The McDonalds Corporation refers to a multination fast food establishment that began operations in 1940. The company, though headquartered in San Bernardino, California, United States, operates in over 100 countries worldwide. The founders were two siblings namely Maurice and Richard McDonald that introduced the speedy service system in catering for the clients' needs and demands. It has various market segments by geographical location that include International Lead Market, the United States (primary market), Foundational markets, High Growth markets, and Corporate Markets. Essentially, McDonalds is a franchisor. The current franchise agreement is the company purchases or owns land and the building then secures a long-term lease the location. The franchise has the sole responsibility of paying for the equipment, decor, seats, and signs. The company has great footing various countries that include but not limited to China, India, Russia, Italy, Korea, Canada, and Germany. The menu includes cheeseburgers and hamburgers, Big Mac, various chicken sandwiches, wraps, Chicken McNuggets and salads. During the limited-time promotion, the company sells different products.
McDonalds is the world's leading restaurant by revenue, as it serves an estimated 70 million people in over hundred countries. Approximately, it has 37000 outlets in the contemporary setting. The company recently responded to the growing backlash claiming that its food is unhealthy by including healthy diet in its menu. The healthy menu includes fish, smoothies, fruits, and salads. The company obtains its revenue from royalty, rent, and the fees paid by the franchises. Additionally, it also earns form the restaurants it owns. It is worth noting that it is the second largest private employer in the United Sates after Wal-Mart. It employs close to two million people, 1.6 million of who are employees of the franchises. Recently the company's fortune took a downturn when its stocks traded down by at least one percent. The fourth quarter of the last financial year (2017) saw a revamp it the share trading as the stock sold for $1.45 per share, which was up from $1.32 per share. The company's total revenue fell by at least 5% from $6.34 billion to $6.02 billion (Gao, 2018).
Analysis of Global Operating Environment (PESTLE Framework of India)
In the political environment, the company's policies are subject to government policies regulate the fast food industry due to the health and obesity concerns associated with the same. The country is one of the largest democracies in the contemporary times and runs on a federal form of government. India has the most advanced taxation systems charged by the Union Government (George, 2012). The types of taxes charged include the service taxes, income tax, utilities, octroi taxes, sales tax. The government highly restricts the propensity to open fast-food restaurants. The good relations with the government form the much-needed foundation of the creation employment and further expansion into the international market.
In the economic front, India's GDP stands at $2.264 trillion making it one of the largest economies in the world. The predicted economic growth rate is 5% ceteris paribus, which is an improvement of close to 0.98% from the previous years (Chowdhury, 2016). The country operates in the low cost niche, which is a high target market due to the sheer number of the clients found therein. The company imports raw materials in bulk such as beef and potatoes since the local suppliers may not meet the required quantity. The only hurdle in that regard is navigating the foreign exchange rates that keep on fluctuating. The company suffered during the financial crisis or the recession in 2009, but quickly bounced back with the help of austerity measures.
In the social aspects, the Indian people are quite aware of the health risks posed by fast foods. Therefore, the people have very high expectations form the company that means that the company includes organic menu to capture the changing customer tastes and preferences. It is imperative for the products to be at the right place at the right time. The company should also get the quality right to ensure that it attracts new clients while maintaining the existing client base. Generally, the ambience is always decent to the client's expectation and the subsequent satisfaction. The advancement of the technological environment allows for easy payment, wireless internet connection, improved supply chain management, and better ordering systems that permit fast service. The competition in the Indian fast food market is quite high with companies such as Dominos and Redix have a formidable share of the market.
The first risk is the profound or the rampant social instability associated with the social protests or movements that normally disrupt the social and political stability. By definition, the movements have effects on businesses and the populations at large. Closely related to that is the failure of the national government that at times to the flouting of the constitution, rampant corruption, and political deadlock. Finally, underemployment and unemployment are quite common in India. Underutilization or the unemployment of the productive part of the employment is the cause of social instability in the country.
Feasibility of the Integration of the Ecommerce
The Indian fast food market is growing rapidly due to the changing lifestyles and the fastest growing middle class in the world currently. India's fast food industry is growing at an impressive rate of 24-31% annually (Hussain, 2014). The market potential is responsible for the establishment of the major fast food brands that include but not limited to the Yum Brands, McDonalds, Big Square, and Dominos. Most of the mentioned brands are posting appreciable, splendid growth. There is a large room for growth in the tier-II and tier-III cities, meaning that the future of the industry expansion lies in the mentioned cities.
