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Cultural issues affecting international business expansion

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Sealwrap, a producer of plastics in the United States, is about to expand its business. As part of this expansion, they will begin to sell their products in Europe and Asia. In addition, they plan to open a plant in Asia. Jerry, the President and CEO, is concerned. He has heard many stories of companies that have tried to expand globally but operations either failed miserably or did not live up to expectations due to the cultural differences between workers and customers in each country. Jerry wants Sealwrap to be prepared for this so any potential problems can be addressed prior to expansion.
Jerry has asked you to research problems other companies have had with this issue and develop ways in which the errors those companies made can be avoided by Sealwrap.

Select a multi-national corporation or international non-profit agency that has encountered these problems (this can be a previous or current employer of yours). Using the Internet and the Cybrary, research that organization to discover any cultural barriers that organization encountered and what its managers did to try to overcome those barriers.

- Generate and evaluate reasons why people may not appreciate the cultural point of view of others. Use at least 10 references as well as 3 sociologists' views.
- Discuss how appreciating cultural diversity affects peoples' ability to communicate effectively in the context of a multi-national corporation or an international non-profit agency. Feel free to add your own experiences as well as quoting others.
- Create a report for Jerry which summarizes your discussion and provides suggestions on steps Sealwrap can take and policies that can be put in place to help ensure the expansion is successful.

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Select a multi-national corporation or international non-profit agency that has encountered these problems (this can be a previous or current employer of yours). Using the Internet and the Cybrary, research that organization to discover any cultural barriers that organization encountered and what its managers did to try to overcome those barriers.

The company is McDonald's; an international company

"Billions served," indeed. McDonald's is the world's #1 fast food company by sales, with more than 30,000 of its flagship restaurants serving burgers and fries in more than 100 countries. Almost 30% of its locations are company-owned; the others are run by franchisees. While most of the company's eateries are free-standing units, it does have some quick-service kiosk units located in airports and retail areas. Each unit gets its food and packaging from approved suppliers and uses standardized procedures to ensure that a Big Mac purchased in Pittsburgh tastes the same as one bought in Beijing. McDonald's also owns the Boston Market and Chipotle Mexican Grill fast-casual chains.

Shifting its focus from opening new restaurants to building sales in existing ones, the number of restaurants opened in 2004 was reduced to 430 traditional and 198 satellite (limited-menu) restaurants. That year the Chinese government authorized McDonald's to begin franchising in its nation. It seems that nowadays nothing is more American than fast food; however, the "grand-opening" of a fast food joint, such as McDonald's, is a regular occurrence despite which part of the world you live in.

The cultural competition that McDonald's faces

For example, Chinese cuisine, known for the essence of fine eating, has yielded to the rising popularity of fast food chains. In fact, residents of China are more likely to be seen munching on French fries or a Big Mac than Americans and Australians.
According to a survey -- which involved more than 14,000 adults in 28 countries -- researchers found that 41 percent of those surveyed who live in China eat in a fast food restaurant once a week, compared with 35 percent of people in the United States and 30 percent of people in Australia.

McDonald's has most certainly had a profound affect on China. When the first McDonald's opened in Beijing a dozen years ago, 40,000 people lined up to observe a Big Mac and get their picture taken with the infamous Ronald McDonald. Not to mention:
1. McDonald's is growing faster in China than in the United States
2. McDonald's owns and operates more than 600 stores across 105 cities in China
3. More than 100 more McDonald's stores will be added annually to Chinese cities within the coming years
Business Wire December 21, 2004

Problems for the company

Dr. Mercola's Comment:
It's bad enough that 35 percent of us in the United States eat at a fast food restaurant at least once a week but now we learn that over 40 percent of the Chinese eat at a fast food restaurant in the same timeframe. This is particularly concerning as McDonald's has only been present in China for a mere 12 years. Also, where foreign brands in China have often met with more frustration than profit, fast food amounts to a lucrative exception. Major brands have enjoyed striking and visible success carving into what now stands as a $48 billion-a-year Chinese fast food industry.

However, what people in China, the United States and anywhere around the world must realize is that fast food is damaging your body and your health. It is in processed foods, like the ones you find on the menu at McDonald's, where the artery-clogging trans fat lives. You see, eating trans fats can lead to a major increase in adverse health conditions including:
1. Cancer
2. Arthritis
3. Fatigue
4. Diabetes
Therefore, the key to winning the battle against toxic fast food restaurants is to simply not visit them.
I understand that, with today's fast-paced society, this can be a difficult task for busy families; however there are some healthy solutions for families (and individuals) on the go.

McDonald's overcame the problem by:

McDonald's revamps menu, expands in China
(Agencies)
Updated: 2004-08-16 08:55
Fast food giant McDonald's Corp. plans to remodel and revamp its menu at existing stores in Europe while setting its sights on building new outlets in China, its global marketing chief said on Friday.
Larry Light said the company is sticking to a strategy, rolled out about a year and a half ago, to get more customers into existing stores in Europe by offering new products such as salads and low-calorie foods, including adult "happy meals" that come with pedometers and similar prizes.
"That strategy is working," Light said at in an interview after an event to promote the company's Olympic sponsorship. "You get a much higher return on assets when you do that, and profitability goes up."
McDonald's has been able to attract more customers to the golden arches around the globe, but the growth in Europe has not been as robust as that in some other regions.
Last month, the company said overall same-store sales, or those at restaurants open at least 13 months, rose nearly 8 percent overall in the second quarter -- up 9.2 percent in the United States, 4.4 percent in Europe and 9.3 percent in the company's combined Asia Pacific, Middle East and Africa region.
"Europe was behind the curve that the U.S. was on. Europe is performing today where the U.S. was a couple of years ago," he said. McDonald's operates about 6,000 restaurants in Europe.
One region where the company sees enormous opportunity is China. Light said the company's board of directors will head to China in about two weeks to discuss a growth strategy for the world's most populous nation.
McDonald's has about 600 stores in China and is looking to have about 1,000 by 2006, a company spokesman said.
"China is our number one growth opportunity in the world. We think the market has huge potential," he said.
Light said the company sees a market of about 300 million consumers for its products in the country.
Meanwhile, business has been booming for the company at the Athens Olympics. McDonald's expects to serve up about 2 million hamburger patties at the three facilities it maintains for, athletes, officials and journalists.
http://www.chinadaily.com.cn/english/doc/2004-08/16/content_365753.htm
http://news.bbc.co.uk/2/hi/business/3488668.stm

McDonald's handled cultural differences effectively

A Fast Race of Fast Food in China: McDonald's VS. KFC

9/8/2003
U.S. fast-food franchise Kentucky Fried Chicken currently operates over 900 restaurants in China. This number places KFC ahead of its archrival McDonald's in the race to claim the rapidly expanding fast-food market in China. Presently there are just 566 McDonald's in the eastern country.

Refusing to lag behind KFC, McDonald's has decided to speed up the opening of new restaurants in China. Right now it launches about 60 new restaurants in the country every year; the goal now is go above 100 annually. Still that is not as fast as KFC China is expanding. Last year, KFC opened over 200 new restaurants in China. One reason that McDonald's ...

Solution Summary

The solution discusses cultural issues affecting international business expansion. Business examples and a mock business plan are given to demonstrate how to overcome some of the difficulties of international business expansion. Many statistics are given as supporting information.
A discussion on how appreciating cultural diversity affects peoples' ability to communicate effectively in the context of a multi-national corporation or an international non-profit agency is also addressed.
Also a discussion of why people may not appreciate the cultural point of view of others is undertaken.
Please open the attachment containing a comparative chart.
The text contains

$2.19