THUNDERBIRD
THE GARVIN SCHOO L OF INTERNATIONAL MANAGEMENT

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KISHORE DASH

McDoNALD's IN INDIA
I do not see any thing wrong with McDonald\ doing business in India. A/fer all, if ts not McDonaldization that we know of 11 is a Big MaCcommodatw n. A Senior Bureaucrat in New Delhi

In October 1996, McDonald's opened irs ttrst Indian ourlec in Vasant Vihar, a n affluent residential colony in India's capital, New Delhi. As of November 2004 , McDonald 's has opened a total of 58 restaura nts, mostl y in the northern a nd western parr of India (Exhibit 1). 1 While McDonald 's opened 34 restaura nts in five years (by 2001 ), 58 restaurants in eight yea rs (by 2004), it is now pla nning to add more than 90 new restaurants in the next three years. 2 Although the initial scenes of crowds lining up for days outside the M cDonald 's res taurants in Delhi and Mumbai are no longer seen, Indian consumer response to McDonald's products still remains very strong. The ten McDonald's I visited in Mumbai and Delhi were pac ked with young people, children , and yo ung p a renrs enjoying ice c reams, sp icy potato wedges (instead of the usual frenc h fries), and Happy M ea ls. The growth of M cDonald's in India is not as rapid as in China (Exhibit 4) . Bur irs growth is nevertheless impressive . How did McDo nald's d o it? How d id a hamburger cha in becom e so promi nent in a cultural z.one dominated by non-beef, non-pork, vegetarian, and regional foods such as chofa bhatura, kababs, bhaji, samosa, dosa, vada, sam bar, bhefpuri, and rice? The answer to this question lies in McDonald's carefully pla nned entry and expansio n strategy in accordance with I ndia's c hanging political, economic, and culw ral landscape in the 1990s.

The Indian Food Service Industry
With more than ftve thousand e thnic co mmunities represenred , India has a very diverse population. Each region and subregion in India has distinct food traditions and preferences. Itidian consumers rypical ly maintain the ir distinct food habits even after migrating to different parts of the counrry. In large cities and m etropolitan areas, some restaurants serve only specialry regio nal foods. Some regional fas t foo ds such as samosa, kababs, chofa bhatura, pakoda, afoo-paratha, poori-bhaji, dosa, and sambarvada are popular am ong Indian co nsumers and are available in both special ry a nd multi-cuisine resta urants thro ugho ut India. Most Indians pre fer to ear h ome-cooked foods and rake immense pride in the varieties o f food cooked at home. For most Indians, home-cooked foods a re co nsidered fresh , healthy, and inexpensive. G iven the distinct dietary habits and food p refe rence oflndian consume rs , it is not surprisin g that unril the early 1990s Western fast food chains had largely ignored India n markers. As a result, Nirulas, the o nly notable Indian fas t food chain , has been able to dominate the Indian market in fast food service sa les . In N ovember 2004 , M cDonal.d 's entered the southern parr oflndia wi th irs flrsr res rauram in Banga lore, the so-called Sil icon Va lley of India. 2 "M cD o nald's to Open 90 Outlets in T h ree Years," Business Sta ndard, June 24, 2005.
Copyright © 2005 Thunderbird, The Garvin SchooL of InternationaL Managemenr. A Ll rights reserved. Thzs case was p repared by Projess01· Kishore Dash based on his interviews and field research in India fo r the purpose of classroom discussion only, and not to indicate either effective or inejfectzve management.
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There are approx imately 22,000 registered res taurants in India. In addition, there are more than 100,000 dhabas (small roadside food stalls) that sell a variety of foods in cities and on highways. By 1998, there were approximately 1,568 registered hotels in India, half of which have rheir own restaurants:" In addition, large to medium-range canteens se rve rhe food needs of various institutions such as hospitals, prisons, defense es tablishments, schools, co ll eges and un1versiries, railways, airlines , government establishments, and private companies. Since 1994 , India's food 1m pons have bee n growing more rhan 37% per year. Half of India's food imports are agricultural items such as cereals, vegetables, fruits, wheat, and nuts. One of the significant problems of the Indian food indusuy is an in efficient food chain between farmers and co nsum ers. About 20% of India's food production is wasted becau.se of roo many inrermediaries, poor infrastr ucture, and poor transportation facilities. Considerable inefficiency in the food distribution system curs farmers' income while rai sing consumer food prices. Although India is rhe world's third larges t food producer, irs processing industry is very small compared ro orher countries in Asia, Europe, and the United Stares. Despite rhe lack of a well-developed food processing industry, India's imports of processed consumer foo ds have traditionally remained low. Since the early 1990s, India's food service sales have significantly increased. India's processed and fast food markets have shown considerable potential for growth. A number of factors have driven increased processed and fast food sales: • Growing Income • The long-term growth trend in India is improving. The past three decades have seen a steady acceleration. Average annual growth in GDP per head climbed from 1.2% in rhe 1970s to 3% in rhe 1980s and 4% in the 1990s. From 1972 to 1982, GDP growth averaged 3.5% a year- the so-cal led "Hindu rare of growth." As a result of India's decade-long liberalization of economic policies, rhe growth rare climbed to 6% from 1992-2002 and is likely to reach 7% by 2010. 4 If this rate is maintained, GDP per person will double in only 18 years. However, high GDP growth is confined ro only rhe few stares with coastal access and high level s of urbaniza tion . The fastest-growing Indian states in 1991-2001 were Delhi, Maharashrra, Karnaraka, West Bengal, and Gujrar. These stares enjoyed annual average economic growth of 6-8%, which is compa rable w East Asian economies during the same period . Bur the economies of poor stares like Bihar, Urrar Pradesh, Madhya Pradesh, Orissa, and Assam grew by a dismal annual average of 2% over rhe sa me period. 5 Not surprisingly, income distribution is highly skewed in IncLa. Just 20% of rhe richest Indian s share more than 40% of the national income (Exhibit 2). Exhibit 3A gives a proftle of average annual household income distribution in India. According to a study by National Applied Economic Research (2004), rhe number of households with an annual income over Indian Rupees (Rs.) 1 crore (US $228,351) has grown by 26% since 1995-96 to 20,000 in 2001-02. By 2009-10, ir will increase more than seven rimes to 1,40,000 households. In the Rs. 50 lakh (US $114, 180) to Rs. 1 crore (US $228, 351) bracker,6 rhe number of households is expected to increase from 40,000 in 2001-02 ro over 250,000 in 2009-1 0. Exhibit 3B describes the change in average annual household income distribution of low, lower, and high middle class in India's urban and rural areas from 1989-90 ro 2001-02. It also provides a projection in income distribution of low, lower, and high middle class for rhe year 2009-10. In rhe 11 years following 1989-90, rhe total number of households increased by 32%, although the average size of
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USDA Foreign AgriculturaL Service GAIN Report#IN9082, U.S . Embassy, New Delhi, November 14, 1999, pp. 2-3. 4 Dani Rodrik and Arvind Subramanian, "Why India Can Grow at 7 Percenr a Year or More: Projections and Reflections;" IMF Working Paper, July 2004. 5 EIU, Business India Intelligence, January 26, 2005, Vol. 12, No.2, p. 5.

