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Cultural differences are a set of beliefs, behaviour, practices and expressions ascribed to the members of particular race, ethnicity or nation. For any successful international business there is a need of understanding the role of culture which could in turn impact the profitability of business. Mc Donald's is an American based fast food company, instituted in the year 1940 by Richard and Maurice McDonald as a small restaurant. Currently, operating in more than 119 countries across the globe as a franchisee, affiliate or the corporation, serves around 68 million customers everyday (Rancati, Gordini and Capatina, 2016). The franchise agent of the chain Ray Kroc purchased it in 1955 and administered its growth across the globe. Mc Donald's while operating globally is subjected to cultural differences and to overcome these it has to adapt and adopt various strategies which are discussed in detail in the case study. The study focuses on identifying intercultural issues and appropriate business solutions are suggested to overcome the impacts of intercultural issues.
McDonalds is one the fast food restaurants in the world which conduct business in many countries including UK. Today it has near about 32,000 restaurants in approximate 119 countries whereby 75% of them are owned by individual owners. It serves products to more than 47 million customers per day. Being the best serving organisation, the main mission of this company is to become world's best quick service restaurant (Smith, 2014). To achieve this mission, it provides outstanding services, best quality of products, cleanliness and value of business to customers. It indicated that there is no change in quality and standard of its fast food products all over the globe, taste and freshness of all, are same everywhere in all countries. In terms of business strategy, main goal of McDonalds is to gain 100% satisfaction of its customers and as well as keep retention of them for longer period. In this regard, to achieve this goal, in international market, it has formulated various strategies and policies. Along with this, core competency of McDonalds is giving convenience when customer wants to eat its products. It also offers eatables on competitive price which provide best value to customers' money.
Since every nation has its own culture and tradition, which reflects a unique pattern of society. Therefore, to enter into a new marketplace especially of new nation, it is necessary for organisations to focus on social and cultural difference. As per current scenario, McDonalds want to expand its business in India which is a combination of various communities and societies. The reason behind this is that India consider as large eating out market where people spend huge money on tasty and savoury eatables (Baack, Harris and Baack, 2013). This would provide a great opportunity to McDonalds to grab its marketplace and generate high revenues. But to serve fast food products as per Indian taste is the biggest challenge in front of this company. In addition to this, to serve fast food products in this country, managers of McDonalds need to evaluate culture and preference of native people. There is a big difference between traditional culture of people of UK and India. In terms of fast food products, people used to eat mostly on occasions like birthday events, business parties etc. rather than on regular basis. Therefore, concerning on this point and other aspects on international business expansion, aid McDonalds in building effective strategies by which it can attract minds of new customers.
Working in International Teams
Cultural differences are a set of patterns which are distinct to every society or ethnicity or nation, such as the beliefs, behaviour, expression of thoughts etc. After the advent of globalisation the cultural differences have become all the more important because the understanding and knowledge about culture is primary for succeeding in any business irrespective of the size and sector of an organisation. The profitability of an organisation is directly impacted by the culture of the place of business. Mc Donald's is a chain of fast food restaurant headquartered in California, USA and was founded in the year 1940 by the McDonald brothers initially dealing in hamburgers. The business was then bought by Ray Kroc, who joined the chain as a franchisee and saw its expansion across the globe (Dibb and Simkin, 2013). The company has a presence across the globe as it is running business in around 119 different countries and serving around 68 million customers on daily basis. The company predominantly deals in hamburgers and various types of sandwiches and variety of other products such as, french fries, soft beverages and desserts. Different countries have different menus resulting in deviance from the standard menu, for instance, in India beef and pork are not served because of the cultural values of the place. Mc Donald's is also serving soups, rice, sea food and beer in certain countries depending on the cultural value and according to the foods prevalent in that region.
India is one of the fastest growing economies in the world and is witnessing a global inclination of businesses with various foreign companies investing in India. While doing business in India could be beneficial for the international organisations but at the same time there are a number of cultural issues which cannot be left unnoticed. In context of Mc Donald's the cultural issues posed while operating in India are many as India is a mix of various cultural diversities which are as follows:
- Language – there are 22 official languages recognised by the law in India and Hindi is the most common and widely spoken and Mc Donald's has to keep in mind that language should not be a hurdle in understanding perspectives (Griffitts, 2016). This will be considered as a barrier among the employees working within the outlet which comes from different culture if they belong from different continents. One of the major impact which can be identified is on their understanding and capability of sharing information and ideas which has direct negative impact upon their individual and organisational performance.
