Executive Summary

Mc Donalds is a multinational company operating in the fast food industry. Raymond Kroc started the
company initially in San Bernardino, California. Today Mc Donalds is said to be the world’s largest fast
food chain serving 47 million customers daily. The golden arches and its mascot Ronald McDonald has
gained universal recognition across many countries. Since the launch of the company Mc Donalds has
grown exponentially and today it has entered many markets all over the world. As one of their global
strategies the company tries to keep the product global as much as possible. This was manageable until
the company entered the Indian market in 1996. India was one of the toughest markets to enter for foreign
businesses and Mc Donald’s did so with much rising issues.

The main aim of this report is to identify the issues arising as Mc Donalds try to enter the Indian market.
The aim of this paper has been to examine the national cultural value of native India and orientation of
employees to a diverse work setting.

Findings of the report are that a diverse work force theoretically supplies a rich array of different ideas to
bear on organizational problem solving. However there are adverse effects of diversity and it needs to be
managed cautiously in order to gain benefits. In this case similarity attraction paradigm and social
categorization theory would come into play when analyzing the issues.

Cultural orientations of employees play a major role in the case of Mc Donalds. This is because India is a
country which has a large population of Hindu’s, this segment of the market is vegetarians and believes
the cow to be sacred. This would require the managers of Mc Donalds to align the values of employees
along with the values of the company. In addition the company has transferred employees from US to
India. These employees need to adapt to the national culture in India. Training and development is
identified as the main way to accommodating the transferred employees to the organisation in India.
Furthermore it is also important for the local employees to understand the company’s culture as well. As a
means of keeping both the domestic and transferred employees happy Mc Donalds could enhance their
work-life balance. This means that employees feel they are freely able to use flexible working hour’s
programmes to balance their work and other commitments such as family, hobbies etc. Furthermore in a
religious country such as India it is also important to accommodate the religious practices of the
community.

Finally the main point of the report is concluded and five short recommendations are provided for future
improvements in the Indian market. The findings are limited due to time limitations as well as resources
to carry out first hand research on the issues.
Introduction

The Mc Donalds restaurant chain of today began its humble beginnings in a renovated barbeque car-hop
in 1940 at San bernadio, California. This was started by the two brothers Richard and Maurice Mcdonald
(Briggs, 2009). Since then the business has boomed and it is now a well known fast food restaurant all
over the world. Today McDonalds has become the world’s largest fast food chain serving 47 million
customers daily (Ghosh et al., 2005). McDonald’s Corporation primarily franchises and operates
McDonald’s restaurants in the food service industry. These restaurants serve a varied, yet limited, value-
priced menu in more than 100 countries around the world (Arlington et al., Nov 2008). As a result of their
global strategies the company has moved across many geographic barriers and entered many markets
around the world.

McDonalds entered India in 1996. The company did so with much difficulty in cracking the Indian
market as well as due to the rising HRM issues (REF genesis article). Mc Donald’s leaders believe that
people are their most valuable resource as they compete with national and international fast-food giants
throughout the world (Mujtaba & Patel, 2007). Because of this special importance is given to the welfare
of the employees by this company.

Most Indians are barred by their religion to eat beef and because of this it’s said that most consumers are
vegetarians (REF). Globally Mc D’s was known for their beef are pork burgers. In India Hindu managers
working in a firm which contributes to slaughtering of cattle would be working against their ethics and
values. Such employees would be de motivated leading to a lower performance in the company (Mujtaba
& Patel, 2007). Such an issue has risen when Mc D’s tried to introduce the original beef and pork burgers.

When McD’s grew globally, some managers from US were transferred to India. There are around 5000
employees transferred from Mc Donalds branches already established in other countries to India (Arlington
et al., Nov 2008). This is because the company had positions to be filled and it is easier to transfer a current
employee who is already skilled, as well as familiar with the policies and practices. Hence the HR
department needs to focus on the cultural adaptations of the transferred employees (Mujtaba & Patel,
2007). This is further confirmed in another study which states that the company invests in making its
expatriate managers feel home in India (Raghavan, 2007). One example of this is Mc D’s paid for Korean
speaking maids who can cook Korean food to help the families and managers to feel at home in India
(Raghavan, 2007). The most significant difference between domestic and international human resource
management seems to be that there are far more variables to be taken into consideration when training staff
to operate (Mujtaba & Patel, 2007). Thus Mc D’s need to constantly monitor and adapt to the language
translation services, international relocation and orientation of employees as an integral part of successful
international SHRM.
Such issues could be explained through theories such as social identity theory and similarity attraction
paradigm. Because when employees are transferred from one country to the other, the majority of Indian
employees are likely to not include these transferred ones since they are perceived to be different
(Budhwar & Khatri, 2001). Such issues and discussed using the two theories mentioned before.

