PROJECT

REPORT
ON

SUBMITTED TO:SUBMITTED BY:1

Mrs. SHIPRA KHANNA

NAVAL PREET

BAJWA
(Assistant Professor)

CHITKARA UNIVERSITY

ACKNOWLEDGEMENT
This project report could not have been written without Mrs. Shipra khanna who
encouraged and challenged me through my academic program. She never accepted
less than my best efforts. Thank you.
What is collected in this project are materials that I found in articles or in books. I
make no claim to be comprehensive.
A special thanks to the Authors mentioned in the refrences page. Without you, this
guidebook would
Have taken years off my life (which I dont have many to spare).
Most especially my friends, otherwise i wont be able to express what
I owe them for their encouragement me to complete this project

And especially to God, who made all things possib

TABLE OF CONTENTS

S.NO

TOPICS

PAGES

Introduction

2-3

History

4-8

Organizational Structure

9-10

SWOT Analysis

11 14

Financial Status of The Firm

15 - 17

Main Competitors Of The Company And There Strategies

18 - 21

Marketing Strategy Of The Company

22

Suggestions And Recommendations

23

Summary

24-26

10

References

27

INTRODUCTION
In 1996, McDonald's opened in India for the first time, a country where the
majority of th population was Hindu and vegetarian, and the cow was sacred.
Many saw it as just another example of the relentless spread of Western
corporations into every nation, creating a global system in which wealth was
drained out of local economies into the hands of a very
5

Volume 1, Issue 2 (Jan. 31, 2009) OJICA-Online Journal of International Case

Analysis
few, very rich elite. McDonalds opened its doors in India in October 1996,
demonstrating what the McDonalds experience was all about. McDonalds in
India was a 50-50 joint venture partnership between McDonalds Corporation
(U.S.A.) and two Indian businessmen. Amit Jatias company, Hardcastle
Restaurants Pvt. Ltd., owned and operated McDonalds restaurants in Western
India, while Connaught Plaza Restaurants Pvt. Ltd., headed by Vikram Bakshi,
owned and operated the North Indian operationsi.
These companies signed their joint-venture agreements with McDonald's in April
1995 and along with their Indian management team trained in McDonald's
restaurants in Indonesia and the U.S.A. before opening the first McDonalds
restaurant in India.
The entry of McDonalds in India was perfectly timed. The market had begun to
open up. The economy of the country was growing stronger. The customer markets
were eager to acquire newer products and use newer forms of services. Foreign
brands were valued and perceived to be superior in quality. According to a report
of AC Neilson, among the worlds consumers, Latin Americans and Asians were
the biggest supporters of globalisation andthe value that it added to the various
aspects of their livesii. It was a favourable situation for McDonalds because at the
time when they entered, India, the Asian Tiger was awakening to the global call.
The Indian customer was enthusiastic about the market situation which provided
them with numerous choices to choose and pick.
In a way McDonalds revolutionized the food retailing business in India. It
introduced the Indian customers to service standards which were available in the
western world for years.
6

These service standards were visible and noteworthy and hence triggered quick
acceptance within the customers. McDonalds positioning in India as a family
restaurant further fuelled its success. India as a market was a unique example of
diversity. Divided into 28 states and 7 union territories, the vegetation, climate,
religion, language, clothing, and food varied from one state to another. With the
combination of spices in a unique way, food of these states reflected their traditions
and culture. Hence the biggest challenge to any food business in India definitely
was about balancing the diversity and the product offerings. McDonalds got
clearance from Foreign Investment Promotion Board (FIPB) of India in 1991. But
it was only after five years of preparation, that the first restaurant became
operational in 1996. It
worked on developing local relationships with local partners to facilitate the raw
material. Indian companies for their operational convenience had divided the
Indian subcontinent into four zones, the progressive West, the powerful North, the
traditional and culturally rich, South and East. McDonalds opened their first
restaurant in the capital of India which is Delhi. The second restaurant was opened
in the financial capital of India, Mumbai. McDonald initially concentrated in the
West and North regions. Later the company exhibited ambitious plans for
expansion in Eastern and Southern regions.

