Cultural differences in the
standardization and adaptation
processes of multinational
corporations
A case study of McDonald’s
Master Dissertation Dual-degree International Business & Management and
International Marketing
Acknowledgements ... 2
Abstract ... 3
1. Introduction ... 4
1.1 Standardization ... 4
1.2 Adaptation ... 4
1.3 Standardization versus adaptation ... 5
1.4 Continuum ... 5
1.5 Relevance ... 6
2. Fast food market ... 8
2.1 McDonald’s ... 9 2.1.1 South Korea ... 10 2.1.2 The Netherlands ... 10 2.2 Problem statement ... 11 3. Theoretical framework ... 13 3.1 Marketing ... 13 3.2 Taste ... 15 3.3 Consumer attitude ... 17 3.4 Competition ... 18 3.5 Cultural differences ... 19 3.6 Management practices ... 20 3.7 Performance ... 21 3.8 Conceptual framework ... 23 4. Methodology ... 26 4.1 Data collection ... 26 4.2 Data selection ... 26 4.3 Measurement ... 27 4.3.1. Measuring marketing ... 28 4.3.2. Measuring taste ... 28
4.3.4. Measuring competition ... 29
4.3.5. Measuring cultural background ... 29
4.3.6. Measuring performance ... 29
4.4 Statistical tests ... 30
5. Findings ... 32
5.1 General data ... 32
5.2 Independent samples t-test ... 33
5.3 Multiple regression analysis ... 33
5.4 Results hypotheses ... 34
5.4.1. Hypothesis 1: Marketing ... 34
5.4.2. Hypothesis 2: Taste ... 34
5.4.3. Hypothesis 3: Consumer attitude ... 34
5.4.4. Hypothesis 4: Competition ... 35
5.4.5. Hypothesis 5: Cultural background ... 35
5.5 Group comparison ... 35
5.6 Conclusion ... 36
6. Conclusion ... 38
6.1 Conclusion ... 38
6.2 Managerial implications ... 39
6.3 Limitations and further research ... 40
References ... 41
Appendices ... 44
Appendix A. Questionnaire ... 44
Questionnaire ... 44
Personal information ... 44
Appendix B. SPSS output: Factor Analysis and Cronbach’s alpha ... 48
Appendix C. SPSS output: General data ... 54
Appendix D. SPSS output: Independent samples t-test ... 57
Appendix E. SPSS output: Multiple regression analysis hypotheses ... 58
adaptation processes of multinational corporations
A case study of McDonald’s
Abstract
Over the past few decades Western fast food chains have expanded themselves enormously around the world. On the one hand by standardizing several processes i.e. service, appearance, and on the other hand by adapting to local food cultures by changing menus. Increasingly the marketing mix elements affect the internationalization processes of multinationals. This research aims to indicate what factors influence the performance of multinationals. In order to indicate the main influential factors, this research focuses on five variables, namely marketing, taste, consumer attitude, competition, and culture, which might have an influence on the performance of McDonald’s. These five variables have been researched for McDonald’s within two countries, South Korea and The Netherlands.
Key words:
Marketing, taste, consumer attitude, competition, culture, performance, McDonald’s, South Korea, The Netherlands
Author Inge Willemse
Student number S1548603/B110165154 First supervisor Dr. L. Karsten
Second supervisor Dr. M. Gorton
Year December 2011
University of Groningen Newcastle University
MSc. International Business and Management MSc. International Marketing
Faculty of Economics and Business Business School
List of figures and tables
Figures
2.1 Fast food sales approach in US$...8
2.2 Worldwide burger sales………..9
3.1 Standardization and adaptation of the international marketing mix………. 15
3.2 GMS – a conceptualization of global marketing strategy……… 23
3.3 Conceptual model……… 24
Tables
2.1 Brand shares of chained fast food in South Korea 2007-2010………. 102.2 Brand shares of chained fast food in The Netherlands 2006-2009……….. 11
Acknowledgements
y study abroad period in Newcastle, United Kingdom inspired me to do this research. During a lecture on international marketing, Mrs. Caroline Barrass encouraged me to do research on McDonald’s, since this international company is a perfect example on how to perfectly integrate the marketing mix elements when internationalizing. I thank her for providing me with this inventive idea. Ever since McDonald’s opened its first restaurant, the introduction of new fast food chains skyrocketed. Nowadays, the fast food industry is dynamic, with many diverse fast food chains. Due to health issues, the fast food industry has gone through significant innovations to reduce the risk of losing its consumers.
Personally, I used to perceive fast food chains as an easy way to carry out a fixed concept globally. However, carrying out this research made me conscious of all the decisions managers of global fast food chains have to go through. Some part of the global concepts of fast food chains can be carried out among all countries the chain is active in, although, many marketing mix elements need to be adapted to local cultures in order for the fast food chain to be successful. This research has been very helpful in correctly perceiving the industry and understanding the challenging decisions marketing managers have to go through when internationalizing. Understanding the challenging decisions marketing managers have to deal with will be very supportive in my future career.
I could not have done this research without the assistance of several people who I would like to thank gratefully for assisting me throughout this process. First of all, I would like to thank my supervisors, Dr. Luchien Karsten and Dr. Matthew Gorton, for their support, inspiring ideas, advice, and critical feedback. Also, I would like to thank my Korean, as well as Dutch, friends who spent their valuable time on filling out the questionnaires. Performing research in both South Korea and The Netherlands got me back in contact with my Korean friends again, which reminded me of all the great times we have had together. Furthermore, I am very grateful to my family, friends, and boyfriend for their support and their
continuous belief in me throughout my studies.
Kam sah hamnida!
Abstract
arketing plays an increasingly important role in the internationalization process of companies. Marketing managers have to take significant decisions when it comes to the standardization versus adaptation process. Additionally, marketing managers have to take into consideration the cultural differences that might influence their activities across countries. Several factors can be of influence on the performance of multinationals; however, these factors in its turn might be influenced by cultural differences. This research aims to indicate what factors influence the performance of multinationals. In order to indicate the main influential factors, this research focuses on five variables, namely marketing, taste, consumer attitude, competition, and culture, which might have an influence on the performance of McDonald’s. These five variables have been researched for
McDonald’s within two countries, South Korea and The Netherlands. In total, 150 students were asked to fill out the questionnaire of which 75 South Korean and 75 Dutch respondents. Multiple regression analysis has been used to statistically analyze the relationship between the five variables, country of origin, and the performance of McDonald’s. It was found that country of origin has no influence on the five variables, marketing, taste, consumer attitude, competition, and culture which in its turn were not of any influence on the performance of McDonald’s. Excluding country of origin from the multiple regression analysis did not have a clear effect on the relationship between the five variables and McDonald’s performance. Nevertheless, by comparing groups on gender, age, and income it was found that females do have an influence on the variable culture and thus indirectly influence market share. However, this result was not supported for age and income.
