MAR038-6 Intercultural Business Competencies Assignment Sample
Module code and Title: MAR038-6 Intercultural Business Competencies Assignment Sample
Introduction
Business behaviours towards a culture of different locations and areas where they operate play a significant role in the success and growth of a business. Other stakeholders of business location play important functions such as “customers, investors and suppliers”. The current study is based on the impact of culture shock on the performance of business entities.
The report is a realtor with a case study on the failure of KFC in Israel (Bettermarketing.pub, 2022). Apart from this, in order to execute different reasons, a case study on the failure of KFC in Israel as well as “Hofstede’s comparison intercultural theory” has been considered which has been indicating different factors related to both countries’ cultural investment.
Based on analysis of annual different factors as well as cultural dimensions of both countries, USA and Israel suggested a recommendation which may assist KFC to ensure better cultural performance in other countries where they operate or want to expand. The main aim of this study is to identify different dependent and independent cultural factors to recommend possible and effective strategies to restore better performance and growth in other nations.
Findings
Background of the company
KFC has operated in more than 22000 outlets in the whole world and it was founded by Colonel Harland Sanders. At present time KFC has expanded its business in more than 145 countries. KFC also expanded its business in Israel during the 1980 period nevertheless; KFC has failed to perform effectively in Israel due to different reasons which have been retained as below.
KFC has existed at a global level with a better position in the global food supply chain market. KFC is a USA-based fast-food giant that operates its business internationally and it is expanding in different regions of the world to spread its business market. Expanding the business is not an easy task to do, which needs more conceptual frameworks to execute the plan according to the company’s vision.
Fast food industry is increasing its valuation currently, its valuation is $593.3 billion according to the 2021 report, and it is planning to expand to $813.9 billion by 2028. KFC is also trying to increase its potential business obligations to reduce its financial loss. Currently, KFC started its business operations in Israel and the Israel Company faced a wide range of challenges and opportunities, which can help the company to understand its success rate in the new country (T4, 2022). KFC is competing with different fast food companies like McDonald’s, Taco Bell, Starbucks, and many more.
KFC works on a “Franchise Based Model ” to operate its business, which is helping the company to increase its market share. KFC has the largest market share in China with 12% of the total fast food market in China. Market share is also dependent on the share price, according to the NYSE share report, the company’s share price is 1507 (Finance, 2022). Currently, KFC is exploring new countries to set up a business, which leads to different changes, which need to be mitigated to increase their financial performance.
Ignorance of a Centuries-Old Israeli Tradition: Israel has the highest number of devout Jews as well as have some regulation for cook food in the country regarding Halal food in Islam. KFC has not considered all regulations and religious codes of the country which has affected the interest of consumers regarding eating different non-dairy as well as vegetarian food in Israel. Hence ignorance of religious code while providing different types of food as well as non-daily products in Israel has also affected the performance of KFC in Israel.
Israel’s maximum population is Jews and they have different dietary laws that they followed religiously. The food that is cooked keeps the regulation in mind and is called Kosher Food, which is similar to Halal food in Islam. Moreover, it has also been analyzed that food is the medium that Jews follow to achieve their religious objectives. However, there are many other religions that also live in Israel, including Palestinians, Christianity, and many more (Haaretz, 2022).
According to Kosher, food, and dairy cannot be mixed with dairy products, which is the main component of KFC while cooking the chicken. KFC’s teste will be affected if the company makes changes in their recipe, which backfire on the company’s business plan in Israel. Diary is the key ingredient of KFC, which needs to be there to maintain the product teste, due to this reason KFC keep using dairy in their recipes, which is a big no-no in the ease of Devout Jews.
Judaism is the macro cultural practice that most of the Jews people do and because of those reasons devoters of Jews denial to eat KFC and it affects the profit margin of the organization KFC it has become difficult to run the business in Israel.
Non-Dairy Menu does not tantalise the Locals’ Taste Buds: Restaurant, as well as hotel, needs to cook food and other items with better taste as well as features in order to attract and gain consumers’ interest towards eating food. Nevertheless, it has been obtained from its food menus as well as consumers’ interest that the non-daily food is not well tested and features for its consumers. Hence, this is also a key reason for the failure of KFC in Israel.
In 2009 KFC also launched a milk-powder coating which is a say-based substitute not affected consumers. Hence, it has also failed in Israel and these products are not too popular among consumers even if they have a dairy product which is preferable to people in Israel.KFC changes some main ingredients in Israel, which changes the taste, and it is affecting the overall food process of the company in Israel. Different taste buds are also the main reason that Israel failed to make business in Israel.
