Cultural Differences in International Trade

Topic: Trading
Words: 2831 Pages: 10

Cultural adaptation as strategic management of global business

There exist several recent publications or literature works on the effect of culture in shaping the management strategies of several types of business that deals in various products especially fast-moving food products like McDonald’s company. As per the research by Damić, Rajšić, and Smetiško (2018) business strategy is recognized to set focus, directions, formalizing, and elaborate plans for various workers to understand the goals of the organization. Additionally, Wolf and Alwan (2019) and Damić, Rajšić, and Smetiško (2018) in their literature work discovered that it should be recognized that culture contributes to goal achievement by incorporation of the business strategies into the organization’s common beliefs and values. According to Damić, Rajšić, and Smetiško (2018) in international trade, culture is a significant determinant, this is because it influences how customers communicate, think, and behave. The research by the authors will be used in discussing how culture influences the types of transactions and the manner of negotiating them. Furthermore, Qing et al. (2021) confirm that cultural variations can influence customer behavior, putting an opportunity for the brand for worldwide success in the hands of their attempts to bridge cultural divides between domestic and overseas markets. Therefore, when coming up with a comprehensive market business strategy, cultural differences have to be considered by the global chain of McDonald’s restaurants.

In various parts of the world, McDonald’s products are confronted by different reactions that favor and deny their consumption. Gupta, Pansari, and Kumar (2018) explain that when a business, for instance, the management of McDonald’s accepts the existing cultural difference, it will be able to operate under a broad spectrum of business innovations and skills to assist in solving the difficulties associated with the business. While to Raj and Singh (2021), it is a way of overcoming several hurdles that are found within the international culture and commerce, for instance, the use of scorecards. Before coming up with a comprehensive business management strategy, McDonald’s must recognize that there exist general business cultural organization and culture in regard to the global business operations.

In a global corporate setting, activities that one civilization may deem acceptable according to their cultural norms may be rejected or remain unrecognized by another civilization. According to Gupta, Pansari, and Kumar (2018), the global engagement of customers is a facilitator of the development of marketing strategies since it leads to enhanced company performance when customer engagement is improved. Some of the factors that McDonald’s should ensure change as per the prevailing cultural norms are communication, interactions, workplace etiquette, organizational hierarchy, different negotiation skills, and products. For the changes identified by Gupta, Pansari, and Kumar (2018) to work properly, Tien (2019) notes that McDonald’s has to utilize the adoption and standardization strategies. The company should consider how it adapts and ensures that its products in those nations, their products are of standard value.

The management has to ensure that the content of the ingredients used in the company’s products are as per the local tastes and preferences of each nation where they are located. For instance, according to Du, Wei, and Wang (n.d) in China, one of the biggest markets for McDonald’s is chicken burgers, which are made of meat from chicken thighs. During Chinese New Year, grilled chicken burgers are usually offered and are usually prepared with curly fries and a Chinese horoscope that has 12 animal signs. Therefore, it is positive for McDonald’s management to recognize that different people have to go diverse behaviors eating.

As the biggest and most recognizable brand worldwide, McDonald’s has got several competitors that include KFC and Burger King. Research by Dittfurth, E., Gerhardt, S., and Joiner, (2019) reveals the reasons why KFC and McDonald’s are close competitors. A similar concept is also covered by Peeroo and Mooznah Auleear Owodally, A. (2021) who state that the close competition in market share is contributed by the fact that KFC and McDonald’s deal in similar products.

In addition, according to the research by Zamani et al. (2020) and Saidarkaa and Rusfianb (2019), some of the factors that are looked at, when doing a comparison in the kind of competition that two or more companies such as KFC and McDonald’ have are the price and food quality. Price and food quality is a significant determinant of customers and contributes greatly to a company’s market share. Additionally, flavor, number, and outlets are considered in considering customer attraction and market share. For instance, a pricing strategy that is relied upon and is significant in the marketing of the products of the two companies includes price breakdown. Rivalry in the pricing of a company’s products should be considered between McDonalds products and that of KFC.

Are Cultural Differences an Opportunity or Maybe a Threat to International Trade?

Cultural difference is recognized as a major hindrance to the development of global business activities. As discussed by Qing et al. (2021), Perano, Hysa, Calabrese (2018), and Chin et al. (2022), the larger the difference in the cultural values among the parties, the higher the cost of trading will be. The management of McDonald’s should ensure that they are aware of the current cultural situation in each region and part of the world that they are expanding. In many parts of the world where McDonald’s is located, the business will have to incur alterations in order to adjust. Some of the activities that the organization will consider include body language. And especially, to Qing et al. (2021), Agbanyo, and Wang (2022), the success of a business that is world distributed or that has got its outlets distributed worldwide, is said to be dependent on the level of understanding of the cultural differences of various states or communities.

