In the world of globalization, business has also become global and now it is very common to manage business functions in other countries with some sort of reporting relationships with functional teams in different countries. Culture is a common pattern of thinking, believing and working which is presented by a person or an entity towards the external environment consciously or unconsciously. As the core of the business lies in human resources, it can’t be devoid of cultural effects. The companies are employing a global mindset in order to survive in the competition. A small restaurant may use a communication channel like e-mail or telephone to book orders many times being unaware of where it is going.
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For an organization having a global mindset, the ability to recognize and appreciate the similarities and dissimilarities among nations and cultures and then take up an approach to work on organizational and strategic issues is what managing across cultures is. Following are some of the phenomena the confluence of which is important to understand the importance of a global mindset-
The global phenomena
Due to the fast pace of technological growth one can’t sit in one corner of his office and do business from there itself. It is sure that business will make one encounter people from different cultures. The exchange of ideas and flow of people around the world is what called the global mobility.
In today’s world from procurement of raw materials to the flow of human capital, everything is possible from any part of the world. This is called as the global resourcing.
Under global marketing organizations require its employees to understand the cultural differences among different nations so that the products can be developed keeping the local requirements in mind or can be customized according to the needs of the target population.
Lastly, global wisdom and collaboration is one of the core competencies of an organization as in people must understand how to work with people having diverse backgrounds and countries. By understanding the similarities and differences in the cultural values of your marketplace, you become perceptive and the probability of achieving success in the colorful global arena rises.( Charlene Marmer Solomon, Michael S. Schell)
Main issues discussed in this case-
Given the overview of effects of globalization, the main focus of this study would be to understand how McDonald’s has maintained its flexibility in its activities taking the contrasting cultures of the US and Japan into account. This study would explain as to how the management practices of both the countries differ and these differences have a direct or an indirect relationship with the cultural practices like the communication style, leadership style, decision making styles etc. It also aims to touch upon the differences in marketing strategies of McDonald’s in both the countries.
McDonald’s- The Company Background
Serving nearly 47 million customers daily through more than 31,000 restaurants
in 119 countries worldwide, McDonald’s Corporation is the world’s largest chain of fast food restaurants. It offers various fast food items and soft drinks including, burgers, chicken, salads, fries, and ice cream.
The restaurants have been redesigned in more natural style which includes a playground for children, lounge areas and fireplaces. It eliminated the use of hard plastic chairs and table to improve the comfort level of the consumers.
Richard and Maurice McDonald introduced the “Speedee Service System” in 1948 which was in line with the principles of the modern fast-food restaurant. This was the foundation of the one of the largest chain of fast food restaurants of present times. The brothers kept on experimenting with the food in order to expand the business and cater to a larger segment of consumers.
They came up with innovative products like Chicken McNuggets in 1980 after introducing a breakfast menu in 1970. But these innovations could not reflect in sales for so long as sales per unit slowed down between 1990 and 1991 lowering its market share from 18.7% in 1985 to 16.6% in 1991. One main reason for this was the heightening competition it faced from its traditional rivals like Burger King, Wendy’s and Taco Bell. (http://www.en.wikipedia.org/)
In the late 1980s, McDonald’s started recognizing the importance of environmental hazards occurred by wastage and packaging. As a result of this McDonald’s tied up with Environmental Defense Fund, a leading organization for environmental protection. By this McDonald’s came up with some inspired solutions as in it introduced brown paper bags having some percentage of recycled content, employing suppliers who produced corrugated boxes with more recycled content. It had actually a cascading effect on reduction of solid waste and establishment of a market for recycled products. Apart from that it also replaced polystyrene clamshell containers for holding sandwiches with new paper-based wraps that combined polyethylene, tissue and paper to keep food warm and prevent leakage.
Furthermore, McDonald’s one of the biggest threats was lack of growth opportunities in the domestic market due to the fact that in some small way it contributed to the increase in cancer incidences, heart diseases and diabetes among the population.
On the flip side, if one looks upon the major strengths the flexible operations strategy is the one that can’t be left unmentioned. Its history of experimentation is pretty long. Regardless of failures like McLean Deluxe, it has continued to focus on its key strengths – quality and consistency while evolving new palates.
