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									                      INTERNATIONAL MARKETING


According to the American Marketing Association, “International Marketing is the
multi-national process of planning and executing the conception, prices, promotion
and distribution of ideal goods and services to create exchanges that satisfy the
individual and organizational objectives.”

International marketing is the performance of business activities designed to plan,
price, promote, and direct the flow of a company’s goods & services to consumers or
users in more than one nation for a profit. The only difference between the definition
of domestic marketing and international marketing is that in the later case marketing
activities take place in more than one country. This apparently minor differences “in
more than one country”, accounts for the complexity and diversity found in
international marketing operations.

Marketing concepts, processes, and principles are universally applicable to all
markets. If this is the case what is the difference between domestic and international
marketing? The answer lies not with different concepts of marketing but with the
environment within which marketing plans must be implemented. The uniqueness
of foreign marketing comes from the range of unfamiliar problems and the variety of
strategies necessary to cope with different levels of uncertainty encountered in
foreign markets.

The purpose of international marketing is to find out as to why and how a product
succeeds or fails in a foreign country and how marketing efforts influence the results.

There are many aspects that differentiate one country from another the main criteria
being its culture, habits, lifestyle, environment and market. In order to expand the
business from the home country to the host country companies need to evolve and
adapt themselves to the requirements of the host country.

                       WHY GO INTERNATIONAL?

Trade is increasingly global in scope today. There are several reasons for this. One
significant reason is technological—because of improved transportation and
communication opportunities today, trade is now more practical. Thus, consumers
and businesses now have access to the very best products from many different
countries. Increasingly rapid technology lifecycles also increases the competition
among countries as to who can produce the newest in technology.

In part to accommodate these realities, countries in the last several decades have
taken increasing steps to promote global trade through agreements such as the
General Treaty on Trade and Tariffs, and trade organizations such as the World
Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and
the European Union (EU).


A purely domestic firm focuses only on its home market, has no current ambitions of
expanding abroad, and does not perceive any significant competitive threat from
abroad. Such a firm may eventually get some orders from abroad, which are seen
either as an irritation (for small orders, there may be a great deal of effort and cost
involved in obtaining relatively modest revenue) or as "icing on the cake."

As the firm begins to export more, it enters the export stage, where little effort is
made to market the product abroad, although an increasing number of foreign
orders are filled. In the international stage, as certain country markets begin to
appear especially attractive with more foreign orders originating there, the firm may
go into countries on an ad hoc basis—that is, each country may be entered
sequentially, but with relatively little learning and marketing efforts being shared
across countries.

In the multi-national stage, some efficiencies are pursued by standardizing across a
region (e.g., Central America, West Africa, or Northern Europe). Finally, in the
global stage, the focus centers on the entire World market, with decisions made
optimize the product’s position across markets—the home country is no longer the
center of the product. An example of a truly global company is Coca Cola.

Note that these stages represent points on a continuum from a purely domestic
orientation to a truly global one; companies may fall in between these discrete stages,
and different parts of the firm may have characteristics of various stages. Although a
global focus is generally appropriate for most large firms, note that it may not be
ideal for all companies to pursue the global stage.


Marketing is the process of focusing the resources and objectives of an organisation
on environmental opportunities and needs. It is a universal discipline. However,
markets and customers are different and hence the practice of marketing should be
fine tuned and adjusted to the local conditions of a given country. The marketing
man must understand that each person is different and so also each country which
means that both experience and techniques obtained and successful in one country or

Every country has a different set of customers and even within a country there are
different sub-sets of customers, distribution channels and media are different. If that
is so, for each country there must be a unique marketing plan.

For instance, nestle tried to transfer its successful four – flavour coffee from Europe
to the United States lost a 1% market share in the US. It is important in international
marketing to recognize the extent to which marketing plans and programs can be
extended to the world and the extent to which marketing plans must be adapted.

                           COCA COLA SUCCESS

The success of Coca Cola was not based on total standardization of marketing mix.
According to Kenichi Ohmae, Coke succeeded in Japan because the company spent a
huge amount of time and money in Japan to become an insider. Coca Cola build a
complete local infrastructure with its sales force and vending machine operations.

By adapting sales promotion, distribution and customer service to local needs, Coke
capture 78% of soft drink market share in Japan. Apart from the flagship brand Coca
Cola, the company produces 200 other non- alcoholic beverages to suit local
beverages. There are other companies who have created strong international brands
through international marketing.

For instance, Philip Morris has made Marlboro the number one cigarette brand in the
world. In automobiles, Daimler Chrysler gained global recognition for its Mercedes
brand like his competitor Bayerische.


International Marketing constitutes the following areas of business:-

      Exports and Imports:
       International trade can be a good beginning to venture into international
       marketing. By developing international markets for domestically produced
       goods and services a company can reduce the risk of operating
       internationally, gain adequate experience and then go on to set up
       manufacturing and marketing facilities abroad.

      Contractual Agreements:
       Patent licensing, turnkey operations, co – production, technical and
       managerial know – how and licensing agreements are all a part of
       international marketing. Licensing includes a number of contractual
       agreements whereby intangible assets such as patents, trade secrets, know –
       how, trade marks and brand names are made available to foreign firms in
       return for a fee.

      Joint Ventures:
       A form of collaborative association for a considerable period is known as joint
       venture. A joint venture comes into existence when a foreign investor
       acquires interest in a local company and vice versa or when overseas and
       local firms jointly form a new firm. In countries where fully owned firms are
       not allowed to operate, joint venture is the alternative.

      Wholly owned manufacturing:
       A company with long term interest in a foreign market may establish fully
       owned manufacturing facilities. Factors like trade barriers, cost differences,
       government policies etc. encourage the setting up of production facilities in
       foreign markets. Manufacturing abroad provides the firm with total control
       over quality and production.

   Contract manufacturing:
    When a firm enters into a contract with other firm in foreign country to
    manufacture assembles the products and retains product marketing with
    itself, it is known as contract manufacturing. Contract manufacturing has
    important advantages such as low risk, low cost and easy exit.

   Management contracting:
    Under a management contract the supplier brings a package of skills that will
    provide an integrated service to the client without incurring the risk and
    benefit of ownership.

   Third country location:
    When there is no commercial transactions between two countries due to
    various reasons, firm which wants to enter into the market of another nation,
    will have to operate from a third country base. For instance, Taiwan’s entry
    into china through bases in Hong Kong.

   Mergers and Acquisitions:
    Mergers and Acquisitions provide access to markets, distribution network,
    new technology and patent rights. It also reduces the level of competition for
    firms which either merge or acquires.

   Strategic alliances:
    A firm is able to improve the long term competitive advantage by forming a
    strategic alliance with its competitors. The objective of a strategic alliance is to
    leverage critical capabilities, increase the flow of innovation and increase
    flexibility in responding to market and technological changes. Strategic
    alliance differs according to purpose and structure. On the basis of purpose,
    strategic alliance can be classified as follows:

        o   Technology developed alliances like research consortia, simultaneous
            engineering agreements, licensing or joint development agreements.

           o   Marketing, sales and services alliances in which a company makes use
               of the marketing infrastructure of another company in the foreign
               market for its products.
           o   Multiple activity alliance involves the combining of two or more types
               of alliances. For instance technology development and operations
               alliances are generally multi- country alliances.

On the basis of structure, strategic alliance can be equity based or non equity based.
Technology transfer agreements, licensing agreements, marketing agreements are
non equity based strategic alliances.

                       GLOBAL PERSPECTIVE

                                Foreign Environment
        7. Structure of                                1. Competition
        Distribution          Domestic environment

                               (Controllables) 1. Competition
                               Price     Product         2. Technology
                 5. Political-    Target
6. Geography and Legal
  Infrastructure           Promotion Place or 2 .Technology
                                     3. Economy
              5. Political-                              3. Economy
                                      4. Culture

The international marketer’s task is more complicated than that of domestic marketer
because the international marketer must deal with atleast two levels of
uncontrollable uncertainty instead of one. Uncertainty is created by the
uncontrollable elements of all business environments, but each foreign country in
which a company operates adds its own unique set of uncontrollable factors.


International Marketing presents a more complex task than domestic marketing
because of the uncontrollable international marketing environment and their
heterogeneity. Hence, though the basic marketing decisions to be made are similar in
international and domestic marketing, making international marketing decision is
generally more challenging. In international marketing, a company has to make,
broadly four strategic decisions.

1. International marketing decision:

The first decision a company has to make is whether to take up international
marketing or not. This decision is based on a serious consideration of a number of
important factors, such as the present and future overseas opportunities, present and
future domestic market opportunities, the resources of the company in terms of
skills, experience, production and marketing capabilities and finance, company
objectives etc.

2. Market Selection Decision:

Once it has been decided to do international marketing, the next important step is the
selection of the most appropriate market. For this purpose, a thorough study of
potentials of the various overseas markets and their respective marketing
environment is essential. Company resources and objectives may not permit a
company to do business in all the overseas markets. Further, some markets are not
potentially good, and it may be suicidal to waste company resources in such markets.
A proper selection of the overseas markets therefore is very important.

