Management and Culture of McDonald's and KFC - Term Paper Example

?A. Definition of essay topic This essay is all about the management and culture in the case of international companies. McDonalds and KFC are among of the most renowned fast food chain restaurants in the world. Within these two cases, the proponent identifies the idea of internationalisation of business and globalisation. The importance of Hofstede’s beliefs of countries’ culture is included in the analysis. Furthermore, the Ritzer’s McDonaldisation thesis is integrated in this paper. The following are main questions that this essay addresses: 1. What are the management issues concerning with culture? 2. How do international organizations manage to face the challenges with management and culture? 3. What are the relevant strategies that need to be addressed in order to reach competitive advantage in the case of an organization faced with challenges of management and culture? B. Critical discussion of theory In this section, the proponent discusses different theories and concepts in line with culture and organisational management. Internationalisation versus globalisation of business Internationalisation is a matter of expanding boundaries of a certain country that sometimes it includes political invasion or domination, which further implies that internationalisation of business is highly associated with people’s consciousness about nationality (Parker, 2005). It is claimed that the United States in the twentieth century is responsible for such of this. The internationalization for instance has become a major source for growth and survival of a family business (Kontinen and Ojala, 2010). Internationalisation of business is also associated with the international expansion of an industry (Leontiades, 1987). In this view, it is important to consider that internationalization of business today covers not just the broad context of expansion of a nation, but the integral part of it involves the expansion of single or even personal businesses as well. The skills required for international management includes self and cultural awareness and the right interpersonal and communication in managing between national cultures (Parker, 2005). The good thing about internationalisation of business is the thought that a certain business may be able to expand and diversified its activities across different countries. In contrast to internationalisation, globalisation tries to look at the world as without boarder and nationless (Parker, 2005). This means that every nationality is integrated and each nation is dependent or relying on each other. This great reliance brings forward the idea or concept that the various cultures in the world can be combined together. Thus, the entire world would be bringing one single culture. However, this concern is just among of the mostly considered issues in the case of globalisation. In the midst of globalisation, the issue about whether its entire activity has remarkably been applied remains to be discovered especially in cases of international companies trying to expand into other nationalities or culture. It is also important to find out which of the principles between internationalization and globalisation are remarkably currently put into practice. Many companies are claiming the benefits of globalisation. However, it is also important to consider what specific principles they are using between internationalisation and globalisation. Hofstede’s theory of culture Hofstede’s theory of culture is about ideas on people’s behavior and attitude (Callahan et al., 2007). This theory has five dimensions which include: individualism/collectivism, power distance, uncertainty avoidance, masculinity/feminity, long-term versus short-term orientation (Landy and Conte, 2007). These dimensions can elaborately explain the existing culture in the workplace since it is a product of identifying the peculiarities of different nations (Naue and Moller, 2010). Therefore, it can explain or help gauge the main differences of varying nationalities. The impact of Hofstede’s culture can be clearly observed in its attempt to try to emphasize the role of national culture within an organisation (Perry, 2009). Other important points of Hofstede’s theory of culture include its being known, its coverage of different cultures, and its ability to explain the effect of culture on work behavior (Aykin, 2007). It has a very clear level of identifying national cultures (Kipp et al., 2009). One of the main limitations of Hofstede’s theory of culture when it is applied in an organisation is the issue in line with whether an individual actually carries a national culture (Zerfass et al., 2008). This cannot be ascertained by Hofstede’s theory of culture. This simply points out that the broader concept of nationality and identify cannot be entirely explained by the use of this theory. It is also claimed that in an international entrepreneurial activity, single cultural value parameters may no longer exist because of the existence of certain combinations of national cultural value orientation (Klemer, 2009). In line with this, Hostede’s five cultural dimensions may be limited in explaining the existing cultural values employed in an organization. Ritzer’s McDonaldization thesis Ritzer’s McDonaldization thesis is an integral part of the broad explanation of homogenization of culture such as the claim that the world is increasingly westernized with high level of uniformity (Ritzer, 2007). This theory is based on the theory of rationalization of the West (Ritzer, 2009). McDonaldization is considered as the process by which fast food restaurants dominate not only in American sectors but the rest of the world (Ritzer, 2009). It is not only found