Because of the Kosher, the soy-based product did not stick to chicken, which changed the structure of the product. Freezing processes are also changing and affecting the overall product (Bettermarketing, 2022). The execution process was the main hardship that KFC faced with soy-based costing. Franchise owners were not happy with the product and according to them, after applying the soy-based coating technique; the company faced a big backlash from local people in terms of taste. Personal satisfaction is the first priority that was not fulfilled and it is the biggest reason that KJFC failed in Israel to make business.
Tough Competition: Competition is also a key factor which has affected the entry of new businesses as well as tract consumers’ interest towards business through a market gap. Besides that, there are also different global and local food players operating in different locations with better market positions. For example, McDonald’s has also customised itself as per market and consumers’ interest in Israel which is assisting McDonald’s to expand consumers’ loyalty in Israel.
Besides that, other local foods and restaurant channels such as “Zero Egg, ChickP, TasteWise and Better Juice” have better performance and consumer size in Israel. Comparative advantage is the biggest opportunity that KFC failed to achieve in Israel and it is a valid reason that KFC faced a major loss in Israel. There, aware of different local restaurants and fast food chains that were already operating their business and the KFC controversy, other local companies gained competitive advantages, which also affected KFC’s remaining business operations.
Other competitors are capturing the market and KFC’s market share was reducing after a period of time, which effaced the efficiency percentage of the Company (Bettermarketing, 2022). Furthermore, McDonald’s became the biggest competitor of KFC in Israel and they are capturing the market share of KFC. Other than that, McDonald’s was already running their business in Israel before KFC came into Israel, which helped McD to achieve the “First Move Advantage” (Christodulelis, 2020).
McD has many stores in Israel, they were giving Kosher Food to the Israeli people by changing the receipt, and which helped McD to receive “Kosher Certification”. McD does not need to change its recipe to make kosher food; they are applying kosher beef to make their recipe, which helped the company to compete with other restaurants including KFC. These are also potential reasons that KFC failed in Israel to achieve success.
The contrast between Customers: people of Israel are too struck by their religious code such as avoiding eating halal food as per their religious code. It has been found from menu cards in Israel that 80% of food items are non-dairy and vegetarian food, as well as 30% of the food team of KFC, is related to halal food. This is the main reason for failures in Israel even though KFC has sold and tasted non-dairy as well as vegetarian food items in Israel.
The Israel market was not easy for KFC to handle and it is reducing the productivity factor of the organization. After developing the financial hardship, the company was also facing backlash from the local; Israeli people while managing the business operations in the Israeli market. Diary is the key ingredient of KFC, which needs to be there to maintain the product teste, due to this reason KFC keep using dairy in their recipes, which is a big no-no in the ease of Devout Jews (Amar, 2021).
On the other side, non-religious people care about the taste rather than the kosher food. Overhyped products are increasing in the market and KFC’s market reputation is decreasing over the years, which is also a potential reason that KFC failed to achieve success in Israel.
Israelis Needed a Really Good Reason to Visit KFC: A restaurant is an entertainment place where people are visited with friends as well as family members. The Israelis need authentic as well as valid occasional reasons for visiting different restaurants whereas in Israel the occasion events are organised very often. This is an additional reason for low consumer engagement in Israel and fails in Israel.
Issues that the company deals.
The first KFC outlet started in the year 1950 and the company has been operating its business operations for more than 60 years, which suggests that the company is increasing its profit margin over the years. After analyzing the current performance of the company it has been determined, that KFC has started its business operation in Israel to explore a new market. KFC is facing financial hardship in Israel due to “Intercultural Differences”.
As of today, KFC has 22,000 outlets worldwide, however, this success did not work out in Israel, and the company is struggling to gain recognition in the country (Bettermarketing, 2022). KFC always faced business challenges in Middle Eastern Countries where conceptual and cultural difference is the main reason for not getting the recognition that the company deserves. Different issues that companies have in Israel have been discussed which can help the other companies to achieve their financial success.
Hofstede’s comparison of intercultural theory
Hofstede’s model is a cross-culture excavator model which has been considered by different businesses and the management of businesses in order to set and develop rules and regulations for business entities. There are some significant factors that have been discussed below that should be considered by KFC in order to effectively expand in Israel as well as other locations in future.
Figure 1: Cross-country comparison between the United States of America and Israel (Source: Hofstede-insights.com, 2022)
Power distance: Power distance is an important factor in the cultural environment of a country. It has indicated that people have the power to change ideas as well as the perception of other people. The power distance of Israel has been existing at 13 whereas in the US the Power distance score exists at 40 (Hofstede-insights.com, 2022). Differences between power distances indicate that the people of Israel have less power to affect the interest of other people regarding different religious and cultural interests.
