HI5019 STRATEGIC INFORMATION SYSTEMS T1 2017
November 22, 2023
Report on Constructive Relations at Top Trucking Company
November 24, 2023
Introduction
The report is prepared to provide a proper description of international business in the international market. In return, there will also be a description of the business processes through the illustration of particular events carried out by the company. In that context the report, therefore, considers the company to be McDonald’s. Thus the report will bring out the business plan of McDonald’s based on the theme of their events that were carried out in 2016-2017 in China.
Now coming to the company, McDonald’s is very well known to food lovers. It is because the company is very well known for its fast food and hamburger. The company was founded in the year 1940 and in the initial condition, it was opened as a barbecue restaurant that was previously operated by Maurice McDonald and Richard McDonald. The company owns its business as one of the largest restaurant chains across the globe. In that context, it provides services to almost 68 million customers all over the world along with having operations in 120 countries and 36899 outlets.
The restaurant of McDonald’s can be opened through its corporation or franchise or by an affiliate and based upon that the revenues are generally generated from the rent or royalties or fees as well as the franchisees. Specifically, McDonald’s restaurants are supposed to be sales-based restaurants and aim for sales in company-operated restaurants. For that reason, the company opted for two of the events for the expansion of its international business. Based upon that context the company thought of increasing the sales.
Event by McDonald’s in China
McDonald’s has planned for the expansion of its international business and for that reason, they have planned for the opening of their new outlets in China. Therefore the business event that McDonald’ has launched describes the opening of its 1000 outlets in China. The reason behind this is McDonald’s thinks that the Asian market provides the largest long-term growth opportunity for the international business in terms of global food service. Based upon that the company planned to open 1000 outlets in China and this plan is supposed to be completed within the next five years (McDonald, 2017).
This decision will eventually result in the transformation of the Chinese market as the second largest market in the international market after the United States. In addition, the company has also planned to open almost 250 outlets in Hong Kong as well as in South Korea. In the event, that McDonald’s announced that there have been operations of 2200 outlets still they want to open 250 outlets per year so that they can achieve the high growth markets that can help in boosting the sales of the company (McDonald’s, 2017).
This event took place in 2016 and thereafter in 2017 Waal Street also provided its acceptance and cheers for the decision to sell the deal with McDonald’s. From the initial condition, the Chinese market is said to have a strategic economic sense which is added with more sense by the encouragement provided by Wall Street (McDonalds, 2017). The decision of the company to sell the majority of the massive operations was accepted by Wall Street.
Description of the Theory of the Event
As mentioned in the above section the company McDonald’s decided to open 1000 outlets in China to enhance its sales and to make China its second-largest market after the US (Alessandria, Kaboski & Midrigan, 2013). Thus the company’s strategy is formulated so that it would very clearly reflect the presence of diversity in the business. In most situations, the company wants its expansion in such areas where there will be an increase in sales as a result of internationalization (Alessandria, Kaboski & Midrigan, 2013).
The Chinese market witnessed the opening of the American fast food service in the year 1987 and thereafter it took the increase of 20% per year.
In that context, Becker & El-Said said that the theory which is selected to describe the report is Hofstede’s Theory of Cultural Dimensions. Thus based on the definition of culture as per Hofstede, it is described as the collective programming that has emerged from the human mind and which helps in distinguishing the members of one group from another (Becker & El-Said, 2013). For that reason, the concept of culture can be described as the proper sense of the system that collectively holds the values. In that context, the description of Hofstede’s cultural Dimensions will very easily provide the proper description of how behavioural adaptation takes place as a result of international business. In that context, the scholars have provided the notion of cross-cultural adaptation by knowing all the aspects of the norms, rules, customs and language (Boussebaa & Morgan, 2014).
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Hofstede’s Cultural Dimension Theory
While expanding the business in the international market, Caraiani said that it is necessary to know the six dimensions of the market which is selected. These cultural dimensions represent various kinds of preferences for any one state of affairs as compared to the other individuals of other countries (Caraiani, 2013). The model comprises various country scores based on the relative dimensions. In that context, the model consists of six dimensions.