- Religion – though the changing lifestyle patterns of the people has made the fast food industry evolve in India but still Indian society is rooted in traditions and various religious beliefs. Mc Donald's has should be sensitive towards the religious beliefs in order to manage business in India, for instance, beef burger is not offered in India because cow is considered to a sacred and holy. As the most of the people in India are Vegetarian so, there is quite difficult for McDonald to sustain their market with the help of non vegetarian dishes. In this regard, they have to focus on market needs and requirements of local people and try to innovate in their offerings to match up and provide their best in the market.
- Values and Customs – as India is a mix of cultures there are varied range of values and customs possessed by the people. Since the belief system of people is so varied Mc Donald's might find it difficult in analysing its objectives. Therefore, it has to come up with attractive promotions to attract customers. There are different type of cultures are prevail within the nation and every individual have their different values and ethics according to which they perform their daily functions (Lane, 2015). This will result in conflicts in near future which reduces the overall productivity of an outlet and negatively impacts their sustainability and profitability.
- Aesthetics – the people in India value home cooked food and traditional food and there are many food joints offering local delicacies with spicy and vegetarian food, similarly, Mc Donald's should focus on the setting a traditional menu over the standard menu.
- Concepts of time – India has a different poly chronic culture, meaning thereby the attitude of people about punctuality is a bit relaxed here and the priorities are changed according to importance, therefore Mc Donald's has to go through a cultural awareness training in order to understand Indian concept of time and build a strategy for dealing with it (Babin and Zikmund, 2015).
- Building relationships – in India people tend to set business on trust and intuitive feeling by stressing more upon cultivating relationships, therefore, Mc Donald's has to understand the strategy rather than straightly rushing into the business.
Hofstede Cultural Dimension Theory:
This theory is developed by Geert Hofstede which gives a framework of cross-cultural communication. It has provided a six dimensional model which allows organisations who want to expand business in international market, to make comparison between cultures of different nations (Pappas, 2017). It includes Power Distance Index (PDI); Individualism v/s Collectivism; Uncertainty avoidance; Masculinity v/s Felinity; Long-term v/s Short-term orientation and Indulgence v/s Restraint. These dimensions entail the effects of society culture on strategies and functions of organisations which deal in international market. As per current scenario, as McDonald has already conducted its business at global level but in order to enter into Indian Market, it needs to concern on various factors. It includes cross-culture, preference, culture, living standard and more. To analyse these factors according to Hofstede Cultural Dimension theory, an analysis has been done on culture difference of UK and Indian Market in following manner:-
Individualism Versus Collectivism: This stage of Hofstede model categories culture on the basis of strengths and weakness of the people within the community. It is divided into two types that are Individualism and collectivism. In relation to McDonalds, the company is planning to expand its business in India where they will face certain problems related to the culture. As per observation, it has been identified that India is country of multi-culture where people uses different languages and religion in their daily basis living life. Here, according to this dimension of Hofstede overall community of the country is divided into two parts (Hofstede Culture Dimensional Theory, 2018). Both of them are described as below:
- Individualism: In this, the community gives more priority to their work. As employees of this culture do not give much preference of company and its work. Instead of this, they highly give importance to their personal work. In addition to this, people belongs to this culture are conscience about their own privacy and freedom. They also work hard to gain high rewards by agreeing for challenges. It can be said that they believes in giving respect to other individual along with this they also demand for the same. In context to McDonald, if the company wants to expand their business then they are required to initially understand actual type of employees and the culture from which they are belonging. After this identification, it will be easier for the company to persuade its employees by availing them their desired working environment and workplace.
- Collectivism: On the other hand, collectivism culture states that in this employees as well as organization both gives importance on building relationship as well as skills with each other. This is done for the purpose of gaining long term benefit for both. In this, a mainly employee believes in earning high profitability ratio by giving equal importance to their colleagues by giving them opportunity to perform their work well with more effective efforts. This helps in building positive relation among employees at work place and also results in minimum execution of issues and conflicts in working environment. In relation to McDonald's, it can be said that this kind of people is more effective and beneficial as culture of chosen country shows more relevancy towards the collectivism (Pike, 2015). As people of this country are giving more importance to the human relations so that they can perform their work smoothly with healthier relations.
