McDonalds in USA and India - Essay Example

MacDonald Table of Contents Introduction 3 Literature Review on Cross Cultural Theories and Research Outcomes 4 Difference in cultures between USA and India and its impact on business 6 Analysis of problems, opportunities, and challenges related to the case and the different cultures involved 7 Suggestions on how to do business successfully across the two cultures 8 Recommendations 9 Conclusions 10 Team Reflection 11 References 13 Bibliography 14 Introduction The project tries to present the case of a company which operates across borders. The main purpose of the project is bring forth the problems and issues that a company confronts with while operating in different cultures. It also tries to bring out the impacts that such differences have on the business operations of the company. The company chosen for the purpose is McDonalds based in USA having which has business operations in India. The company’s restaurants are present in 119 countries across the world. It is said to serve 58 million numbers of customers every day. India has been chosen as the host country. The project tries to bring out the impacts cultural differences existing between India and USA has on the decision making, communication, leadership, teamwork and human resources in organizations. The company is known for its respect for culture of the place where is operates. The company has even developed a menu especially for India. This has been done with special emphasis on Indian culture and tastes. Culture consciousness of the company reflects from the fact that India is the only first nation in the world where the company does not offer pork or beef items. In fact MacDonald even had to re-engineer its operations in order to serve the requirements of the vegetarians of the country. The company ensures that the vegetable items are prepared separately using separate utensils and equipments. Separate preparation of vegetarian and non vegetarian items is maintained throughout all stages of procuring, cooking and serving (MacDonalds India, 2009, p.1). This reflects company’s respect for local culture where it operates. This tradition can be attributed to its popularity and success. Apart from abiding by the local cultures and traditions, the company is also said to enhance their corporate responsibities. It provides employment opportunities to the Indian people and also provides bright career growth for them (MacDonalds India, 2009, p.1). Literature Review on Cross Cultural Theories and Research Outcomes Hofstede’s analysis has revealed that national cultures differ along four different dimensions. Power distance is the first among these. Power distance refers to the fact that each one in society has unequal power. In cultures characterised with high power distance people accept hierarchical organisational structures readily. In such cultures, power disparities exist among people as well. In such countries power remains in the hands of a few people only. On the contrary, cultures with low power distance have greater equality of power among people. Uncertainty avoidance is the second cultural variable and it measures “the extent to which the members of a culture feel threatened by uncertain or unknown situations” (Fowler, C. 1999, p.6). Nations with high uncertainty avoidance have citizens with high anxiety levels. These countries are generally those which have been subjected to military attacks and defeats. In these cultures, the leaders of organisations formulate rules, procedure and strategies which the employees have to follow. Employees also prefer to work in an environment which is structured and organised. The third cultural dimension is known as individualism. Individualistic cultures are characterised with high autonomy and variety. People expect extreme freedom in what they do. They prefer challenging works which would motivate them to satisfy their self interests. In the less individualistic cultures, the employees are more dependent and loyal towards their employers and prefer group decision making in comparison to individual decision making (Fowler, C. 1999, p.6). The fourth cultural dimension is known as masculinity. A masculine culture is characterised with high levels of recognition, challenge and advancement. Employees belonging to such cultures are competitive and crave for high salaries. In low masculine countries or more feminine ones, the workers place more importance on relationships, environment, cooperation and service. The fifth dimension is referred as the long term orientation. Cultures having high degree of this dimension accept the fact that results may take time to come. In such cultures, the employees wish to remain in long term relationship with organisations. In short term oriented cultures, the results are set beforehand and they have to be attained within a stipulated time. Here the employers are likely to change their employer frequently (Business Mate, 2009). Trompenaars has divided the culture into seven dimensions. ‘Universalism’ verses ‘Particularism’ is the first one. According to universalism, practices and ideas can be used in all contexts without any modifications. Particularism however, believes that circumstances and situational factors determine how the practices and ideas should be applied (Kale & De, n.d., p.3). The second dimension is called individualism and communitarianism. In highly individualistic counties like USA, Canada and UK, people like to make their own decisions and take complete credit for their success. In Communitarianism, group decisions and group achievements are given greater priorities in comparison to individualism. Neutral verses affective culture is another dimension. In neutral cultures, the emphasis is on keeping one’s emotions under control. People do not show their emotions in front of the public. While in affective cultures, people express their opinions and emotions more openly (Kale & De, n.d., p.4). These two types of cultures are sequential and synchronous. In sequential cultures like USA, each activity is assigned a particular time. Here punctuality is given value. In synchronous cultures, more than one activity is performed at the same time and there is less punctuality in society. In inner directed cultures, people believe that the outcomes of their actions can remain under their control. In outer directed cultures, people do not pay much attention to their actions and allow things to happen on their own (Kale & De, n.d., p.5). Difference in cultures between USA and India and its impact on business It is common that different nations have different