The Challenges Marketers Face in an Environment of Different Culture - Dissertation Example

? The Challenges Marketers Face in an Environment of Different Culture: The Case of McDonald’s UK Research Context Standardization is an outcome of globalization. Some authors argue that these two are synonymous. With the advent of globalization and the internationalization of business, products were designed, demanded, sold, distributed and marketed the same way all throughout the world. It was known as the universal way of selling a product, the opening salvo of international marketing. Changes evolved. Organizations have to introduce various changes in their marketing strategies, product orientation, employee management, and other organizational strategies. Cultural diversity is a trend in the age of globalization. Meanwhile, the demand for localized products is growing. Adaptation is one innovation that global organizations have to apply in their marketing strategies to adjust to cultural differences. McDonald’s UK is the main focus in our study of standardization and adaptation. McDonald’s originally came from the United States. When it penetrates foreign markets, it has to adapt to the cultures of the country of destination. This is what they call adaptation, as opposed to standardization of products. McDonald’s UK suffered rough sailing in the initial stages. Later on, it adapted strategies. How the company did it is a test of the company’s desire to succeed is the primary focus of this paper. There are criticisms that McDonald’s do not apply diversity in its marketing strategy and that as an international organization, it is an agent of globalization. Adaptation is coping with a culture of a country where an organization operates. If an organization wants to do business in a country with a different culture, it has to adapt. It always has to cope with the local culture. Cross-cultural aspects affect the people in the organization, including organizational knowledge, marketing, product mix, etc. International organizations have their own way of doing international marketing. Some modify a little of their products and strategies, or adapt to the culture and behavior of the local community. 2. Literature Review A remarkable gap between standardization and adaptation is that it is still one of the controversial issues and has always been a subject of debate among international companies since 1961 (Vignali and Vrontis 1999; Elinder, 1961 cited in Vrontis et al., 2009). To date, international companies still battle over which one to choose. There have been numerous studies conducted on these two subjects but it remains a hot topic for discussion (Vrontis et al., 2009). Vignali and Vrontis (1999 cited in Vrontis et al., 2009) stated that the debate started as far back as 1961 when advertising was one of the primary topics. Multinational companies wanted to standardize advertising, and to further apply it to other promotional mix and marketing mix. Until now the debate whether to standardize marketing (or to adapt new products) remains a focal point for discussion (Schultz and Kitchen, 2000; Kanso and Kitchen, 2004; Kitchen and de Pelsmacker, 2004; Vrontis et al., 2009). Ryans et al. (2003 cited in Vrontis et al., 2009, p. 478) pointed out that academic research on this subject has covered much of the literature on marketing. They pointed out that because of globalization, there has been a surplus of exports over imports, prompting international companies to minimize cost of production. However, firms realized that it was necessary to answer or meet the needs and wants of consumers. Meeting the needs and wants of customers is a primary marketing strategy of international companies nowadays. A study was conducted by Hite and Fraser in 1988 on whether firms used standardization or adaptation in their international trade and business throughout many countries. The study utilized a sample of 418 Fortune 500 companies, and the findings were varied and, in fact, surprising. The respondents comprised of 66 percent international firms who advertised internationally, but of this percentage, only 8 percent patronized standardization in advertising, with the rest using adaptation in their advertising campaign. The researchers also found that ninety-five percent of the respondents were united in saying that language is an important aspect of advertising and this should be used in the local advertising in introducing the scenes, models, backgrounds, etc., to the public. The conclusion of the study is that adaptation is an important strategy in accommodating cultural differences in the host country. (Baker, 2000, p. 23) Standardization sees the world as one entity with a common market (Herbig, 1998, p. 47). To have a standard product is to have the same product sold throughout the world. There are benefits for this, for instance, the production cost for the organization is at the minimum. Economic benefit is one of the primary objectives of having a standardized product. A company does not have to spend much for research and development or add more expenses for the development of the product. Simply said, it is a standard product for anyone