Key words: Marketing, taste, consumer attitude, competition, culture, performance, McDonald’s, South Korea, The Netherlands
1.
Introduction
rganization’s aspiration to operate in foreign markets is mainly caused by the increase in interconnectedness in today’s world. According to Hollensen (2008), a market is global when a few large powerful players dominate the market, while a local market is represented by a multi domestic market environment. Expansion to foreign markets provides organizations with
potentially more profitable markets, increased competitiveness, and the expansion facilitates access to new product ideas, manufacturing innovations, and better technology (Hollensen, 2008). Severe preparation is necessary for organizations to become successful internationally. In preparation to becoming a global player, the potential global player needs to put its organization along a continuum. On the one end the continuum states standardization and on the other end it states adaptation.
Ever since the beginning of the 1980s, the term ‘globalization’ became a matter of debate (Hollensen, 2008). The most appropriate way for organizations to become international has been the subject of many extensive debates. Levitt (1983) initially proposed two sides to these debates, which received support as well as criticism. On the one hand Levitt (1983) put global marketing, which asks for a standardized approach. On the other hand he put local marketing, which is concerned with a country-specific and differentiated approach. According to Hollensen (2008), a fundamental decision for
managers to make is the degree to which their organization is going to standardize or adapt their global marketing mix.
1.1
Standardization
Several features characterize a standardized marketing concept, namely customers operating on a global basis, organizations benefiting from sufficient economies of scale, and the homogenization of demand. On the one hand, standardization concerns the decision-making process. Standardization of multinational corporations (MNCs) can be defined as having similar management practices amongst subsidiaries and headquarters (Pudelko and Harzing, 2007). On the other hand, standardization is concerned with the elements of the marketing mix, consisting of product, price, distribution, and communication.
1.2
Adaptation
In contrast to standardization, adaptation concerns markets where customers are focused mainly on a local basis, organizations do not specifically benefit from economies of scale, and the homogenization of
demand does not take place. Adaptation, as well as standardization, is concerned with both the
decision-making process and the marketing mix elements. The adapted decision-making process can be referred to as having localized management practices within subsidiaries that severely differ from headquarters’ practices. Within the marketing mix, products and services are subject to the paradigm of standardization versus adaptation as well as product branding and the overall marketing.
1.3
Standardization versus adaptation
In the past, competition between global corporations has led to a discussion on whether to standardize or adapt to the needs of customers, since the challenge is to identify and respond to consumers’ expectations, interests in products and services, as well as addressing cultural differences. As Alashban, Hayes, Zinkhan, and Balazs (2002) as well as Winram (1984) described, standardization of a brand helps saving costs and leads to higher sales volumes; the more standardized the brand name worldwide, the higher are the firm’s cost savings and the higher is the product’s sales volume. Furthermore, several scholars claim that standardization leads to economies of scale, a consistent and well-known brand image throughout the world, and better control and coordination of international operations. However, Wind (1986) argues for adaptation by stating that a global brand increases its revenues by adapting the brand to specific needs of each market segment. Kotler (1986) also argues for adaptation by describing the fact that each specific market segment needs to be addressed individually.
An alternative to these views has been provided by Hassan and Katsanis (1991), who integrate standardization and adaptation by stating; “consumer marketers are expected to think of global similarities and adapt to local differences as they develop and implement a brand”.
Subsequently to the debate on standardization versus adaptation, brand management received significant attention over the past decades. As Zaltman and Wallendorf (1979) stated, 40 percent of a product’s success or failure is determined by its brand name, since a well-known and stable brand is perceived as a quality brand. The quality perception of consumers on well-known brands leads to dissolute purchases.
1.4
Continuum
country they are entering. Similarities and differences as well as convergent and divergent interests and cultures exist, which makes it difficult to develop products with a universal appeal. Obviously, success in one country does not guarantee any success elsewhere, since one expansion strategy may not fit all other markets. Different cultures and markets ask for the marketing mix to be modified to the particular market. The degree of standardization and/or adaptation illustrate a much better view on the operation of organizations, since only a few marketing mixes are totally standardized or adapted. Therefore, standardization and adaptation cannot be seen as two distinct options, but rather along a continuum.
1.5
Relevance
“In recent decades the increasing liberalization of trade policies; growing stability in economic transactions; the existence of regional economic integrations; free-trade zones; and the significant progress that has been taken place in transportation, communication, and information technologies has led to globalization and an enormous international business scene” (Czinkota, 2001 and Keegan, 1999). Globalization makes global corporations encourage people to develop a taste for their products, to acquire a need for their services, and to accommodate to their ways of doing things (Smart, 1999). Furthermore, globalization had led to a significant decrease in transportation costs and has caused for the arising of communication networks (Reich, 1991). Globalization has encouraged organizations to create value from lowering the output costs to a minimum (Bartlett and Ghoshal, 1989). Everything people eat, drink, wear, and probably need or want is provided by global corporations, which all compete to expand their brand, goods, and services within the market.
at the concepts of standardization and adaptation; this research will rather focus upon several aspects of the marketing process.
A second reason for this research to add to previous literature is that this research will take into account two specific countries, namely South Korea and The Netherlands. Even though an increasing number of products and services become available worldwide and therefore cultures become more widely accepted amongst various countries, cultures still need to be approached differently. The approaching of various cultures is extremely important when expanding globally as well as in the development of internationally focused marketing practices. During my study abroad period in South Korea in 2009, I experienced the cultural differences between South Korea and The Netherlands, not only social differences, but differences in each country’s food culture as well. Even though South Korean food differs a lot from Dutch food, the fast food industry, and especially McDonald’s, has proven to be successful in both countries.
2.
Fast food market
ver the past few decades, fast food has become far more popular worldwide. According to a consumer survey done in 2004 by the leading global information and measurement
company, ACNielsen, 46 percent of Europeans eat fast food once a month, compared to 35 percent of Americans and 34 percent of Asians who consume fast food at least once a week (ACNielsen, 2004). Low prices are the main factor behind facilitating a sustainable consumer interest and market growth. Major fast food chains accomplished to continue this growth during the economic downturn of 2007 by expanding and opening new restaurants.
Figure 2.1 shows that in 2009 fast food reached the second position concerning the world’s foodservice categories, which additionally includes full-service restaurants, cafés, bars, kiosks, home delivery, takeaway, and self-service cafeterias.
Figure 2.1. Fast food sales approach in US$ (EUROMONITOR)
Despite the economic recession of 2007 fast food remained popular around the world, mainly caused by rather cheaper food offerings compared to other foodservice categories. In South Korea as well as in The Netherlands the economic recession even caused for a boost in fast food sales over 2009. In South Korea fast food value increased by 7 per cent to reach sales of 8.3KRW trillion, opposed to a value increase of 1 per cent to reach 2.6EUR billion in sales in The Netherlands (EUROMONITOR).
