Master’s Thesis

On
THE IMPACT OF CULTURAL
DIFFERENCES ON
INTERNATIONAL BUSINESS
NEGOTIATIONS
FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF

MASTER OF BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF

DR NEHA BHATIA

Submitted By

AYUSH SHARMA (22GSOB2010179 )

MBA 2022-2024

SCHOOL OF BUSINESS
GALGOTIAS UNIVERSITY
May, 2024
 Certificate

This is to certify that the Master’s Thesis “ THE IMPACT OF CULTURAL

DIFFERENCES ON INTERNATIONAL BUSINESS NEGOTIATIONS ”
has been prepared by AYUSH SHARMA (22GSOB2010179 ) , under my
supervision and guidance. The project report is submitted towards the partial
fulfillment of 2 year, Full time Master of Business Administration.

Signature of Faculty
Dr Neha Bhatia

Date
 DECLARATION

I, AYUSH SHARMA (22GSOB2010179 ), student of School of Business,

Galgotias University, Greater Noida, hereby declare that the Master’s Thesis on “
THE IMPACT OF CULTURAL DIFFERENCES ON INTERNATIONAL
BUSINESS NEGOTIATIONS ” is an original and authenticated work done by
me.

I further declare that it has not been submitted elsewhere by any other person in
any of the institutes for the award of any degree or diploma.

AYUSH SHARMA (22GSOB2010179 )

Signature of the Student

Date
 ACKNOWLEDGEMENT

This project is the outcome of sincere efforts, hard work and constant guidance of
not only me but a number of individuals. First and foremost, I would like to thank
Galgotias University, Greater Noida.

I am thankful to my guide Dr Neha Bhatia for providing me help and support

throughout the Research Project Report.

I owe a debt of gratitude to my faculty guide who not only gave me valuable inputs
about the industry but was a continuous source of inspiration during these months,
without whom this Project was never such a great success.

Last but not the least I would like to thank all my Faculty members, friends and
family members who have helped me directly or indirectly in the completion of the
project.

AYUSH SHARMA (22GSOB2010179 )

 TABLE OF CONTENTS

[Link]. TOPIC PAGE NO.

1. Executive Summary
2. Literature Review
3. Objectives of the Study
4. Material & Methods
5. The Case of McDonald’s
6. How McDonald’s Evolved in India
7. The 7 P’s of McDonald’s
8. Pestle Analysis of RESTAURANT
9. SWOT Analysis of McDonald’s
10. Famous McDonald’s Campaigns in India
11. Questionnaire
12. Analysis of the Survey
EXECUTIVE SUMMARY

This project is aimed towards studying and analyzing the cross cultural marketing strategies
adopted by marketers in the fast food industry in different parts of the world.

In 2006, the global fast food market grew by 4.8% and reached a value of 102.4 billion and a
volume of 80.3 billion transactions. In India alone the fast food industry is growing by 41% a
year. McDonald's is located in 126 countries and on 6 continents and operates over 31,000
restaurants worldwide. On January 31, 1990 McDonald’s opened a restaurant in Moscow, and
broke opening day records for customers served. The Moscow restaurant is the busiest in the
world. The largest McDonald’s in the world is located in Orlando, Florida, USA.
There are numerous other fast food restaurants located all over the world. Burger King has more
than 11,100 restaurants in more than 65 countries. KFC is located in 25 countries. Subway is
one of the fastest growing franchises in the world with approximately 39,129 restaurants in 90
countries as of May 2009, the first non-US location opening in December 1984 in Bahrain.
Pizza Hut is located in 97 countries, with 100 locations in China. Taco Bell has 278 restaurants
located in 14 countries besides the United States.

The purpose of this study is study how the cultural differences among consumers play an
important role in the development of effective marketing and branding strategies. Culture is a
significant factor that influences buying behavior in consumer markets. Cross cultural studies
provides empirical evidence of convergence and divergence in consumer behavior. In today’s
world, culture plays an important and significant role in the ethical attitudes of marketing
managers; different cultural backgrounds may influence individuals' ethical reasoning.

This project focuses on the Indian Fast Food Industry primarily and analyses how the tastes and
preferences of consumers has been converging due to globalisation. We have taken the case of
the global fast food giant “McDonald’s” and studied the different marketing strategies they
adopted to cater to the Indian customer. Marketing strategies in terms of change in food menu,
hygiene, marketing their products and services, customer satisfaction, etc. It was successful in
their approach of “Think Global, Act Local.”

In this paper we studied the consumer perception about the brand McDonald’s on various
aspects, for instance, the marketing strategies, the tastes and preferences, how much consumers
trust this brand. Questionnaires were used as research tool to identify expectations of customers.
People from all age groups and cultural backgrounds were a part of the survey.
Some of the Key Findings were, McDonald’s was an all time favourite for maximum people that
were surveyed. Factors such as Price, Quality, Cleanliness, Service, Advertising & Promotions
were taken into consideration and people were asked to rate these factors. Now since, a majority
of Indian customers are vegetarian, McDonald’s had to redesign their menu to cater to the
mindsets of the purely vegetarian customers and they were successful in doing this. The service
provided by McDonald’s was also customized to suit the Indian customer. Hence, McDonald’s
was successful in positioning itself as a promoter of ‘Indian family values and culture.’
LITERATURE REVIEW

Fast Food Industry – Overview

A fast food restaurant, also known as a Quick Service Restaurant or QSR within the industry
itself, is a specific type of restaurant characterized both by its fast food cuisine and by
minimal table service. Food served in fast food restaurants typically caters to a "meat-sweet
diet" and is offered from a limited menu; is cooked in bulk in advance and kept hot; is finished
and packaged to order; and is usually available ready to take away, though seating may be
provided. Fast food restaurants are usually part of a restaurant chain or franchise operation,
which provisions standardized ingredients and/or partially prepared foods and supplies to each
restaurant through controlled supply channels. The term "fast food" was recognized in
a dictionary by Merriam–Websterin 1951.

Arguably the first fast food restaurants originated in the United States with A&W in 1916
and White Castle in 1921. Today, American-founded fast food chains such as McDonald's, KFC,
Domino’s Pizza, Subway, etc. are multinational corporations with outlets across the globe.

