Category: McDonald’s

Quality and Capacity: Videos Analysis

The two videos illustrate the features mentioned in the textbook, namely quality (McDonalds) and capacity (Bloomberg Airlines). While quality is the most significant characteristic of a profitable business, capacity is probably the second most important.

The video about McDonalds featuring how chicken nuggets are made shows the companys dedication to its products quality. I think that McDonalds is doing a great job letting people come to their factories and see the working process. By doing this, they prove that their company takes care of peoples health by using only fresh meat and no additions to it. By this video, the company dissolves the skeptics myths about its food being of poor quality. Anyone can see that McDonalds does everything possible to supply the best products to its restaurants. While some may say that even high-quality meat does not make McDonalds a competitive restaurant, I would say they should take into consideration the fact that it is a fast-food restaurant and not some posh place. Moreover, a posh place means high prices, and McDonalds can boast its moderate price level. Thus, I am convinced that the companys high quality is the most encouraging factor for the customers to choose their restaurants.

The second video featuring Bloomberg Airlines illustrates another issue mentioned in the textbook  capacity. In my opinion, this characteristic is no less desired in business than quality. A thorough plan is necessary to promote strong capacity possibilities. The video emphasizes the importance of predicting the customers needs, tracking the strategic movements of the rival companies, and following the global prices of fuel for providing a high capacity of ones company. Capacity undoubtedly is a vital attribute for any company that strives to be successful. I think that an airline companys supply chain functions based on the use of capacity are bound to bring it a success.

Additional Funding for Starbucks

As businesses expand their scale of operations, there is need to obtain additional funds that would facilitate the growth. An expansion program of most businesses aims at increasing the sales level of the an entity. To generate additional sales, a business need to increase the asset and capital base. It is for the reason that businesses use assets to generate sales and these assets are funded by the available capital. Therefore, an increase in income generating assets increases sales (Eugene and Ehrhardt 530). Computation of additional funding needs is of utmost importance for a business which intend to expand. After ascertaining the additional funds needed, an organization needs to look for economical ways of obtaining the funds. It is important to note that the factors that determine the additional funds needs varies. Further, management needs to ascertain whether an organization is operating at full capacity. This would help evaluating whether there is the need to acquire additional machinery and equipment. This may increase the additional funds needed. Calculation of additional funded needed is shown below.

Additional funds needed = Forecasted increase in sales  unstructured upsurge in

liabilities  increase in retained earnings (Eugene and Ehrhardt 532)

Additional funds needed can also be obtained by using the data for the forecasted income statement and balance sheet statement. Calculation of the additional funds needed will be based on a number of assumptions as listed below.

Assumptions

1. Cost of sales including occupancy cost, store operating expenses, general and administrative expenses will increase at the same rate as sales increase that is, 14% in 2013, 11% in 2014, 8% in 2015, 7% in 2016, 6% in 2015, and 5% in 2018.
2. It is assumed that the amount of profit retained is constant at $505.16 during the period of the forecast.
3. Sales will increase according to the rates used for forecasting.
4. Accounts receivable, inventory, accounts payable and fixed assets will increase at the same rate as sales increase that is, 14% in 2013, 11% in 2014, 8% in 2015, 7% in 2016, 6% in 2015, and 5% in 2018.

The assumptions will help ascertain whether the company will require additional funds or whether the expansion program will generate excess cash. When using this approach, it is necessary to obtain the amount of total assets and liabilities & equities which are directly affected by the sales during the period of the forecast. The sum of total liabilities and shareholders equity is deducted from the total assets to ascertain whether the organization will require additional funding or the company has excess cash (Eugene and Ehrhardt 536). The table below summarizes workings or additional funds needed.

From the table, it is evident that the amount of total assets exceeds the total amount of liabilities and equities in 2013 and 2014. These differences denote the additional funds needed to increase the sales. However, for 2015 to 2018, total liabilities and equity exceeds the amount of total assets. This implies the organization has adequate capital that is required to acquire the value of total assets which is adequate to generate the projected growth in sales. This implies that the company has excess cash and does not require any additional funding to generate the forecasted sales. In summary, it is evident that the additional funding is required for only two years that is 2013 and 2014 (Eugene and Ehrhardt 539).

Value of equity for McDonalds and Starbucks

The value of equity denotes the value of a company that is attributed to shareholders. The value is obtained by summing up together the value of an entity and all investments less debt and minority interest. Computation of the value of the equity of an entity shows the value of a firm. This value is of great importance to investors since it guides them in knowing which companies to invest in. This further helps them in minimizing risks and increasing risks. The value of equity can either be expressed either as market value or intrinsic value. The value of equity per share is obtained by diving the value of equity by the total number of outstanding shares. To calculate the value of equity it is of essence to obtain the cost of capital. Cost of capital is an aggregate rate of return required by all providers of capital.

Estimation of cost of capital for Starbuck Corporation

Cost of debt after tax = 6.5% (1  0.32) = 4.5%

Cost of equity (using CAPM method) = 3.2% + 1.2 (5%) = 9.2%

Total debt = 549.5million

Total equity = 4,384.9milion

Debt + equity = 4,934.4

The weight of debt = 549.5/4934.4= 0.1113

Weight of equity = 4,384.9/4,934.4 = 0.8886

Cost of capital = 0.1113*4.5% + 0.8886*9.2%

0.5011+ 8.1755 = 8.68%

Cost of capital for Starbucks corporation is approximately 9%.

Estimation of cost of capital for McDonalds Corporation

Cost of debt after tax = 6.7% (1  0.294) = 4.7%

Cost of equity (using CAPM method) = 6.2% + 0.41 (5%) = 8.25%

Total debt = 12,500.40million

Total equity = 14,390.20million

Debt + equity = 26,890.60

The weight of debt = 0.4649

Weight of equity = 0.5351

Cost of capital = 0.4649*4.7% + 0.5351*8.25% = 6.57%

Cost of capital for McDonalds corporation is approximately 7%.

To compute the value of equity, present value of future cash flow is first computed using the cost of capital estimates above. The tables below show the computation of equity value per share for Starbuck Corporation.

The equity value per share = Equity value/number of shares outstanding

The tables below show the computation of equity value per share for McDonald Corporation.

Since the unlevered cash flow is computed from earnings after interest the net debt is excluded from the computation of equity value, thus the present value of unlevered cash flow is the same as the equity.

The equity value per share = Equity value/number of shares outstanding

Projected and historic economic profitability

Economic analysis deals with the allocation of scare resource and analysis of opportunity cost. Economic profitability denotes the difference between income received from the sale of a commodity and the opportunity cost of the factors of production. It is different from the accounting profitability which is the difference between income from the sale of a commodity and the cost of production of the commodity. Economic profit is attained by deducting the cost of capital from the net operating profits after tax obtained in a given financial year (Bruner, Kenneth and Schill 76). Calculation of historic and projected economic profits for Starbucks corporation is shown in the tables below.

Continuation.

Calculation of historic and projected economic profits for McDonald corporation is shown in the tables below.

Continuation.

Works Cited

Bruner, Robert, Kenneth Eades, and M. Schill. Case Studies in Finance: Managing for Corporate Value Creation, USA: McGraw Hill, 2003. Print.

Eugene, Brigham, and M. Ehrhardt. Financial Management: Theory and Practice, Mason: Thomson South-Western, 2008. Print.

Surname

McDonalds was successful throughout the first two decades after it was first introduced to customers. Nonetheless, in the mid-1980s, the company started dragging behind as the business became a bit more dynamic. This situation required McDonalds to implement a novel approach. This is how the Made for You kitchen system appeared. This system was aimed at improving food quality, introducing the menu items in an easier way, and providing exceptional customer service. The key idea of that approach was that each meal was prepared exclusively and the whole order was made on the spot. All of the operational and customer requirements were followed in the new system. McDonalds administration explored a number of new technologies with the intention of implementing critical changes into the current system. The main objective of the company was to find a way to cook food faster and provide the customer withe high-quality food at the same time. McDonalds management and staff had to engage into the learning process and find the ways to improve the companys processes.

There were five major key criteria that defined the goals of the Made for You kitchen system. Those criteria included service (60-second delivery after the order has been made), food quality, and food preparation (easier cooking patterns allowing the employees to prepare the food much quicker than before). It is also important to take into consideration the staff (increasing job satisfaction among the employees) and profitability (minimizing the costs and increasing customer satisfaction at the same time). Combined, these five criteria turned out to be the custom recipe for McDonalds success. The company was able to do whatever it took in order to comply with all the essential requirements. The way in which these five criteria of success were followed defined the success of the McDonalds brand and proved the fact that a JIT technique may be useful in the food industry as well.