in the culture in America but in many cultures around the world (Ritzer, 2010). This simply illustrates the fact that McDonaldization is a globalizing force that tries to integrate the entire world into one specific market with one specific taste and experience for food. However, McDonaldization is not only applicable in food chains or international restaurant. It can also be applied in other sectors or industry. One concrete example would be the Disney theme parks (McGuigan, 2006). This only implies that McDonaldization thesis can be applied in the business world particularly when there is consideration about culture. McDonaldization is said to have greater advantages such as availability of goods and services, convenience, economical alternatives and a familiar and stable environment (Newman, 2007). It seeks to limit or eliminate variety and unpredictability to have better control of the market (Newman, 2007). This particularly is in line with Porter’s idea of competitive advantage in which each key player is aiming to be a cut above the other and have better control of the market (Porter, 1998). Ritzer simply sees globalization as a process linked to Americanization and further connected it to economic and cultural advantages of McDonaldization (Schroeder and Morling, 2006). Furthermore, he argued that it offers advantages of rationality and people become committed to it emotionally, which clearly emphasizes the ability of the process to counteract Weber’s idea about bureaucracy as the driving force of the economy (Ritzer, 2010). Ritzer admitted some limitations of McDonaldization which include the variation of the applicability of the process from sector to sector and the existence of certain postmodern countertrends (Maurer and Sobal, 1995). This only proves that the said theory is susceptible to various challenges and still remains one of the best area for debate and various challenges. In other words, Ritzer and his McDonaldization thesis is open for further scrutiny and this also implies that not in all situations it can be effectively applied. C. Description of case study McDonald’s Business wise, many business persons were able to find their business opportunity with McDonalds. In 1994, the said company was able to serve around 22 million people worldwide as estimated (Lyon et al., 1994). Today, there are around 32,000 restaurants that are daily serving over 60 million people in more than 100 countries (McDonalds, 2011). The global success of McDonalds is evident on its franchising activity leaving the company to penetrate local markets around the globe. It was able to penetrate in Europe, found its way in Asia and in somewhere else. The success of McDonalds has something to do with its ability to understand excellent management and cultural diversity. Started in the United States, McDonalds is carrying in its name the American culture. However, it is a very important point to learn why it was able to penetrate into other culture despite the fact that it might be carrying other cultural principle in its business. Kentucky Fried Chicken A United State-based company, Kentucky Fried Chicken (KFC) is successful at creating its innovative idea in integrating or uniting human experience all through out the world. KFC is proven good at understanding the market behavior which is tantamount to identifying market segment for its product offerings. For example, its case in China is a remarkable proof. Its promotion for its product offerings in China in 1990s was in line with targeting young population or children (Lozada, 2005). In China, Lozada emphasises that children in there are the ones to have strong decision when it comes to what food they would want to eat. This is opportunity for KFC and it tried to seize it by combining social and cultural issues in their marketing approach. The consideration of these socio-cultural issues and other related concerns was able to result to having more children in Beijing that are now patronizing KFC’s product and service offerings. According to Lozada (2005) in China as more individuals are becoming at ease with trying KFC’s product offerings, more of them are convinced to try what the company is offering to the public. Today, KFC is known about the same strategy it applied in China within its international branches. In line with this, it is no longer a question for KFC why it successfully introduced its product offerings to other culture. After all, KFC is a transnational company that has great contribution and market share in the latest trend in international food industry (Lozada, 2005). Today, 12 million customers are served by KFC daily in its 5,200 units in the United States and over 15,000 in the world (KFC, 2011). D. Applications of the theory to the case study Significant gaps KFC and McDonalds are well known about their capacity to strengthen their cultural awareness and the right interpersonal and communication processes as they continue expand boundaries and their range of coverage. However, it is also important to look at this from the point of view of the principles of internationalisation and globalisation. It is remarkable that KFC and McDonalds were able to successfully penetrate into other countries with varying cultural backgrounds. What does this means is evident on understanding of these companies about the issue on management and culture. There are various management issues when it comes to culture. Culture normally clashes with management (Kavaler and Spiegel, 2003). Culture has remarkable impact on management (Haynes, 2002). This covers all the essential parts of management and it could not just be simply overlooked. However, the main point is the actual consideration of globalisation and internationalisation of