McDonald's India: A Report on Intercultural Business Competencies

This report examines the intercultural business competencies of McDonald's in India, focusing on the challenges the company faced and the strategies it implemented to overcome them. The report identifies three primary problems: religious and cultural constraints, poor management and slow service, and the shutting down of restaurants in certain regions. To address these issues, McDonald's adapted its menu to suit Indian tastes and religious preferences, improved its management practices through training and time management initiatives, and optimized its supply chain. The report highlights the importance of market research, understanding cultural nuances, and employing effective strategies like penetration pricing and employee training to achieve success in a diverse market. The analysis also emphasizes the significance of brand management, customer satisfaction, and adapting to local competition to maintain a strong market position and build brand loyalty.

Intercultural business
competencies

EXECUTIVE SUMMARY
Intercultural competences is a process of developing targeted skills, knowledge, strategies
and ideas that helps company to interact inter-culturally (Kumari and Nirban, 2018). It refers to
the ability of company that how it functions effectively in different cultures. Present study
includes the problem faced by McDonald's in India. The first problem faced by the company is
religious and cultural problem for which company has provided solutions by changing the menu
and price according to the Indian economy and customer needs. Second problem in the report is
poor management and slow service. Company solved this problem by giving training and
induction sessions, doing proper recruitment and time management. Lastly report includes the
third problem i.e. shutting down of McDonald's in half of the India. Company solves this
problem by changing supply chain.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION...........................................................................................................................4
PROBLEMS FACED BY McDonald's IN INDIA..........................................................................4
Problem 1: Religious and cultural constraints............................................................................4
Problem 2: Poor management and slow service.........................................................................7
Problem 3: The problem of shutting down of McDonald in half of the India..........................10
CONCLUSION..............................................................................................................................12
RECOMMENDATIONS...............................................................................................................13
REFERENCES..............................................................................................................................13

INTRODUCTION
To know the tree firstly understand how deeply it is rooted in ground with this thought
entering in any intercultural business, the business has to understand the culture of that place
(Swartz and Luck, 2018). Intercultural business competencies is making business with different
culture by entering in market and competing with other company present in market. McDonald's
company is a fast food company of America. The company was founded in 1940 its restaurant
was firstly opened in Richard and Maurice McDonald's in San Bernardino, California, US. In
India McDonald established for first time in 1996 its restaurant in Basant Lok, Vasant Vihar,
New Delhi. For the first time in the world the restaurant did not serve beef in its menu. The
present report will study about the problems that is faced by the McDonald company in India.
Study will be done by taking three main problems with its solution and justification of the
problem. All three problems will be discussed separately.
PROBLEMS FACED BY McDonald's IN INDIA
Problem 1: Religious and cultural constraints
Problem faced:
One of the major problem that McDonald's faces in India was religious and cultural
issues. As McDonald's was carrying a public image of international food chain and do not match
the Indian standards. There was a concern in the minds of Indian people that how the burger is
made, what is the cost and it serves 90% non-veg snacks. India is a big country and lands of
ancient river, company have to keep in mind the cultural, social and economical factors which
affects its profits. India is very diverse and has different religion and communities like
Buddhism, Sikhism, Hinduism, Islam, Christianity and Jainism having different beliefs and
values. 80% of the Indian population practice Hinduism which prohibit non-vegetarian food.
Because of these issues McDonald's face decrease in market share in India, complexity in
developing supply chain, making a brand image (Hickman, Louis, and Mesut Akdere, 2018). As
McDonald's is international brand, company serves only non-veg food so in India, people
protested in front of their restaurants. Company also faces cultural problems in markets of India
which may destroy its reputation and stop them from expansion. Indian people prefer family
dining instead of breakfast concept. This problem makes difficulty for enterprise in marketing
and attracting new customers. Enterprise need to provide training to employees to maintain
relation with the customers and make them satisfied. Company also had to satisfy the authorities

