Study of Business model of international food chains

1. Study and analysis of
business model of
International Food Chains in
India
Submitted By
Ishan Tyagi
Under the guidance of
Mr. Vivek Arya

2. OBJECTIVE
To study and analyze the
business model of International
Food Chains in India.

3. SCOPE
 This report will cover the basic concept of International
Marketing.
 It also covers the reasons of International Food chains for
entering into Indian Market.
 This report will also focus on entry modes.
 The case study on McDonalds, KFC, Subway, Domino’s will cover
all the above stated facts.

4. INTRODUCTION
What is Marketing?
“It is the process by which companies create
value for customers and build strong customer
relationships, in order to capture value from
customers in return”
marketing concept holds that achieving
organizational goals depends on knowing the
needs and wants of target markets and
delivering the desired satisfactions.

5. Now, What is International Marketing?
 American Marketing Association (AMA) “international marketing
is the multinational process of planning and executing the
conception, pricing, promotion and distribution of ideas, goods,
and services to create exchanges that satisfy individual and
organizational objectives”.
 In simple words international marketing is the application of
marketing principles to across national boundaries.

6.  Fast Food:
Fast food is the term given to food that can be :
 Prepared and served very quickly.
 Has low preparation/delivery time.
 Packaged form for take-out/take-away.

7.  Increasing intervention of international brands in the Indian market
has attracted attention of mass population.
 Curiosity to know :
 Why they target the Indian Market.
 How they enter into the Indian market.

8. COMPETITION

9. ENTRY METHODS/ STRATEGIES
 Strategic alliances
 usually depends on what complimentary resources the foreign company is
looking for in its local partner.
 Joint Ventures
 Contract Manufacturing
 Licensing
 Franchising
 Exporting
 Standalone entries
 are done by companies which perceive themselves to have adequate
capability in taking capital risk and are ready to gain the knowledge
associated with the new markets over time.

10. DATA COLLECTION
 Secondary data is used as the sole source of information.
 It includes the collection of data from
 Internet- 1.http://kalyan-city.blogspot.in/2011/09/what-is-
international- business-meaning.html
2. http://www.thehindubusinessline.com
 Book- Mirage of Global Markets, The: How Globalizing
Companies Can Succeed as Markets Localize

11. ANALYSIS
 This project will be analyzing : Why they prefer to enter into the
Indian market,
 reasons behind choosing the particular mode to make an entry
into market
 how they succeeded in capturing market in India, What are the
issue associated with entry modes of international food chain.
 We will perform the comparative analysis in the basis of
parameters like their promotion strategies, their pricing strategies
& their customer demand for Nirula’s, Wimp, McDonald's.

12. CONCLUSION
 Reasons for Emergence
 Gender Role
 Paucity of Time
 Working Women
 Large population
 Relaxation in rules and regulations
 Menu diversification

13.  Challenges will have to face by International Food Chains.
 Food regulation and licenses
 Starting a restaurant requires all permits and licenses from local governing
bodies and adequate insurance coverage. There are up to 10 basic licenses
to be procured before setting up a food supply store. In addition the duration
of these licenses vary from 1 to 3 years.
 Poor infrastructure
 A major concern for a country like India is poor infrastructure, poor
transportation facility and erratic power supply. An indication of the severity of
the infrastructure problem is the spoilage of 25-30% of the crops each year
due to infrastructure bottle necks. The result of these bottle necks is that
prices for food material tend to be on the higher side with the quality
compromised.
 Lack of organized supply chain
 An inefficient supply chain creates hurdles in ensuring that food of the
required quality and quantity is procured and it reaches the end customer on
time with little or no loss.

14.  High price of real estate
 A majority of the restaurant players operate under leased premises. Hence,
high real estate lease rentals impact profitability and the growth of the
industry.
 Shortage of skilled and semi-skilled manpower
 The food services industry is highly dependent on skilled and well-trained
manpower –especially experienced chefs and managers. With growth in other
sectors, the hospitality industry as a career option finds few takers.
 Lack of adequate training institutes
 There is a huge imbalance as the educational institutions are producing
managers but not workers who are required in larger numbers to run a
business.
 Social and cultural implications of Indians switching to
western breakfast food:
 Example MC Donald's

15. MC DONALD’S
 Entry in Indian Market
 The market entry strategy was Joint Venture. McDonald’s was a Wholly
Owned Subsidiary. It incorporated to India in 1993. McDonald’s opened its
door in India in Vasant Vihar, New Delhi in October 1996.
 It Entered into two 50:50 joint ventures with Cannaught Plaza Restaurant-
Vikram Bakshi- North and Hardcastel Restaurant- Amit Jatia-West.
 After Joint Venture they adopt their global business strategy and
spread their business through franchise driven business model.

16.  Franchise driven model
 15% owned stores, remaining 85% are operated by franchises.
They opted joint venture because
 For gaining experience in the new area of activity.
 Tax advantage was a significant factor.
 Market access and knowledge
 Need of framework for assessing industry/ market attractiveness.
An advantage to McDonald’s in Joint Venture:
 Pool of resources
 Full utilization of under-utilized resources.
 Higher rate of profits.
 Low risk factor.
 Knowledge of local taste and preferences.
 Less cost involved.
Disadvantages for choosing Joint Venture
 Diminish control over some important matter.
 Sharing of profit.
 Risk of giving control of recipes to partner.
 Joint venture does not give the management of the company complete control because the decisions are
taken by both the companies.

17. DOMINO’S
 Entry into Indian market
 Domino’s entered India in1996 through a Special Franchise
agreement with Vam Bhartia corp. (Jubilant Food Works Ltd. )
 The first outlet was opened in Delhi.
 On 2000, Domino’s had a presence in all the major cities and
towns in India.

18.  Advantages to Domino’s
 Domino’s benefit from continuing royalties that are, based upon percentage of
jublient food works ltd gross sale and paid on basis.
 Jubilant Food Work Ltd. who have invested their own capital and savings- serve
better managers and operators than paid employees who do not possess a vested
interest in the business.
 Minimum investment is required on the other hand they get regular income in form
of royalties from Jubilant Food Works Ltd.
 The multi- unit expansion associated with franchising serves to supplement and
expand the value of dominos.
 Disadvantages to Dominos
 Domino’s need to look after the trust and enthusiasm of franchisee.
 Threat from Jubilant food works ltd of becoming too independent.
 The fear of training future competitor.
 Ant management styles must be open and advisory instead of doctorial or
hierarchical.

19. LIMITATION
 This project is confined only to the secondary source of data.
 The available data may not be as accurate as desired.