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International Business Expansion

International Business Expansion

Introduction

In this paper, we discuss some of the factors that need to be considered while embarking on international expansion of fast food hamburger franchise. For the business to expand its franchise successfully internationally to United Arab Emirates, China, Mexico and Israel, it is ideal to first evaluate different values and cultures in these countries as relates to eating and food. It is also ideal to analyze the social behaviors in relation to employees and customers, understand the work attitudes and training requirements in these cultures as well. The ethical standards within which businesses operate in the respective countries will be analyzed as well. Lastly, we will evaluate the individualistic and collective attitudes in the four countries. These attitudes will be used to classify the nature of culture in the country as either individualistic or collectivist.

The first aspect to be looked at is the cultures and values in each country with regard to consumption of U.S fast foods. The major U.S fast food outlets in China, like KFC and McDonald’s are already in place and they are a representation of the popular Chinese urban life. Such locations are often frequented by young college graduates as well as preferred social spots especially among young Chinese white collar and traditional workers. The immaculately neat and lit restaurants are a representation of traditional Chinese restaurant characterized by meal times that are hectic scarce franchises and frequented by adults mostly. In China, the United States fast food restaurants are looked upon as a representation of the expanding Chinese upper middle class (Yu & Zhang, 2009).

In regard to Mexico, several cultural factors contribute to consumption of United States fast foods. Some of these include mean age of Mexican population, increasing number of women in gainful employment as well as overall economic growth (Euromonitor, 2013). In Mexico, the median age is thirty years, as such, the majority of companies target consumers who are young with a preference for fast and processed foods as compared to traditional Mexican foods. What is more, the involvement of majority of women in employment is an implication they do not have time to make home meals resulting to consumption of fast foods by young adults and children (Euromonitor, 2013). What is more, the rising incomes coupled by large number of mothers who work has improved spending power of majority of young Mexicans, which gives them the freedom to make more informed purchase decisions.

The United Arab Emirates (UAE) while rooted in Middle-Eastern culture, has embraced fast foods consumption. A large number of Emiratis, particularly the young people consume fast foods. Such a shift from the past is occasioned by a growing popularity of fast foods, extended working shifts, hours as well as long school days. Because of this, people lack time to shop for the ingredients as well as prepare meals at home. Secondly, the percentage of young affluent individuals in UAE is rising with rapid economic growth which is coupled with oil revenues; more than three quarters of the population has more than adequate to spend. There are several expatriates in the country, including those from the US who have influenced eating habits in favor of fast food (Government of Canada, 2013). However, the rising cases of obesity and health concerns, especially among young people are a major threat to the United States fast food business.

Just as is the case in other countries, the food market in Israel is shifting equally towards continence food with a large percentage of the population settling for readymade foods, fast foods and snacks. Packed food demand is stable throughout Israel (Government of Canada, 2013b). However, due to health concerns, the demand for healthy food has risen, particularly for gluten free food, whole grains, foods high in fibers and organic food.

Types of training

Social behaviors vary largely from one nation to another which necessitates study of social norms before expansion. Issues like attitude towards women, etiquette, values, religious influences, ethical standards and work ethics affect customers and employees. As such, making use of one’s perceptions as basis for analyzing social behaviors of others results to misconceptions and stereotyping. As a means of preventing social and cultural misconceptions, there are different training approaches that fast food hamburger franchise businesses need to implement.

Attribution Training is about informing people of their cultural background and how different it is from the cultural background of any of the 4 destinations they are assigned to carry out business in (Chaney and Martin, 2011). The second form of training that can also assist employees avoid misconceptions and problems with foreign cultures is coaching. The major objective of coaching is demonstrating higher sensitivity to all customs and practices within a particular nation, as well as styles of expression and language that might be used in that location or country. Additionally coaching entails provision of specific examples to employees on what they are supposed to expect in regard to beliefs, customs and practices (Galanti, 2000).

Ethical Standards of the Organization

Actions and behaviors that might be viewed as ethical in the U.S might not be ethical in Mexico, the UAE, Israel and China. For instance, backdoor dealings and bribery are part of business in countries like China and Mexico but they are not tolerated in the United States and Israel, where high ethics and values are upheld in business dealings. The UAE has strong anti-corruption legislation since 1980’s (Steemkamp, 2013).

Collectivism and Individualism

In individualistic cultures, individuals look for their own personal interest and those of family members who are close only. In collectivist societies on the other hand, individuals belong to a specific group or groups which will take care of them and in turn, they give their loyalty. Cultures can be categorized as collectivist, individualist or a combination of these two. Under individualist societies, people believe in assuming responsibility for their individual actions and destiny. Collectivist culture however places great value in shared interests, loyalty to the group and responsibility for their actions (Chaney & Martin, 2011). Comparing the 4 countries in terms of scores of collectivism and individualism, we find UAE scores 25, Israel scores 54, China scores 20, US scores 91 and Mexico scores 30 (Geert-hofstede, 2013).

From these scores, it is clear the US, Israel and to a lower extent Mexico are individualist cultures. China and UAE on the other hand have low individualism scores which is an indication these cultures are highly collective and traditional in nature. This has the implications for expansion of business, for instance, UAE and China in-group considerations influence promotions and hiring decisions, with preferential treatment directed towards family members. Employees are committed more to the people within the organization compared to their commitment to the organization. Personal relationships are also highly valued and override tasks and at times, even the organization. An American expatriate moving to the UAE and China is likely to experience culture shock especially in regard to the currency, business practices, work attitudes and food. However, while the Mexican culture differs from that of the US, its close proximity to the US and cultural interaction between these two countries make it easy to adopt as compared to another country, for instance China or the UAE. Out of these 4 countries, Israel might be less foreign in regard to cultural differences with the US. In the UAE, religious practices shape almost all the aspects of business, while China contracts are far less valued compared to those of the US.

References

Chaney, L. & Martin, J. (2011). Intercultural Business Communication: Fifth Edition. Upper Saddle River, NJ: Prentice Hall.

Euromonitor (2013). Fast Food in Mexico. Retrieved on 23 November 2013 from: <http://www.euromonitor.com/fast-food-in-mexico/report>

Galanti, G. (2000). An introduction to cultural differences. Western Journal of Medicine, 172(5):335-338

Geert-hofstede (2013). Geert Hofstede Cultural Dimensions. Retrieved on 23 November 2013 from:<http://geert-hofstede.com/china.html>

Government of Canada (2013). The United Arab Emirates Consumer – Behaviour, Attitudes and Perceptions Toward Food Products. Retrieved on 23 November 2013 from: <http://www.ats-sea.agr.gc.ca/afr/5661-eng.htm>.

Government of Canada (2013b). Agri-Food Sector Profile- Israe. Retrieved on 23 November 2013 from: <http://www.ats-sea.agr.gc.ca/afr/4560-eng.html>

Steemkamp, W. (2013). Federal anti-bribery legislation in the United Arab Emirates – Al Tamimi & Company. Retrieved on 23 November 2013 from: <http://www.tamimi.com/en/magazine/law-update/section-7/april-6/federal-anti-bribery-legislation-in-the-united-arab-emirates.html>

Yu, C. and Zhang, T. (2009). American Fast Food in Chinese Market: A Cross-Culture Perspective: The Case of KFC and McDonald’s.