Analysis of McDonald's Intercultural Business Competencies in India

This report provides an analysis of the intercultural business competencies of McDonald's in India, focusing on the cultural problems the company faces due to religious beliefs and dietary restrictions. The report highlights the challenges related to the consumption of beef and pork, as well as the need to cater to both vegetarian and non-vegetarian customers. It explores the impact of these issues on the company's market performance, revenue, and growth. The report suggests solutions such as menu re-engineering, differentiated marketing strategies, separate kitchens for vegetarian and non-vegetarian food, and product development to meet the cultural needs of the Indian market. The report emphasizes the importance of understanding and adapting to local cultural values to ensure business success, including the use of focused differentiation market strategies and investment in product development. The study provides insights into how McDonald's can improve its market share and customer retention in India by addressing these cultural challenges.

Intercultural business competencies

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Cultural Problem Faced by McDonald's in India.........................................................................1
Solution for Problem....................................................................................................................3
Justification..................................................................................................................................5
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Intercultural competence is the ability of the organization to work efficiently across the glob to
gain growth and success in the business. This is consisted of effective communicate and work
with different people with different cultural. The cultural factors are the external issues that are
faced by the organization and this factors can affect the business of company (Zwerg-Villegas
and Martínez-Díaz, 2016). These cultural factors are related to religious values, moral values,
traditional language and rules of behaviour. When an organization is performing business on the
international level then they have to face different communities of local place and their culture
beliefs and moral values affect the business strategies and planning of organization. McDonald is
an American originated restaurant chain that was established in year 1940 by Richard and
Maurice McDonald's at San Bernardino, California, USA. This report is providing brief of
cultural issues that are faced by McDonald in India. As per the problems relevant suggestions are
provided to solve this cultural issues in country to run the business with good marginal output or
profit. Justifications are also provided for the solutions that are suggested for different problems.
This study is covering the religious issues of people that are related restriction of food items for
particular religion. For this report issue of Veg and Non vegetarian food restriction is considered.
MAIN BODY
McDonald's restaurant chain is operating all over world and serving the customers by providing
fast food products and beverages to them. There are total 290 Mc Donald's outlets in India. Due
to some issues there are McDonald's shut downed 165 outlets in north and east India. Company
is facing various cultural issues in India. This cultural issues are originated from religious beliefs
of people of country. There in India people of different religion are living and each religion
follows various practices that are restricted in their religion. As an American restaurant chain the
fast food menu of McDonald's is quit different form eating habits of people of south Asia
continent where religion of communities play important role in eating habits of people.
Cultural Problem Faced by McDonald's in India
McDonald's restaurant chain comes to India in year 1996 and the first outlet of chain was opened
in Delhi in joint venture with Vikram Bakshi at Vasant Vihar. Initially this venture had faced
different problems that are related to awareness of customer related to product and services of
restaurant chain. As the people start getting aware off this restaurant then the actual problem for
company were started (Kumari and Nirban, 2018). Major people in India follows Hindu and
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Muslim religion. People from both this religion are particular about restrictions mentioned in
their religion. According to Hindu religion cow is considered as sacred animal and people avoid
eating beef which is obtained from slaughtering the cows that is not allowed in Hindu culture.
This is major issue for McDonald's in India. The other religious issue is related to Muslim
community pork is considered as Haram that means it is prohibited in Muslim community. The
menu of McDonald is mostly contains this two form of meat in food product. Major population
of India are from Hindu and Muslim religion and that creates big problem to company.
Other thing about his that people are divided in two categories in the first category is of
people who are vegetarian and other is consists who eats the non vegetarian food product but
avoid pork and beef. In this case the major issue is related to source of meat. This issue or
problem force the company to perform re-engineer of their menu as per religious need of
customers of in India. According to the survey of Sample Registration System which was of base
line and released in year 2014 by the registrar general of India 71 percent of people in India
above 15 year age are non vegetarian. As this report of survey conclude that most of the business
profit company can gain could be from non vegetarian customers' by also they can not avoid rest
of 19 percent of vegetarian people in India (Nita and Solomon, 2016). According to the survey
people who live in the north and east India prefer vegetarian food over non vegetarian cause of
their religious beliefs and regular eating habits. In united states of America that is base origin
country of McDonald's people prefer both pork and beef as food but in India company can not
offer this to the customer because it is not allowed in their religion. People of India who avoid
non vegetarian food wants the company to separate the cooking department of both vegetarian
and non vegetarian fast food. This religious values create trouble to McDonald's in operation
and serving customers. This thing is forcing to the company to provide alternative solution for
this issue.