business. In fact, if it has to be closely considered, these two do not have much of difference. The reason is that they are all integral parts of uniting varying cultures. This understanding has to be effectively considered because understanding culture and making it work for the entire business is necessary in order that a certain business will grow and succeed. The essential gap between these two is the thought that when it is applied in the business context, there is no difference at all because their entire activities are in line with trying to integrate different culture and boundaries through effective communication process and strategic activities. This is a simple and major thing that can be found both in globalisation and internationalisation of business. Applying this in the context of KFC and McDonalds it is evident that these two companies are simply trying to make use of their understanding about culture and it does not matter at all which principles they are trying to use may it be internationalisation or globalisation. The very essence is to expand and such expansion gives them the opportunity to provide a management approach that will effectively work in varying culture. Thus, this simply is telling that the issue about globalisation and internationalisation may not be of great concern for as long as a certain organisation is able to understand that whatever may quiet work well in a certain culture it may or may not be necessarily be effective in others. However, it is also important to point out that it may be hard to place the entire world into one culture. Thus, it is evident that what is prevailing today is the internationalisation of business. It would be difficult to integrate the entire world in one culture. However, this may just be at first, but the entire process will take long and enough time in order to realise that the whole world is indeed moving in unison and without border. On the other hand, it is also important to investigate Hofstede’s theory about cultural dimension. Each country has varying cultures which specifically according to Hofstede should be addressed. This variation of cultures among nations is necessary to be understood because according to Hofstede this has substantial influence in an organisation. In other words, Hofstede is making it clear that it is important to have a general perspective about culture in a certain country because this can remarkably reflects the same trend in an organisation. However, it is clear that some international organisations are not purely relying on manpower overseas. This means that some organisations especially like McDonalds and KFC need to have some staffs or personnel coming from an international counterpart in order to manage the entire business. This also is to ensure that the main goal and strategic plans of the business are put into strategic actions in the most effective way. This in particular is where the main gap of Hofstede theory of cultural dimension is evident. It cannot be ensured that in an organisation, the entire culture reflects of the national level. This is due to the fact that internationalization or globalisation is on its way to every nation. As a result, variation of cultures may be experienced at first. The need to expand abroad is advantageous on the part of KFC and McDonalds because it would mean maximisation of both of their profit and resources. For instance, they could gain access to highly competitive human resource because they could eventually set a high level of standard which is based on an international benchmarking. They could also influence other cultures to go try their product offerings. Everything for them is a matter of trial and error from the start. However, the very thought of their existence in many parts of the world is a justification that these companies are able to make a difference in the world. They also proved that it is important to integrate both management and culture. In this case, the theory of Hofstede about cultural dimension is of great application especially when these companies tried to make and advance their way into a certain country. Understanding of the general culture of the nation is necessary in managing companies such as McDonalds and KFC. However, it is remarkably clear that understanding the culture within an organisation may not necessarily reflect that of the entire nation. This is proven by the fact that bureaucracy still applies today especially in every organisation. Thus, the entire organisation may eventually set its own culture in the long run. In the first place, handling of an international business is so challenging. Thus, the only way to handle it in a most effective way is to have one culture for the entire organisation around the world. This lessens the amount of effort a certain organisation like McDonalds or KFC should apply. In the presence of bureaucracy in every organisation, it is not impossible to influence the entire organisation with one culture. The above argument therefore emphasizes that Hofstede’s theory of cultural dimension when applied in the case of KFC and McDonalds is highly applicable in understanding what product offerings should fit within different nations with varying cultural background and orientation. In the first place, the main goal of these companies is to penetrate into certain markets with substantial consideration of culture. However, the issue about management within these organisations may be understood as based on benchmarking procedure due to the idea or concept about internationalisation and the existence of bureaucracy in a certain organisation. In every organisation, there is a need to follow certain rules and procedures. There is a need to obey designated individuals in a