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3. Entry and Operating Decisions:

Once the market selection decision has been made, the next important task is to
determine the appropriate mode of entering the foreign market such as export,
contract manufacturing, direct manufacturing plant etc. on the basis of this decision,
proper arrangements must be made to continue the activities of marketing.

4. Marketing Mix Decision:

As in the domestic marketing, the success highly depends upon the applicability of
proper Marketing Mix, in International marketing also; Marketing Mix plays a major
role. The elements of marketing mix – product, promotion, price and physical
distribution should be suitably designed so that they may be adapted to the
characteristics of the overseas market.

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The key difference between domestic and international marketing is the multi-
dimensionality and complexity of foreign country markets that they may operate in.
Knowledge and awareness of these complexity and implications for international
marketing is must. The most important aspect considered for understanding these
implications is a thorough study of the environment.

The SLEPT (Social, Legal, Economical, Political and Technological) draw the basis for
the environmental study.


a.       SOCIAL: Difference in social conditions, religion and culture determines
         whether the customers are similar or dissimilar across the globe. Social
         environment consists of religious aspects, language, customs, traditions,
         beliefs, tastes, and preferences, social institutes, living habits, eating
         influences the level of consumption.
         For example, though the economic position of Germans living habits,
         dressing habits etc. Social environment and French people is more or less the
         same culturally they are different. Consumption level of French people is
         more than that of Germans. Hence, the study of social environment helps in
         deciding up on the type of product, market, and the like. Now, we discuss
         various aspects of social environment.

b.       CULTURE: Culture describes the kind of behaviour considered acceptable in
         society. The prescriptive characteristic of culture simplifies a consumer’s
         decision-making process by limiting product choices to those which are socially
         acceptable. The same feature creates problems for those products, which are not
         in time with culture.

          Coca Cola had to withdraw its 2 liters bottle from Spain market as Spaniards
           were not having refrigerator having larger compartments

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      Johnson’s floor wax was doomed to failure in Japan as it made the wooden
       floors very slippery and Johnson failed to take into account the custom of not
       wearing shoes inside the home.
      Coca Cola when introduced in china the name sounded like “KOOKE –
       KOULA” meant thirsty mouth, full of candle wax. So they had to change the
       name to “KEE KOU KEELE” which meant “joyful taste and happiness.”
      The size of refrigerators in USA is very big compared to Indian refrigerators,
       as women there believe in storing vegetables and other eatable items, which
       can be consumed till longer period of time.

Even the value and beliefs associated with colour vary significantly between
different cultures. Blue considered as feminine and worm in Holland, is seen as
masculine and cold in Sweden. Green is a favorite color in Muslims, but in Malaysia,
it is associated with illness. White is associated with death and mourning in China,
Korea and in some traditions in India, although, the same color expresses happiness
and the colour of a wedding dress of the bride in English country.

Such differences suggest that same marketing mix cannot be used for all markets.


Legal systems vary both in content and interpretations. A successful marketer will
modify his marketing strategies in accordance with such variations. Laws affect the
marketing mix in terms of products, price, distribution and promotional activities
quite dramatically. For many firms such laws are burdensome regulations.

For e.g. in Germany environmental laws mean a firm is responsible for the retrieval
and disposal of packaging waste it creates and must produce packaging which is

In Canada, if the information does not appear in both French and English, the goods
may be confiscated.

An international marketer should learn about the advertising, packaging, and
labeling regulations in foreign markets.

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India has been seen by many firms to be an attractive emerging market having many
legal difficulties, bureaucratic delays and lots of official procedures. Many MNCs
have found it difficult to break such hard structure. Foreign companies are often
viewed with suspicion. However, some firms have been innovative in overcoming


The economic situation varies from country to country. There are variations in the
levels of income and living standards, interpersonal distribution of income, economic
organization, occupational structure and so on. These factors affect market

The level of development in a country and the nature of its economy will indicate the
type of products that may be marketed in it and the marketing strategy that may be
employed in it. In high income countries there is a good market for a large variety of
consumer goods. But in low-income countries where a large segment does not have
sufficient income even for their basic necessities, the situation is quite different.


The political environment of international marketing includes any national or
international political factor that can affect the organization’s operations or it’s
decision-making. The tendencies of governments to change regulations can seriously
affect an international strategy providing both opportunities and threat.

An unstable political climate can expose firms to many commercial, economic and
legal risks. Political risk is defined as being: “A risk due to a sudden or gradual
change in a local political environment that is disadvantageous to foreign firms and

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The Technological Environment is perhaps the most dramatic force now shaping our
destiny. An international marketer should very well keep in his mind the change
taking place in technology and thereby affecting the product.

New technologies create new markets and opportunities. However, every new
technology replaces an old technology. Xerography hurt carbon-paper industry,
computer hurt typewriter industry, and examples are so on. Any international
marketer, when ignored or forgot new technologies, their business has declined.

Thus, the marketer should watch the technological environment closely. Companies
that do not keep up with technological changes, soon find their products outdated.

The United States leads the world in research and development spending. Scientists
today are researching a wide range of promising new products and services ranging
from solar energy, electric car, and cancer cures.

All these researches give a marketer an opportunity to set his products as per the
current desired standard. The challenge in each case is not only technical but also
commercial that means manufacture a product that can be afforded by mass crowd.

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Culture is part of the external influences that impact the consumer. That is, culture
represents influences that are imposed on the consumer by other individuals. The
definition of culture offered by one text is “That complex whole which includes
knowledge, belief, art, morals, custom, and any other capabilities and habits acquired
by man person as a member of society.”

      Culture, as a “complex whole,” is a system of interdependent components.
      Knowledge and beliefs are important parts. In the U.S., we know and believe
       that a person who is skilled and works hard will get ahead. In other countries,
       it may be believed that differences in outcome result more from
       luck. “Chunking,” the name for China in Chinese literally means “The
       Middle Kingdom.” The belief among ancient Chinese that they were in the
       center of the universe greatly influenced their thinking.
      Art, for example, may be reflected in the rather arbitrary practice of wearing
       ties in some countries and wearing turbans in others. Morality may be
       exhibited in the view in the United States that one should not be naked in

       In Japan, on the other hand, groups of men and women may take steam baths
       together without perceived as improper. On the other extreme, women in
       some Arab countries are not even allowed to reveal their faces. Notice, by the
       way, that what at least some countries view as moral may in fact be highly
       immoral by the standards of another country.

      Eating habits and other consumption patterns, priority of needs are
       dictated/ influenced by culture.
       Some Thai and Chinese and most of the Indians do not consume beef.
       Thailand Chinese believe that consumption of beef is improper and
       Indians (particularly Hindus) believe that eating beef is a sin as they
       believe cow is sacred.

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Chinese eat fish stomach and bird’s nest soup, Japanese eat uncooked sea food,
and Iraqis eat dried, salted locusts and snakes while drinking. The French eat
snails, Americans and Europeans eat mostly non-vegetarian food. Indians eat
mostly vegetarian food. It was surprising to the rest of the world to know that
there were pure vegetarians in India.

   Dressing habits, living styles, also vary from country to country based on
    their culture. We observe different dress styles of West, Middle East, India,
    and Pacific etc. Wearing ‘saree’ by Indian women is a peculiar dressing
    habit, which is influenced by the culture. Similarly, wearing ‘burka/ parcia’
    by the women of Middle East is another example for the influence of
    culture on the dressing

   Culture has several important characteristics:
       o   Culture is comprehensive. This means that all parts must fit together
           in some logical fashion. For example, bowing and a strong desire to
           avoid the loss of face are unified in their manifestation of the
           importance of respect.
       o   Culture is learned rather than being something we are born with. We
           will consider the mechanics of learning later in the course.
       o   Culture is manifested within boundaries of acceptable behavior. For
           example, in American society, one cannot show up to class naked, but
           wearing anything from a suit and tie to shorts and a T-shirt would
           usually be acceptable. Failure to behave within the prescribed norms
           may lead to sanctions, ranging from being hauled off by the police for
           indecent exposure to being laughed at by others for wearing a suit at
           the beach.
       o   Conscious awareness of cultural standards is limited. One American
           spy was intercepted by the Germans during World War II simply
           because of the way he held his knife and fork while eating.
       o   Cultures fall somewhere on a continuum between static and dynamic
           depending on how quickly they accept change.              For example,
           American culture has changed a great deal since the 1950s, while the
           culture of Saudi Arabia has changed much less.

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Culture is a problematic issue for many
marketers since it is inherently nebulous and
often difficult to understand. One may violate
the cultural norms of another country without
being informed of this, and people from
different cultures may feel uncomfortable in
each other’s presence without knowing exactly


When observing a culture, one must be careful not to over-generalize about traits
that one sees. Research in social psychology has suggested a strong tendency for
people to perceive an “out-group” as more homogenous than an “in-group,” even
when they knew what members had been assigned to each group purely by
chance. When there is often a “grain of truth” to some of the perceived differences,
the temptation to over-generalize is often strong. Note that there are often significant
individual differences within cultures.

