George Mason University International Business Perspective Case Studies Please write the critiques from an international business perspective. This is for

George Mason University International Business Perspective Case Studies Please write the critiques from an international business perspective. This is for my international business class.One page, 1.5 spacedDON’T USE OTHER SOURCES JUST USE THE CASES AND THE CRITIQUES SHOULD BE BASED ON THEM.The one page of your case critique must include your critiques on all three cases assigned to each lecture. This means that you don’t have to write a long memo on each case. I would like you to read each of three cases carefully and share your own ideas based upon your reading. It can be but not limited to why you think the case is well written or not, what aspects the case should have considered or included, and the like. I just would like you to read the cases carefully and critique based upon your understanding of the case Mcdonald’s Expansion in India
McDonald’s, one of the largest fast-food franchises in the world, faced sharp criticism
regarding the company’s unsatisfactory attitude towards the Indian market. Founded in 1948,
McDonald’s would soon begin on its path to becoming a successful global enterprise. Its
suitable localization strategy and Velocity Growth Model has allowed McDonald’s to own
more than 35,000 stores in more than 100 countries. And they have found success in various
nations around the world, including Japan, Netherland, and the United Kingdom. With plenty
of information and experience, entering the Indian market did not seem like a challenge.
However, McDonald’s was not prepared for the distinct factors of the Indian market. A
variety of religious backgrounds and ethnic tension has shaped a unique cultural background
in India. It is McDonald’s new challenge to solve their problems and regain its position
within India.
Keywords: Halal Certification, Velocity Growth Model, Indian Market
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Introduction
On August 23rd, 2019, one curious McDonald’s customer threw a question on Twitter,
asking “Is McDonald’s in India halal certified?” McDonald’s India replied promptly with proud
and confidence:
Thank you for taking the time to contact McDonald’s India. […] The meat that we use,
across our restaurants, is of the highest quality and is sourced from governmentapproved suppliers who are HACCP certified. All our restaurants have HALAL
certificates. You can ask the respective restaurant Managers to show you the certificate
for your satisfaction and confirmation. (McDonald’s India, 2019)
For McDonald’s, it was evidence of their successful localization strategy, therefore,
expected enthusiastic responses and applause. Right after the post, 5.4 thousand twitter users
made comments and 981 re-tweeted it. It was a massive response. However, contrary to the
company’s expectation, many Indian customers showed aggressive anger and disappointment
towards McDonald’s: “What about #Jhatka certification?”(Bahri-Dhanda, 2019), “Is India an
Islamic country[…]What sort of sickularism & appeasement is this??” (Parashar, 2019), “Thank
you for clarifying. From now onwards, I will never eat McDonald’s – halal is not acceptable to
Hindus or Sikhs.” (Chintan, 2019)
With the hashtag #BoycottMcDonald’s, McDonald’s India faced the threat of boycotting
and an inevitable decrease in their profit. This public anger came from India’s long background
of religious conflict between two major religious parties: Hindu and Muslim. According to the
official government data in 2011, 79.80% of the whole Indian population is Hindu, whereas
14.23% is Muslim. (Exhibit 1) Therefore, McDonald’s consideration of Muslims cannot be seen
positively by the majority of the Indian population. Acknowledging the importance of the Indian
market and global expansion, McDonald’s India is trying to find an escape way to solve the
problem.
Company Background
McDonald’s was found by Maurice and Richard McDonald’s in 1948 in California. They
started out by launching a drive-in restaurant, which they named Speedee Service System. The
success of their first business led to a wider spread around the continent and Ray Kroc would
later join the company in 1954 as McDonald’s franchise agent. McDonald’s sought global
opportunities starting in 1967, starting from Canada. By the early 21st Century, McDonald’s
became one of the largest franchise companies, owning more than 35,000 outlets in more than
100 countries around the world. (The Editors of Encyclopaedia Britannica, 2018)
Company Values
McDonald’s values ‘responsible leadership’ that shapes new opportunities. Francesca
DeBiase, Executive Vice President and Chief Supply Chain and Sustainability Officer in
McDonald’s Corporation stated: “We recognize that the size and reach of our business puts us in
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a unique position to improve people’s lives and the environment. We want to use our Scale for
Good and continue raising the bar on what it means to be a responsible company committed to
people and the planet.” (McDonald’s Corporation, 2019) McDonald’s is constantly trying to seek
corporate social responsibility and put the environment as its global priority.
