hut. Pizza Hut has renowned pizza chains around the globe. It has approximately 34,000 franchise outlets, delivery units and kiosks in over 100 countries.

Availability of Substitutes

A substitute product for any of McDonald’s product can cause the company to lose its business. Any product that is in the market has a substitute available and substitute for pizza is burgers and fried food. For example, McDonald’s is easily substituted for Burger King, McDonalds, Subway or KFC. McDonald’s must ensure that it is as available as fast food restaurants but advertise as a family, evening out and quick healthy facility with fresh ingredients. It must determine and maintain facilities in prime locations.

Threat of New Entrants

This is another of the competitive forces that affect the company in a big way. For example, the entrance of Dominos within the food and beverage industry can cause McDonald’s to lose some of its business. Several food organizations are infiltrating new areas to increase customer numbers. California Pizza Kitchen began selling coffee; Starbucks is selling Danishes and sandwiches. In order for McDonald’s to remain as a front-runner, they must maintain innovative ideas that are fresh and new in the industry.

Which factors will McDonalds need to focus on in order to increase the success of its market entry into India? (Key Success Factor) fill the table attached

The company uses various critical success factors, which include higher levels of customer satisfaction, improved quality of the products and services, and development of new products. The high levels of customer satisfaction are critical in the ability of the company to make profits due to higher sales levels hence increase in profit margin. Secondly, the quality of product and service dictates the company’s success. High quality products and services will mean that the customer satisfaction level is high hence; higher numbers of customers are able to purchase their products leading to the increased revenue. Employee satisfaction level is also important in the success of the company; when employees are satisfied, they will be committed to service above self. This lead to higher customer satisfaction hence more products will be purchased leading to higher levels of profit margins. Moreover, the ability of the company’s ability to initiate new products and service determines its success. The development of new products and services that appeal to consumers of their product leads to retention of the customers as well as attracting others, an increase in customer base means that the company is likely to increase its profit margins. Money plays a crucial role in determining the success of McDonald’s ,ability to increase its revenue, having a positive cash flow and ability to access finance and higher profit margins enables the company to be sustainable and have a loyal customer base.

 What are McDonald’s relevant strengths, weaknesses, opportunities and threats within the Indian fast food market?

A SWOT analysis is an integral component of the strategic planning process of any company and is used to study the strengths, weaknesses, opportunities, and threats of that particular organization. The central theme for the SWOT analysis of McDonalds Company is to identify company’s strengths. The following SWOT analysis shows McDonald’s current position in the market place, their core competencies, and possible improvements, which can be utilized to advance the strategies of the business.

Strengths

The first strength is that the company has a recognized brand name. Since the company has been in place for a long time, many people have come across their products and therefore they can identify with them. Their global local presence is also strength in that it serves many countries and therefore has gained a competitive advantage over many regions. It utilizes a strong advertising and promotional campaign, which has been made possible by the recent developments in the use of the Internet. This has made sure that the product can be viewed over the Internet making it possible for a greater percentage of individuals to be reached at. The company offers a variety of products and varied features of the product therefore appealing to a diverse group of people. The Similarity and uniformity of quality across geographical locations makes the company to experience a greater market share. The company offers convenience and timeliness services thus making sure that their customers enjoy them to the fullest. The affiliation with other bodies like heart- to- heart foundation and Coca-Cola Corporation has also enabled the organization to gain an upper hand with its customers.

Weaknesses

McDonald’s suffers negative public perception that its products are of low nutritional value. Because of lower disposal income, people have resorted to spending less on fast food. The affiliation of McDonald’s with the American obesity epidemic gave a negative picture for the company. Social changes and lifestyles of people have made the company less flexible. Because of affiliation of McDonald’s with the American obesity epidemic, the sales have been so low over the past years.

Opportunities

Further investment in charities such as Ronald McDonald’s house has led to the company’s expansion of its operations and made its brand name well known. Creativity and innovation within the product development and variety of choices in the store has made the company to design new and more personalized products. New greener policies and conversation with regard to disposal of wastes and packaging of products has necessitated the company to influence a greater market. The current trends in technology have proved to be an opportunity in trying to be in a brace with technology, many have been forced to purchase the new products of this company.

Threats

There has been a shift from fast food to healthier operations in the world today thus posing a threat to products of this company. The products that McDonald’s company offers are highly substitutable product thus a threat in terms of its products not obtaining an upper hand. The highly competitive and mature marketplace today is also a threat to the company. The continued inventions and innovations are a threat to this product since new and appealing features are being introduced, a scenario which may mean substituting this product.