beliefs, values, attitudes, religions and special relations. Companies operating across borders have to adjust with the culture prevailing in that nation to operate successfully. Such was the case with McDonalds as well. The most important adjust that the company had to make was with its decision making. The two countries vary largely in terms of their power distance index. “Power distance is the extent to which less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally” (International Business Cultures-a, n.d.). USA is characterised by greater distribution of power among people. Thus it would be important for the company to set up a proper hierarchy in the Indian organisation along with the right assignment of responsibilities for each post. Unequal Power distance in the two cultures also implies impacts on the kind of leadership followed in the organisation. Organisations in India would be more accustomed with the authoritarian style of leadership. The communication pattern would also have to be changed in accordance with the country’s cultural pattern. The communication pattern reflects the culture of the society. India is characterised by a rich and complex culture. It has its own set of rules, customs, language usage patterns and rituals. It is also characterised by a complex social relations. The atmosphere prevailing in USA is friendlier while that in India is more conservative. The company requires keeping in mind that people would prefer to have a conservative and homely atmosphere in society. The society in India is also well knit together. This reflects from its low rate of individualism. This is contrary to that in USA where individualism is high. Thus McDonalds would expect to have great team work and team spirit in the organisation. (Online Encyclopedia, 2010). Both societies show dissimilar characteristics in terms of masculinity. This trait shows that the values prevailing in society are assertive and are concerned about things than the needs of society. In the USA this trait is more visible. Thus, the company needs to satisfy the requirements of people and be less business oriented. Winning the confidence and hearts of people would be its key to success (International Business Cultures-b, n.d.). The uncertainty avoidance index does not differ much between the two countries. The index gives the measure of extent to which societies feel threatened by the presence of uncertainties and ambiguous situations (Texas University, n.d.). The company also has to keep in mind that India is characterised by particularism, where the same beliefs and thoughts are followed everywhere. This would mean that McDonalds would have to change its rules and customs according to those prevailing in the place (Kale & De, n.d., p.3). Analysis of problems, opportunities, and challenges related to the case and the different cultures involved The culture of USA and India are distinctly different from one another. MacDonald’s attempt to enter India was a challenge for them because the Hindu culture was predominant in the country. In this culture, cow is considered to be sacred. Consuming the meat of cow is prohibited. The consumption of pork is also prohibited by the Muslims community. First and foremost, the Hindus would oppose the expansion of the restaurant in the country. Since the nation is dominated by the Hindus, it is possible that its attempts to expand in India would remain unsuccessful. India is characterised by high uncertainty avoidance index. This proves that they would remain over anxious to external threats and disturbances. A restaurant which sells items made out of the flesh of cows and pigs would be seriously opposed by the society. The company is not expected to face problems in employing the country’s citizens and retain them. This is because the society is less individualistic in nature. Here the people do not always look towards their interests only. They are also said to be extremely loyal towards their employers. This characteristic of the society would go in favour of the company as the people can be easily retained and less likely to leave the company. However the company would face difficulties managing the feminine characteristic of the society. While USA is characterised by masculine culture, India is more of a feminine culture. People are less likely to be competitive and open to challenges. They are also not very hard working. This would go against the aggressive culture prevailing in companies in USA. MacDonald’s policies are more aggressive in nature which the Indians would find difficult to cope with. People’s desire for gaining higher salaries also remains low in the country. However this would go in favour of the company as they would get skilled and efficient men at lower salaries. Suggestions on how to do business successfully across the two cultures As follows from there is vast difference in the cultures prevailing in the two countries. The company would have to focus much on the performance of the management and follow a proper hierarchical order in the organisation. Each one would have to be assigned a suitable responsibility and job role. The Indian society does not have an individualistic character. The organisation must encourage team work and team spirit in the organisation. Most importantly, following a business oriented approach would not be helpful in achieving success in the country. People are sensitive and hold conservative attitudes. McDonalds needs to maintain this culture in India as well. The company should also look towards gaining long term goals as the India is long term oriented. Trying to make short term profits would not be beneficial for the company. Recommendations It is recommended for MacDonald to take utmost care of the culture of the place of operation. It should try and preserve the country’s culture and traditions while operating. The country is characterised by great inequality of power. Generally power remains in the hands of a few people only. This is why it is possible that the employees would form unions in the company to enforce their opinions. The management should take care of employee satisfaction in the organisation. The focus should be on enhancing the welfare of employees and not only on maximising profits. Employee satisfaction would go a long way in increasing the revenues of the company. The organisation structure should be such that communication gap exists between the management and employees. The feminine culture of society reflects people’s tendency to maintain strong relationships with each other. Thus the focus of the company should be towards implementing fair practices in the