Cultural influence on management of organizations 1. Introduction As businesses and firms grow in size, they are crossing borders and becoming multi-national companies. When the firms cross borders, several management strategies need to be aligned in accordance with the cross-cultural needs. This assignment will examine two famous multi-national companies on their application of cultural aspects and analyze how successfully they have applied those aspects and reasons for their success.
Before proceeding with examination and analysis, let’s look what culture means. According to Hodgetts and Luthans (2000), acquired knowledge will form values and behavior and subsequently influence the behavior of individuals or society. According to this definition, culture can be learned. It can be adopted. Therefore, the successfulness of a cross-cultural company will depend on how much they have learned the culture of the host country. 2. Elements of culture There are different types of cultures across the world and each culture has its unique essence.
While defining the term ‘culture’, there are several elements that together constitute as the culture of a particular region or the culture of particular people. What are the elements of culture? Here is your answer: * Language: The various languages are essentially an important part of the culture. Read information about different languages. * Norms: Every society or every civilization has a set of norms, which are an inseparable part, and an important element of the culture. This can include the folkways, mores, taboos and rituals in a culture. Values: The social values of a particular civilization are also considered as an element of the culture. The values of a culture often refer to the things to be achieved or the things, which are considered of great worth or value in a particular culture. * Religion and Beliefs: The religion and the beliefs of the people in a civilization play an important role in shaping up of the culture as well. Read information about world religions. * Social Collectives: Social collectives refer to the social groups, organizations, communities, institutions, classes, and societies, which are considered as symbolic social constructions. Statuses and Roles: A status or a social role is nothing but a slot or position within a group or society, which gives an overall idea of the social structure and hence is an important element of culture. This can also include traditional gender-based or age-based roles. * Cultural Integration: This includes the degree of harmony or integration within the various elements of culture. This can include elements like sub-cultures, local cultures and the difference between historical and cultural traditions. 3. Cross cultural aspects in McDonald and Kentucky Fried Chicken
For the purpose of this assignment I have chosen two very famous fast food chains of the world. The McDonald and Kentucky Fried Chicken are renowned for adaptation of cross cultural aspects in their strategies. In this section I will be examining the degree of application of cross cultural aspects in th Chinese market by both companies. a. About McDonald and cross cultural adaptation McDonald’s is the leading global foodservice retailer serving more than 58 million people in 118 countries each day. More than 75% of McDonald’s restaurants worldwide are owned and operated independently by local people.
They serve the world some of its favorite foods – World Famous Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin. (www. mcdonalds. com) Product and position adaptation When McDonald opened their restaurant in April 1992 on Beijing’s Wangfujing Street it the world’s largest McDonald’s restaurant. They have localized their menu to some extent. McDonald believed that the customers visit to their restaurants are going to enjoy the Western-style fast food. Therefore, they do not want to change their core product, such like the Big Mac, Fries, Coco-Cola, and Milk Shake and so on.
But they added some kinds of adaptable products into their menu to adapt to the Chinese market. For instance, the Spicy Chicken Sandwich which is mixed some Chinese characteristics that to put spicy chicken into sandwich can be found in this market. From October 20th in 2004, McDonald’s had begun to ordering suitable menu for Chinese market, such like the breakfast product. The products like scrambled eggs, pancakes and hot tea which have typical Chinese elements can be found in McDonalds? breakfast menu in China. The good market response proved that our strategy of product localization is correct,” said by the by marketing manager (2009). Chinese are very much of family oriented and kinship based. Therefore, McDonald takes the “family” as the main target group, including three groups. They are children, their parents and young people. Pricing adaptation China is a developing country with a lower economic level than America. Hence, McDonald has adapted their pricing strategy in the Chinese market in accordance with the economic level. The same product would be available at different prices from Chinese and American markets.
Advertising According to Chinese culture, the color red is regarded as color of good fortune. Hence, McDonald’s advertisements in Chinese market always contain a warm picture. It sometimes looks like the elderly and the young generation within a happy and relaxing atmosphere with easy-listening background music. Fancy red and eye-catching golden are the main colors of our logo. Moreover, we keep on using some symbolic cartoon characters and free toys to attract the youth. McDonald’s tends to establish a good relationship with the consumers.
Thus, the advertisements are always emphasizing the traditional customs and values which are cherished and followed by Chinese people, such as the celebration of Chinese New Year, New Year wishes, calligraphy and so on (www. mcdonalds. com. cn). b. About KFC and cross cultural adaptation KFC Corporation, based in Louisville, Kentucky, is the world’s most popular chicken restaurant chain, specializing in Original Recipe®, Extra Crispy®, Kentucky Grilled Chicken™ and Original Recipe Strips with home-style sides, Honey BBQ Wings, and freshly made chicken sandwiches.
Every day, more than 12 million customers are served at KFC restaurants in 109 countries and territories around the world. KFC operates more than 5,200 restaurants in the United States and more than 15,000 units around the world. KFC is world famous for its Original Recipe® fried chicken — made with the same secret blend of 11 herbs and spices Colonel Harland Sanders perfected more than a half-century ago. Customers around the globe also enjoy more than 300 other products — from Kentucky Grilled Chicken in the United States to a salmon sandwich in Japan. KFC is part of Yum! Brands, Inc. the world’s largest restaurant company in terms of system restaurants, with more than 36,000 locations around the world. The company is ranked #239 on the Fortune 500 List, with revenues in excess of $11 billion in 2008. (www. kfc. com) Product and position adaptation Unlike McDonald, upon entering into Chinese market, KFC has introduced specialized new products. For instance, original chicken in China involves mixing all the ingredients and dig chicken pieces in beaten eggs, then turning them over in regular bread crumbs, finally plunging them into the secret spices and heating them in the oven at 350 degrees.