Individualism: it is also a key factor which has affected the society as well as cultural environments of a country. The Individualism score of Israel exists at 54 whereas the US has an Individualism score of 91. It has indicated people of Israel are more interested in following their existing family. Where in the United States people innovate as well as imagine their own rules and regulations regarding society as well as religious culture.
MASCULINITY: The high score of masculinity indicates that people of that country are more interested in competing in order to achieve their competitors in the market as well as society. It has been found from Hofstede’s model that people of the US have more sifted to achieve success in high compositions. After that, in the cross-cultural event, it has been obtained that the masculinity score of the US has been existing at 62 which is more compared with Israel’s masculinity of 47 (Hofstede-insights.com, 2022). Hence, KFC needs to ensure better competition in the business organisation to achieve different objectives and aims set by the business entity.
Uncertainty avoidance: uncertainty has existed everywhere where gains exist. It is important for any country to know how people are inactive towards avoiding uncertainty through adopting different tools and techniques. The uncertainty avoidance of Israel exists at 81 as well as 46 of the US. This indicates that the people of Israel are more interested in avoiding any uncertainty compared with people in the US. KFC should consider the Uncertainty avoidance practice of Israelis while wanting to expand in the market.
Long-term oriented: the success of any country as well as a society also affects the design as well as the practice of people towards long-term orientation. The long-term orientation score of the US of 26 was low compared with Israel’s score of 38 (Hofstede-insights.com, 2022). Hence, the people of Israel may also expect that the practice of KFC may affect their religious code for the long term while operating in Israel for a long term period.
Indulgence: The indulgence score of Israel indicates that people of the country are more aggressive in controlling their desire as well as implants which are realised by them as compared to people in the US. These are key factors which may be accepted in the performance of KFC in Israel.
Culture shock
Cultural shock is a phenomenon which occurs when many people live too far from home in other cultures. As stated by Maizan et al. (2020, p.16), it is nothing just unfamiliar with current social norms which have been occurring in business as well as employee work in other nations and other cultures. Israel is also a new workplace as well as cultural norms for KFC while expanding business in Israel with the same food menu as well as a marketing strategy. There are four stages of their theory which should be considered by KFC when it wants to expand to a new place to achieve its business goal.
Honeymoon: As opined by Bieliaieva (2021, p.29), in this stage, people as well as business entities interact with new environments, cultures and food items. In this stage, a business entity like KFC needs to execute different cultural as well as environmental perspectives aggressively in order to avoid future issues to operate in Israel and other countries.
Negotiation: in this stage, the business entity as well as people may be negotiating with new changes and trends in the current social environment. For example, KFC needs to develop alternative food items as well as recipes which are common as well as interesting per the religious code of Israelis and KFC’s perspective.
Adjustment: In the third stage of the current model suggested to new companies as well as people to adjust them self as per current trends in new locations they operate. As a result, KFC gets better consumer loyalty and engagement in Israel.
Adaptation: According to Neugröschel (2021, p.25), in the last stage KFC needs to adjust itself as per the adjusted culture environment in order to sustain itself for a long-term period which has not been considered by KFC in the case of expanding in Israel.
Uncertainty avoidance theory
The uncertainty avoidance theory should be considered by a business while operating in a new culture as per new business decisions. As opined by Alipour (2019, p.54), uncertainty avoidance is a society’s tolerance which has been occurring while a business operates business in location as per their own cultural perspective. This also occurs in the case of KFC while expanding business in Israel without considering the religious code of the country and even selling halal food items in Israel which is totally unacceptable for Israelis.
As a result, the people of Israel have avoided food and other non-dairy food products in Israel. Hence as per the finding from the case study fails in Israel KFC news to consider different uncertainty while implementing a currency business perspective during performing food business in Israel is discussed (Bettermarketing.pub, 2022). As suggested by Darmawati and Herlina (2019, p.65), KFC should be focused on selling or eating food or innovating other new food items which do not affect the religious code of the country.
Corporate culture theory
Corporate culture refers to employees as well as managers of an organisation who interact with outside organisations with client customers and external stakeholders of the company. Has suggested that an organisation to the employee must have better communication as well as respect for which state holders of an organisation equally as internal as well as external have played important roles in the growth as well as performance of an organisation.