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lndian households h as declined from 5.9 people per household in 1990 ro 5.2 in 2001. What is imponant is that the number of low-income urban households has been approximately halved, from 14.9 million households in 1989-90 ro 7.6 million in 2001-02. The number of low-income r u ral households has also declined from 69 million in 1989-90 ro 58 million in 2001-02. The growth in incomes in the rop band has been experienced by both urban and rural households, both of w hich have rough ly doubled as a share of the total population over the 1990s 7 The members of these households have higher disposable income a nd have shown greater propensity ro spend on fast foods. • Population Growth and Urban ization According ro the 2001 census, India's population grew at a rate of around 2% a year during the previous decade. This was a marked decline from earlier decades of population growth of around 3% annually. Nevertheless, India added 181 million people between 1990-2001, more than the rota! population of Brazil. 8 According ro the forecast of Goldman Sachs (an American investment bank), the reason why India is expected to outperform Brazil, Russia, and China, as well as the "rich world" (i.e., United States, Canada, France, Germany, United Kingdom) , is t hat it is the only country where the population wil l continue to grow for the next 50 years and where the proponion of working-age people will increase well inro the 2020s 9 The percentage of urban population in India has increased from 21% in 1975 to more than 28% in 2004 (Exhibit 2). It is likely ro increase to 36% in 2025 . 10 Most high-income Indians prefer to live in urban areas. Over 70% of affluent urban Indian consumers live in the ten most populated and cosmopol itan cities in India: Mumbai, Delhi , Kolkara, Pune, Chennai, Hyderabad, Bangalore, Ahmedabad, L udhia na, a nd Nagpur. The number of dual income households, where both husband and wife work, is slowly increasing in urban areas. Like their husbands, full-rime working women spend most of the ir rime away from home. A s a resu lt, there h as been a dra matic change in the way Indian working wives shop a nd organize family m ea ls. Packaged rice, prepared yoghurt, packers of flour, frozen ch ickens, and marinated mutton (goat or lamb meat) are fast replacing curd ling, grind ing, and handling of marker-bought fowls and h aunches of mutton. Not surprisingly, even some Indian consumers have started opting for meal s away from home on working days. The growing popularity of Delhi's Waiters on Wheels (WOW), a supply agency delivering meals to people's doorsteps from 30 d ifferent resta ura nts at the same price as one wou ld pay in the restaura nts, is an example of India's changin g food serv ice landscape. 11 High income a nd growing urbanization h ave also contribu ted to a shift in the traditional Indian food habits. High-in come urban dwellers are seeking variety in their choice of foods and are willing to sp end more on interna tional cuisin e, in cluding fast foods. Consequently, a growing number of domestic fast food outlets, home delivery, take-away restaurants, and American resta urant chains, such as Kenwcky Fried Chicken (KFC), TGI Friday's, Domino's Pizza, Pizza Hut, M c Donald 's, and Baskin Robbins, have opened in the last few years. NCAER (National C ouncil o f Applied Economic Research) survey report, March 9, 2004. "Looking on rhe Bright Side: India's Economy Is Revving Up," The Economist, February 2 1, 2004 , p. 13. 9 In a widely c irculated re port on the growth prospec ts of BRlC (Brazil , Russia, India, China), Goldman Sachs predic ted rhat over the nex t ha lf century grow[h will slow sharply in rhe world 's six big rich countries and in Brazil, Russia, a nd C hina. Bur India will continue to experience a n annua l average growth of more tha n 5% , and by 2032 its GDP will be bigger tha n J apan 's. By 2050, lndia's national incom e per head in do ll ar terms will have multi p lied 35-fold . Goldma n Sach s, Global Economic Paper N o 99: Dreaming with BRJCs: The Path to 2 05 0, O ctober 2003 , http:/ /v.rww.gs.com/insight/ resea rch/ reponslreporr6.html. Also see r.he fo llow-up report by Goldman Sachs, GLobaLEconomic Paper N o 112: The G8: Tim e fo r a Change, June 2004, Imp:! /www .gs.com/ ins ighr/resea rch / repo rts/ re po rt] 5.hrml. 10 Tim Dyson. Ro ber[ Cassen , a nd Leela Visa ria, T wnety-First Centu ry India: Population, Economy, H uman DeveLopment and the E nvtronment, O xford U niversity Press, 2004. 11 See Adirupa Sengupta, "Living Up to the C hoices Offe red by the Free Ma rker," India Abroad, Augusr 29,
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India's Economic Liberalization
The effort of McDonald's w encer India commenced in ea rnest in rhe early 1990s after it s uccessfu ll y opened outlets in China_~ 2 Exhibit 4 provides some facts abo ut McDonald's entry and growth into selecr countries. India's wide range of eco nom ic reforms in the 1990s, coupled with a po tentiall y large consumer marker (wirh 300 millio n cons umers, a lmost as big as C hina) , provided eno ugh ince ntives for M cDonald 's ro enter inro the Indian marker. ExecU[ives a r McDonald's we re aware oflndia's deep suspicion of foreign companies . A.fter all , India's colonization by rhe British for over three centuries starred w ith rhe East India Compan y's trade linkages . N ot surprisingly, after its indepen d ence in 194 7, Indian political leaders propounded vigoro usly the swadeshi mantra (preference for national products). Accordingly, rhey pursued policies of econo mic nationalism in which heavy state intervencion in economic m atte rs and preference for domestic compa nies contin ued until the late l980s.lndia's sensi tivi ty ro cultural imperialism , the so-caJied Western c ultural domination over Indian values, tradi tions, reli gious beliefs, customs, a nd food h abits, made the e ntry offo reign multinational corporations (MNCs), particularly in the food i ndusrry, difficult. Untillare 1980s, India co ntinued to pursue a dirigiste (state control over economic mauers) and autarkic (self-suffi cie nt) development strategy. Under this strategy, p ublic secror-led economic growth was g iven critical importance. Government control ove r the economy was maintained through protective trade policies; price control; licensin g reguiremenrs for companies ro relocate ex isting facilities , establish new plants, expand produc tion , a nd introd uce new technology or new product lines; severe constrai nts on the in -flow of foreig n capital an d tech nology; and extensive regulatory intervention on marke r activities. Compa nies were forced to import at the governmem-fl xed exchange rate. The inefficiency of rhe public secto r and the government's policy to support Joss-making public fi rms by b udget ou tlays and loans from nationalized banks led to a considerable slowing down of the Indian eco nomy. Such strategies produced a low economic growth rate (the so-called Hindu rare of growth) o f 3 .5% between 1965 and 1980. By the la te 1980s, India began to borrow h eavily from both commercial sources and the World Bank and Asian Development Bank ro finance irs growi n g budget deficits. The major portion of rhe govern m ent's fiscal defic it was incu rred by irs inability ro co ntrol the expa nsion of public secro r em ployment, subsidies, military expenditu re, and interest p ayments. By 1990, India's economi c situation was in a critical stage. In June 1991, India faced a severe balan ce of paym ent c risis as its foreign exchange reserve plummeted to an all -rime low of $ 1.2 billion, barely sufficie nt ro pay for rwo weeks o f viral importS. Besides, by 1991 th e central government's budget deficits reached a record high of 8 .4 % of GOP. The infl atio n rare, which fo r most of the 197 0s and 1980 s remained at a single digit, went up w 17 % ; external debt increased from $2 1 billion in 19 80 to over$ 7 1 billion; and the debt- to-service ratio increased to an unmanageable 32% of GDP. 13 In response to this severe macroeconomic crisis, In dia's n ewly formed government, under the leadership of Prime Minister N a rasimha Rao of the C ongress (I) party, introd uced a series of economic reforms designed ro d ec rease government control in the eco nomy and move roward a n increasingly marker- based economy. Exh ibit 5 o utlines some of the major poli cy reforms o f 1991 . India's eco nom ic liberalization po licies were d esign ed to c reate a marker-friendly e nvironmenc ro attract MNCs and foreign direc t investment.

For background in format ion about McDo nald's and its history, see M cDonaLd's: Behind the A rches by J ohn F. Love (New York: Bantam Books, 1995); Grinding it Out: The Making of McD onaLd's (Chicago: H . Regnery, 1977) written by McD o nald 's C orporation founder Ray Kroc wirh Roben Anderson ; Big Mac: The Unauthorized Story of M cDonaLd's (New York: Dutton , 1976) by Max Boas and Steve C h ain ; and rhe McDonald's Web sire. 13 See Momek Singh Ahluwalia's commenrary o n Ind ia's Reform, CoLumbia journaLofBusiness, 29:1 (Spring 1994), p. 7.

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\XIhiJe a number of U .S.-based fast food chains like KFC a nd Pi zza Hut rushed to the Indian market in the early l 990s as res ult of rhe Indian government's liberalization policies, McDonald's did nor enter the Indian market until 1996. In stead , it spent ahout six yea rs in plann ing, extensively researching Indian consumer rasres, product development, and suppl y chain arrangement before o pening irs flrsr outlet in 1996.

McDonald's Road Map for India
Emphasis on Local Management
McDonald's has given the adage of "think global, act local" a concrete shape in India. The company's localization strategy is clearly m an ifest in the critical area of m a nageme nr. McDonald's decided ro set up two joint venwres o n a 50:50 basis w irh two local entrepreneurs in Mumbai and Delhi. In Mumbai, Amit )aria's company, Hardcastle Restaurants Priva te Limited, was selected to own and manage McDonald's restaurants in the western region . In Delhi, V ikra m Bakshi's Con naught Plaza Restaurants Private Limited was chosen ro own and m anage McDonald's restaura nts in the northern region . Bo rh Vikram Bakshi and Amir Jaria are responsible for running McDonald's in India. V ikram Bakshi has extensive background in real esrate development in Delhi, while Amir )aria, a vegetarian , has a chemicals and textile business background in Mumbai. It was not their backgrounds, however, that won the confidence of the Big Mac's management. Rather, it was their business plan emphasizing India-centric m anagement strategies a nd their easy access to b u rea ucracy so critical to effective government relations bu ilding .

"Politically Correct" Strategy
In rhe beginning, McDonald's was faced w ith rwo challenges of rh e Indian marker : (1) how to avoid hurting religi o us sensibilities of Indian co nsumers; and (2) how ro avo id po litical confrontation with Indian government and politica l activists. McDonald's managers we re well aware of the fact that politi cal activists can create tro uble for foreign-based fast food chains, as demonstrated in the case of political ly organized agi tation against KFC in Bangalore in January l 996. Wirh two local managing direcrors (Bakshi and ] aria) playing c ritical roles, McDonald's rook a series of politically correct strategies to deal wi rh the initial chal lenges of rhe Indian marker. Since India's majoriry Hindus (80% of India's population) revere cows as sacred a nd 150 million o flndi an Muslims do not ear pork, beef and pork have been a "complete no -no" from the start. Instead, McDonald's introduced a mutron-based " Maharaja Mac" in India, as o pposed to irs fl ags hip beef-based Big Mac elsewhere. 14 Other item s- such as rhe tantal izing McAioo Tikki Burger (breaded potato and pea pattie)-were add ed to the menu ro lure India's middle class. Approxim atel y 75% of the menu available in M cDo nald 's in India is India nized and specifically designed ro woo Indian custom ers (Exh ibit 6).