that their products does not contain pork and beef. Organisation also faced problems in
maintaining the taste and price of its product according to the Indian markets. Facing all these
issues was not enough for McDonald's, company also need to compete with its competitors like
KFC who also entered by selling non-vegetarian products (Schorr, Voigt and Rose, 2019).
Solution:
After facing the issues of culture and religion in the Indian markets, McDonald's should
conduct a market research and constant quantitative and qualitative surveys which helps
company in identifying the lifestyle of Indian people, their needs, likes, dislikes and purchasing
power. Company believe in developing close relationship with their customers and suppliers, for
this organisation has find solution to these problems:
 As Indian population is price sensitive, company need to conduct price sensitive studies
for determining price of the product according to the purchasing power of the people.
Manager of company must review the economical changes such as inflation rates while
determining the price. Enterprise need to produce their products according to the taste of
Indian markets so that customers like their products and are willing to give particular
price. Company may use market penetration strategy which measures the level which
product is accepted and purchase by the customers (Rosa and Karimov, 2018).
Organisation need to use this strategy to sell its existing products in the existing market in
order to increase market shares. McDonald's survived because of its good understanding
of Indian economy. Organisation should use aggressive and massive expansion strategies
to achieve its objective and establish its existence in the Indian market. Company should
use penetration pricing strategy in order to target medium and lower class people.
 Company need to increase its market share by providing restaurant which projects fine
dining with the family. Company need to this because Indian prefer family dining more
than breakfast combos. Company should train employees and conduct induction session
for them. Company should interact with the employees and make them communicate
with the customers so that they can develop good relations with them.
 India having different cultures and majority follows Hinduism who do not eat non-veg.
Company need to offer only vegetarian food (Dziatzko, Stehr, and Struve, 2018).
Organisation have cleared with the higher authorities that their product do not contain
pork and beef. Enterprise should understand the cultural difference and segregate the

employees and cooking tools in non-vegetarian and vegetarian. Company can introduce
vegetarian snacks such as Aloo tikki burger, spicy potato cakes and Mc Spicy paneer
burgers. Company need to produce egg less mayonnaise to put in the burger. Enterprise
understands the local taste and make products according to the local taste.
 McDonald's has positioned itself as a family restaurant and has banned serving alcohol
and smoking (Plumanns and et.al., 2018). This change has made 48% increase in the
footsteps and increase sales by 30%. They also created value for the customers by
serving soft cone of Rs. 7. This has increase the brand image. Organisation can do
customer research and identify the needs and than add new products in the menu. The
Happy price menu can be a marketing initiative which can be communicated in funny and
funky style to attract new audience and creating brand awareness.
Justification for the solution:
McDonald's need to innovate products constantly and maintain customer base by
satisfying them. In order to preserve its competitive advantage, company need to continuously
adopt new concepts in its operations and marketing strategies. Providing Indian markets with
vegetarian food and at low price using penetration strategy will benefit company in entering in
new markets, it reduces competition, increase sales, building brand image, brand loyalty,
increase market shares and identify potential buyers (Usunier, 2018).
By analysing the needs of the customers, company can also introduce change or services
which can be sustained for longer period and benefits in increasing profits. McDonald's has
adopted technologies and started online delivery and booking orders and family can organise
birthday parties.
Offering products at low cost, changing menu according to the purchasing power of
people and adding new products in the menu benefits company in pulling new customers and
make them purchase its products. Company also offers vegetarian food as well as non-vegetarian
food, enterprise has kept in mind the cultural and religious factors in serving good quality food.
Its main objective is to develop good relation with the customers and make them loyal against
their brand. Improving the quality standards of products by using food processing technology
helps in creating manufacturing installation in India (Grzybowska and Łupicka, 2018).
Brand management is very important to build powerful brand identity. It benefits
company in building its reputation and make company look different from its competitors. It

creates values and attract potential customers. Fulfilling all the needs of the people McDonald's
have conquered Indian markets. Company has also compete with its competitors like KFC which
sells 90% non-vegetarian food and is not so famous in Indian markets. Customers prefer
McDonald's against KFC because company has 50% vegetarian and 50% non-vegetarian food. It
benefits company in attracting both types of customers (Wilczewski, Søderberg and Gut, 2018).
Problem 2: Poor management and slow service
Problem faced:
McDonald's faces poor management problem which has decreased the sales by 20%.
company do not focus on quality of food produced and do not care about employees working
their. The problem was identified when all the franchises was struggling with new items in the
menu card which has slow down the service. Change in the technologies and preference of
customers make difficult for them to manage. From the survey it has been identified that 25
franchises face nightmare in operating. New and high priced products take long time to make
thus it increases the service time. Complicated menu makes it difficult for employees to manage
and operate the customers. Due to slow service of foods customers are unsatisfied and they do
not feel values (Bourn, 2018).
The average waiting time for delivery of food is 208.16 seconds but 10 years ago the
waiting time was 167.1 seconds. Increasing the time of service reduce customer base and
decrease profits of the company. Poor management and slow servicing has dropped the visit of
customers by 2.1%.
Change in technology also makes operations complex. As McDonald's is regularly
updating the technology, employees found difficulty in operating the technology. Employees get
demotivated when they are not able to perform well due to adoption of change. Changes in the
organisation reduces the efficiency of work and increases employee turnover. Employees cannot
cope up with the technologies very soon, they face problems in operating online payment
services and book order. Continuous change in the technology give stress to employees which
make them to leave the company (Woo, 2019).
Solutions:
McDonald's have faced many problems related to management and poor service.
Company need to change its menu so that it is less complex and employees can easily manage.
Employees need to be provided with the training and induction session so that they know how to