HISTORY
McDonalds Corporation grew from a single drive-in restaurant in San Bernardino,
California, in 1948, to the largest food-service organization in the world. In 1991,
McDonalds owned $13 billion of the $93 billion fast-food industry, operating
12,400 restaurants in 59 countries including company-owned restaurants,
franchisees, and
7

joint ventures. In the U.S. alone, more than 18 million people visit a McDonalds
daily. 1 Exhibits 13 contain McDonalds 1991 income statement and balance
sheet
as well as an 11-year financial summary for the company. McDonalds
management intends to continue growing by:
1) maximizing sales and profits in existing restaurants
2) adding new restaurants, and
3) improving
4) international profitability.
Ray Kroc based his empire on the fundamental principles of Quality, Service,
Cleanliness, and Value (Q.S.C.&V.) and developed tangible goals and specific
operating practices to carry out his vision. An extensive team of field auditors
monitor these practices, which are communicated to employees through continuing
education
that includes videotaped messages from Kroc himself. These values were
integrated into McDonalds three strategic priorities for 1991, stated in the Annual
Report
as follows:
To enhance the message that McDonalds is valuedriven on behalf of its
customers by emphasizing their profitable value-meal combinations;
McDonalds: Case A March 1995
To provide exceptional customer care by exceeding Vcustomer expectations,
including finding ways to add personal touches that go beyond convenient
locations,
Quick service, clean restaurants, and quality products;
8

 To remain an efficient producer while maintaining quality by looking to

innovations in food processing, construction, and design operations that will
increase global profits. Approximately 80 percent of McDonalds restaurants
are franchises, paying a percentage of their monthly revenue for centralized
marketing research and R&D. Franchise fees cover roughly the costs of
corporate services; thus, if the franchises are not making money, neither is
the corporation. This mutual dependence is considered by management to be
a corporate strength. McDonalds Corporation revenues are derived from
franchise fees plus company restaurant sales. The Corporation operates
approximately 16 percent of U.S. McDonalds restaurants, and a higher
percentage of international restaurants since they usually enter new countries
with company restaurants and then franchise them after they are well
established. McDonalds typically receives over 20,000 franchise inquiries
per year. Twenty-year franchises are awarded to applicants after extensive
screening, and additional restaurants are allocated to franchisees with proven
records of success. McDonalds management style may be described as
tight-loose the corporation sets overall quality standards, but the
franchisees are given the freedom to make localized decisions. Many new
product innovations,
such as the Filet O Fish and the Egg McMuffin, originated with franchises.
Recently, McDonalds has increased its new product development efforts,
responding to customers concern for nutrition. However, Tom Glasglow,
Vice President and Chief Financial Officer, is concerned with maintaining
the focus that has made McDonalds successful: in the 1991 Annual Report
he stated, Were in the business of serving a small number of products that

have mass appeal. Thats our niche." McDonalds is the second-best-known

global brand
and intends to maintain this level of consumer awareness with a $1 billion
marketing budget.2 McDonalds launched a major new ad campaign in
1991, Great
Food at a Great Value, which was successful in promoting profitable valuemeal combinations. High brand recognition is particularly important as
many
customers are impulse purchasers, often selecting McDonalds over
competitors by the convenience of the location. Glasglow, discussing how
McDonalds customers distinguish it from the competition, stated, We are
the easiest. The place that satisfies customers best, and gives them the best
value." The emphasis McDonalds places on customer convenience is
manifested in McDonalds self-description as a leader in the quick-service
industry, rather than the fast-food industry. A typical McDonalds may serve
as many as 2,000
people per day, 6070 percent of whom take their food outside the
restaurant. McDonalds depends on the ability of their crew to be able to
prepare hot, fresh
food and to serve it to their customers within two minutes of the time they
enter the restaurant. To do this,
McDonalds engineering department has carefully
equipment for its restaurants.