Not only fast food in general became more popular over the years, worldwide burger sales in particular skyrocketed. Together with Asian fast food, burgers are the most sold fast food products over the world in 2009 (figure 2.2). Burger fast food made its return after a decline in sales over the early 2000s. Ever since the start of the economic recession in 2007, burger fast food has been on its return. The sudden rise in burger fast food has not only been caused by the economic recession. The rise was
correspondingly caused by the health issues and obesity problems that became more important to people. Therefore, burger fast food chains have made a change in their offerings as well as their marketing campaigns. With their marketing campaigns focusing on the healthier choices, burger fast food chains have overcome the risk of losing customers on health issues. Furthermore, in South Korea 24-hour services as well as home-delivery were added to the services of burger fast food chains, which was an additional reason for South Korean burger chains to remain their increasing sales numbers.
Figure 2.2. Worldwide burger sales (EUROMONITOR)
2.1 McDonald’s
One of the world’s most successful and popular fast food chains is McDonald’s. Even though the economic crisis was expected to cause an unstable climate during 2010 McDonald’s’ sales grew, which again could be explained by low prices and an increasing number of restaurants. Furthermore, McDonald’s remodeled its existing establishments and extended its opening hours. Research, done by Mintel (2009), shows that the segmented and flexible menus meeting consumer needs are accountable for McDonald’s recent success.
2.1.1 South Korea
In 2009, McDonald’s by McDonald’s Korea Corp. took a 29 per cent value share out of burger fast food, while it only took 5 per cent of total fast food (EUROMONITOR). The share McDonald’s took in burger fast food was strengthened not only by offering burgers, but rather by extending the menu with breakfast offerings, discounted lunch menu offerings, McCafé coffee, and social events. Within South Korea McDonald’s value share is still growing, however, the national competitor Lotteria by Lotte Group is growing at a faster pace. Table 2.1 shows the shares of the five leading brands within the chained fast food sector from 2007 till 2010.
% Value Global brand owner
2007 2008 2009 2010
Paris Baguette Paris Croissant Co Ltd 16.0 16.5 18.1 19.3 Lotteria Lotteria Co Ltd 7.2 7.4 7.2 7.4 McDonald’s McDonald’s Korea Corp 4.2 4.5 5.2 5.2 BBQ Genesis Co Ltd 3.9 3.8 4.8 4.9 Tous Les Jours CJ foodville Corp 3.6 4.5 4.6 4.5
Table 2.1. Brand shares of chained fast food in South Korea 2007-2010 (EUROMONITOR)
2.1.2 The Netherlands
Within The Netherlands, McDonald’s by McDonald’s Corp. remained the leading brand in fast food over 2009. Due to McDonald’s marketing and promotion, it remains one of the leading fast food brands in The Netherlands. Furthermore, by reducing the sizes of menus as well as low fat products, McDonald’s eliminated the risk of losing customers due to increasing health issues. Table 2.2 shows the shares of the five leading brands within the chained fast food sector from 2006 till 2009.
Bakkerij Bart Various franchisees
3.5 3.4 3.7 3.7
Burger King Various franchisees
2.5 2.6 3.3 3.5
KFC Various franchisees
2.8 2.8 2.4 2.9
Table 2.2. Brand shares of chained fast food in The Netherlands 2006-2009 (EUROMONITOR)
2.2
Problem statement
This paper will focus on whether McDonald’s can enlarge its success by expanding the flexible menus to meet consumer needs over numerous countries. Therefore, it needs to be researched whether similar factors influence McDonald’s performance over various countries.
This leads to the following research question:
“To what extent do marketing, taste, consumer attitude, competition, and culture influence the performance of a global player like McDonald’s and do country differences have a direct influence on
these variables and thus an indirect influence on performance?”
This research paper will continue with a theoretical framework (chapter 3), which reviews the existing literature on this subject. An outline will be given on what variables could influence the management practices and performance of McDonald’s and whether this is influenced by cultural aspects. Besides, information on the influence of marketing, consumer attitude, taste, competition, and culture on management practices and market share will be provided within this chapter. This information will lead to the formulation of a conceptual framework as well as to the formulation of hypotheses, which will be used to analyze the performance of McDonald’s in two countries.
The following chapter (chapter 3) will elaborate on the existing literature. After reviewing the existing literature on the topic the methodology (chapter 4) will be specified. This chapter will include a thorough explanation of the data collection, data selection, and the measurement. Additionally, an outline on the statistical tests used within this research will be provided.
3.
Theoretical framework
his chapter will elaborate on previous studies done on corporations getting global, which involves many different facets. However, since this research will focus upon McDonald’s in South Korea and The Netherlands specifically, only several concepts will be used to analyze the performance of McDonald’s in both countries. The concepts that will be used are the ones that according to me could have an influence on the performance of McDonald’s, namely marketing, taste, consumer attitude, competition, and cultural background. This chapter will elaborate on previous research done on each and every of these concepts.
3.1
Marketing
A useful marketing approach in becoming international, as proposed by Wind (1986), is clustering countries according to their similarities. Kreutzer (1988) used two types of segmentation to market globally. The first segmentation took place at a global level by grouping countries together based on their environmental, cultural, technological, and legal characteristics. On local level a second
segmentation occurred by segmenting within single countries on behavioral characteristics, including consumption patterns and brand loyalty. In addition to the research done by Kreutzer (1988) and many other scholars, Hassan and Katsanis (1991) defined segmentation as “the process of identifying specific segments, whether they be country groups or individual consumer groups, of potential customers with homogeneous attributes who are likely to exhibit similar buyer behavior.”
A company entering into one or several market segments participates in brand extension by using the same brand name for different products to increase market share and profits (Levin et al., 1996). “Popular and well-known brands are better exposed and visible due to their accessibility” (Lane, 2000). The brand name familiarity reflects on consumers’ direct as well as indirect experiences with the brand (Alba and Hutchinson, 1987). Furthermore, highly familiar brands may receive better response on their extension than less familiar brands, due to the association consumers have with the parent brand. Research done by Erdem (1998) found that the quality of an extension is indicated by the degree of familiarity and experience with the parent brand. Consumers, obviously, respond differently to brand extensions according to their innovative characteristics (Hem et al., 2003; Völckner and Sattler, 2006). According to several scholars the innovative characteristics of consumers include factors such as the degree of novelty seeking, the need for change, and the degree of information seeking. Innovative consumers are less risk averse and therefore more willing to try new brand extensions. Furthermore,
consumers high in innovativeness are more likely to respond positively to the new extension than consumers that score low on innovativeness.
