Marketing across Culture - McDonalds - Case Study Example

MARKETING ACROSS CULTURES By (Name) Name of Class (Course) Professor (Tutor) Name of Institution (University) City and State The Date Executive Summary With over 1.5 million franchises in the United States and over 750,000 outside in more than 120 countries worldwide, McDonald’s is one of the most successful international restaurant chains in the world (IBISWorld, 2015). The company has utilized effective global expansion and intercultural management strategies to expand into new markets and have managed to gain their share of the international fast food markets. This success however comes with a price as there are concerns of how the company products affect the cultures of the host countries. There are various concerns about how McDonalds affects the cultures of the host countries especially in the Asian countries including China, India, Russia and Japan. This paper aims to analyze these contentious issues in the specific countries and how they could affect the company’s business and income in the long run. The paper will first of all give a brief introduction of the company’s operations and structure, the strategies they use and how they are suitable to their business structure and the success of the company. This will be followed by an introductory overview of the case study background. This will be followed by an analysis of the contentious issues which is the company’s effects on the cultures of the host countries. A discussion of whether these contentious issues are justified will then follow leading to recommendations given on an intercultural management perspective. Introduction Company Overview McDonald’s, incorporated in the 1950s is a fast food company owning over 35,000 restaurants in more than 120 countries. It has over four million employees and serves close to 70 million customers in a day (IBISWorld, 2015). In 2014, McDonald’s had the largest market share in the fast food restaurant industry in the United States with a 17% share (IBISWorld, 2015); this was 6% higher than its closest competitor Yum! Brands. The chain of fast food restaurants offer similar consistent menus worldwide of the Big Mac, fries, chicken sandwiches, hamburgers, chicken nuggets, salads, the quarter pounder with chees, wraps, soft drinks, desserts and other various beverages. However, in order to connect with the global markets, the company offers food menus that are relevant to the host countries as well. China has the black and white burger while India has the Veg Pizza McPuff just to mention a few. McDonald’s has a trademark of quality, service, cleanliness and values with which it delivers experiences to its customers. This is done through a strategy that focuses on customer experience through the five Ps which stand for Product, Place, People, Promotion and Price. They also have a three-legged stool approach where the three legs represent Operators/owners, suppliers and the employees who ensure the symbolic stool stands firm. The company has an incomparable global competencies and framework in restaurant operations, retailing, real estate, franchising and marketing (Cleveland M. & Laroche M., 2007). The company’s expansion into other global markets has made it a symbol of globalization and the spread of Americanization. The reputation of the enterprise has made it a recurrent topic of public debates; these topics include health with a focus on obesity and other non-communicable diseases, social and consumer responsibility, corporate ethics and the point of this discussion which is culture or management across cultures to be specific. Background of Case Study The arrival of foreign fast food restaurants into other countries come with various changes in the nutrition patterns of the country. McDonalds is no exception to this as its expansion to other countries has brought about concerns of how it can affect the environment, attitudes and cultures of the people. Food is a vital aspect of culture as it is the oldest carrier of culture globally (Regmi, 2008). The introduction of foreign foods in different countries is believed to be causing a decline in traditional values. Different types of foods are symbolic to certain regions, religions and cultures and introduction of other types of foods in these societies would come with adverse effects on the traditions these communities are trying to uphold. McDonalds is seen as American and its globalization is considered as Americanization of the diet. This also means that the cultures and attitudes are also Americanized and this is not acceptable in many countries. The McDonalds diet has been a bone of contention for a long time with nutritionists who claim that people around the world have begun looking like Americans just by eating like them. Of all the developed countries, the United States is believed to have one of the highest obesity rate. When eating outside their homes, individuals consume more fats and calories and less fiber. The traditional cultures of the host countries are significantly affected by the introduction of unhealthy eating habits due to the introduction of foreign foods. It is believed by the World Health Organization (2002) that in the next couple of years, non-communicable diseases will be the main cause of death and health problems due to the shift towards highly refined food and meat and other dairy products with very high saturated fat content. Apart from the content of the diet, the method of consumption is also an issue thought to be affecting culture. With the introduction of fast foods, there is a shift from the family oriented dining to eating individually. Asian cultures, which are the main focus of this paper, perceive the dining experience as a social and religious activity. They value group conventionality and coordination to encourage harmony among them (Yu & Zhang, 2009). This is different from the American cultures where eating is seen as a necessity and is more inclined towards independence from others and individualism. This paper therefore aims to analyze this case and factors that have brought about these issues from an intercultural management perspective and