For McDonald’s to fit or adapt to various cultural needs of different communities across the globe, the business has to consider several concepts for instance the classical theories. This will facilitate the operations and the management of the business to focus on the utilization of the division of labor, specialization, and pursuit of the comparative advantage despite the negatives brought about by the cultural difference (Murdock, 2020). In pursuant to the comparative advantage, McDonald’s when adopting the theory should be utilized effectively on the value, demand, distribution, and supply of the company’s products.

Cultural difference is likely to lead to the issues of language barrier within the company’s organizational structures and in addressing the customer needs. Research by Kavyasri, and Vaijayanthi (2022) provides detailed information on how the problem of language barrier due to the existence of more than 200 languages in India has been a major hindrance. In such scenarios, a company undergoes extra expense to guarantee that there is understanding or proper communication between the involved parties. Lang et al. (2021) explains how those companies that are unable to create a conducive environment that leads to the elimination of language barrier, are in a better position of ensuring that they maintain the advantage they have over other enterprises. Therefore, the cultural difference will influence McDonald’s operations negatively unless proper considerations are taken.

There may exist social tension between McDonald’s and the individuals who live within the host nation. This issue will result due to the cultural and language barrier where each culture looks strange to another group. Additionally, a lack of respect for one’s cultural differences can be made worse by the existence of inexperienced negotiators (Cardenas, 2022). These individuals may tend to belittle the unfamiliar practices that are present in that nation. The existence or presence of an odd culture that disobeys or is against that of the host nation or community is a major concern that should be taken into consideration. Fatehi and Choi (2019) argue that most of the time, the involved group of the tribes in the host nations, would not accept eating food from a given organization such as McDonald’s. According to research carried out by Fatehi and Choi (2019) social tension may lead to a collapse of business or maybe the reason for shutting down after a considerable period of loss.

Cultural differences serve as a great business opportunity for various businesses and McDonald’s is likely to succeed and maintain its competitive advantage over other businesses. Research by Hunt et al. (2018) acts as an important literature material on the importance of cultural diversity, the piece of research justifies the importance that exists with cultural diversity. Authors Nambisan, Zahra, and Luo (2019) support research by Hunt et al. (2018) through the use of various business international theories. Hofstede’s cultural diversity model as approved by Gallego-Álvarez, and Pucheta-Martínez (2021), Litvin (2019); sent, and Kroese (2022), aims at understanding the cultural differences that exist across nations to discern the ways or the manner in which various companies or corporation’s carry out their activities across various cultures. Through the use of the different dimensions of Hofstede’s cultural diversity model, McDonald’s management should therefore be able to consider its actions for better performance. The company’s leadership recognizes that considering Hofstede’s cultural diversity model, investors prefer to invest heavily in culturally close nations instead of those whose cultures are distant.

A proper dimension that is likely to maintain McDonald’s competitive strategy is collectivism. According to Agbanyo and Wang (2022), the centralized management of the McDonald’s should ensure that before incorporating the various initiatives into the business, it should consider carryout questionnaires and making inquiries about the change. Through that, it is easier to come to a conclusion depending on the feedback on the activity or the product to be introduced. This strategy is effective in assessing the reasons why some fast-moving food is not liked in a nation while the same is sold in others. With such inquiries, management will always find a way of ensuring that there is a potential flow of customers into the business.

Additionally, with the application of Hofstede’s Cultural Dimensions theory, the benefits of cultural differences can be provided through the model. According to Gallego-Álvarez and Pucheta-Martínez (2021), four major dimensions to understanding the culture of a nation and its international implication include power distance, individualism, masculinity, and uncertainty avoidance. Though through them, it would be possible to identify the values and beliefs that McDonald’s may apply regarding work goals. When applied in a research study, it will not be accurate since the theory assumes and does not recognize the fact that culture is complicated and multifaceted to be utilized as straightforward organizational change control.

What Cultural Differences in International Trade Show in the Research Sample?

The major contributor that leads to cultural differences between McDonald’s and individuals of various nations is customs. Different customs explain why sometimes McDonald’s fast-food experiences low sales. McDonald addressed local eating patterns while implementing various marketing methods. For instance, because several Chinese people prefer Chinese food in the morning, McDonald’s introduced a Chinese-style breakfast depending on their eating patterns. Jiang et al. (2019), in their research, have confirmed the contributory effects of the dietary norm or the eating habits that the Chinese have formed. This research work will play a significant role in the provision of the proven evidence that McDonald’s is adapting the norms, a strategy that ensures it stays at the top.