As per corporate culture, it is necessary for KFC to respect all religions and communities of people in order to gain better respect and faith of people towards the organisation’s growth and operations. As stated by Gorton et al. (2021, p.62), it has been observed that different organisations face issues to sustain their growth as well as business performance due to not having respect for each culture and religion of equal status in the organisation. Result employees, as well as customers, are satisfied through the business operations and service of the companies may increase companies’ customer loyalty.
Trompenaars and hapden Turner cultural dimension theory
This theory indicates that an organisation should focus on universalism instead of a particular event in order to attract different cultures and religions of people in the organisation in order to sustain growth and performance. As opined by Pirlog (2021, p.21), KFC should be considered collectivism in order to promote the ideas and thinking power of each employee and manager of an organisation.
Another result is an organisation not able to develop vector internal control numbers to take benefit and support of external stakeholders which may be at least for long-term time orientation in the market. Apart from this the company should focus on neutral working culture towards cultural events as well as religious events of all religions of people in order to support the level of people in their organisation which may be support and collaboration between all levels of employees.
McClelland’s theory of motivation theory
This story has supported an organisation to identify three experts through which manager as well as reader motivate its employees in order to ensure a vector working environment as well as culture which is necessary for ensuring a better working environment in the business. The three key aspects through which an organisation is able to motivate its employees is achievement affiliation and power.
Therefore, it is necessary for an organisation to support their employees by providing power as per their achievement in the business in the terms of better sales and consumer satisfaction which may increase their population in future. Apart from this the business organisation not being able to promote productivity and efficiency of an employees never tell is also increasing their trust as well as coordination between employees as well as customers.
As opined by Hussainy (2022, p.32), better coordination with customers as well as employees assist an organisation to increase its operating size as well as consumer engagement. Hence it can conclude that this theory may also support an organisation to motivate its employees in terms of vector working and environment culture.
Future of the company
Israel’s government is taking initiative to achieve success by adopting western culture and they invited foreign companies to operate their business in Israel. Moreover, KFC is also planning to relaunch their brand in Israel by opening 100 restaurant brands in the country (Times of Israel, 2022). KFC is optimistic about its comeback and they are applying different conceptual frameworks and business models to operate its business operations in Israel. After the fact, the food chain KFC is planning to develop restaurants that can cater to the high-class customers.
“High-Quality Food ” is the main priority of KFC that the company has achieved in the one-year time period and it is the main objective and goal for the organization. “Developing New Frying technique” is necessary to reduce fat percentage from the product, “Inventing and processing Kosher and Halal food” for Israel and Islamic countries. “Initiative to grab local market”, catering to the local market is the main plan that KFC is planning and it is the most effective marketing planning that can help KFC to get more consumers and it can also help the company to achieve success in “Middle Eastern Countries”.
Conclusion
KFC is a multinational fast food brand that operates its business in different regions of the country and they have faced different hardships in making business in Israel due to traditional boundaries. Maximum customers strictly follow the Religious Code and they prefer kosherfood, which is the first difficulty that KFC faced. KFC failed to achieve in Israel and it is also a valid reason that KFC faced a major loss in Israelis report discussed different Issues that KFC faced in Israel to operate its business operations.
The Israeli government is also strict about their religion and they mostly prefer kosher food. They are also trying to abolish non-kosher food from the country, which was the biggest issue that KFC faced during the business. Moreover, cultural boundaries and traditional factors have also been analyzed by using “Hofstede’s comparison of intercultural theories” and “Culture Shock Theories”. Furthermore, the report also discussed the potential issue and potential recommendations that can help the KFC Company to achieve its success factor.
Recommendation
After analyzing the current scenario of the organization and its business plan it can be determined that KFC is trying to achieve financial success by reentering the Israeli market. “Developing Cross Culture Management” is the primary initiative that KFC needs to take for better performance. Cross-cultural management is the most important factor that needs to develop in the business and to expand the business. It also helps the company to get proper information for the particular business market (Hi, 2022).
“Multicultural Team” is the main objective of Cross culture management, which works differently to improve Synergies among the team members. For example, Israel is very strict about their religion and it became difficult for KFC to achieve success in the local Israeli market. However, the Israeli Marketing and Management team can handle the situation by developing an International team that can work with the local management and marketing teams to achieve sales and marketing obligations.
KFC needs to develop alternative food items as well as recipes which are common as well as interesting per the religious code of Israelis and KFC’s perspective.
The local people of Israel did not like KFC needed to change their milk-based costing to soy-based, which affected the taste of the product and it. Developing the Market Chain is the main priority of the company that can help the company to achieve its business objectives and it can help the company to achieve market share in Israel (Iide, 2022) Other than that, KFC got a 10% average profit margin from a franchise in the USA.
