Managing Across Global Cultures

Question: Write an essay on international business analysis. Answer: Introduction China is a developed economy with a string economic growth witnessed in the last decade. The economic growth has accelerated its GDP growth and he overall economic growth of the country. China has witnessed a 1.1 % increase in the GDP growth rate in the first quarter of 2016, which has surpassed the forecasts and estimation made for the Chinese economy. The annual growth rate in China in the last year was 7.3 % with the highest being 9% in the last decade (Ang and Van Dyne 2015). The strong economic growth has attracted foreign companies across the globe. The foreign investment in China generally tends to lend important benefits to the company. The increasing foreign markets in China and the ever increasing economic growth of China attract foreign companies in China. However, this was not the case with McDonalds in their business endeavors in China (Erickson 2016). The research paper focuses its study on the business endeavors of McDonalds in China and the outlines the causes for the failure of it in China. The research paper critically analyses the business model of the company and shed critical light into the cultural differences between the two countries. The underlying issue of cross cultural management issue is critically handled and addressed and necessary recommendations are also provided. Discussion The case study of McDonalds business endeavors in China is taken and the research paper gives an overview of the case study. McDonalds is worlds largest chain of fast food restaurants serving 68 million of people and operating in 119 countries. The growing business scale of McDonalds made it enter the Chinese market and decided to expand its market in China (Erickson 2016). However, an 8.3 % slump in the profitability and growth of McDonalds in Chinese markets made the company to shutter 220 stores in China. The company has been planning to shut down the stores in China due to low profitability of the company in the country and the lack of demand from the customers in China. The latest 8.3 slump in the growth and profitability of the company has led the company into shutting down stores in China and facing huge loss liability in the country (Moore 2015). It has been noticed that the cultural gap and cross cultural management issues were a contributing factor to the loss faced by the company in China. The two contributing factors of the companys failure in the country has been the controversy relating to the supply of meat to the company, which involved the mixing of meat of chicken and beef that were beyond the expiring date. This created a stir in the public and the episode created a major blot on the image of the country. The public however, took the incident seriously and maintained a hesitant attitude towards procurements and purchase from the restaurant. McDonalds failed to address and meet the daily requirements of the customers in China and the changing demands and requirements culminated into the decline of the operations and profitability of the company in China. Also, the changing lifestyles and habits of the public were a major cause for the changing demand to the products of the company (Spencer Oatey and Franklin 2014 ).The case study of McDonalds failure in China needs to be analyzed and studied from a cultural point of view. The case study stresses on the cultural differences between the two countries for the cause of the decline of the companys business in China. The cultural gulf between the eastern and western countries has been a major cause for the decline of the company in China. The inability of the company to bridge the gulf between cultural perspectives of the countries is another reason and cause for the failure of McDonaldss China. The evaluation and the assessment of business model of the company highlights the areas where the company fails in meeting the requirements and demands of the consumers (Spencer Oatey and Franklin 2014). The scandal relating to the supply of meat by a supplier in McDonalds was one of the biggest causes of its downfall. The meat, which was a mixture of chicken and beef were way past the expiry date. This caused a great alarm among the Chinese customers. The concerns regarding health and safety issues turned out to be the biggest cause of concern and downfall for the company. It is inferred that the Chinese customers are very susceptible to scandals and controversies and the impact of such scandals and controversies have a lasting impression on their mind. In such scenario, McDonalds suffered a major setback in terms of this controversy. More and more consumers started protesting against meat laced with antibiotics. The questions over the quality and assurance about quality of substance were highly raised and the controversy dragged the company to the court regarding the fact that the move had jeopardized the health of the people and the company had compromised the health and safety of the consumers for profit motive (Chaney and Martin 2013). The notion of Chinese customers against fast food is that quality is not the primary motive. Despite the fact that McDonalds ensures quality of the food, the conceived notion of the people is that it only gives back reasonable return on the price of the food that is provided since McDonalds items are cheap as a part of their expansion policy. The people of China would raise similar concern and worry about the consistency of quality and conformity to health and safety issues regarding food in fast food chain of restaurants. It is a part of their cultural views. The globalization strategy of McDonalds could not compete or understand the localization factor in terms of food among the Chinese people. This inability of McDonalds turned out to be the undoing of the company in China (Ang and Van Dyne 2015). The taste and preference of the customers is an element of the culture and views of a people. It affects the demand pattern and is one of the major causes that affect the demand and the purchasing trend of the people. It was seen that urbanization had affected the lifestyle and the income spending ability of the people. This had paved the way for the scope of growth and rich prospect for foreign markets. This was however not the case with McDonalds. Brand loyalty and brand awareness is a part of a cultural view of people. The Chinese were conscious and did tend to show loyalty to Chinese brands and they preferred local food and the Chinese cuisine over the fast food restaurant McDonalds. The taste and preferences of the Chinese did not