“Cultural Diversity faced by McDonald’s in India”

MPhil Management Sciences

Students GIFT University Gujranwala

Seminar in Finance

Submitted to: Mr. Usman Naeem

Lecturer GIFT University Gujranwala

 Cultural Diversity faced by McDonald’s in India

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 Cultural Diversity faced by McDonald’s in India

Authors Detail
Member # 1 :-
Name Sadia Ashraf
Id 17261008
Email Id [email protected]

Member # 2:-
Name Nazia Ayoub
Id 17261006
Email Id [email protected]

Member # 3:-
Name Sehrish Iftikhar
Id 17261007
Email Id [email protected]

Member # 4:-
Name Ali zaib
Id 16161024
Email Id [email protected]

Member # 5:-
Name Rabeet Siddiqui
Id 16161022
Email Id [email protected]

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 Cultural Diversity faced by McDonald’s in India

COMPANY INTRODUCTION

In term of delivering best hamburger and fast food to the customers, McDonald’s is one of
the leading restaurants throughout the world. McDonald corporation is at the crest of best
serving fast food restaurants due to consistent finest performance. Quality of Food,
convenient atmosphere for family, variety of products and their services intrigue customers
towards McDonalds globally. McDonalds is valuable brand and well known due to its fresh
French fries, hamburgers, chicken Mc Nuggets, Big Mac, Soft Drinks, Egg Muffin, cheese
Burger, Breakfast Menu, Milkshakes, Ice-cream etc. McDonalds provide its services in
approximately 119 countries having 35,000 restaurants with 68 million customers daily.
McDonalds perform its functions as either Franchises, Association or organization itself.
McDonalds franchises operates in Canada, Russia, Japan, Germany, France, UAE, UK, USA,
Australia, India, Pakistan, but the main office is situated in United States. The major profit of
McDonalds corporation arises from rental payments, franchises fees, royalties and sales from
corporation itself.

According to Communication Department McDonald’s Restaurants Ltd 1995, Initially

Maurice & Richard McDonald opened a barbeque restaurant in California in 1937.
McDonald is colossal corporation and international fast food brand, it was first started as
barbecue restaurant in 1940 by two brothers Mac McDonalds and Dick (Walsh, 2009). Later
it spread across Europe and worldwide. According to McDonalds corporation (2010),
McDonalds is prominence globally on the bases of executing effectively Consumer
responsibility as well as corporate ethics. In 1965, McDonalds became a public corporation,
listed on stock market and responsibility for leading corporation to worldwide expansion was
took by Ray Kroc. As both brother noticed that most of their profit was generating from
hamburger, so they keep their menu simple to Hamburger, Cheeseburger, Soft drinks, French
Fries & Apple pie. Other products and symbols define the McDonald’s brand, including the
Big Mac (1968), the Egg McMuffin (1973), Happy Meals (1979), and Chicken McNuggets
(1983).

More recently, in 2009, McDonald’s added a new line of premium coffee to their menu
which led to creation of McCafe. In 2010 McCafe added to their menu Real Fruit Smoothies
to broaden their reach. (McDonalds, 2010). • The numerous awards and recognitions such as
“2011 most Innovative Food Companies”, “2010 Most Inspiring Brand” speak for themselves
(McDonald’s, 2012).

McDonald’s sustain their image as they continuously growing domestically and

internationally, they elongate to Canada in 1967. From 1988 to 21st century. They operate
more than 35000 outlets, expand 10,000 restaurants as it effectively became most well-known
family restaurant. After acquiring Mexican Grill, McDonalds move from hamburger business
in 1998, Donates Pizza in 1999. In 2000, they boost their market in united stated and in 1999

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 Cultural Diversity faced by McDonald’s in India

purchase UK Aroma café. In 2001, they started to take interest in sandwich restaurant chain.
Be that as it may, by late 2008 McDonald’s no longer claimed or had a stake in any of those
companies, contrary they concentrating on their possess brand. McDonald’s was dynamic in
charitable work. In 1974 it joined Philadelphia Hawks football player Fred Slope, whose girl
had been analyzed with leukemia, in establishing the Ronald McDonald House in
Philadelphia. The home permitted families to live close the healing center where their
children were accepting treatment. By the early 21st century, more than 360 such houses
existed around the world. The Ronald McDonald House Charities (set up 1987) moreover
underpins different other efforts.