Employment Opportunity
India has come a lo ng way from oppos ing the entry of MNCs to encouraging them to expand their business opera tions in India. Today, every expansion move M cDonald's makes is received well by government offi cials. An important reason for this shift in attitude is the ab ili ry of the company to generate qualiry and long-term employmen t opportunities for Indians. McDonald's rypically employs local people, and the average McDonald's restaurant in India employs more than 100 people in all kinds of positions- cashiers, cooks, manage rs, ere. Besides, every expansion also brings addi tional incom e and employment opportunities to India's agricultural work force, which is very pleasing to government offtcials. As Devinder Singh , a post-graduate econom ics swden t of Delhi Schoo l of Econo mics in Delhi Un iversiry, pur it: "McDonald's is now seen as a small - or medium-scale industry and is rhus considered

Maharaja Mac is made of two all-lamb patties, special sauce, le[ruce, ch eese, pickles, on io ns o n a sesame seed bun. A07-05-001 5

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as useful for generating additional employment opportunities. As long as McDonald's serves this purpose, government support will follow." 15

Green Sensitivity
In Indi::~, there is a vocal group of envHonmemal and animal activists who oppose the e ntry offasr-food chains lrke KFC and McDonald's Maneka Gandhi, former environment minister in the central government, and Dr. Vandana Shiva, direcror of the Research Foundation for Science, Technology and Ecology, are the prominen t leaders of this group. According ro this group's campaign , junk food chains like McDonald's and KFC destroy ecological balance and cause severe behavioral disorders because of thei r fatty and unhealthy foods, w hich have excessive levels of monosodium glutamate (MSG). Besides, they also campaign that these food chains are anti- poor a nd carer only to the rich segment of the Indian soctety. To counter such negative campaigns, M cDo nald's has instituted a special fund ro support green movemenrs in Delhi. In Mumbai, in add ition to fin ancial conrribution s, ir sponso rs various comnlUnity-relared activities-such as "keep yo ur city clean"- to promote environmenral conscio usness. In some of its restaurants in Delhi's residential areas like Vasanr Vihar and No ida, McDonald's has p ut up pro-environmenr advertisements like "We Love Green ." As a part of its attempt ro increase awareness for an active a nd healthy lifestyle, McDonald's has sponso red and promoted several highly v isible sporrsrelared activities, including rhe recentl y concluded and very well attended " O lympic Day Run" in June 2005 in Vadodara in the state of Gujrar. Besides, McDonald 's is currently focusing on fine tuning irs fast food image by adding healrh food options to irs product lists in terms of offering more baked or roasted options as opposed to fried parries. McCurry Pan , introduced in 2003, was the first baked dish optio n , and many more are being developed .

Corporate Citizenship: Giving Back Is Good Business
The executives of McDonald's understand it well that g ivi n g back ro society is not just a one-way street (benefiting the recipients of corporate volu nteerism ). Ir is also a critical elem enr of a company's brand and reputation. Giving back to rhe comm uni ty brings benefits thar far exceed any costs- whether it's in terms of stre ngthening the bra nd name or gen e rating positive political capital that translates into more official support for company's expansion strategy. T hus, as a part of irs corporate ciri2enship strategy, McDonald's has been involved in man y community-rela ted projects in India. Most of irs projects are, however, directed toward ch ildren. One of irs mosr popular community programs in Mumbai is called McDonald's Spotlight, whic h is an a nnual interschool performing arrs competition. T his competitio n is open to all secondary schools (standards 5th to l Orh) . The popularity of M cDonald's Spotl ight is evident from rhe number of schools participating in ir. From 28 schools in 1998, rbe figures have increased to 120 schools in 2003. Since 2002, McDonald's h as been participating in Wo rld C hildren's Day o n November 20 that coincides with United Nations' Universal Chi ldren's Day. On rhis day, M cDonald's restaurants all over the wo rld come togethe r to raise funds for a charity of their choice. Since India h as already been celebrating Ch ildren's Day on November 14 (th at coincides wirh the birthday oflndia's first Prime Minister, Jawaharla l Nehru) , M cDonald's thought it appropriate to link these rwo days in India to create w h at is known as World C hildren's Wee k. Thus, instead of World Childre n's D ay, McDonald's cel ebrates World C hildren's W eek from November 14-20 in all its restaura nts in India, during which funds are raised to finance various educatio nal programs for ch ildren. One such popular initiative by McDonald's in Mumbai is known as the Blue Dot initiative rh at supporrs educational programs for the gi rl-child . In rhe Indian society, where rhe girl-child is always less favored than a boy, s uch an initiative by M cDonald's has generated a lot of goodwi ll among Mumbai's politicians and communi ty orga ni2atio ns that are working towa rd improving the status of the girl-child.
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Another successful progr::~m sponsored by McDonald's is the Pulse Polio program that aims w make India polio-free by the year 2005. Parmering with the Rotary Club and local health orga nizations in Mumbai, M cDonald's has been setting up inoculation booths outside irs restaurants in Mumbai since 2001 w provide free polio vaccine w the children up to the age of five years during rhe polio eradication drive week once a year. McDonald's has also sponsored such popular children progra ms as the Millennium Pune Festi val, Millennium Dreamers Global Recognition program (a talent search program for chi~dren between 8 to 15 years) in collaboration with UNESCO and Disney World Resort in Florida, and Inrerschool Science Quiz contest (where more than 180 schools fro m Mumbai participate every year) in collaboration with the Nehru Science Center, Mumbai. Needless to say, such community-related programs have earned official support for McDonald's and have he.lped irs brand and reputation.

Pricing
Much of the McDonald's growth in India can be anribured to its pricing srraregy. Since, on an average, each household spends about 50% of income on food and beverages in Indi a, food prices are always a sensitive issue (Exhibit 7) . Even the Indian middle class, despite their much improved income level, remains very price sensitive. Accordingly, McDonald's has pursued what Amit Jatia, rhe company's managing direcror in the Western region, ca lls "p urchasing power pricing" or the customer's ability w pay. The adoption of such a pricing strategy in India offers a useful country-specific insight on possible price differences of the company's products on the basis of purchasin g power pa rity (PPP) calculations across coumries as provided by rhe so-called Big Mac Index (Exhibits 8 and 9). Worldwide, McDonald's has achieved success by rapping middle-class households. But in India, while McDonald's has been able to get a larger share of rich and upper-m iddleclass population , it has not been as successful at effectively tapping the middle-class and lower middle-class segments. Capturing the latter segment is critical as McDonald's starts emering into smaller cities. Bur this section has mainly stayed away because of a widely prevailed perception that M cDonald's is expensive. This is the reason why the company cut prices on irs vegetable nuggets from Rs 29 toRs 19, and the soft service ice cream cone from Rs 15 to Rs 7 in 1997. 16 In September 2001, McDonald's offered its enormously popular shudh shakahari (p ure vegetarian) Veg Surprise (a veggie burger) for Rs 17. Wi th this price, McDonald's was able to sell the veggie burger 40% more than what it expected within a month between September and Ocrober of 2001. 17 Jn March 2004, McDonald's launched a Happy Price menu under which it sells four of irs burger products at Rs20 each. This h as led w a 25% increase in customers. 18 C learly, the McDonald's strategy has been to increase sales volume of irs products by making its products available at an affordable price. McDonald's has been offering value meals in a range of prices- Rs 29, Rs 3 9, R s 49, Rs 59, Rs 79, and Rs 89. McDonald's has employed this value-ladder strategy to ensure affordabiliry and rhus attract the widest section of c ustomers. As Vikram Bakshi, McDonald's managing director of the Northern region in India, explains, "Our clear strategy is to bring the customers in initially and provide a range of entry-level products so that they can try new items and graduate to the higher rungs. Thus, if a cusromer starts with a McAJoo Tikki Burger (breaded potato and pea pattie), what he graduates w finall y is a vegetaria n burger. Or, if a customer starrs with a C hicken Kaba b burger, what h e graduates finall y to is the McChicken. " Such strategy has helped irs volume business. Another strategy that seems ro have gone well with India n customers is what the company calls the 80-20 m enu board- 80% visual and 20% descriptive. The mairi objective of the compan y is to m ake it easier for customers ro understand what the 29, 39 , 49 , 59, 79, and 89 rupee options are. Coup led with the pricing range, McDonald's quick service, conve nience, and no- rips enviro nment have attracted many school- and college-going customers, as well as yo ung middle-class families.
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Bhanu Pande and Aani Dua, "Big Mac's Appetite for Growth ,;, Business Standa rd, August 29, 2000, p. 4. Seema Shukla, "Mclndia," Business Today, N ovember 25 , 200 I , p. 58.
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The most impona m reason for McDo na ld 's pricmg fl exibility is irs well-establ ished supply c hain arrangemenr, which ensures efficien cy and speed in distributio n. Bes ides, huge in creases in volume sales and food p rocessing technology have been helping rhe company to offset irs cost.

