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:star: McDonald's Vietnam Cultural Management:star: (About…
:star:
McDonald's Vietnam Cultural Management
:star:
1. McDonald's is affected by
Vietnamese Culture
Uncertainty Avoidance :red_flag:
Score of 30 - low preference for avoiding uncertainty.
Maintain a more relaxed attitude in which practice counts more than principles and deviance from the norm is more easily tolerated.
People believe there should be no more rules than are necessary and if they are ambiguous or do not work they should be abandoned or changed.
Schedules are flexible, hard work is undertaken when necessary but not for its own sake, precision and punctuality do not come naturally, innovation is not seen as threatening
Long Tern Orientation :red_flag:
Score of 57 - pragmatic culture
People believe that truth depends very much on situation, context and time
Showing ability to adapt traditions easily to changed conditions, a strong propensity to save and invest
Thriftiness and perseverance in achieving results
Individualism :red_flag:
Score of 20 - A collectivistic society
Loyalty in a collectivist culture is paramount and overrides most other societal rules and regulations
Highly integrated into the group
Enterprise
Management is the management of groups
Employer/employee relationships are perceived in moral terms
Masculinity :red_flag:
Score of 40 - Feminine society
Conflicts are resolved by compromise and negotiation.
Incentives such as free time and flexibility are favoured.
The focus is on “working in order to live”
Enterprise
Managers strive for consensus, people value equality, solidarity and quality
An effective manager is a supportive one, decision making is achieved through involvement.
Power Distance:red_flag:
Score of 70 - High Power Distance Index Country
Enterprise
Inherent inequalities
Challenges to the leadership are not well-received
Centralization is popular
Large differences in salary and status
Emphasize hierarchical relationships
Indulgence :red_flag:
Score of 35 - the culture of Vietnam is characterised as Restrained.
Society has a tendency to cynicism and pessimism
Does not put much emphasis on leisure time and control the gratification of their desires
Actions are Restrained by social norms
American Culture
Uncertainty Avoidance :black_flag:
Score of 46 - below average but not too low
There is a fair degree of acceptance for new ideas, innovative products and a willingness to try something new or different
Tend to be more tolerant of ideas or opinions from anyone and allow the freedom of expression
Do not require a lot of rules and are less emotionally expressive than higher-scoring cultures
Long Tern Orientation:black_flag:
Score of 26 - Normative Society
Prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion.
Enterprise
Measure their performance on a short-term basis
Profit and loss statements being issued on a quarterly basis
Americans have very strong ideas about what is “good” and “evil”
Americans are very practical, being reflected by the “can-do” mentallity.
Masculinity :black_flag:
Score of 62 - Masculine Society
People want to be the winner, try hard to achieve best outcome,
Americans “live to work” so that they can obtain monetary rewards and as a consequence attain higher status based on how good one can be
There exists a “can-do” mentality which creates a lot of dynamism in the society, as it is believed that there is always the possibility to do things in a better way
Indulgence :black_flag:
Score of 68 - an Indulgent society
Work hard and play hard.
People feel more free to accomplish their desired and impulses
Individualism :black_flag:
Score of 91 - one of the most Individualist culture
in the world
Not being shy about approaching their counterparts for information.
It is often difficult, especially among men, to develop deep friendships
Enterprise
Hiring, promotion and decisions are based on merit or evidence of what one has done or can do.
Employees are expected to be self-reliant and display initiative
People living independently but many of the society experience loneliness
Power Distance :black_flag:
Score of 40 - Low Power Distance Index Country
Greater equality between societal levels, including government, organizations, and even within families.
Enterprise
Managers and employees expect to be discussed with during decision-making
Superiors are always accessible and managers rely on individual employees and teams for their expertise.
Information is shared between the different levels of leadership and power
This orientation reinforces a cooperative interaction across power levels and creates a more stable cultural environment.
The American premise of “liberty and justice for all.”
About McDonald's Vietnam
Headquarter
: Chicago,Illinois,USA
Product
: : Food and Beverages
Brand Vision and Ambition
:fire:
Provide the highest quality food and superior service, at a great value, in a clean
and welcoming environment.
