Thesis Training and Development in McDonald by sjain38401

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									                                   ABSTRACT

Despite a focus on efficiency and cost control, overall spending on training and
development continues to rise. It’s a reflection of the fact that companies are ratcheting
up the amount of training they require of their workers in the ceaseless drive for a
competitive edge. Companies clearly subscribe to the belief that smarter, better-trained
workers increase chances for success. Observers also say that companies are working to
get more efficiency, more effectiveness and better alignment out of training. Training is,
of course, an essential part of any job. Very few of them, after all, are competent to
undertake a new job from day one! It can be informal, on the job training, or take the
form of formal recognized courses. Some employees may find external training worrying,
particularly if it is assessed in any way or in a classroom environment, or may feel that
they are implying that they are not doing their job well enough by sending them on
courses. This is where an appraisal system helps enormously, as training is linked to the
job role and objectives, and mutually agreed between them. Most people, however,
welcome the opportunity to develop new skills or to gain further qualifications. Offering
training and development opportunities can be a very significant factor in retaining staff
that are keen to progress.




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                               1. INTRODUCTION

Fast food industry in India:

The fast food industry in India has evolved with the changing lifestyles of the young
Indian population. The sheer variety of gastronomic preferences across the regions,
hereditary or acquired, has brought about different modules across the country. It may
take some time for the local enterprise to mature to the level of international players in
the field.

Many of the traditional dishes have been adapted to suit the emerging fast food outlets.
The basic adaptation is to decrease the processing and serving time. For example, the
typical meal which called for being served by an ever alert attendant is now offered as a
Mini-Meal across the counter. In its traditional version, a plate or a banana leaf was first
laid down on the floor or table. Several helpers then waited on the diner, doling out
different dishes and refilling as they got over in the plate.

In the fast food version, a plate already arranged with a variety of cooked vegetables and
curries along with a fixed quantity of rice and Indian flatbreads is handed out across the
counter against a prepaid coupon. The curries and breads vary depending on the region
and local preferences. The higher priced ones may add a sweet to the combination. Refills
are generally not offered.

The diversity of Indian cuisine poses logistical problems when it comes to handling.
Hence it is common to serve different cuisines at different counters within the same
premises. Presence of a large vegetarian population, who eschew non-vegetarian food,
has given rise to outlets which exclusively serve vegetarian fast food. Also, different
variety of food may be served depending on the times of the day. Beverages such coffee,
tea, soft drinks and fruit juices may also be served in such outlets. Some outlets may
additionally have specially designed counters for ice-cream, chaats etc.


Fast food is the term given to food that can be prepared and served very quickly. While
any meal with low preparation time can be considered to be fast food, typically the term



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refers to food sold in a restaurant or store with low quality preparation and served to the
customer in a packaged form for take-out/take-away. Outlets may be stands or kiosks,
which may provide no shelter or seating, or fast food restaurants (also known as quick
service restaurants). Franchise operations which are part of restaurant chains have
standardized foodstuffs shipped to each restaurant from central locations. The capital
requirements involved in opening up a fast food restaurant are relatively low. Restaurants
with much higher sit-in ratios, where customers tend to sit and have their orders brought
to them in a seemingly more upscale atmosphere may be known in some areas as fast
casual restaurants.

History:

The concept of ready-cooked food for sale is closely connected with urban development.
In Ancient Rome cities had street stands that sold bread and wine. A fixture of East Asian
cities is the noodle shop. Flatbread and falafel are today ubiquitous in the Middle East.
Popular Indian fast food dishes include vada pav, panipuri and dahi vada. In the French-
speaking nations of West Africa, roadside stands in and around the larger cities continue
to sell—as they have done for generations—a range of ready-to-eat, chargrilled meat
sticks known locally as brochettes.