Uncertainty Avoidance: It is part of the model that describes the particular degree up to which the individuals of the society keep uncomfortable feelings along with ambiguity as well as uncertainty. For that reason, the fundamental factor that has been associated with the part is by what means society deals with the future in this factor.
Power Distance: This part of the theory indicates the particular degree up to which the weak members or the less powerful individuals of the society accept as well as expect the equal distribution of power within the society. From the very beginning, there has been an issue that specifically indicates ongoing inequalities among the people (Casson, 2015).
, this factor describes which indicates how society will act to handle the issues of inequality. In that case, a higher degree of the power distance indicates the distribution of equality and the low amount indicates the inequalities of power.
Individualism vs. Collectivism: Individualism is the part that describes the loosely-knit social framework in which people take care of themselves as well as their immediate family members. Opposite to that collectivism is the part that describes the tightly-knit framework in the society where the people make their expectation from their relatives to look after them while questioning their loyalty (Coviello, 2015).
Masculinity vs. Feminity: Masculinity is the part that describes the preference of society to make the reflection of their achievement or heroism or rewards or assertiveness while indicating their success. By viewing this society is quite competitive. On the opposite, feminity is the part that describes the preference of society which reflects modesty, caring, and cooperation for getting a quality life. In this part, the society is more consensuses oriented.
Long-term vs. Short-term: It is the part that links the surrounding scenario of the individual as compared to the challenges of the present position as well as the future position. This part will provide a particularly pragmatic approach to preparing the business organization for success (Davis, 2014).
Indulgence vs. Restraint: The concept of indulgence reflects the free gratification which has been provided by the basic as well as natural human drives to make the proper enjoyment of life. In that case, the restraint is the fact that makes the suppression of gratification of needs and thereafter restricts it through social norms.
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The link between the event and the concept:
The event of establishing more than 1000 restaurants in China in the upcoming years has to be coordinated along with considering the cultural differences that would have significant implications on the international business of the company. The events of the company can be analysed effectively through the Hofstede theory of culture which would provide the association with the theories and events in a much-elaborated way (Eicher, 2016).
Power Distance: As per Flores, et al, the dimension of power distance would deal with the fact that every individual is not equal in society and McDonald’s needs to consider this fact while planning on the expansion different people have different attitudes towards the culture which results in inequalities among them (Flores, et al., 2013). Thus, in the context of China, the power distance can be described as the extent to which the members who have less power in the organization and institutions in China accept and accept that power is unequally distributed. China is positioned at 80 and acquires the higher rankings of PDI.
This denotes that it is a society that believes in the acceptance of inequalities among people. Thus, the relationship of subordinate and superior tends to get polarized which is very favourable for a company like McDonald’s to move ahead regarding the expansion of establishing 1000 new outlets as there will be no defence against the abuse of power by the superiors in the social climate of China. In a country like China, individuals experience the impacts of formal sanctions and authority. The individuals are also optimistic in general regarding the capacity of the people for initiative and leadership which results in making China very feasible for this expansion (Folsom, et al., 2016).
Individualism: The basic issue that is addressed by this dimension in the context of the opening of 1000 new outlets by McDonald’s in China is the degree of independence that the society of China maintains among its members. This dimension is related to the self-image of the people of China in terms of “we” or “I”. China has a very highly collectivist culture and has a score of 20. In this society of China, the people act in the interests of the group and not in themselves (Frank, 2013).
For McDonald’s, China would prove to be a great market for effective expansion as the in-group considerations would have an impact on the promotions and hiring regarding the closer groups like the families would receive preferential treatment (Goerzen, Asmussen & Nielsen, 2014). However, there are fair chances of the commitment of the employees in the new outlets to be comparatively low. On the other hand, the relationships and associations with the colleagues would be cooperative for the in-groups but cold and in some cases hostile to the individuals belonging to the out-groups. The personal relationships would prevail over the company and the task.