Power Distance Index (PDI): In this dimensions people gives more priority to the one who owns power. Here, cultures of the countries are categorized on the basis high power and Low level of powers. In relation to McDonald, the company is very much popularize and is known by maximum people across the world. This company is expanding its business in India. Hence, it is important for its management team to give importance to evaluate cultural factor of the country. In context to the India, the country is Low in the power index of culture. As it follows hierarchical system and owns centralized organizations. It will be helpful for the company to expand its business in this country so that they can also delegate their responsibility among employees. In addition to this, they also involve employees in decision making process as they are the only one who will be affected by the same after execution of decision in working practices.
Masculinity versus Femininity (MAS): This dimension of Hofstede models of culture categories it on the basis of Masculinity and Femininity. High range of masculinity in culture states that people living in the country have more ego and they highly prioritise status. Along with this, people of the masculinity give more preference to money as with this they can fulfil their demand and needs both (Cavusgil and et. al., 2014). On the other hand, culture belongs to femininity gives preference to relationships and mainly focuses on the quality of their life. In relation to the McDonald, the company is new for culture of India. Hence, it is important for them to the initially build their relationship with people living over there. It includes collaboration with the team mates so that employees can perform their job role by coordinating with colleagues. High level of femininity is beneficial for the McDonald, as this company is expanding its business in the India. According to culture of India, people of this country are prioritising its customers so that they can establish their business effectively. It will also contribute in enhancing growth rate of the company for long duration of time.
Uncertainty Avoidance Index (UAI): In this dimension of Hofstede theory, it is important for McDonald to evaluate actual culture of the India. It is divided into two types that is high range of degree of Uncertainty avoidance Index and low range of degree of Uncertainty avoidance Index. In relation to India, the country is High in this index as the people live in this country are free to express and share their experience as well as anger with the other people . Along with this, people of India are allowed to take their own decision without compromising with each other. They are even allowed to change their decision according to the requirement of country as well as market. It will be beneficial for McDonald, as they can expand their business easily and can also discuss and share their polices with the employees in order to implement them effectively. Along with this, they can even change or formulate new policies according to the requirement of business.
Pragmatic Versus Normative (PRA): In this dimension of Hofstede, it has been identified that culture of people belong to same country varies on the basis of every individual (Baker and Magnini, 2016). Here, it has been identified that people are mainly of two types that is pragmatic and normative. It can be said that pragmatic people are the one who do not like to communicate much. Instead of this prefers to perform their own work without involving much people in it. On the other hand, normative people give more priority to their work and gives importance to their own values and rights.
There is a huge difference between UK and Indian market where American like to eat healthy foods and people of India on savoury and tasty eatables. India has a large marketplace which is considered as second most populous country in the world. Here people belong to different culture and various traditions. McDonald serves a wide variety of fast food products including vegetarian and non-vegetarian. But to enter into Indian market, this company needs to develop a new menu which includes a line of vegetarian items and match with local taste and preferences. According to survey, it has believed that India is only country where people are high religious and bounded by traditions. They do not eat any kind of beef or pork items therefore, McDonald needs to develop its new menu as per tradition of this nation. Along with this, in order to overcome from cultural issues, it has recommended to McDonald to build effective strategies and policies as per Indian market. Further, it needs to provide different sections for dealing with vegetarian and non-vegetarian food products till it serves to Indian customers. In addition to this, even ice-creams and milk-shakes or other soft-serves should made egg-less as well as only vegetable oil used for cooking process. Along with this, spices and herbs which are used for making burgers, aloo-tikki and other items should be mixed as per Indian taste.
India is a versatile country. With a total of 29 states and a population of more than 1.3 billion, it is an amalgamation of people with different cultures and mindsets. McDonald's, to effectively establish its business in India, must focus on these cultural aspects. There are many factors which could help McDonald's easily set up its business in India. One of these major factors is considering religious sentiments of the people of the country. Majority of people living in India are Hindus, who worship cows and gives important various other animals. McDonald's must avoid using any beef or pork products in their items to respect their religious sentiments. The second major factor is the taste of people of India. India is a land of rich spices, and people never hold themselves back of using these spices in their dishes. McDonald's too must focus on such use of spices to develop taste in their products according to the preference of Indians. The third on perhaps one of the crucial factors for McDonald's to establish itself in India is that people in the country are divided as vegetarians and non-vegetarians. However, there has been a shift amongst customers to go vegetarian; still there are many customers who prefer non-vegetarian food. This issue can be a major factor which could influence its success in Indian markets. McDonald's must focus on establishing different kitchens in their outlets along with different utensils to prepare these foods separately. Emphasis should also be given on packaging of these products for customers to distinguish between the two.