For example, within the Muslim tradition, the dog is considered a “dirty” animal, so
portraying   it   as   “man’s   best   friend”   in   an   advertisement   is   counter-
productive. Packaging, seen as a reflection of the quality of the “real” product, is
considerably more important in Asia than in the U.S., where there is a tendency to
focus on the contents which “really count.” Many cultures observe significantly
greater levels of formality than that typical in the U.S., and Japanese negotiator tend
to observe long silent pauses as a speaker’s point is considered.

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There is a tendency to stereotype cultures as being one way or another (e.g.,
individualistic rather than collectivistic).   Note, however, countries fall on a
continuum of cultural traits. Hofstede’s research demonstrates a wide range
between the most individualistic and collectivistic countries, for example—some fall
in the middle.

Hofstede’s Dimensions. Gert Hofstede, a Dutch researcher, was able to interview a
large number of IBM executives in various countries, and found that cultural
differences tended to center around four key dimensions:

      Individualism vs. collectivism: To what extent do people believe in
       individual responsibility and reward rather than having these measures
       aimed at the larger group? Contrary to the stereotype, Japan actually ranks in
       the middle of this dimension, while Indonesia and West Africa rank toward
       the collectivistic side. The U.S., Britain, and the Netherlands rate toward
      Power distance: To what extent is there a strong separation of individuals
       based on rank? Power distance tends to be particularly high in Arab
       countries and some Latin American ones, while it is more modest in Northern
       Europe and the U.S.
      Masculinity      vs.   femininity   involves   a   somewhat   more   nebulous
       concept. “Masculine” values involve competition and “conquering” nature
       by means such as large construction projects, while “feminine” values involve
       harmony and environmental protection. Japan is one of the more masculine
       countries, while the Netherlands rank relatively low. The U.S. is close to the
       middle, slightly toward the masculine side. (The fact that these values are
       thought of as “masculine” or “feminine” does not mean that they are
       consistently held by members of each respective gender—there are very large
       “within-group” differences. There is, however, often a large correlation of
       these cultural values with the status of women.)

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      Uncertainty avoidance involves the extent to which a “structured” situation
       with clear rules is preferred to a more ambiguous one; in general, countries
       with lower uncertainty avoidance tend to be more tolerant of risk. Japan
       ranks very high. Few countries are very low in any absolute sense, but
       relatively speaking, Britain and Hong Kong are lower, and the U.S. is in the
       lower range of the distribution.

Although Hofstede’s original work did not address this, a fifth dimension of long
term vs. short term orientation has been proposed. In the U.S., managers like to see
quick results, while Japanese managers are known for take a long term view, often
accepting long periods before profitability is obtained.

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In some cultures, “what you see is what you get”—the speaker is expected to make
his or her points clear and limit ambiguity. This is the case in the U.S.—if you have
something on your mind, you are expected to say it directly, subject to some
reasonable standards of diplomacy. In Japan, in contrast, facial expressions and
what is not said may be an important clue to understanding a speaker’s
meaning. Thus, it may be very difficult for Japanese speakers to understand
another’s written communication.

The nature of languages may exacerbate this phenomenon—while the German
language is very precise, Chinese lacks many grammatical features, and the meaning
of words may be somewhat less precise. English ranks somewhere in the middle of
this continuum.

In some countries like USA, Canada, Germany and Switzerland the messages that
the people convey are explicit and clear. They use the actual words to convey the
information. These cultures are called ‘low context cultures.’

In countries like India, Japan, Saudi Arabia, and other Middle Eastern Arab
countries communication is mostly indirect and the expressive manner in which
the message is delivered becomes critical. Much of the information is transmitted
through nonverbal communication. These messages can only be understood only
with the reference to the context. Such cultures are referred to ‘high context

Cultures also vary based on the manner of information processing. Cultures,
which handle information in a direct, linear fashion, are called; “monochromic”
Americans are more monochromic. Americans’ fast tempo and demand for instant
responses are viewed as pushy.

The other type of culture is ‘polychromic’. In this culture people work on several
forms simultaneously instead of pursuing a single task. Japanese and Indians
belong to polychromic culture.

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American businessmen consider - the failure of the Japanese to make eye to eye
contact as a sign of rudeness whereas, the Japanese do not want to look each other
in the eye as eye to eye contact is an act of confrontation and aggression.

Examples of low context, high context cultures and monochromic and polychromic

GERMANY: Monochromic and low context culture.

FRANCE : Polychromic and high context culture.

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The self-reference criterion refers to the tendency of individuals, often
unconsciously, to use the standards of one’s own culture to evaluate others. For
example, Americans may perceive more traditional societies to be “backward” and
“unmotivated” because they fail to adopt new technologies or social customs,
seeking instead to preserve traditional values.

In the 1960s, a supposedly well read American psychology professor referred to
India’s culture as “sick” because, despite severe food shortages, the Hindu religion
did not allow the eating of cows. The psychologist expressed disgust that the cows
were allowed to roam free in villages, although it turns out that they provided
valuable functions by offering milk and fertilizing fields. Ethnocentrism is the
tendency to view one’s culture to be superior to others. The important thing here is
to consider how these biases may come in the way in dealing with members of other

It should be noted that there is a tendency of outsiders to a culture to overstate the
similarity of members of that culture to each other. In the United States, we are well
aware that there is a great deal of heterogeneity within our culture; however, we
often underestimate the diversity within other cultures. For example, in Latin
America, there are great differences between people who live in coastal and
mountainous areas; there are also great differences between social classes.

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1. Language

   Language is an important element of culture. It should be realized that regional
   differences may be subtle. For example, one word may mean one thing in one
   Latin American country, but something completely opposite in another. It
   should also be kept in mind that much information is carried in non-verbal
   communication. In some cultures, we nod to signify “yes” and shake our heads
   to signify “no;” in other cultures, the practice is reversed. Within the context of

      With language one should consider whether or not the national culture is
       predominantly a high context culture or a low context culture. The concept
       relates to the balance between the verbal and the non-verbal communication.
      There are often large variations in regional dialects of a given language. The
       differences between U.S., Australian, and British English are actually modest
       compared to differences between dialects of Spanish and German.
      Idioms involve “figures of speech” that may not be used, literally translated,
       in other languages. For example, baseball is a predominantly North and
       South American sport, so the notion of “in the ball park” makes sense here,
       but the term does not carry the same meaning in cultures where the sport is
       less popular.
      Slang exists within most languages. Again, regional variations are common
       and not all people in a region where slang is used will necessarily understand
       this. There are often significant generation gaps in the use of slang.

Writing patterns, or the socially accepted ways of writing, will differs significantly
between cultures.

Because of differences in values, assumptions, and language structure, it is not
possible to meaningfully translate “word-for-word” from one language to
another. A translator must keep

                                                                                - 24 -
“unspoken understandings” and assumptions in mind in translating. The intended
meaning of a word may also differ from its literal translation.

Different perspectives exist in different cultures on several issues; e.g.:

      Space is perceived differently. Americans will feel crowded where people
       from more densely populated countries will be comfortable.
      Symbols differ in meaning. For example, while white symbols purity in the
       U.S., it is a symbol of death in China. Colors that are considered masculine
       and feminine also differ by culture.
      Americans have a lot of quite shallow friends toward whom little obligation
       is felt; people in European and some Asian cultures have fewer, but more
       significant friends. For example, one Ph.D. student from India, with limited
       income, felt obligated to try buy an airline ticket for a friend to go back to
       India when a relative had died.
      In the U.S. and much of Europe, agreements are typically rather precise and
       contractual in nature; in Asia, there is a greater tendency to settle issues as
       they come up. As a result, building a relationship of trust is more important
       in Asia, since you must be able to count on your partner being reasonable.
      In terms of etiquette, some cultures have more rigid procedures than others.

2. Values and Attitudes

      Values and attitudes vary between nations, and even vary within nations. So
       if you are planning to take a product or service overseas make sure that you
       have a good grasp the locality before you enter the market. This could mean
       altering promotional material or subtle branding messages.
      In 2004, China banned a Nike television commercial showing U.S. basketball
       star LeBron James in a battle with animated cartoon kung fu masters and two
       dragons, because it was argued that the ad insults Chinese national dignity.

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3. Education

      The level and nature of education in each international market will vary. This
       may impact the type of message or even the medium that you employ. For
       example, in countries with low literacy levels, advertisers would avoid
       communications which depended upon written copy, and would favour
       radio advertising with an audio message or visual media such as billboards.
       The labelling of products may also be an issue.
      In the People's Republic of China a nationwide system of public education is
       in place, which includes primary schools, middle schools (lower and upper),
       and universities. Nine years of education is compulsory for all Chinese
      In Finland school attendance is compulsory between the ages of 7 and 16, the
       first nine years of education (primary and secondary school) are compulsory,
       and the pupils go to their local school. The education after primary school is
       divided to the vocational and academic systems, according to the old German
      In Uganda schooling includes 7 years of primary education, 6 years of
       secondary education (divided into 4 years of lower secondary and 2 years of
       upper secondary school), and 3 to 5 years of post-secondary education.