The new Made for You kitchen utilized a computerized approach that allowed the company to identify the customers purchasing patterns and helped the new system to predict the upcoming purchases and generate the orders for the best-selling products. This was intended to help the employees to be ahead of schedule during the busy hours. Another important aspect of this forecasting system was the ability to monitor the employees output. In other words, the Made for You forecasting system was designed to accomplish two key goals: employee efficiency and accurate order prediction. This system boosted all the vital characteristics of the company.

McDonalds administration believes that the forecasting system used by the company is one of the best in the market. Since the first implementation of the McDonalds forecasting system, the company has been able to seriously improve the quality of their service and enrich McDonalds customer base. This can be explained by the perfect balance between the particularities of the supply chain planning and the growing popularity of new products. The actions that were taken by McDonalds impacted the resulting complexity of the system, but the forecasting system proved to be profitable and efficient at all of the production stages. Lately, the demand for McDonalds has increased dramatically, and one of the explanations is the correct use of the forecasting system that turned out to be the game-changing asset for the franchise.

Introduction

Human resource is the most valuable asset of an institution. This is merely because in absence of the work force, implies no production in the industries, or offering of services. This in turn results that the institutions would have to fall. Consequently, it is of great importance to manage human resource effectively. Walker points out that emergent strategies blend the benefits of the formal planning approach with the realisation of behavioural realities in organizations, which encourages such things as strategic learning and grass-roots management (Walker, 1992, p. 72).Human resource management is a function mostly undertaken by the human resource department in a company. Human resource management is a task facet within an institution that mostly involves itself with hiring, compensations and salaries, training, motivation of workers, performances appraisals, directing and managing people employed within an institution. In todays dynamic environments HRM calls for one to be smart enough especially when it comes to recruitment and attracting the best candidates to your organisation. This is the trickiest area of human resource management, as with liberalism of labour, it is very uncertain on the part of the institutions to retain their best quality.

MacDonald Case Study Summary

MacDonald is faced with crisis of attracting top-flight candidates in the market in their company through their entry positions known as McJobs. They are planning to hire more workforce of about 50,000 store level employees on April 19. However, they have the problem of negative perception of their McJob and competition from Starbucks, which of late has been the one stop employee for most the workers in spite of the hard employment times. Over the years, the job has lost its former glory among people and its good reputation built over the years is slowly declining both within the company, but the adverse effects are being witnessed in the outside public.

These effects have also been brought about by some publications that associated MacJobs negatively, implying they are not well remunerated and are of lower status. McDonalds were both displeased with these publications in the year 2003 and tried to stop them, but the publishers went ahead to tarnish the perception people would later half to be employees with McDonalds. This has gone to the extent that McDonald addresses these issues and achieves their goal of employing workforce for the summer period when they will be having more work to be done. They have embarked on the redefinition of the McJob from a low paying job that requires little skills and provides little opportunity for advancement to a job that is stimulating, rewarding and offers skills this they hope will recast back confidence in the entry-level jobs of their company.

Analysis

In the effort of the company to redefine and reclaim its Macjob glory has endowed itself with several approaches. The MacDonald has realised that for effective change it has to start from within, as evidenced from the management team going out of their normal day-to-day tasks to pass a positive McJobs message. They achieve this through career advancement while in McDonalds this is aimed at reducing if not eliminating the prejudices and misjudgements in the minds of people concerning McJobs. In addition to achieve their goal they saw it being wise to undertake campaigns and promotions so as to sensitize, reach and inform as many people as possible on the paramount issue. The main message during these promotions was the great extent to which an employment opportunity at McDonalds would offer any promising candidate. They also cemented their arguments with claims that these benefits are available to the employees currently employed. These campaigns have their supporter and those who disagree from within the company. Ron Paul is among those who disliked and he claimed that all the efforts aimed at the redefinition of the MacJob would amount to nothing in the end. On the other hand, Paul had a contrary view that the company had more in its docket to frame the MacJob with and could not stalled in its quest to convince people out there that it had and offers more better opportunities than its competitors, and more so the chance to be responsible as a restaurant manager.

The company in order to estimate and get a better view of the state of how their image as an employer was distorted conducted a survey from within. They enquired to know if they were satisfied, working at McDonalds and again what was the contributing factor in the company that made them feel comfortable while being an employed. To their amazement they found out that majority of employees were very happy with working with them, although from the environment outside the company these same jobs had below average perception. This was a clear signal that employees of McDonalds like their work and the company in general. The company sales may have dropped and business is better although sales figures could have decreased due to the reason that we are in recession and most people opt for cheaper goods and services that is more of cheaper food when they are taking meals. It has of late been very clear in most countries that the company has operations in that since the inception of the policy of three Fs there has been the perception that McDonalds is the best employer compared to the rest.

The company has all the best intentions in the end to clear off the bad perception. This is mainly due to the fact as employment chances are due to rise, the company may experience high staff turnover with most of them moving to better paying jobs. It is inevitable that Job turnover will go upwards as the conditions of the economy stabilizes and we are clear the recession period. It is worrying that the company restaurant is very high which implies employees in these restaurants do not stay more than twelve months before they leave for better positions. There are also some advertisement and research information, which goes to worsen the company image in the outside public. Most of the senior management are aggravated by this and are of the opinion that it is of high important to spread the good news of the benefits and the better working conditions and terms provided by the company. This at least will be of beneficial in creating a good public image as well as contributing in redefining MacJob.

Recommendations

It is worthwhile from the above case for MacDonald in future to be wise enough to have and be conducting continual assessment in regards to the market. This is because without such they will ever be resulting to same scenario where they lose more in advertising and campaigns.

The company should have their salaries and wages being reviewed according to the market rates. Moreover, the MacJobs allowances should be structured to attract talents into Macdonald. This can be achieved through market research for market salaries and wages of all individuals.

MacDonald should consider social responsibility tasks or project participation so as not to lose touch and good relation and perception from its environment; on the other hand, the company should shy away from cyclical hiring of staffs i.e. during summer time. This should be encouraged to put a stop a scenario whereby

The company should also strengthen their human resource development with more qualified employees who have new and more advanced procedures to evaluate and recognise such crisis as bad reputation early enough before their effects takes toll on the company. Who are in a better position and capable to correct or address the matter amicably.

Conclusion

Human resource department in an institutions is necessary since it foresees different needs of the employees, thus they are the links between the Management of the organisation with the employees. They conduct HRM is their sole tasks. Concerning McDonalds the steps they have undertaken towards redefining Macjobs will bore result since they have assessed themselves clearly known where they are and their goal. This is the first solution to any problem, determining the root cause. Human resources management is increasingly being used and applied by several institutions to reveal the interconnections between human resources management with the cultural evolvement and planning. HRM is the new application being used by several organisations to understand the various facets of interactions points of the companies with the environment.

Introduction-MC Light

MC Light would be an innovative approach to McDonalds business enterprise. The reason is simple the company would be able to establish a separate fast-food chain that will meet the growing demand for healthy food options. It is possible to list several reasons to invest in this expansion strategy:

1. First is the growing population of young adults concerned with dishes health benefits in light of the growing percentage of obesity.
2. Second is the potential hidden in the market of Hong Kong, the city in which citizens propagate fast eating habits. Consequently, making room for an opportunity that will satisfy the demand for both fast and healthy cuisine at a premium price.
3. The third reason is the potential for high marketability and profitability and improving the main brand image.

Innovation

The reason for customers preference of MC Light could be hidden in the customers growing concern for sustainability and eco-friendly approach.

Combining the selling point of the main brand  tasty and fast delivery of food for the family  with healthy points of the MC Light would make it one of the key players on the market.

Although it is necessary to prepare diverse types of tasty dishes that would suit the goal of providing nutritious and healthy food.

The company may introduce three innovative points:

• MC Light will actively partner with trainers and gyms to provide people with real meal plans for workouts.
• The widespread availability of prebiotic and probiotic-rich beverages has prompted the development of functional beverages like kombucha and other related health drinks.
• Using a semipermeable membrane and the energy from osmotic pressure, the process of forward osmosis (FO) may purify water by removing dissolved solutes (Aquaporin, 2022).
• This process is more sustainable in comparison to conventional methods due to the lesser energy consumption and heat utilization which allows to preserve high quality of products (Aquaporin, 2022).

Market environment

Markets for health foods worldwide are broken down into submarkets defined by product type, sales channel, and regional/national markets. Natural health, functional, BFY, organic, and other segments make up most of the global health food market. The worldwide health food market may be divided into two broad categories: conventional grocery shops and internet marketplaces.