McDonald’s emphasis on ‘inclusion’ cannot be ignored. The company stated, “Diversity
IS Inclusion”, (McDonald’s Corporation, 2019) emphasizing the valuable positions of every
individual with different cultures, identities, and experiences. The company organized the Global
Diversity, Inclusion & Community Engagement team in order to share relationships with
community-based organizations. They constructed a partnership relationship with several
organizations, including Red Cross, WFF, Asia Society, and CATALYST. The Global Diversity,
Inclusion & Community Engagement team also provided an education portfolio, entitled ‘Food
for Thought’, Beyond bias. Moreover, their value of inclusion applies to workers and associated
members of McDonald’s. Employees Business Networks such as Global Women’s Leadership
Network and Working Parents Business Network promote an inclusive working environment,
being a catalyst for the company’s growth.
Growth Model
In March of 2017, McDonald’s introduced its unique growth model called Velocity
Growth Plan. ‘Velocity’ is a keyword for their growth strategy as quick food delivery, fast global
development and more customers are their future goals. McDonald’s Corporate asserted that
“Velocity makes the most of our competitive advantages, from our unmatched global scale to our
iconic brand to our tremendous presence in local markets around the world.” (McDonald’s
Corporation, 2019) The key pillars of their growth strategy are to retain the customers they
have, regain the customers they lost, and to convert casual customers into more committed
consumers. McDonald’s also identified three accelerators of their growth, which were digital,
delivery and Experience of the Future in the U.S. (EOTF).
The positive remark for launching Velocity Growth Model was shown in the early part of
2019 as the net income for the first quarter ended March 31 was $1,328.4 million, which equals
$1.78 per share. Stephan J. Easterbrook, president and CEO of McDonald’s in 2019 proudly
promoted their core belief and stated, “Our sustained performance gives us confidence that our
strategy is working, as more customers are experiencing a better McDonald’s every day.”
(McDonald’s News, 2019) There are various fields that McDonald’s successfully entered, but the
most significant success was the application of technology in their business. Dynamic Yield’s
decision technology allowed McDonald’s to diversify its drive-thru menu and the systems are
employed in more than 700 drive-thrus across the US. Easterbrook added, “By acquiring
Dynamic Yield, we also have access to strong data science and engineering talent, who will help
us stay ahead of the curve when it comes to connecting with our customers in more personalized
ways.” (Fleming, 2019) The success of technological development in ordering, delivery and
customizing allowed McDonald’s to develop future competitive advantages. They are now
testing out even more dramatic steps, such as robotic fryers. Through the process, McDonald’s is
always trying to be positioned one-step ahead of its competitors.
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McDonald’s in the Global Market
History of Global Expansion
The first international franchise opened in 1967 in British Columbia and another store
opened in Costa Rica later that year. Over a six-month period in 1971, McDonald’s expanded to
three new continents, as stores started in Japan, Holland, and Sydney. McDonald’s first emerged
in South America in 1979 when it opened a new store in Brazil. McDonald’s finally expanded to
the sixth continent, Africa by opening a restaurant in Casablanca, Morocco in 1992. Four years
later, the company made the expansion into its 100th nation, Belarus, becoming the franchise
that opened a new restaurant every three hours. Recently, it has grown to have 38,695 restaurants
in more than 119 countries. (James, 2009)
Global market strategy
Based on its core competencies of serving hot, delicious food quickly, McDonald’s has
entered many countries. While maintaining these core competencies, McDonald’s is also trying
to differentiate in order to enhance their competitiveness in a new market. One way they achieve
this is by developing different menus from region to region, which reflects local preferences.
McDonald’s takes the idea “think global, act local” to heart.
McDonald’s in Singapore
There is a local dish called “Nasi Lemak”. It is a fragrant rice dish cooked in coconut
milk and commonly eaten for breakfast. Nasi Lemak usually comes out with side dishes like a
fried egg, cucumber, ikan bilis, and some spicy sambal chili. McDonald’s successfully changed
Nasi Lemak into a burger. The Nasi Lemak Burger includes juicy coconut-flavored chicken
patty, fried egg, cucumber slices, caramelized onions between semolina buns. It not only
embodied the rice dish itself but also embodied the side dishes together, increasing the
satisfaction of local customers.