For brands as well as brand extension to become successful worldwide, the marketing mix should be internationally focused. The internationalization of the marketing mix is influenced by standardization and adaptation. Managers need to take a fundamental decision regarding the global marketing strategy, namely the degree to which they should standardize or adapt the global marketing mix (Hollensen, 2008). According to Meffert and Bolz (1993), there are three factors that provide major opportunities for marketing standardization. Since customers are increasingly operating on a worldwide basis and are characterized by their centralized purchasing process, the globalization of markets provides for the first opportunity. Like markets, also industries are being globalized by outsourcing operating practices worldwide, for instance resources and development practices, to create economies of scale. The third opportunity comes from the globalization of competition. Ever since the worldwide demand started to homogenize, various markets became interrelated. Therefore, organizations can outsource their activities worldwide and outperform the competition. Furthermore, with standardization, the
communication, planning, and control becomes less complicated as well as the degree of transferability of competitive advantages across markets is high, and thus costs might be reduces. On the other hand, various other factors also provide opportunities for marketing adaptation. Due to cultural differences, consumer needs move towards heterogeneous products, which provides the first opportunity for organizations to adapt their international marketing mix. The globalization of industries might be influenced by governmental and regulatory factors, which provides the second opportunity for
organizations to adapt. A third opportunity to adapt, concerning the globalization of competition, exists because of the local competition of small players. Organizations cannot outsource their activities worldwide, which makes it more difficult for each small player to outperform the competition. Furthermore, legal issues and differences in technical standards cause organizations to adapt. A downside of adaptation might be the low degree of transferability of competitive advantages across markets as well as the decentralization of management, which might increase costs.
Figure 3.1 shows the extremes of the two strategies. However, as described before, standardization and adaptation are not two distinct options, both processes should rather be seen along a continuum, since only a few marketing mixes are totally standardized or adapted (Hollensen, 2008).
Hᵒ: Higher awareness for customers of standardization and adaptation processes within marketing campaigns of a brand, will positively influence the market share of McDonald’s
After conducting the case study on McDonald’s, it will be measured whether this hypothesis can be supported or rejected for this particular research.
Figure 3.1. Standardization and adaptation of the international marketing mix (Hollensen, 2008)
3.2
Taste
Taste varies across countries due to cultural differences (Gao et. al., 1997). Cultures are converging due to global travelling, communication, and media. The globalization of markets has led to a convergence towards a common culture worldwide (Park, 2004). One typical example of global business is the fast food industry (Emerson, 1990). The fast food industry has been growing rapidly in recent years with an estimated market size of 16.2 billion dollars and an annual growth rate of thirteen percent in 2004 (Park, 2004). Within the short period of time in which fast food became popular, fast food has helped in transforming not only people’s diet, but also the landscape, economy, workforce, and popular culture
HQ Marketing Standardization
Border
Undifferentiated use of the same marketing mix in all countries (1,2…n): Product 1,2…n Price 1,2…n Place 1,2…n Promotion 1,2…n All countries HQ Marketing Adaptation Border
Country 1 Country 2 Country n Product 1 Price 1 Place 1 Promotion 1 Product 2 Price 2 Place 2 Promotion 2 Product n Price n Place n Promotion n
(Schlosser, 2002). Many people purchase fast food every day without giving it much thought and most people buy it because of its so called ‘good’ taste (Schlosser, 2002). As Schlosser (2002) states within his research: “The taste of McDonald’s French fries has long been praised by customers, competitors, and even food critics”.
In Korea, the fast food market has rapidly grown ever since the Seoul Olympic Games in 1988. Also in The Netherlands the fast food market has grown over the last decade. However, compared to Western cultures, there are some cultural differences in the fast food consumption of Koreans. According to Park (2004), Koreans tend to consider fast food as a representative for Western culture. Furthermore,
Koreans do not only view fast food as and economic and efficient place to eat, however, Koreans tend to view fast food restaurants as an environment for social interaction and entertainment, compared to the Dutch that mainly view fast food as an easy, fast, and cheap alternative to have dinner.
Due to cultural differences that also come across in consumer’s taste, adaptation processes might be necessary for fast food chains to remain successful in various countries. McDonald’s has various special offerings in numerous countries to adapt to the local taste. In Korea McDonald’s, for instance, offers the McBulgogi, while in The Netherlands the McKroket is offered. According to Park (2004), there are negative viewpoints as to whether or not standardization of fast food restaurants in Korea will be successful. A reason for this might be that local restaurants are far more popular, and sometimes even a cheaper alternative to fast food within Korea. While in The Netherlands, fast food is one of the cheapest alternatives in having food outside of home. Furthermore, the differences in taste between local food and fast food are less big in The Netherlands compared to Korea. Fast food restaurants in Korea should develop customer-oriented marketing strategies based on cultural differences to survive and
outperform competition (Park, 2004).
The results described by Park (2004) provide us with the second hypothesis:
Hᵒ: Higher adaptation and reliability of taste amongst various cultures, will positively influence the market share of McDonald’s
3.3
Consumer attitude
A McDonald’s executive once explained: “McDonald’s…it is really a part of Americana” (Ritzer, 2000). As described by Ritzer (2000), there are two factors that strengthen this perspective and show the
significance of McDonald’s. Firstly, each year The Economist publishes the so called ‘Big Mac Index’, which shows the purchasing power of various currencies. Secondly, Friedman (2000) said: “No two countries that both had McDonald’s had fought a war against each other since each got its McDonald’s. To give an example, Friedman (2000) describes the threat of war still continuing today in the Middle East, which mostly takes place around countries as Syria, Iran, and Iraq, exactly those countries that do not have a McDonald’s. To further elaborate on his statement, Friedman extended his research at the Hamburger University, McDonald’s in-house research and training facility, and figured that also Argentina did not get their McDonald’s until four years after the war ended with Great Britain (Friedman, 2000). Furthermore, according to Friedman (2000), during the civil wars in Moscow, El Salvador, and Nicaragua McDonald’s served its food to both sides. Friedman’s theory got a lot of criticism, since people fell over civil wars occurring in Kosovo as well as NATO countries fighting against Yugoslavia. Friedman responded in a way that proved these critics wrong, by stating that NATO is not a country and that the Kosovo war between the Serbs and Albanians was a civil war, which Friedman does not include in his theory (Friedman, 2000). Civil wars were not included in his theory, since Friedman (2000) argued that globalization will cause for civil wars to happen between globalizers and localizers living within the same country. Furthermore, he stated that sooner or later wars will occur between two countries both having a McDonald’s, since McDonald’s will finally become virtually existent in each and every country around the globe. However, criticism against Friedman’s theory did not end as critics kept arguing about Kosovo. Therefore, Friedman extended his theory and took a closer look at the situation in Kosovo. NATO made life miserable for the Serb civilians in Belgrade, by taking down its integration to the Western world by for instance closing down McDonald’s which symbolized economic development. Governments can ask their civilians only to sacrifice up to a particular point for the country’s welfare. When governments are taking actions that decrease the country’s integration to economic development and higher welfare, by for instance closing down McDonald’s, the civilians will not tolerate that
The combination of many commercials and not being able to drive hundreds of miles without seeing a McDonald’s restaurant, caused for McDonald’s to have become entrenched in people’s modern consciousness (Ritzer, 2000). Ritzer (2000) calls the fact that cultures are taking over several
characteristics of the fast food restaurant McDonaldization. Ritzer (2000) outlines four dimensions that cause for the success of McDonaldization, including efficiency, calculability, predictability, and control through nonhuman technology. McDonaldization is omnipresent; however, McDonaldization occurs in degrees. Fast food restaurants, like McDonald’s, are highly McDonalized, since amongst almost every country around the world people get the same service and product offerings. Universities are
moderately McDonalized, as most universities have still remained part of their initial image. Small local shops have mainly absconded McDonaldization, as their local influences are still visible. Therefore, in today’s world it is hard to think of a social phenomenon that has not been fully McDonalized (Ritzer, 2000).