Variations on the fast food restaurant concept include fast casual restaurants and catering trucks.
Fast casual restaurants have higher sit-in ratios, and customers can sit and have their orders
brought to them. Catering trucks often park just outside worksites and are popular with factory
workers.

McDonald's, a noted fast food supplier, opened its first franchised restaurant in the US in 1955
(1974 in the UK). It has become a phenomenally successful enterprise in terms of financial
growth, brand-name recognition, and worldwide expansion. Ray Kroc, who bought the
franchising license from the McDonald brothers, pioneered many concepts which emphasized
standardization. He introduced uniform products, identical in all respects at each outlet, to
increase sales. At the same time, Kroc also insisted on cutting food costs as much as possible,
eventually using the McDonald's Corporation's size to force suppliers to conform to this ethos.

Other prominent international fast food companies include Burger King, the number
two hamburger chain in the world, known for promoting its customized menu offerings (Have it
Your Way).
Multinational corporations typically modify their menus to cater to local tastes and most
overseas outlets are owned by native franchisees. McDonald's in India, for example, uses lamb
rather than beef in its burgers because Hinduism traditionally forbids eating beef. In Israel some
McDonald's restaurants are kosher and respect the Jewish Shabbat; there is also
a kosher McDonald's in Argentina. In Egypt, Morocco, Saudi Arabia, Malaysia, and Singapore,
all menu items are halal.

Indian Fast Food Industry

The Indian market has been growing and evolving at a very fast pace. Constantly experimenting
with the tastes of consumers by mixing western and 'desi' menus, fast food industry has seen a
rapid growth in last few years, thanks to high disposable incomes and greater exposure to
multiple cuisines. A lot of Indians are travelling abroad experiencing changes in lifestyle and are
keen on experimenting with food.

When western fast-food chains such as McDonald’s, Domino’s Pizza and KFC initially opened
their doors in India in the mid-1990s, they struggled to compete with spicy street food and the
elaborate home-cooked meals Indian women regularly prepared for their families. But more
hectic schedules, rising incomes and demographic realities – about 60 per cent of Indians are
under 30 years old – have created new appetites among Indian consumers.

Now, sales at western fast-food chains, and local rivals, are taking off, growing at an average of
28 per cent a year, as dining out moves from being a special occasion, to a routine part of
Indians’ busier schedules. Indians spent an estimated $1.3bn on dining out in “chain restaurants”
in 2009, of which about 400m was accounted for by fast food, according to research group
Euromonitor.

It is not just India’s biggest urban agglomerations, but smaller, second-tier cities where such
restaurants are finding growing favour. The consumer is beginning to recognise that quick-
service restaurants mean quality and value for money.

McDonald's made its India debut in 1996 with one outlet at Basant LoK in Delhi and at present,
it has 211 restaurants of which 105 are in North & East India and 106 in West & South
India. Apart from metros, McDonald's is fast reaching rural areas as well, as there are 14 outlets
in Haryana, 11 in Punjab and 28 in Uttar Pradesh. With ever increasing pool of working
population, nuclear families and a progressive middle class, the demand for fast food already on
the rise will see a tremendous growth in future also.

Domino’s Pizza is growing at a blistering pace, with 364 outlets in 55 cities, all run by Domino’s
Indian franchisee, Jubilant Foodworks, in New Delhi. Jubilant, which raised $71m in an initial
public offering last year, increased sales by 61 per cent from April to December, compared to the
previous year, buoyed by 54 new stores opened in the period.

Last month, US-based Dunkin’ Donuts, owned by the private equity firms Carlyle Group,
Thomas H. Lee and Bain, announced a partnership with Jubilant to bring its deep-fried products
to India.
Subway is also gaining popularity in India, with 199 outlets, and Starbucks is gearing up for an
Indian market launch this year.

Hardcastle Restaurants, one of two Indian partners to McDonald’s, is buying out the US
hamburger chain’s stake in the 50-50 joint venture that operates the chain in southern and
western India, paving the way for accelerated expansion. Hardcastle aims to open 30
McDonald’s outlets this year.

Western fast-food brands have gone through a tough learning process to cater to Indian tastes.
Traditional menus were spiced up, vegetarian options enhanced, and low price, entry-level items
developed to make the restaurants more accessible in a highly price-sensitive market. Such
efforts have won the loyalties of consumers.

While fast-food chains have finally adapted their recipes to local tastes, they face other trials.
Finding suitable real estate in crowded Indian cities is difficult. Real estate is the single biggest
challenge. Indian rivals also pose stiff competition. Café Coffee Day, a coffee chain based in
Bangalore, has around 1,000 outlets, and a range of food offerings.

Near McDonald’s at Phoenix Mills – Mumbai, cheery food stalls like Dosa Hut, On a Roll, Thai
Chi, do brisk business serving up Indian and Asian dishes – which for many Indians are still
more appealing than spiced up versions of Western fare.

Cross-Cultural Marketing

“Culture is defined as the sum of learned beliefs, values and customs that serve to direct
consumer behaviour in a particular country market”. Culture is made up of beliefs, values and
customs that are often embedded in a society and have noticeable differences among different
countries.

Cultural values are important aspects of the self of consumers. As businesses have become more
and more global, the cultural differences among consumers play an important role in the
development of effective marketing and branding strategies. When managers want to understand
consumers’ behavior in different countries it is necessary that they compare the cultures to
discover how these national cultures are different from, or similar to, each other before they
carry out their marketing strategies. This is because cross-cultural phenomenon rises as a result
of the different cultural components existing among consumers in different countries. Culture is
a significant factor that influences buying behavior in consumer markets.

Cultural differences lead to different consumer responses across countries. Empirical evidence
has shown that, no matter how a company sells products or offers its services in another country;
the marketing strategy will be influenced by the cultural environment of the specific country and
region. Thus, today’s body of knowledge suggests that marketing managers should at the very
least, be cautious in ensuring that they understand the cultural differences when deciding on the
kind of products to put out in the market, as well as when developing marketing activities and
branding strategies.