Supply Chain Management
Ano ther critical strategy was to set up a well-established supply chain in India in order to achieve three objectives: (1 ) to operatio nalize irs gl o bally practiced Q SCV (quality, service, cleanliness, and value) princ iple; (2) to enjoy fl exibility in pri cing; a nd (3) to launch a n ew product when necessary. To achieve these three objecti ves, McDonald's often uses an o utsourcing m o del in all irs markets. In some cases, it also actively imports. But give n India's relatively hi gher import duties a nd fore ign exch a nge fluctuations, McDo nald's dec ided early on to source its raw materials from the loca l suppliers to the maximum extent possible. C urrently, M cD o nald 's o nly imports rhe p rocess con tro l equi p m e nt rhar al lows ir ro dish o ur burgers a nd other orders within irs supe r-fas t rime frames. T h e company, however, sou rces 95% o f its raw m ateria ls fro m 38 local suppliers. 19 Fresh lettuce com es fro m D elhi , Pune (M ah arashna) , Nainital, and O o ry (Utta r Prad esh ) ; cheese com es fr o m D yn a mix Dairies located in Baramati (M aharashrra); buns come fro m C remica Industries in Phillur (Punj ab) and Shah Becro r a nd So ns in Khopoli (Maharashrra); pickles come from Glo bal Green C ompa ny in H ydera bad (Andhra Pradesh) ; sauce com es fro m Becror Foods in Phillur (P unj ab); and chicken parries, vegetable p atties, pies, and pizza puffs come from Vista Processed Foods in Taloj a (M aha rash t ra) (Exhibit 10) . The enrire supply distributio n is rhe responsibili ty o f AF L Logistics Lrd ., a joint ven ture between Air freight and Coughlin in the U.S. , and R adha krishna Foodland (P) Lrd. in Thane, M aha rashrra. Settin g up a well-coo rdin ated supply chain was no t easy, gi ven India's poor transportatio n and storage infrastructure, as well as irs lower-qua lity agricultural products. Thus, six years prio r to rhe opening of irs first resta urant in India, M cDonald 's and irs internatio nal suppliers worked together w ith local Indi an companies ro d evelop p roducts that m eet the rigorous quali ty stand ards M cD onald 's dem ands. An underl ying principle in product development was to strictly adhere to the Indian government's reg ul ation on food , health, and hygiene and to exceed the government's sta ndards. To d o so, M cD o nald's transferred its state-of-the-art food process ing tech nology to India, enabling India n businesses to grow by improving their ability to com pere in tod ay's inte rnatio nal m arkers. M cD o nald's has wo rked with local Indi a n suppliers ro co nsistentl y improve the quali ty and in crease greater y ields o f agricultural produ cts. For instance, it helped farm ers of Trikaya Agriculture Co mpa ny ro grow high-qua li ty lettuce yea r ro und in Ooty, Pune, Delhi, a nd o ther regio ns. M cD o n al d 's shared wi th Tri kaya ad vanced agricultural techno logy and expe rtise like utiliza tion o f d rip irrigation system s that reduce overal l water consumpti o n and agricultural m a nagem ent p rac ti ces. Fo r quality control, T rikaya's post-h a rvest facilities no w incl ude a la rge cold storage fac ili ty, a cold chain consisting o f a pre-coolin g room to rem ove field hea t and large refri gerated vans with humidity co n tro ls. To ensure standa rdizatio n and higher q uali ty, Vista Inrernatio nal, wh ich supplies the pies, nuggets, and vegetable and c hicke n patti es, built a new facili ty in 1996 with help from M cD o nald's. T his new facility has insulated panels, tem pe rature cont rol, a nd chill roo ms. V ista Internatio nal has o btained American Institute of Bakers a nd H azard Anal ysis C ritical C ontrol Po ints (HACCP) cerriflcatio n fo r qual ity sran d ard s.20 I n so m e cases, Indian co m pa n ies like D ynamix Dairies had the techno logy b ut no market for their milk d erivative p roducts. By associating with McD o nald's, D ynamix D a iri es has seen a regularly g rowPooja Kothari, "Brand-Equity- Shaking Ir Up at M cDo nald 's," The Economic Times, Ocwber 13, 2004 . Seema Shukla, "Mcl nd ia," Business Today, N ovember 25, 2001 , p. 62. 20H aza rd Analysis C ritical C ontrol Po int (HACCP) is a systematic approach w food safety that emphasizes prevention of iII ness or p resence of micro bio logica l data w irhi n su ppl iers' facili ries and restaurants rather rhan irs detec tion thro ugh inspection . Based o n HACC P guid elines, contro l po ints and critica l cont rol points fo r all M cDonald 's major food processing pla nts and restaurants in India have been idenrifled . T he HACCP verification is done at least rwice a year and is certified .
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ing expansion of its marker. Now, it not only supplies products to McDonald's resrauranrs in India , bur also has an export order of approximately US$12 million per year. Radhakrishna Food land (P) Ltd., which is responsible for getting products from various suppliers and delivering products ro various McDonald's ourlets, has earned an excellent reputation in maintaining a tight "delivery-on-time" schedule. This is possible because of the company's installation of enterprise resource planning (ERP) software, which provides data of what is selling where. This way, the company is able ro anticipate demand in each retail oudet and place orders wirh producers accordingly. Wirh the help of McDonald's, the company has ser up a trucking fleet ro move supplies ro restaurants ar short notice. Each of the company's delivery trucks has three degrees of refrigeration-a freezer section for meats, a cold refrigerator section for vegetables, and a nonrefrigerated section for paper cups, napkins, and plastic cutlery. This way, each truck delivers multiple items at one go and saves the company and restaurants a huge sum of transportation cost. Radhakrishna Foodland distribution center also maintains high-quality standards in cleanliness, including personal hygiene for the drivers, packing, and checking temperatures of the food it transports ro various restaurants. The company maintains derailed data logs to uack rhe movement of each batch of food items. In case of a complaint about a food item at any McDonald 's restaurants, the data logs help the company ro identify the batch from which the particular food item came. Then the company issues a warning or decides to discontinue the batch from which the food item came. 21 This ensures a high-quality standard of food items delivered to each McDonald's outlet. Not surprisingly, the company has obtained American Institute of Bakers and HACCP certification for quality standards. Such meticulous planning in setting up a well-coordinated supply chain system has paid rich dividends to the McDonald 's operations in India. It has minimized cosrs, optimized qualiry control, and ensured higher customer satisfaction, which is so very essential for the company's growth . More critically, rhe improved transportation and food processing technology seems to have served as an important catalyst for increasing India's agricultural ptoductiviry while raising farmers' incomes. This has scored very well on the political front and won the government's goodwill.

Location
The initial openings of McDonald's ourlets in Delhi and Mumbai were driven by affordability and brand recognition factors. Given the metropolitan culture and wide Western exposure of these two large cities, where most of India's rich and upper middle-class population live and are aware of McDonald's foods, it was logical for the company to open its iniriaJ outlets in these two cities. Besides, rhe inhabitants of borh Mumbai and Delhi love to experiment wirh a wide variety of foods. This obviously suited McDonald's brand of foods. In addition, McDonald's has two large distribution centers in these two metros. Needless to say, opening up restaurants in these two cities would drive down the opportunity and transaction costs. Logistics play a critical role in McDonald's location strategy. As a part of irs Quick Service Restaurant (QSR) business, McDonald's has initially decided to open irs outlets only within a 500-km radius of its main distribution centers in Delhi and Mumbai. This is rhe reason why McDonald 's has nor opened a single outlet in metropolitan cities like Kolkara in the eastern part of India, despite rhe ciry's huge urban and cosmopolitan character. Besides Delhi and Mumbai, other places where McDonald's has opened up restaurants are satellite cities located near Delhi (such as Noida, Gurgaon, and Faridabad), or Mumbai (such as Pune); places with tourist appeal (such as Jaipur, Mathura, and Shimla); and cities with an eating-out culture (such as Ahmedabad, Chandigarh, and BangaJore). The McDonald's outlet in Ahmedabad in the state of Gujrar is an interesting case. Ahmedabad is largely a vegetarian ciry. Bur, like other metropolitan Indian cities,
21

Neera Bhardwaj, "The Making of McQualiry," Business I ndia, Augusr 24, 1998, p. 19.

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Ahmedabad has a signiflcanr number of eating-our customers. Given long lines of people at the counter, it seems rhar McDo nald's well-balanced menus of vegetarian and nonvegerarian items has provided enough choice and space for c ustomers of this ci ry22 McDonald's has partnered with rhe state-owned oil company, Bharar Petroleum Corporation Ltd. (BPCL), to set up restaurants ar the latter's petrol stations in and around Delhi to make it more convenient for automobile-driving consumers. BPCL is the leading petroleum retailer in India and has the largest number of petroleum stations in and around Delhi. It is important to note the shift in government attimde toward MNCs that led to a successful partnership berween McDonald's and rhe largest state-owned company. Keeping an eye on the huge pO[ential for eat ing out venues for lower middle-class Indians, McDonald's has partnered with a railway station and bus station in Delhi to open its outlets: Delhi Metro Rail Corporation, and the overcrowded Delhi's Inter-State Bus Terminus, where thousands of people pass through daily on their way to different destinations. More importanrl y, to tap rhe auto mobile-driving consumers, business travelers, and tourists, McDonald's has set up drive-through outlets in Delhi and along national highways. Two drive-through outlets on the Delhi-Agra and Mumbai-Pune highways have proven to be successful. The company has plans to open more drive-through ourlers in Delhi and Mumbai and along national highways- such as rhe Delhi-Jaipur highway, Delhi-Ambala highway, and Delhi-Ludhiana highway. Again , as with all of its restaurants, the move to set up these new restaurants has been driven by business prospects, logistics, and supply chain. In order to tap into the business of shopping mall and film-going customers, McDonald's has set up outlets ar shopping malls and new multiplexes in merros like Delhi and Mumbai . The success of irs outlet ar the C rossroads in Mumbai is evide nce that a strategic location outside a mall can bring in customers in hordes. G iven the premium pricing in the shopping mall, it is not surprising to see that many people are contenr with window-shopping at the C rossroads. But they do not mind spending a few rupees at McDonald's for a burger or spicy fries. More important, families wirh children are happy ro spend at least 7 rupees ro buy an ice cream for their children. Thus, while most shopowners at the mall are hard-pressed ro break even , the lines at rhe McDonald's co unters seem une nding. A similar trend is seen at the newly opened multiplex in Delhi's Vikaspuri.