Apart from the non vegetarian category of people McDonald's also have to target the
vegetarian customer but company was only serving non vegetarian fast food products. Cause of
this reason it is difficult for McDonald's to earn profit in states like Rajasthan, Punjab, Jammu
and Kashmir and Utter Pradesh. These are the major kind of problems that are faced by the
McDonald's India (Esterhuizen and Kirkpatrick, 2015). The religious issue influence the
selection of customer and this is important for the organization to know the religious aspects and
values to design the menu of restaurant accordingly. There is major impact of religious issue on
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the business of organization. If the consumers are not satisfied with service of organization then
it will lead to conflict between organization and customer. These conflicts between the
McDonald's India and customer will reduce their annual revenue with high margin that is not
good for the market performance and success of business in particular country. The growth of the
organization also will be affected by this. Target of different company in the market place is to
gain competitive advantage and improve the market share of company to generate larger
revenue.
Solution for Problem
The problems faced by the McDonald's restaurant chain India can be resolves by making
different changes in the operation and working of restaurants in different regions in India
(Czarnecka and Szymura-Tyc, 2016). The first problem is related to the issue of vegetarian and
non vegetarian food preferred by people. For the people who prefer vegetarian food company
can perform re-engineering in the menu to attract these customers. This thing nee intense
research in different regions of India to decide the menu as per need of customer and eating
habits of people with in the local area. This research will make the organization aware of
different things that can improve their business strategy in India to improve profit and growth of
business chain. The diversity of India as a country it is big trouble for the restaurant chain to
decide a particular menu for all different areas of country. People in different states there is
different ratio of people who eat vegetarian and non vegetarian food. For example in western
states the percentage of people who eat vegetarian food is higher. For this particular state
company can differentiate the menu as per eating behaviour of people. According to the report
of sample registrar system of India the states like Rajasthan, Punjab, Maharashtra, Gujrat, J & K
and UP Majority of vegetarian people is higher. In these regions' restaurant can offer vegetarian
menu to customer to earn equal profit. For the regions where percentage of non vegetarian is
high there company can offer menu accordingly.
For region where percentage of vegetarian people is high there company can make
various changes that can improve the productivity of business (Dziatzko, Stehr and Struve,
2018). These changes are can be considered as reduce the non vegetarian product in the menu
and offer high range of vegetarian fast food. The patty used in the burgers of McDonald's can be
replaced with other options that preferred by the people. There are different alternatives can used
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as stuffing in products of restaurant. As alternative McDonald's used meshed potato as patty in
burgers to attract customer who only eat vegetarian food.
McDonald's is serving beef and pork as patty in hamburgers. This important to serve the
food to the customer as their needs. In India one religion do not eat beef and other do not eat
pork so it can cause larger damage to company cause most of the people will avoid the restaurant
because of this issue. For this organization need to perform proper research to get alternative of
these type of meat in Indian region (Hickman and Akdere, 2018). Most of the people in India
prefer the meat of lamb and chicken as source. So McDonald's can make improvement by
introducing non vegetarian fast food product with lamb and chicken meat. This can help to
regain there market share in target market. The outlets that are running in loss also can be
restarted with these changes. The best way to get out of this problem is by using differentiate
strategy of marketing and business operation to serve different people of India. By targeting the
specific customers company can earn larger profit. This thing only can be done by specific
research of different area. This will help the organization select the way and decide strategy for
the specific target market. The menus will be decided on the basis of this targeted research.
There one more option company can used to change the business status of restaurant in market.
Organization also can use various business strategy to improve the customer retaining in
India. This is all about trust of customer in the organization. To build more trust of customer
McDonald's can use differentiated kitchens for each vegetarian and non vegetarian food. This
will ensure the customer that processing of each type of food is processed in different ovens. For
McDonald's this is important to separate both kitchens. There is also need to make the customers
aware of this change in the kitchen of restaurant to attract them to select product of company.
McDonald's can use different marketing strategies to meet the predefined targets of organization.