Masculinity:
As per Hoenen & Kostova, a high score of masculinity relates that eh society will be driven by competition, success, and achievement as success would be defined by whosoever would be best in the field. On the other hand, a low score for feminism denotes feminism which relates that the dominant values would be quality and care for others as well as for life (Hoenen & Kostova, 2015). It describes a society that associates with the quality of life being a symbol of success. China stands at the 66th position as a masculine society which is driven and oriented toward success.
This would assist in accelerating the growth of business for the new outlets of McDonald’s as the people of China will sacrifice their priorities regarding leisure and family for their work which is favourable for the business of McDonald’s (Khakhar & Rammal, 2013). Thus, the employees in the new outlets will also be ready to provide service and products at the late night. For them, leisure time will not be of that importance in comparison to the workforce in other countries.
Uncertainty avoidance:
According to Morrell, et al, the uncertainty avoidance dimension has to do with how a society handles the uncertainty of the future which the society either should or should not try to control. This sort of ambiguity gives rise to various anxieties and society has to devise ways to tackle these (Morrell, et al., 2013). China is positioned at the 30th position which states its low score on uncertainty avoidance.
The truth for Chinese society may be relative although there are demands and concerns for the rules and truth which may or may not bind laws. Abiding by the rules and laws might appear flexible for the people of China to be appropriate for the real situation. It is noticed that the Chinese are very comfortable with ambiguity (Park, et al., 2015). The fact that the Chinese language is filled with ambiguous meanings would be difficult to follow for McDonald’s which is a Western company.
The people of China are very entrepreneurial and adaptable by nature which would provide a very feasible environment for the business expansion of McDonald’s to flourish provided that most of the businesses in China tend to be medium or small scaled and the majority of them are owned by families (Pierdzioch, Risse & Rohloff, 2014).
Long-term orientation:
This dimension has to deal with the maintenance of the association with the past of the country while dealing with the issues and barriers of the past and future. The societies which score low in this aspect are considered as normative societies whereas the societies which score high in this aspect are said to have a pragmatic approach (Polsa, 2013). Chain stands in the 87th position in this aspect which denotes that it has a very pragmatic culture.
People in China believe that truth is determined by the situations, time and context. This would be very helpful for McDonald’s in opening 1000 outlets as the Chinese people and employees who would be associated with McDonald’s would adapt to the corporate culture and traditions and can easily adjust according to the changing conditions. McDonald’s would be very much favoured in doing extensive business in China as the people here have a strong propensity to invest and save, and have perseverance and thriftiness in achieving the desired results.
Indulgence:
China happens to be a restrained society which is evident from the 24th position that it has secured in this dimension. The indulgence dimension can be described as the extent to which individuals try to control their impulses and desires based on the manner they were raised (Rugman & Nguyen, 2014). The society of China is restrained as it does not put much emphasis on the control of desired gratification and leisure time. Thus, the business expansion in China would be very much favourable in this type of society (Zhang, 2013).
Critical analysis:
The initiative regarding the business expansion of McDonald’s in the international market which is China by opening 1000 new outlets and initiating the reduction in the costs is one of the most effective strategies that the company could make while venturing for extensive expansion into the international market (Warwick, 2014).
The economic health of the company will be heightened in the next five years due to this initiative by McDonald’s. This initiative appears to be a daring move which would increase the sales and the turnover for the world’s largest fast food company as a whole. It appears from the study that the margins and the stock price-earnings of the fast food brand will multiply in the upcoming years (Xu, Poon & Chan, 2014).
Conclusion:
The study of the business expansion of McDonald’s through the opening of 1000 outlets in the international market of China helped in the comprehension regarding the globalization processes of an organization. The various factors that would affect and play significant roles in the scenario of international business expansion are understood and reflected.
The study helped in gaining the idea of domestic and international business and how the difference between them can affect the organization. The probable development that would take place in the financial health of the company along with the current trends could be identified through the study.
References
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