Now as U.S. market was close to being well saturated, McDonald’s tried to explore new opportunities abroad. With a view of expansion McDonald’s entered Japan in 1971. This was a challenge as the habits of Japanese people had a stark difference from that of the Americans. They had to take into account all the cultural aspects in order to offer food in commensurate with the eating habits and likings.
The organizational structure
Organization structure can be defined as the way that an organization manages its employees so that work can be performed efficiently and it can meet its targeted goals.
For a small organization like a sole proprietorship or partnership where face-to-face communication is frequent, there may be no requirement of a formal structure. For a larger organization such as a corporation or limited liability company, there must be a more defined structure, as many decisions have to be made about the delegation of various tasks.
McDonald’s Corporation is an excellent example of company with a global strategy and centralized organizational structure. All the typical franchises restaurants receive food and packaging from the same approved vendors. This means that a McDonald’s in the U.S. is just like a McDonald’s in Japan. At the top of the hierarchy are the McDonald’s Chairman and CEO. Below comes the President & CEO, America followed by President & CEO International. All the decisions regarding menus and marketing strategy are made at the corporate level in the U.S (Hoover’s, 2009)
McDonald’s organization structure in Japan is also based on the US model.
It is structured along the following functional lines with their Chief Executive Officers Overseas being the head of respective functionality-
Operations – the head is the COO who handles all the nuances regarding the procurement and supply of equipments and franchising.
Development – it has the CDO as its head who deals with the issues regarding the acquisition of property and construction of the restaurants.
Finance – the head is the CFO who manages all the finance related issues and is the key decision maker in the issues of feasibility of new projects in terms of gaining profits out of them.
McDonald’s Chairman & CEO
President & CEO, USA
President & CEO, International
SVP Latin America
SVP Asia Pacific
SVP, Middle East/ Africa
Marketing – the CMO manages the issues related to new product development, sales and marketing.
Human Resources – the head is the chief people’s officer who manages the customer services, personnel, hygiene and safety related matters.
Cultural Differences between the US and Japan
“Japan and the United States are amongst the largest economies and are arguably the most sophisticated consumer cultures in the world” (Rose, Bush, and Kahle, 1998)
The culture concept appreciates that individuals from different backgrounds are exposed to different traditions, rituals, customs, and religions. These factors provide present various learning environments to human beings, which cause significant variations in standards, behaviors, attitudes, and beliefs.
Individualistic vs. collectivist
Japan has a collectivist culture having strong ties to family and country. Self behavior is governed by the norms of group. Collectivists have the essence of superiority of the group over the individual.
The United States, on the other hand follows the individualistic culture, where people have flexible ties to group and self-interest governs their behavior. In case of conflict between individual goals and group goals, personal goals take precedence (Belch, 1998). Americans highly rate autonomous and self-reliant person; thus they see themselves as individuals and not the representatives of their respective families or communities (Lin, 1993; Belch, 1998). Other cultures have often viewed this behavioral affect as selfish. For advertising, Americans have an overall negative view of advertisements. They are skeptics and disbelievers of ads.
Low-context vs. high-context society
Americans have a low context culture in which things are fully yet concisely spelled out. Communication is explicit, and there is considerable significance on what is actually written or said .Japan is an example of a high context culture. There less is spelled out explicitly and much more communicated through indirect ways. Americans are vulnerable to breakdowns in communication and are not known for their capacity to tolerate or understand diversity.
Future vs. Past Orientation
Generally, past-oriented societies like Japan are concerned with orthodox ways of doing things. They tend to be conservative in management and slow towards change. On the contrary, future-oriented societies have a pragmatic approach towards the future. They look upon management as a matter of planning, doing and controlling instead of going with the wind. The United States is a major example of future-oriented societies. (http://www.analytictech.com/mb021/cultural.htm)
Consumer Socialization and Family Influence
For better exploration of advertising and reactions toward advertising, one must study as in how much is the influence of the family in both Japanese and American cultures is. The nature of parental control can explain the family communication, central in both Japanese and American consumer socialization processes. This is important as practices toward advertising should be related to the pattern of family communication. Through a research, Dr. Gregory Rose, examined the difference between patterns of family communication in Japanese and American parents and their respective attitude toward advertising.
Rose’s study showed “American mothers held more negative attitudes toward advertising in general and toward children’s advertising” (Rose, 1998).