suggest possible solutions and recommendations for changes to practice. Analysis Effects of McDonalds Globalization on Cultures The entry of McDonalds into other countries has significantly affected their cultures mostly in Asian countries whose cultures are quite different from the American cultures. Globalization happens to be irreversible and therefore countries have either consciously or unconsciously embraced the process or risk losing living space. Different cultures are linked to different levels of economic developments. Economic globalization has adverse effects on global culture which means different cultures are going through changes under this strong driving force (Wagner & Brath, 2012). The case was similar with the introduction of McDonalds into China for example. When the company was first introduced to the country in the 90s western fast food restaurants were not widely accepted. Most of the locals did not even know about most of the foods such as hamburgers and French fries that were the main foods offered by fast foods. However China became the number one market for growth for the company with 960 restaurants and more than 60,000 employees (Laroche, Kalamas & Huang, 2005). The different foods have changed the eating preferences of the locals especially those born in the nineties and late eighties. Their diets have drastically changed from soybean milk and steamed breads to hotdogs and fried chicken which have led to the impairment of their health resulting in blood pressure problems and obesity. By the end of the 20th century, there was a substantial shift on the eating preferences of the Chinese due to the introduction of the McDonalds menu. People and most especially the youth are no longer consuming their traditional meals but more American style meals (Fung, 2010). This shows that McDonalds has brought about a new meaning of eating in the country. Previously, Chinese children were not allowed to consume a lot of snacks due to oncogenes and high calorie content, these rules were gradually eroded after the introduction of McDonalds. It is claimed by critics that the fast spread of McDonalds and other fast foods undercuts aboriginal cuisines and promotes the creation of a standardized global culture (Pan, Dixon, Himburg & Huffman, 1999). Three meals a day is no longer sufficient for the young Chinese populations as they are now used to consuming high calorie foods to help support their energies as a result of eating too much fast food. The traditional Chinese cooking methods are those recommended by doctors and other health officials which include boiling, steaming and pan frying that rely on less oil use and consumption. By trying to incorporate the local culture, McDonalds has pushed these traditional cooking methods into new ways that are still perceived as unhealthy. The introduction of McDonalds into China has turned out to be a disturbing transformation regarding health problems especially for the youth. Japan is another country that has been greatly affected by the introduction of McDonalds. The first establishment was opened by Den Fujita in 1971 (Megan, 2009). In Japan, there is the obento’s which are quite significant to their culture. These are boxed lunches prepared by mothers for their children going to nursery school. The foods are arranged intricately and have a cultural meaning and order. It represents various Japanese ideals including the fact that women are responsible for a child’s sustainability through food and supporting the cultural ideas embedded in the foods (Beck, 2005). Rice is also symbolic core of the Japanese culture to an extent that they say they cannot feel full until rice has been consumed at least once a day. However, the culturally oriented food preferences changed with globalization and the introduction of McDonalds into the country. The company posed a major threat to the Japanese culture with its individualized eating methods while the country highly valued eating together at one table. They see food as a way of creating a sense of community by bringing people together. Apart from the food itself, the sitting arrangement in McDonald’s restaurants de-emphasizes the feature of communism further, where customers are expected to eat their meals on the go. This was however changed as a way to incorporate the local culture. As much as McDonalds has become more acceptable in the country but their image is that of a light meal restaurant for young people and not a dining place for adults (Beck, 2005). In India, the majority of the population is Hindu and vegetarian. This made it quite difficult for McDonalds to strongly establish themselves in the country as it did in other countries. Since the cow is seen as sacred in the country, the introduction of beef flavored French fries in the country brought about very strong opposition. This made it difficult for the company to generate substantial revenues and gain the confidence of the public. India also has a large number of Muslims who do not eat pork, this also paused as a challenge to McDonalds as they had to be strictly vegetarian in the country which is not their way. Indian consumers are also family oriented. The company even had to face a law suit after being sued by three vegetarian businessmen for using oil with beef extract in to make their fries, they ended up paying 10 million dollars and were asked to apologize (Afaqi, 2017). The introduction of McDonalds into India further caused riots and protests leading to one of the restaurants being vandalized causing damages worth 45,000 dollars. The Indian Prime Minister eventually shut down all McDonalds restaurants until the oil was tested. These were some of the challenges faced by McDonalds but the storm eventually calmed down and the company was able to reopen its restaurants and were more careful serving ‘Indianized’ Menus. In Russia, McDonalds faced more corporate culture problems than social and ethnic cultural issues. This was further enhanced by the deteriorating relationship between the United States and Russia. First, there were problems that some of McDonald’s items did not reach Russia’s health safety standards; this was because