Also, McDonald’s figured out that Singaporeans enjoyed gula melaka, coconut, and
Bandung. So the company created a special menu regarding this preference. Chendol McFlurry,
which contained gula melaka sauce and bits of coconut shavings, and a Bandung McFizz, which
tasted like Bandung, a rose syrup drink enjoyed by locals, had drawn an explosively positive
response from the local people. (McDonald’s Singapore, 2019)
McDonald’s in Japan
McDonald’s Japan has a special menu during the fall. In Japan, there is a festival
honoring the autumn moon. McDonald’s got the idea from this event and created “Tsukimi
Burger”, which contains a big moon-shaped egg. You can enjoy the item with a Yuzu McFizz
drink, which uses Yuzu, a Japanese lemon.
There are also special flavored fries in Japan. One flavor is called the “Mentai-Mayo”.
Using mentai sauce, which is widely enjoyed by Japanese people, McDonald’s offers a pleasant
experience of combining the fries and the likable sauce for local people. (Matousek, 2018)
McDonald’s in the Netherlands
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McDonald’s is selling a Stroopwafel McFlurry with famous Dutch cookies for a limited
period of time in the Netherlands. Also, it sells McKrokets all year round. The McKroket burger
uses an ingredient called “kroket,” which is a deep-fried, ragout-filled snack coated with bread
crumbs. It was originally a French invention in the 18th century but became a favorite of the
Dutch. The McKroket continues to be enjoyed with high popularity since being added to the
menu when McDonald’s opened the first store in the Netherlands in 1971. (Matousek, 2018)
McDonald’s in the United Kingdom
Regarding the history of British Breakfast and the culture of having breakfast,
McDonald’s extended the time for serving a breakfast menu in the UK till 11 a.m. exceptionally.
Also, the UK is providing a breakfast menu like a Bacon Roll (butty), a hashbrown (rasher), and
a cup of English breakfast/builder’s tea. If you order these menus together, you can easily enjoy
a simple version of a “royally British breakfast”.
They also revamped their menu, as many in the local market found it to be dry and dull.
For example, they revamped their Bacon Roll to be made with a delicious sourdough bun, higher
quality of bacon, HP sauce, and a generous amount of sides. McDonald’s also provides its
customers with a Builder’s tea, a classic English breakfast tea. For many fast-food companies, it
can be a challenge to provide their customers with a great quality experience. But McDonald’s
worked hard to provide local customers with the experience of an amazing British breakfast. The
company stuck their necks out to reinvent the wheel and locals were impressed. (Matousek,
2018)
Challenges of Global Expansion
Not everyone loves McDonald’s coming to their countries, however. Many people see
McDonald’s as a symbol of American economics that spoils cultural diversity all around the
world. European nations especially view American-style fast food as an insult to their culture
and national and traditional foods. Bermuda banned all fast-food restaurants to stop McDonald’s
from expanding to the island. A French farmer, Jose Bove, and some other activist groups were
admired after they destroyed a McDonald’s construction site in 1999, stating that McDonald’s is
“bad food”.
Localization also causes some problems. To some countries where a lot of ethnic and
religious groups coexist, localization and adaptation toward one of these groups sometimes cause
a backlash from the other groups. In India, a halal burger aimed at Muslim customers is incurring
the resentment of Hindu customers. This is because of the long history of religious conflict
between Muslims and Hindus.
McDonald’s in Northern Indian Market
Challenges in the Indian Market
Halal Certification
As mentioned previously, McDonald’s India is currently dealing with the backlash that
was generated by them tweeting out that all their restaurants are halal certified. But this isn’t the
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first time that McDonald’s has had to adapt its business strategy in the country. In 2012,
McDonald’s found itself at the receiving end of Hindu protests. This came as a result of
McDonald’s playing to open restaurants near some of India’s most revered religious centers and
pilgrimage sites. (Nelson, 2012)
McDonald’s hasn’t done a very good job of realizing just how important religion is to the
Indian people and their culture as a whole. It is the one piece of their culture that they are truly
struggling to fully understand and adapt their business strategy in the market to. Additionally,
while it can be applauded that McDonald’s India has taken the step to make sure that a minority
group in the country feels welcomed within their restaurants, they can’t completely ignore the
needs of the majority group.
Connaught Plaza Restaurants Ltd Battle
Throughout the world, McDonald’s relies heavily on the use of franchisees and joint
ventures in order to aid its rapid expansion. In India, its strategy was more focused on joint
ventures, in the hopes of partnering with those who already understood the market. They relied
on two different companies to expand into India: Connaught Plaza Restaurants Ltd (CPRL), who
managed their northern locations, and Hardcastle Restaurants (Westlife Development Ltd),
which operates in the country’s south. Unfortunately, the relationship with joint venture CPRL
quickly soured.