As a means of increasing the cultural adoption for the transferred employees to build a comfortable
working environment in India the company could focus on diversity-open training and development. In
addition to this a proper work life balance is essential for the transferred employees as well as the newly
recruiting employees, thus the managers at Mc D’s should look at aspects of improving work life balance
in their SHRM.

The main purpose of this report is to identify SHRM issues arising at Mc D’s when entering a market
under harsh conditions. Then the report proceeds to explaining these issues through the use of similarity
attraction paradigm and social identity theory. Next as a remedy for the issues, how to increase diversity
open training and work life balance is discussed. Finally the essay concludes with the findings and five
short further recommendations.

Discussion

A diverse work force theoretically supplies a rich array of different ideas to bear on organizational
problem solving (Knouse & Dansby, 1999).However there are adverse effects of diversity and it needs to
be managed cautiously in order to gain benefits. In the case of Mc Donalds two theories would come into
play when analyzing the issues.
Firstly similarity attraction paradigm states that attraction was high among individuals who share similar
attitudes (Byrne, 1991). Further more recent research has shown that dissimilarity can lead to repulsion
and distruptive behavior (Ashford & Tsui, 1992). In general people are said to be drawn to others those
who are similar to them. In the case of Mc Donalds the transferred employees may be perceived to be
different to those employees in native India. The Indian managers would be drawn to each other since
they have a similar attitude of not eating their sacred animal on top of the fact that all of these employees
are Indian. In such a case it is likely that at work US managers to not be included in social groups, leading
to low performance, conflicts and low morale of the transferred employees. Such a situation could be
avoided by giving proper training, language translation services, international relocation and orientation is
vital for the transferred employees in order to adapt to the new work environment. Also activities could
be carried out to enhance relationships between the Indian managers and the foreign managers.

Secondly social categorization model maintains that society comprises many social categories. Social
categories refer to the division of people on the basis of many factors including nationality (e.g., Iranian
or Australian), occupation (e.g., student or teacher), religion (e.g., Muslim or Hindu), and gender. In the
case of Mc Donald’s in India, the employees who are Hindu’s against eating their sacred animal(cow)
would categorize themselves to be against the Mc D’s product where as Muslims who consume a lot of
beef would be reasonable towards the product. This may cause conflict among groups, also lead to low
morale and low performance.

Social categorization theory maintains that the awareness of belonging to a common category is the
necessary and sufficient condition for group formation (Share-Pour, 1999). The focus of group formation
is on categorization itself. An important part of this theory is how members of a group define themselves
rather than how individuals feel about each other (Mullen, 1991). According to this theory, the necessary
and sufficient condition for group formation is the awareness of belonging to a common category.

Cultural orientations of employees play a major role in the case of Mc Donalds. This is because India is a
country which has a large population of Hindu’s, this segment of the market is vegetarians and believe the
cow to be sacred (Raghavan, 2007). Thus this makes Mc Donalds a company which contributes to
slaughtering cattle and pigs. The Hindu managers at the company would be working against their values
leading to de motivation and low morale.
Such a case could be explained by the national culture of India. To confirm this one research suggests that
the value orientations of employees mainly come from the country they are born in (Parkes et al., 2006).
Values guide behaviour as they give order and direction to human acts (Parkes et al., 2006). This is so
because individuals express culture and its normative qualities through the values they hold.
Though national culture is the most important factor in explaining cultural variations (Hofstede, 1983;
Laurent, 1983), it is emerging that professional cultures have some measurable impacts on how
individuals who work for specific organizations with specific objectives and goals develop their own
unique value system (Parkes et al., 2006). Employees whose values are not congruent with the
organisations values would cause issues in the organisation. In the case of Mc Donalds it is clear that the
national culture of India is against the consumption of beef. Thus almost all of Hindu managers would be
holding negative attitudes towards the companies beef based products. Hence it is important for Mac to
alter its menu in India and eliminate the beef based products in order to align the employee’s values with
the company’s values.
Another study states that in staffing, the importance of aligning individuals to the values of the company
is highlighted by the practice of values-based interviewing, where specific attention is paid to identifying
whether the individual’s attitudes will match the values of the organization’s (Mujtaba & Patel, 2007). A
similar approach could also be taken by Mc Donald’s when hiring employees in India.
Once the values of the employee’s are well aligned with that of the company’s, it is important to
communicate the value system to the staff. In the case of Mc Donald’s they could use formal and informal
communication to ensure that all employees are not working against their values at work. One example of
an informal communication method is to circulate a newsletter which has articles about the development
of new non- beef based products in Mc Donald India.
It is said that
Cultural communication could be costly. Such communication can be intimate, such as the interaction
between two co-workers, or can even take place in a more public arena, such as in an advertising
campaign. With the increased recognition that culture affects all facets of international industry comes the
challenge for Mc Donald’s to provide information that will enable business professionals to operate
successfully in culturally-diverse environments (Fray-Ridgway, 1997).