match with the cuisine of McDonalds. The company was unable to fulfill the daily requirements and the major needs of the people. The people were of the view that the cuisine of McDonalds did not suit their palate and the preferred choice was Chinese cu isine and brands. The traditional culture of the Chinese in terms of food was revolving around color, flavor, fragrance and variety. Thus, McDonalds was unable to expand in the Chinese market and develop significant customer due to taste and preferences if the people. The company failed to establish a brand loyalty and brand awareness among the people since the local people did tend to shift mainly towards the local brands and the local food (Hashmi et al. 2014). One of the reasons that the company could achieve much success in its business endeavors in China was mainly because of the failure of the company to recognize the habit of the thrift and saving among the people. It was inferred that the Chinese people preferred local brand local cuisines because they would expect greater bargain with a local brands as they could get products at a cheaper rate and would also be assured of the quality. The recent scandal circulating McDonalds would backfire against the company (Erickson 2016). Another r response from a Chinese customer was that dealing with a Chinese brand would ensure fair quality and price and would also ensure better services since there would no cultural gaps between local brands. the significance and importance of relationships between the company and the customers is a very important aspect and cultural gaps can be one of the biggest cause of the companys stagnant growth and failure in a business endeavors (Hashmi et al. 2014). Language is a major part of a culture of a country. Language barrier could one of the biggest hindrances in a business undertaking. Inability to communicate is one of the major snags in a business strategy. Language is a manifestation of culture. Chinese is the mother tongue of China and is spoken by more than three times than the English speaking population. However, English is the official language of the world. The official language is an important tool in terms of business endeavors involving different cultures. The silent language, which is the mother tongue of the Chinese people is a powerful language and the inability to adjust or induce this language in the business strategy might lead to adverse conditions and consequences for the business due to lack of communication, which is a critical factor in business (Rothlauf 2015). McDonalds tried to incorporate the same business strategy throughout China. They failed to realize that China comprises of sub-cultures with difference in style in in-land and coastal regions. The industrial revolution has changed lifestyles of people but it led to indifferent development of style and culture in different parts of China, which culminated into sub-cultures in different parts of China. The incapability of the company to adjust to different sub-cultures within China led to the downfall of the company (Ang and Van Dyne 2015). The application of the Hofstedes four dimension towards culture helps in further understanding the cultural gap between these countries. The four dimensions that are used in the study are masculinity vs femininity, Individualism vs collectivism, uncertainty avoidance and power distance. These cultural gaps depict the distinction in the culture between eastern and western countries. American and western countries are strongly dominated by individualism concept where individuals are strong dominated by individual concept. They are mainly concerned about themselves and the people that are close to them. In such a case they are not majorly influenced with what the different individuals in a society feel. On the other hand, the Chinese people are strongly dominated by collectivism concept, where they are strongly affected by how people react to changes and the elements in the external environment. The fact can be traced from the scandal that embodied McDonalds (Moore 2015). Both the countries are dominated by masculine quotient. The countries are equal in this regard. The people are prefer material goods and do not favor leisure over work. The uncertainty avoidance indicates the tolerance level of a culture toward uncertainty. The Chinese culture show level of tolerance towards uncertainty but observe rules and universal truths. The laws are amendable and flexible according to the requirement of the situations in the Chinese culture. The Chinese culture favor ambiguity as the Chinese culture comprises ambiguous elements just like the Chinese language. The Americans are completely reversed in this regard (Chaney and Martin 2013). The power distance of China is measured with a higher rating than America in this regard. The Chinese people have a strong power to question and challenge authorities and class division is assumed to be logical and fair (Rothlauf 2015). The difference in culture between eastern and western countries is also a contributing factor towards the decline of McDonalds in China. The Eastern people live in a complex and interdependent society with complex social practices. They value relationships and the contexts associated with it. The Western people tend to live in a more independent and individualistic social setting with uncomplicated social practice. They tend to value material objects than relationships and contexts (Chaney and Martin 2013). Conclusion On concluding the essay, one can see the importance and the value of culture in a social setting and in business endeavors. Culture is a driving force among people in their social practice and social behavior. McDonalds could not efficiently employ and use the business models due to cultural reasons. The scandal surrounding McDonalds turned out to be the major cause and the downfall of the company in China. The definite and unique Chinese culture had different taste and preference, which McDonalds could not achieve and the tendency of the Chinese people to favor local cuisine and Chinese food culminated into the factors, which led to McDonalds closing around 220 shops in China. Reference List Ang, S. and Van Dyne, L., 2015.Handbook of cultural intelligence. Routledge. Caganova, D., Cambal, M. and Weidlichova Luptakova, S., 2015. Intercultural managementtrend of contemporary globalized world.Elektronika ir Elektrotechnika,102(6), pp.51-54. Chaney, L. and Martin, J., 2013.Intercultural business communication. Pearson Higher Ed. Eisenberg, J., Hrtel, C.E. and Stahl, G.K., 2013. 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