The cross cultural variations tend to implicitly or explicitly affect the branding strategies that
companies adopt. Due to the fact that brand positioning elements interact with various variables
of culture, firms need an adaptation framework in reference to the culture in which they operate.
This interaction demands an adaptive response from the brand.

Consumers worldwide are not the same, and the difference in consumer behavior between
countries has intensified over the years. Because all aspects of consumer behavior are culture-
bound, and not subject merely to environmental factors but integrated in all of human behavior,
there is an increased need to identify and understand this integration and its impact on marketing
management. Culture and behavior of consumers explains the myths that surround marketing in
different countries. Cross cultural studies provides empirical evidence of convergence and
divergence in consumer behavior. The concept of culture also covers various psychological and
sociological aspects of human behavior used for explaining consumer behavior.

In today’s world, culture plays an important and significant role in the ethical attitudes of
marketing managers; different cultural backgrounds may influence individuals' ethical reasoning.
Furthermore, each culture perceives the world from a very different point of view. These cultural
differences make is necessary, now more than ever, that business people consider these ethical
attitudes and cultural differences in this new era of globalization.
OBJECTIVES OF THE STUDY

 To study the different marketing strategies adopted by fast food giants in

different cultural environments.
 To understand how the specific national culture affects the strategies which
are implemented by some multinational companies in a certain industry.
 Understand the concept of Standardization vs. Localization in the global fast food
industry.
 To analyze the differences in tastes and preferences pattern of consumers globally.
 Due to globalization of markets and businesses, and a large increase in the ethical
conflicts faced by marketing managers around the world, it is imperative to study what
impact culture has on the ethics
 Studying the marketing strategies adopted by the major fast food chains in India.
MATERIAL AND METHODS

I. Study Design – It will be based on the Historical collection of data & analysis of the
reports with a Sampling design technique taking into consideration the performance &
objectives associated with the Top fast food chains in India to test the Hypothesis on the
same.

II. Setting – The Research work will be conducted within the premises of the Campus; with
a sufficient amount of data gathering based on company reports, research reports and
information gathered from the web sites

III. Duration of the Study - The duration of the study will be for 8 weeks right from
data gathering to analysis & Interpretation.

IV. Sample Size - The sample size for this study will be the top Fast Food chains in India:
McDonald’s. A total sample of 200 would be taken for the research

V. The sampling employed will be stratified whereby observations would be classified

separately in different buckets depending on the Company being analyzed at the
given point of time.

VI. Data collection procedure – It will be exploratory research based on the

variables assigned by way of Secondary research sources.

VII. The sampling technique to be used is non probabilistic sampling A well structured
questionnaire would be prepared taking into account all aspects ranging from gender,
location, salary , comparative ranking with respect to different players in the market.
The Case of McDonald’s

McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving
around 68 million customers daily in 119 countries. The company, headquartered in the United
States began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice
McDonald. A McDonald's restaurant is operated by either a franchisee, an affiliate, or the
corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the
franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27
percent over the three years ending in 2007 to $22.8 billion, and 9 percent growth in operating
income to $3.9 billion. The business began in 1940, with a restaurant opened by brothers Richard
and Maurice McDonald in San Bernardino, California.

Marketing Strategies

1. Speedee Service System - Their introduction of the "Speedee Service System" in 1948
furthered the principles of the modern fast-food restaurant that the White Castle hamburger
chain had already put into practice more than two decades earlier. The original mascot of
McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name
was "Speedee." Speedee was eventually replaced with Ronald McDonald by 1967 when the
company first filed a U.S. trademark on a clown shaped man having puffed out costume legs.

2. Drive-In Restaurant Services - McDonald's first filed for a U.S. trademark on the name
"McDonald's" on May 4, 1961, with the description "Drive-In Restaurant Services," which
continues to be renewed through the end of December 2009. Drive-Thru, Auto-Mac, Pay and
Drive, or "McDrive" as it is known in many countries, often has separate stations for
placing, paying for, and picking up orders, though the latter two steps are frequently
combined. In some countries, "McDrive" locations near highways offer no counter service or
seating. In contrast, locations in high-density city neighborhoods often omit drive-through
service. There are also a few locations, located mostly in downtown districts that offer Walk-
Thru service in place of Drive-Thru.
How McDonald’s Evolved in India

McDonald's India launched in 1996 when Mr. Amit Jatia joined the McDonald’s family March
1995 as MD, Hardcastle Restaurants Pvt. Ltd. Today, he is spearheading McDonald’s in West &
South India. McDonald's India was set up as a 50:50 joint-venture between McDonald's at a
global level and regional Indian partners such as Hardcastle Restaurants Private Limited in
western India, and Connaught Plaza Restaurants Private Limited in northern India.

The first Indian McDonald's outlet opened in Mumbai in 1996. Since then, outlets have begun
trading in metropolitan and Tier II towns across the country. Now with over 15 years of
leadership in food service retailing India, McDonald’s now has a network of over 235 restaurants
across the country.

The starting point for McDonald's India was to change Indian consumers' perceptions, which
associated it with being 'foreign', 'American', 'not knowing what to expect' and 'discomfort with
the new or different'. McDonald's wanted to position itself as 'Indian' and a promoter of 'family
values and culture', as well as being 'comfortable and easy'. Simultaneously, the brand wanted to
communicate that, operationally, it was committed to maintaining a quality service, cleanliness
and offering value for money.

Challenges in Entering Indian Markets

 Regiocentricism: Re-engineering the menu: McDonald’s has continually adapted to the

customer’s tastes, value systems, lifestyle, language and perception. Globally McDonald’s
was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion
not to consume beef or pork. To survive, the company had to be responsive to the Indian
sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to suite the Indian
palate.

 The vegetarian customer: India has a huge population of vegetarians. To cater to this
customer segment, the company came up with a completely new line of vegetarian items
like McVeggie burger and McAlooTikki. The separation of vegetarian and non-vegetarian
sections is maintained throughout the various stages.

