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Globalization

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Globalization Paper - Fast Food in China

Anastasia Allen, Terry Clevenger, Robert Combs, Kirk Dickerson, Cassie Sherlin

April 28, 2013
China is a country that prides themselves on history and tradition. China has possibly been the greatest country to contribute to modern day society. But not even the ever so powerful China can resist a bucket of Kentucky Fried Chicken or a juicy hamburger from Burger King. The majority of fast food began in the United States, but now has spread across the globe. Besides the United States, China is one of the biggest contributors to fast food business. The fast food market from China contributes an estimated $29 billion alone (Economist). This is big money business for any genre of an organization. With the proper techniques, skills, and drive, any sort of organization can succeed anywhere in the world. How does an American business work and succeed across the world? Does the business incorporate China’s culture into manufacturing and marketing? What strategies do businesses take in advancing the opportunity in China? These questions along with others will be answered to find out how and what is done to allow fast food businesses to be successful in the fast-pace, culture rich, and tradition loving China.

Cultural considerations in terms of product manufacture and marketing in relation to fast foods in China.

A successful product launch demands a better understanding of the market in terms of both culture and consumption habits. The trend of consuming fast food in China is rapidly growing, and any company wishing to invest along such a line, must view the market in terms of cultural and socioeconomic backgrounds. XYZ Corporation needs to assess the influence or the level of damage that its product is likely to cause to the environment in which they operate. The products must not contradict the country’s culture and socioeconomic trends (Backman & Butler, 2009, p. 67). Given that China is known for many food types and great diversity in the nature of foods consumed, there is a greater market survey to be done to know which foods are consumed more. The fast foods that XYZ Corporation intends to bring into the market must not be adverse; rather, they should fully accommodate the Chinese culture. The Chinese food culture is unique and requires an in-depth understanding of the market to launch the product successfully. A strategy that XYZ Corporation needs to incorporate during its product launch is creating a better portfolio strategy (PGDC, 2010, p. 14). Under this, the company sets out a few things; first, the market it wishes to operate in and the intended customers. In the case of this company, it is the Chinese fast foods, which mainly target the Chinese citizens. Another factor is the basis of competition in terms of value, style, and reliability among others. Having a good portfolio can help a company attain certain basic objectives upon its launch. For instance, it helps in ensuring balance in the market and utilizing all the available, yet limited resources in a responsible manner. A good project management concept is necessary during product launch. Operating in the correct manner can help a company have a stable market stand on the launch of its product. If XYZ Corporation considers these concepts, then there is a likelihood of it achieving considerable success in terms of market entry.

Taking into account Hofstede's cultural dimensions, how should expatriate employees (American employees living in China) behave in order to fit within the respective culture? How should human resource policies in the foreign subsidiary change to mesh with local norms?

Expatriate employees will need to be aware of cultural differences before being deployed in the Chinese market. According to Geert Hofstede’s framework for assessing cultures, countries vary on five dimensions of national culture (Robbins & Coulter, 2012, p. 83). Expatriate employees should ask themselves where they differ on these five areas, and learn what changes they will need to make. The hiring or selection process for resources assigned to the Chinese expansion project must be able to assign the proper resources to the project. A model American employee may not be a perfect fit in Chinese markets. As an example regarding obligation, Chinese relationships with other people involve reciprocal obligations, whereas Americans tend to avoid interdependent relationships and situations that might entail long-term obligations (AIEF). Another example would be social relationships. The Chinese social relationships tend to be formal, hierarchical, and they are the most comfortable in the presence of a hierarchy in which they know their position and the customs or rules for behavior in the situation (AIEF). Americans on the other hand prefer social relationships that are informal, being most comfortable with their social equals; the importance of social rankings is minimized (AIEF). China is a highly collectivistic culture, and in regards to hiring and promotion policy, tends to favor in-group considerations with closer in-groups (such as family) get preferential treatment (Hofstede). XYZ Corporation must have a solid understanding of Chinese customs and ways if they are to be successful in expanding their fast-food chain into China. An expatriate employee will need to have clear understanding of China’s national culture, which includes Chinese attitudes, and values (Robbins & Coulter, 2012, p. 82).

What types of strategy should you recommend to XYZ so that their global expansion is successful?

As XYZ Corporation takes on global expansion into the Chinese market, the company must consider the option of multiple management and globalization processes to ensure a successful immersion process. The best way to do this would be to utilize a growth strategy when bringing fast food businesses to the Chinese market. Growth strategy, is used when an organization wants to expand their number of markets through current or new businesses (Robbins & Coulter, 2012, p. 229). It is important to note that with growth strategy, XYZ does not implement a type of renewal strategy, or a strategy used to address declining performance (Robbins & Coulter, 2012, p. 231) simply based on cultural differences. A constant growth and steady business environment will work well in the Chinese market. Utilizing a growth strategy to further the reach of XYZ will allow China to have a private sector of business that continues to grow economically. The employees of a business are important in ensuring the success of any organization, global or domestic. To ensure that the expatriate or traveling XYZ employees maintain a healthy and successful working relationship with their peers in China, the company must also create training programs to acclimate our hard working employees to their new work environment. It is important that XYZ does not display an ethnocentric view when reaching out to the global market. To ensure success globally, XYZ must enter the Chinese market as a strong and open minded company that is willing to take on new cultural challenges. As previously mentioned, the Chinese are not a culture that takes part in short term or “get rich quick” business ventures. To ensure that XYZ is welcomed on a business level, the company must show the Chinese food industry that they have their best global interests at heart by offering a growth strategy. XYZ must also inform its employees of expectations and cultural norms, to ensure a healthy and respectful work environment.

There is a lot for an organization to consider when fighting for successful in a different area, especially a completely different country. An organization needs to be committed, patience, and flexible to ensure the best possible outcome for the organization. The top priority for starting a fast-food company in China is to have a strategy and plan about the area and how you will use it to you advantage. When a fast-food company is put in a foreign area such as China, it is important the company learns and studies the organization. When the companies know how China’s culture operates and the five dimensions, then the company can start beginning the process of opening a chain in China. Just because fast-food was popularized in the United States doesn’t mean that there is no change that is can succeed across the world. No one can resist a bucket of Kentucky Fried Chicken.
References

American International Education Foundation. Some General Differences between Chinese and American Cultures. Pre-departure Orientation for Chinese Students. Retrieved from http://www.china-nafsa.aief-usa.org/culture/differences.htm

Backman, M., & Butler, C. (2009). Big in Asia: 25 Strategies for Business Success. Houndmills, Basingstoke, Hampshire: Palgrave MacMillan.

The Economist. (Oct 23 2008). Here Comes a Whopper. Retrieved from http://www.economist.com/node/12488790

The Hofstede Centre. National Culture: China. Retrieved from http://geert-hofstede.com/china.html

Hong Kong Trade Development Council (2010). Practical Guide to Distribution in China: How to Launch Product Sales? Hong Kong: Hong Kong Trade Development Council.

Robbins, S. P., & Coulter, M. (2012). Management (11th ed.). New Jersey: Prentice Hall.

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