Globalization and Adaptation of Companies to Different Cultures - Case Study Example

Globalization and Adaptation of Companies to Different Cultures Name: Student number: Course code: Word count: Date of Submission: 1. Introduction Globalization is a process that has been ongoing for quite a long while only that it is much more noticed and appreciated in the modern world because of its impacts. It refers to a series of events that rapidly change the world to make it more integrated in different aspects. Such aspects include culture, social factors, economy and trade. The international integration process of globalization has virtually overcome the physical distance and other artificial barriers. However, globalization has had various impacts on international business for multinational companies that enable easy flow of goods, services, various kinds of capital as well as knowledge. The evident effects of globalization include cultural integration on a global scale, facilitated exchange of goods, services and ideas. It has practically made the physical distance between cultural backgrounds seem to be less of a limiting factor. Respectively, this paper assesses the impact of globalization and how different companies implement various business styles necessary to adapt to different cultures. 2. Companies and their Adaption to different Cultures 2.1 McDonald’s Adaptation An example of such companies that had to find adaptation strategy is McDonald’s, a food processing company headquartered in the United States. In order to adapt to the various cultures of the world, a multinational company has to design an appropriate business style, each to every culture. McDonald’s recognized this need by implementing a global strategy under the umbrella slogan of ‘Modifying the Burger around the World’. The subject idea is to represent McDonald’s strategy of adaptation in different cultures but the real subset objective entailed processing a different burger for different culture, while keeping the McDonald’s sign, expertise, taste and variation in each piece of the snack. As such, the company came up with the Chicken Maharaja Mac for India, Kiwiburger for New-Zealand, McRice Burger for Southeast Asia, McLaks burger for Norway and the Black and White Burgers for China (Mathur, 2013). 2.2 Red Bull and the Packaging Adaption Strategy Red Bull is also another multinational company whose products are evident in continents including Asia, Africa and America. The company’s idea of adapting to the different cultures is relatively similar to that of McDonald’s only that this involved in product packaging. For Red Bull, the global adaptation strategy was all about packaging the drink product differently for a culture as it would for another. For instance, Red Bull’s packaging for the Chinese culture is different from that of the American culture. Figures 1 and 2 below show Red Bull’s different packaging styles for America and China respectively. Figure 1: American Red Bull packaging Figure 2: Chinese Red Bull packaging In this strategy, Red Bull is seeking to add value to the product by adapting a packaging design that has basis on the preferences of the consumer. This is an interesting approach because culture always influences a customer’s preference, especially in a heavily cultural society like the Asian society. For the Chinese Red Bull, the product has a package with the two bulls in red colour, a colour that symbolizes good luck in the Chinese culture (Mathur, 2013). At the centre of the two bulls is a golden circle, which symbolizes wealth and happiness in this culture. On the other hand, the North American Red Bull package has red to symbolize courageous action with the silver background symbolizing maturity. The other blue section speaks of spirituality of a person at youth, and peace (Mathur, 2013). 2.3 Zara’s Model of Production for Adaptation While other multinational companies focused on products design and packaging, Zara opted to modifying its production model to adapt to the cultural impacts of globalization. Zara is just one arm of a cloth designing and producing franchise know as Inditex Corporation. It is principally the driver of the growth in this franchise and the largest internationalized brand of the Inditex's chain. More relevantly, Zara adaptation strategy involved basing most of its production on the demands and preferences of the client, thereby incorporating cultural interests. This can be referred to as a pull strategy; it is a model of local production that enables Zara to provide much faster. Notwithstanding the feasibility of this model, as indicated by Ferdows, Lewis & Machuca (2005), it also reduces inventory costs, lowers margins by working with the most competitive offer and eliminates the need to resort to traditional sales in the sector to provide an outlet for surplus production. For this model is critical to have flexible production capacity to quickly adapt to changes in the always uncertain demand. Zara achieves the flexibility by subcontracting approximately 60% of its manufacture and production process. It therefore outsources some labour and professionalism but importantly, it does the crucial parts like design by itself. Also important is the housing on one floor, of all related sections in the production line. 2.4 Portakabin’s Adaptation by Segmentation Portakabin is a company that deals with structures and operates in the construction industry to constructs modular buildings. Over the years, it has gained high level clients and subsequently, substantial market share. However, the evident impacts of globalization brought these clients closer to each other and information sharing became simply easy and quick. As such, differentiation of these clients and their target needs became challenging for Portakabin. In