Become a customers’ favorite place
and way to eat and drink.
History
:pen:
McDonald’s Vietnam is a brand of McDonald's Corporation - an American fast food company
Launched in Vietnam in 2014
4. McDonald's VN's organizational culture
Influenced by McDonalds company in the USA :
GUIDED MISSILE CULTURE
, This organizational culture is famous in US companies
Strive for new higher goals and its accomplishments
Encourage and highlight the importance of
learning
Employees are
rewarded
inspired
and
motivated
Prioritize
employees’ needs and development
, provide a platform for the them to
deliver the best
to the day to day activities and objectives
Encourage
team building
and
team work
Decentralization
. This strategy involves a breakdown of management structures so that they are less centralized
Project-oriented
culture,
focus on objectives and targets
set for their projects and tasks
5. McDonald's stage of multicutural management
In Phase 4 (Global Corporations) :silhouettes:
Primary Orientation: Strategy
Adaptation strategy
The strategy can be compared to localization.
With this strategy, McDonald’s adapts to the needs of the consumers as required by the cultures of specific countries
Pricing strategy
As the value of currencies varies worldwide, McDonald's is often forced to change its pricing strategy in accordance to its target market
Company tries to maintain a price range on all its products based on the location and income distribution.
Standardization strategy
Anywhere the company operates, it offers identical food products
The strategy is a time and money saver for McDonald’s as it helped build economies of scale.
Structure: Decentralized
That's allowed regional variations, such as vegetarian-friendly dishes in India and the McArabia sandwich in Pakistan.
The company's commercials and marketing strategy allows the company to tailor ads geared to regional audiences.
The company operates with a decentralized organizational system.
Market: Largest, global
Having restaurants in 120 countries and territories around the world and serving 68 million customers each day.
One of the largest fast-food retailer in the United States as well as globally
Cultural sensitive: Critical Important
In each country, McDonald’s has its own menu or special dishes to serve customers which depend on their culture.
Ex: Dosa Masala Brioche-India, Poutine-Canada, McCurrywurst with Chicken-Germany, Taro Pie-China, etc.
Product/Service: Mass - Customized. Product and Process engineering
The "Create Your Taste" custom-burger option: Locations nationwide now have touch-screen kiosks that allow customers to choose exactly what goes into their custom burger, including multiple bun options, specialty sauces, and unique toppings.
Profit margin: High, yet immediately decreasing
32.73% on Sep 2017
13.08% on Dec 2017
Competitors: Significant (Few or Many)
KFC, Burger King, Subway, Starbucks, Pizza Hut, Domino's, etc
Important of world business: Dominant
McDonald's operates 37,855 restaurants worldwide. According to two reports published in 2018, McDonald's is the world's second-largest private employer with 1.7 million employees.
In 2012, McDonalds made 24 billion in revenue placing them as the 90th largest economy in the world. The economy also benefits from the 231.3 million dollars the company paid in 2012 in taxes
Level: Executives
Brand comes after which consist of social media. Chief Financial Officer (CFO) is next to brand which consists of control department
Next are Chief Operating Officer (COO), Human Resource, Legal and Secretary, Restaurants, Operation in the United States, Supply Chain and Franchising, the president Europe, and finally the president of Asia, Pacific, Africa, China, and Middle East.
The Chief Executive Officer (CEO) on the top, followed by the chairman of the board to the board of directors.
Technology: Instantly and extensively shared
Some of the advanced and competent technological facilities provided by McDonald’s include customer retaining equipment, speedy and modern distribution channels, quick and easy payment options, wireless internet facility and the company is endeavored to augment more number of facilities within its stores.
The company always ensured that adequate and influential technological access must be there to attract more number of customers.
Perspective: Global/Multicentric
"The world's best quick service restaurant experience"
Giving customers what they really want: hot, delicious food served quickly – with an overall experience and value for their money that meets their rising expectations.
Strategy: Global
Think Global Act Local
McDonald employs a transnational strategy in terms of local responsiveness and global integration.
