Abstract

McDonalds is a household name that has been around since the 1950’s. The Golden Arches have symbolic meaning around the world. Kids everywhere know that arriving at the Golden Arches equates to an enjoyable eating experience. McDonalds serves customers in more than 30,000 restaurants across 119 countries. They are currently the worlds leading food service retailer serving some 47 million customers daily. One of the 119 countries is India. It was a very daring move to take a renowned hamburger joint into a country that views the cow as a sacred animal. Despite much controversy, McDonald’s remains in India and continues to do well throughout the world.

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Believe it or not, Ray Kroc, the man that revolutionized the fast food market began as a Multimixer salesman. He mortgaged his home and invested his entire life savings to become the exclusive distributor of the five-spindled milk shake maker called the Multimixer. (McDonalds Corporation, 2004)

In 1954, Kroc heard about the McDonald's hamburger stand in California running eight Multimixers at a time. He proceeded to pack his car and headed west.

When Kroc arrived at the restaurant in San Bernardino California, he was very impressed with the speed at which people were served. He was so impressed he brokered a deal to open more of the restaurants.

Ray Kroc opened his first restaurant in Des Plains, Illinois in 1955. The restaurant pulled in three hundred sixy dollars and twelve cents on the opening day. The restaurant has long been converted into a museum and if you gaze upon it today, you will be swept back in time as everything is, as it was. Kroc’s Multimixer is still there along with the fifteen cent hamburger sign and the old fifty’s style automobiles.

Ray Kroc’s success, is certainly due to his determination and bold business decisions; however, by putting the hamburger on the assembly line, each worker’s steps were calculated in order to ensure maximum efficiency. “The result was a decrease in preparation time and an increase in volume, allowing for cheap prices and fast service”. (Bigpicturesmallworld.com, 2004)

Another of Ray Kroc’s innovative business decisions was made in 1961, when he founded the Hamburger University. Kroc’s Hamburger University marked the starting point for the corporate university. The first courses were held in the basement of a McDonald's restaurant in Elk Grove Village, Illinois. The Hamburger Universities were designed to instruct personnel employed by the McDonald's Corporation or by McDonald's Independent Franchisees in the various aspects of the business and operations of McDonald's. More than 65,000 managers in McDonald's restaurants worldwide would graduate from Hamburger University during the following four decades. Today, Hamburger University is located in a 130,000 square foot, state-of-the-art facility on the McDonald's Home Office Campus in Oak Brook, Illinois. “There, a faculty of 30 resident professors can teach and communicate simultaneously in 22 languages with the help of translators and technology. By the end of the twentieth century, Hamburger University had branches in England, Japan, Germany and Australia.” (Schugurensky, 2002)

McDonald’s continued to grow although slowly at first. Ray Kroc, for reasons of uniformity, built all of the restaurants before franchising them out. With this technique, all of the restaurants looked alike and, even today; there are few people that will fail to recognize the shape and colors of a McDonald’s restaurant.

McDonald’s best known burger, the Big Mac, was Introduced 1968. The Big Mac was Jim Delligattis creation. Jim Delligatti was one of Ray Kroc's earliest franchisees who, by the late 1960s, operated a dozen stores in Pittsburgh. Later, in 1973, the Egg McMuffin was developed by owner operator Herb Peterson. (McDonalds Corporation, 2004)

In the early 1980’s, McDonald’s ran into the first stumbling block. Other corporations had noted the success that McDonald’s was having. Everyone wanted a piece of the fast food market, so chains such as Burger King, Wendy’s and Taco Bell began the price slashing period that reduced the companies profit margins to the bottom. Chicken McNuggets were the corporations answer to the burger wars of the 1980’s. Chicken McNuggets were introduced in 1983 to meet the demands of the fast food customer. It was the McNugget that set McDonald’s apart from the fierce competition. By the end of 1983, McDonald’s was the second largest retailer of chicken in the world. (Bigpicturesmall world.com, 2004)

It is true that McDonald’s has become the largest fast food restaurant organization, but the corporation has also come to symbolize globalization as it has definitely changed eating habits around the world. McDonald’s commands a leading share (42%) of the fast food market in the United States. McDonald’s also runs more than 30,000 restaurants in 119 countries. Each day, about eight percent of the U.S. population will eat a meal at McDonald’s, and each year, ninety six percent of the U.S. population will eat at a McDonald’s. By 1988, a mere 33 years after opening there doors, McDonald’s had opened 10,000 restaurants. It was then able to reach the 20,000 mark in another 8 years. By 1997 McDonald’s was opening 2,000 restaurants per year – an average of one every five hours. (Bigpicturesmallworld.com, 2004)

McDonald's India opened its doors to India in October 1996. This was a very bold decision because, in India, the cow is a sacred animal. The Indians also place a high value on all animals. Also, animal cruelty is a popular and widely protested subject.