Key for Truly Indian Products

a) Local Sourcing: McDonald's India is committed to sourcing almost all of its products
from within the country. Prior to its launch, the company invested six years to develop its
unique cold chain, which has brought about a veritable revolution in food handling,
immensely benefiting the farmers at one end and enabling customers to get the highest
quality food products, absolutely fresh and at a great value. McDonald's India today has
developed local
 Indian businesses, which can supply the highest quality products required for its Indian
operations.

b) Respect for Indian Customers and Culture: McDonald's worldwide is well known for the
high degree of respect to the local culture of each market it operates in. In line with this
respect for local culture, India is the first country in the world where McDonald's does not
offer any beef or pork items. McDonald's has developed a menu especially for India with
vegetarian selections to suit the Indian palate and has also re-engineered its operations to
address the special requirements of vegetarians. Special care is taken to ensure that all
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. So much so that the mayonnaise and
soft serves are also 100% vegetarian and McDonald's uses only vegetable oil as a cooking
medium in India.

Segmentation, Targeting and Positioning

McDonald’s uses demographic segmentation strategy with age as the parameter. The main target
segments are children, youth and the young urban family.

% of Kids who influence what FMCG brand their

family buys

71%
59%
52%

Biscuits Burgers & Pizzas Fruit Juices

As shown above, kids reign supreme in FMCG purchase related to food products. So to attract
children McDonalds has Happy Meal with which toys ranging from hot wheels to various Walt
Disney characters are given (the latest in this range is the toys of the movie Madagascar). For
this, they have a tie-up with Walt Disney. At several outlets, it also provides special facilities
like ‘Play Place’ where children can play arcade games, air hockey, etc. This strategy is aimed at
making McDonald’s a fun place to eat. This also helps McDonald’s to attract the young urban
families wanting to spend some quality time while their children have fun at the outlet.
To target the teenagers, McDonald’s has priced several productsaggressively, keeping in mind
the price sensitivity of this target customer. In addition, facilities like Wi-Fi are also provided to
attract students to the outlets like the one at Vile Parle in Mumbai.

“McDonald’s mein hai kuch baat” projects McDonald’s as a place for the whole family toenjoy.
When McDonald’s entered in India it was mainly perceived as targeting the urban upper class
people. Today it positions itself as an affordable place to eat withoutcompromising on the
quality of food, service and hygiene. The outlet ambience and mild background music highlight
the comfort that McDonald’s promises in slogans like “You deserve a break today” & “Feed
your inner child”

This commitment of quality of food and service in a clean, hygienic and relaxing atmosphere has
ensured that McDonald’s maintains a positive relationship with the customers

Customer Perception and Customer Expectation

Customer perception is a key factor affecting a product’s success. Many potentiallyrevolutionary

products have failed simply because of their inability to build a healthy perception about
themselves in the customers’ minds. McDonalds being an internationally renowned brand brings
with it certain expectations for the customers.

Target Segment What is McDonald’s for me?

A Family with children A treat to children, a fun place to be for the children
Urban customer on the move Great taste, quick service without affecting the work schedule.
Teenager Hangout with friends, but keep it affordable

Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects
their values. The customer’s expect the brand to enhance their self-image. Customer responses
obtained at the Vile Parle, Mumbai outlet confirmed the fact that they connect strongly with the
brand. However, fulfilling some of the customer expectations like a broader product variety
provide McDonald’s a great scope for improvement.
THE 7 P's Of McDonald’s

PRODUCT: How should the company design, manufacture the product so that itenhances
the customer experience?

Product is the physical product or service offered to the consumer. Product includes certain
aspects such as packaging, guarantee, looks etc. This includes both the tangible and the non-
tangible aspects of the product and service.

McDonald’s product portfolio primarily comprises of vegetarian and non-vegetarian burgers.

Products like McAloo Tikki burger, Veg Pizza McPuff and Chicken McGrill burger were
formulated and introduced using spices favored by Indians. The menu development team has
been responsible for special sauces which use local spices do not contain beef and pork. Other
products do not contain eggs and are 100% vegetarian. The Indianized products have been so
well received that we even export McAloo Tikki burger and Veg. Pizza McPuff to the Middle
East.

McDonald’s brings with it a globally reputed brand, world class food quality and excellent
customer specific product features.

PRICE: What should be the Pricing Strategy?

Pricing includes the list price, the discount functions available, the financing optionsavailable
etc. It should also take into the consideration the probable reaction from the competitor to the
pricing strategy. This is the most important part of the marketing mix as this is the only part
which generates revenue. All the other three are expenses incurred. The price must take into
consideration the appropriate demand-supply equation.
McDonald’s came up with a very catchy punch line “Aap ke zamane mein, baap ke zamane
ke daam”. This was to attract the middle and lower class consumers and the effect can clearly
be seen in the consumer base McDonalds has now. McDonald’s has certain value pricing
and bundling strategies such as happy meal, combo meal, family meal etc to increase overall
sales volumes.

McDonald’s vegetarian menu is priced between Rs 25 and Rs 60 while the non vegetarian menu
is priced between Rs 30 and Rs 80. Other menu items like potato wedges are priced at Rs 20,
soft serves at Rs 35, mc swirl at Rs 12, medium soft drinks at Rs 20 and medium shakes at Rs
45.

McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal,
family meal etc to increase overall sales volumes.

PROMOTION: What is the suitable strategy and channels for promotion of the product?

The various promotion channels being used by McDonald’s to effectively communicate

the product information are given above. A clear understanding of the customer value
helps decide whether the cost of promotion is worth spending.

There are three main objectives of advertising for McDonald’s are to make people aware of an
item, feel positive about it and remember it. The right message has to be communicated to the right
audience through the right media. McDonald’s does its promotion through television, hoardings
and bus shelters. They use print ads and the television programmes are also an important
marketing medium for promotion.
At McDonald’s the prime focus was on targeting children. Happy meals too were targeted at
children, and small toys were given along with the meal. Apart from this, various schemes for
winning prices by way of lucky draws and also scratch cards are given when an order is placed
on the various mean combos. In fact, the various economic meals and value meals also signal to
the customer that buying separate items results in greater value for money for the customer.

Some of the most famous marketing campaigns of McDonald’s are:

 “You Deserve a break today, so get up and get away- To McDonald’s”

 “Aap ke zamane mein ,baap ke zamane ke daam”.
 “Food, Folks, and Fun”
 “I’m loving it”.