Based upon the dimensions of Ritzer (2000) this research will look at whether the dependability, availability, and efficiency of McDonald’s services as well as the competency of McDonald’s personnel. This leads us to the third hypothesis:
Hᵒ: Higher dependability, availability, and efficiency of McDonald’s services as well as higher competency of McDonald’s personnel, will positively influence the market share of McDonald’s
3.4
Competition
continuous innovation (Porter, 1998). In the process of creating a competitive advantage, both the internal process and the external environment of an organization play a significant role.
In 2011, McDonald’s will change the image of approximately 850 restaurants around the world and will continue remodeling ninety percent of their interiors and about fifty percent of their exteriors over 2012 (McDonald’s annual report, 2010). The remodeling of McDonald’s strengthens its brand quality to further differentiate them from the competition. Several other techniques are being used or will be implemented in the near future to outperform the competition, namely the deployment of technologies through the use of POS systems, self-order kiosks, hand-held order devices, drive-thru customer order displays to enhance customer experiences, and labor efficiency (McDonald’s annual report, 2010).
These theories on competition bring us to the fourth hypothesis:
Hᵒ: Better service and innovations compared to competitors, will positively influence the market share of McDonald’s
3.5
Cultural differences
Aside from some individual factors described before, are cultural aspects of the country that a brand extension is launched into, that influence the perception of global brands and its extensions. Culture includes the way people act, the way they think, and what they believe; it further includes everything you see around you as for instance food, clothing, and customs (Solomon and Schell, 2009). However, culture does not stop at what you can see, it rather has an invisible side as well, which includes people’s believes, values, and philosophy. Finally there is the core of culture, which is built up from a country’s geography, climate, and mythology (Solomon and Schell, 2009).
According to Hofstede (1980, 1991), national culture can differ on several dimensions, namely
masculinity versus femininity, individualism versus collectivism, power distance, uncertainty avoidance, and long-term versus short-term orientation. Hofstede (1980, 1991) received a lot of criticism on his research, since the sample was not representative as well as the fact that five dimensions were not found enough to convey cultural differences as these five might not be the most important dimensions. Furthermore, the research is seen to be outdated, since globalization makes younger people in
developed countries converge around a common set of values instead of along a continuum.
particularism, individualism versus communitarianism, neutral versus affective, specific versus diffuse, achieved status versus ascribed status, internal versus external, and time as sequence versus time as synchronization. However, Trompenaars’ work has been criticized, since he is never fully transparent on his methods and results. Furthermore, Trompenaars does not provide clear argumentation for all of his models.
More recent work providing clear argumentation is the work of Solomon and Schell (2009). Solomon and Schell (2009) start reasoning along the layers of culture; the core, invisible culture, and visible culture. A country’s core will result in a certain behavior and attitude, which in its turn influences all kinds of visible behavior like eye contact, clothing, treatment of minorities, etcetera. Following this reasoning, Solomon and Schell (2009) introduced their CW-model consisting of seven cultural dimensions, namely hierarchy and egalitarianism, group focus, relationships, communication styles, time orientation, change
tolerance, and motivation – work life balance.
Culture is of significant influence on the successes of global organizations. Solomon and Schell (2009) provide an excellent example of how McDonald’s has used the appreciation and understanding of culture as a competitive advantage. By adapting several products to local tastes and developing relationships with local suppliers, McDonald’s has managed to raise its sales by 8.2 percent globally in existing stores in 2008. McDonald’s succeeds, definitely in Europe, because it understands, appreciates, and accepts various cultures (Solomon and Schell, 2009).
The theories and results of McDonald’s described above provide us with the fifth hypothesis:
Hᵒ: A better match between the cultural background, including cultural habits, of a country and the product, will positively influence the successfulness of McDonald’s
3.6
Management practices
concerns the integration of the organization’s operations in various countries. According to Prahalad and Doz (1984) integration usually involves creating a network of subsidiaries in which activities, such as R&D, manufacturing, and distribution, are centrally allocated and coordinated.
Standardization and adaptation of MNCs, concerning management practices, vary from standardized management practices across overseas subsidiaries to adapted management practices in overseas subsidiaries usually employed by domestic companies in the host country (Pudelko and Harzing, 2007). The standardization of management practices can be seen at, for instance, McDonald’s that applies a standard format for managers on how to act and handle situations. The same holds for Starbucks that worldwide standardized its products and management practices. Adaptation of management practices is mostly seen in the promotion and distribution practices, even though many organizations apply global advertising strategies. According to Pudelko and Harzing (2007), MNCs transfer their headquarters’ practices to global subsidiaries in order to standardize their human resource management practices. Therefore, management practices at subsidiaries will show great similarities with management practices at the headquarters. However, the transferring of human resource management practices to global subsidiaries is limited by differences in national, cultural, and institutional characteristics. Therefore, MNCs might choose to localize their human resource management practices (Pudelko and Harzing, 2007).