4. Social Organizations

      This aspect relates to how a national society is organized. For example, what
       is the role of women in a society? How is the country governed - centralized
       or devolved? The level influence of class or casts upon a society needs to be
       considered. For example, India has an established caste system - and many
       Western countries still have an embedded class system. So social mobility
       could be restricted where caste and class systems are in place. Whether or
       not there are strong trade unions will impact upon management decisions if
       you employ local workers.

                                                                                - 26 -
5. Technology and Material Culture

      Technology is a term that includes many other elements. It includes
       questions such as is there energy to power our products? Is there a transport
       infrastructure to distribute our goods to consumers? Does the local port have
       large enough cranes to offload containers from ships? How quickly does
       innovation diffuse? Also of key importance, do consumers actually buy
       material goods i.e. are they materialistic?
      Trevor Baylis launched the clockwork radio upon the African market. Since
       batteries were expensive in Africa and power supplies in rural areas are non-
       existent. The clockwork radio innovation was a huge success.
      China's car market grew 25% in 2006 and it has overtaken Japan to be the
       second-largest car market in the world with sales of 8 million vehicles. With
       just six car owners per 100 people (6%), compared with 90% car ownership
       in the US and 80% in the UK, the potential for growth in the Chinese market
       is immense.

6. Law and Politics

      As with many aspects of Terpstra and Sarathy's Cultural Framework, the
       underpinning social culture will drive the political and legal landscape. The
       political ideology on which the society is based will impact upon your
       decision to market there. For example, the United Kingdom has a largely
       market-driven, democratic society with laws based upon precedent and
       legislation, whilst Iran has a political and legal system based upon the
       teachings and principles Islam and a Sharia tradition.

7. Aesthetics

      Aesthetics relate to your senses, and the appreciation of the artistic nature of
       something, including its smell, taste or ambience. For example, is something
       beautiful? Does it have a fashionable design? Was an advert delivered in
       good taste? Do you find the color, music or architecture relating to an

                                                                                 - 27 -
       experience pleasing? Is everything relating to branding aesthetically

8. Religion:

      Religions influence human behavior and business practices People in all the
       religions believe in working hard to glorify god. In the Hindu religion work
       is equivalent to worshipping the god. Marketers must pay attention to
       religious practices. Religious taboos include pork and alcohol for muslims,
       beef for Hindus and pork and shellfish for Jews. The entire Ramazan is a
       religious holiday for Muslims. In Hinduism and Buddhism, the emphasis is
       on contentment and elimination of desires.
      Religion is one of the important social institutions influencing business. A
       few religions have spread over large areas in the world. The Protestants’
       influence is dominant in USA, Canada and Australia with regard the
       production and distribution. Roman Catholics dominate in Latin America
       and Southern European Countries. Islam dominates northern Africa, Middle
       East, Malaysia, Brunei, Indonesia etc. These religions have enforced
       prohibition of liquor. Buddhism and Hinduism dominate in most part of
       Asia. It has effects on high spiritual values, low value of material goods and
       more emphasis on ethics and moral values.
      The nature and complexity of the different religions an international marketer
       could encounter is pretty diverse. The organization needs to make sure that
       their products and services are not offensive, unlawful or distasteful to the
       local nation. This includes marketing promotion and branding.
      In China in 2007 (which was the year of the pig) all advertising which
       included pictures of pigs was banned. This was to maintain harmony with
       the country's Muslim population of around 2%. The ban included pictures of
       sausages that contained pork, and even advertising that included an
       animated (cartoon) pig.

                                                                               - 28 -
      In 2005 France's Catholic Church won a court injunction to ban a clothing
       advertisement (by clothing designers Marithe and Francois Girbaud) based
       upon Leonardo da Vinci's Christ's Last Supper.

9. Family System:

In addition to religion, family system has its impact on international business. In
most of the Islamic countries, women play less significant role in the economy
and also it] the family with limited rights.

In Latin American countries, though the role of women is better compared to that
in Islamic countries, women’s role is limited in economics and in families. But
women play a dominant role in European and North American countries.

In addition, joint families are more prevalent in Islamic and Hindu religions.
Joint family system reduces the demand for goods and service compared to
nucleus families.

                                                                              - 29 -
                          PRODUCT ADAPTATION

The problem of adapting products to sell abroad is similar to those associated with
the introduction of a new product at home. Products are not measured solely by their
physical specifications. The nature of the new product is in what it does to and for
the customer – to habits, taste, and patterns of life. What significance, outside its
intended use, might a product have in different culture? When product acceptance
requires changes in patterns of life, habits or taste, the understanding of new ideas,
the acceptance of the difficult to believe or the acquisition of completely new taste or
habits, special emphasis must be used to overcome natural resistance to change.

An important first step in adopting a product to a foreign market is to determine the
degree to newness as perceived by the intended market. How people react to
newness and how new a product is to a market must be understood. In evaluating
the newness of the product, the international marketer must be aware that many
products successful in one country, having reached the maturity or even decline
stage in their life cycles may be perceived as new in another country or culture and
thus must be treated as innovations. From a sociological view point any idea
perceived as new by a group of people is an innovation.

Some marketing scholars and professionals tend to draw a strong distinction
between conventional products and services, emphasizing service characteristics
such as heterogeneity (variation in standards among providers, frequently even
among different locations of the same firm), inseparability from consumption,
intangibility, and, in some cases, perishability—the idea that a service cannot
generally be created during times of slack and be “stored” for use later.

However, almost all products have at least some service component—e.g., a
warranty, documentation, and distribution—and this service component is an
integral part of the product and it’s positioning. Thus, it may be more useful to look
at the product-service continuum as one between very low and very high levels of
tangibility of the service.

                                                                                  - 30 -
On the topic of services, cultural issues may be even more prominent than they are
for tangible goods. There are large variations in willingness to pay for quality, and
often very large differences in expectations. In some countries, it may be more
difficult to entice employees to embrace a firm’s customer service philosophy. Labor
regulations in some countries make it difficult to terminate employees whose
treatment of customers is substandard. Speed of service is typically important in the
U.S. and western countries but personal interaction may seem more important in
other countries.

                       PRODUCT NEED SATISFACTION

We often take for granted the “obvious” need that products seem to fill in our own
culture; however, functions served may be very different in others—for example,
while cars have a large transportation role in the U.S., they are impractical to drive in
Japan, and thus cars there serve more of a role of being a status symbol or providing
for individual indulgence. In the U.S., fast food and instant drinks such as Tang are
intended for convenience; elsewhere, they may represent more of a treat.

Thus, it is important to examine through marketing research consumers’ true
motives, desires, and expectations in buying a product.


Firms face a choice of alternatives in marketing their products across markets. An
extreme strategy involves customization, whereby the firm introduces a unique
product in each country, usually with the belief tastes differ so much between
countries that it is necessary more or less to start from “scratch” in creating a product
for each market.

On the other extreme, standardization involves making one global product in the
belief the same product can be sold across markets without significant
modification—e.g., Intel microprocessors are the same regardless of the country in
which they are sold. There are certain benefits to standardization.

                                                                                   - 31 -
Firms that produce a global product can obtain economies of scale in manufacturing,
and higher quantities produced also lead to a faster advancement along the
experience curve. Further, it is more feasible to establish a global brand as less
confusion will occur when consumers travel across countries and see the same
product. On the down side, there may be significant differences in desires between
cultures and physical environments

Finally, in most cases firms will resort to some kind of adaptation, whereby a
common product is modified to some extent when moved between some markets—
e.g., in the United States, where fuel is relatively less expensive, many cars have
larger engines than their comparable models in Europe and Asia; however, much of
the design is similar or identical, so some economies are achieved.


      Mandatory adaptations involve changes that have to be made before the
       product can be used—e.g., appliances made for the U.S. and Europe must run
       on different voltages, and a major problem was experienced in the European
       Union when hoses for restaurant frying machines could not simultaneously
       meet the legal requirements of different countries.
      Discretionary changes are changes that do not have to be made before a
       product can be introduced (e.g., there is nothing to prevent an American firm
       from introducing an overly sweet soft drink into the Japanese market),
       although products may face poor sales if such changes are not
       made. Discretionary changes may also involve cultural adaptations—e.g., in
       Sesame Street, the Big Bird became the Big Camel in Saudi Arabia.

                                                                              - 32 -
   Another     distinction   involves   physical   product   vs.   communication
    adaptations. In order for gasoline to be effective in high altitude regions, its
    octane must be higher, but it can be promoted much the same way. On the
    other hand, while the same bicycle might be sold in China and the U.S., it
    might be positioned as a serious means of transportation in the former and as
    a recreational tool in the latter.
   In some cases, products may not need to be adapted in either way (e.g.,
    industrial equipment), while in other cases, it might have to be adapted in
    both (e.g., greeting cards, where both the occasions, language, and
    motivations for sending differ). Finally, a market may exist abroad for a
    product which has no analogue at home—e.g., hand-powered washing

                                                                              - 33 -

Consumers in different countries differ in the speed with which they adopt new
products, in part for economic reasons and in part because of attitudes toward new
products. Thus, it may be possible, when one market has been saturated, to continue
growth in another market—

e.g., while somewhere between one
third and one half of American homes
now     contain     a     computer,     the
corresponding figures for even Europe
and Japan are much lower and thus,
many    computer        manufacturers   see
greater growth potential there.