The ingredients include chicken, flour, bread crumbs and secret recipe. Moreover, Chicken Roll of Old Beijing is chicken rolled in a thin pancake with green onions, cucumber and hosing sauce, and made into a wrap which is modeled after the way Peking duck is served, but with fried chicken inside. It is flavored, not only with hamburger sauce, but also a sweet sauce made of fermented flour, which is a condiment for the famous Beijing dish (english. peopledaily. com. cn). Pricing adaptation
Despite China being a low economy compared to America, KFC did not have general price discrimination for the Chinese market. On the contrary, KFC sometimes raises the price of its products in the recent years. However, because of the worldwide financial crisis happened in the end of 2008, many consumer products had a lower price from then on and KFC confronted with the same situation as well. Finally, KFC reduced the price of some products and carry out some promotion strategies to attract the customers. Advertising
Like the McDonald, Chinese family oriented culture is being noted by the KFC as well. In contrast to using conventional methods of casting famous stars in their advertisements, KFC adopted to use the family values in their advertisements. One of the TV advertisements tells a story about an employee of a KFC restaurant who was taken care of by her grandmother when she was young. After she grows up, she carefully helps another grandmother, to persuade her granddaughter who was choosy about food to have more vegetables in order to keep healthy (Zhang, 2005).
Besides, stories like three generations within one family, story about the days before the university entrance examination, looking for girlfriend in Li Jiang and so on. In the Spring Festival of the year 2003, more than 800 KFC restaurants in 170 cities changed the traditional Chinese Tang dress for “Colonel Harland D Sanders” to attract more customers in the Chinese market (zh. wikipedia. org). 4. Analysis of cultural adaptation Cultural aspect| McDonald| KFC|
Product| McDonald’s targets the right customers so that these customers in China can accept eastern fast-food culture more easily. The product strategy is influenced by consumer behavior. | By wrapping the “core” of Chinese traditional dining culture with the “appearance” of the western food, KFC has gained the success of carrying out the new product strategy in cross-culture marketing. KFC always launch new taste of products in different seasons to cater to the needs of Chinese customers.
The Chicken Roll of Old Beijing which was mentioned by one of the marketing managers in Beijing and the beef wrap, for instance, demonstrate the innovation and creation of products in KFC combined with the characteristics of Chinese culture providing more choices to the customers. | Price| The price of the product in China is much cheaper than in American, for example, Big Mac. China is a developing country, and the per capita income in China is lower than that in United States.
Thus, the operators of McDonald’s chose to use low-price strategy in Chinese market so that the customers have the ability to purchase its product. In addition, in 2009, McDonald’s started entering the largest low-cost marketing with the plan of defeating its competitors. The product was sold at the same price level as 10 years ago. Because of the economic crisis which happened in the end of 2008, more and more restaurants and shops had to reduce prices in order to attract customers and lift the depressed sales in China.
And during this period, many consumers tend to seek extra valuable products and services. The products with high quality and low price become more and more popular than before. Considering this social phenomenon, McDonald’s decided to reduce its price in order to adapt to the market environment. To sum up, price strategies are influenced by consumer behavior, such like consumers’ perceptions, expectations and ability to pay and so on. Otherwise, it is also affected by the value of Consumers. | Many people in China emphasize the relationship between the prices of consumer products and the personal status seriously (Huang, 2001).
As mentioned by the marketing manager in Shanghai, KFC scarcely reduces the price of its products. Sometimes, KFC even raises the price of its products in the recent years. However, because of the worldwide financial crisis which happened in the end of 2008, many consumer products in China had a lower price from then on and KFC confronted with the same situation. Finally, KFC reduced the price of some products and carried out some promotion strategies to attract the customers. | Advertising| In advertisement, McDonald’s gives more attention to the cultural transmission in China.
McDonald’s defines its main target as Children and young people, because that in traditional Chinese culture, children are considered as apples in hands of their parents. When implementing the advertisement McDonald uses some symbolic cartoon characters and free toys to attract those people. In addition, to show the respect to the culture, McDonalds chooses to integrate the Chinese value into its advertisements. This style of advertising is accepted and enjoyed by Chinese customers much easier. Evidently, the advertisement strategy is affected by culture including local language and value in Chinese market. China is a society with relatively high collectivism (Hofstede, 1998), where people have a high sense of identity to the traditional culture and traditional food. Since the family members in China often share the similar value and most Chinese people consider that it is necessary to keep on the wonderful family traditions, such as respecting, loving and supporting the elderly, helping others, friendship between individuals and so on. Thus, many advertisements of KFC in recent years try to reveal the background of common Chinese families. | 5.
Conclusion By researching two case companies the conclusion can be drawn that culture differences affect the implementation of most management strategy in different ways in both of the companies. The product and price strategies are influenced by the local values. The promotion strategies are affected by even more components. Anyway, language, consumer values and buying behaviors are the most significant considerations for the transnational companies when entering a new foreign market and gaining the market shares as many as possible.