10

designed the layout and

Exhibit 4 shows how all food flows from the back of the kitchen to the front
as it is prepared, and is placed in a heated food bin awaiting customer
delivery.
Servers at the counter or drive-through window collect
and drink stations for customers.

An

important

items from the bin

component

of

McDonalds operational strategy is to anticipate customer traffic patterns

and

food selection based on a detailed analysis of sales history and trends

and to use this information to prepare,various menu items in the right

quantities and at
the right times in order to have the food ready for their
they arrive. Food may be stored in

customers

when

the bin for up to ten minutes before it

is discarded.
1991 marked the introduction of Series 2000 design

restaurants.These

buildings are approximately half the size of traditional restaurants, designed

to accommodate nearly the same level of sales but requiring a lower real
estate investment. Series 2000 restaurants are targeted toward both small
towns and major metropolitan areas. All of McDonalds 600-plus suppliers
are independent companies with whom long-term relationships have been
developed. This strategy is intended to improve .
McDonalds ability to focus its efforts on its core business

restaurant

operations. Most suppliers operate on a cost-plus basis. McDonalds often

holds seminars and conferences for suppliers to discuss their needs.

11

ORGANISATIONAL STRUCTURE OF MC DOLAND

12

13

14

SWOT ANALYSIS OF MC DOLAND

STRENGTH

WEAKNESS

OPPORTUNITIES

THREAT

Strengths
It has a strong global presence and is considered as a market leader in both the
domestic as well as the international markets.
It is a global brand that owns 31,000 restaurants serving in 120 countries. Of
these 31,000 restaurants at least14,000 restaurants are situated in the US.
It uses economies of scale for reducing the cost, as its huge expansion diversifies
the overall risk involved with the economic performance.
They own an active childrens charity by the nameThe Ronald McDonald
House.
It takes steps in adjusting the Ingredients and product offerings in order to
comply with the upgraded health standards deemed necessary by the USDA.
It earns revenue by fast food sales as well as a property investor and a franchiser
of restaurants.

15

 It has a firm real estate portfolio.

It has branded menu items i-e Big Mac, Chicken McNuggets, which further
promote McDonalds.
It is recognized as one of the worlds most recognized logos.
It is recognized as a socially responsible and community oriented firm.
It adapts to the cultural differences regarding the region where the restaurant is
set up.
It has located itself in major airports, cities, highways, tourist locations, theme
parks.
It has an efficient food preparation style that follows the process in a systematic
way.
It takes food safety extremely cautiously.
It was the first to provide the customers about nutrition facts.

Weaknesses
It uses advertising that mostly targets children.
High employee turn-over.
It has yet to accomplish going on the trend of organic food.
Price competition with the competitors resulting in low revenue.
Lack of innovative products.
16

Opportunities
It can adapt to the needs of the societies and undergo an innovative product line.
It can research ways to use green energy and packaging which will work as a
part of their promotional effort as well as fulfill their social responsibility.
It can create new product offerings, use mobile text messaging to offer services
that appeal to consumers.
It can upscale some of its restaurant settings at luxurious locations to attract more
customers.
It can provide optional items that are regarded to be the basis of allergy for some.
It can slow down the level of expansion in order to increase the profitability of
the organization.
Threats
The recession negatively impacts the holding position of the firm regarding its
revenue streams, even though they are quite diversified.
Foreign currency fluctuations are regarded to be a major problem as it uses
standard pricing for its food items.
More restaurants that are increasing their food offering and declining the price.
Health issues regarding the fast food chain.
Heavy investments on promotional campaigns which decrease the gaining of
market share.

17

 Some parents criticize the firms cradle to grave marketing strategy that focuses
on kids, who later on take it as a trend to their adulthood.
Sued various times for unhealthy food, usually with addictive additives.
Emergence of major fast food competitors: Burger King, Starbucks, Wendys,
Taco Bell, KFC.
The expansion has made the firm vulnerable to the slow economies of the other
countries.