There are various strategie3s are available to perform effective business in target market (Barker
and Mak, 2015). This will also help to penetrate the new market in India. As a food serving
organization company need to be specific for their marketing policy to achieve advantage in
market. Company can follow focused differentiation market strategy to improve their market
share in the market. In this process company can focus on targeted specific customer as per the
region they are operating in. The goals of organization also can be full filled by promotion of
different changes that are implemented in the organization to meet the cultural needs of both
employees and customers. In the focused differentiation company can spend on both product
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development and improve menu card with focusing on marketing to maintain market share goal
of McDonald's India.
The other thing McDonald's can do is by investing in the product development. That
includes the changes according to the problems that are faced by the company before from the
customers. Also, McDonald's can offer attractive offers to the customers to gain their attention
towards the innovative products in restaurant. Company can also include new product in menu
card of organization (Barker and Mak, 2015). The addition of new product will attract more
customer and by giving Indian twist to the product will improve the productivity of organization.
Company can use different methods of marketing to reduce the issues of consumers that are
related to processing of vegetarian and non vegetarian fast food together. Most important thing
company can change is- they also can make the changes visible to the customer to ensure them,
about decision that are made to full fill cultural values of customer. In process of McDonald's
they can use different dress code to differentiate between the people who are dealing with
vegetarian food and other who are preparing non vegetarian food. This will ensure them about
the process of restaurant.
Justification
The biggest problem that was faced by McDonald at the time of launching its products in
India is that, the opinion of public regarding the food products is that the items will not meet out
Indian standards, and they may not be 100% pure. For example- Indians raise their concerns
regarding the process of manufacturing items like burger etc. To change the public image in
respect of food items, the management of the firm has made efforts for segregating the menu for
vegetarian and non vegetarians to suit religion and taste of Indians. Company also introduced
animal free food items and offers vegan options to the customers (Kaur, M. and Silva, 2018).
To resolve all the types of religious issues, in year 2012 McDonald's has introduced
vegetarian only restaurant in northern India. This has help the firm to change the mentality of
Indian Vegetarians towards the products of the firm. Indian population is consisted of various
religions. 80% of Indians forbids the consumption of non vegetarian food. Management of the
organization has considered cultural factor as important because this will help the firm to
improve its current level of sales (Lyubovnikova, Napiersky and Vlachopoulos, 2015). Change
in the menu for vegetarians has help the company to gain competitive advantage over other
companies such as KFC that has initially launched products for non vegetarian in India.
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McDonald's has change all the ingredients to attract Indian Vegetarian customers such as the
firm has even changed mayonnaise in preparing burgers (Peggs, 2018).
Company has also introduced new methods for preparing food items different for
vegetarian and non vegetarian customers. So that, organization can attract more and more
customers and it also helps to develop positive public image of Indian people regarding the food
items of McDonald's. It has changed the mentality of customers that firm is using pure and green
ingredients for preparing food items. McDonald's has made huge efforts that help the firm to
improve its reputation in the minds of Indians (Woods, 2018).
Another important step taken by the management of McDonald's regarding the
employees that are working in the organization. Company has separated the employees in
different departments such as vegetarian and non vegetarian departments. McDonald's has placed
some employees only in department that prepare vegetarian food. Some employees in non
vegetarian department for preparing non vegetarian food (Karkhanis, 2019). This strategy of
McDonald's has help to resolve the religious issues and it has help the firm to attract people of
different religions. Separating the departments for vegetarian and non vegetarian food helps the
company to promote the feeling in Indian people that all the raw material, items involved during
the process of production is pure and according to Indian standards. McDonald's has added new
products in its existing product range for attracting Hindus such as it has added Maharaja Mac
which is 100% vegetarian burger that contain all green raw material and no animal product,
McAloo Tikki, patties etc. that is according to Indian standards. This concept has attracted large
number of all Vegetarian consumers in India (Fischer, 2016).
Other than this, another important factor that McDonald's consider for resolving religious
problem is Marketing strategy. Company has considered promotional strategy under which it has
use various tools and techniques like sales promotion, social media platform etc. for attracting
vegetarian customers. Management of the firm has conducted research and analysed that, Indians
are not aware regarding the quality of products of McDonald (Duggal, R. and Alexander, 2018).