3.7
Performance
One of international marketing’s intentions is that an organizations global marketing strategy has a positive effect on the organizations performance (Craig and Douglas, 2000). However, it remains questionable what exactly constitutes global marketing strategy. Therefore, Zou and Cavusgil (2002) developed a general conceptualization of global marketing strategy, which they refer to as GMS. Previous research pointed out three major perspectives concerning global marketing strategy, namely standardization, configuration-coordination, and integration (Zou and Cavusgil, 2002). The
across markets”. GMS aims at increase organization’s global overall performance. The GMS model is comprised of eight dimensions, shown in figure 3.2, namely product standardization, promotion standardization, standardized channel structure, standardized price, concentration of marketing activities, coordination of marketing activities, global market participation, integration of competitive moves (Zou and Cavusgil, 2002). In explaining the relationship between the GMS model and an organization’s performance, Zou and Cavusgil (2002) make use of two additional theories, namely the industrial organization (IO) theory and the resource-based view (RBV). Industrial organization theory states that an organization’s strategy is mainly build on external market- and industry structures, which in its turn influences the organization’s performance (Scherer and Ross, 1990). Contrariwise, the resource-based view states that an organization’s strategy and performance are influenced by the organization’s internal resources (Barney, 1991). The GMS model looks for a perfect fit between an organization’s global marketing strategy, its external market environment, and the organization’s internal resources (Zou and Cavusgil, 2002). As soon as there is a respectable fit between the three determinants, GMS is a compatible factor for the organization’s performance. Zou and Cavusgil’s (2002) study provides results that prove that GMS has a positive and significant effect on an organization’s global market performance. More specifically, GMS provides organizations with an advantage in the global market through its effects and efficiency (Levitt, 1983). Furthermore, GMS additionally provides organizations with an advantage in the global market through cross-subsidization (Hamel and Prahalad, 1985) as well as through synergy (Porter, 1986). Due to the significant influence of GMS on an
Figure 3.2. GMS – a conceptualization of global marketing strategy (Zou and Cavusgil, 2002).
3.8
Conceptual framework
This section will summarize the previous provided literature review into a conceptual model. This conceptual model will be used to analyze a case study on McDonald’s. Throughout the literature review it became apparent that there are various factors that can influence a company’s performance. In this research paper several of these factors, will be analyzed through a case study on McDonald’s.
Based on previous research, that mainly exclusively focused upon standardization versus adaptation rather than observing them along a continuum. This research will put focus the extent to what McDonald’s should standardize its products and services and to what extent it should adapt to local needs as well as the extent to which country and culture differences are of influence on the
standardization and adaptation process. Furthermore, the research will elaborate on the possibility for McDonald’s to mix and match its products amongst countries due to similar or irrelevant country differences. To perform this research, the following theoretical model (figure 3.3) will be used throughout this research paper.
GMS
Promotion Standardization
Standardized Channel structure
Figure 3.3. Conceptual model
Five hypotheses were formulated throughout the conduction of the literature review:
• Hypothesis 1: Higher awareness for customers of standardization and adaptation processes within marketing campaigns of a brand, will positively influence the market share of McDonald’s
• Hypothesis 2: Higher adaptation and reliability of taste amongst various cultures, will positively influence the market share of McDonald’s
• Hypothesis 3: Higher dependability, availability, and efficiency of McDonald’s services as well as higher competency of McDonald’s personnel, will positively influence the market share of McDonald’s
• Hypothesis 4: Better service and innovations compared to competitors, will positively influence the market share of McDonald’s
• Hypothesis 5: A better match between the cultural background, including cultural habits, of a country and the product, will positively influence the market share of McDonald’s
4.
Methodology
his chapter will elaborate on the methods used in this research for data collection, data selection, measurement, and statistical measurement. The chapter will focus on the variables relevant to this particular case study research.
4.1
Data collection
The data in this research will be conducted through quantitative research. Quantitative research can be described as deducing evidence for a theory through measuring variables that produce numeric
outcomes (Field, 2009). Research performed within this paper makes use of cross-sectional research, where observations are made on what naturally goes on in the world without interfering with it (Field, 2009). This cross-sectional research will collect data using various participants, which means that different individuals take part in the experiment. However, this research does not include reinforcement of individuals; therefore each individual takes the questionnaire just once instead of being monitored over a longer period. Data on the internationalization of brands and its influences will be collected by setting out questionnaires in both South Korea and The Netherlands. Furthermore, data on performance will be gathered through, McDonald’s annual reports and EUROMONITOR as well as through Internet research.
4.2
Data selection
Several selection criteria apply to this research which defines the scope of this study. This research focuses on McDonald’s as a case study. McDonald’s is one of the best examples of a company that created a perfect match between standardization and adaptation. McDonald’s standardizes its services, restaurant lay-out, and taste. However, McDonald’s followed the adaptation path when entering for instance the Asian market, since they adapted its menu to local cultures and local preferences. McDonald’s applied a successful strategy that combines innovative practices with loyalty to traditional services and products. Therefore, McDonald’s has been used as a case study to research the effects of standardization and adaptation decisions, as well as cultural differences, on management practices and performance. Research will take place between two culturally different countries in order to view the differences in the influence of adaptation processes and cultural differences on McDonald’s
performance.
Next, two culturally different countries, namely South Korea and The Netherlands, have been chosen in which McDonald’s has established itself. In preparation of the Asian Games in 1986 and the Olympics in 1988, internationalization and globalism became widely accepted in South Korea. In 1988, the first McAnn restaurant was opened in Seoul, established through a joint venture between Mr. Ann and McDonald’s, followed by several other joint ventures, such as ShinMc and McKim (Watson, 1997). The very first McDonald’s in Europe opened in 1971 in The Netherlands, which quickly grew to 225
restaurants in 2011 when the fast food chain celebrated its forty year anniversary.
Within these two countries, two cities have been selected to carry out research. Within South-Korea focus will be on Seoul and within The Netherlands focus will be on Groningen. Both cities are provided with more than one McDonald’s.
Finally, to limit the scope of this research only students have been used to gather data. A student sample will be taken, since mainly students visit McDonald’s on a regular basis. Elderly people and families do visit McDonald’s; however, this is on a less regular basis than students. In order for this research to get the most accurate data, students have thus been chosen as a sample. Seventy-five university students in both Seoul and Groningen will be asked to fill out a questionnaire in order to gather accurate data on McDonald’s. Within the Seoul area two universities have been selected to provide students to fill out the questionnaire, namely Ajou University and Ewha Womans University. In Groningen, Rijksuniversiteit Groningen has been selected as a source for students. The students are randomly selected and no specific criteria are applicable to the students, apart from being student at either one of the above mentioned universities. Reason for not using specific criteria for the students is that this research tries to gather data from a, as much as possible, varying audience.
4.3
Measurement
This research used self-constructed questionnaires, since no questionnaire on this particular subject and these particular countries were available to measure the factors influencing the market share of
McDonald’s. The questionnaires have been used to research the influence of several factors on the market share of McDonald’s. The questionnaire as used within this particular research is added in appendix A. The respondents could participate in this research by either filling out the questionnaire in paper or online.
questions out of the questionnaire. The mean of scores, ranging from 1 to 5 on a Likert-scale, on each question for each respondent are calculated for each variable to end up at the original range from 1 to 5. The Likert-scale questions used to measure each independent variable were not drawn upon verified scales taken from literature.