The International Product Life Cycle
suggests that countries will differ in their timing of the demand for various products.

Products tend to be adopted more quickly in the United States and Japan, for
example, so once the demand for a product (say, VCRs) is in the decline in these
markets, an increasing market potential might exist in other countries (e.g., Europe
and the rest of Asia).

                                                                                 - 34 -
                      DIFFUSION OF INNOVATION

Good new innovations often do not spread as quickly as one might expect—e.g.,
although the technology for microwave ovens has existed since the 1950s, they really
did not take off in the United States until the late seventies or early eighties, and their
penetration is much lower in most other countries. The typewriter, telephone
answering machines, and cellular phones also existed for a long time before they
were widely adopted.

Certain characteristics of products make them more or less likely to spread.

      Relative advantage - While a computer offers a huge advantage over a
       typewriter, for example, the added gain from having an electric typewriter
       over a manual one was much smaller.
      Compatibility in the social and physical sense. A major problem with the
       personal computer was that it could not read the manual files that firms had
      Complexity refers to how difficult a new product is to use—e.g., some people
       have resisted getting computers because learning to use them takes time.
      Trialability refers to the extent to which one can examine the merits of a new
       product without having to commit a huge financial or personal investment—
       e.g., it is relatively easy to try a restaurant with a new ethnic cuisine, but
       investing in a global positioning navigation system is riskier since this has to
       be bought and installed in one’s car before the consumer can determine
       whether it is worthwhile in practice.
      Observability refers to the extent to which consumers can readily see others
       using the product—e.g., people who do not have ATM cards or cellular
       phones can easily see the convenience that other people experience using
       them; on the other hand, VCRs are mostly used in people’s homes, and thus
       only an owner’s close friends would be likely to see it.
      At the societal level, several factors influence the spread of an
       innovation. Not surprisingly, cosmopolitanism, the extent to which a
       country is connected to other cultures, is useful. Innovations are more likely

                                                                                     - 35 -
    to spread where there is a higher percentage of women in the work force;
    these women both have more economic power and are able to see other
    people use the products and/or discuss them.

   Modernity refers to the extent to which a culture values “progress.” In the
    U.S., “new and improved” is considered highly attractive; in more traditional
    countries, their potential for disruption cause new products to be seen with
    more skepticism. Although U.S. consumers appear to adopt new products
    more quickly than those of other countries, we actually score lower on
    homiphily, the extent to which consumers are relatively similar to each other,
    and physical distance, where consumers who are more spread out are less
    likely to interact with other users of the product. Japan, which ranks second
    only to the U.S., on the other hand, scores very well on these latter two

                                                                            - 36 -

             - 37 -
In order to practically display the impact of cultural differences on international
marketing an example of one of the most successful brands in today’s time i.e.,
McDonald’s has been illustrated at length. The Case study of McDonald’s depicts its
history, marketing strategy, product adaptation techniques and the ‘secret’ of its
global success.

Can you guess the name of the company which:

      Is the ninth most valuable brand in the world?
      Has replaced the US army as the Nations largest job training organization?
      Controls the market share of more than 3 food chains taken together in

It’s none other than McDonald’s Corporation USA. Looking at the above statistics
makes one wonder that what is the driving force behind all these achievements?
How is it that the chicken burger available in San Francisco is same as the one
available in Delhi? Many of these questions have been answered in the book
“McDonald’s: Behind the Golden Arches” written by John Love.

Everyone knows McDonald’s is big, but very few know just how significant its
impact on world business really is. The inside of McDonald’s remains a mystery.

In one way or another, the golden arches
of McDonald’s have slowly become an
integral part of the world’s landscape.

                                                                               - 38 -
                            HISTORY OF MCDONALD’S

McDonald's has come a long way ever since it’s beginning in 1955. Here are a few
milestones of the McDonald's journey ...

  1955    Ray Kroc opens his first restaurant in Des   1983   Chicken McNuggets is introduced.
          Plaines, Illinois and the McDonald's                New Hamburger University campus
          Corporation is created.                             opens in Oak Brook, Illinois. Set in 80
                                                              wooded acres. Training is provided for
                                                              every level of McDonald's management
  1957    Quality, Service, Cleanliness and Value             worldwide.
          (QSC& V) becomes the company motto.
                                                       1984   50 billionth hamburger sold.
                                                              Ronald McDonald Children's Charities is
  1959    The 100th McDonald's opens in Chicago.
                                                              founded in Ray Kroc’s memory to raise
                                                              funds in support of child welfare.
  1961    Hamburger University opens in Elk Grove,
          near Chicago.
                                                       1989   McDonald's is listed on the Frankfurt,
                                                              Munich, Paris and Tokyo stock exchanges.
  1963    One billion hamburgers sold.
          Ronald McDonald makes his debut.
                                                       1990   McDonald's opens in Pushkin Square and
                                                              Gorky Street, Moscow.

                                                                                          - 39 -
1964   Filet-O-Fish sandwich is introduced.       1993   The first McDonald's at sea opens aboard
                                                         the Silja Europa, the world's largest ferry
                                                         sailing between Stockholm and Helsinki.
1965   McDonald's Corporation goes public.

                                                  1994   Restaurants open in Bahrain, Bulgaria,
1967   The first restaurants outside of the USA          Egypt, Kuwait, Latvia, Oman, New
       open in Canada and Puerto Rico.                   Caledonia, Trinidad and United Arab
                                                         Emirates, bringing the total to over 15,000
                                                         in 79 countries on 6 continents.
1968   The Big Mac is introduced.
       The 1,000th restaurant opens in Des
       Plaines, Illinois.                         1996   McDonald's opens in India – the 95th

1972   A new McDonald's restaurant opens every
       The Quarter Pounder is introduced.

1973   Egg McMuffin is introduced.

1974   The first Ronald McDonald House opens
       in Philadelphia.
       The Happy Meal is launched.

                                                                                       - 40 -
McDonald is the leading global foodservice retailer with more than 30,000 local
restaurants serving 52 million people in more than 100 countries each day. More than
70% of McDonald's restaurants worldwide are owned and operated by independent
local men and women.

It is one of the world's most well-known and valuable brands and holds a leading
share in the globally branded quick service restaurant segment of the informal
eating-out market in virtually every country in which they do business.

Serves the world some of its favorite foods - World Famous French Fries, Big Mac,
Quarter Pounder, Chicken McNuggets and Egg McMuffin.


              Market Cap                    US$ 60.07 billion (2009)

              Revenue                       US$ 22.79 billion (2008)

              Operating Income              US$ 3.879 billion (2008)

              Net Income                    US$ 2.359 billion (2008)

              Total Assets                  US$ 29.391 billion (2008)

              Total Equity                  US$ 15.279 billion (2008)

                                                                              - 41 -

McDonald’s Corporation, the world’s largest and best-known global food-service
retailer, has demonstrated positive momentum with a growth potential of opening
2,000 restaurants per year worldwide. Total stores in 1998 exceeded 23,000, with
over 12,000 in the United States and 11,000 in company's strategic priority providing
exceptional customer care, remaining an efficient and quality producer, offering high
value, and effectively marketing McDonald's brand on a global scale. The future
success of McDonald's is based on strategically managing its strengths and
competitive advantages today to develop increasingly profitable positions in its
global markets tomorrow. McDonald's strategy has the following core elements.

Growth Strategy:
    Add 2000 restaurants annually, some company owned and some franchised,
       with about two-thirds outside the United States.
      Promote more frequent customers via the addition of breakfast and dinner menu
       low price specials, and Extra Value Meals.
      Dominate the global food-service industry. Global dominance means setting the
       performance standard for customer satisfaction while increasing market share and
       profitability through the firm's convenience, value, and execution strategies.
      Improve an already strong position. The firm's strategies are simple and emphasize
       making customers happy with everyday low prices and outstanding restaurant
       operations so they visit more frequently. Further strategies are to increase market
       share by attracting more customers more often to increase profitability by being
       more efficient, and to create economies of scale.

                                                                                        - 42 -
McDonald's restaurants are found in 119 countries and territories around the world
and serve nearly 47 million customers each day. McDonald's operates over 31,000
restaurants worldwide, employing more than 1.5 million people. The company also
operates other restaurant brands, such as Piles Café, and has a minority stake in Prêt
a Manger.

The company owned a majority stake in Chipotle Mexican Grill until completing its
divestment in October 2006. Until December 2003, it also owned Donatos Pizza. On
August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.

McDonald's has become emblematic of globalization, sometimes referred as the
"McDonaldization" of society.