Cultural Sensitivity
Since the mid-l980s, Indian sociery has undergone a dramatic shift in social values. The traditional caste-defined view of Indian life, which undervalues social and economic mobiliry, and the dominance of the Brahmanical culture's disdain toward commerce have been c hallenged by the middle class in contemporary Indian sociery. Getting rich and enjoying a good life has become the new mantra of social existence for the Indian middle class. With more income and more purch asing power, the starus-con scious Indian middle class now seek to buy good qualiry consumer products a nd spend more money on food and entertainment. In metropolitan cities, extensive foreign media exposure and the Internet revolurion have contributed to the emergence of a new social attitude which accepts Western values and culture. The contemporary Indian sociery can be understood on the basis of a 7 0/30 dynamic. While 70% oflndians are sti ll traditional, poor, and live in rural areas, 30% oflndians (more rhan 300 million people) have emerged as rich, modern , Western -exposed , English-speaking, urban dwellers. In India's meuopolitan cities, the young and rich have embraced the spirit of Ame rican cultureY America has come to be associated with success, productiviry, and a good life. Th is growing acceptance corresponds to the big impacr of the American influence on India n business, education, and entertain ment. The U.S . is India's largest trading partner, investor, and business co llaborato r. Top U.S . corporations like General Elecrric, General Motors, Ford, C itiban k, Coca Cola, Pepsi, Microsoft, IBM, a nd
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Vinod Marhew, "M cDonald's Set to Encer Veg Terrirory," Business Line, Febmary 18, 2002. For growing acceptance of American culture, see Sudeep C hakravarti , N andita Chowdh ury , and Stephen David, "America na: Like, This is it 1" India Today, February 9, 1998, pp. 17- 19.
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lnrel are entrenched in India. American universities in general , and a few in parricular like Harvard , Wharton, Columbia, Princeton, and Massachusetts Institute ofTechnology (M IT), are instantly recognized in Indi a and have becom e the m ost preferred destin atio ns for today's generation. The growi ng popularity of Western pop culture, MTV, Hollywood movies, and American-type fast food are all a parr of rhis new socia l acceptance of rhe urban -based India n rich and middle class. The image of McDonald's as a premier American fast food chain firs well with this changing Indian socio-cultural landscape. For many, McDonald's has become an important stop on rhe way w Harvard or MIT, a place that provides an opportunity w "co nnect" with the world outside India. For irs pan, McDonald 's has also introduced several new products specifically for Indian consumers in order to get accepted and successfully blend inw local Indian cu lture. Of course, introducing local products for the local palate is not a new concept at McDonald's. The Teriyaki Burger in Japan, Croque McDo in France, the Maharani Burger in Malaysia, a green pepper burger in Singapore, a Thai burger with a Thai curry paste, spaghetti in the Philippines, spicy chicken with rice in Indonesia, and spicy seafood noodle in China are some of rhe examples of irs localization strategy. Bur what is unique in the context oflndia is the company's willingness to replace its core product, beef-based Big Mac. Given the fac t that an overwhelming majority oflndians (about 83%) do not eat beef or pork, the introduction of the Maharaja Mac (a mutton-based burger) by McDon a ld 's seems to be an appropriate cultural fir. Contrary to popular belief, however, India is not a predominanrly vegetarian counrry. About 20% of!ndia's population is completely vegetarian (Exhibit 1 I) . A closer look at stare-level food habits in India revea ls that food preferences vary widely among rhe cou ntry's 30 stares and six union territories. About 69% of Gujrat is vegetarian; GO% of Rajasthan ; 54% of Punjab a nd Haryana; 50% of Uttar Pradesh; 45% of Madhya Pradesh; 34% ofKarnaraka; 30% of Maharashrra; 2 1% ofTam il Nadu ; I 6 % Andhra Pradesh and Delhi; 15% of Assam; 6% of Kera la, Orissa, Bihar, and W est Bengal; and less than 5% in northeastern states/ union territories (Manipur, Mizoran, N agaland, and Arunachal Pradesh). While parr of this vegetarianism is economic, a more compelling force is ethical and even religious. Jains avoid meat totally, while many Buddhists in India are vegetarian. Brahmins, Saivire non-Brahmins of South India and several Vaishnavite sects across the co untry avoid meat. Interestingly, though, Brah mins of East India, Kashmir, and the Saraswats of the southwest eat fish and mutto n . Bur even among meat-eaters, beef is raboo. 2' For vegetarian consumers, M cDonald's offers veggie burgers, which are very popular am o ng the vegetarians in India. Like rhe Maharaja Mac, rhe veggie burger has gone through a rigorous testing procedure and derailed planning. Sanjiv Mediratta, McDonald's quality assurance a nd product developmenr manager for India, had test-marketed this veggie burger in 1994 in M cDonald's outlets located in three Asian population-dominated towns of London-Sourhhall, llford, and Hounslow- before launching the product in India in 1996. 25 Furthe r, McDonald's has sought to enforce strict sta ndards in product development a nd cooking so as nor to ruffle c ultural sensitivities of the vegetarian consumers of the Indian society. All food s are strictly segregated into vegetarian and nonvegerarian lines and separate utensils are used for cooking vegetarian and nonvegetarian food s. French fries in India are not flavored with beef tallow, as is the case in the United States and elsewhere. Even the mayonnaise and ice cream conrain no eggs 26
24 See D . Balas ubram ania n, "Changes in the Indian M enu over the Ages," The Hindu, O ctober 2 1, 2004; for derails abo ut India's demography and food preference. Also see "The Rediscovery of India," India Ab1·oad, January 2, 1998. T his report is based on a decade-long nationwi de ethnographic survey of Indian peop le, which was published by Anthropological Survey of lndia, New Delhi, December 1997 , under rhe ride of "Peo ple oflndi a." 25 lmerview, N ew D elhi , May 17, 2003. 26 This information is promi nently disp layed in a ll M cD onald's ourlers in India. On June 1, 2002, McDonald's Co rporatio n said ir wou ld pay $ 10 million to Hindu, vegetarian, and or her groups mo re rhan a year after a Sea rtle lawyer, H arish Bharri, sued the fas r food chain, alleging ir failed w disclose the use of beef flavorin g in irs french fri es. In the sam e press release, McDonald 's clearly stated rhar it does no r use rhe beef flavorin g fo r fries sold ac irs restaurants in India.

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Indians typically spend more money on eating out and purchasing new products duri ng festi val seaso ns. To capitalize on the spending habits of Indian consumers, McDonald's has often sought to launch new products, the so-called "fourth flavor,"r during India's festi val season, which falls between September and November. Some of the major and popular religious festivals in India during September and November are Navratras, Dussehra, and Diwali, when even nonvegerarian Hindus turn vegetarian . Given rh.is dynamic, McDonald's decided to launch a new product called Veg Surp rise, a vegetable burger laced with Indian spices, in September 2001, achieving an impressi ve sales figure 40% higher than what the company expected. Likewise, Paneer Salsa, a vegetarian w rap, was introduced in 2003. Given irs growing popularity, this product is likely to be adopted by McDonald's in global markets soon.

Family-Centric and Child-Centric Strategy
In India, McDonald's has positioned itself as a family restaurant. Family has become the cornerstone of irs strategy. Its oudets are called " McDonald's Family Restaurants," as opposed to simply McDonald 's as in other parts of the world. McDonald's restaurants provide a clean, comfortable, and stress-free environment especially suited for working families. With India's changin g family system in metropolitan ci ties, where the extended family is no longer the preferred way of living, McDonaJd's has become an atuactive place for working and busy yo ung parents on weekdays. On weekends, residents of Delhi and Mumbai bring their children to McDonald's so that they can relax , while their ch ildren play in McDonald's hugely popular play places. Like irs O[her worldwide locations, McDonald's targets children as their main clientele in India. Children in India may not have the purchasing power comparable to their Western counterparts, but they are still the center of rhe universe in the Indian famil y system, and they can actually pu.ll the parents tO visit a place time and again. Children are an enormously powerful medium for relationship bu ild ing in India. They not only influence markets in terms of the parental decision-making to buy certain kinds of products, they are also future consumers. After all, bra nd impressions, o nce formed, can stay for a lifetime. Thus, M cDonald's has done everything possible to attract children . W hen one of irs outlets was opened in South Mumbai, a children's parade was organized all along the popular Marine Drive, led by McDonald's mascot, Ronald, who was accompanied by a 40-feet long float depicting the various tourist destinations in Mumbai. lts "Happy Meals" and the accompanying Lego roys are a great attraction for children . McDonald's p lay places- appropriately called Fun Zo nes- appeal to childre n and their parents, because they are cons idered safe, reliable, hygienic, and kid-friendly. Kids like McDonald's outlets because they are brightly lit and full of young people. During their visits, kids are showered with knickknacks. The Noida outlet near Delhi even has a low-height order counter for children. McDonald's outlets provide the kids wi th a hassle-free experience where no one tells them "sit down ," "don't move," or "keep out of my way." McDonald's also promotes birthday parties complete with cake, candles, and roys in television advertising aimed directly at kids. In some Indian cities like Mumbai , Delh i, and Bangalore, birthday parties are all the rage for upwardly mobile youngsters. Given that most young people in these cities live in small, overcrowded flats, McDonald's has becom e a convenient and welcoming place fo r birthday celebrations. McDonald's has become a popula r place fo r ma ny jean-dad tee nagers, who use the ou tle t as a venue to meet their boyfriends/girlfriends, still a tricky issue among India n middle-class fam ilies. M c Donald's appeals to India's new Westernized elites beca use its food is dean, safe, and reliable. India's upward ly mobile middle-class famil ies show considerable interest in enjoying what is ofte n described as

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McDonald 's terminology for products rha t are tempo rari ly added