Few works of literature have been published that will be significant in the research in ensuring that there is a proper discussion of the effect of the business on the religious beliefs that should be considered. For instance, per the study that was carried out by Abdelali and Ngah (2019), the two authors conducted an analysis of the various phases of the fast-food chains of an industry owned by McDonald’s in Malaysia. The research found out that the production process that McDonald’s has adopted right from hygiene, safety, ingredients, environment, and equipment are within the Sharia restrictions on Halal food restrictions. This concept will play a significant part in the research by ensuring that McDonald’s products and religious measures are recognized. With the discussion in this section on the cultural differences, the research work could be beneficial to several foods and research companies that are located internationally. These companies will be able to know or recognize the halal restriction measures that should always be considered from processing to consumption when operating in nations of the Islamic religion.

Religion as a contributory factor to cultural difference and by which a given group of individuals can be identified is considered to be playing a significant role in the expansion of McDonald’s. Incorporation of this concept means ensuring there are various dimensions that influence McDonald’s products in the contemporary business world. This research by Wilkins et al. (2019) will show how they act towards various situations or when addressing an observed change. This will act as an example to other fast-food companies to consider critically how the business environment should be handled.

When the comparisons are made on the manner that the company adheres to the norms of various religions, research founds out that McDonald’s provides the same treatment and responds to them in time and in a fair manner (Wilkins, Butt, Shams, and Pérez, 2019). Furthermore, according to the research conducted by Wilkins, Butt, Shams, and Pérez (2019), the authors have detailed pieces of information on the nations across the globe where McDonald’s has ensured that no distribution of Halal products. Apart from that, the company has ensured that it is responsible for ensuring that none of its products are offensive in various nations that are included in the research work as well. With this kind of concept in the research work, the work will be of importance to various people who may seek to know about the constituents of McDonald’s products in various countries.

How Does Cultural Adaptation Shape the Style of Work?

Cultural adaptation empowers several managements of various businesses to be able to work around potential challenges to come up with the best possible outcome. Research by Cardenas (2022) complements the literature work by Damić, Rajšić, and Smetiško (2018), and from that, critically, it is evident that adapting to the culture of a given people is not only significant during international communication, but in various professional situations. According to Mariani, Borghi, and Okumus (2020), McDonald’s management should be recognized, that cultural variations can influence customer behavior, putting a brand’s chances of worldwide success in the hands of its attempts to bridge cultural divides between domestic and overseas markets. In the research, the literature work will be used to devise the right styles of work that are relevant and can be adopted by McDonald’s to enable the formulation of continued competitive advantage.

Comparative Cost Advantage Theory

This theory is to be adopted to identify an appropriate work style in a business. Considering the strengths of this theory, producing or manufacturing products at a lower opportunity cost, McDonald’s will be able to gain a stronger sales margin (Vlados, 2019). This is because of the opportunity to sell cheaply as compared to its competitors. Concerning the theory, Hamadamin and Atan (2019) reinforce Vlados’ (2019) work by identifying how through the theory, organizational and societal way of life is important to the success of a business. McDonald’s management should ensure that every strategy that is considered in order to conform to the then prevailing cultural norms is aimed at the advantage of the business. This means that the business for instance has to desist from practices such as avoiding the use of pork meat in fast food that are meant to be shifted to all Islamic states.

Additionally, McDonald’s should stop the use of beef meat in products that are shifted to various parts of India. This will be a great way of ensuring that there is no boycotting of the company’s products. Additionally, according to research by Haseeb et al. (2019), there are other several ways of ensuring that a constant competitive advantage is maintained by a business. This research will be used to identify the several means by which the social and technological challenges can be solved to come up or ensure that McDonald’s is at par compared to several businesses or its competitors. Some of the technological ways include the adoption of fast and reliable delivery services within and out of the ordered region.

Assumption of full employment is one of the weaknesses of comparative cost advantage. Therefore, McDonald’s management may rely on this theory, it should be recognized that its weakness may lead to limitations such as different prices to opportunity cost ratios. Additionally, research by Murdock (2020) indicates that the theory is static and hence does not take into account certain dynamic elements that determine global trade. While according to Baccaro, Blyth, and Pontusson, eds. (2022) when the theory becomes complex and unworkable, it is likely to lead to the law of diminishing return. In the research, the theory of competitive cost will be tested and compared to absolute advantage to find out its effectiveness. In addition, one theory that should be considered that is likely to lead to competitive advantage is then Porter’s diamond or the National Competitive Theory.

Reference List

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