On the go:

Fast food outlets are take-away or take-out providers, often with a "drive through" service
which allows customers to order and pick up food from their cars; but most also have a
seating area in which customers can eat the food on the premises. People eat there more
than five times a week and often, one or more of those five times is at a fast food
restaurant. Nearly from its inception, fast food has been designed to be eaten "on the go",
often does not require traditional cutlery, and is eaten as a finger food. Common menu
items at fast food outlets include fish and chips, sandwiches, pitas, hamburgers, fried
chicken, French fries, chicken nuggets, tacos, pizza, hot dogs, and ice cream, although
many fast food restaurants offer "slower" foods like chili, mashed potatoes, and salads.

India – emerging market for global players:



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The percentage share held by foodservice of total consumer expenditure on food has
increased from a very low base to stand at 2.6% in 2001. Eating at home remains very
much ingrained in Indian culture and changes in eating habits are very slow moving with
barriers to eating out entrenched in certain sectors of Indian society.. The growth in
nuclear families, particularly in urban India, exposure to global media and Western
cuisine and an increasing number of women joining the workforce have had an impact on
eating out trends.

Facts and Figures:

Fast food is one of the world’s largest growing food type. India’s fast food industry is
growing by 40% a year and is expected to generate a billion dollars in sales by 2012.The
multinational segment of Indian fast food industry is up to Rs. 6 billion, a figure expected
to zoom to Rs.70 billion by 2012. By 2012, the value of Indian dairy products is expected
to be Rs.1, 00,000 million. In last 6 years, foreign investment in this sector stood at Rs.
3600 million which is about one-fourth of total investment made in this sector. Because
of the availability of raw material for fast food, Global chains are flooding into the
country.

Market size & major players:

a) Dominated by McDonalds having as many as 75 outlets.
b) Domino’s pizza is present in around 100 locations.
c) Pizza hut is also catching up and it has planned to establish 125 outlets at the end of
2012.
d) Subways have established around 40 outlets.
e) Nirulas is established at Delhi and Noida only. However, it claims to cater 50,000
guests every day.

Major players in fast food are:

    MCDONALDS
       KFC
       PIZZA HUT



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      DOMINOS PIZZA.
      COFFEE DAY
      BARISTA.

The main reason behind the success of the multinational chains is their expertise in
product development, sourcing practices, quality standards, service levels and
standardized operating procedures in their restaurants, a strength that they have
developed over years of experience around the world. The home grown chains have in
the past few years of competition with the MNCs, learnt a few things but there is still a
lot of scope for improvement.

Challenges for the industry:

Social and cultural implications of Indians switching to western breakfast food:
Generally, Hindus avoid all foods that are believed to inhibit physical and spiritual
development. Eating meat is not explicitly prohibited, but many Hindus are vegetarian
because they adhere to the concept of ahimsa. Those seeking spiritual unity may avoid
garlic and onions. The concept of purity influences Hindu food practices. Products from
cows (e.g., milk, yogurt, ghee-clarified butter) are considered pure. Pure foods can
improve the purity of impure foods when they are prepared together. Some foods, such as
beef or alcohol, are innately polluted and can never be made pure. But now, Indians are
switching to fast food that contain all those things that are considered impure or against
there beliefs. Some traditional and fundamentalist are against this transformation of food
habit and number of times they provoke their counterparts to revolt against such foods.
And that is what happened when McDonald’s decided to enter the complexity of Indian
business landscape, counting only on its “fast food global formula”, without any
apparent previous cultural training.
Emphasis on the usage of bio-degradable products: Glasses, silverware, plates and
cloth napkins are never provided with fast food. Instead, paper plates and napkins,
polyurethane containers, plastic cups and tableware, drinking cartons or PET
(polyethylene terephthalate) bottles are used, and these are all disposable. Many of these




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items are tossed in the garbage instead of being recycled, or even worse, merely thrown
on the ground. This burdens nature unnecessarily and squanders raw materials.
Retrenchment of employees: Most of new industries will be capital intensive and may
drive local competitors, which have more workers, out of business.
Profit repatriation: Repatriation of profits is another area of concern for Indian
economy. As when multinational enters the any countries, people and government hope
that it will increase the employment rate and result in economic growth. However, with
the multinational operation, host country experiences these benefits for a short time
period. In long run neither employment increases (because of capital intensive nature of
MNC’s) nor it increases the GDP or GNP because whatever MNC’s earn they repatriate
that profit back to their home country.