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the "McDonald's experience"-i.e., eating McDonald's food in a clean, friendly, and fun-fdled environment with quick and accurate services. McDonald's offers attractive new promotions from rime to rime to attract more young adults to irs outlets. One such promotion- "Music Meal," launched in April 2005 in association with CocaCola India and Universal Music India-became extremely popular with young men and women . Through this promotional campaign, young people were offered free rickets roan exclusive hugely popular Bombay Vikings show upon collection of four McDonald's mini-COs, which come with a large meal combo order. By engaging young customers with fun and new promotions rhar are in tune with their changing desires, McDonald's has been able to increase irs business volume considerably over rhe past years. M cDonald's has imroduced other innovations tha t appeal ro cuswmers of all ages in India. In some of its newly opened restaurants, McDonald's has provided lounges for senior citizens to relax and taste irs food. For people used w a traditional restaurant environment, in which waiters lead patrons to sitting places, McDonald's in Delhi's residential areas has made special arrangements, where several crewmembers are present to direct families to available sirring places. Most Indians love to have sweet desserts after a meal. Keeping this in mind, McDonald's has opened several very popular Cold Kiosks in Mumbai and D elhi. These Cold Kiosks, which are located either inside the main outlet or adjacent to the McDonald's outlet, offer customers an innovative ra nge of cold desserts such as ice creams with unusual flavors like bubble gum, green apple, and peach. Most Indians believe in fare , and fate-driven success or failure is a way of life. There may nor be frequent discussion in public discourse, but the powerful con cept of Karma in Hinduism and reward for good Karma still continues to be a critical and almost subconscious dererminanr of Indian social existence. Not surprisingly, one of M cDonald's most popula r attrac tions has been the instant scratchand-win prizes on a daily and weekly basis (Exhibit 12). The daily drawn prizes include color televisions, cell phones, Panasonic camcorders, VCRs, music systems, microwave ovens, and even scooters. The weekly prizes promise a family vacation ro various places outside India. There is also a monthly jackpot prize of a Mahindra Bolero jeep and other high -ticketed items available . Aprly named the "Lucky Itch," these prizes have become enormously popul ar for rhe fate-driven Indian psyche, i.e. , "if you are lucky, you are successful a nd win big." For p eople who still wa nt to ear at hom e or are unable to visit restaurants because of lack of transportation, traffic jams, and overcrowded eating places, McDonald's has introduced its popular home-d elivery (McDelivery) services. For another section o f rich middle-class families in Delhi and Mumbai who prefe r to enjoy watching movies, cricket marches at home, or just for plain relaxation away from cooking, M cDona ld 's home-delivery services (where food is delivered usually hot) h ave become popula r and convenie nt. M cDonald's h as achieved about a 15% increase in sales as a result o f starting home deliveries from some of its stores.

Challenges Ahead lr is roo early to say that M cDonald's h as succeed ed in India. Nine years after M cD o nald's first set up in India, the burger giant has yet to make any net profit. Acco rding to M cDonald's m anagem ent, each M cDonald's sto re in India tal(eS a bout five to seve n years to break even. Part of the reason for this lo ng break-even period has to d o w ith the investments requi red per store in terms o f expensive process control equipment (that the co mpany imports fro m abroad) and acquiring prime locatio n real estate properties. However, compared to 12- 13 yea rs that M cDonald's takes to break even in any new country the company enters, India's brea k-even rime is ac tually more favorable. One reason for the quicker breakeven in India is rhe reductio n in the per-store investment that M cD onald's has m anaged to achieve with indigenization. M cDonald 's per-srore investment in 2003-2004 was 33% less than ItS pe r-sro re investmenr in 1996 in 1ndia.

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Going by McDonald 's expansion, an impressive 50% annual revenue growth since 1997, and growing populariry, it is reasonable to a rgue rhar McDonald 's operations in India have achieved decent success. 28 McDonald's couldn't have achieved the s uccess without appealing to new generations of consumers-children 3 to 14 and their busy p a rents' nurturing needs. In a recent survey by Synovate, a global market research agency, 20% of young Indians betvveen the ages of 8 and 24 reporred t he ir preferen ce for McDonald's products, followed by Pizza Hut (11 % ) and rhen KFC (2%). 2 ~ No amounr of advercising and brilliant promotions could have done the trick alone. In India, McDonald's did nor create a marker where none existed. It merely responded w an opporruniry presented by the changing India n socio-culrural values and sustained economic liberalizatio n. McDonald's srrateg)' of positioning itself as a family restaurant with an emphasis on local menus and local values seems to be working well in India. Bur w what extent M cDonald's can continue its growth in India remains uncertain. McDonald's is more than just another American fast food chain. Ir carries a symbolic load of Americanness-American varianr of capitalism and its overwhelming domination over the global economy. It is also a symbol of Ameri can cultural imperialism. l° For this reason, McDonald's operations in India, like other pans of the world, will continue to face opposition from religious fundamentalists, e nvironmentalists, protectionists, animal rights activists, and antiglobalizarion protestors. 11 Already, McDonald's outlets in Delhi and Thane (on the ourskins of Mumbai) have been the targets of violent proresrs from the Hindu militant groups led by the Shiv Sena (the right-wing Hindu nationalist group) after the company was sued in rhe United Stares over the use ofbeef extract on irs French fries . '~ 2 M cDonald's public ass urance that it does nor use a ny animal ex tract in vegetarian foods in India and the clearance certificate r.he company got from the governmenc agency Brihanmumbai Municipal Corporation (BMC) rook the steam o ut of rhis kind of politically motivated violent protests /or rhe rime being.JJ In March 2005, McDonald's outlet in Ahmedabad in rhe western state ofGujrar became a target of protest fro m rhe rulin g BJP (Bharariya Ja nara Parry) parry workers, following the U .S. d ecision to For rhis assess mem , see "M cDonald 's Plans w Explore South Indian M arker," The Economic Times, April 30 , 2002. 29 C h andrima S. Bhattacharya, "Rich Kids Ear, Drink and Wear Videshi ," The T eLeGraph, July 10, 200 5. 30 Several books and a rticles have explored the cultural impact of McDonald 's expansion around rhe globe, including To Russia wzth Fries (Toron w : M&S, 1997) by George Cohon w ith David M acfarlane, which tells rhe story of how McDonald 's opened its first resta urant in Russia; GoLden Arches East: McDonald's in East Asia (S tanford: Stanford Universiry Press, 1997) ed ited by James L. Warson , which looks in particular at Ch ina; and M aoz Azaryahu' s "Mclsrael? On the 'Americaniza tio n ' o f Israel" (IsraeL Studies, March 31 , 2000) . Tho mas L. Friedman offers his "Go lden Arches Theory of Conflict Prevention" in The Lexus and the OLive Tree: Understanding GlobaL ization (New York: Farrar, Straus & G iroux, 1999) . Th eodore C. Besror provides an example of how the spread of orher cuisines has affected loca l rasres and cu ltures in "How Sushi Went G lobal" (Foreign PoLicy, November/December 2000). 31 For opposition w McDonald's operations in various countries, see Fran cis Rocca, "America's M ulricul rural Imperialism ," American Spectator, Vol. 33, No .7, September 2000, pp. 34-38. Mclnform arion N etwork, an independent gro up of McDonald 's critics, h as created irs own Web sire where readers can learn about protests agai nst M cDonald's worldwide, including the much publicized McLibel Trial in Britain. For more informarion about that trial, also see John Vidal 's McLibeL Burger CuLture on TriaL (New York: N ew Press, : 1998). For a survey of European reaction w M cDonald's, see Carla Power's "M cParadox" (Newsweek, Jul y I 0 , 2000). John Sropford's "Think Again: M ulrinariona l Corpo rations" (Foreign PoLicy, Wimer 1998-99) gives a good overview of how roday's multinational co mpanies operare. For outlooks on McDonald's future, read Ken Kurson's "Surprise Dread: McDonald's Future Is Smelling Wo rse than Its Resrauranrs" (Esquire, April 200 1) ; and fin ancial press releases on M cDona ld 's Web sire. See how mad cow disease is affecting M cD ona ld 's in Andrew Edgecliffe-Johnson 's "Beef Concerns Hi r McDonald's" (FinanciaL Times, M arch 15, 2001). 32 "Quit India, Shiv Sena Tells M cD o nald 's," http ://www. businessworldindia.co m/archive/990621/ su aregy l .htm. 33 "Animal Flavouring-McDonald 's Indian A rm Says lr's C lear," Buszness Line, March 9 , 2002, htrp: // www.blonnet. co m/2002/03/09/srories/20020 30901530600.hrm. 14 14 A07 -05-001 5
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deny the BJP party's lead e r and the C hief Minister o f G ujra r Nare nd ra M odi a diplomatic visa on rhe ground of his alleged involvement in rhe Godhra train carnage, whe re hundreds o f people were killed as a result of Hindu -M uslim communal riots. Den oun cin g rhe U .S. d ecisio n as an insult to India's sovereignty, the BJP party workers organized protest rall ies in Ahmedabad w ith placards like, "Throw o ur all Ameri ca n goods and Americans from Gujrat." 54 Wirh increased d eployment o f police force a nd the ce ntral BJP leade rs' advi ce nor to attac k the American compa nies, rhe pro test fizzled o ut. Bu t it m ay eru pr agatn. In India, McDonald's is likely to face constant press ure to in crease its produc t ran ge. Until now, the company has responded well to varyin g c ustom ers' tastes and preferences by introd uci ng n ew prod ucts. But given India's fragmented regional cultures, where no single food preference predominates, McDonald's n eed s ro devel op new products on a regular basis. Developing new p roducts adds complexity and cost and raises rhe risk of error. It also run s counter to M cDo nald's c ulture an d hisrory. Yet, if M cDonald's does nor do it on a regular bas is, rhe compa ny's popul arity w ill be short-lived. It wi ll be difficult fo r the compa ny ro m eet rhe ran ge of diffe rent comperi rors, m ost nota bly the h omegrown Nirula's, which offers a variety of produc ts at reaso nable prices. In order to grow, McDonald's needs to ex pa nd co o ther cities and cowns in In dia rather than concentra tin g in Delhi, Mumbai , and a few o ther m e tropolita n cities. For exp a n sion ro succeed , McDona ld's can no longer depend on irs processing and distribution centers in a nd aro und Delhi and Mumbai. Given India's p oor rran sporration and road facilities, rhe logisti cal bot tleneck of transportin g fo od items from one place to a nother will add ro the cos t of irs products. Ir n eeds to build new processing and disrriburio n centers in other cities for opera tional efficiency. This req u ires additional investment, a nd the cost ca nnot be easily passed on ro the con sumers. P rice increase is rhe las t thing chat M cDonald 's can affo rd if it wa nts to succeed in its expansion srra cegy in India. Al ready, for most people, McDonald's is assoc iated with h igh prices. Many c ritics the refo re argue rha t McDonald 's wi ll never become part of mass c ulture in India because most people can't affo rd a Maharaja Mac. Despite these ch allenges, the outlook is positive for McDonald's in India. It may remain as a restau ra nt fo r ric h and middle-class people in the near future. But these a re the classes rha t h ave extra m oney to spend on food a nd e ntertai nment. The g rowing po pula ri ty of M cDo na ld's-type fast food is only one dime nsion of a muc h larger Indian trend toward culina ry adventurism associated with risin g affluence of 3 0 % o f India ns. Rajesh C hauha n , rhe m arketing m a nager of the newly opened superplex in Delhi's Vikas Puri , where the newly open ed M cDonald's is attracting strea m s of well -dressed a nd wellm an nered p eople, sta tes with a cal m sm ile, " Personally, I like Maha raja M acs." 35 T his view was echoed by Pramod Charrerji, an Indian Airlines Pilot, w ho sa id , "McDonald's o ffe rs j ust anothe r option for eating out, a nd their produc ts rea ll y caste good. " 36 While eating a Ma ha raja Mac in a McDonald's located in Delhi's crowded Co nnaught Place sh opping a rea, Sandeep Kohli, a tO u rist taxi driver in Delhi, said , "I d o nor mind eating at McDonald's once a while if I can afford it. " M ore cri tically, sup port for McDonald's operations in India co m es from an unexpected quarter. A senior high- ra nking burea uc rat in his mid -4 0s, who occas io nall y visits McDonald's o utl ets in Delhi with his two children, o bserved , "I do n ot see a nything wrong w ith M cDon ald's doing business in India. After a ll , it is nor M c Don a ldization (cul tu ra l imperi als im) that we know of, it is a Big MaC commodation (c ultural acco mmod a tio n )," referring to the lnd iani zari on of M cDo nald's prod uces. 37 Local ad aptat ion, no do ubt, has co ntributed to M cDonald's business growth in India. As Vikram Bakshi, M a n aging Directo r of M cDonald's India, s ums up, "Good Pla nnin g is absolutely n ecessary "Securi ry Beefed Up for U.S . Com pa nies in G ujrat," The Economic Times, March 19 , 200 5. s> lncerview, N ew Delhi , Decem be r 28, 2003. 36 I nterview, N ew Delhi, December 28 , 2003. 37 Incerview, New Delhi , December 28, 2003 . A07 -05-00 15 15
34