PLACE: Where should be the product be available and the role of distribution channels?

The place mainly consists of the distribution channels. It is important so that the product is
available to the customer at the right place, at the right time and in the right quantity. Nearly
50% of U.S.A is within a 3 minute drive from a McDonald’s outlet.

There is a certain degree of fun and happiness that a customer feels each time he dines at
McDonalds. There are certain value propositions that McDonalds offer to its
customers based on their needs. McDonalds offers hygienic environment, good ambience
and great service. There are certain dedicated areas for children where they can play while their
parents can have some quality time together.
McDonald’s outlets are very evenly spread throughout the NCR region. McDonald’s does not
offer home delivery but its outlets are very readily accessible. McDonald’s also offers take away
drive through facilities.

PEOPLE: How to converge the benefits of internal and external marketing?

McDonald’s understands the value of both its employees and its customers. It understands the
fact that a happy employee can serve well and result in a happy customer. McDonald’s
continuously does Internal Marketing. This is important as it must precede external marketing.
This includes hiring, training and motivating able employees. This way they serve customers
well and the final result is a happy customer. The employees in McDonald’s have a standard
uniform and McDonald’s specially focuses on friendly and prompt service to its customers from
their employees. The punch line “I’m loving it” is an attempt to show that the employees are
loving their work at McDonalds and will love to serve the customers

PROCESS:

The food manufacturing process at McDonald’s is completely transparent i.e. the whole process
is visible to the customers. In fact, the fast food joint allows its customers to view and judge the
hygienic standards at McDonald’s by allowing them to enter the area where the process takes
place. The customers are invited to check the ingredients used in food.

PHYSICAL EVIDENCE:

McDonald’s focuses on clean and hygienic interiors of is outlets and at the same time the
interiors are attractive and the fast food joint maintains a proper decorum at its joints.
PESTLE ANALYSIS OF RESTAURANT

Pestle is an analysis of the external macro environment in which a business operates. Pestle
stands for political, economic, social, technology, and environmental factors.

A. Political Factors

The international operations of McDonald’s are highly influenced by the individual state
policies enforced by each government. For instance, there are certain groups in Europe and the
United States that clamor for state actions pertaining to the health implications of eating fast
food. They have indicated that harmful elements like cholesterol and adverse effects like obesity
are attributable to consuming fast food products.

On the other hand, the company is controlled by the individual policies and regulations of
operations. Specific markets focus on different areas of concern such as that of health, worker
protection, and environment. All these elements are seen in the government control of the
licensing of the restaurants in the respective states. For instance, there is an impending legal
dispute in the McDonald’s franchise in India where certain infringement of rights and violation
of religious laws pertaining to the contents of the food. The existence of meat in their menus in
India is apparently offensive to the Hindu religion in the said market. There are also other studies
that points to the infringement of McDonald’s Stores with reference to the existing employment
laws in the target market. Like any business venture, these McDonald’s stores have to contend
with the issues of employment procedures as well as their tax obligations so as to succeed in the
foreign market.

B. Economic Factors

Organisations in the fast food industry are not excused from any disputes and troubles.
Specifically, they do have their individual concerns involving economic factors. Branches and
franchises of fast food chains like McDonald’s has the tendency to experience hardship in
instances where the economy of the respective states is hit by inflation and changes in the
exchange rates. The customers consequently are faced with a stalemate of going over their
individual budgets whether or not they should use up more on these foreign fast food chains.
(2004) Hence, these chains may have to put up with the issues of the effects of the economic
environment. Particularly, their problem depends on the response of the consumers on these
fundamentals and how it could influence their general sales. In regarding the operations of the
company, food chains like McDonald’s tend to import much of their raw materials into a specific
territory if there is a dearth of supply. Exchange rate fluctuations will also play a significant role
in the operations of the company.
As stated in the paragraph above, McDonald stores have to take a great deal of consideration
with reference to their microenvironment. The company’s international supply as well as the
existing exchange rates is merely a part of the overall components needed to guarantee success
for the foreign operations of McDonald’s. Moreover, it is imperative that the company be
cognizant of the existing tax requirements needed by the individual governments on which they
operate. This basically ensures the smooth operations of the McDonald’s franchises. In the same
regard, the company will also have to consider the economic standing of the state on which they
operate on. The rate at which the economy of that particular state grows determines the
purchasing power of the consumers in that country. Hence, if a franchise operates in a
particularly economically weak state, hence their products shall cost higher than the other
existing products in the market, then these franchises must take on certain adjustments to
maintain the economies of scale.

C. Socio-Cultural Factors

Articles on the international strategies of McDonald’s seem to function on several fields to

guarantee lucrative returns for the organisation. To illustrate, the organisation improves on
establishing a positive mind-set from their core consumers. McDonald’s indulge a particular
variety of consumers with definite types of personalities. It has also been noted that the company
have given the markets such as the United Kingdom, an option with regards to their dining
needs pointed out that McDonald’s has launched a sensibly valued set of food that tenders a
reliable level of quality for the respective market where it operates. Additionally, those who are
aged just below the bracket of thirty-five are said to be the most frequent consumers of
McDonald’s franchises.

The multifaceted character of business nowadays is reflected in the harsh significance of the
information on the subject of the existing market. This procedure is essentially identified in the
field as market research. Information with regards to the appeal and potential fields of the market
would double as obstructions to the success of the company if this area of the operations is
neglected. In the case of McDonald’s they establish a good system in determining the needs of
the market. The company uses concepts of consumer behaviour product personality and
purchasing decisions to its advantage. It is said to have a major influence on the understanding of
the prospective performance of the organisation in a particular market. (2000)
D. Technological Factors

McDonald’s generates a demand for their own products. (2006) The company’s key tool for
marketing is by means of television advertisements. There are similarly some claims that
McDonald’s are inclined to interest the younger populations more. The existence of play spots as
well as toys in meals offered by the company shows this actuality. Other demonstration of such a
marketing strategy is apparent in the commercials of they use. They employ animated depictions
of their characters like Grimace and Hamburglar. Other advertising operations employ popular
celebrities to promote their products. The like has become endorsers for McDonald’s worldwide
“loving’ it” campaign. Moreover, the operations of McDonald’s have significantly been infused
with new technology. Elements like the inventory system and the management of the value chain
of the company allows for easy payments for their suppliers and other vendors which the
individual stores in respective markets deal with. The integration of technology in the operations
of McDonalds tend to add value to their products. Basically, this is manifested in the
improvements on its value chain. The improvement of the inventory system as well as its supply
chain allows the company to operate in an international context.