18

FINANCIAL STATUS OF MCDOLAND

Jun

Period Ending

Assets
Current Assets
Cash
And
Equivalents
Short

Cash
Term

Investments
Net Receivables
Inventory
Other Current Assets

30, Mar

31, Sep

30,

2011

2011

2010

2010

2,070,000

1,939,900

2,387,000

2,495,000

1,249,100
115,000
591,300

1,160,300
111,500
612,500

1,179,100
109,900
692,500

1,013,600
103,600
564,300

3,824,200
1,317,500

4,368,500
1,335,300

4,176,500
1,295,900

22,644,800

22,060,600 21,477,500

2,669,600
1,624,100

2,586,100
1,624,700

2,521,500
1,697,100

Total Current Assets

4,025,400
Long Term Investments
1,355,600
Property
Plant
and
23,015,800
Equipment
Goodwill
2,725,400
Intangible Assets
Accumulated Amortization Other Assets
1,710,800
Deferred Long Term Asset
Charges
Total Assets

31, Dec

32,833,000 32,080,200

Liabilities
19

31,975,200 31,168,500

Current Liabilities
Accounts Payable
2,729,400
Short/Current
Long
1,219,400
Term Debt
Other
Current
Liabilities
Total Current Liabilities 3,948,800
Long Term Debt
11,062,800
Other Liabilities
1,548,200
Deferred
Long
Term
1,320,400
Liability Charges
Minority Interest
Negative Goodwill
Total Liabilities
Stockholders' Equity
Misc
Stocks
Options
Warrants
Redeemable

Preferred

Stock
Preferred Stock
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
Other Stockholder Equity

2,737,700

2,916,400

3,187,400

1,516,400

8,300

78,900

4,254,100
10,524,300
1,544,500

2,924,700 3,266,300
11,497,000 11,357,100
1,586,900 1,570,400

1,303,700

1,332,400

1,336,900

17,880,200 17,626,600

17,341,000 17,530,700

16,600
16,600
35,165,000 34,386,200
(27,135,300) (26,463,300)
5,362,100 5,259,900
1,544,400 1,254,200

Total Stockholder Equity 14,952,800 14,453,600

20

16,600
16,600
33,811,700 32,568,900
(25,143,400) (24,759,800)
5,196,400 5,108,300
752,900
703,800
14,634,200 13,637,800

Net Tangible Assets

12,227,400 11,784,000

12,048,100 11,116,300

MARKETING COMPETITORS OF COMPANY AND THERE STARTIGIES

21

Lately, I have noticed a big jump in Subwaysbrand awareness and marketing. I

wanted to point out a few things they are doing to hit one out of the park. When
you are selling a consumer a product, there are some traits Subway is hitting
more than most in a very tactful way.
Eat Fresh

22

Subways slogan is perfect. How much more simple could they make their
slogan to imply so much? Does any other national food chain come close to
competing? You can see your food being made with tons of leafy greens piled
high right before your eyes.
Footlong
A Subway franchise owner by the name of Frankel started something huge. He
was looking for a way to increase slumping weekend sales at his restaurant, and
that triggered the idea of selling Footlong subs for just $5.
There are only a few times when a chain has been able to scramble up the
whole industry, and this is one of them, says Jeffrey T. Davis, the president of
restaurant consultancy Sandelman & Associates. Its huge. Just take a look at
what the competition has done since the $5 Footlong introduction. In fact,
the $3.8 billion in sales generated nationwide by the $5 footlong alone placed it
among the top 10 fast-food brands in the U.S. for the year ending in August,
according to NPD Group.
lesson: pricing and branding rolled into one
Same but different
One of the biggest reasons I personally love going to Subway is for the food and
how it is the same sandwich yet it is just a little bit different every time. I can
order the same Roasted Chicken Breast sandwich from 5 different Subway
Restaurants and they will be just a little bit different each time. Not to mention a
few extra or fewer veggies or sauces adds an element of satisfaction you are