15

when you go inro any country. Very clearly, you have to understand the culture; you have to un derstand how you intend to be relevant to the consumer in that country. I don't think any brand, no marter how big it is, can take the market lightly. And I think the biggest mistake is w hen you think yo u have a big brand and that everyone is overwhelmed by it. Because whatever the brand , it has to be relevant to the consumer of that country." By providing counuy-speciflc relevant products-Maharaja Mac and about 70% Indian ization of its products-McDonald's has been able to rriumph ove r its last great frontier. Or has it, really 1

16
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Exhibit 1

Map oflndia

INDIA
States and Union Ter,ritori. s c

PAKISTAN

ARABIAN SEA

BAY OF BENGAL

0
L.:. -r;. s ~i AOW E- ~ P

n

..'·

'

Po't Bta u
.£1, NDAMAN 4 NIC O BA.R IS LAND S

Exhibit 2

India's Socio-Economic Proftle
658.2 3,033.0 3,100.0 6.8 1,080.0 1.3 21.3 28.1 31.7 63.0 59.5 29.0 43.3 8.9

GDP (US$ billions, 2003) GDP (PPP US$ billions, 2003) GDP per capita (PPP US$, 2004) GDP per capita annual growth rate o/o (1999-2004) Total Population 2005 (millions) Annual Population growth rate (%) 1999-2015 Urban Population (as o/o of total, 1975) Urban Population (as o/o of rota!, 2004) Population under age of 15 (as o/o of toral, 2004) Life expectancy at birth (2003) Adult literacy rate (o/o age 15 and above, 2003) Population below national poverry line o/o (1999-2000) Share of Income or Consumption o/o (richest 20%) 2000 Share oflncome or Consumption o/o (poorest 20%) 1999

Source: World Development Repon 2003, The World B"ank (New York: Oxford University Press, 2003); Human Development Repon 2003, UNDP (New York: Oxford University Press, 2003); Economisr .lmelligence Unit, 2005.

A07 -05-0015

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17

Exhibit 3A Income Distribution and Market Size in India (2004)
Average Annual Income in US $ 0- 1,000 I ,00 1 - 2,000 200 1 - 3,000 3,00 1 - 5,500 > 5,500 Total
% of Households

Number of Households (millions)

32
40 13

64.4 78.4
26 .3 15 .2 13.4

8 7
100

197.7

Source: India Econom ic>, Merrill Lynch, Lafferty esrimares, Lafferty Lrd. , Cards Inrernarional , February 24, 2005;
India: The Structure ofPoverty, Wo rld Resource l nsrirure, Washingcon, D.C., May J 9, 2004.

Exhibit 3B Middle-Class Income Distribution in India (Rs, 2001 - 2002 prices) Total Number of Households (' 000)
Income above 90,000 (Middle High)
100%
100% 90% 80% c .2 70% :; .c 60% ·c Vi 50% Ci 40% 30% 20% 10% 0%

.2

c:

80% 60% 40% 20% 0%

54
~

:;
(;)

..0

·c:

0

Urban

Rural
1989-90
102.334

All

India

Urban

Rural

Alll1dia

2001-02 142.440
- - - - 53.488 - - 134, 704 - - 188,192 -

-

-

- - - - 40, 106

Income below 45,000 (Low)
100%
c:
:;:;
::J

80% 60% 40% 20% 0% Urban

0

..0 ·;::

(;)

Ci

Rural
2009-10
152 ,744

All India

69,202

221,946

Source: N C AER, March 2004 .

18

A07-05-00 15

18

Exhibit 4

McFacroids

• Ray Kroc, founder of McDonald's Corporation , opened his first McDonald's in 1955 in Des Plaines, Illinois. • McDonald's is rhe largesr global fas t food-service retailer, wirh more chan 30,000 restaurants in 120 counrries serving 47 million customers daily, and more than I 5 mill ion employees worldwide. • The first McDonald's resta uram outside of North America opened in Cosca Rica on December 28, 1970. • ln Russia, McDonald's opened Its first restaurant on January 3 1, 1990. As of June 200 1, it h as opened 60 restaurants in rhar coumry. • McDonald's opened irs first restaurant in the People's Republic of China (Shenzhen Special Econo mic Zone) o n October 8, 1990. lr opened irs outlet in Beijing in 1992. As of june 1999, ir has opened 235 o ud ers in rhar coumry. • T here are 164 M cDonald's in three cou n uies in Africa: Sourh Africa, Egypt, and Morocco. • McDonald's opened irs first restaurant in Japan in 197 1. As of September 30,2001 , Japa n has 3,717 McDonald's resraurams. • McDo nald's opened irs fi rst restaurant in Singapore in 1979. As of September 30, 2001 , Singapore has 124 McDonald's resra ura ms. • McDonald's opened its first res ra uram in India in 1996. As of November 2004, India has 58 M cDona ld 's restaurants. • McDonald's opened irs first restaurant in Pakista n in 1998. As of September 30,200 1, Pakistan has 18 McDo nald's restaurants.
Sou rces: "McAdas Shrugged," Foreig-a PoLicy, May/june 2001, p. 30; Seem a Shukla, "Mdndia," Business Today, November 25, 2001, p. 6 1; James L. Warson, "China's Big Mac Arrack," Foreign Affairs, May/J une 200, p. 120.

A07-05 -001 5

19

19

Exhibit 5

Summary of Economic Reforms and Changes in the Indian Economy (1991-93)

Industrial Reform Abolition of indu.mial lice nsing Industrial licensing abolished for all bur 18 strategic industries. Earlier, licenses were required no r only for new ind ustries, bur also ro make any change in rhe existing ones. Removal of co nrrol over capacity expansion Under Monopoly and Resrricrive Trade Practices (MRTP) Acr, large firm s were prevemed from expanding their existing industrial capacity. T his was re moved. Participation of foreign firms in new projec ts Auromaric approval gramed for projecrs in volving foreign equity in vesr mem up ro 51 o/o in high prio rity industries such as transportation , power, infrastructure-related , ere. Privatization List of industries rese rved for public secror reduced from

17 ro 6. Private secror partici pation is allowed in industries
Price liberalization Capital Market Reform Liberalization of forei gn invesrmenr Foreign Exchange Regulation Act (FERA) was amended ro make ir easier for foreign ftrms ro rake more rhan 40% srake in Indian firms. Foreign institutional invesrors such as pensio n funds and mutual funds were allowed ro invest in Indian capital marker after registering with rhe independenr authority called Security and Exchange Board of Ind ia (S EBI). Access ro global capital markers Rupee convertibility o n current accounr Tax Reform Reduction of income tax rare Corporate raxes lowered from 65% ro 45 %. Personal income ra.x rare reduced ro 40% and exemption limit raised. Wealth tax on all financial assets, including shares, secu rities, bonds, and bank d eposits abolished. Labor Market Reform Exit policy No real progress. Companies with a workforce of over 300 ca nnot rerrench workers without authorization from the gove rnmenr. EXJM Policy Reform Reduction of tariff structure C usroms duties on raw materials and finished goods lowered from 1 1Oo/o ro 65% and on capital goods from 1 I Oo/o to Indian firms were allowed ro raise d ebt a nd equiry in global capiral markers. No longer necessary ro purchase raw mate rials and capital goods ar governmenr-flxed exchange rares. on the reserved I isr. Prices of mosr comrolled items such as steel , petroleum, and coal liberal ized.