E. Legal

As a certified fast food operator, there are many regulations and procedures that McDonalds
should follow. For example is the Halal certification that becomes a concern to Muslim
consumers. McDonalds should protect its integrity and consumer confidence by ensuring all
materials and process are as claimed or must followed.
Other legal requirement that the business owner should follow as stipulated in laws are such as
operating hours, business registration, tax requirement, labor and employment laws and quality
& environment certification (such as ISO) in which the outlet has been certified. The legal
requirement is important because the offenders will be fined or have their business prohibited
from operating which can be disastrous.

F. Environment

As one of world largest consumer of beef, potatoes and chicken, McDonalds always had been
critics for world environmentalist. This is because high consumption of beef causing the green
house effect by methane gasses coming from the cow’s ranch. Large scale plantation has effect
the environment and lost of green forest opening for plantation activities. Vegetarian
environmentalist criticizes the fast-food giant for cruelty to animals and slaughtering. In Japan,
once McDonalds want to introduce whale burger causing uproar because whales are endangered
species. Before using paper packaging, McDonalds has also been criticized for being insensitive
to pollution because using polystyrene based packaging for its foods. Imagine millions of people
purchase from fast food operator and how is the impact to world environment by throwing away
those hard to recycle packaging. Our world is getting concern on environment issue and
business operating here should not just care for profit, but careful usage of world resources for
sustainable development and care for environment safety and health for our future generation.
Critics and concern from all public or activist should be review and support if necessary to
ensure we play our social responsibility better.

Importance of PLC in McDonalds

The requirements of customers change over time and thus the product offering has to be
changed accordingly. What is the fashion today may be out of market within few weeks. Thus
continuous innovation is required. To counter these changes McDonalds has continuously
introduced new products and has phased out the old ones which were at the decline stage of their
PLC. The introduction is timed such that the new product does not cannibalize the product
already in the maturity or growth stage. Thus the secret lies in getting profits with different
products in the different stages of the PLC.
A perfect example of revitalizing a product in decline phase

The French Fries have been an important part of the McDonalds menu worldwide. But now it
was in the stage of decline and was actually not generating proper return. In an attempt to
revitalize it, a new variant was introduced namely Shake Shake Fries. This is being served with
chatpata spice mix which has resulted in increase in the sales of French Fries and has elevated it
from to the decline stage. This is used to delay the decline of a well established product which
has the potential of generating further revenue.

Competitors Analysis

McDonald’s has been a leading fast-foods outlet in Vile Parle. But the outlet under study has
other competitors eating away into its market share. In addition to its traditional rivals—KFC,
Dominos, Pizza Hut—the firm encounters new challenges. Jumbo King competes using a back-
to-basics approach of quickly serving up burgers for time-pressed consumers. On the higher
end, the KFC has become potent competitor in the quick service field, taking away customers
from McDonald’s. Perhaps in the new environment, fast, convenient service is no longer
enough to distinguish the firm. At this time, a new critical success factor may be emerging: the
need to create a rich, satisfying experience for consumers. This brings us to service and
experience based competition w hich McDonald’s can use for competitive advantage against
Jumbo King.
Keeping in mind the demographics of the area, McDonald’s has Wi-Fi enabled the outlet to cater
to the student community. It is for this overall “Food, Fun & Folks” experience that customers
pay a premium over the other competitors.

Competition also reduces product lifecycle; inducing firms to revise their products portfolios and
to revisit their product market to understand changing needs, expectations and perception of
different market segments. The new Mc Breakfast would be introduced between 6am to 11 am as
a pilot project. This would open up a whole new revenue stream for McDonald’s by tapping into
the student and working population by providing a healthy and wholesome breakfast. This
shows how demographic shift can affect the demand for products and services. McDonald’s has
anticipated these changes to maintain its competitive edge.

Two Dimensional Perceptual Mapping

SWOT Analysis of RESTAURANT

Strengths

 It has a strong global presence and is considered as a market leader in both the domestic
as well as the international markets.
 It is a global brand that owns 31,000 restaurants serving in 120 countries. Of these 31,000
restaurants at least 14,000 restaurants are situated in the US.
 It uses economies of scale for reducing the cost, as its huge expansion diversifies the
overall risk involved with the economic performance.
 They own an active children’s charity by the name ‘The Ronald McDonald House’.
 It takes steps in adjusting the Ingredients and product offerings in order to comply with
the upgraded health standards deemed necessary by the USDA.
 It earns revenue by fast food sales as well as a property investor and a franchiser
of restaurants.
 It has a firm real estate portfolio.
 It has branded menu items i.e. Big Mac, Chicken Mc Nuggets, which further promote
McDonalds.
 It is recognized as one of the world’s most recognized logos.
 It is recognized as a socially responsible and community oriented firm.
 It adapts to the cultural differences regarding the region where the restaurant is set up.
 It has located itself in major airports, cities, highways, tourist locations, theme parks.
 It has an efficient food preparation style that follows the process in a systematic way.
 It takes food safety extremely cautiously.
 It was the first to provide the customers about nutrition facts.

Weaknesses

 It uses advertising that mostly targets children.

 High employee turn-over.
 It has yet to accomplish going on the trend of organic food.
 Price competition with the competitors resulting in low revenue.
 Lack of innovative products.
Opportunities

 It can adapt to the needs of the societies and undergo an innovative product line.
 It can research ways to use ‘green’ energy and packaging which will work as a part of
their promotional effort as well as fulfill their social responsibility.
 It can create new product offerings, use mobile text messaging to offer services that appeal
to consumers.
 It can upscale some of its restaurant settings at luxurious locations to attract more customers.
 It can provide optional items that are regarded to be the basis of allergy for some.
 It can slow down the level of expansion in order to increase the profitability of
the organization.