Environmental friendly products cost high: government is legislating laws in order to
keep check on the fast food industry and it is emphasizing more on the usage of bio-
degradable and environment friendly products. But associated with this issue is the
problem that fast food player faces - the cost associated with the environment friendly
product. They cost much higher than the normal products that companies uses for
packaging or wrapping their products.
Balance between societal expectation and companies economic objectives: To
balance a society’s expectation regarding environment with the economic burden of
protecting the environment. Thus, one can see that one side pushes for higher standards
and other side tries to beat the standard back, thereby making it a arm wrestling and mind
boggling exercise.


Health related issues: obesity:
I. Studies have shown that a typical fast food has very high density and food with high
density causes people to eat more then they usually need. \
II. Low calories food: Emphasis is now more on low calorie food. In this line McDonald
has a plan to introduce all white meat chicken Mcnuugget with less fat and fewer
calories.

Trends in Indian Market:


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Marketing to children's: fast food outlets in India target children’s as their major
customers. They introduce varieties of things that will attract the children’s attention and
by targeting children’s they automatically target their parents because Children’s are
always accompanied by their parents.
Low level customer commitment: Because of the large number of food retail outlets
and also because of the tendency of customer to switch from one product to other, this
industry faces low level customer commitment.


Value added technology services: There is continuous improvement in the technology
as far as fast food market in India is considered. The reason behind that is food is a
perishable item and in order to ensure that it remain fresh for a longer period of time.
Earlier, Indian people prefer eating at home but now with the change in trend there is also
need for improvement and up gradation of technology in food sector.

Attracting different segments of the market: Fast food outlets are introducing varieties
of products in order to cater the demands of each and every segment of the market. They
are introducing all categories of product so that people of all age, sex, class, income
group etc can come and become a customer of their food line.

The success of fast foods arose from the changes in our living conditions:

1. Many women or both parents now work
2. There are increased numbers of single-parent households
3. Long distances to school and work are common
4. Usually, lunch times are short
5. There's often not enough time or opportunity to shop carefully for groceries, or to cook
and eat with one's family. Especially on weekdays, fast food outside the home is the only
solution.




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Food Processing:

In order to further grow the food processing industry, the Ministry of Food Processing
Industries (MOFPI) has formulated a Vision 2015 action plan under which specific
targets have been set. This includes trebling the size of the food processing industry,
raising the level of processing of perishables from 6 per cent to 20 per cent, increasing
value addition from 20 per cent to 35 per cent, and enhancing India’s share in global food
trade from 1.5 per cent to 3 per cent.

According to Mr Subodh Kant Sahai, Union Minister for Food Processing Industries, the
Central Government is envisaging an investment of US$ 21.9 billion in the food
processing industry over the next five years, a major chunk of which it plans to attract
from the private sector and financial institutions. Moreover, the food processing sector
has grown from 6 per cent a year ago to 14.9 per cent in 2010, according to Mr Sahai.
The Minister further said that at present the country was processing 10 per cent of the
total food produce and aimed to enhance it to 20 per cent by 2015. Exports are also
targetted to increase from 1.5 per cent to 3 per cent. Furthermore according to Mr Sahai,
foreign direct investment (FDI) in food processing is likely to rise 27 per cent to US$
264.6 million in 2010-11. "This year, FDI is expected to cross Rs 1,000 crore and touch
Rs 1,200 crore," Sahai said on the sidelines of the second national conference of the
National Meat and Poultry Processing Board (NMPPB) in New Delhi in May 2010. The
cumulative FDI received by the food processing industry from April 2000-September
2010 stood at US$ 1,102.03 million, according to data released by the Department of
Industrial Policy and Promotion (DIPP).

Beverages:

According to a report published by market research firm RNCOS in August 2009, titled
"Indian Non-Alcoholic Drinks Forecast to 2012", the Indian non-alcoholic drinks market
was estimated at around US$ 4.43 billion in 2008 and is expected to grow at a CAGR of
around 15 per cent during 2009-2012. As per the report, the fruit/vegetable juice market
will grow at a CAGR of around 30 per cent in value terms during 2009-2012, followed




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by the energy drinks segment which will grow at a CAGR of around 29 per cent during
the same period.