McDonalds in India

Numerous franchisees of McDonalds disseminated across the world. McDonalds is the world
2nd greatest private employer. Popularity level of McDonalds is basically not only due to
hamburgers but also well known for its mouthwatering sandwiches, diverse sort of breakfast
menu, chicken wrap, aerated drinks and different types of fries, ice-creams & shakes. Each
country poses a new challenge for McDonalds in maintaining or improving their position.
Soon McDonald’s set its foot in India and started to operate and sell its products through
different outlets in India. In 1995, with the help of two partners, McDonald’s started to be
operative in India (Vasudevan, 2007). The television commercials of ‘TohAaj McDonald’s
Ho Jaye’ and ‘McDonald’s Mein HaiKuchBaat’ and the happy price menu is what attracts
Indian people to McDonald’s. The new advertising of Prices of the Yesteryears, attracted the
teenager crowd too. (Mathur, S., 2011)

Following data is collected from the mcdonaldsIndia website. In 1996, first time McDonalds
opened its restaurant in India on Oct, 13, at Basant Lok in New Delhi. It was also the first
McDonald's™ restaurant in the world to not serve beef and pork based products. In 1997,
First Drive -Thru restaurant at Noida (UP) & first disabled friendly store at Noida (UP). In
`1999, First Mall location restaurant at Ansal Plaza (New Delhi). In 2000, First highway
restaurant at Mathura (UP). In 2001, First thematic restaurant at Connaught Place (New
Delhi). In 2002, The first restaurant in a food court at 3C's, Lajpat Nagar (New Delhi), the
first restaurant at the Delhi Metro Station at Inter State Bus Terminus, the first fundraiser in
association with ORBIS and Dr. Shroff's Charity Eye hospital. (Delhi). In 2003, the first
Dessert Kiosk - Faridabad (Haryana). In 2004, McDonald's™ Delivery Service
(McDelivery™) introduced in New Delhi Local menu innovations like McAloo Tikki™,
McVeggie™ and Pizza McPuff™ exported to Middle East. In 2006, McDelivery™ on
Bicycles flagged off at Chandni Chowk (Delhi) - another first initiative by McDonald's™
India, 100th McDonald's™ Restaurant opens in India & 10th Year Anniversary. In 2007,
First McDonald's™ open in Eastern Region at Park Street, Kolkata, first restaurant opened at
Airport (Domestic Airport at New Delhi) & First 'Made for You' (MFY) restaurant opened at
Greater Noida, Uttar Pradesh.

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 Cultural Diversity faced by McDonald’s in India

Consequence (Cultural Diversity) Faced by McDonald’s in India

McDonald’s should scrutinize the factors of cultural, economic and sociopolitical in India.
There is huge cultural diversity among population of India as it is split between various
communities, religion & beliefs & values i.e. Hinduism, Buddhism, Sikhism, Islam, Jainism
& Christianity. It is the fact that preferences of food and dining among people are highly
influenced by these narrated parameters. 80% of India population is exercised Hindu religion
which permits non-vegetarian meals (Indian Mirror, no date).

For McDonalds it is very challenging, risky & ambitious as well to introduce themselves in
the market where beef and chicken is “off limits”. The main purpose of McDonalds to enter
in Indian market is to inspired Indian culture and serve customers with exquisite food
experience. Managers of McDonalds intend to change the perception of Indian people that it
is not only an “American brand” also a place for family dinning which is the tradition for
centuries in India.

Management of McDonalds desired to endorse themselves as a stimulator for family oriented

people. As Smolicz in 1980 stated that, heterogeneity in language and in communication style
of people is of the main cultural factors. According to Chaturvedi in 2000, targeting outlet
design and serving diverse Indian population with the food items that fulfill their needs was
the main focus of McDonalds. Indeed, the opening of McDonalds in India was the
tremendous ecstatic announcement, but unfortunately due to some factors and circumstances
it was failed to succeed. No doubt, it had high anticipation of success but failed to live up to
it.

Above all, management of McDonalds were not able to interpret the difference of “localize or
localization’. They basically endeavor to implement the western approach in India, ignoring
the fact that the two nations United states and India are contradict with each other in every
aspect (economic, social, cultural, values & moral Beliefs etc.) so, it was very essential for
the brand to understand the preferences of the people in order to achieve their objective. But
McDonalds was failed to interpret the mentality and way of thinking of single individual as
they believe that with the passage of time human beliefs modified. By keeping this fact, they
offered beef burger in their menu by ignoring the tradition of India that Hindus forbid eating
beef.

Nonetheless, the values, & norms of people had not alternated with time and McDonalds
faced a lot of criticism which diminishes its popularity and goodwill. For this, they offered
Maharaja Mac in order to changing the eating preferences of Indians and it took years to
explore their craze towards the vegetarian food. In protest to restraint the selling of “Beef”,
BJP (Bharatiya Janata Party) revolt against them. The outlets of McDonalds were shattered
by the Indians which were situated in the thane area of Mumbai.