no matter what the culture or race is. It is not only the product that is standardized, also the marketing. The basis for standardization is the comparison of market strategies and operation in the country of origin, or the home market, to the market strategies in the country of destination. The target market must be known and well studied. (Chung, 2007, p. 145) Theodore Levitt (1983) discussed the “homogenization of markets” whereby consumers throughout the world tend to want the same kind of products whilst organizations will reach a point that they can build or manufacture the same kind of products with quality and sell them to the world at minimal costs (Levitt, 1983, p. 92). Many authors however argue that ‘pure’ standardization is not possible. Somehow, the company has to modify some aspects or properties of the product or the strategy in order to sell. The school of thought of standardization emphasizes that globalization is the primary cause or the main driver of standardization. Standardization enables the company to conduct effective planning and control. The product brand image is enhanced and protected (Codita, 2011, p. 25). International companies are not focusing on brands that can be sold globally. Considered a reaction to standardization is adaptation. Advocates of adaptation school of thought argue that various factors affect the organization and its marketing strategies. Culture, language, social, and other factors trigger adaptation as a method of selling products to other countries. (Codita, 2011, p. 25) Firms find adapting to a new environment a difficult task. There are difficulties in adjusting to a new culture, as well as adapting to technical innovations (Henderson and Clark, 1990), or solving market crises (Haveman, 1992). Some organisations have made it successfully, but many have failed because of so-called inertial forces. Knight (1921, 1965 cited in Kaplan, 2008, p. 729) argued that it is not the environmental forces that made the managers perceived it to be difficult, but their inability to assess the various changes taking place in the new environment. Moreover, “strategic action is influenced by how managers notice and interpret change and translate those perspectives into strategic choices” (Daft and Weick, 1984). This means it all depends on the manager’s skill and expertise to translate the changes into usable strategies. Vrontis et al.’s (2009) study provides a compromise and wise answer to this question. Multinational companies should decide whether to standardize or adapt after a careful study of the premises, and this should be added with some experience. International practitioners need to search for the balance between standardization and adaptation as it is hypothesized that “adaptation versus standardization is not a dichotomous decision” (Vrontis et al. 2009). However, Herbig’s (1998) states that standardization is preferable to adaptation when adaptation is expensive; when the market calls for industrial products only; when tastes or convergence are similar in different countries; when it is used commonly in urban markets; when management of a particular organization is centralized; when R&D and development and marketing are not too costly; when other competitors are doing the same; and, if home image has a good standing internationally. (Herbig, 1998, p. 39) Globalisation drives Standardisation Herbig’s Globalization has triggered standardization. It became a rallying point of international organisations at the advent of the internet or the World Wide Web. It has affected the political, economic, social, and even religious life of the peoples of the world. (Herbig, 1998, p. 31) Globalization is also characterized by mergers and acquisitions and joint ventures of industrial, commercial and financial companies, leading to an increase in the global role of large, multinational companies and to a lessening of the role of nation-states. (Bairoch, 2000, p. 197) Theorists like Held (2000, p. 55 cited in Raab et al., 2008, p. 597) and his colleagues conceptualize globalization as “a process (or set of processes) which embodies a transformation in the spatial organization of social relations and transactions – assessed in terms of their extensity, intensity, velocity and impact – generating transcontinental or interregional flows and networks of activity, interaction, and the exercise of power.” Globalization is facing numerous challenges, such as protectionism, neo-liberalism, and complaints by groups against exploitation of human and natural resources by transnational corporations. Present remarkable innovations include the establishment of multilateral organisations such as the World Trade Organization (WTO), the International Monetary Fund (IMF), the World Bank Group, and the rise of regional trade agreements. Economically, proponents of globalization expect it to increase growth, decrease inequality and poverty across people and countries. Politically, socially and culturally, they hope that it will decrease differences, reduce xenophobia and lead to a global consciousness where the nation state is no longer the main unit of identity for individuals. Other scholars interpret