23

looking for at that moment. Having the ability to add or take away as you see fit
is a nice and welcomed change from the other fast food joints.
lesson: meeting peoples immediate needs
Carved out niche
The health industry is a multi-billion dollar annual business. Subway has carved
out their niche in the fast food industry in a healthy way. They have become the
default for a healthy and fast meal, two huge points.
Biggest Loser By sponsoring a run-a-way success tv show focused on raising
awareness of obesity and healthy living, Subway has cemented themselves in
the health niche and is expanding quickly.
Marketing/Advertising Eat Fresh and Fast but not Fast Food. These mantras
are simple yet imply so much.
Dont forget Jared Subway placed a lot of faith in their spokesperson Jared.
Imagine if Jared packed on the pounds again or died of a heart attack. Ouch. A
very big and bold move that sets themselves apart from so many of their
competitors.
Picking a fight
Subway uses its own products against the competition in their quest to elevate
themselves. Subway says look at how bad McDonalds or Burger King is for
you and look how great our food is for you. The names, products and health
information of different brands are listed right on Subways packaging and
marketing material.
24

All food, all hours

Most fast food restaurants have to switch systems over in order to make
breakfast items vs regular menu items. Subway doesnt have this problem
because they are only adding egg as an additional element. No matter what type
of person you are, youre able to enjoy breakfast for dinner and visa-versa

25

MARKETING STRATIGIES OF THE COMPANY

One of the first results of the task force was the development of a strong companywide environmental policy declaring that McDonalds is committed to protecting
the environment for future generations, and that it believes that business leaders
must also be environmental leaders. The policy takes a total lifecycle approach to
9reducing and managing solid waste: a sizable challenge, considering that each of
McDonalds 8,600 U.S. restaurants 3 238 pounds of waste per day and each of its
34 U.S. regional distribution centers disposes of another 900 pounds of waste per
day.4 McDonalds has also been active in educating its customers about the
companys environmental activities and positions. Brochures are available in
restaurants informing customers about McDonalds position on such topics as
ozone depletion, the rain forest, and packaging.
McDonalds is working to translate this environmental commitment into specific
actions. In order to live up to its environmental policy, McDonalds Environmental
Affairs Officer has been given the authority to enforce adherence to standards, and
reports directly to the Board of Directors on a regular basis. McDonalds also
plans to continue to seek counsel with environmental experts to take advantage of
opportunities to improve its environmental performance on an ongoing basis.
As part of its waste reduction action plan, McDonalds has committed to reviewing
annually all food-service products and packaging items to identify opportunities
for source reduction. McDonalds realizes that in order to achieve its waste
reduction goals, it must collaborate with its suppliers. To promote collaboration, it
has developed an annual environmental conference intended to train suppliers and
has included environmental issues in its annual supplier reviews and evaluations.
The following initiatives were proposed by the task force.
26

SUGGESTION AND RECOMANDTAION

Environmental groups play an increasingly important role in influencing policy
of leading environmental groups).Further

more,during the past decade,

membership in many of the leading environmental groups doubled in size. This

growth may be attributed to both the publics concern that industry and
government are not adequately addressing environmental issues and to public
confidence in environmental groups. In fact, a recent study conducted by
Golin/Harris Communication, Inc. found that 80 percent of those studied believe
some of what environmental groups report while less than 40 percent believe
some of what businesses report. 9
The joint task force was one of the first collaborative efforts involving a leading
environmental organization and a major corporation aimed at improving corporate
solid waste practices. It posed opportunities and challenges for both sides. EDF
wanted to create a model approach that could be used by other companies, yet it
risked criticism from other environmentalists. McDonalds needed a way to
respond to public criticism of their environmental practices, but knew that potential
task force disagreements could be embarrassing.
An early outcome of the task force was McDonalds adoption of the waste
management hierarchy. The hierarchy served as a means to guide early decision
making, but the long-term success of the program will depend on both parties'
ability to manage the partnership. EDFs President Fred Krupp said,
Environmentalists and industry alike will be waiting to see what McDonalds does
with the task force options and recommendations. That will be the ultimate test of
this efforts success.