Threats

 The recession negatively impacts the holding position of the firm regarding its
revenue streams, even though they are quite diversified.
 Foreign currency fluctuations are regarded to be a major problem as it uses standard pricing
for its food items.
 More restaurants that are increasing their food offering and declining the price.
 Health issues regarding the fast food chain.
 Heavy investments on promotional campaigns which decrease the gaining of market share.
 Some parents criticize the firm’s ‘cradle to grave’ marketing strategy that focuses on
kids, who later on take it as a trend to their adulthood.
 Sued various times for unhealthy food, usually with addictive additives.
 Emergence of major fast food competitors: Burger King, Starbucks, Wendy’s, Taco
Bell, KFC.
 The expansion has made the firm vulnerable to the slow economies of the other countries.
FAMOUS MCDONALD’S CAMPAIGNS IN INDIA

1. ‘Chatpata McAloo Tikki Burger’

McDonald’s India has come a long way in its brand communications and product
innovations since it began operations in India in 1996, a point reinforced by the latest ad
campaign from McDonald’s India which highlights the tingling taste of the New Chatpata
McAloo Tikki Burger. The campaign will run across the country on a variety of media
including television, radio and OOH from 3rd to 31st January, 2009.

McDonald’s India has established itself as an affordable brand that offers great eating
out options through its ‘Happy Price Menu’ at Rs. 20. This fresh ad campaign showcases the
latest offering from McDonald’s India which manages to tingle the taste buds by adding an
exciting chatpata desi touch to the much loved McAloo Tikki Burger.

The fun filled ad campaign created by Leo Burnett and produced by RDP Productions, shows
how strangers become friends and life becomes chatpata while enjoying the New McAloo
Tikki Burger. The Ad has elements of both youthfulness and fun. It starts with a young boy
winking at a girl who is at the counter placing the order and then the fun continues…

Mr. Arvind Singhal, Head Marketing, McDonald’s India (West and South) said "‘Life
Banaye Chatpati @ Rs 20 only’ is the key message which we intend to highlight through this
latest McAloo Tikki Burger campaign. The new campaign will surely leave the customers
saying ‘I m lovin it’.

Quote from Nitesh Tiwari, creative director Leo Burnett, “We are always looking for small
ways in which we can add a little fun, a bit of zing to our every day mundane lives. This
simple insight is core to our idea for McDonald’s new McAloo Tikki Burger: Its new
chatpata taste adds spice to your life just the way the protagonist in the film adds to his by
coming up with a unique way to break ice with a pretty girl”

2. McDonald’s ‘Happy Price Menu’ Campaign

Leo Burnett India has created a new set of commercials for McDonald’s’ Happy Price
Menu. The menu was launched in 2004 and has since seen taglines like “What your bahaana
is?”, “Purane zamaane ka daam” and “Bees mein full dhamaal”. The thought for the latest
lot is "You don't need to think twice when McDonald's has burgers at only Rs 25".
 The first commercial, which is already on air, begins on a meeting in a conference room, to
which the boss has brought her dog. A young executive tosses the pooch a ball when the
boss’s back is turned, but it accidentally goes out of the window and the dog bounds out after
it. As the executive looks horrified, his colleagues threaten to tell on him. He manages to buy
their silence with the help of the McDonald’s Happy Price Menu, and says conspiratorially to
the camera, “I’m loving it”.

Like the dollar menu in America, the Happy Price Menu is part of our everyday affordable
platform and has worked very well in India. We know how the world is: everyone’s looking
for something fresh, exciting and insightful, and that’s why we refresh the creative every
year.

The intention this time was to add a little freshness and try to bring in some amount of
tongue-in-cheek humour. The second commercial that was out in a week’s time targeted
college-goers. Besides television, the agency and the brand also plan to communicate
the new thought across outdoor, radio, social networks and mobile.

3. “I’m Lovin’ it” Campaign

Retail fast-food giant McDonald’s India is gearing up to implement a new human resource
(HR) initiative on the back of its recently launched worldwide brand campaign called ‘I’m
lovin’ it’. As part of the initiative, the company has recently provided training on
‘hospitality’ to its crew members by way of conducting five to six major workshops in
India.

With the move, the company will henceforth use ‘I’m lovin’ it’ campaign as a platform for
its crew members to become managers of McDonald’s restaurants in the near future.

McDonald’s India will incorporate the ‘I’m lovin it’ theme into its advertising, promos,
public relations, restaurant merchandising and overall brand communications initiatives. It is
called ‘Rolling Energy’ and it involves McDonald’s first-ever integrated global two-year
calendar that will provide consistency in messaging and communications to customers and
employees worldwide. The international television commercial reflecting the lifestyles and
attitudes of today’s customers and culture was aired from October 5, 2003, in India. For the
purpose, the company has have invested Rs 4 crore.

The ‘I’m lovin’ it’ theme is the unifying element for its new worldwide creative approach
that speaks in one voice to customers across more than 100 countries.

According to the company, with the new initiatives, the company hopes to garner a 15 per
cent jump in its overall sales turnover within a year.
 QUESTIONNAIRE

Hi!! Thanks for sparing time and visiting this page. This survey is part of my Dissertation
on the topic “Cross Cultural Marketing in the Fast Food Industry” and will help me
analyze this study. I would request you to please spare 5 minutes and fill this survey. It’s
not that boring ;-)

1. Name:

2. Age:

3. Place (Your current location):

4. Are you a :
a) Vegetarian
b) Non-Vegetarian
c) Eggetarian
d) Other:

5. Which is your favourite fast food chain?

a) RESTAURANT
b) KFC
c) Domino's Pizza
d) Fastrax
e) Subway
f) Other:

6. Are you influenced by TV commercials/Ads/promotional activities done by these fast

food chains?
a) Yes
b) No
c) At Times
d) Yes, I used to get influenced as a kid
e) Other:
7. Which of the following factors affect your choice of fast food joint?