In order to structure the gathered information, factor analysis has been performed on the data. The number of variables has been decided upon by eigenvalues larger than 1. Factor analysis has been followed up by measuring the internal reliability of the questions related to each variable, by looking at the Cronbach’s alpha (tables 1-10, Appendix B).
The remaining of this section will describe the questions used to arrive at the five independent variables; marketing, taste, consumer attitude, competition, and cultural background. Furthermore, the internal reliability for each variable will be given.
4.3.1. Measuring marketing
The independent variable ‘marketing’ has been comprised of two questions which measure the
influence of marketing on the market share of McDonald’s. Questions asked covered the attractiveness and recognizability of McDonald’s menu as well as McDonald’s packaging. Results based upon factor analysis as well as on the Cronbach’s alpha prove it to be valid for these questions to be added together (α = 0,744; N = 134). To assess whether marketing has an influence on the market share of McDonald’s, a five-point Likert scale is used. The Likert-scale can be explained as follows;
Likert Rating Classification 1 Totally disagree 2 Disagree
3 Neither disagree nor agree 4 Agree
5 Totally agree
Table 4.1. Five-point Likert rating classification
4.3.2. Measuring taste
analysis and internal reliability tests these questions measure the same construct which means both questions measure taste (α = 0,685; N=134). However, the Cronbach’s alpha is not above 0,7, the alpha can be accepted. The variable has been assessed by making use of the five-point Likert scale (table 4.1).
4.3.3. Measuring consumer attitude
The independent variable ‘consumer attitude’ has been measured by comprising four questions. The questions used to measure consumer attitude include the dependability, availability, and reliability of McDonald’s services as well as the competency of McDonald’s personnel. The Cronbach’s alpha for these four questions combined proves for the questions to be a reliable configuration of the variable consumer attitude (α = 0,724; N = 134). The variable has been assessed by making use of the five-point Likert scale (table 4.1).
4.3.4. Measuring competition
‘Competition’ has been measured by three questions, which questioned the service of McDonald’s compared to its competitors, the logo of McDonald’s, and the marketing campaigns McDonald’s uses. The logo and marketing campaigns might seem ought questions to look at competition, however, the better customers recognize McDonald’s, the more likely it is them visiting McDonald’s instead of its competitors. Based on factor analysis as well as the reliability test it can be concluded that these three questions measure the same construct and thus can be added together. The Cronbach’s alpha for these questions is acceptable (α = 0,650; N = 134). The variable has been assessed by making use of the five-point Likert scale (table 4.1).
4.3.5. Measuring cultural background
The independent variable ‘cultural background’ is measured by two questions, which covered both the impact of the respondent’s cultural background on the decision to favor fast food and on the type of fast food the respondent favors. Factor analysis and an acceptable Cronbach’s alpha secure the adding up of these two questions (α = 0,674; N = 134). The variable has been assessed by making use of the five-point Likert scale (table 4.1).
4.3.6. Measuring performance
success. Furthermore, EUROMONITOR reports will be used to assess McDonald’s market share in both South Korea and The Netherlands. EUROMONITOR assesses the market share of each global brand owner within the chained fast food sector over 2007 till 2010 in South Korea and over 2006 till 2009 in The Netherlands. The market share for 2011 is not given; however, McDonald’s annual reports state that over 2010 global comparable sales growth rose with 5 per cent, while sales growth within Europe rose with 4.4 per cent over 2010 and sales grew with 6 per cent over 2010 in Asia. Since specific growth numbers for South Korea and The Netherlands are not stated within the annual reports of McDonald’s, this research will assume that market share for both South Korea and The Netherlands remains similar to the market share of 2009.
4.4
Statistical tests
The five hypotheses that have been formulated based upon previous literature and results from the questionnaires will be tested by performing an independent samples t-test as well as by multiple regression analysis. The independent samples t-test compares the influence of the independent variables on the dependent variable ‘market share’ for both South Korea and The Netherlands. The results on the independent samples t-test will provide significant motives to whether or not take country of origin into account when testing the influence of the independent variables on the dependent variable.
In multiple regression analysis the outcome variable Y is predicted by several predictors, which can be calculated using the following equation:
(Eq. 1) Where: Y = Outcome variable
Bn = Coefficient of the nth predictor (Xn)
Ɛi = Difference between the predicted and observed value of Y for the ith participant
In this particular case the outcome variable ‘market share’ is predicted by several predictors, namely marketing, consumer attitude, taste, competition, and cultural differences. So, the multiple regression analysis researches the relationships between the independent variables and the dependent variable ‘market share’. The equation used for this research will thus be:
Running the multiple regression analysis will measure what predictor variables will substantially contribute to the model’s ability to predict the outcome (Field, 2009). Within the multiple regression analysis, performed in this research, the influence of all independent variables together on the dependent variable will be tested as well as the influence of each independent variable alone on the dependent variable.
5.
Findings
his chapter will cover the testing of the hypotheses based upon previous literature and questionnaires. Section 5.1 will cover the general results gathered from the data, including the number of respondents, number of respondents divided per investigated country, the age of the respondents, the income of respondents, and if the respondents ever eat fast food and if so how often. Section 5.2 will be devoted to the results on the independent samples t-test followed by section 5.3 covering the results on the performed multiple regression analysis. Section 5.4 will elaborate on the results from the multiple regression analysis for each hypothesis and will either accept or reject each hypothesis. The final section will describe the multiple regression analysis based upon group
comparison. Here, the influence of the independent variables on the dependent variable will be tested within groups based on gender, age, and income.
5.1
General data
In total 150 students responded to the questionnaire of which 75 South Korean students and 75 Dutch students. Out of the initial number of respondents, 16 students either never eat fast food or never eat at McDonald’s. Due to the fact that these students either never eat fast food or never eat at McDonald’s they did not fill out the remaining question of the questionnaire. These missing data might negatively influence the relation between the dependent and independent variables. Therefore, these respondents have been deleted from the data set, which resulted in a total number of 134 respondents consisting of 64 South Korean students and 70 Dutch students. Out of these 64 South Korean respondents are 34 males and 30 females; while out of the 70 Dutch respondents are 29 males and 41 females (table 1, appendix C).
Furthermore, 106 out of the 134 respondents were between the age of 20 to 25 (table 2, appendix C). In total 104 out of the 134 respondents’ monthly gross personal income before taxes was categorized within the lowest category, which means less than 1,600,000KRW or less than 1500EUR (table 3, appendix C). To test the successfulness of McDonald’s it is significant to understand and compare how often the respondents eat fast food and out of these times how often they eat at McDonald’s. Out of the total number of 134 respondents, 52 eat fast food once a week and 51 eat fast food once a month. The 52 respondents that eat fast food once a week are comprised of 31 South Korean students and 21 Dutch students, while the number of students who eat fast food once a month is comprised of 20 South Koreans and 31 Dutch (table 4, appendix C). However, the number of students that visit McDonald’s
once a week is only 10, while 53 out of the 134 respondents visit McDonald’s once a month (table 5, appendix C). Therefore, it might be said that when students eat fast food it is not necessarily
McDonald’s, they rather eat various other types of fast food as well. The other types of fast food include fries, chicken wings, pizza, and kebab. Most respondents, 74, eat burgers; however, 51 respondents favor fries compared to 12 respondents who eat chicken wings, 5 who eat pizza, and only 1 that prefers kebab. There is hardly a difference between countries in how often the students of both countries eat fast food and what types of fast food are favored by each country’s students.