The brand is known informally as "Mickey D's" (in the US and Canada), "Macky D's"
(in the UK and Ireland), "Mäkkäri" (in Finland), "McDo" (in France, Quebec, the
Philippines and the Kansai region of Japan), "Maccer's" (in Ireland), "Macarrannis"
(in Mexico), "Maccas" (in New Zealand and Australia), "McD's" (in New Zealand),
"Donken" (in Sweden), "de Mac" (in the Netherlands), Mäkkes (in Germany), "Mac"
(in Brazil and the Kanto region of Japan), "Mek" (in Serbia), "Mekáč" (in the Czech
republic), "Mak-Dak" (in the Russia), Mac (in Portugal) and "MacDon's' (in Canada).

Some observers have suggested that the company should be given credit for
increasing the standard of service in markets that it enters.

                                                                                - 43 -
               GLOBAL PRESENCE OF McDonalds

The spread of McDonalds across the globe can be divided into 7 continents and their
cultural similarities and dissimilarities affecting product offering are depicted ahead.

                                                                                   - 44 -

Starting its first ever McDonald’s in 1955 were the McDonalds brothers along with
Ray Kroc. Even today, there stands the tall Golden Arches of the first in Des Plaines,
Illinois, USA. Today McDonalds has made its mark in more than 120 countries and is
still expanding.

North America – Canada, US, Costa Rica, Panama, Netherland Antilles

South America – Argentina, Brazil, Chile, Peru, Venezuela

Main Product Line:

      Shellfish - McDonald's offers various types of shellfish dishes on a regional
       basis. In the New England region of the US, McDonald's offers lobster rolls on
       a seasonal basis, and in the Mid-Atlantic States region crab cakes are offered.
      Touchdown Burger - sold in Wisconsin and seasonally in southeastern
      Johnsonville Brats - A toasted hot dog bun with a Johnsonville Bratwurst
       topped with spicy mustard and onions. Available seasonally and in a 2 Brat
       Extra Value Meal. Sold in Minnesota, Wisconsin, southern Michigan,
       northern Illinois and northwest Indiana. Also briefly available in Cleveland,
       Ohio in the late 1990s.
      Texas Homestyle Burger - a quarter pound (113.4 gram) beef patty, lettuce,
       tomato, onion, pickle, and spicy mustard. Sold in Texas, although it was
       available as an LTO (limited time offer) item called the Southwest Homestyle
       Burger in New Mexico.

                                                                                 - 45 -
   Cajun McChicken Sandwich - it is a variation of the McChicken sandwich
    with Cajun spices mixed into the breading on the chicken portion. LTO item
    sold in Southern United States.
   Hawaii franchises offer saimin on their regular menu. Spam or Portuguese
    sausage with eggs and white rice is offered as a breakfast item. A Spam
    McGriddle sandwich has also been offered as an LTO item. Pineapple and
    taro pies have also been occasionally offered on the regular menu, and
    pineapple is also sometimes available as an additional topping on burgers.
    Haupia pie was recently introduced in Hawaii locations as an LTO. In
    Waikiki locations, small trays of pineapple can be ordered as a side-dish.
   In New Mexico customers are offered the option of Bueno Foods brand Green
    Chile on their burgers.
   In the southern U.S., breakfast items include a country ham biscuit, made
    with salt-cured country ham, and a sausage gravy biscuit, which is a split
    biscuit served in a tray with the gravy ladled on top. The white sausage
    gravy, resembling sawmill or milk gravy, has small chunks of southern-style
    breakfast sausage. Other national items, such as the steak and cheese bagel,
    are also available on a biscuit in the south.
   McRib is occasionally on the menu, and is a pre-formed boneless pork patty
    meant to resemble and taste like pork ribs. It is served with a tomato-based
    barbecue sauce.

                                                                                 - 46 -

As a prominent example of the rapid globalization of American fast food industry,
McDonald's is often the target of criticism for its menu, its expansion, and its
business practices.


The McLibel Trial, also known as McDonald's Restaurants v Morris & Steel, is an
example of this criticism. In 1990, activists from a small group known as London
Greenpeace (no connection to the international pressure group Greenpeace)
distributed leaflets entitled What's wrong with McDonald's?, criticizing its
environmental, health, and labor record. The corporation wrote to the group
demanding they desist and apologize, and, when two of the activists refused to back
down, sued them for libel in one of the longest cases in British civil law. A
documentary film of the McLibel Trial has been shown in several countries.


Morgan Spurlock's 2004 documentary film Super Size Me said that McDonald's food
was contributing to the epidemic of obesity in society, and that the company was
failing to provide nutritional information about its food for its customers. Six weeks
after the film premiered, McDonald's announced that it was eliminating the super
size option, and was creating the adult happy meal.

                                                                                - 47 -
                         PRODUCT ADAPTATION

With the change in the location of a country changes also occur in the habits, needs,
use and consumers buying behaviour. It is imperative for any company to adapt
itself within the norms and functionalities of that country. In Mc Donald’s example it
has reached such heights and has become a name to reckon with in all parts of the
world purely on the basis of its capability to adapt.

The United States of America being the Head of Operations for McDonald’s empire
doesn’t restrict itself to complete control on the operations throughout the world.
McDonalds has adapted itself in a format which can be accommodated in any
country and constant innovation to suite local needs.

McDonalds functions on a Franchising platform and has developed product lines
completely different from the home country. McDonalds trademark technique is to
mix the three approaches to product adaptation - standardization, adaptation and

An example of this is aptly presented as follows.

McDonalds has made its presence felt in all the 7 continents of the global market in
varying numbers. Given below is a detailed list of important cities, their cultural
differences from the home country (USA) and the product transformation technique
adopted by McDonalds.

                                                                                - 48 -
                       7 CONTINENT SPREAD

   Morocco:

The McArabia is sold in the Middle East. In 2005, the McSahara was briefly sold.
In late 2006, the Chicken Mystic, Le Petit plaisirs (small pleasures), and 280 gram
Recette Moutarde (Mustard burger) were all released.


Belgium, Czech Republic, Finland, France, Germany, Greece, Hungary,
Netherlands, Norway, Poland, Slovenia, Sweden, Turkey, United Kingdom &

   France

The French known for their leisurely lifestyle have changed recently and started
to accept western way of living.

Although they are known for their
hostility    towards   the   American
influence, they have recently been
imitating their lifestyle. In the past
they shopped mainly at markets,
green grocers and butchers and they
prepared two leisurely, formal meals
a day. They used to drink wine and
water with their dishes, now there are
soft drinks and sweet fruit juices more
commonly served.

                                                                             - 49 -
In France, McDonald's offers Kronenbourg 1664 in 25 or 33 cl measures. All
McDonalds across the European continent offers a choice of Beer n wine to savour
their local tastes.

    The "Croque McDo" is also offered which is a toasted cheese and ham sandwich,
    similar to the French classic Croque-monsieur. Every three months or so, a new
    "Petit Plaisir" is introduced. It's a sandwich made of chicken or of beef.

       Greece

    In additional to the traditional offering of a
    Big Mac, McDonald's sells the Greek Mac,
    which includes all the ingredients of a Big
    Mac, sans the outer and middle hamburger
    buns, inside a piece of pita bread.

       Turkey

    McDonald's offers the Turkish drink Ayran and McTurco, a type of Turkish
    Kebab with either chicken or lamb. A new kind of square hamburger that fits to
    Turkish taste is MaxBurger. Additionally, Turkey features a sour cherry pie,
    which is similar to the Apple Pie. Sour cherry is a popular flavor in Turkey and
    the pie predates the U.S. cherry pie.

                                                                                 - 50 -

Australian Food, the cocktail of different culture is famous for its miscellany rich
cuisines. Traditionally Australian cuisines were based on British cooking from its

Later Australian-cookery was enriched with multi-cultural contribution made by
German, Italian, Greek, Asian and South African immigrant communities. The
inhabitants of Australia are fond of both veg and non-veg foods consisting pies,
roasted cuts of meat, grilled steak and chops, and other forms of meat generally
accompanied by vegetables.

For centuries the native Australians are using the fruits and plants growing in
their local lands to make mouth-watering delicacies like, Calamari seasoned with
lemon myrtle, Lemon myrtle linguine tossed with local scallops and prawns,
Native spinach fettuccine with Springs Smoked Salmon with creamy bush
tomato and macadamia sauce etc.

The various innovations by McDonalds also include a new format McCafe’
introduced in Australia and other select countries.

Keeping the local tastes in mind McDonalds kept evolving with products
seasonally. It would start off with a trial run of a product to gauge the consumer
response and then shoot up the product once it become successful. Given below
is a detailed menu of New Zealand McDonalds giving a glimpse of the
adaptation undertaken.

                                                                              - 51 -
New Zealand McDonalds Menu:

Due to popular public demand, the
Kiwi burger was re-introduced to
the menu in 2007; it consists of an
all-beef patty, egg, tomato, lettuce,
cheese,   onion,   cooked   beetroot,
sauce and mustard in a toasted bun.
In April 2007 Large Ravioli Bits
began being served as part of the
Happy Meal menu. 'Pasta Pets'
comes in animal shaped pasta filled
with a cheese, vegetable mixture.