Abolition of wealth tax

25%. Reguiremenr on import lice nses removed.
Impo rt duties o n m achinery for agric ulture, horticulture, forestry, poultry, ere. , reduced from 100% ro 25%. Im portation of consumer goods re mains restric ted.

20

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Exhibir 6

McDonald's Menu in India (May 2001 )

AlA CARTE Maharaja Mac McChicken Burger McChicken Burger with Cheese Filet-o-Fish McBurger McBurger with Cheese McVeggie Burger M cVeggie Burger with C heese McAloo T ikki Burger McAioo Tikki Burger with Cheese SaJad Sandwich Pizza McPuff C hicken M cG rill C hicken M cGrill with Cheese Extra C heese Exrra Condiments HAPPY MEALS (with regular drink and toy) McBurger Pizza Puff Salad Sa ndwich McAioo T ikki C hicken McG rill VALUE MEALS (with wedges and regular drink) McAioo Tikki Ch icken McGrill Salad Sandwich Pizza Puff MEAL COMBOS (wirh medium fries and medium drink) McVeggie M cVeggie w irh C heese Maharaj a Mac McChicken M cChicken with Cheese Filet-o-Fish Upsize

FRJES Regular Medium Large Wedges BEVERAGES Regular Coke Medium Coke Large C oke Regular Fama Medium Fanta Large Fanra Regular Sprite M edium Sprire Large Sprite McSHAKES C hocolate Strawberry Vanilla Mineral Warer 500ml Coffee Tea Toned M il k DESSERTS SOFT SERVE Vanilla Pineapple Hor Fudge Soft Serve Cone Appl e Pies

A07 -0 5-00 I 5

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21

Exhibit 7

Household Expenditures (%of total), 1998-99
14 % 0 food. beverages. and tobacco • transportation and communications

53%

0 hous1ng and energy 0 clothing and footwear
•health O other

Source: India: The Structure ofPoverry, World Resource lnsrirure, Washingron, D.C. , M ay 19, 2004.

Exhibit 8

The Big M ac Index C oncept

The Economist, a weeld y news magazine pu blished in rhe Uni ted Kingdo m, in trod uced irs Big Mac Index in 1986 w explain rhe concept of p urchasi ng power pari ry (PPP). G iven the consistency of McD onald's Big Mac product across co untries, irs p rice is used by The Economist w calculate exchange rates adj usted for pu rchasing power fo r a sample of countries. The idea of rhe Big M ac as a measure of purchasing power pariry is based on rh e Law of O n e Price, accord ing ro wh ich rhe exchange rare sho uld adjust to equate prices of the same p roducts between countries. By com paring rhe price of a Big Mac in any two cities in diffe rent countries, the exchange rate can be readily calculated that wo uld m ake rhe prices equ al (Exh ibit 9). For example (as shown below), if a Big Mac costs US$2. 90 in the U nited Stares and 10.4 1 yuan in C hina, then rhe exchange rare sho ul d be 3.59 yuan per U .S. doll ar, so rhat rhe same Big Mac costs the same in New York and Shanghai.

Calculating the Big Mac PPP rate
PPP Yuan/US$
= = =

Chinese price of a Big Mac in yu;w d ivided by U.S . price of a Big Mac in US$ Yuan! 0.40 I US$2 .90 3.59 Yuan/US$, which is the exchange ra re that wil l exist if the Law of O ne P rice h olds exactl y

The above example m akes ir dea r that the calculatio n o f p urch asing power pari()' is based on equal prices in both co untries, ra ther than necessaril y equal pu rchasing power fo r consume rs. Given rhar rhe average per capita income in C h ina in 2004 was US$5,225, wh ile in rhe U.S . rhe average was US$34,770 , iris clear that C hinese wou ld not have rh e same p urch asing power as the average American in that yea r. It wo ul d cost a C h inese consum er about 6 .5 t imes as much as a perce ntage of his/ her income w buy a Big Mac, even if the price were rhe same in bot h counrries. N or su rp risingly, a Big Mac costi ng I 0 .4 0 yuan in Chi na m ay very well be a lu xury good . In fact, in m any co untries, rhis is exacrly rhe case.
Source: Adapted from Robert Grosse and Adrian E. Tschoegl, "T he Manager's G uide w Big Macs," unpublished paper,

July 2004.

22

A07-05-00 15

22

Exhibit 9

Big Mac Index
Big Mac prices in local currency $ 2.90 Peso 4 35 A$ 3 .25 ReaL 5.39 £1.88 C$ 3. 19 Peso 1,401 Yuan 10.41 Koruna 56.55 DK.r 27.75 Pound I 0.00 2.74 HK$ 12.0 1 Forint 531 Rupiah 16,101 ¥262 M$ 5.05 Peso 24.0 1 NZ$ 4.35 New Sol 8.99 Peso 69.02 Z loty 6.29 Rouble 42.05 S$ 3 .31 Rand 12.4 1 Won 3, 199 SKr 29 .87 SFr 6.29 NT$7 5. 11 Baht 58.87 Lira 3,950,000 Bolivar 4,399 Rs 34.00 Big Mac pncess 10 dollars 2.90 Implied PPP of the dollar 1.50 l.J2 1.86 1.54 1.10 483 3.59 19.5 9.57 3.45 l.06 4 .1 4 183 5,552 90.3 1.74 8.28 1.50 3 .10 23 .8 2. 17 14.5 l.l4 4.28 1, 103 10.3 2 .1 7 25.9 2 0. 3 1,362,069 1,5 17 11.7 Actual dollar exchange rate Max: 2004 2.94 1.43 3. 17 1.79 1.37 643 8. 26 26.6 6.22 6.1 7 1. 20 7 80 211 9,097 112 3.80 11. 54 1.64 3 .50 56 I 3.86 29 .0 1.72 6.67 J,J 7 6 7.58 1.28 33.5 40.6 1,53 1,008 2,972 45.3 Under (-)/over (+) valuation against the dollar (%) -49 -22 -4 1 +16 -20 -25 -57 -27 +54 -44 +13 -47 -1 3 -39 -20 -54 -28

United Srates Argenrina Australi:1 Brazil Briram Canada Chile C hina Czech Rep Denmark Egypt Euro area Hong Kong Hungary Indonesia Japan MaJaysia Mexico New Zealand Peru Philippines Poland Russia Singapore South Africa South Korea Sweden Switzerland Taiwa n T hailand Turkey Venezuela India*

148
2.27 1.70 3 .37 2.33 2. 18 1.26 2. 13 4.46 l.62 3.28 1.54 2.52

1.77
2.33 133 2. 08 2.65 2.57 1.23 1.63 1.45 1.92 1.86 2.72 3.94 4 90 2.24 1.45 2 .58 1.48 0 .75

-8
-]]

-57 -44 -50 -34

-36
-6 +36 +69 -23 -50 -1 1 -49 -74

Calculating over (under) valuation: PPP Yen/US$= Tokyo price of a Big Mac in Yen divid ed by U.S. price in US$ = (Yen 262)/(US$2.90) = 90.3 Over (under) valuation =The PPP exchange rare minus rhe acrual exchange rare, divided by rhe actual exchange rare = (90.3- 112)/112 = -20% (Thar is, US$ has ro fall by 20% against rhe Yen-Yen has ro appreciate from 112/ US$ to 90 yen/US$- for rh e rare to reach Big Mac PPP). *Big Mac is nor sold in India. In irs place, Big Mac's subsrirure Maharaja Mac's price is given here. Source: Adapted from The Economist, May 29, 2004 , pp. 7 1-72; and Robert Grosse a.nd Adrian E. Tschoegl, "The Manager's G uide to Big Macs ," unpubLished paper, ]L~Y 2004. Data for India is author's calcwarion.

A0?-0 5-001 5

23

23

Exhibit 10 Suppliers for McDonald's in India
~c::.::~.l' ~ SP~1~ from

Ghaziabad, U"ar Pradesh

I·

Sper.ial Veg~tarian (eggluss) Sauce from Quaker Cremica, Phillaur, Punjab

Buns from Shah Sector & Sons, Khopoli , Maharashtra & Cremica, Ludhiana

Fresh Iceberg Lettuce Veget biP Pa1ly from Trikaya (made from fresh Agriculture, Talegacon. peas, carrots, green Maharashtra, Ooty beans, red capsicum, Farms. Ootacarmund, potatoes, and rice) Tarmil Nada. Meena from Kitran Foods. Agritech, Delhi, Taloja, Maltarashlra Ferrocoa Farms, Dehradan Batter & Breading Cheddllt Checso from Cremica EBI, from Dynamix Dairy, Ludh iana, Punjab Baramati, Mallarashtra

Source: hHp:l /www. red i ff.com/busi ness/ I999/ apr/ 29mac5. jpg.

Exhibit 11 Indian Food Preferences-Vegetarian vs. Nonvegetarian
Beef -eater
17%

Nonveget a rian

80%

20%

So urce: 'The Rediscovery of India," India Abroad, January 2, 1998. This report is based on a decade-long nario nwide erhnographic survey of Indian people, wh ich was published by Anthropological Su rvey of India, N ew D elhi, D ecember 1997, under rh e ririe "People oFlndia."

24
24

A0?-05-00 15

Exhibit 12 McDonald's Enticement (itch karo, rich bano)

Source: McDonald's in Mumbai, India (May 21 , 200! ).

A07 -0 5-001 5

25
25