The arrangement with CPRL was a 50-50 joint venture between McDonald’s and CPRL
led Vikram Bakshi. Since 2008, there have been issues with differences over financial issues, as
McDonald’s believed that Bakshi was poorly managing its restaurants and mismanaging funds.
They saw Bakshi as the reason for the lack of growth in the region. (Exhibit 2) This led to both
sides creating offers to buy the other out. Both sides were rejected, and in 2013, Bakshi was
ousted as the managing director of CPRL. Soon after Bakshi moved the National Company Law
Tribunal (NCLT) in Delhi to rule in his favor over his firing and loss of his company. In
response, McDonald’s went to the London Court of Internal Arbitration, who asked Bakshi to
sell his stake in the venture for a fair price valuation.
Since then, the NCLT has been taking another look at the issues outlined in the case.
However, McDonald’s India has been forced to close all of its locations in the northern region
while it works through the situation with Bakshi and negotiates with other companies who may
potentially operate these locations in the future.
Competitors
While McDonald’s has been dealing with its issues with CPRL, three fast-food chains
with similar offerings have risen to fill the void left behind. These competitors are Burger King,
Burger Singh, and Jumboking. And while not their main competitors, Fast-food rivals Subway
and Kentucky Fried Chicken (KFC) have seen a five and two percent traffic increase (2017)
since McDonald’s was forced to leave.
Burger King
Not only are they one of McDonald’s main competitors here in the states; they are a
competitor in India as well. At the time that McDonald’s was leaving the market, Burger King
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had just opened its 100th store in Northern India. (2017) They have doubled their footprint on the
market since the prior year and have had 64 percent annual revenue growth in the past three
years. (Vyas, 2019) Being the second-largest fast-food chain in the world, they also have the
resources to continue their expansion. Like McDonald’s, they also experimented with their menu
to create unique creations for the local market. (Burger King India, 2019)
Burger Singh
Burger Singh, a craft burger chain in northern India has plans to expand its company by
opening 30 new restaurants in the market. While currently a new and local brand, only being
founded in 2014, they believe that “these are the next steps in building Burger Singh into a great
and enduring worldwide brand.” (Burger Singh, 2017) Their unique approach to burgers and
their fun and hip brand image has helped them to secure and solidify a strong customer base.
Jumboking
Jumboking is an Indian-style (vada paav) fast-food burger chain based primarily in
Mumbai. They began as an early franchisee of Burger King and much of their business model is
based on that of McDonald’s and Burger King. When McDonald’s closed the doors in the
northern half of its Indian market, Jumbo King responded by opening 200 new stores. This has
since put them on the path for a very high growth trajectory. (Jumboking Foods, 2019)
Why the market is important
Currently, India holds the fifth largest economy in the world. By 2025, they expect their
economy to double to become five trillion dollars. (Govindarajan & Venkatesan, 2018) While
Indians tend to have a preference towards more local establishments over large multinational
firms. However, there are three main reasons why it is important and valuable for McDonald’s to
do well in the Indian market.
Growth in Infrastructure Spending
Over the past three years, India has seen much growth in its infrastructure spending. They
have increased their spending on infrastructure buildings such as cities, hotels, roads, and
hospitals, with a big push on renewable energy. The creation and improvements of these
infrastructures offer more potential locations for new restaurants for the company. Subsequently,
this will lead to an influx of new customers from not only the local market but those visiting the
improved areas well. (Govindarajan & Venkatesan, 2018)
Strong Emerging Middle Class
If McDonald’s can overcome their challenges, they will do extremely well on India’s
economic pyramid. India is the world’s second most populated country. The population there is
roughly four times the population of the United States. Three-fourths of the Indian population
lives in what is considered urban areas. The per capita income is still very low there, but Indians
still like to spend their money on costly products and on eating out. India’s consumers get a lot
of their brand awareness through media channels, such as the internet, TV, and Magazines.
Because of the economic growth in the country, its middle-income population is growing larger
and larger each day. This coupled with the large population makes India an ideal target for
McDonald’s. (Khandelwal, 2016)
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Tech Startup Boom
McDonald’s is starting to focus heavily on its own technological advancement. They
believe technology is the future of fast food. This makes India a great market for them to be in,
as India is experiencing a boom of tech startups. India’s IT …
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