 It comes with tong-like grippers
used to dip the pasta into a tomato sauce. In 2007, McDonald's introduced the
                                        Down Under Deluxe - a home-style
                                        burger, named via a nation-wide public
                                        contest, and also launched the "Made to
                                        Order" menu which consisted of all
                                        burgers cooked fresh upon ordering and
                                        encouraged customers to personalize their
Kellog's® Just     Kellog's® Nutri-
   Right®              Grain®           tastes.

                                                                           - 52 -

China, Indonesia, Japan, Hong Kong, South Korea, Thailand, Taiwan, Philippines,
Singapore, Malaysia, Israel, Bahrain, Saudi Arabia, India

A group of anthropologists in a study entitled Golden Arches East (Stanford
University Press, 1998, edited by James L. Watson) looked at the impact
McDonald's had on East Asia and Hong Kong in particular. When it opened in
Hong Kong in 1975, McDonald's was the first restaurant to consistently offer
clean restrooms, driving customers to demand the same of other restaurants and
institutions. In East Asia in particular, McDonald's have become a symbol for the
desire to embrace Western cultural norms.

   China

Chinese Food reflects the culinary art of the Chinese people that has indeed a
long history. Chinese Food is the product of the diverse cuisines and culinary art
of China. It actually originates in four different areas of the country, and
gradually spread on an international basis. In fact, China food is highly popular
al over the world, especially in countries like India, Eastern Asia, West Europe,
Australia and North America.

Chinese food invariably consists of more than two components – rice, noodles or
Mantou that is steamed beans, containing plenty of carbohydrate and fat

   Rice is a main part of most of the Chinese foods
   Soup is an obvious starter before each Chinese menu
   China food uses special utensils called Chopsticks while eating
   Maximum Chinese dishes are ready to be picked up directly and begin

                                                                            - 53 -
Chinese McDonalds Menu:

   The Chicken McNuggets come with the traditional BBQ, Sweet & Sour, and
    Honey     Mustard   sauces,   but
    there's also a chili garlic sauce
    (very popular in China).
   There are specific McDonald's
    restaurants and counters for ice
    cream, beverages, and desserts
    (otherwise rare in China).
   There are 24 hours McDonalds
    also providing delivery services
    to beat the competition.
   They include crispy chicken wings on their menu which comes in 2, 4, and 6
   A seasonal Chinese New Year meal is available, including Grilled Chicken
                                                            Burger, curly fries, with a
                                                            horoscope of the twelve
                                                            zodiac animals of Chinese
                                                            astrology and traditional
                                                            "red" packets, or gift bags,
                                                            for monetary gift giving
                                                            as good luck.

                                                               All chicken burgers
                                                            offered in Chinese
                                                            McDonald's use ‘thigh’
    fillet (eg Premium Grilled Thigh Fillet Burger, Hot and Spicy Grilled Thigh Fillet
    Burger), rather than breast meat as per usual in western countries.

                                                                                  - 54 -
   Thailand

McDonald's serves the Samurai Pork Burger, flavored with teriyaki sauce. Chili
Sauce is available along with ketchup. Other Thailand-specific items that have
been sold include rice patties made with jasmine rice, the Caribbean Shrimp
Burger (known as the Ebi-Filet-O in Japan), and a salad shaker based on som tam,
papaya salad. They also serve fried chicken as well.

   Taiwan

McDonald's has introduced kao fan (literally "baked rice"), a burger-like entree
with rice patties in place of buns. It is modeled on the eponymous product of
McDonald's Japanese rival, MOS Burger.

   Indonesia

McDonald's sells fried chicken, which is by far more popular than the
hamburgers. McRice is also offered, a small mound of steamed, plain rice.
McSoup is a chicken flavored soup with bits of reconstituted croutons and
vegetables. A bun containing a beef patty covered with satay sauce (spicy ground
peanut sauce) is sold as Mc Sate. At one point, McDonald's also began offering a
"McSpaghetti" to their menus.

   Israel
   McDonald's has Kosher branches
    only in Israel and Argentina.
   McShawarma (shawarma served in
    flatbread)   and    McKebab     (kebab
    served on flatbread) are specialty
    items on the Israeli menu.
   All meat served at McDonald's in
    Israel is kosher.
   Israel and Argentina are also the only places in the world where McDonald's
    burgers are barbecued on charcoal rather than fried.

                                                                          - 55 -
   In Israel most branches are non kosher since they serve Cheeseburgers (which
    are non-kosher by Judaism) and they serve milk based deserts (ice cream,
    milkshakes). In the kosher branches they do not serve either, though some
    kosher branches do serve them, but in a separate booth, which allows
    separation of dairy and meat.

   Bahrain

In addition to the McArabia, McDonald's restaurants in Bahrain, beginning in
March 2008, sell the McCrispy, a meal consisting of 1, 2, or 3 chicken strips served
in a wrapper for a single strip or in a box for 2 or 3, with a choice of barbecue,
sweet & sour, or garlic sauce. Like all Middle Eastern McDonald's restaurants, all
food served in Bahraini outlets is halal.

   Saudi Arabia

In Saudi Arabia, no pork products are served as it is prohibited by Islamic law.
All meat sold is halal. Mc Donalds serves the McArabia.

                                                                              - 56 -

McDonald's India is a joint venture of McDonald’s Corporation with Amit Jatia and
Vikram Bakshi. Amit Jatia handles the operations in western region whereas Vikram
Bakshi in the northern region.

McDonald's India is an employer of opportunity, providing quality employment and
long-term careers to the Indian people. The average McDonald's restaurant employs
more than 100 people in 25 different positions – from cashier to restaurant manager.
McDonald's world class-training inputs to its employees can be seen at present to be
close to 2000 employees currently in Mumbai and Delhi.

                                                                              - 57 -
But the most overlooked fact of McDonald’s India is its contribution to the food
processing industry. Six years prior to the opening of the first McDonald's restaurant
in India, McDonald's and its international supplier partners worked together with
local Indian Companies to develop products that meet McDonald's rigorous quality

Part of this development involves the transfer of state-of-the-art food processing
technology, which has enabled Indian businesses to grow by improving their ability
to compete in today’s international markets. McDonald’s dedication to its suppliers
has lead to their growth, beyond the boundaries of the India.

McDonald’s India has tried not to leave any stone un-turned in its objective to satisfy
the Indian customer. But in Amit Jatia’s words, “Customers are generally not
forgiving.” According to the survey conducted, customers demand low prices, more
seating space, more variety, home delivery, and the list is endless.

McDonald’s had to understand the vast cultural difference in India when they had
to enter such huge market with its burger. In 1995-96 India’s vegetarian market was
40%. These vegetarians preferred that the burger should be made in a clean and
separate kitchen. Also their love for spicy food was required to be considered.
Among the non-veg. eaters, their disliking towards pork and beef among mean eater
was very well known. McDonald’s realize that they need to serve Indians more than
just burger, a burger that satisfies Indians taste.

The fundamental secret to McDonald’s success is the way it achieves uniformity and
allegiance to an operating regimen. McDonald’s India has to adhere to many rules
and regulations laid down by the parent company, and it still has to cater to the
Indian customer and his needs. McDonald’s India is a case study on how to mix
conformity with creativity.

                                                                                 - 58 -
   Beef and pork products are not served to cater to Indian religious sensitivities.
    Chicken (only Halal) along with fish are the only meat products used.
   In India, meat and vegetarian meals are prepared in separate areas of the
    restaurant because of religious laws about preparation of food for vegetarians
    and meat-eaters. Cooks preparing vegetarian dishes wear distinctive green
   The "McCurry Pan", the famous dish is very popular and is an original
    creation of McDonald's across India.
   The Big Mac is replaced by the Maharaja Mac, which was originally made
    with lamb but is now made with chicken.
   Mexican-style wraps for both vegetarians and non-vegetarians, such as the
    ‘Paneer-Salsa wrap’ and the ‘Chicken-Mexican wrap’, and Curry pans in
    Shahi-Paneer and Chicken-Tikka variations are also offered.
   Other items on the Indian Menu include chicken products such as the
    McChicken Burger and Chicken McGill (a burger with a thin chicken patty,
    thin slices of both onions and tomatoes, filled with green chutney replacing
    the usual layer of mayonnaise).
   The vegetarian burger menu consists of the McAloo Tikki Burger. McVeggie
    is another Vegetarian burger on the menu. It looks similar to the above
    McAloo Tikki Burger, but is made from mixed vegetables, peas, and spices,
    lettuce and veg mayonnaise (referred to as Veg Sauce in India).
   There is also a Pizza McPuff, consisting of a puff pastry stuffed with peas,
    sliced cheese etc.
   Recently a breakfast menu was introduced in selected outlets. The menu
    includes veg items like Veggie McMuffin, hash browns, cuppa corn, Hot
    cakes with maple syrup, and Spinach and corn McMuffin. Non veg menu
    features egg and cheese McMuffin, Sausage McMuffin and chicken Salami
    McMuffin. These products were available at selected outlets from 7 AM to 11
    AM in the mornings.

                                                                              - 59 -
- 60 -
                         MARKET RESEARCH

In order to portray the consumer’s acceptance of a global brand like McDonald’s I
have conducted a Market research on the customers from the Western region located
McDonalds in Mumbai.