The market of healthy fast food is filled with various threats and opportunities.

Opportunities

Healthy food businesses have had to adjust to pandemic shutdowns. This raises worries about food availability and safety. The restriction of international borders has disrupted the supply chain, and food companies cannot get raw ingredients.

Many customers focused on health and nutrition in 2020. Several studies show that the pandemic increased interest in immune-boosting foods. This tendency is expected to continue in 2023.

Challenges

Two thousand twenty lockdowns boosted demand for different sales channels. Healthy food companies that could not handle different sales channels failed to adapt. Direct-to-consumer sales and customers eating at home increased in the business.

With the second wave of coronavirus in 2023, maintaining safety standards is vital to retaining customer confidence. Keeping employees safe and regaining workforce trust will be a struggle in 2023.

According to Yahoo Finance (2023) projections, the market for plant-based burger patties could grow by $2.13 billion through 2026.

Growth and strategy

In order to thrive in todays fast-food industry, businesses need to expand by opening more restaurants at a quicker rate in prime locations. That is on top of constantly debating which eateries should be shut down and which should have facelifts to prevent sales from being siphoned off from one another. A franchise systems ability to develop and improve depends on the managements ability to handle intricate dynamics between sales success and patrons.

The 5-year plan includes several items:

• Analysis of countries to determine where people care the most about their diet.
• Preparation of a strategy for entering new markets.
• Gradual replacement of some of the companys old restaurants.
• Increased presence in new countries.

MC Light would be an innovative approach to fast food which is typically unhealthy. However, it does not mean that typical marketing strategis for fast food will not be applicable. It is possible to integrate existing strategies of the brand to build customer loyalty to MC light.

These strategies would allow to build initial customer segment.

Combos allow for the sales of more product and attract customers in the similar manner to collectibles and kids menu. QR codes and single page menus allow for faster delivery and order reception while branded apps allow to expand the customer base. Unique promo options would be ideal way to attract new customer.

Conclusion

MC Light represents innovative approaches to food processing and fast food image which penetrates a new market opportunity. The market and the brand is expected to grow rapidly as customers adopt healthy eating habits. The strategy of expansion would start from the adoption of common marketing traits of the main brand name McDonalds. Consequently, it might be possible to rapidly expand the customer base.

References

Aquaporin. (2022). What is forward osmosis: Frequently asked questions. Aquaporin. Web.

Newsmantraa. (2023). Health Food Market to witness superb growth: Danone, PepsiCo, Amway, L T Foods. Digital Journal. Web.

Yahoo Finance (2023). Plant-based meat market size to grow by USD 12,532.87 million from 2022 to 2027; Growth driven by new product launches- Technavio. Web.

Competition is an integral part of any firms functioning; the choice of the means, strategies, and tools to enhance the firms competitive advantage is often the key to understanding the roots to its success or failure, as well as the issues connected with its competitive behavior.

Every business owner wants to be successful, and wants to receive the highest revenue possible. Nevertheless, there are always certain limitations, requirements, and factors that produce a complex influence on the firms functioning and predetermine its profitability.

Business stakeholders should always keep in mind that the firm cannot function in an isolated way; the strategic success of any company depends first of all on the way it attracts customers. One of the effective tools to improve communication with customers, to raise the corporate image and reputations, and to preserve a positive social image, is to get actively involved in the corporate social responsibility (CSR) issues.

They are nowadays recognized as one of the dominant factors affecting the company performance; CSR has become particularly important under the conditions of the modern economic crisis when large corporations cooperate with worldwide NGOs and governmental authorities in order to help states overcome the problems of unemployment, hazards to health, and inequality of people (Royle 2005, p. 42).

The majority of large and successful corporations pose corporate social responsibility as one of their top priorities in business operations; it is evident that this way they manage to cater for their customers and to create the constant, stale, and reciprocal relationships with their clients.

In case corporate social responsibility standards are kept to, there is always much more customer confidence loyalty. As in case with McDonalds that is the subject of the present paper, the mission statement of the company clearly states that the main task of the company is to create unique and unforgettable experiences for their customers (McDonalds Corporate Responsibility  Values in Practice).

The present mission statement is clearly customer-focused, which will surely create a positive feedback from customers feeling that they are valued.

It is true that the core assumption lying in the basis of the Porters model is that the industry structure produces a strong and inevitable influence on the firms performance.

The five forces outlined by Michael Porter include the threat for businesses because of the entry of new market participants, the intensity of rivalry firms experience inside the market segment, the pressure from product substitutes or very similar products of rivals, the bargaining power of buyers and suppliers (Ormanidhi & Stringa 2008, p. 57).

Therefore, engagement in CSR activities falls within the framework of intensity of rivalry  all fast food leaders in the field have strong positions, and they can easily survive even under the conditions of fierce competition.

McDonalds is the $40 billion company that employed about 1.6 million workers worldwide in 2005, and reported serving 46 million of customer a day (Royle 2005, p. 45). McDonalds has been involved in the corporate social responsibility activities for a long time, since its administration realized the potential for the corporation in the socially responsible approach.

Even upon a glance at their CSR philosophy, one can assume that McDonalds provides 10% of Americans with their first job, and has become the number one job training center in the USA, which creates a highly positive reputation and image for the company and improves its position regarding its competitors (Royle 2005, p. 45).

There is a great number of corporate social responsibility activities in which McDonalds is currently involved; upon viewing its social responsibility page at the official McDonalds website, one can see that there are the following CSR activities McDonalds pursues:

• Proper care about nutrition and well-being of customer
• Expanding the food menu for children with proper attention paid to their unique needs
• Education and information provision about useful nutrition
• Implementation of the forestry policy
• Popularizing environmental considerations on product packaging
• Provision of financial and volunteer support for Ronald McDonald House Charities (RMHC)
• Proliferation of volunteer activities through an online management tool
• Publicizing all production and transportation processes through the from Farm to Front Counter program (McDonalds Corporation Worldwide Corporate Responsibility 2010 Report 2010, pp. 6-10).

It is not only a strong focus on the customer satisfaction but also considerations of profitability that make the CSR activities of McDonalds effective. There is a feasible contribution that McDonalds makes to the economies of the countries in which its major markets operate, such as the USA; for example, the expenditures for philanthropic activities in 2006 constituted $13.6 million, while the 2009 figure equals $19 million.

The McDonalds Corporation paid $493 million of social taxes in 2006, and the figure rose to $568 million in 2009 (McDonalds Corporation Worldwide Corporate Responsibility 2010 Report 2010, p. 10). However, at the same time the corporation experiences substantial gains deriving from the introduction of CSR initiatives.

For instance, the electricity consumption rates have decreased considerably to the level of 1.68⁹ kWh/TC, 100% of meat-producing plants go through thorough certification and analysis, and more than 90% of employees receive their professional certification in the McDonalds-owned Hamburger Universities (McDonalds Corporation Worldwide Corporate Responsibility 2010 Report 2010, pp. 7-10).

The popularity of CSR activities has been realized by all leaders in the fast food market, which is proven by the active engagement in such actions by other US leaders in the fast food industry such as Burger King, KFC, and Pizza Hut (Royle 2005, p. 45).

The present observation supports the claims of Ormanidhi and Stringa (2008) about the applicability of the Porters Five Forces model to the assessment of CSR activities as well, since they contain the element of competition for the customer loyalty as well.

The deep involvement in community work, volunteer work, and other types of CSR activities called philanthropic activity by the company are first of all driven by the effort to reduce the negative impact of such Porters force as pressure from substitutes. There is a clear indication on the emphasis put by the company administration on authenticity of their products and services.

Even their mission statement claims about the creation of unique customer experiences for each single client coming to a McDonalds restaurant. In addition, the business objectives published at the official side of McDonalds indicate the wish to take care about customers health, and to place their customers and commitment to them to the core of their corporate values.

Obviously, it is a clearly beneficial competitive strategy, since the principle of stakeholder democracy is fully retained at each level of the corporations functioning (Royle 2005, p. 42).

Another popular CSR activity that McDonalds has implemented only recently is the online discussion blog Open for Discussion initiated by the company in order to engage in closer and more active communication with customers and stakeholders on health and environmental issues (Fleck, Fieseler, & Meckel 2009, p. 1).

It is an experimental form of communication between the complex body of an organization and its stakeholders that proved highly successful and beneficial in terms of ensuring the implementation of corporate business objectives, tracking customer satisfaction, and monitoring the feedback received from customers as well.

The present feature of the McDonalds CSR activities is also directed at reduction of the pressure of substitutes factor from the Porters five forces model of competition. There is a clear advantage in communication tools that McDonalds employs, and the CSR activities it undertakes provide the corporation with a confident competitive advantage, and customer loyalty in the industry with very easy entry conditions.