Training and development programmes, reward systems and promotions are also activities that reinforce
company value systems (Mujtaba & Patel, 2007). Effective employee training is not only critical for
enhancing long term employment and economic growth, which can add to a country’s competitive
advantage, but it also provides firms with a unique and differentiated position that can improve the
standard and quality of service or products (Mathews, 2002; Taylor and Davies, 2004)
As a result of this Mc Donalds needs to give special emphasis to training of employees. In the case of
Mac, the transferred employees need to adapt to the national culture in India. Furthermore it is also
important for the local employees to understand the company’s culture as well (Mujtaba & Patel, 2007).
To confirm this further Albert (1994) states thta organisations have to consider diversity training both
domestically and internationally. The same study also stresses on the fact that among other things had to
expatriate employees that are bilingual and hire people that could speak English.

Prior studies on human resource development among multinational companies tend to focus on diversity
training and development of expatriates and international management teams especially on cross-cultural
situations (Zheng et al., 2007). Such training is essential for the transferred employees from US to India
in order to gain insight into attitudes of the locals and build relationships through effective
communication.
Two strategies to do this would be by line provision and buddy systems in place in a number of firms to
welcome and induct new transferred members to feel at home. Also active feedback sessions are provided
to understand where the new employee is in terms of their familiarity and development within the
organization (Parkes et al., 2006).
Cultural diversity training is very much important for the transferred employees to settle in as well as the
domestic employees to grasp the new organisations working methods. However this solely is not
sufficient to motivate employees and keep them happy. Work life balance is very important in order to
maintain and retain satisfied employees. However with the rise of studies on work-life balance, many
researchers have debated whether flexible working practices have had positive or negative effects on the
ability of employees to maintain a positive work-life balance (Moore, 2007).
It is also said that improving a company’s employees’ work-life balance leads not only to greater
productivity but to greater company loyalty and job satisfaction (Chapman, 1997). Frame and Hartog
(2003), implied that good work-life balance means that employees feel they are freely able to use flexible
working hours programmes to balance their work and other commitments such as family, hobbies, art,
travelling, studies and religious practices, rather than focusing exclusively on work. For example the
transferred employees could be given a trip to Taj Mahal all exclusive of the company to spend time with
their family and enjoy.
Although many diversity consultants say that religion is not usually a major issue, the case of Mc Donalds
has proved us otherwise (Infoworld, 1999). It is essential to accommodate religious beliefs of the
personnel and doing so would motivate them. India is country which constitutes a large population of
Hindu’s (Raghavan, 2007). Most of this population tends to be very religious(Infoworld, 1999). Thus it is
important for Mac to accommodate the Hindu rituals such as having the Friday afternoon free for going to
the temple. This needs to be given special attention since the company is famous for killing cattle the
sacred animal of Hindu’s. Similarly Muslims could also be given flex-time to fit in with their prayers. Not
only that the company could actually invest in making prayer rooms inside the work unit.

Conclusion
In conclusion Mc Donald’s has faced with several issues when entering the market in India. These are as
elaborated. Firstly Mc Donalds is famous all over the world of their Big Mac which contains a beef patty
and majority of hindu’s frown upon this. This is because cow is considered to be sacred in India. Such an
issue could be dealt with the restructuring the beef based menus. Secondly some US employees are
transferred to India. These employees would face issues settling into the new country and requires
adequate training and/or orientation. Finally since Mc Donalds believes the best way to making customers
happy is through happy employees. In order to make employees happy Mc Donalds can enhance their
work life balance. Also the company can focus on accommodating the varied religious practices in India.
Recommendations

 Instead of introducing another red meat burger Maharaja Mac, Mc D’s could make the
burger patty completely vegetarian using vegetarian meat which taste like beef. This
would not cause any offence for India’s National Culture. Furthermore the burgers could
be made more spicy in order to meet general taste preferences.

 In order to keep employees happy Mc Donalds could introduce policies to accommodate

religious practices. Since majority of the Indian population are Hindus and Muslims, it is
possible to provide flexible work hours (ex- Friday afternoon off for Hindu’s to go to
temple and Muslims to go to the mosque) so the employees meet their religious
commitments.

 Maintaining a work life balance could be stressful for employees. Hence to keep
employees happy and loving their work Mc D’s could introduce flexible family friendly
work practices such as flexi work hours, casual leave and Telecommuting.

 Mc D’s to train the employees being transferred to India from other countries, the HR
dept could employ diversity open training and development. These would be training
programs aimed at causing attitudinal changes and to adapt to a new cultural setting.

 Lastly the company could annually invest money in releasing a no of cattle that are in
slaughter houses and they could also actively communicate their efforts to employees
through a newsletter.

References