organisation. It must be ensured that there are no disparities in salaries and other benefits among the employees. The more the company strives towards strengthening the bonding among employees, the more they attain loyalty and faith of people. India is also characterised by a synchronous culture, where the timing of activities are not fixed from before. Here, more than one activity may be performed at the same time. It is recommended that the company allows its employees to choose between their activities instead of pre-assigning them. People would prefer to have their own space while performing their work. The society is also inner-directed. This means that the people would prefer to take responsibilities on their own actions. Thus the management should not always interfere in the activities of the employees and allow them to rectify their own actions. Conclusions It is seen that companies operating across borders have to abide by the cultures and traditions prevailing in that country. MacDonald is one such company which was faced with a lot of difficulties while establishing its operations in India. Since India is a country characterised with rich cultures and traditions, even a small amount of disturbance in its culture leads to big eruptions in society. Hofstede’s cultural dimensions bring out the differences in the type of cultures in the societies of USA and India. The company has to especially keep in mind that the Indian culture is characterised with high uncertainty avoidance index and power distances. The society remains anxious about external threats and attacks. Thus, MacDonald must ensure that they do not have any intensions of breaking the rules and traditions of the society. Moreover the Indian culture is such where there are strong bonds among people. An organisation which implements fair strategies and practices for all is likely to survive in India. MacDonald should ensure that the salaries and other benefits provided to the people remain fair and just. Strengthening the bonds existing between people would also account for their improved performances. This would account for the success of the company. Here, the people are also seen to display collective behaviour. A slight dissatisfaction among the employees would lead to formation of employee unions which would go against the management. Here the relationships are given greater priority than money. Thus the most important way to keep them satisfied would be to ensure they maintain healthy relations with them as well as the management. The managements’ role would be to enhance cohesion among the employees. The employees’ strength would account for the success of the organisation. Moreover India is characterised by a neural culture. They prefer to keep their emotions and interests among themselves. The management should keep this mind. If the management has to provide comments on an employees’ performance it should be done secretly. It must be ensured that the information reaches the particular candidate only and not to the entire organisation. Team Reflection While working in a team it was seen that there were a number of opinion differences between the team members. This was primarily because each member’s cultural background was different from the other. However the positive point was that each one had something important and special to contribute in the project which improved its quality substantially. Some of the team members were not enough participative. This was on account of their low aggressive culture. These members predominantly adjusted to the opinion of others in the team. They remained satisfied with the work that was assigned to them. They performed their job on time and according to the rules specified. They did not make many modifications in the strategies. The learning from the project was meeting the situational requirements of the members instead of enforcing them to follow a particular strategy. Employees work best when they are given the freedom to work on their own. The team members should not be monitored in every aspect of their job. They should rather be given a guideline to follow. They should be given the accountability and responsibility of performing their job. In case, their performance is not up to the standards they should be made responsible. They should also be given place to rectify their mistakes and learn from their mistakes. In future it should be ensured that team work and team spirit is enhanced and the assignments are fair for all. This would ensure that there is no conflict between the employees. The greater the bonding between them, the greater would be their satisfaction of performing the job. Thus they would perform their job with more devotion which will consequently improve their performance. References Business Mate. September 16, 2009. What are Geert Hofstedes 5 Cultural Dimensions?. [Online]. Available at: http://www.businessmate.org/Article.php?ArtikelId=4. [Accessed on December 2, 2010]. International Business Cultures-a. No Date. Power Distance. [Online]. Available at: http://www.via-web.de/power-distance/. [Accessed on November 11, 2010]. Fowler, F. C. 1999. Applying Hofstede’s Cross-Cultural Theory of Organizations to School Governance: A French Case Study. [Pdf]. Available at: http://www.eric.ed.gov/PDFS/ED433281.pdf. [Accessed on December 2, 2010]. International Business Cultures-b. No Date. Masculinity versus femininity. [Online]. Available at: http://www.via-web.de/masculinity-versus-femininity/. [Accessed on November 11, 2010]. Kale, S. H. & De, S., No Date. Culturally Compatible Websites: Applying Trompenaars Dimensions to Web Design. [Pdf]. Available at: http://www.anzmac2008.org/_Proceedings/PDF/S10/Kale%20&%20De%20S1%20JS%20P3%20.pdf. [Accessed on November 11, 2010]. MacDonalds India. 2009. McDonald’s India. [Pdf]. Available at: http://www.mcdonaldsindia.com/McDonaldsinIndia.pdf. [Accessed on December 2, 2010]. Online Encyclopedia. 2010. Culture and Communication - The Relationship Between Communication and Culture, Characteristics of Culture, Glimpses of Culture. [Online]. Available at: http://encyclopedia.jrank.org/articles/pages/6491/Culture-and-Communication.html. [Accessed on November 11, 2010]. Texas University. No Date. Culture. [Online]. Available at: http://www.tamu.edu/classes/cosc/choudhury/culture.html. [Accessed on November 11, 2010]. Bibliography Ryu, S. 2005. The Effect Of LTO Culture On International Supply Chain Contracts. The Journal of Applied Business Research – Fall 2005. Hofstede, G. 2001. Cultures consequences: comparing values, behaviors, institutions, and organizations across nations. SAGE. Read More