The stiff competition for the share of the market is responsible for the use of various promotional and marketing strategies that include putting up billboards, social media presence to reach out to the young tech-savvy generation, and investment in both the print and mainstream media advertising. Last year the estimated market value for the Indian Fast Food Industry stood at $435 billion (Hussain, 2014). By all standards, India has all that it takes to be a competitive nation in the international business front. The Indian population is currently undergoing a change in lifestyle in that most of the young people, especially the ones in the urban centers, are rapidly embracing the Western culture such as the consumption of fast foods such as pizza and burgers. The increase in the use for social media is responsible of the adoption of the Western ideals and culture by the dynamic young Indian population.
Justification for the Entry into the Indian Market
The rapidly changing lifestyle and the growing middle class, India has the fastest growing fast food Industry in the world rivaled only by China. The industry is growing at an estimated rate of 25% annually, thereby attracting the leading global fast-food brands like KFC, Dominos, and McDonalds (Kaushal & Pathak, 2015). The country is stable since the last five quarters of the company's operations saw a constant increase in sale and the profitability margin. The company has at least three stores for one million people living in India. The country has profound consumer momentum that certainly informs the exponential expansion going on currently. India is the seventh largest country in the globe by area and the second most populous country with 1.2 billion people. It has diverse cultural compositions and one of the leading democracies now. The country's growth in GDP has been stable in the past decade coupled with the continuous growth in economic liberalization that began in 1991 and continuing at present. The country has been opening its doors to foreign companies and investors to promote economic growth.
Potential Risks Market Expansion Using E-Commerce
The first risk is the technical infrastructure. Launching of sites in the international market does not necessarily mean that the servers in India have to host the sites for the markets. It is impossible due to the limitation in the local infrastructure. The company may mitigate the problem or the latency issue by using robust solutions distributed smartly that enable the spread of the loads across large regions that the country may sustain. The second problem is the geopolitical or the logistical status. The use f the ecommerce or the internet for business across the border normally increases the cost of transaction by at least 20%. The bureaucracies and the governments have the final say in the rules, regulations, and at time the procedures to be followed (Singaariya & Sinha, 2015). The solution is to adhere to the rules and the laws of the nation (India) to avoid unnecessary disruptions of business. Finally, the lack of the relevant payment systems is hindrance to the establishment of ecommerce for international business. The solution is to find a reliable system such as MasterCard that is reliable and enables the clients transact business without much delays or hindrances.
Ways to adapt to the Operational Strategies
Changing the internet architecture coupled with the improvements in the development tools and software architecture is a functional, great strategy since is helps in the differentiation of the companies with presence in e-commerce such as McDonalds. The strategy provides clear differentiation that is essential in a competitive environment such as India. However, the company should not adopt generic packaged applications, but rather tailor the deployment of the internet applications using particular applications. The customization of the applications allows for greater continuity and sustainability, which are the sources of competitive advantage. Customization may be quite expensive. To save on cost, the company may collaborate with other companies in the development of better, functional software.
Chowdhury, P. R. (2016). An Impact Analysis of GDP on a Country's Household Consumption Expenditure and It's Savings Pattern-Study Taken with Consideration of India. Adarsh Business Review, 3(1), 45-49.
Crawford, A. (2015). McDonald's: A Case Study in Glocalization. Journal of Global Business Issues, 9(1), 11-34
Gao, H. (2018). Cross-Cultural Management Strategies of McDonald's in France-Based on a Multimodal Discourse Analysis of Three Print Advertisements. IJASSH.
George, P. A. (2012). Environmental accounting in Indian context: perspective on environmental performance and social accountability of business. Indian J Commer, 65(2), 9-19.
Hussain, S. (2014). The impact of sensory branding (five senses) on consumer: A case study on KFC (Kentucky Fried Chicken). International Journal of Research in Business Management, 2(5), 2347-4572.
Kaushal, L. A., & Pathak, N. (2015). The causal relationship among economic growth, financial development and trade openness in Indian economy. International Journal of Economic Perspectives, 9(2), 5-24
Singaariya, M. R., & Sinha, N. (2015). Relationships among per capita GDP, agriculture, and manufacturing sectors in India. Journal of Finance and Economics, 3(2), 36-43.
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