The researcher found that American mothers, compared with Japanese mothers in general, discuss advertising more with their children. In addition, American mothers more actively mediated what their children watched, as well as, controlled their exposure to advertising. “The implication is that perhaps advertisements or marketing communication programs can be developed and used across international borders, once family communication style is understood” (Rose, 1998).
Thus it can be concluded that such kind of study could help advertisers better formulate effective advertising strategies and segment the market.
Management style différences
Différence in Marketing style
According to Peter Drucker, American management guru. “When the rest of the world was talking about marketing, the Japanese were doing it; they just didn’t know it” (Herbig, 1999).The Japanese viewpoint of marketing was different from that of the United States. Marketing is considered second to manufacturing and production in Japan. “Because Japan is a modern collectivist culture, once a product is “hot” everyone has to have it”. (Herbig, 1999). “The Japanese get very close to their customers, however this is not equated with strong marketing, as Americans know it” (Crowe, 1997). The United States is known for its emphasis on self-reliance and autonomy. There, marketing is more about customization and is, several times, even individually tailored.
Marketers in Japan typically use emotional appeals rather than informational ones. They generally avoid mentioning product benefits, guarantees, and safety (Ramaprasad and Hasegawa, 1990). Japanese marketers believe that projecting a company’s brand image is a more effective way to transfer feelings to consumers and stay ahead in the competition.
On the contrary, American marketers tend to be more logical, scientific, and process-oriented. American advertisements reflect more individualism and direct speech. Generally American ad is very information rich and features the product, while describing the price, a special offer, performance, the warranty/guarantee, safety etc. (Tansey, Hyman, and Zinkhan, 1990)
Snack Wrap v/s McWrap
McDonald’s Snack Wrap comes into the category of portable food as it can be eaten with just one hand. Its constituents are juicy premium chicken breast meat; cheddar jack cheese; crisp lettuce; honey mustard; choice of ranch sauce, etc. as there was a trend of individuals seeking health developing Snack Wrap was a right product for the consumers in America.
The Snack Wrap was introduced in the US on 1 August, 2006 while it was available in Japan in 2007 with modifications.
In Japan the product’s name has been changed to McWrap. It’s a perfect example of the so called term glocalization in which the home country the US accommodates the host country Japan in order to be more related to their consumer expectations and linguistic features. There were two reasons for that as Japan gains its strength from the prefix ‘Mc’ and from the branding perspective it is more close to being a McDonald’s product.
Secondly, for Americans attaching a prefix ‘Mc’ to wrap would sound as “Mc-Crap”. Well Japanese had no problems with this word as they don’t understand the word crap in their language. (Source: Sharon Kleinman)
Communication style differences
In America if the work culture in companies is observed then there is more kind of an authoritarian environment where the employees at lower level are bound to follow the work style or the procedures established by their superiors. The subordinates are not likely to have a contradiction in opinions of their bosses. Also there is a direct style of communication in the corporate houses as everybody has own individuality. It differs from the way Japanese work as they often hold a contradictory view to their bosses. Though the communication and decision making is group oriented.
Leadership and Decision making style
In general Japanese focus on long term goals and make strategies accordingly while the Americans believe that if they achieve short term goals , ultimate objective is more likely to be accomplished. So they are short term goal oriented. The Americans bear individual responsibility while the group or team working for similar goal holds accountability. Hence there is less individual autonomy in Japanese working methodology.
The Americans are quite sensible in allocating one specific job to one person who is best in it while Japanese give more stress on team work and they don’t have specific roles assigned to them. In most of the Japanese companies there are figureheads and facilitators for decision making, on the contrary the leadership style of Americans is individualistic.
Discussion and Conclusion
The analysis has provided with a few take-aways regarding importance of management of cultures in different countries in case of McDonald’s. The focus of US organizations remains on short-term objectives, on the other hand Japanese organizations has its focus on long-term objectives.
Furthermore, in leadership styles in US organizations, the leader acts as the decision-maker and head of the group while in Japanese, leader only acts as the facilitator and a group member. The Americans have a face to face confrontation which emphasizes on clarity while Japanese avoid confrontation and emphasize on harmony(sometimes leading to ambiguities).
Also organizations in US have more casual corporate culture while in Japan the hierarchical structure dictates the flow of communication.
In the U.S, employees generally enjoy appraisals of short-term results and feel that their organization values them as separate, distinct individualities as opposite to the case for Japanese firms. Japanese employees have no clearly defined roles, and there teamwork is given highest priority.
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