Furthermore, to run business successfully, the main role is played by employees who help in giving best services to customers. With this assistance, McDonalds need to give employment to high skilled workers who are experienced in dealing with people belong to different-different culture. The staff must be trained properly to serve the customers according without behaving in manner that could hurt their cultural beliefs. Such practices would allow them to build strong and positive perception about the company and would help McDonald's to be a local leader in the country. In order to deal with Indian people, it is suggested to managers of this company to adopt Autocratic Management Style. One of the main reasons behind this is that at peak period (occasions) where high foot of customers are seen at restaurants, this style of management help in quick decisions. This would help to ensure that people receives the best services at restaurants in short interval of time. Giving fast services on occasional period like on Diwali, Christmas and other festival time, McDonalds will get opportunity to achieve its set mission. Furthermore, another reason for adopting autocratic management style by managers of McDonalds is that it aid to provide best training to staff members. The people who are better trained in certain tasks will help McDonald in giving fast to customers at busier times.
As McDonalds has operated business on global level so, different cultures are present within its business. In this regard, to build effective team, its managers are needed to follow Task Culture for developing high collaboration between employees of different culture. Along with this, it is also recommended that managers and leaders of McDonald's should follow situation leadership as most of the companies in modern world that are dealing in food and beverage sector like restaurants are using this leadership only. This can help organisation main in making right decisions on correct time and whenever it is required for making any changes. McDonald's can make alterations as per the requirements on the basis of this leadership while performing tasks like serving to consumers at the restaurant and so on. This leadership style has been recommended because on a regular basis many of consumers do comes in the restaurants for having food. It has been analysed that they may consist with different moods and culture. Therefore, following this type of leadership might help organisation in performing tasks even when customers and other employees are having different cultures. Apart from this, following this type of recommended leadership can help McDonald's in gaining ample number of competitive advantages which might help organisation main in reaching to its goals in specific and set time frame. On the other hand, it has also been recommended for this organisation to recruit employees and at the same time when they are having different cultures train them accordingly so that at they can easily contribute their level of capabilities with each other. This would help both organisation and employees in making effective relationships while having different cultures.
From this assignment, it has examined that intercultural differences poses a major challenge for organisations when it comes to global business management. Therefore, while managing business across continents there are certain barriers which are faced by the companies such as, language barriers, cultural backgrounds, perceptions etc. While talking about the global business management of Mc Donald's it could be witnessed that the cultural understanding plays a crucial role for successful launch of a product in that particular place while it also helps in marketing and publicity of the product. Therefore, organisations are required to build effective strategies and policies by concerning on cross-cultural aspects. This would help in overcoming from issues which may develop when a company moves its business international market.
Books & Journals
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Cavusgil, S.T., and et.al., 2014. International business. Pearson Australia.
Baack, D.W., Harris, E.G. and Baack, D., 2013. International marketing (Vol. 3). Sage.
Babin, B. J. and Zikmund, W. G., 2015. Exploring marketing research. Cengage Learning.
Dibb, S. and Simkin, L., 2013. Marketing essentials. Cengage Learning.
Griffitts, M., 2016. Human resources marketing and recruiting: Essentials of internship management. Handbook of Human Resources Management, pp.103-118.
Lane, P., 2015. Human resources marketing and recruiting: essentials of employer branding. Handbook of Human Resources Management, pp.1-30.
Pappas, N., 2017. Effect of marketing activities, benefits, risks, confusion due to over-choice, price, quality and consumer trust on online tourism purchasing. Journal of Marketing Communications. 23(2). pp.195-218.
Pike, S., 2015. Destination marketing: essentials. Routledge.
Rancati, E., Gordini, N. and Capatina, A., 2016. Conceptualizing and Measuring Content Marketing in Luxury Firms: An Exploratory Analysis. In Global Marketing Strategies for the Promotion of Luxury Goods (pp. 109-132). IGI Global.
Smith, A., 2014. Breaking the chain: The screen industry and disintermediation. Metro Magazine: Media & Education Magazine, (182), p.104.
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