Arriving at a conclusion in the discussion of McDonalds CSR activities ensuring its sound competitiveness in the market of fast food, one should assume that the company has chosen the correct focus of its CSR initiatives, and manages to secure its leading place in the global fast food production and service.

The competitive business strategy of the company is highly adjusted to the current needs of all stakeholders, including investors, shareholders, customers, and international controlling institutions. The business strategy of McDonalds is focused on environmental protection, care about health and well-being of clients, education for staff, and adjustment to customer needs.

The company also ensures transparency of its processes (e.g., through the From Farm to Front Counter manual). In the industry offering more or less standardized and comparatively cheap products, the present strategy wins a leading role, positive reputation, and beneficial social image for McDonalds, ensuring its profitability and diminished impact of Porters five forces of competition.

References

Fleck, M, Fieseler, C, & Meckel, M 2009, Micro-Dialogues in Cyberspace  McDonalds Blogging Efforts in Communicating Corporate Social Responsibility online. The 59th Annual Conference of the International Communication Association, Chicago, IL.

McDonalds Corporate Responsibility  Values in Practice 2011, McDonalds Official Site. Web.

McDonalds Corporation Worldwide Corporate Social Responsibility 2010 Report 2010. Web.

Ormanidhi, O, & Stringa, O 2008, Porters Model of Generic Competitive Strategies: An insightful and convenient approach to firms analysis, Business Economics, July 2008, pp. 55-64.

Royle, T 2005, Realism or idealism? Corporate social responsibility and the employee stakeholder in the global fast-food industry, Business Ethics: a European Review, vol. 14, no. 1, pp. 42-55.

Introduction to the Study

McDonalds Company is one of the largest businesses in the world, with branches in 119 countries. The company serves over 60 million people daily in over 24,000 operational business zones worldwide. The following report focuses on one of the branches and/or subsidiaries operating in the UAE.

It gives a brief history and background followed by a strategic analysis of the company. The companys chain of restaurants in the UAE will be discussed, including an assessment of their operations, investigation of the industry in which the business operates, and the market as a whole.

The report also states the mission, vision, values, and goals of the organisation in terms of its delivery of services to customers in the region and beyond. The Porters five forces model that is applicable in the analysis of performance and competition will also be applied in the companys analysis. This will be followed by the competition analysis from new entrants in the market as well as the existing competitors.

An analysis of the company in terms of strengths, weaknesses, opportunities, and threats will be done in the section on SWOT analysis. The entry strategies that were used in the creation of the international brand of McDonalds will also be analysed, with the provision of appropriate recommendations to the same. A conclusion is also provided encompassing all the suggested recommendations.

Background and History of the Company

McDonalds Company began as a small restaurant in California under the steer of two brothers, Maurice and Richard McDonald in 1949. One of the other individuals responsible for the international expansion of the company is Ray Croc who is the American businessperson with roots from the Czech Republic. Croc bought the two brothers equity in the company, thus transforming it into a nationally and internationally renowned brand.

McDonalds business was listed as a public company in 1965 where it continued with its international expansion to markets away from America including Asia. The UAE subsidiary of McDonalds Company was established in 1994. It has since been involved in the delivery of services in the area and in the region as part of McDonalds Arabia Company. The company currently has over 100 restaurants that are spread all over the Arabian region.

Industry Analysis

The restaurant industry in the United Arab Emirates is one of the fastest growing industries in the world, with this growth being related to the relatively good performance of the economy. Several restaurants are spread out across the region and in the ever-growing cities. These restaurants provide services related to those that McDonalds offers.

The industry is also well performing. In 2008, it recorded a growth of about 12% from the previous year in the purchase of food and beverages from the restaurants (Williams, 2008). The value was expected to increase from that of $841 in 2008 to over $1.2 billion in 2012 (Williams, 2008). In 2008 alone, there were over 11000 restaurants in the UAE, with McDonalds business being among these establishments (Williams, 2008).

Market Analysis

The restaurant market in the UAE is relatively developed, with people here having a culture that is related to that in the Western nations. McDonalds commands a respectable market share. It currently lies third in the market share in the region that it operates in the UAE. Most of the cities are places of work and residence in the UAE. McDonalds business has capitalised on this to ensure that it is located in regions where the best market is located.

Mission of the Company

The mission of any company provides the strategic objectives for its existence in the region and industry. The brief statement of an organisations mission provides a means of guaranteeing the best services to customers of the organisation, thus ensuring that the company lives to the fullest of its customers expectations.

Mission Statement

McDonalds Company mission is to be the, customers preferred base and the way to eat.

Vision of the Company

The companys vision is to be the desired food outlet restaurant in the UAE, providing services to customer satisfaction.

Values of the Company

Company values are important to the organisation, employees, and customers. In the UAE, the company aims to be the favourite dining place for the population. The company also aims to provide unmatched quality services. It also hopes to maintain the highest level of cleanliness in its operations to facilitate in its vision of providing the safest food in the region. The company also values time. Besides, it has the value of providing timely services to its customers.

Goals of the Company

The goals of McDonalds include being the market leader in the restaurant industry in the UAE and the region (Walker, 2007). It also has the goal of being the preferred eating-place for the population by providing the best ethically approved services. The company also aims to give back to the community and/or to grow its business positively in profitability.

McDonalds UAE, which is a part of the McDonalds Arabia, is a well-established company, with the brand name being strong in the region and internationally. The company has used this characteristic to ensure that it grows on the international front, with operations in the UAE being based on the desire to establish a restaurant chain as successful as in the mother country.

The vision, mission, and goals of the company are related to those of the mother company. They are necessary in facilitating the success of the company and quality service delivery. Some of the recommendations include that the company should invest more in other aspects of the economy and/or diversify its services in the region by providing foods that are culturally general in the area.

External Analysis of the Company

A competitive analysis of McDonalds Company in the UAE is possible although with reference to the mother company and the regional branches from which the company operates.

Porters Five Forces Model

An analysis of McDonalds using Porters five forces model is necessary to show the competitiveness of the company both in the region and in the UAE specifically. Porters competitiveness model shows the attractiveness of a market based on the outcome of the negative and positive influences that this aspect has on the profitability of the organisation on focus.

Risk of entry by Potential Competitors

The entry of potential competitors into a market is an important factor in the model. It is assumed that markets with a high performance index and with high returns will lead to attraction of new member of the market. There are a number of determinants to the entry of new members in a specific market.

They include the barriers that exist, as imposed by the existing market participants, or the nature of the industry in which they operate. For McDonalds, the brand name is a very important factor in the prevention of entry of other competitors, as these are deemed to be afraid of competing with the well-established brand that the company has created.

Rivalry among established Companies

In any industry, competition is driven by the rivalry between the major industry players who determine the course of the competition. Several factors influence the competition, with different forms of competition being driven by the rivalry between the companies. The main determinant of the intensity of competition in the market that McDonalds operates in the UAE is the use of advertising and majoring on innovation to attain competitive advantage.

The company has a number of recognised advertising campaigns that it has run in the region. These campaigns have ensured that it is ahead of the pack in competition. The rivalry in the industry is between the company and the major players who originally dominated the market before McDonalds entry.

The Bargaining Power of Buyers

The bargaining power of buyers, also known as the market of outputs, is also a pillar in the Porters five forces model. Consumers have the power to determine the performance of any organisation.

One of the major ways that firms reduce customers bargaining power is using loyalty programs that ensure that customers are faithful to the organisation. Another component of this pillar is the number of customers in relation to the number of outlets that the organisation runs. McDonalds in the UAE has a significantly better ratio, having a number of branches distributed throughout the UAE.

The Bargaining Power of Suppliers

Suppliers are also a significant factor in determining the performance of any organisation. McDonalds is not an exception of this fact. As opposed to the bargaining power of customers, bargaining power of supplier, also known as market of inputs, affects the availability of raw materials for use on the organisation. If an organisation secures a good supply chain with trusted suppliers, the output also improves.

There is the availability of goods and services to the convenience of its customers. McDonalds UAE has ensured that suppliers are available for the main utilities in the organisation. These utilities are sourced locally and internationally as per the requirements. Suppliers have also contributed to the quality services that the organisation provides.

Substitute Products

There are several restaurants in the UAE that offer competition to McDonalds. While these restaurants offer direct competition, the hotel and catering industries around offer an indirect competition through the provision of related products. McDonalds ensures that the competition that is provided by these substitute products is reduced through the pricing of its own products. When the prices of a product are lower than that of another related product, the customer often makes the choice of buying the cheaper product.