Major Investments:


Some of the major investments in the industry are:

      Chennai-based FMCG company CavinKare is planning to invest around US$
       109.50 million over the next two years in various expansion plans, including a
       greenfield facility for namkeen at Thane, cool drinks in the North and others.
      Nestle, the fast moving consumer goods major, plans to invest US$ 50.49 million
       to set up its first research and development (R&D) centre in India at Manesar in
       adjoining Gurgaon district. The facility will be made operational by July 2012.
      Packaged consumer goods company GlaxoSmithKline Consumer Healthcare
       (GSKCH) plans to invest over US$ 64.87 million on repositioning milk food
       drink Horlicks as the company’s umbrella brand.
      Yum! Restaurants India, the operator of the Pizza Hut , KFC and Taco Bell
       restaurant chains, plans to invest US$ 100 million to more than treble the number
       of eateries it operates across the country to 1,000 by 2015, said Niren Chaudhary,
       Managing Director, Yum! Restaurants India.
      FieldFresh Foods , joint venture of the Bharti Enterprises and Del Monte Pacific
       Ltd, has inaugurated their Research and Development and manufacturing facility
       in Hosur, Tamil Nadu at an investment of US$ 25.93 million.
      Agri solutions provider Buhler India plans to invest US$ 22.55 million in an
       integrated manufacturing unit and other expansion projects in the next four years,
       in line with its plans to achieve US$ 225.49 million turnover by 2014.
      Soft drinks and snacks major Pepsico is planning to invest US$ 500 million in
       India in the next two years.
      Atlanta-based Coca Cola Company plans to invest up to US$ 120.75 million to set
       up a new bottling plant in Karnataka, India.




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Government Initiatives:

      The Centre has announced a series of new initiatives which include a separate
       policy at the state level, thrust on contract farming and making the sector tax-free.
      The government plans to open 30 mega food parks by the end of the 11th Five
       Year Plan (2007-2012).
      In the Union Budget of 2010-11, the government has announced setting up of five
       more mega food park projects in addition to the ten already being set up.
       Moreover, external commercial borrowing will be made available for cold storage
       or cold room facility including for farm level pre cooling, for preservation or
       storage of agriculture and allied produce, marine products and meat.

As per information published on MOFPI:

      Income Tax rebate is allowed, 100 per cent of profits for 5 years and 25 per cent
       of profits for the next 5 years, for new industries to process, preserve and package
       fruits and vegetables.
      Excise duty on ready to eat packaged foods and instant food mixes has been
       brought down to 8 per cent from 16 per cent.
      Excise duty on aerated drinks has been reduced to 16 per cent from 24 per cent.

Looking ahead:

According to an industry body and E&Y study on the Indian food industry called
'Flavours of Incredible India – Opportunities in the Food Industry', published in October
2009, investment opportunities in the Indian food industry are set to shoot up by a huge
42.5 per cent to US$ 181 billion in 2015 and to US$ 318 billion by 2020.

Fast-food’s high business potential:

Fast-food restaurants seem to be big business in India, and so a many foreign chains have
made an entry into the market to joint the early movers like McDonald's or KFC. On of
the last entrants is Bembos, and that chain from Peru will not be the last one.