Local Management
McDonald’s emphasize on local management for better responsiveness to the external environment
Political Sensitivity
The political risk factor is quite important for McDonald’s since there can be several countries which might not allow FDI in fast food industry or disallow franchise kind of business model.
Environmental Friendliness
McDonald’s engage themselves in CSR activity like sustainable supply chain management, healthy and nutritious food products, etc. Recently McDonald’s have come up with products which have low calorie content, nutritious to the health of customers.
Growth Strategy
Maximizing sales and profits at existing restaurants
Improving international profitability
Increasing number of restaurants
3. McDonald's cultural challenges
Predisposition
:lock:
Geocentric
Product planning
Think global, act local.
Marketing strategy
All decisions are made jointly with mutual consultation marketing decisions
Company's objectives
Profitability
Public acceptance
Cultural challenges in Vietnam
:lock:
Vietnamese spending habits
Solutions
Expanding the network of restaurants in the South
Adapt some local recipes (local spices, local sauce) to the food
Use local material sources like Vietnamese potatoes, sweet potatoes, etc.
Reasons
High-priced products
McDonald’s target high-income consumers first, and medium-income people later
High export tariff on US potatoes
Regional dining difference
Northern people prefer eating in to dining out
Local food preference
"Western food is bland while Vietnamese food is full of spice and herbs"
Vietnamese consumers' taste
Solutions
Creating localized menus
(crispy fried chicken, Vietnamese fries, banh mi)
Healthier choice of food
Reasons
McDonald’s serves beef while Vietnamese are more familiar with pork and chicken
Competing with not only other fast food restaurants but also other take-away shops on pavements
6. McDonald's communication barrier
Employee and Manager :beer_mugs:
Perceptual barrier
Ensure proper feedback: To figure out what the manager actually wants their employees to understand or not
Manager must convey important things: this would not create confusion in subordinates's mind.
Clarity in the thought: The manager must have clarity in his thoughts so that it could be easy for him to convey his message to his subordinates.
Employee and Customer :beer_mugs:
Language barrier
Simple language should be used: The employees should interact with the customers in the language to which the customers feel feasible.
Active listening: They must listen to customers actively so that he could feel easy to communicate.
Ensure proper feedback: Employees should give proper responses to the customer which enables the customers to understand whether the employee is able to figure out his demand or not.
7.McDonald's negotiation strategy
Integrative negotiation
Overlapping
Long term
Group-cooperative benefit
Win-win
Create and claim value:
Negotiation tactics
Location: choose a neutral site to create an incentive to conclude their negotiations as quickly as possible
Time limits is an important negotiation tactic but it not it is not available to the market in Vietnam
Relation between 2 or more partners
2. McDonald's sales are affected by
Uncertainty Avoidance Index (UAI)
of Vietnamese culture (scores 30) :pencil2:
Description
Vietnamese people are not afraid to change, easily adapt and accept new things.
Vietnam has a rapidly growing economy with more than 90 million people who all want a taste of American fast food.
Vietnamese has a low preference for avoiding uncertainty.
Results
McDonald's Vietnam has got a giant profit since its opening.
Only on 2 starting days, there were more than 40,000 people queuing to buy a set of Big Mac.
Its revenue in these days proved the potential consumption.
Individualism versus Collectivism (IDV) of Vietnamese culture (scores 20) :pencil2:
Description
Vietnam is a collectivistic society.
Loyalty in a collectivist culture is paramount and overrides most other societal rules and regulations.
Integrity and community in the Vietnamese diet is shown by the way they share food to others.
Vietnamese people’s eating habits, they prefer being served to self-service.
McDonald's serve food which is separate for each person.
McDonald's use the form of self-service for customers.
Community of the Vietnamese diet is also shown in the way of processing food. Most Vietnamese dishes are mixtures of many vegetables.
Results
No "queuing to enjoy western lifestyle" as they had local options that are healthier.
The curiosity for this western food style was over.
McDonald's margin revenues have been slowing down.
McDonald’s company reported a loss of VND150 billion because its operating profit could not cover the huge selling and administrative expenses.
McDonald’s Vietnam's selling and administrative expenses account for 86-87% of total revenue.