External Threats to the Company

Despite the company performing well both internationally and on the local front, there are a number of threats that it faces. These are likely to affect the future operations and profitability of the business. The main threat is the heath campaign against the company that is evident in many avenues. There has been concern about the prevalence of obesity in other areas of the world where the company operates. This situation is likely to emerge in the UAE. The negative publicity that the campaign creates for the company is likely to affect its performance.

External Opportunities for the Company

Despite the threat above, the company has a potential opportunity on the international front. With the improved performance of most of the economies in the region and the development of major infrastructure projects, the population will increase in the region (Robison, & Goodman, 1996). This provides an opportunity to the company to use its well-established brand name to improve its presence and performance in the region.

Internal Analysis of the Company

Resources and Capabilities of the Company

The company has a number of resources that it can attribute to its success in the country and the region in general. One of the major resources is the strong brand name that it has created over the years. The company also has a large number of experienced personnel to ensure that the services provided are adequate.

The company prides itself in having an experienced human resource. Some of the future resources that the company may invest in are cleaner and efficient way of producing the goods that it sells. This will be a likely source of future better performance.

Competencies of the Company

The company has a number of competencies that it is known for in the industry. As a restaurant with a powerful brand name, McDonalds provides some of the tastiest fast foods available, with the best known of these foods being the burgers and chips. The organisation has used them as the marketing strategy to ensure that customers can relate the company with the sweetest foods.

The company also offers delivery services for some of the foods that it produces. It often has promotions where these foods are provided at a reduced cost. The main competence of the company is the efficiency with which it is able to provide quality foods. Some of these foods also include sandwiches and coffee, fruits and vegetables, and beef products.

Competitive Advantages of the Company

The company has a competitive advantage in a number of ways that it has managed to add value to its customers. One of the ways that the company adds value to customers is saving them time and money. Through the availability of cheap foods, customers can work comfortably in any city where there is a McDonalds business. The organisation also ensures that families can save time and money through providing them with cheaper food options as opposed to travelling to their home places to look for food.

Strengths of the Company

The company has a number of strengths that are a source of its dominance in the region and on the international arena. One of the major strengths that have been mentioned is the strong brand name that it has created internationally. This continues to influence its performance even in the UAE.

Another source of strength is the location of the branches at the most convenient places where customers can access them. A large market and consumer base is another of the strengths that the company has. Many people in the UAE have at least dined, or wanted to dine, in the restaurant. The ownership of the restaurant is also by the locals. This makes them tailor their services according to market needs.

Weaknesses of the Company

Despite the strengths discussed above, the company also had its share of flaws. The major weakness of the company is the absence of varieties in the provision of services. The company has embarked on the preservation of its brand name. This has involved the restriction of services to the food and restaurant industry. The company is also located in the large urban areas, thus locking other markets that have a potential to develop.

SWOT Analysis

Global Strategy

The company has adopted an efficient global strategy that is run by the mother company. This involves spreading to all corners of the world. Now, the company has subsidiaries and branches in over 110 countries. The ownership of these branches is purely by the local investors in each of the countries. The company controls the activities of these subsidiaries. The main achievement that the company has had is the establishment of branches in all the major continents and the provision of services related to the mother company.

Entry Strategy

The company used a number of strategies in its entry into the global markets. One of the strategies that it used was the acquisition of other international companies and organisations offering the same services elsewhere where they wanted to enter the markets. The company bought the smaller chain of restaurants where its operations were to run in the countries.

Another strategy that the company used was to contact investors in the different parts of the world. These investors were contracted to provide services on behalf of the organisation using its strong brand name to provide these services. The company used this entry strategy in most of the restaurants that are run in the UAE.

Entry Strategy Recommendation

The Arabian region is one of the regions that McDonalds may expand into with a large presence. A number of branches are already available in one of the UAE neighbours. In order to expand to countries such as Iran and Iraq, the company needs to invest through the local investors.

It should build its own restaurants and contract locals to run the outlets. This method will be an effective strategy to ensure a widespread acceptance in the new places in terms of determining the entry strategy that should be used when the company enters a market in the future.

Conclusions

Based on the expositions made in the paper, McDonalds qualifies to be one of the largest restaurants chain in the world. One of the international branches is the McDonalds UAE. The company, as discussed, is locally owned by different investors, with the brand name being the most significant of its strengths in the operations. Some of the characteristics of the organisation have been discussed in brief.

Some suggestions are possible for this international organisation. One of the recommendations is that it should consider diversification of its services to other industries apart from the restaurant chain. This move would be important in guaranteeing performance even with the threats in the restaurant industry.

Reference List

Robison, R., & Goodman, S. (1996). The New rich in Asia: mobile phones, McDonalds and middle-class revolution. London: Routledge.

Walker, J. (2007). Oman, UAE & Arabian Peninsula. Footscray, Vic.: Lonely Planet.

Williams, D. (2008). United Arab Emirates FAIRS Subject ReportUAE Establishes Arabic Labeling Requirements for Food Products 2008. USDA Foreign Agriculture Service. Retrieved from https://www.fas.usda.gov/

Abstract

McDonalds Corporation is one of the largest fast food retailers in the world. The publicly traded company was founded on 15^th May 1940 in San Bernardino, California. Over the years, the company has managed to achieve consistency with regard to meeting various customer needs, maintaining high quality products, and adapting well to the dynamic nature of the international market. The company mainly sells fast foods such as hamburgers, chicken, French fries, soft drinks, coffee, milkshakes, salads, and desserts.

With more than 35,000 chains in 119 countries, McDonalds is definitely one of the worlds best known brands. One of the main factors that have contributed to the strong brand is the ability of the company to understand the changing lifestyle choices of their customers by providing menus that meet their dietary needs. McDonalds often conducts market analysis to understand various factors that influence the dietary choices of its customers in order to develop new products that match their changing needs.

Drivers for new product-menu development at McDonalds

New product development refers to the complete process of introducing a new product to a market. The process at McDonalds involved increasing the product range and variety by introducing new items (Barnes, 2007). In addition, the company developed new product lines and renovated the existing ones to include healthier options.

The new developments made at McDonalds were customized to reflect the tastes and customs of the local market. One of the main factors that contributed to McDonalds introducing the balanced lifestyle menus was the changing needs of the customers (Barnes, 2007). People in the contemporary world have become overly conscious about their health and the need to life a healthy lifestyle. Meeting the dynamic customer needs is a complex process that required McDonalds to make numerous considerations with regard to the interplay of factors that influenced various food choices.

Healthy living entails eating low fat foods and daily exercise (Williams & Carter, 2011). McDonalds considered these factors because they have a huge effect on food decisions made by their clients. Customers responded very well following the introduction of the balanced lifestyle menus, thus boosting the companys revenue across various outlets.

Another driving force for new product development at McDonalds was the need to retain their customers and continue their dominance in the global market (Barnes, 2007). With the customer needs and preferences rapidly changing, the company could not afford giving their competitors a chance to take away their customers. Thus, they needed to act swiftly by introducing the balanced lifestyle menus across it numerous outlets.

Reflection of new product development in McDonalds menu lines

The concept of new product development reflects on McDonalds menu lines in various ways. It is important to note that the company sourced the ideas for its new menu across various functional international teams comprising of its employees and experts. The balanced lifestyle menus were supported by three pillars namely, menu choice, need for physical activity, and information (Barnes, 2007).

Under menu choices, McDonalds focused on adding new products that would help its customers to adapt healthy living. In addition, it introduced new menu lines that introduced new products such as salads, fruits, and vegetables (Williams & Carter, 2011). For example, McDonalds units in Europe, Canada, and Hong Kong were among the first to introduce fruit salads, fruit yoghurt, and other new products created by the company (Hawkes & Henson, 2009).

In other menu lines such as Taiwan, Australia, and Sweden, McDonalds introduced new products such as toasted rice burger, carrot slices, cereals, juices, as well as low-fat milk and yogurt. The introduction of balanced lifestyle menus also focused on promoting the concept of physical activity (Williams & Carter, 2011). The initiative was highly localized as the company wanted to create a positive appeal to its customers across the world. McDonalds used a number of strategies in its efforts to internalize its business.

The first strategy was developing a work partnership with the international Olympic committee during the launch of its Go Active program (Barnes, 2007). This help the company to create a global appeal to its customers across the world, a step that helped to boost its performance in the international market. For example, the sponsorship deal with Stepometers in order to promote their happy meals, also help McDonalds to have an easier time creating an international appeal (Williams & Carter, 2011). The main aim of the program was to provide McDonalds customers with various online physical resources and personal fitness assessment tools.