McDonald’s planned to open some 60 chains throughout India in 1996. However, there was much trouble brewing in India. Another fast food chain, Kentucky Fried Chicken, was having a tough time getting start in India. They were widely criticized as treating the chickens they slaughtered for the restaurants poorly and kept them in substandard conditions.

According to Vandana Shiva, in her interview, there were supposed to be 30 outlets throughout India by 1997. Due to protests from many of India’s citizens including farmers, consumers, doctors and environmentalists, Kentucky Fried Chicken had managed to only get two restaurants going for a short time. “The way Kentucky Fried Chicken managed to get its outlets open despite the protests, was through changing standards, getting the Government of India to change those standards and the permissible level on MSG – Mono – sodium – Glutamate - which is now recognized worldwide to be a health hazard and which has wrongly been called a food additive when it is really a drug - such fools use by sending signals to our brain that there is taste in the food when there is none. Besides, fooling us about food has severe health hazards”. (Shiva, 1997)

It was on the heels of the fierce protests of Kentucky Fried Chicken that McDonald’s planned to make its entrance into the country. The decision was made and the corporation made its move in 1996.

McDonald’s has done its best to suite the customer needs in India. As previously mentioned, the Hindu religion regards the cow as a sacred animal. The answer was to formulate another sandwich that resembled the incredibly popular burger in the United States, the Big Mac. India’s signature burger is called the Maharaja Mac. This burger resembles the Big Mac except the formula consists of “two all lamb patties, special sauce, lettuce cheese pickles, onions on a sesame seed bun.” (McDonald’s Corporation, 2004) In the first year of business, McDnald’s sold more than 350,000 Maharaja Macs.

The Maharaja Mac is not the only change to the menu. McDonald's has specially developed a variety of 100% pure vegetarian food to offer individuals who are vegetarians. In fact, even the mayonnaise used in the items is egg less. The new items include a vegetable burger and vegetable nuggets. Taking into account the sensitivity of Indian tastes, they have prepared the choicest of products using spices selected by the public. (McDonald’s India, 2001) Some of the unique dipping sauces include chili and masala, which is an aromatic mixture of spices, extensively used in curries.

To make things easier for the customers, the menus have been color coded to reduce confusion. The menu board is split in two with green symbolizing vegetarian products and purple having a non-vegetarian designation. The preparation areas have also been separated to ensure that meat and non-meat products do not come into contact. The restaurant has even gone as far as separating the preparation crew. The employees dealing with meat products have different uniforms than those that do not. This gives visual peace of mind to the customers. Knowing that the meat products are separated as well as could be feasible expected, helps to give the fun eating experience desired by all of McDonald’s branches.

Much of this separation is done to show that McDonald’s is sensitive to the Indian culture. When dealing with food, the Indian culture calls for a little different dining protocol than that of the typical United States household. In India, it is expected that an individual will eat with the right hand only. The left hand is reserved for hygienic purposes and is considered unclean. Also, touching a communal dish may cause fellow diners to avoid it. Offering another person food from your plate is offensive. The Indian culture believes that once food is placed on your plate it is considered polluted. (Morrison, Conway & Borden, 1994)

McDonald’s is trying to help the economy in India as well. “In order to diminish fears of American imperialism, the chains try to purchase as much food as possible in the countries where they operate.” (Elliot, 2001) McDonald’s determined that they would be better off trying to contract local food production instead of importing food. The corporate giant imported an entire systems of agricultural production. “Seven years before McDonald's opened its first restaurant in India, the company began to establish a supply network there, teaching Indian farmers how to grow iceberg lettuce with seeds specially developed for the nation's climate.” (Elliot, 2001) This decision was beneficial to both parties. The Indians are lending a hand in the production of the food they eat, giving them a tie to the McDonald’s corporation. McDonald’s wins because the lettuce is grown in the country with which they are doing business, ensuring a fresh product and doing away with a lot of import taxes and tarriffs.