For the hash brown and fries’ vegetable oil used for making taste and for flavor purposes. In
addition, the McDonald agree to donate 10 million in 2002 for accused chain of mislabeling

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 Cultural Diversity faced by McDonald’s in India

French fries and brown hash in the vegetarian flavor. They donate to the Hindu and many
other groups in US for sellement (Rajiv singh,2017).

According to Asian journal of science and technology in 2013, the dominant fundamentalist
political parties in the India are Hindu organizations, the Bajrang Dal, and militant arm. So
McDonald is facing very tough competition in India, they openly challenge to McDonald
across the India branches.

In thane, the restaurant was open by members of Bajrang Dal, by their opening McDonald
demolished in northeastern Bombay suburb. But in southern bomby, Bharatiya Janata party
protest McDonald store they shouted that restaurant and slogans against mascot with cow
dung. The Hindu alliance shiv sena also protest the MacDonald corporate office after lawsuit
also filled against McDonald(nationmaster.com).

Moreover, mayonnaise in vegetarian products and in burgers usage of egg in low quantity but
made in 100% vegetarian(Mishra,2013).

For the management it’s not easy to understand the belief of Indian citizen as the use of meat
and extermination of cows created big issue in the market. As to the perception of Hindu’s
the extermination of cow is unholy act. so it’s difficult for management to carry out their
business in India after becoming familiar about the fact. The Hindu religion perceives cows
as their god mother. The Hindus protest due to their respect for the cows, but there are
thousands of slaughtering of cows are held within one day by McDonald so it become tough
for their management to run their business in India. After facing these challenges, McDonalds
added items in their menu like Maharaja Mac, which is a Big Mac made with chicken patties
instead of beef. It also offers a McAloo Tikki, a burger made with a spicy breaded potato
patty, red onions, tomatoes and a "special vegetable sauce."

Due their bad reputation in the society, McDonald’s was not able to predict the demands of
food items which create difficulty for them in order to introduce any new product. Indian
citizens were also not sure about which ingredients were being used to prepare the food items
as they are strictly opposed to eating beef products. Also they were confused about the kind
of oil that was being used to make the product. They had a belief that McDonalds used beef
fat to fry the products instead of using vegetable oil. So launching a product and getting a
huge response was really a tough thing to achieve considering the attitudes and believes of
the Indians. Since they were unsure of the products or the ingredients, they stopped eating or
dinning out at this food joint. The Management started to face constant challenges due to
such problems. The solution to these challenges is McDonald’s should try to sell different
kinds of vegetarian items instead of selling beef and pork products. As most of the Indians
are vegetarian, they would certainly enjoy their meal and also it won’t hurt the sentiments and
the emotions of the common men (Miller, 2012).

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 Cultural Diversity faced by McDonald’s in India

Delimitation of study

Our study is supremely confided on secondary data.

The future changing trends of the economy.
Lack of rigorous
Time is constraint

LITERATURE REVIEW

According to Mazur in 2010, The controversies that occurred among population of different
countries due to cultural diversity is considered more imperative in today’s era. As the factor
of diversity results in high productivity & competitive edge for the organizations, so
companies should reconnaissance for those strategies that helps to tackle the diversity issues.
In 1991, cox et al defined the cultural diversity as the difference in appearance of individuals
due to cultural significance in a single social system. This definition had adverse results in
both laboratory & field settings. Diversity among the people increases the organization
performance and effectiveness outcome of laboratory test, supported by value-in-diversity
perspective (Lobel et al. 1991). Contrary, diversity is correlate inversely with negative
performance outcome, supported by social identity & self-categorization theories (Pelled et
al, 1999). As Earley & Mosakowski narrated in 2000 that people with identical culture
communicate with each other, share their ideas, views and perceptions globally.

In 2013, Amadeo define cultural diversity is when differences in race, ethnicity, language,
nationality, religion, and sexual orientation are represented within a community (cited in
Martin, 2014). In term of multiculturalism, policies of anti-discrimination and educational
context, there is still debate on cultural diversity (Brewster et al, 2002). In 1998, vertovec
stated that culture is the factor that build in the genes of human beings and distinguish
individuals with each other. The phenomena of we’s & they’s always divided in multicultural
societies. Cultural diversity has been defined as “the representation, in one social system, of
people with distinctly different group affiliations of cultural significance.”

The study of Al-Jenaibi in UAE (2011) proposed the positive aspect of cultural diversity that
it increase the organization performance and effectiveness by providing the organization
with, different experiences, vast and sound knowledge. On the other hand, the study on
Bialostocka in 2010, recommended the negative aspect of cultural diversity that difference in
opinion, value, norms tradition, beliefs, customs, trends among race, ethnicity, gender, age
indulge in the interpersonal conflicts that results in decline of organizational performance. In
2010, Mirza stated that in international policymaking cultural diversity is one of the latest

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 Cultural Diversity faced by McDonald’s in India

buzzwords and the proper well defined definition of cultural diversity is still not proposed by
anyone.