Designing of new products and innovation teams at McDonalds

Over the years, McDonalds has been very consistent and effective with regard to designing new products. This has been necessitated by it ability to bring together a highly creative innovation team that identifies opportunities as soon as they sprout (Barnes, 2007). The balanced lifestyle menus represent one of McDonalds latest products to be introduced into the market.

This new product was designed and developed with an orientation towards fulfilling the increasing demands for healthy foods by the customers (Bratskier, 2015). The innovation team that came up with the new menus comprised of nutritionists, as well as experts in the fields of wellness and physical activity. One of the corporate objectives of McDonalds is increased promotion of innovation and development of new products that meet the dynamic needs of various customers (Associated Press, 2004).

The customer is always the top priority, a phenomenon that influenced the kind of new products developed by McDonalds. In addition, the food retailer also developed and promoted new and healthier menus that considered the tastes and customs of local in its various outlets. The innovation teams generate and source ideas for new products by conducting a thorough market analysis (Hawkes & Henson, 2009).

Research has established that a market analysis helps in developing new perspectives about consumer choices, a factor that highly influences the development of new ideas. In addition, creating an innovation team with individuals providing expertise in various fields helps to introduce efficiency in the decision making process (Associated Press, 2004).

Activities by McDonalds geared towards increasing the acceptance of new menus

First, the company focused on developing menus that promoted the habits of the local people and at the same time meeting their dietary needs (Barnes, 2007). Research has established that culture a lot of influence of the choices that people make with regard to food. Therefore, it was important for McDonalds to ensure that their new menus had a cultural aspect that would draw more customers.

Second, McDonalds created an active lifestyle team, whose main duty was to provide the management team with strategic directions with regard to achieving efficiency in the introduction of new products (Gilbert, 2008). The cross-functional team was very influential in ensuring that customers understood the health benefits of the new products through well coordinated advertisements (Williams & Carter, 2011). In addition, it ensured that the information available in the companys website is updated as soon as new products are developed.

Third, McDonalds also hired a global team of nutrition experts, whose main role was creating contact with the right stakeholders. The reason for creating a nutrition team was to ensure that the culinary culture of various communities was considered when developing new products for respective markets (Barnes, 2007). This played a crucial role in increasing customers acceptance of new products because they met all their nutrient and culinary requirements.

Exploiting the power of social media

Social media has changed the way people do things in a lot of ways. Research has established that social media tools such as blogs are very influential in the food industry with regard lifestyle choices and food decisions (Hill & Jones, 2011). There are numerous ways through which McDonalds can exploit the power of social media to increase the acceptance level of their new menus among their customers.

First, the company can create a nutrition blog that will give their customers a platform to interact with each other and nutrition experts (Hill & Jones, 2011). The blog can also be used to generate posts that educate people about various products contained in the menus and their importance in terms of achieving success in adapting a healthy lifestyle. In addition, the customers can share their different experiences with the new menus on the blog, thus influencing other users who have not tried them to do so (Hill & Jones, 2011).

Second, social networking sites such as Facebook provide a good opportunity for McDonalds to promote its new recipes among the high number of people using the tool. By hiring a social media manager, McDonalds can increase the customer adoption of its balanced lifestyle menus through status updates and instant chat messaging service (Hill & Jones, 2011). The number of people that use Facebook keeps increasing every day, thus creating an even bigger opportunity for McDonalds to dominate the online market.

Another effective way in which McDonalds can exploit the power of social media is giving free meal vouchers to the people who like their social media pages and profiles (Hill & Jones, 2011). This is a form of advertisement that the company can use to promote their menus because the few followers who will get a chance to sample the menus will definitely influence the others depending on the kind of feedback they give. Social media is a very powerful tool that can propel a business to prolonged success as long as it is used effectively (Hill & Jones, 2011).

Measuring the success of new menu items

There are numerous elements that McDonalds can use to assess the success rate of its new balanced lifestyle menus. The first element is the number of people that visit their outlets every day (Love, 2008). A sudden increase in the number of customers is a clear indication that the menus are a success, while a reduction in the number of people visiting various outlets can indicate the ineffectiveness of the new products. The second element that can be used to measure the success of new menus is the kind of feedback and comments from customers.

Positive remarks would definitely mean that the customers appreciate the new menus, while negative remarks indicate that there are certain things that should be improved (Love, 2008). Profitability can also be another effective element that McDonalds can use to assess the effectiveness of their new tools. Increase in revenue is an indication that more people make purchases, while a reduction in profit margins can be an indication that the demand for the new products is very low (Gilbert, 2008).

References

Associated Press. (2004). McDonalds Phasing out Supersize Fries, Drinks: Efforts to Offer Customers a Balanced Lifestyle. Web.

Barnes, D. (2007). Operations Management: An International Perspective. New York: Cengage Learning.

Bratskier, K. (2015). Want Kids to Eat Healthy? Make their Meals More like McDonalds. Web.

Gilbert, S. (2008). The Story of McDonalds. San Francisco: The Creative Company.

Hawkes, C., & Henson, S. (2009). Trade, Food, Diet, and Health: Perspectives and Policy Options. New York: John Wiley & Sons.

Hill, C., & Jones, G. (2011). Essentials of Strategic Management. New York: Cengage Learning.

Love, J.F. (2008). McDonalds: Behind the Arches. New Jersey: Paw Prints.

Williams, E.M., & Carter, S.J. (2011). The A-Z Encyclopedia of Food Controversies and the Law. California: ABC-CLIO.

Executive Summary

In this paper, a comprehensive report has been provided to examine the modern applications of cross-cultural management in multinational corporations and their impact on managing workforce, organisations, and business processes in foreign cultures. In particular, the report takes a case study approach, using the fast-food multinational company, MacDonalds, which is a leading American multinational corporation in global business.

In particular, the entry and adaptation of the company in the vast Chinese market will be examined with special consideration of the cultural differences between Chinese and American societies. Using the case of McDonalds, the paper concludes that it is important for managers to develop comprehensive knowledge and understating of cross-cultural management to develop quality interventions in international marketing, mergers, and acquisitions.

Introduction

With an increasing trend towards the globalisation of business, the number of companies working in foreign nations has increased significantly.

As modern companies attempt to diversify their business to cover multiple nations, the number of employees working in foreign lands or for foreign corporations has increased tremendously¹. For instance, it is estimated that more than 70 million people across the world work for foreign companies or in foreign countries. Studies have shown that this number has more than doubled between 1990 and 2010.

Methodology

The paper will carry out a comprehensive analysis of the cross-cultural patterns used in MacDonalds business in China. It will examine the cultural differences between China and the USA based on existing theories, such as Hofstedes cultural diversity model². In particular, the study attempts to examine how the company has used cultural adaptation strategies in China and how Chinese customers think about the companys adaptive behaviours in the country.

Thus, the paper will examine the cross-cultural issues facing the company in its Chinese market, the behaviours adapted to deal with these issues and the customer perceptions of the corporate strategies. The research is a qualitative approach that uses a case study approach as a study protocol. The case of MacDonalds presence in China and the strategies the company has used to deal with cultural differences and adapt to the Chinese culture have been examined from the case study approach.

Also, it describes the perceptions of Chinese customers towards the cross-cultural strategies that the company has used to fit into Chinese culture. First, the paper will provide a brief but detailed analysis of different definitions of culture, culture, and cultural adaptations and different cultural frameworks. Secondly, it will examine the companys strategy for entering the Chinese marketing, with a special reference on issues that relate to culture and cultural differences.

The paper attempts to answer the question on the measures and strategies that the company has taken to adapt to Chinese culture. Also, the paper tries to answer the question of the factors that contribute to the successful adaptation model at the company, which is favoured by the target customers.

Body of research Report

Different definitions of culture

According to Hofstede³, Culture is a collective programming of the human mind, which forms a difference between groups of people. According to this model, culture is a system of values that are collectively held among a given group of people or society. On the other hand, Becker⁴ states that culture refers to all the things that are done thought, or possessed by people as members of a given society.

This definition states that culture is made up of distinct components- material objects, beliefs, ideas, attitudes, and values as well as behaviour either specified or expected. Thus, this definition has become an important model for examining culture and cultural differences between individuals in different countries.

The current examination of culture in a narrow concept regarding a given market or society is an important aspect of modern studies on cross-cultural management. In this concept, culture is considered as a form of behaviour adaptation by an organisation as a legal entity or a person⁵. Several scholarly works have been carried out to investigate this notion.

In particular, the notion of cross-cultural adaptation has become an important area of research in business and management. Elements of cultures, such as normal values, rules, language, attitudes, and customs, are significant in these studies.