use new technologies. Company also need to provide rewards to employees so that they feel
motivated and perform better. Training and induction sessions: Company should provide induction and training session
for the employees to give information about the technological changes and any other
change in the strategies and process of the organisation (Varela, 2019). McDonald's
should provide training to employee in using technologies and perform effectively and
efficiently. Induction is given to new employees to make them understand the procedures
and system of the company. It make easy for them to settle quickly in new environment.
They feel valued and motivated so they perform better. McDonald's can also provide
induction to new employees and make them feel as a part of their family and get to know
the organisations rules and regulations, mission, vision, organisational structure,
responsibility, quality management and important standards to maintain health and safety.
It is important to provide training to employees so that they feel valued and encourage
them to engage in the organisation to develop relations with customers. Training will
increase productivity, time, money and retention of employees of McDonald's. Time management: Company expects a good time management skills from its employees
so that they can deliver food on time (Eizaguirre, García-Feijoo, and Laka, 2019). Time
management solve the problem of slow servicing. Company need to improve its
technology so that employees do not face any problem in receiving orders. Employees
need to schedule their time to provide fast service. Delivering food on time makes
customer happy and satisfied that they will come again. Through time management work
can be managed and goals are reached. It improves the quality of decision making. It also
reduces stress and make employees calm so that they can make and deliver food on time.
Taking stress and not following the schedule will reduce the efficiency of work and
customers will be angry. They will not remain loyal to the brand.
 Recruitment: McDonald's should hire skilled candidates so that they can perform better
and know how to use new technologies. Recruiting skilled candidates helps company in
managing their customer base, creating the quality of food and manage the issues of
customers and resolve them (Kumari and Nirban, 2018). Recruitment new candidates is
an advantage because they bring new ideas and strategies which can be used to satisfy

customers, improve the management and service facilities. Company can take test of
employees so that they can be evaluated on the basis of their performance .
 Reward management: McDonald's should provide rewards to employees to motivate
them in engaging with the customers. Main clients of company is customers from which
they generate revenue.
Justification:
Company can improves its poor management and services by providing training and
induction sessions, reward management. Company need to recruit right person at right place so
that work is done in an effective and efficient manner. McDonald's will benefits from this as it
will increase the retention of employees because they feel valued and they will be loyal to the
organisation (Swartz and Luck, 2018).
Employees find difficulty in using the new technology, they feel demotivated and want to
leave their job. Training provides confidence in the employees and gives available information to
them so that they can adopt the changes quickly. Training helps company to fulfil customers
needs and manage operation of the company effectively.
Time management will helps employees to improve their services and provide food on
time. Fast delivery of food will make customers happy and make them return to the store
quickly. Employees need to schedule their task according to the time so that they do not get
stressed. Stress makes their performance slow. Thus time management is important in every
organisation.
Recruitment of right person for the right job on right times benefits company in reaching
their goal fast. Hiring skilled and knowledgeable employees brings new strategies and ideas
which helps McDonald's to increase its customers and retain them for long period (Dziatzko,
Stehr, and Struve, 2018).

Problem 3: The problem of shutting down of McDonald in half of the India.
Illustration 1: supply chain of McDonald's
(Source: McDonald Supply Chain in India, 2019)
The McDonald company enter in Indian market with joint venture of 22 years old
partners. The first partner of company was Connaught Plaza Restaurant(CPRL) which has outlet
over the part of north and east India. The company cancelled its franchise agreement with CPRL
which was in the hand of Vikram Bakshi, its first partner since 1996. In the controlling of Bakshi
the company faced less supply of burger in Asia which is third largest economy. It caused
company to close its 43 outlets in Delhi in July, another reason was expiry of licence which
influence McDonald to discontinue its chain with the CPRL company. The chain of burger hit
the business to shut down in many parts of India (Grzybowska and Łupicka, 2018).
Beginning of problem was when Bakshi began as managing director of the company appointed
by McDonald. The company protested that Bakshi was getting benefits through business interest
in management of food chain. The company sued on Bakshi through company law board in
2013. The statement given by Bakshi was that company wants to remove in nature of oppressive
and make Bakshi to control its food chain which intended to be at lower valuation. In 2014