5.2
Independent samples t-test
The independent samples t-test (Appendix D, table 1) has been used to compare the results on the variables for each country separately. The influence of the independent variables on the dependent variable is tested for both South Korea and The Netherlands separately. Results on the independent samples t-test show that there is no significant difference between the means of the two samples (marketing t = 0,311; p ≥ 0,05, taste t = 0,792; p ≥ 0,05, consumer attitude t = 0,745; p ≥ 0,05, competition t = 0,360; p ≥ 0,05, cultural background t = 0,698; p ≥ 0,05). Therefore, country has no impact on the independent variables and thus not on the market share of McDonald’s. Since the results of the influence of the independent variables on the dependent variable are not being impacted by the country of origin, all data will be put into one file and country will no longer be taken into consideration. To be entirely sure of the fact that country has no influence on the independent variables, this has been tested by using multiple regression analysis as well. The independent variables have been transformed to being the dependent variable for this test only, since ‘country’ is taken as an independent variable. For each dependent variable, marketing (p = 0,545), taste (p = 0,896), consumer attitude (p = 0,529), competition (p = 0,486), and cultural background (p = 0,088) country is of no influence. This assures that the results on the independent samples t-test are correct and thus the data will be covered as one sample from here on.
5.3
Multiple regression analysis
cent of the combined independent variables (R² = 0,015). Furthermore, the model is not significant and therefore it is once again proven that the combined independent variables are of no influence on the market share of McDonald’s (p = 0,223). Hence, the next section (section 5.4) will test the influence of each independent variable separately on the dependent variable.
5.4
Results hypotheses
Statistical results containing the data described below are presented in table 1 to 5 in appendix E.
5.4.1. Hypothesis 1: Marketing
Hypothesis 1: “The higher the awareness for customers of standardization and adaptation processes within marketing campaigns of a brand, the more positive the influence on the market share of McDonald’s”.
This hypothesis will be tested by taking ‘marketing’ as an independent variable to examine the influence marketing has on the dependent variable ‘market share’. Marketing does not have a positive effect on the market share of McDonald’s (ß = 0,27; p = 0,755). This results in rejecting the hypothesis.
5.4.2. Hypothesis 2: Taste
The second hypothesis is tested by performing multiple regression analysis, with ‘taste’ being the independent variable and ‘market share’ being the dependent variable. The hypothesis stated to investigate the influence of taste on the market share of McDonald’s is as follows: “The higher the adaptation and reliability of taste amongst cultures, the more positive the influence on the market share of McDonald’s”. From the multiple regression analysis it became apparent that taste has no significant influence on the market share of McDonald’s (ß = 0,069; p = 0,430). Therefore, the hypothesis will be rejected.
5.4.3. Hypothesis 3: Consumer attitude
Hypothesis 3: “The higher the dependability, availability, and efficiency of McDonald’s services as well as the higher the competency of McDonald’s personnel, the more positive the influence on the market share of McDonald’s”.
consumer attitude also does not have a significant influence on McDonald’s market share (ß = -0,055; p = 0,529). Consequently, the hypothesis is rejected.
5.4.4. Hypothesis 4: Competition
This hypothesis tests the relationship between competition and the market share of McDonald’s. To test whether the market share of McDonald’s is influenced by competition, the following hypothesis has been used: “The better the service and innovations compared to competitors, the more positive the influence on the market share of McDonald’s”.
The variable ‘competition’ has no significant influence on the dependent variable ‘market share’, which automatically leads to the rejection of hypothesis 4 (ß = -0,145; p = 0,096).
5.4.5. Hypothesis 5: Cultural background
The final hypothesis investigates whether culture is of significant influence on the market share of McDonald’s and therefore the hypothesis is as follows: “The better the match between the cultural background, including cultural habits, of a country and the product, the more positive the influence on the market share of McDonald’s”.
The variable ‘cultural background’ has been added to the multiple regression analysis including the dependent variable. ‘Cultural background’ does not have a positive influence on the dependent variable ‘market share’. Although the relationship between ‘cultural background’ and ‘market share’ is far closer to being significant than any other of the independent variables, the relationship is still not significant which results in rejecting the fifth hypothesis (ß = -0,148; p = 0,088).
5.5
Group comparison
Since the independent variables ‘marketing’, ‘taste’, ‘consumer attitude’, ‘competition’, and ‘cultural background’ are all of no significant influence on the market share of McDonald’s, the influence of the independent variables on the dependent variable will now be tested by comparing groups on gender, age, and income (tables 1-3, Appendix F).
= 0,362, competition ß = 0,221; p = 0,120, cultural background ß = 0,091; p = 0,497). However, being female does have a significant effect on the independent variable ‘cultural background’, so indirectly affects the market share of McDonald’s (ß = 0,327; p = 0,006). Several reasons could be thought of why females do have a significant influence on culture. One of the reasons might be that females put more value on culture than males. Another reason could be that females live their lives according to cultural expectations and thus consume according to cultural expectations. Females are often seen as being more considerate when it comes to cultural differences. Therefore, it might be that the consumption of females unconsciously is influenced by cultural expectations.
Secondly, groups are compared on age to test whether age directly affects the independent variables and thus indirectly influences market share. No age group has a significant influence on any of the independent variables. Therefore, it can be concluded that it does not matter what age the respondents have, since no matter what age it does not influence the independent variables and thus does not influence the dependent variable market share.
Thirdly, groups are compared on income to test whether the income of the respondents is of influence on the independent variables and thus the dependent variable. None of the income groups have a significant influence on the independent variables. Therefore, it can be said that the respondents’ income does not directly influence the independent variables and thus does not indirectly influence the market share of McDonald’s.
5.6
Conclusion
After taking a thorough look at the independent samples t-test accompanied by the multiple regression analysis, it might be concluded that the country of origin does not have any influence on either the independent variables or on the dependent variable.
Furthermore according to the multiple regression analyses, the independent variables, taken together as well as taken separately, are of no influence on the dependent variable ‘market share’. Unless groups are compared on gender, then culture has an influence on market share, at least for females. Comparing groups on age and income do not prove any significant influence on the independent and thus
dependent variable.