On the other hand, they were not getting the required profit margin, which needs to improve for better performance. Other than that, “Investing in the local market” can also be an appropriate solution for the company to achieve its profit margin. “Developing Culture Compass’ ‘ is essential to understand the cultural difference can also help the company to identify marketing flow regarding tradition and culture. These are the potential management and marketing criteria that KFC needs to mark to achieve success in different regions.
Reference List
Journals
Alipour, A., 2019. The conceptual difference really matters: Hofstede vs GLOBE’s uncertainty avoidance and the risk-taking behaviour of firms. Cross Cultural & Strategic Management.
Amar, A., 2021. Fifty shades of kosher: negotiating kashrut in Palestinian food spaces in Israel. Food, Culture & Society, pp.1-12. Available at:https://www.academia.edu/download/66788359/Fifty_Shades_of_Kosher_Final_draft_accepted_24.9.2020.pdf, pp 98 (Accessed on:11/01/2022)
Bieliaieva, V.V., 2021. Cross-cultural aspects of international business (Master’s thesis, Sumy State University).
Christodulelis, L.J., 2020. SEIZING THE FIRST-MOVER ADVANTAGE. Columbia Law Review, 120(2), pp.431-464. Available at: https://columbialawreview.org/content/seizing-the-first-mover-advantage-resolving-the-tension-in-delaware-law-between-boards-of-directors-and-controlling-shareholders/, pp55 (Accessed on:11/01/2022)
Darmawati, B. and Herlina, A., 2019, October. Bugis Cultural Taxonomy: An Overview of Hofstede’s Cultural Dimension. In 6th International Conference on Community Development (ICCD 2019) (pp. 108-110). Atlantis Press.
Gorton, G.B., Grennan, J. and Zentefis, A.K., 2021. Corporate culture (No. w29322). National Bureau of Economic Research.
Hussainy, S.S., 2020. Review on Motivational Theories & Models: Its application for Employees’ Retention in Organizations. International Journal of Business and Applied Social Science, 6(1), pp.40-46.
Maizan, S.H., Bashori, K. and Hayati, E.N., 2020. Analytical theory: Gegarbudaya (culture shock). Psycho Idea, 18(2), pp.147-154.
Neugröschel, M., 2021. Redemption online: Antisemitism and anti-Americanism in social media. Volume, 5, pp.175-200.
Pirlog, A., 2021. National Cultural Profile in the Republic of Moldova According Hofstede and Trompenaars-Hampden-Turner Models. Revista de Management Comparat International, 22(4), pp.450-457.
Websites
Bettermarketing, 2022, Why KFC Failed in Israel, Available at:https://bettermarketing.pub/why-kfc-failed-in-israel-5b75bdbbbef7 (Accessed on:11/01/2022)
Bettermarketing.pub, 2022: Why KFC Failed in Israel Available at: https://bettermarketing.pub/why-kfc-failed-in-israel-5b75bdbbbef7(Accessed on:11/01/2022)
Finance, 2022, KFC, Ltd. (3420.T), Available at:https://finance.yahoo.com/quote/3420.T?p=3420.T&.tsrc=fin-srch, (Accessed on:11/01/2022)
Haaretz, 2022, KFC Relaunching in Israel for the 4th Time — but This Time It’s Not Kosher, Available at:https://www.haaretz.com/israel-news/2019-12-02/ty-article/kfc-relaunching-in-israel-for-the-4th-time-but-this-time-its-not-kosher/0000017f-e2aa-d9aa-afff-fbfa962f0000(Accessed on:11/01/2022)
Hi, 2022, INTRODUCTION TO CROSS-CULTURAL MANAGEMENT, Available at:https://hi.hofstede-insights.com/introduction-to-cross-cultural-management123(Accessed on:11/01/2022)
Hofstede-insights.com, 2022: COUNTRY COMPARISON Available at: https://www.hofstede-insights.com/country-comparison/israel,the-usa/(Accessed on:11/01/2022)
Iide, 2022, Detailing the Business Model Of KFC from End-to-End, Available at:https://iide.co/case-studies/business-model-of-kfc/(Accessed on:11/01/2022)
T4, 2022, Fast Food Market Share, Available at:https://www.t4.ai/industry/fast-food-market-share (Accessed on:11/01/2022)
Times of Israel, 2022, As KFC plans an Israel comeback, will the chicken fly this time?Available at:https://www.timesofisrael.com/as-kfc-plans-an-israel-comeback-will-the-chicken-fly-this-time/#:~:text=KFC%20plans%20to%20open%20100,success%20of%20the%20network%20here. (Accessed on:11/01/2022)
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