McDonald & Dominos Entry in India

PGDM Batch II (Term V) Presented By: Rajkamal Paroha Anurag Gupta Ashwin Mehta Moiz Uddin Shraddha Shrivastav

Presented To: Prof. Grish Bhatia

• A mode of entry into an international market is the channel which your organization employs to gain entry to a new international market • Expansion into foreign markets can be achieved via the following mechanisms:  Exporting  Licensing  Joint Venture  Entering New Markets through Wholly Owned Subsidiaries  International Agents & International Distributors  Strategic Alliances

 Social and Cultural Differences

Economic Differences Legal And Political Differences Quotas, Tariffs, and Subsidies Protectionism Debate Local Content Laws Business Practice Laws

MacDonalds  McDonald's was started as a drive-in restaurant by two brothers, Richard and Maurice McDonald in California, US in the year 1937.  McDonald a chain of family restaurant Currently operates in 121 countries & having more than 30000 restaurant and serving 53 Million customers everyday.  Low price, Speed, service and cleanliness became the critical success factors of the business and now  With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life.

McDonald's complete commitment to Quality, Service, Cleanliness and Value. “We take the burger business more seriously than anyone else” “If you've got time to lean, you've got time to clean”

To be India “best” quick Service restaurant experience – supported by principles and core values

 Wholly owned subsidiary-MIPL.  Incorporated in 1993.  McDonald’s opened its door in India in Vasant Vihar, New Delhi in October 1996.  Entered into two 50:50 JVs with Connaught Plaza Resturant-Vikram Bakshi- North & Hardcastel ResturantAmit Jatia- West.  Trained Extensively, along with their Indian management team, in McDonalds in Indonesia and the US before launch.  Market Entry Strategy was joint venture.

 Customer driven, goal oriented.  Achieving sustainable, profitable growth.  Designed to increase restaurant visits and grow brand loyalty among new & existing customers.  Further build financial strength.

• After Joint Venture they adopt their global business strategy and spread their business through franchise driven business model.

• Franchisee driven model – 15% owned stores, remaining 85% are operated by franchises

 For gaining experience in the new area of activity.  Tax advantages was a significant factor in McDonalds joint ventures.  Market access and knowledge.  Need of framework for assessing Industry / Market attractiveness.  Government Policies.

 Pool of resources.  Full utilization of under utilized resources.  Higher rates of profits.  Low risk factor.  Massive leverage.  Knowledge of local taste & preferences.  Less cost is involved.  Building relationship with vital contacts

 Diminished control over some important matter.  Sharing of profit.  Risk in giving control of recipes to partner.  Different cultures and management styles result in poor integration and co-operation. (Because of this reason McDonalds have to provide training to their employees)  Joint venture does not give the management of the company complete control because the decisions are taken by both the companies.

 Much higher degree of adaptability.  40% Vegetarians – Vegetarian selections to suit Indian taste.  Maharaja Mac replaced Big Mac, Chicken Patty instead of Beef.  Respect for local culture- Special Indian menu, No beef or pork items in India.  McAloo burger, Veg Salad Sandwich, McMasala & McImli sauces.

 Common Menu- Chicken Nuggets, Fillet-O- Fish, fries, sodas, shakes.  Garlic free sauces to get in “hard core” vegetarian customers.  Re-formulated own products using spices favored by Indians.  Eggless sandwich sauces, Soft serves & McShakes.  Freshest chicken, fish and vegetable products.  Only vegetable oil used as a cooking medium.

• McDonald’s Has adapted well to Indian tastes and preferences. • It has been success story till now. • They have 157 restaurants now and they plan to open 180-190 company owned restaurant by 2015. • Needs to come up with new offerings for Health-Conscious consumers

Founded in 1960 by Tom Monaghan. Second-largest Pizza chain in the United States. About 8,500 corporate and franchised stores in 55 countries. Domino's Pizza outlet in India opened in 1996. 70 percent of its world revenue comes from home delivery service & around 30 percent is over-the-counter sales.

• Domino's entered India in 1996 through a Special franchise agreement with Vam Bhartia Corp.(Jubilant Food Works Ltd) • The first outlet was opened in Delhi. With the overwhelming success of the first outlet, the company opened another outlet in Delhi.

• On 2000, Domino's had a presence in all the major cities and towns in India • Special Franchise Agreement

→Dominos benefit from continuing royalties that are, based upon a percentage of Jubilant Food Works Ltd gross sales and paid on a monthly basis. →Jubilant Food Works Ltd - who have invested their own capital and savings - serve as better managers and operators than paid employees who do not possess a vested interest in the business.

• Minimum investment is required on the other hand they get regular income in a form of royalties from Jubilant Food Works Ltd. • The Multi-unit expansion associated with franchising serves to supplement and expand the value of Dominos

→ Dominos need to look after the trust and enthusiasm of franchisee. → Threat from Jubilant Food Works Ltd of becoming too independent. → The fear of training future competitor.

→ Any management styles must be open and advisory instead of doctorial or hierarchical.

• Today Dominos stores are spread across 87 Cities in India. • There are total 364 stores including two subFranchised stores in operation. • 65% of its revenue comes from home delivery service, around 35% is from sales 'in premise. • Domino's is also undertaking a brand positioning with launch of a Rs 6 crore advertising and marketing campaign over next three months.