either they contained more calories and carbohydrates than stated in the menu of the evidence of E-coli in the items. This led to the temporary closing of four of their restaurants and later 200 of the total amount of restaurants in the country were under government investigation (Business Today, 2017). The findings of these investigations have subjected the company to several court cases. The cases range from layout of McDonalds kitchens and the separation of food products to lack of a consolidated laundromat for the uniforms worn by the employees. There was also a case alleging that the company mislabels its food products. These problems greatly affect the company’s performance in the country and as such measures have to be taken in order to avoid or reduce the issues which the Russian consumer health ministry argues that the investigations do not have anything to do with their geopolitical backgrounds. Multinational companies have to always respect the cultures of their host countries. There should be cross cultural literacy in every business environment; the lack of attention to cultural differences can have adverse effects on a global business. While the globalization of McDonalds has caused some beneficial changes in different societies there are also consequences on the cultures and health of the people in the host countries which are causing worldwide concerns. World health officials propose that food and beverage businesses should be accountable for their actions not only in their countries but also internationally. The spread of fast food restaurants like McDonalds are displacing fresh food markets and farms and increasing the consumption of sugary beverages and packaged foods. It is suggested that governments should have regulations on these products which would help improve the quality of diets in the world; these can give financial deterrents which will discourage unhealthy eating behaviors (Hawkes, 2012). These include taxes on sugary beverages and fast foods like those imposed on tobacco use. If this happens, companies like McDonalds are bound to be greatly affected as it can result to high operational costs and less revenue. Culture also has a very strong influence on any company that wants to expand internationally (Mujtaba, 2007). It plays a vital role in the pattern of consumption of institutions or individuals depending on the core cultural beliefs. To be successful, brands have to be able to take up branding strategies in coherence with the dominant cultural philosophies in the host countries and integrating the brands with the specific cultures. It is only this way that a multinational company can smoothly run its processes in a foreign country. McDonalds has its impacts in more than half of the world, changing the food culture where food cultural identities are turning to fast food culture, mostly with the younger generations. The global food culture has basically been Americanized by McDonalds; it has significantly reduced the trends of traditional hotels since it attracts the largest populations of middle and lower income earners leaving the traditional hotels for the high income earners. Despite its success, the company is facing criticism and protests from different organizations more so health agencies, nutrition and dietetics officials and different scholars advocating for cultural preservation. If such protests continue and are taken seriously, McDonalds could face problems which may lead to its downfall. It actually looks like the world is no longer as interested in the brand as it used to before as the company recorded its worst sales in a decade than ever before. The company recorded a decrease in revenue of eleven percent and a global drop of sales of 2.3 percent as a result of negative customer traffic in all important segments (Rosenfield, 2015). Even worse the company disclosed the closure of 350 stores in China, Japan and the United States within the first three months of the year 2015; which is not included in the 350 other stores the fast food chain was already planning to close in that year (Mead, 2004). This clearly shows that the populations are rejecting the brand for other healthier and fresher alternatives from competitors like Panera Bread and Chipotle. As such it should take certain measures especially in the countries where it faces criticism and work on the issues at hand. Only then will the company be assured of continued success and growth. Governments are now working with the media together with other non-profit organizations to harness the positive features of internationalization like the increased and better flow of information in order to bring about social marketing campaigns which advocate for healthy diets and choices of lifestyles. These efforts can change the social and cultural norms that surround food consumption and influence eating behaviors to eventually curb the ever increasing global health issues. As much as this is a positive move this may negatively influence companies like McDonalds and this calls for drastic changes in their operations. The following are some of the recommendations for the company’s smooth operations and continued success. Recommendations It is quite clear from the analysis that the main problem facing Mcdonalds is the health problems caused by their foods and the effects it has on the cultures of the countries it has expanded into. The consumption of junk and fast foods is the main cause of health problems like obesity, heart diseases and other problems like diabetes this has led to the scrutinization and criticism of fast food companies most especially McDonalds as it is thought to produce the most unhealthy foods. In China, the main problem facing McDonalds is the cooking mechanisms where the foods contain too much fats and calories. The company can therefore change these ways of cooking to the old habits of steaming, boiling and pan frying the foods. There is a new cooking machine that makes fries by air frying which can be used for healthier fries which is the main concern in Japan. The health concerns are the same for Japan and Russia. Mcdonalds can seek the help of local health, nutrition and dietetics