higher rank. Thus, it is evident that the concept of Hofstede’s cultural dimension may or may not be necessarily applied in an organisation because at some point, the management is entirely in control of everything and it has to ensure that it has to work accordingly according to its plan of actions. In other words, it is important understand that an organisation is directed by someone else whom the point is to direct it into a certain direction no matter what it takes. In the case of KFC and McDonalds understanding about culture was necessary from the start. However, the entire business operation does not only consider cultural dimension of an organisation, there are various issues that need to be included as well. Part of this for instance includes understanding the competition, and consumers’ needs among any other. Thus, Hofstede’s theory of cultural dimension is a remarkable theory that can be applied in every organisation, but it does not necessarily mean that it can be applicable in all circumstances because of the existence of different management issues that need to be addressed in an organisation in the first place. The idea of McDonaldization by Ritzer is a remarkable proof that bureaucracy may be significantly eliminated in an organisation. This is one of the main points in this theory why it gained controversy and popularity. This can be proven in various instances especially in the case of KFC and McDonalds. This theory or thesis emphasizes that it is important to understand a certain organisation in a manner that there is always a need to come up with procedures or standard operating procedure. However, if it has to be closely considered, McDonaldization is a process and it is not simply considered that way but it is also a procedure. In this regard, it is clear that McDonaldization may be considered a counter attack to bureaucracy within the management but it is also actually a form of procedure or approach that tries to ensure success of an organisation especially in the international arena. This process is bringing the same approach of putting everything in order. Critiques The ideas of globalisation or internationalisation are very important in order to understand how KFC or McDonalds came to dominate in the global fast food restaurants. In the first place, the issue is not about aiming to go global, but the point of these organisations is to reach their competitive advantage that is why they need to expand. KFC opened up its window for its opportunities by its aggressive initiation of franchising activity in the US and in Canada in 1960 (KFC, 2011). This company starts from its humble beginning without any idea of going global. However, as the opportunity came, KFC started to apply the very principle of internationalisation and globalisation. However, prior to that, it is clear that it was able to aim at reaching its competitive advantage by trying to come up with unique and special recipe for fried chicken which was the first in the world (KFC, 2011). This was the very point of Michael Porter and KFC was good at differentiating its product offering from the start. Thus, in the case of KFC, globalisation or internationalisation was not a primarily principle used prior to its expansion, but the thought about competitive advantage or increasing market share was the bottom line. McDonalds on the other hand also started with a humble beginning. Just like KFC, McDonald’s also was aiming to provide consistent high quality preparation for its product offerings that would taste the same from Alaska and in the same way in Alabama (McDonald’s, 2011). This means that McDonald’s was aiming for consistency because it wanted to be identified with its unique and consistent taste. It is clear that McDonald’s did not aim to go global at first, but it was having focus on creating its perfect image. This is another competitive strategy that Porter emphasises in his idea on how to obtain competitive advantage. Focus is necessary and Porter nailed it as it is proven by McDonald’s itself. The success of McDonald’s is therefore not because of globalisation or internationalisation, but its being determined and focused on something that will create its image over the other fast food restaurants in the world. Hofstede’s theory of cultural dimension on the other hand is applicable in the case of McDonald’s and KFC the moment that these companies are still in the process of expansion and finding their way in a certain nation with different or varying cultural orientation. As stated earlier, KFC and McDonald’s need to entice the consumers to go try its offerings the moment they are still building up their names in a certain place. This primarily would consider everyone’s beliefs and culture. However, at the management aspect, Hofstede’s theory of cultural dimension is necessary because it talks about the issue of individualism/collectivism for instance. However, it is also important to consider that not everyone is carrying the same principles or having the same experience, so it is important not to rely so much on Hofstede’s cultural dimension. On the other hand, the McDonaldization thesis of Ritzer proves to be a remarkable theory emphasizing the path taken by KFC and McDonald’s towards their success. However, such move should not be totally relied on considering that the main intention of KFC and McDonald’s from the start was just to be a cut above the other by serving something new or product offerings that would make difference in history. It was just later they discovered that they need to expand. Thus, the McDonaldization in the case of KFC and McDonald’s is founded by a strong competitive advantage in order to obtain remarkable fulfillment in the first place. The reliability of the