Ady⁶ asserts that cultural adaptation is a process of evolution through which individuals and groups modify their habits, behaviour, and customs to ensure that they fit into a given culture. Also, other scholars have asserted that cultural adaptation is a gradual process that particular society or culture undergoes as individuals or groups from other cultures actively participate in the culture through sharing of ideas, objectives, perspectives and other practices.

It includes the behaviours that allow people to live independently and function in the desired manner in their daily lives expected of a particular age or social setting. For an individual or group to adapt to a particular culture, several challenges are involved. Studies have shown that it is a difficult task because there are always defined rules or norms that an individual is to follow. Also, an open mind is required for an individual or group to adapt to a new culture

According to Kotler⁷, the cross-cultural adaptation involved a long process that allows an individual, group, or institution to adjust to the native ways of behaviours and thinking to achieve consistency with the target culture.

Culture and cultural adaptation in marketing

Kotler⁸ has developed one of the most convincing models of studying culture in a business setting. According to this model, culture is the most important and basic of the needs and behaviours of an individual. Also, a model by Herrmann and Heitmann⁹ asserts that multinationals must consider cultural differences when developing management strategies for marketing across borders.

This assertion also argues that differences in cultures between societies in different regions tend to result in different consumer responses to a product or service. According to Kotler¹⁰, culture and cultural differences have a profound influence on consumer behaviour through personal, psychological, and social factors. Similarly, the influence of social, cultural and personal factors has a profound influence on consumer behaviour in any given market¹¹.

Thus, companies and their leaders need to study and understand these factors to have a good knowledge of consumer behaviour and behaviour patterns. In this way, the corporate world is likely to achieve effective and profitable decisions in the market using the conventional market mix¹².

Different cultural frameworks

To elaborate on this assertion, Kotlter (2006) has developed a comprehensive model to describe how culture influences consumer behaviour at the market place. This model shows that culture, social, psychological, and personal factors affect two important elements in a market, which are consumer behaviour and marketing mix. The element of culture is comprised of social class as well as sub-culture. The social factor includes several elements, such as family roles and status as well as the reference group.

Similarly, the personal element is comprised of several elements, such as lifecycle and age, occupation, personality, and economic situation¹³. Finally, psychological factors include leaning, motivation, perceptions, beliefs, and attitudes.

All these factors have a direct influence on consumer behaviours in a given market. In turn, consumer behaviour has a direct influence on the marketing mix adopted by an organisation in the market. This implies that the four factors have an indirect but important influence on the marketing mix adopted in an organisation to deal with cultural challenges in a particular market.

Luckhohn and Strodbeck developed another important model in the 1960s. This model argues that differences in culture have significant practices in leadership. According to the model, the basic nature of humans is an important dimension of culture. It states that individuals are good if left to their devises, which makes them act reasonably and responsibly. On the other hand, they can be evil and untrustworthy if the reverse is true.

Moreover, people can be a mixture of good and evil. Secondly, the dimension of the relationships between people is important in this model. It argues that people are individualistic, which is a primary characteristic of every individual. Group relationships are developed between groups and families, giving individuals an ability to fit in a group or family. The activity of orientation is also an important dimension in this model. It argues that being is the point of an individuals life that seeks to help one to live and experience a given task.

The relationship between man and nature is also an important dimension in this model. It argues that the relationship can be subjugation, harmony, or domination. In the subjugation relationship, the environment and nature determine human activities. In the state of harmony, humans live in harmony with their environment. In domination state, humans dominate the environment.

Hofstedes model is one of the most studied ones in the modern world. It argues that culture is based on certain dimensions. First, the power distance is an important dimension because it determines whether people accept or reject the inequality in power distribution. Secondly, it emphasises on the dimension of uncertainty avoidance, which refers to the degree of comfort associated with ambiguity and uncertainty.

The third dimension, known as individualism versus collectivism, measures the social frameworks in which people give priorities to individual or group needs. Finally, the dimension of masculinity versus femininity emphasises on whether a culture places the importance of male versus female roles and activities.

Managerial roles and differences across cultures

Managerial roles are an important aspect of managing an organisation across different cultures. While the roles of the management are well defined in scholarly work, there are several differences in managerial roles due to differences in cultures. Managers interpersonal roles include figurehead, leadership, and liaison.

All three are affected by cross-cultural differences. For instance, figureheads have symbolic value in certain cultures while in other cultures, it is not an important thing to refer to a leader as the figurehead. In leadership roles, highly individualistic cultures have a higher preference for visible leaders. On the other hand, highly collectivistic cultures have a high preference for consultative leaders.

International mergers and acquisitions

Cross-border mergers and acquisitions are common in the modern business world. They are similar to any other international business project in several ways. For instance, they require an initial outlay. Also, they are expected to generate cash flows with a higher value than the initial cash investment is.

The motivations behind the formation of mergers and acquisitions are mainly based on global consolidation as well as market share, which makes companies seek to enter into new markets, but in an indirect manner.

Mergers and acquisitions on an international level have several advantages. For instance, they take less time and gain benefits from customer relations with a foreign nation because the acquired company in the target market will establish channels for good relations. They allow companies to increase their benefits and trade them off against incremental costs incurred when establishing the ventures.

There are several types of mergers and acquisitions applied at the international level. For instance, mergers and acquisitions can be based on functional roles within the target market. In this case, a horizontal merger is achieved when two companies in the same business sector joint together either by the acquisition of one by other or merging into one unit.

On the other hand, a vertical merger applies to the case in which a business acquires its supplier. A third example is conglomerate mergers and acquisitions, which involve two irrelevant companies joining either through merging or one being acquired by the other. They are both in different and irrelevant areas of specialisation.

Strategic merging is one of the most important methods in the modern world. It involves a long-term event in which an organisation targets at and holds an acquired firm, which allows them to create synergies through the expansion of market share, customer based and corporate strengths in the long run.

Explanations of Different integration mechanisms and approaches

The purpose of this section is to examine the strategies that McDonalds has used to ensure that it fits into the Chinese market, which is defined by a culture different from that of the American one. In this case, the companys ability to grow and achieve profits is examined from the cultural perspectives, taking into consideration the strategies that have been used to influence customer behaviour and perceptions towards its presence, products, and strategies.

Specifically, the examination of the companys cultural adaptation strategies will be done based on the definition of culture that Becker¹⁴ developed. This means that three aspects of culture will be examined  material objects, values, beliefs, attitudes, values, and behaviour, either specified or expected.

Product innovation to meet the demands of the Chinese tastes and preferences is an important strategy. At McDonalds, a well-developed strategy offers worldwide-standardised products within their menu. Nevertheless, entry into the Chinese market proved different in some way. The company realised that Chinese culture and market are unique in different ways.

When the company was entering the market, its leaders claimed that the company was not willing to change its global menu in China. It wanted to retain the American style in foreign markets. According to Bian¹⁵, the company argued that it wanted to do what it had been doing in the US. They wanted to ensure that Chinese food would have been similar to what the company had been offering in other markets. However, this strategy did not work as expected.

The company failed to consider the cultural differences between Chinese and American societies. Chinese consumers have a behaviour of selecting Chinese standards and developing negative attitudes towards western ones.

Also, the presence of other companies like KFC affected MacDonalds. For instance, KFC is an American multinational fast-food corporation that entered the Chinese market some years before MacDonalds. KFC attempted to consider Chinese preferences and tastes in food, which were relatively different from American tastes. This aspect is a product of the cultural differences between the two societies.

To deal with the problem, MacDonalds has decided to reconsider its previous views. For instance, in 2004, the company started preparing and offering Chinese products to its customers. For example, friend eggs and Chinese pancakes were included in the companys breakfast menu. In 2007, the company further introduced a relatively new hot drink enriched with ginger and honey, which are some of the products that are popular in Chinese food culture.

In Chinese food culture, ginger and honey have been used in drinks to drive away coldness. Nevertheless, the company retained its traditional American products, especially hamburgers, which indicate that it is not willing to change its global culture to adapt the local expectations in China.

Between 1990 and 2003, the companys strategy in the Chinese market was based on its global marketing culture. The companys products were targeting families with children, leaving out other segments of the market. When reviewing its strategy in 2003, the company added products for the youths and children aged above four years. It used a new slogan, Young, lively and fashionable, hoping to entice the young Chinese citizens by providing them with a positive and happy experience.

Currently, the company is using this strategy even in its advertising strategy. For instance, its decorations in restaurants and commercials for advertising are mainly designed to entice and attract youths. Also, it uses commercials depicting such topics as romance, music, and sports to appealing to the young people in the market. For example, it uses the services of celebrities in sports, film, and music to advertising its products.