McDonald company tried to make resolution with Bakshi and offered Rs. 120 crore for stake
holding which was 50% in CPRL (Bourn, 2018). When Bakshi valued own stake he founded that
the company valued Bakshi stake at lower price the stake holding of Bakshi in the company was
at Rs. 1800 crore. This made conflict among both and failed to resolve the problem. Bakshi even
claimed that the new director Robert Vee Chong tried to pressurise indirectly to suppliers to stop
supply 169 restaurants of CPRL. Bakshi states that CPRL will run the business in the name of
McDonald brand and will follow all the policies of trade mark, operating, design and
specification. Despite of franchise agreement being discontinued by McDonald company.
Solution:
The McDonald and CPRL company gained solution of the problem in which the board
meeting was held in the company leaded by four members. The members in the meeting were
two representative from McDonald, Bakshi and his wife of Bakshi. The solution made in
meeting was to increase the brand growth in parts of north and east India which was done as the
company in 2012 opened new store and McDonald expanded its business to southern and
western part of India. The company can developed new supply chain in Indian market with
developing close relationship with the suppliers. With the help McDonald the local suppliers get
help to develop and began their business as global suppliers to the company. The world class
facilities of food manufacturing can be provided to Indians (Varela, 2019).
The supply chain can be multilayered which can be further bifurcated in two categories
that is tier-1 which deals with the 14 main suppliers which supplies chicken patties and
vegetables which was supplied by vista processed food pvt. Ltd. Tier-2 include the supply of
processors and growers which provide potato, poultry items, etc. these can be supplied with the
help of refrigerated transport lorries, multi tempered lorry will help to maintain the quality of the
supplies. Indian restaurants will be able to provide fast delivery to its customers. This can be
included as the important aspect in the logistics. The racks and empty bottles can be recycled to
and used further and the crates of plastics can be used again but with assurance of quality of the
buns in them maintain their quality.
Justification:
McDonald companies in India can be able to get many suppliers which helps the
company to grow its profit and will increase its brand reputation among the Indians (Eizaguirre,

García-Feijoo, and Laka, 2019). Through developing new food supply chain the entrepreneur
will be encouraged to do business at global level and become the part of supplier chain globally.
McDonald company make new art of manufacturing food with introduction of new technology in
the company to develop in the food manufacturing industries which will increase the standard of
the company in the Indian market. Facilities provided by suppliers with maintaining the hygienic
standard will attract many customers to visit McDonald.
Due to supply chain the company is growing around 30-40 percent of its business every year.
The distribution partners of McDonald can make agreement to with the company with the proof
of signed contract exhibiting no control over the suppliers. With effective distribution company
increases supply centres in the further big cities of India that are Mumbai, Noida, kolkata and
Bengluru it increased its supply through logistics by 80 percent. Around 250 restaurants are able
to provide fast delivery with the help of following multilayer supply chain system. By making
franchise agreement which the suppliers helps to reduce the disputes and the contract made by
the company built the trustable relationship between the company and the suppliers. As
McDonald maintains its efficiency ratio of inventories up to 36 (Hickman, Louis, and Mesut
Akdere, 2018). the food safety and health criteria is also maintained by organisation critical
control is taken over the point of HACCP certificate and other is distributor quality maintenance
program. Supplier includes the essential of HACCP system of controlling quality. The
refrigeration and movement of the product in the company will be 1 – 4 degree chilled products
and for frozen the temperature will be -18 to-25 degree Celsius and the dry products will be at
ambient temperature. Supply chain can also follow the concept of 'pull- supply' in which the
order will be given to the distributors which in return maintains the extra stock of product. This
concept of supply can also be stated as 'mad to order' (Usunier, 2018).
CONCLUSION
From the above report it can be concluded that the problems faced by McDonald
company includes the problem of religious and cultural beliefs among the society as the country
follows the culture to have vegetarian food. This culture is followed by almost half of the
population of the country. In Indian culture the non-vegetarian people are less and the McDonald
company introduced huge supply of non vegetarian burger with the beef which decreased the
demand among the customers and fewer customers believe to visit the McDonald. The company