Very At times Not so Not at all

Essential Essential Essential Important
Price

Quality

Cleanliness

Service

Advertising &
Promotions

8. Which amongst the following fast food chains do you trust for pure vegetarian products?
a) RESTAURANT
b) KFC
c) Domino’s Pizza
d) Fastrax
e) Subway
f) Other:

9. Do you have a McDonald’s outlet in your city?

a) Yes
b) No
c) Not Aware
d) Other:

10. Which is your favourite product/products at McDonald’s? *

a) Mc Aloo Tikki
b) Veg Pizza McPuff
c) Chicken McGrill
d) French Fries
e) McChicken
f) McVeggie
g) McSwirl
h) Other:
11. Is the product line or Menu in McDonald’s adequate?
a) Yes
b) No
c) Average

12. Is the product line or Menu in McDonald’s adequate?

a) Do you ever feel that there is any kind of product category missing from their menu.
b) Yes
c) No
d) Average

13. Which amongst the following services provided by RESTAURANT do you prefer?
a) Dine-in
b) Take Away
c) Home Delivery
d) Drive Thru
e) Other:

14. According to you, has McDonald's been successful in positioning itself as a promoter
of 'Indian family values and culture?'
(This is in terms of the product offerings of McDonald’s and also the promotional campaigns
run on TV/Radio/Social networking websites, etc.)
a) Yes
b) No
c) Can't Say
d) Other
e) Other:

Thanks for filling this survey!!! :)

Submit
ANALYSIS OF THE SURVEY

1. Are you a :
e) Vegetarian
f) Non-Vegetarian
g) Eggetarian
h) Other:

Vegetarian 40%
Non-Veg 52%
Eggetarian 8%
2. Which is your favourite fast food chain?
a) RESTAURANT
b) KFC
c) Domino's Pizza
d) Fastrax
e) Subway
f) Other:

RESTAURANT 30%
KFC 24%
Domino's Pizza 20%
Fastrax 0%
Subway 23%
Other 3%

24%
3. Are you influenced by TV commercials/Ads/promotional activities done by these fast
food chains?
a) Yes
b) No
c) At Times
d) Yes, I used to get influenced as a kid
e) Other:

Yes 13%
No 10%
At Times 60%
Yes, I used to get influenced as 17%
a kid
4. Which of the following factors affect your choice of fast food joint?

Very At times Not so Not at all

Essential Essential Essential Important
Price

Quality

Cleanliness

Service

Advertising &
Promotions

Very Essential At times Not so Essential Not at all

Essential Important
Price 30% 50% 17% 3%
Quality 96% 4% 0% 0%
Cleanliness 90% 10% 0% 0%
Service 76% 17% 7% 0%
Advertising & 14% 26% 60% 0%
Promotions

Price – Price is not the key criteria for choosing a fast food joint for a lot of people. According
to the survey conducted, only 30% of the people feel that Price of the products is Very Essential
for choosing a fast food joint whereas 17% feel that Price is Not so Essential.

Apart from this, 50% feel that Yes, price is At times Essential and price is one of the factors
that affects their decision of choosing a fast food chain.

Quality – The Quality of the products being offered by the fast food chain is a very important
factor that affects the decision making of people. Thus, 96% of the people surveyed feel that
Quality of food is Very Essential in deciding which fast food joint to eat at. And, the remaining
4% feel it is At times Essential. This factor clearly displays that Indian Customers want good
quality food.
Cleanliness – Now cleanliness is an important factor that affects the choice of fast food joint. A
lot of people want to dine-in at a clean and hygienic fast food joint and they don’t mind paying a
few more bucks for that. Our survey also concludes that 90% of the people feel that Cleanliness
is an important factor and is Very Essential whereas 10% feel that it is At times Essential.
Therefore, this conveys that apart from Quality, Indian customers want a clean and hygienic
ambience.

Service – Service can be in terms of Placing an order, the time taken by employees to deliver the
offer to the customer, behavior of the staff, etc. Service is considered Very Essential by 76% of
the people, At times Essential by 17%, Not so Essential by 7%. Therefore, Service is also an
important criteria that affects the choice of customers. This is because many office going people
don’t like to wait for a long time to get their order, they want instant services. Also, people who
avail the Home Delivery facility want quick delivery.

Advertising & Promotions – Advertising & Promotions is not considered as a very important
criterion by many people. The survey says that 60% people feel that Advertising & Promotions
is Not so Essential, 26% feel that it is At times Essential and only 14% feel that it is Very
Essential.

Therefore, Advertising & Promotions do not play an important role in the decision making
process.
5. Which amongst the following fast food chains do you trust for pure vegetarian products?
a) RESTAURANT
b) KFC
c) Domino’s Pizza
d) Fastrax
e) Subway
f) Other:

RESTAURANT 33%
KFC 3%
Domino's Pizza 20%
Fastrax 0%
Subway 27%
Other 17%
6. Do you have a McDonald’s outlet in your city?
a) Yes
b) No
c) Not Aware
d) Other:

Yes 99%
No 0
Not Aware 1%
7. Which is your favourite product/products at McDonald’s?
i) Mc Aloo Tikki
j) Veg Pizza McPuff
k) Chicken McGrill
l) French Fries
m) McChicken
n) McVeggie
o) McSwirl
p) Other:

Mc Aloo Tikki 10%

Veg Pizza McPuff 6%
Chicken McGrill 14%
French Fries 10%
McChicken 20%
McVeggie 23%
McSwirl 10%
Other 7%
15. Is the product line or Menu in McDonald’s adequate?
(Do you ever feel that there is any kind of product category missing from their menu.)

d) Yes
e) No
f) Average

Yes 63%
No 13%
Average 24%
16. Which amongst the following services provided by RESTAURANT do you prefer?
a) Dine-in
b) Take Away
c) Home Delivery
d) Drive Thru
e) Other:

Dine-In 33%
Take Away 37%
Home Delivery 13%
Drive Thru 17%
17. According to you, has McDonald's been successful in positioning itself as a promoter
of 'Indian family values and culture?'
(This is in terms of the product offerings of McDonald’s and also the promotional campaigns
run on TV/Radio/Social networking websites, etc.)
f) Yes
g) No
h) Can't Say
i) Other
j) Other:

Yes 64%
No 13%
Can't Say 20%
Other 3%
References

 [Link]
 [Link]
 [Link]
 [Link]
 [Link]
 [Link]
 [Link]
 [Link]