theory As clearly discussed above, each theory has specific advantages or limitations. However, what is clear is that they cannot be applied in all situations because there are other important considerations before they can be applied in some certain cases. In the case of McDonald’s and KFC for instance, the McDonaldization could well explain the success and growth of these companies, but not exactly with Hofstede’s theory of cultural dimension because it could only be purely applied within the management level of an organisation with certain limitations. After all, KFC and McDonald’s follow benchmarking procedures in their operation and this could not be undermined by existing theories about culture and management. However, what is important is the thought that these companies are looking forward to obtain competitive advantage that at some point they need to consider existing theories in order to achieve their main objectives and that is the bottom line. E. Conclusion The case of KFC and McDonald’s can exactly tell that internationalisation or globalisation of business is prevailing in the world. These companies started from scratch but they are determined to grow more. This led them to go for expansion in the word through their franchising business. Along the way, their efforts would not be sufficient without consideration various theories that could help them build their competitive advantage. However, the case is silent about their application of theories. However, by understanding theories commonly used in culture and management, it is evident that KFC and McDonald’s were able to apply the essentials. Furthermore, some of these theories were proven using the case of KFC and McDonald’s. However, by applying the same case, some of their limitations are also exposed. Thus, it is clear that the various theories about culture and management of an organisation have remarkable advantages and limitations as well in trying to understand the growth and success of international organisations such as KFC and McDonald’s. Furthermore, it is important to consider that these theories exist not to give answers to everything, but to justify the present situation. For instance, some of these theories mentioned such as Hofstede’s theory of cultural dimension, McDonaldization by Ritzer and globalisation and internationalisation are only supporting ideas that could elaborately explain the present status of McDonald’s, KFC and the rest of concerned organisations. References Aykin, N. (2007) Usability and Internationalization: HCL and culture. New York: Springer. Callahan, E., Indiana University, and University Information Science (2007) Cultural differences in the design of human-computer interfaces: A multinational study of university websites. Indiana: ProQuest. Haynes, J. D. (2002) Internet management issues: a global perspective. Pennsylvania: Idea Group Inc. (IGI). Kavaler, F., and Spiege, A. D. (2003) Risk management in health care institutions: a strategic approach. 2nd ed. London: Jones & Bartlett Learning. KFC (2011) ‘History.’ [Online] Available at: http://www.kfc.com/about/history.asp (Accessed: 22 August 2011). Kipp, M., Martin, J. C., and Paggio, P. (2009) Multimodal Corpor: From Models of Natural Interaction to Systems and Applications. New York: Springer. Klemer, P. (2009) Linking National Culture to Domestic Entrepreneurial Activity: A Review of Current International Comparative Entrepreneurship. Norderstedt: GRIN Verlag. Kontinen, T., and Ojala, A. (2010) The internationalization of family businesses: A review of extant research. Journal of Family Business Strategy. 1(2), 97-107. Landy, F. J., and Conte, J. M. (2007) Work in the 21st century: an introduction to industrial and organizational psychology. 2nd ed. Victoria: Wiley-Blackwell. Leontiades, J. (1987) Multinational Corporate Strategy: Planning for World Markets. New York: Lexington Books. Lozada, E. P. Jr. (2005) ‘Globalized Childhood? Kentucky Fried Chicken in Beijing,’ in J. L. Watson and M.L. Caldwell (Eds). The cultural politics of food and eating: a reader. Oxford: Wiley-Blackwell. Lyon, P., Taylor, S., and Smith, S. (1994) ‘McDonaldization: A reply to Ritzer’s thesis.’ International Journal of Hospitality Management. Vol. 13(2), 95-99. Maurer, D., and Sobal, J. (1995) Eating agendas: food and nutrition as social problems: Social problems and social issues. New York: Transaction Publishers. McDonald’s (2011). ‘Our History.’ [Online] Available at: http://www.mcdonalds.com/us/en/our_story/our_history/the_ray_kroc_story.html (Accessed: 22 August 2011). McGuigan, J. (2006) Modernity and postmodern culture. New York: McGraw-Hill International. Naue, P., and Moller, O. (2010) Critical Reflection of the U.S. Subprime-crisis’ Origin by Using Hofstede’s Theory of Cultural Dimensions. Norderstedt: GRIN Verlag. Newman, E. (2007) Untamed hospitality: welcoming God and other strangers: The Christian Practice of Everyday Life. Michigan: Brazos Press. Parker, B. (2005) Introduction to Globalization and Business: Relationships and Responsibilities. London: SAGE Publications. Perry, B. (2009) CIMA Learning System Enterprise Operations. Burlington: Butterworth-Heinemann. Porter, M. E. (1998) Michael E. Porter on Competition. USA: Harvard. Ritzer, G. (2007) The Blackwell companion to globalization. Victoria: John Wiley and Sons. Ritzer, G. (2009) Globalization: A Basic Text. West Sussex: John Wiley and Sons. Ritzer, G. (2010) The McDonaldization of Society. 6th ed. London: Pine Forge Press. Schroeder, J. E., and Morling, M. S. (2006) Brand culture. New York: Taylor & Francis. Zerfass, A., Ruler, B., and Sriramesh, K. (2008) Public Relations Research: European and International Perspectives and Innovation. Wiesbaden: VS Verlag. Read More