27

SUMMARY
Terri K. Capatosto, Director of Communications, McDonalds Corporation.
Ms. Capatosto joined the Corporation in 1984 and is responsible for managing
McDonalds interaction with local and national news media as well as providing
communications counsel, support, and training to the companys corporate and
regional management and local owner-operators. Since 1988, she has also held
specific responsibility for environmental issues, working with Operations,
Purchasing,
Environmental Affairs, and other key departments within McDonalds on the
companys environmental initiatives. Ms. Capatosto has received numerous awards
for leadership and outstanding performance, including McDonalds Presidents
Award in 1987. Before joining McDonalds, Ms. Capatosto was a Captain
in the U.S. Marine Corps. She holds B.A. degrees in Psychology and Music from
the University of Utah.
Richard A. Denison, Senior Scientist, EDF. Mr. Denison, who holds a Ph.D. in
Molecular Biophysics and Biochemistry from Yale, specializes in hazardous and
solid waste management issues ranging from waste reduction and recycling to the
health effects and regulatory requirements of landfilling and incineration. Prior to
joining EDF in 1987, Mr. Denison was an Environmental Analyst at the U.S.
Congress Office of Technology Assessment and also conducted cancer research in
a postdoctoral position at the University of California, San Francisco. He has
authored numerous papers and reports on solid and hazardous waste management,
and a recent book, Recycling and Incineration: Evaluating the Choices.
28

Robert L. Langert, Director of Environmental Affairs, The Perseco Company.

Bob Langert is responsible for managing projects related to source reduction,
recycling and other waste management alternatives for the Perseco Company, the
exclusive packaging purchaser for McDonalds. His responsibilities include
assisting in the coordination of McDonalds recycling initiatives across the country,
and working with an extensive group of packaging suppliers on waste reduction
initiatives. Prior to joining the McDonalds family, Mr. Langert was an operations
manager for a McDonalds distributor, Perlman-Rocque, and served as Midwest
logistics manager for the American Hospital Supply Corporation. He holds an
M.B.A. degree from Northwestern University.
Keith

Magnuson,

Director,

Operations

Development

Department,

McDonalds. Mr. Magnuson works on developing new operating systems and

improving store operations for the companys restaurants worldwide. Most
recently, he has been involved in the development of McDonalds in-store
recycling programs, packaging source reduction, and other environmental
initiatives. Over the past 17 years, his positions have included store manager, area
supervisor, field consultant, and operations development manager. He attended the
University of Maryland.
S. Jackie Prince, Staff Scientist, EDF. Ms. Prince conducts research on a variety
of solid waste issues, including recycling technologies and the use of product life
cycle assessments in evaluating consumer products. Ms. Prince holds Masters
degrees in Public and Private Management and Environmental Studies, and
29

received her B.S. in chemical engineering, all from Yale. She is a former Project
Manager/Engineer for the Waste Management Division of the U.S. Environmental
Protection Agency, Region I, where she received then 1986 EPA Award For
Excellence. She is the author of Wetlands Assessments at Hazardous Waste Sites
and
Assessment of PCB Contamination in New Bedford Harbor.

30

References
BOOKS:

Marketing Management Philip. Kotler

WEBSITES:

www.thecoca-colacompany.com

www.news.bbc.co.uk

www.india-server.com

www.magindia.com

www.coca-colaindia.com

www.wikiinvest.com

www.open2.net

OTHERS

Annual report of Coca-Cola 2008.

Annual report of Coca-Cola 2009.

Annual report of Coca-Cola 2010.

31