As mentioned earlier regarding the Kentucky fried chicken protests, McDonald’s, along with many other American based companies have not been welcomed with open arms in India. McDonald's restaurants have faced the wrath of Hindu activists over the use of beef flavoring in the chain's french fries in the United States. (CNN.com, 2003) A Seattle lawyer claimed that the french fries were not cooked in 100 percent vegetable oil as the company had previously stated. The claims brought up an eleven year old issue claiming McDonald’s was using beef tallow in their famous french fries, giving the fries the taste that sets McDonald’s fries apart from the competition.

The class-action suite that was filed at the King County Superior Court in 2001 claimed that McDonald’s “intentionally failed to publicly disclose its continued use of beef tallow in the (french fry) cooking process under the guise of ‘natural flavor’”. (Skolnik, 2001) The plaintiffs in the suite were two Hindus living in Lynwood and Seattle along with a non-Hindu vegetarian from Seattle. The claim left many “Hindus and vegetarians all over the world feeling shocked and betrayed by McDonald’s deception and ultimate greed.” (Skolnik, 2001)

In India, members of a Hindu nationalist group shouted slogans outside the corporate office of McDonald's in the Indian capital, demanding the closure of all of its outlets. “More than 50 protesters belonging to the Shiv Sena, an alliance partner of Prime Minister Atal Bihari Vajpayee's government, refused to accept the company's clarification that french fries and other vegetarian products sold in India "do not contain any beef or animal extracts, of whatsoever kind." (Skolnik, 2001)

It was stated by Megan Magee of McDonald’s Home Office Customer Satisfaction Department that a minuscule amount of beef flavoring is used as an ingredient in the raw product. The suite claimed that, “although beef is not listed as an ingredient in McDonald’s fries, it is part of what is described by the company as natural flavor.” (Skolnik, 2001)

A small amount of beef flavoring is added to potatoes as they are being lightly fried at processing plants, according to McDonald’s. When the fries arrive at the restaurants, the frozen products are fried in 100 percent pure vegetable oil.

McDonald’s posted an apology on its web page shortly following the suite on May 25, 2001. The apology read, "McDonald's USA is always sensitive to customers' concerns. Because it is our policy to communicate to customers, we regret if customers felt that the information we provided was not complete enough to meet their needs. If there was confusion, we apologize," (Skolnik, 2001)

McDonald’s took a gamble when it decided to invest in the Indian market. First, they were going to be locating in a country consisting of an 83 percent population practicing the Hindu religion. As it is well known, the cow is a sacred animal in the Hindu religion and McDonald’s is well known for its beefy Big Mac. Secondly, the corporation decided to open its restaurants in India following a large protest from Kentucky Fried Chicken. The chicken is not held in as high a regard as the cow, and Kentucky Fried Chicken was having a difficult time getting their restaurants going.

It appears that the McDonald’s corporation has achieved its current status on behalf of very risky business decisions, the first of which began with the corporations founder Ray Kroc. These decisions have resulted in a positive and prosperous outcome for the corporation.

Today, McDonald’s is ranked 114th in the fortune 500 with an average annual revenue slightly in excess of 17 million dollars. (Fortune, 2004) Although competition has been stiff with the largest demand ever for fast food, McDonald’s remains afloat and is still revered as the founder of the fast food restaurant.

References

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CNN.com (2003). Indian beef protesters raid McDonald's. Retrieved June 13, 2004 from http://edition.cnn.com/2001/WORLD/asiapcf/south/05/04/india.mcdonalds/

Elliott, Iain. (2001). Pulling a Fast One. Retrieved June 14, 2004 from http://articles.findarticles.com/p/articles/mi_m2465/is_5_31/ai_7628545

Fortune (2004). Fortune 500, 2004: 50 years of the fortune 500 special issue (Vol. 149, No.7). New York: Time Inc.

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Morrison, Terri, Conway, Wayne A., & Borden, George A, Ph.D. (1994). Kiss, Bow, or Shake Hands: How to Do Business in Sixty Countries. Massachusetts: Adams Media Corporation.

Schugurensky, Daniel. (2002). McDonald's starts first corporate university. Retrieved June 13, 2004 from http://fcis.oise.utoronto.ca/~daniel_schugurensky/assignment1/1961mcdonalds.html

Shiva, Vandana. (1997). Vandana Shiva on McDonald's, Exploitation and the Global Economy. Retrieved June 13, 2004 from http://www.mcspotlight.org/people/interviews/vandana_transcript.html

Skolnik, Sam. (2001). Hindus, vegetarians sue McDonald's over frying process. Retrieved June 13, 2004 from http://www.mindfully.org/Food/Hindus-Sue-McDonalds.htm