To change the mentality of customers, company has invested huge amount on funds on
advertising its products in India. It has started a marketing campaign that focuses on making
buyers aware regarding the quality of products. Company has focussed on its product mix more
on vegetarian products because most of the Indian consumers are vegetarian. Effective
advertising on different platforms has help the company to influence, persuade and attract Indian
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consumers towards the products of the firm. Mark on food items like red and green mark help the
firm to distinguish vegetarian and non-vegetarian food items. It helps McDonald's to reach large
number of customers for offering new vegetarian products that helps to improve revenue of the
company.
Another change McDonald's has made to resolve religious problems is the process
strategy. The process of manufacturing vegetarian food items. All the stages of manufacturing
process is transparent to the consumers. McDonald's allows the consumers to view the hygienic
standards by providing them permission to enter the place where production takes place. This has
help the company to change the mentality of consumers regarding the purity of raw material. It
has also helps the organization to resolve the problem related with religious and culturally issues
of Indian people. Company has gained success by making efforts for targeting middle class
households that mainly prefers vegetarian food by entering in small cities (Davison, K. and
Russell, 2017).
In India, company is operating large number of stores in different cities like Maharashtra, Kerala
etc. And more than 90% of the population in India are Hindus that do not consume beef. And
there are Muslims also that do not consume pork (Crawford, 2015). Therefore, vegetarian
products for Hindus are manufactured in separate department in McDonald's other than non-
vegetarian items. Rules and regulations of the company in respect of costume for employees that
are working in Vegetarian and Non-vegetarian departments. It helps Indian customers to easily
identify the food they want to order. This policy of McDonald also help to ensure quality and
nutrition of food items. All the efforts' ad strategies of the organization has resulted in resolving
various religious issues that company is facing before.
Due to the efforts and changes in production and distribution strategy of food items that firm is
offering has resulted in improvement in sales from year 2013. In year 2013, annual sales of
McDonald in India is Rs. 68 billion, in year 2017 annual turnover of firm is Rs. 93 billion. In
year 2018 it increased further and net profit of the firm is Rs 65.2 Lakh in year 2017-18
(Bhattacharyya, I. and Mather, 2018).
As the suggestion provided to the company above are related to improve the business of
organization in productive manner (Nurutdinova and Dmitrieva, 2017). The change suggestion
provided to the McDonald's in menu board are important to retain current customer of
organization. The issue of beef can cause different problem, to company and it can also cause
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legal trouble to the company. As per the religious values of people it is important for the
organization to respect them. If company will respect cultural values of consumer them it will
help the company to gain the trust of consume. This will also make effective change in the mind
set of consumer towards the company (MacLeod and Macdonald, 2016). The carting behaviour
of company will improve the customer retaliation. For longer time company can perform with
high marginal profit.
The idea of separate kitchen will attract both vegetarian and non vegetarian consumer
towards the company because they will feel more secure with their cultural values. Consumers
who are currently taking the services of McDonald's have major concern that they are making
wrong choice, and they do not trust the procedure of restaurant. The recommendation provided to
use different dress code in the work place will be an effective strategy for company cause this
will make change visible to the customer, and they will feel positive to use the services and
product of restaurant. Marketing recommendation are also important for McDonald's because
this will provide the platform to restaurant chain to provide information to this customer who are
not in touch with organization (Barmeyer and Franklin, 2016). This is how the McDonald's India
can use and implement this different solutions to resolve current issues that are faced by
company and also helpo them to reopen closed restaurant at different places.
CONCLUSION
This report is analysing the performance of McDonald's in India. For the organization is
important to keep the external and internal issue in mind when they are performing business in a
different country. For McDonald's this report has been analysing different cultural issues that are
faced by the McDonald's India in menu card. These issues are related to the religious and cultural
values of people of India. In this report cultural issues of organization has been considered to
evaluate their effect on the profit and efficiency of business. This religious issues of organization
are studied in brief to collect relative information of these issues to provide effective suggestion
to the company. Further, in the report for each problem various solutions are provided to meet
the needs of McDonald's in India sub continent. Organization is facing customer crisis in India
cause of cultural beliefs of consumers. On the basis of this cultural barrier analysis relevant
changes that can be implemented by organization are recommended. To ensure the success of
McDonald's with this change is justified by evaluation of each change that is suggested in study.
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The suggested changes have been analysed to check their applicability in operation and
infrastructure of restaurant chain.
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