globalization as the result of plans conceived by certain forces pursuing their selfish objectives. There are skeptics coming from many nationalities. The Russians view it “as coined by the modern information media, and is ambiguous, profoundly demagogical and fundamentally misleading” (Kagarlitski, 2001, cited in Rozanova, 2003, p. 51). In this sense, globalization is an expression of the capitalist view because it attempts to impart objective character to reflect the positions of transnational corporations, which are trying to solidify their dominant position. Other authors express it metaphorically by saying that the world is now living in a global village, narrowed down or has been made ‘small’ (but limitless) by the interconnectedness of things with the introduction of the internet or the World Wide Web. With technological innovations being introduced everyday relatively every minute of the day, computers are ordinary inventions. Today we can carry ‘mini computers’ within us like cell phones or such other new inventions. Communication is the most important discovery benefiting globalization. Theodore Levitt says that “technological, social, and economic developments over the last two decades have combined to create a unified world marketplace in which companies must capture global-scale economies to remain competitive” (Bartlett and Ghoshal, 2002, p. 6). The interdependence of nation states across boundaries has increased significantly. Organizations and businesses are now composed of managers and employees of different nationalities. From the phenomenal activities in business, problems have emerged, such as the marketing strategies that organisations have to implement in the countries of destination, or at the subsidiaries which are in foreign lands with different cultures, language, religion, and of course, food that the local inhabitants eat. Organizations, no matter how big and how small, are affected by other organizations and businesses around the world. The attitudes, values and behavior of the people within the organization are affected by different cultures. Moreover, products too are affected by the multiplicity of cultures because customers also seek products that have the global or international look and appeal. McDonald’s Corporation established and ventured in the UK in 1974, and is now the leading fast-food market in the country (Royle, 1999, p. 135). McDonald’s UK’s menu from breakfast to dinner range from starchy foods to pork sausage patty to beef, and ingredients serve the best that the English or European palate can wish for. McDonald’s UK beef comes from British and Irish farm suppliers. They also use chicken breast meat instructing their suppliers to raise animals according to strict standards. Only exclusive cuts of pork are used. (McDonald’s UK, 2010) McDonald’s continues to modify or change its product line to answer customer needs and wants. However, customers complain that some of their meals have high contents of fat, sugar, and salt. Criticisms continue that McDonald’s is not concerned of customers’ health when their meals do not mind health menaces such as obesity, heart disease, hypertension, etc. 3. Research Question 3.1 The first research question is: What are the various factors that affect the decision of a multinational company regarding whether it should have standardized products or an adaptation strategy? This question, which will be the main thrust of the dissertation, emphasizes when to adapt the company’s products and strategies to the local culture. Cultural differences always take a significant place in the introduction of products throughout the globalised world. This pertains whether to introduce products of global standards or local products. For some organizations, it is a question of global marketing initiatives, but for others it is something more than that. It may take the form of cultural management, or “how to manage across cultures” (Lewis, 2004). McDonald’s UK products and menus have been adapted to the taste and culture of the British people. The English and American cultures have almost the same background, and this includes food. McDonald’s Corporation established and ventured in the UK in 1974, and is now the leading fast-food market in the country (Royle, 1999, p. 135). McDonald’s UK’s menu from breakfast to dinner range from starchy foods to pork sausage patty to beef, and ingredients serve the best that the English or European palate can wish for. McDonald’s UK beef comes from British and Irish farm suppliers. They also use chicken breast meat instructing their suppliers to raise animals according to strict standards. Only exclusive cuts of pork are used. (McDonald’s UK, 2010) 3.2 The second research question is: What elements of the marketing mix should be affected by the decision to adapt or standardize? This second question revolves around the different elements of the marketing mix. Adaptation can be applied to some elements of the marketing mix, like advertising or pricing. Buzzell (2000) argued that the growing importance of multinational companies in the twenty-first century brought in new interests in the subject of adaptation and standardization. Some