McDonald's in India

McDonald’s uses a multidomestic strategy in India. This can be seen from its use of local suppliers, its adaptive pricing strategies and the removal of the company’s representative product, the “Big Mac”, and replacing it with a range of new products specifically catered to the Indian culture and preferences.

Unlike in other countries, a large proportion of Indians do not eat pork or beef, and many others are vegetarians. It is therefore practically impossible for McDonald’s to succeed with its international line of products such as the big Mac, which focuses on beef products. Moreover, with each household spending more than 50% of income on food and beverages, and more than 70% of the population earning less than $2,000 annually, the company’s usual target segment of the middle-class households is unable to afford its products. Hence, it can be seen that McDonald’s needs a high level of responsiveness and adaptation to the Indian market. In addition, the company opted to enter the market as joint ventures with local managers, clearly showing no need of global integration, but rather, emphasis on local adaptability.

An important factor for the success of McDonald’s was its reliable distribution channels for supplies from local suppliers. As the food chain and distribution channels in India were inefficient, and imports were taxed at a staggering 65%, it was important that McDonald’s obtain its raw materials from local suppliers, but at the same time ensure that the supplies were of good quality, and were delivered efficiently. This would be necessary to ensure that the company maintains a high standard of quality, while at the same time ensuring low costs of production. Given the state of the agricultural industry and the high import taxes in the country, setting up a reliable distribution channel for McDonald’s creates a valuable resource that is rare, costly to imitate, and non-substitutable. It hence creates a sustainable competitive advantage for McDonald’s in India.

Another important factor of success is the pricing adopted by McDonald’s. Unlike in other parts of the world, the consumers in India are highly price sensitive to food, since more than half of their income is spent on food. Thus, it was important that McDonald’s sets acceptable prices for their products in India. This was not an easy task, as the company had to set a price that was affordable to the Indians, but at the same time, not undercut its profit margin. Hence, the company