agencies or officials in order to understand their health concerns and seek advice on how these can be done. They can help in coming up with new and better ways of cooking the foods and the products to be used. These changes may increase operation costs but they will be advantageous to the company in the long run. After this is done, the company can use these same officials to promote their new food preparation methods and advertise the fresher and healthier raw products used in the preparation. By using these health agencies and officials, the company will be able to gain back the confidence of the customers and in eventually bring back the company to its initial success. In most of these Asian countries, McDonalds is considered to be for the young. This has locked out the market of the older generation. The company can therefore incorporate the conventional restaurant style alongside the ‘eat on the go’ so that no market segment is left out as food is for everyone. This would increase its customer base which translates to higher profits. The company can also add the popular local foods in their menus and find healthier and better ways to prepare them. This can be done by partnering with the locals and learning from them and improving on what they already have, putting the company a step ahead of local competitors (Greenspan, R., 2017). This may be different from the company brand and what it is known for but it will prevent the complete failure of the company and further reduce the criticism that the company is already facing from different segments abroad. McDonalds can also introduce seating arrangements and meals that encourage communism as this is held dear to the Japanese culture. The company should also strive to change the image it has of a light meal restaurant for young people to that of a restaurant for the whole family i.e. for the young and also a dining place for adults which also applies for India. The main concern in Russia is the company’s corporate culture and the health effects McDonalds’ foods have on the people. They are also concerned about the raw products used in the preparation of the food. The company should take these issues seriously more so for the fact that their country of origin has geopolitical issues with the host country. It should therefore be very careful as any slight issue may lead to closure or lawsuits like in the case of India. The same agencies that inspect the restaurants can be used to come up with recommendations for what they expect from the company and advise on how these can be done. There is also the issue of the employee uniforms and salaries. These should be reviewed accordingly and the restaurant and kitchen structures should also adhere to the local requirements in order to avoid scrutiny and issues with the local environmental and health agencies. McDonalds is already a household name globally, as such, it should use this to its advantage to attract more customers and increase the visits from the already existing ones. Fast food and soft beverages already bring large profits for the company but getting involved in other areas and types of food would further increase its customer base. The company’s competitors are regularly coming up with better and new products; McDonalds should therefore invest more on research and Development to come up with new products and services and further increase the efficiency of operations for example incorporate home delivery as most of other fast food chains do. The company also focuses more on animal products menu in most other countries apart from India where they faced problems and had to change. They should also consider vegetarians in other countries and serve vegetarian foods as much as they serve the other foods. This is because people are getting more concerned about their health and more and more are turning towards healthier menus and this gradually decreases the company’s customer base in many countries (Institute of Medicine, 2012). Incorporating this would give the consumers options and still allow McDonalds to maintain its global market share. Lastly, there have been complains about customer service especially in Russia. The McDonald managers are professionally trained and this means they can also train employees to meet the expectations of the customers. There have however been complains about the attitudes and behaviors of the employees. This can cause a major loss of customers. This attitude and bad behavior could be as a result of the high customer to employee ratio where very few employees are expected to serve a large number of impatient customers. The company can increase the number of employees to reduce their work loads and increase their salaries to keep them motivated and in the process reduce the foul attitudes. With the existing campaigns about health issues and against unhealthy fast foods, McDonalds has no choice but to incorporate these changes before it tragically faces a downfall which has already began. After incorporating these changes, the company will have to invest in intensive promotion and advertising to make the public aware of the changes and encourage the lost customers to come back. Conclusion Despite the many health and cultural issues affecting McDonalds, the company has still conquered the United States and now has its focus on the rest of the world. The company’s restaurants can be found in almost every railway station, air-ports and other commercial areas. It has basically changed the eating culture of the people as most turned to the fast food culture because of its convenience in the fast paced lifestyle that is the norm of the modern people. The company has gone through several changes since it started in San Bernardino, California. The company keeps customer satisfaction at its core and at the same time is still enhancing the position it holds in the international market. Despite the drop in sales in the past decade the company is still pushing forward in other continents especially Africa, China, Japan, Russia, India, Korea and the Middle East which is an assured source of revenue for years to come. 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