advertising men have suggested the adoption of uniform advertising approaches due to the fact that some consumer interests and motives are almost the same all throughout the world. (Buzzell, 2000, p. 102) There are however advantages and disadvantages to this form of standardization in marketing, as expounded by Buzzell. According to this argument, “the question of advertising approaches cannot be considered realistically in isolation from other elements of a company’s marketing ‘mix’ in each market, including its product line, packaging, pricing, distribution system, sales force, and other methods of promotion” (Buzzell, 2000, p. 103). Buzzell’s line of argument further states that to consider all elements of the marketing mix on a multinational scale is not possible; it is not realistic because there are always differences that exist among nations. According to George Weissman of Philip Morris Inc. (cited in Buzzell, 2000, p. 103), “until we achieve One World there is no such thing as international marketing, only local marketing around the world.” There have been instances, according to Buzzell (2000), that some multinational companies are shifting toward standardization so as to achieve consistency in their business with customers. Managers who have advocated this style think that there should be “consistency in product style, in sales and customer service, in brand names and packages, and generally in the ‘image’ projected to customers” because this increases sales (Buzzell, 2000, p. 105). Buzzell however concluded in his article that in the traditional sense, marketing strategy has always been a local issue. Customer needs and preferences need different marketing programs. Moreover, the differences among nations when it comes to cultural preferences for food will always exist. 4. Research Strategy Standardization and adaptation cover several underlying topics. We first focus on organizational theories, globalization, international marketing and the various conceptions and theories of standardization and adaptation of global firms. The research will narrow down to McDonald’s UK and the subject of standardization and adaptation. The websites provide information about company mission, aims and objectives, along with their products, menus, employees and managers who have kept the company running through the initial stages of the operation when they encountered problems pertaining to marketing in a diverse culture. This Researcher will conduct on-the-spot interviews of McDonald’s customers. We will pinpoint at least five McDonald’s outlets and ask questions regarding the taste of McDonald’s products, such as the hamburger and various menus with beef, chicken, fish, etc. Customers can provide comments and suggestions on the products/food they have tasted and patronized. The number of customers to be interviewed cannot be determined at first, but this will not create a problem. McDonald’s employees will also be asked to be participants to answer questionnaires and interviews on particular menu that has been adapted to the British taste. There will be no need of contacting the McDonald’s management since the questionnaires will be sent to the employees through their emails, or they can be interviewed on the spot. We use case study research on McDonald’s Corporation as it can provide an explanation on the subject of standardization and adaptation. Case study research was first designed by Yin (1981, 1984), and has since then been expounded and perfected by other authors and researchers. Selnick (1949, as cited in Eisenhardt, 1989, p. 534) introduced this in a study on TVA, and other similar studies and researches. Eisenhardt (1989) explained that the case study “is a research strategy which focuses on understanding the dynamics present within single settings” (p. 534). McDonald’s outlets are franchises and they do give freedom to their managers on how to manage or run their respective businesses. Franchising is a strategic decision, and giving freedom to the managers has proven to be a success. 4.1 The Questionnaire There will be two sets of questions which are open-ended. Open-ended questions can obtain valuable information from the customers and employees of McDonald’s outlets in the UK. Questions for the customers will focus on the products, and the impact of McDonald’s fast-food products to the UK customers; questions for the employees will emphasize some elements of the marketing mix like product, pricing, promotion, branding, and so forth. McDonald’s follows a different process of pricing but with a sense of similarity in its many branches throughout the world. It looks at the objective, the demand from the local community, the cost of the raw materials, and the competitors’ strategy. These factors are being considered in determining the final price for the product. Price of the Big Mac has marginal and comparative differences because McDonald’s determines the prices according to the individual’s ability to buy a Big Mac. McDonald’s thinks of the local population in determining their prices. These are elements of adaptation. REFERENCES Bairoch, P., 2000. 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