Survey of Customers

      Objective of the survey: To find out the perception and acceptance of
       McDonald’s in the minds of the customer.
      Methodology: Primary data was collected as it gives first hand information
       and also the data can be adjusted according to the needs. The tool used was
       the questionnaire method. This method was chosen as it obtains standardized
       results that can be tabulated and treated statistically. A broad category of the
       questions asked were:
        1.     Frequency of visit
        2.     Favorite Product
        3.     Is McDonald’s value for Money?
        4.     Unique Selling Proposition of McDonald’s
        5.     Suggestions to improve McDonald’s

Sample Size:

       We conducted a survey of around 100 customers of McDonald’s. The profile
       was mainly distributed in 3 categories.

                                                                                 - 61 -
   Processing of Data:

       The data collected from the questionnaires was tabulated and the percentages
       were derived.

Categories                              Number of Customer Interviewed

Below 15 years                          28 customers

Between 15 years to 25 years            42 customers

Above 25 years                          30 customers

                                                                              - 62 -

1. Are you a vegetarian?

a. Yes                                  b. No

2. What is your frequency of visit to McDonald’s?

(Please tick the appropriate)

a. Every day                                    b. Twice in a week

c. Once in fortnight                            d. Once in a month

e. Please specify if other ________________________

3. Which is your favorite product of McDonald’s? (Please tick the appropriate)

a. McChicken Burger                             b. McVeggie Burger

c. French Fries                                 d. Others

5. Do you find McDonald’s value for money?

a. Yes                                          b. No

                                                                                 - 63 -
6. What are the problems faced in the visits to McDonald’s? (You can tick more than one

a. Long Queues                                 b. Wrong Order

c. Bad Music                                   d. Other Problems

e. No Problems

7. Please rank the following Unique Selling Proposition of McDonald’s according to your

a. Food                                        b.Hygiene

c.Ambience                                     d.Quick Service

e. Location      ‫ڤ‬

8. Give suggestions to improve McDonalds.


Personal Information

Name             ____________________

Age              ____________________

Occupation       ____________________

Income (p.a.) ____________________

                                                                                      - 64 -

                - 65 -
  8.1 Ratio of Vegetarians and Non-Vegetarians visiting

                                  Veg       Non-Veg

                                46%             54%

The percentage of vegetarian people visiting the restaurant is slightly more than the
non-vegetarians. India being a highly vegetarian dominated country the number of
vegetarians visiting the joint is higher than the non-vegetarian crowd.

If u may see the product graph of McDonalds in India it has varied quite a bit with
experimenting new innovations to suit the culinary tastes of Indians. They have
extended their range of vegetarian menu as also added a few beverages and desserts.

This depicts the change in the range of products vrought about by the company to
suit local needs.

                                                                               - 66 -
                          8.2 Favorite Product

                      14% 11%                                 McVeggie Burger
             18%                      18%
                                                              McChicken Burger
                           39%                                French Fries
                                                              McAloo Tikki
                                                              Salad Sandwich

Some of the customers love to visit McDonald’s just to have the French fries. The
McChicken Burger and the McVeggie Burger are the second favorites. The local
suppliers of McDonald's India provide the highest quality and freshest ingredients.
They completely adhere to the Indian Government regulations on food, health and
hygiene and at the same time maintain their own recognized international standards.
Fast, friendly service is the hallmark of McDonald's restaurants all over the world.

                                                                                 - 67 -
        8.3 Do you find the product line satisfactory?

                                              50%                     No
                          21%                                         It's OK

Only 50% of the customers find the product line satisfactory. Rests 29% find it ok and
the rest find it unsatisfactory

McDonald's has re-formulated some of its products using spices favoured by
Indians. Among these are McVeggie burger, McAloo Tikkiburger, Veg. Pizza McPuff
and Chicken McGrill burger. They have also created eggless sandwich sauces for all
the vegetarian customers. Even the soft serves and McShakes are egg-less, offering a
larger variety to the vegetarian consumers.

They feel that McDonald’s should include more deserts and more items like the
Pizza McPuff besides the burgers.

                                                                                - 68 -
        8.4 Do you find McDonald’s value for money?


Most of the parents gave a positive answer to this question, but the customers above
the age of 25 didn’t find McDonald’s value for money at all.

The main reason for the parents preferring McDonald’s is because their children’s
like it and hence they don’t mind paying any amount. The customers above the age
of 25 years find it a good place to hangout and like the food, but don’t find it
nutritious or filling.

The customers with a non satisfactory answer were of the opinion that there shoul be
changes in the range of product along with the price options and more value
schemes like the “Happy Price Menu (Rs. 20/-)” should be introduced.

                                                                              - 69 -
       8.5 Problems faced in the visits to McDonald’s
 45%                                                                      43%
  5%                                        3%
           Long            Wrong            Bad            Other           No
          Queues           Order           Music         Problems       Problems

Long queue was a major problem of all the customers. They said that the waiting
period was too long, especially in the evenings and weekends.

They felt that even thought the service is fast; McDonald’s could do with increasing
the number of counters.

The customers below the age group of 25 felt that the outlets played outdated music,
which irritates them. But nearly 43% of the customers said that they haven’t had any
problems at all in any of their visits. Even if they had some small issues, the
employees of McDonald’s solved them very well.

                                                                              - 70 -
       8.6 Unique Selling Proposition of McDonald’s


 20%                   24%

 15%                                19%         17%

                                                             6%           8%

          Food       Hygiene     Ambience       Quick      Location     Others

Food remains to be the favorite part of McDonald’s. Hygiene ranks the next with
24%. This was a popular answer amongst mothers as they found it to be a very
hygienic place for their children. The young and energetic ambience of McDonald’s
is also liked by all. Other USP’s of McDonald’s include good crowd and courteous

                                                                           - 71 -
            8.7 Suggestions to improve McDonald’s

 No Suggestions                                                      22%

    Better Music                      7%

     More Space                                   13%

  Home Delivery                                         15%

    More Variety                                              19%

       Low Prices                                                          24%

                     0%        5%          10%     15%        20%       25%         30%

22% of the customers were very satisfied with McDonald’s and said that it is fine the
way it is. On the other hand, 24% of the customers want the prices to be reduced and
also have more variety to choose from.

Some of them would even like to have home delivery. Surprisingly, none of the
Indian customers suggested starting ‘drive-ins’ which are extremely popular in the
other countries.

                                                                                 - 72 -

Recommendations based on the survey are :

    More items should be added to the product line, especially in the vegetarian
      category. More so the menu should be innovated upon seasonally.

    The prices need to be moderated. More value meals should be introduced.
      The french fries, chicken burger and the veg burger are the most popular
      items, so their prices can be reduced to attract more customers.

    The communication can also focus more on the hygiene factor of McDonald’s,
      for e.g.: McDonald’s can stress on the fact that they do not serve any burger,
      which has been prepared but not consumed for 10 minutes.

    The peak time management should be improved. More counters should be
      opened during the peak hours.

    The music played at the outlet should not be outdated.

                                                                              - 73 -

On May 4th 2001, the outcry over the alleged use of beef flavoring in the preparation
of French fries by McDonald’s led to attacks on two outlets in Mumbai and Thane.
Within hours of the story breaking that McDonald’s in the U.S. had been using oil
with a beef extract for cooking its fries, the burger giant’s
Indian operation knew it had a crisis on its hands.

Amit Jatia and his staff huddled together with PR
specialists from Corporate Voice Shandwick, ad men from
Mudra DDB, corporate affairs and legal experts. Police
security for all outlets was first red alerted.

Then, posters were made from office printers with the
headline: “100 percent Vegetarian French Fries in
McDonald’s India.” Below this were various bullets of information such as: “No
flavors with animal products/extracts are used for preparing any vegetarian
products in India.” The posters were plastered over all the Big M outlets.

The main imperative was to supply proof. On the day the story broke in India,
McDonald’s submitted samples of the fries to leading laboratories in Pune and
Mumbai, such as the Council of Fair Business Practices, as well as Delhi’s Central
Food and Technical Research Institute.

Tests were quickly done by the BMC (Bombay Municipal Corporation) and FDA and
local political parties. It took a week but the results were clear – no beef or meat in
the oil or products – which were rapidly passed to the press. The results were also
posted in the various outlets and put as inserts in the daily papers in sensitive areas
like Bombay’s Vile Parle, Charni Road and Thane district.

All these marketing efforts helped the Big Mac to avert the crisis and regain the
confidence of the customers. For a few days after the news, the sales dropped
drastically, but now, the outlets are back to their usual footfalls and french fries
remain the most favorite and most selling product of McDonald’s India.

                                                                                 - 74 -

   1. International Marketing – Cateora, Graham, Salwan

   2. Consumer Behavior – Schiffman & Kaunk

   3. McDonald’s Behind the Arches - John F. Love

   1. International Marketing – Ravi Nair

   2. Cultural Impact on International Marketing – Nadine Freitag




   3. – Different countries


                                                                    - 75 -

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