response to this challenge, and as a way of adapting to globalization impacts, the company applies a simple segmentation of customers institutionally such as local authorities, hospital trusts, schools, public and private companies, and other construction companies. These customers have various needs ranging from reception areas, wards for hospitals, laboratories and staffrooms for schools and booking centres for companies, among other things. In addition to this, the company has evident commitment to quality and with this, it has been able to secure a 17% market share with the closest competitor at 14% (Business Case Studies, 2013). To achieve this kind of quality, Portakabin puts some kind of dimensions to play and these includes; use of high end material, modernity in design, speedy construction and satisfaction of client’s need in fittings and layout (Business Case Studies, 2013). In terms of quality control, the company also invests in quality services, quality processes and quality products as such. Besides that, they also have interest in good quality system which is in composition of integrity, records of work done, review of work done, remedial actions as necessary and repetition of stage processes to confirm perfection. 3. Necessity of Cross-Cultural communication in Adaptation to Globalization Impacts In the international business arena, cross-cultural communication relies on the complication and nature of the interacting cultures. Therefore, it is important to understand culture itself as the underlying determinant. International trade has continued to grow between nations and continents as a result of globalization, yet these nations are of totally different cultural backgrounds and perceptions. As Chaney and Martin (2010) discuss, it is important to understand oneself from the view of another culture, for business to flourish cross-culturally. Lack of cultural knowledge amongst the members of a multinational business company may result into misunderstandings and conflicts either interpersonally, inter-organizationally or even internationally. Misinterpretations and misinformation occur occasionally in intercultural communication and are consequences of language differences since words or expressions in one culture differ in meaning to another culture. Communication between people with different linguistic and cultural backgrounds is thus, inevitable. This communication takes place because of contacts within various sectors of business. As such, the subject of moral reasoning takes a centre stage and culture respect, ability to adhere to business ethics and fair profit become the desirable traits of a good business entity (Yong, 2008). In terms of communication in business, the contacts draw attention to the divergence of perspectives between members of different cultures 4. Business Style and Leadership for Cultural Adaptation Just to use China as an example of a complex culture to comprehend in international business, the business arena is such that social morals, cultural perspectives and education factors are significant influencers of business success. They have a kind of business style called the Confucian Ideology that informs the styles of business in such a Culture. The idea here is to adopt a business style that closely relates to this ideology because it highly regards culture. As such, the kind of business style that will help a multinational company to adapt to the impacts of globalization is the one that appreciates cultural variations and makes it evident in the business strategy. Globalization has enhanced interactions between people from different walks of life and cultural backgrounds more precisely. Communication between these people with different linguistic and cultural backgrounds is thus, inevitable. This communication takes place because of contacts within various sectors of business. As such, the subject of moral reasoning takes a centre stage and culture respect, ability to adhere to business ethics and fair profit become the desirable traits of a good business entity 5. Conclusion Globalization arose out the factors that necessitated international integration and also from the foreseen benefits of global interdependence. It has greatly affected people’s consumption of various products and services, both locally and internationally. This assessment paper establishes that globalization has shaped the world economy in a profound way and completely changed the international business arena, hence the need for multinational companies to adapt. As the paper also establishes, different companies find various strategies more appropriate to achieve the desired adaptation. Nonetheless, no single global strategy of adaptation is more efficient than the other since the dynamics of the industries in which the different companies operate vary from one to another. As such, a comprehensive market research is necessary in identifying the strategy that will work best for a particular company. 6. References Ferdows, K., Lewis, M., A. & Machuca, J. A. D. 2005. Zara's Secret for Fast Fashion [online] Available at: < http://hbswk.hbs.edu/archive/4652.html> [Accessed 12 August 2015]. Mathur, S. 2013. 9 Examples of Firms Implementing Global Strategy by Adaptation. Gujarat India: Indian Institute of Management, Lucknow. Business Case Studies. 2013. The importance of quality in creating competitive advantage. [online] Available at: http://businesscasestudies.co.uk/portakabin/the-importance-of-quality-in-creating-competitive-advantage/ [Accessed 12 August 2015]. Chaney, L. and Martin, J. 2010. Intercultural business communication. New Jersey: Pearson Education Limited. Yong, A. 2008. Cross-cultural comparisons of managerial perceptions on profit. Journal of Business Ethics, Vol. 82., No. 4, pp. 775-791. Read More