Also, the type of music played in its outlets is relatively recent, especially Chinese pop, which attempts to attract young people. However, the company is still using its American approach to deal with Chinese cultures. For instance, it is still using children toys based on American mentalities, such as those toys common in American movies like Toy Story and others.

According to several studies in China, Chinese people consider going to a restaurant as a genuine habit of meeting friends, family members, peers, and business partners. Chen¹⁶ has shown that most Chinese people like meeting people in restaurants for social and business purpose as opposed to taking meals.

Thus, meals in restaurants are taken for socialising. The study also shows that most Chinese prefer taking their friends to restaurants instead of inviting them to their homes. This is in contrast to the American culture, where restaurants are visited for nourishment.

In 2006, McDonalds borrowed the American idea of drive-thru restaurants, a concept that allows order to be placed through microphones and picked at a window. Customers are allowed to remain in their vehicles when ordering and taking meals. To enhance this new idea, the company entered into two partnerships with petroleum dealers Sinopec and Petro China.

The deal allows the company to use the expansive packing areas in the gas stations to allow customers to sit back in their vehicles as they take meals. According to the company, a new strategy is a promising idea that is likely to be a future strategy for expansion, especially in a country that is quickly becoming a world economic powerhouse.

Also, it is an idea that works well in rural areas, which carries the largest population in China. However, this idea is not common or popular in Chinese culture, despite being one of the most popular services offered to fast food consumers in the US. Chinese people prefer eating while seated inside a restaurant where they can meet friends and new people. Thus, a new idea is facing problems in China, and its future is unknown.

McDonalds Corporation has faced conflicts of cultural differences between the American and Chinese standards of culture, especially when entering the market or introduction a new.

Recommendations

This research paper reveals that the need to adapt to the local culture is an important aspect of managing across cultures. Cultural differences between two nations or societies are likely to affect the business of an organisation, especially if the marketing strategies are undeveloped in a manner to attract the local people. Corporate leaders need to develop marketing strategies based on prior knowledge of the local culture, which makes it possible to adapt to the local customs, values, norms, and beliefs.

Bibliography

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Becker, K. Culture and International Business. Jaico Publishing House, London, 2005.

Bian, J. KFCs evolution in China. Citic Press, New York, 2009.

Browaeys, M. Understanding Cross-Cultural Management. Prentice Hall, New York, 2011.

Chen, S. The comparison analysis of the development of Chinese and western restaurants chains. Business Culture, New York, 2006.

Herrmann, A. & M., Heitmann, Providing more or providing less? Accounting for cultural differences in cons, Cross-Cultural Research, vol. 23, no. 1, 2006, pp. 7-25.

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Kotler, P. Marketing management. Pearson Education, New York, 2009.

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Footnotes

1. D. Thomas, Cross-Cultural Management: Essential Concepts, Sage, New York, 2008.
2. Hofstede, G., Cultural dimensions in management and planning, Cross-Cultural Research, vol. 2, no3, pp. 81-99, 2004.
3. Hofstede, 88.
4. K. Becker, Culture and International Business, Jaico Publishing House, London, 2005, p.87.
5. D. Thomas, Readings and Cases in International Management: A Cross-Cultural Perspective, Sage, New York, 2003, p. 47.
6. J. C. Ady, Toward a differential demand model of sojourner adjustment, Sage, Thousand Oaks, 2010, p. 34.
7. P. Kotler, Marketing Management, Pearson Education, New York, 2009, p. 238.
8. Kotler, 253.
9. A. Herrmann & M, Heitmann, Providing more or providing less? Accounting for cultural differences in cons, Cross-Cultural Research, vol. 23, no. 1, 2006, pp. 7-25.
10. Kotler, 321.
11. M. Browaeys, Understanding Cross-Cultural Management, Prentice-Hall, New York, 2011, p. 139.
12. T. Rinne, G. Steel & J. Fairweather, Hofstede and Shane Revisited: The Role of Power Distance and Individualism in National-Level Innovation Success, Cross-Cultural Research, vol. 46, 2: pp. 91-108, 2012.
13. M. Browaeys, Understanding Cross-Cultural Management, Prentice-Hall, New York, 2011, P. 341.
14. Becker, 92.
15. J. Bian, KFCs evolution in China, Citic Press, New York, 2009, 16.
16. S. Chen, The comparison analysis of the development of Chinese and western restaurants chains, Business Culture, New York, 2006, p.231.

Introduction

Corporate social responsibility is a form of self-imposed duty. Business enterprises practice it as a way of giving back to the community. It is a social virtue that ensures commercial enterprises relate well with the society. Therefore, the community is likely to support their commercial operations. Essentially, a responsible firm contributes positively to a countrys development. It takes care of the communitys interests such as provision of funds to clean up the environment and others ways of giving back to the society. Such a firm conforms to all the laws of the land and employs acceptable methods of resolving conflicts such as dialogue, mediation and arbitration. Corporate social responsibility is an important aspect that interests economists. Ruschak (2012) adds it is one of the leading topics in World Economic Forums (WEF) (p. 14).

Corporate Social Responsibility: Focus on McDonalds Corporation

McDonalds Corporation believes in the provision of satisfactory services to its customers. The company has been on the run to improve the dietary allocations in its dishes. Proper diet is important in maintaining good health. The management aims at incorporating healthier food stuffs such as fruits and vegetables in its culinary arts. Additionally, it wishes to reduce the sale of foods with high calorific but low nutritional value. The firm plans to include locally produced whole grains to its range of authentic cuisine. The practice will promote the local producers economically and uplift the consumers health. It strives to relate well with the community through conforming to the laws of the land.

The company offers training to its employees to enhance food safety. Therefore, the employees can handle, cook and store food appropriately to reduce chances of contamination. Similarly, it engages its suppliers in the safety measures to ensure that the supplies are safe. It conforms to the rules of the Hazard Analysis Critical Control Point (HACCP). The company engages the community in capacity building to enhance economic growth. McDonalds believes in respect for basic human rights as per the dictates of the federal constitution. It supports programs to sustain natural resources such as oceans and forests among others. It ensures that the material used to manufacture its packs is a product of sustainable agriculture (Slama, 2014). Similarly, it recycles the packs for sustainable development.

The company minimizes its use of products which emit chlorofluorocarbons to the atmosphere. Chlorofluorocarbons are harmful greenhouse products which environmental researchers link to problems such as greenhouse effect and global warming. Global warming is to blame for problems such as depletion of the ozone layer and unpredictable weather patterns. McDonalds remains alert on this effect and works hard to minimize emission of such gases. Therefore, it has adopted sustainable strategies such as the use of renewable sources of energy, designing its buildings to reduce emissions to the environment and management of its energy consumption.

The company engages in waste recycling to reduce the volume of waste it exposes to the environment. Waste is becoming a big menace in many cities in the world today. Therefore, it is critical to initiate a waste management platform to make the world a better place to live. Hence, McDonalds recycles most of its waste products. For instance, it converts surplus cooking oil into fuel to power automotives. The company gives back to the society through sponsoring major events such as sports. For instance, it supported the Paralympic games in 2012. Sponsoring such events helps grow talents and create good relations between the participants.

McDonalds is an important provider of employment considering the opportunities it offers to the immediate community. It offers job opportunities to people who would otherwise be jobless. Notably, it creates employment to reduce joblessness in the society. In addition, it enhances professional development to its employees through in-service training to help them sharpen their skills and respond to the industrys dynamics.

McDonalds provides an all rounded environment favorable for social- cultural interaction among customers, employees and suppliers. It is important to note that it does not discriminate people on the basis of their gender, color or race. Hence, people can share their cultural experiences. Additionally, the company is strict on all manifestations of discrimination and addresses them accordingly. It is a gender sensitive firm that ensures women remain competitive. It supports those in leadership positions and mentors them to become more productive. It promotes awareness to break the social constructs which label women as weak beings and incompetent leaders. In addition, it organizes regular forums to train women leaders and help them cope with management dynamics

Conclusion

A company ought to take responsibility for its impact to the community. It enhances a companys competitiveness considering its contribution to the society. A firms responsibility to the community is essential in promoting its image among the target group. More often than not, a responsible company gains recognition from the consumers. It is important to note that a responsible company may gain directly through support from the community. Similarly, contented employees work hard; thus, increasing the companys output and vice versa. It allows a firm to partner with others; thus, increasing its presence in other regions.

References

Ruschak, K. (2012). Corporate Social Responsibility: Corporate Social Responsibility and the Theories it Generates From. MuNchen: GRIN Verlag.

Slama, J. (2014). McDonalds Can Make History and Rescue its Brand with Sustainable Food. The Huffington Post.