RESEARCH METHODOLOGY

CONCLUSION

REFERENCES LIST

Cox, T., Lobel, S.A., McLeod, P.L., 1991. Effects of ethnic group cultural differences on
cooperative and competitive behavior on a group task. Academy of Management Journal, 4,
pp. 827–847.

Pelled, L.H., Eisenhardt, K.M., Xin, K.R., 1999. Exploring the black box: An analysis of
work group diversity, conflict, and performance. Administrative Science Quarterly, 44, pp.
1–28.

Mazur.B., 2010. Cultural Diversity in Organisational Theory and Practice. Journal of

Intercultural Management, 2(2), pp. 5-15

Dietz, G. (2007), Keyword: cultural Diversity, ZFE, pp. 7-30

BREWSTER et al. 2002 = BREWSTER, S./BUCKLEY, M./COX, P./GRIEP, L. (2002):

Diversity Education. A literature review. – Calgary.

Mishra, B., & Dwivedi, S. (2013), Success Story of Mc. D In India: Story Of Its Struggle in
Indian Market, Asian Journal of Science and Technology, 4 (7), pp. 66-70

VERTOVEC, S. (1998): Multi-multiculturalism’s. In: MARTINIELLO, M. (Ed.):

Multicultural Policies and the State. A comparison of two European societies. – Utrecht:
Utrecht University, ERCOMER, pp. 25-38.

Al-Jenaibi, B. (2011). The scope and impact of workplace diversity in the United Arab
Emirates an initial study. Journal for Communication and Culture. 1(2), 49-81.

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 Cultural Diversity faced by McDonald’s in India

Martin, G. (2014), The Effects of Cultural Diversity in the Workplace. Journal of Diversity
Management, 9(2), 89-92

Białostocka, P. (2010). Cultural Diversity in Organizational Theory and Practice. Journal of

Intercultural Management. 2(2), 5-15.

Burri, M. (2010), Cultural Diversity as a concept of Global Law: Origins, Evolution and
Prospects. Diversity, 2, pp 1059-1084

Vasudevan, A. (2007). Bridging the Cultural Chasm: Winning Strategies for Global
Businesses in India (Doctoral dissertation, University of Cincinnati).

Miller, J. (2012). A Whole New Ballgame: Analyzing and Understanding India's Emerging
Middle Class Market (Doctoral dissertation).

https://economictimes.indiatimes.com/industry/cons-products/food/why-mcdonalds-had-to-
shutter-outlets-in-delhi/articleshow/59402309.cms

https://www.cbsnews.com/news/mcdonalds-to-beef-up-in-india-with-meatless-menu/

https://www.britannica.com/topic/McDonalds

https://www.mcdonaldsindia.com/

http://www.123helpme.com/mcdonalds-case-analysis-view.asp?id=166350

APPENDICES
Questionnaire used in the Survey:

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 Cultural Diversity faced by McDonald’s in India

The following data is a survey made on different sections of people in order to understand
consumer preferences, and impact of sales.

Q1. What kind of food are you fond of?

1. Homemade food

2. McDonald’s

3. KFC

Q2. What kind of food do you prefer?

1. Non-vegetarian

2. Vegetarian

3. Prefer to eat both of them

Q3. If McDonald’s stops selling beef, will you visit the outlet?

1. Won’t stop visiting the outlet

2. Will stop visiting the outlet

3. Won’t visit even if it sells foods made of beef and pork

Q 4. What will your reaction be if McDonald’s introduces few vegetarian items in its lunch?

1. Will enjoy meal more

2. Vegetarian food will be more famous than non-vegetarian food

3. Whatever food is sold, whether vegetarian or non-vegetarian food, won’t visit the
restaurant

Q5. Did McDonald’s reduce its popularity by selling beef and pork products?

1. Yes, beef products reduced its popularity

2. Beef products are of good taste

3. Doesn’t matter whether it is vegetarian or non-vegetarian food

Q6. How would the restaurant react against the protests made by the Hindus?

1. They will counter protest and try to seek a solution

2. They will stop selling non vegetarian products

3. They will leave India and go back to the western countries.

Q7. What will happen if McDonald’s shuts down all its outlet?

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 Cultural Diversity faced by McDonald’s in India

1. People will miss the mouthwatering sandwiches, and hamburgers

2. It won’t matter much if McDonald’s goes away from India

3. People will try other food joints which serve same food like McDonald’s.

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