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   Now ITCOT, a Chennai based, banks-promoted consultancy has presented the
updated version of a “Feasibility Report on Fast Food Restaurants” which has first been
published in 2002. After an overwhelming response, so ITCOT, a revamped version was
released in 2008 so to provide the latest statistics and information to entrepreneurs about
the fast-food restaurant segment. The report covers both pure vegetarian and multi-
cuisine type fast food restaurants which are classified into different types in the first
chapters, including a history of the “hamburger”. The main focus of the report is on
explaining franchise models and cost aspects of a fast-food venture, introducing
necessary controlling tools, among them “financial ratios”, “projected profitability” or
“projected cash flow”. Regarding locations, for example, the report notes that the top five
foreign brands, namely, McDonald’s, Domino’s Pizza, Pizza Hut, Subway, and Pizza
Corner would be focused on New Delhi, Mumbai, Bangalore and Chennai which account
for 53% of their total number of outlets. The principal factors that drive the demand for
fast food restaurants would be the increasing disposable incomes among the target
groups, increase in working women, urbanization, globalization, the consequent changes
in life styles, and the brand pull, ITCOT says, but informs also that there would be no
authentic estimates of demand for fastfood products in India. According to Down to Earth
(March 2008), Indians would spend close to Rs 4,449 crore a year (approx. €767 million)
at fast-food joints. The fast-food market would be growing at 40% per year. If one would
assume a modest growth of 30% only, so ITCOT, then the business potential for fast food
restaurants in the country may be reckoned at Rs.13,580 crore by 2011-12.




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                             2. COMPANY PROFILE

McDonald's Corporation:


McDonald's Corporation is the world's largest chain of hamburger fast food restaurants,
serving more than 58 million customers daily. In addition to its signature restaurant
chain, McDonald’s Corporation held a minority interest in Pret A Manger until 2008, was
a major investor in the Chipotle Mexican Grill until 2006, and owned the restaurant
chain Boston Market until 2007.




A McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself.
The corporation's revenues come from the rent, royalties and fees paid by the franchisees,
as well as sales in company-operated restaurants. McDonald's revenues grew 27% over
the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to
$3.9 billion.

McDonald's       primarily      sells hamburgers, cheeseburgers, chicken products, french
fries, breakfast items, soft drinks, shakes, and desserts. In response to obesity trends in
Western nations and in the face of criticism over the healthiness of its products, the




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company has modified its menu to include alternatives considered healthier such
as salads, wraps and fruit.


History:


The business began in 1940, with a restaurant opened by brothers Richard and Maurice
McDonald in San Bernardino, California. Their introduction of the "Speedee Service
System" in 1948 established the principles of the modern fast-food restaurant. The
original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped
head whose name was "Speedee." Speedee was eventually replaced with Ronald
McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped
man having puffed out costume legs.

McDonald's first filed for a U.S. trademark on the name McDonald's on May 4, 1961,
with the description "Drive-In Restaurant Services," which continues to be renewed
through the end of December 2009. In the same year, on September 13, 1961, the
company filed a logo trademark on an overlapping, double arched "M" symbol. The
overlapping double arched "M" symbol logo was temporarily disfavored by September 6,
1962, when a trademark was filed for a single arch, shaped over many of the early
McDonald's restaurants in the early years. The famous double arched "M" symbol in use
today did not appear until November 18, 1968, when the company filed a U.S. trademark.

The first McDonald's restaurants opened in the United States, Canada, Costa Rica,
Panama, Japan, the Netherlands, Germany, Australia, France, El Salvador and Sweden, in
order of openings.

The present corporation dates its founding to the opening of a franchised restaurant
by Ray Kroc, in Des Plaines, Illinois, on April 15, 1955, the ninth McDonald's restaurant
overall. Kroc later purchased the McDonald brothers' equity in the company and led its
worldwide expansion, and the company became listed on the public stock markets in
1965. Kroc was also noted for aggressive business practices, compelling the McDonald
brothers to leave the fast food industry. The McDonald brothers and Kroc feuded over
control of the business, as documented in both Kroc's autobiography and in the



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McDonald brothers' autobiography. The site of the McDonald brothers' original
restaurant is now a monument.

With the expansion of McDonald's into many international markets, the company has
become a symbol of globalization and the spread of the American way of life. Its
prominence has also made it a frequent topic of public debates about obesity, corporate
ethics and consumer responsibility.


Corporate Overview:

Facts and Figures:


McDonald's restaurants are found in 119 countries and territories around the world and
serve 58 million customers each day. McDonald's operates over 31,000 restaurants
worldwide, employing more than 1.5 million people. The company also operates other
restaurant brands, such as Piles Café.

Focusing on its core brand, McDonald's began divesting itself of other chains it had
acquired during the 1990s. The company owned a majority stake in Chip
								
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