The Globalisation of McDonald's

      Globalisation is every where, three months ago in Shanghai my hometown,I woke up in the morning turned on my Ipod from APPLE (America) and my speaker from SONY(Japan) and drank a bottle of milk from NESTLE(Switzerland) and put on my sneaker from NIKE(America) Those thing suppose to be thousand miles away from me but because of globalisation they all come sloser together.

      

      Globalisation refers to a world in which societies,cultures,politics and economies have, in some sense come closer together(Kiely,1999) ,which means globalisation is not only about products from other countries, it could be cultures, for example,we never do christmas things in China before, but now Chinese people are willing to send christmas presents to friends and family members and decorate christmas trees. it also could be people in China love listening to the songs from Mariah Carey or watching the Downtown Abbey.

Its hard to say whether globalisation is a blessing or a curse,but it does influent our daily life  from many aspects, in this blog I will examine why the globalisation of Mc Donald's are so successful and outline the advantages and disadvantages about it.

Mc Donald's has become not only the largest fast food restaurant organisation, but is a symbol of globalisation. It has 32,000 outlets in 117 countries. Mc Donald's daily customer traffic(62 million) is more than the population of UK. I found a video from Youtube:

                            

WHY?

• Mc Donald's is trying its best stop the cultural change, by changing itself to fit. For example, in Italy Mc Donald's servers mediterranean salads, and fried rice is also available in Japan. In israel there are several kosher Mc Donald's restaurants,and in Mexican outlets sell burritos. These are just a few examples of the decisions made by Mc Donald's to change itself to fit the local culture.
  
  

• Homogeneous market needs and the amount of global customers. Citizens nowadays all live at a busy pace everybody want to get food as soon as possible instead of being in a long queue or spending ages waiting for lunch. Mc Donald's noticed this and take full use of Scientific management theory (Taylorism) on how to train their employees doing the jobs in the most efficient way.

• Transferable brands and advertising---advertisements to attract children all over the world. Mc Donald's especially focus on children's by offering happy meals.

 

 ADVANTAGES:

• More employment opportunities---Mc Donald's has 31,000 restaurant in 119 countries, employing more than 1.5 million people, which is about 1/4 singapore's population ,thus increasing job opportunities world wide.

• Mc Donald's has contributed in giving greater access to a global marketplace of goods by its strong economic influence as they encourage many enterprisesto offer them different services in order to keep up with the demands of people.

• Increases global economy---Mc Donald's invests and supports initiatives to adapt its products and services to different local scales to ensure its global brand,which increases global economy.

  DISADVANTAGES:

• Some local tiny and small industries will be ruined directly--- Due to the high market share in fast food industry occupied by Mc Donald's some chinese traditional fast food chain store were attacked seriously such as Honghong in my home town closed 12 outlets last year because of low profit.

• Cultural convergence---More people are keen on fast food.Besides, more people are moving towards the western fashion, it may affect the life style of local people  for example high reliability on hamburg and coke cola may cause obesity problems.

Ansoff's Matrix

  
         H. Igor Ansoff (December 12.1918- July 14,2002) was a Russian American. He is known as the father of strategic management. Ansoff Matrix is his most famous work.       

         There are three levels of strategy: corporate level,business level and operational level. In this blogger I will introduce the choices of making strategy at the corporate level---ANSOFF'S MATRIX, which sounds quite complex at the first time I heard it.

         After attended the lecture, I found the Ansoff's Matrix was useful for managers to consider how to grow their business through existing or new products or in existing or new markets and it can also help managers to assess the different degrees of risk when they making decisions.

   

        AS is illustrated in the picture, its obvious that Ansoff suggests four different strategies based on whether products are existing or new and focus on whether a market is existing or new. Within each strategy, there is a different level of risk. In this blogger I will focus on one of the strategies-----Market Penetration.

                                                
  
                                                 Market Penetration (Generic Growth)

        Market penetration means to increase the market share by launching existing products in an existing market, which usually achieved by selling more products or by finding more customers. For example, Home Plus (Tesco changed its name in Korea), increased market sales 130% using online technology. Here is a video I found from youtube, its a genius marketing idea in Home Plus, which helps Tesco increased online sales 130% by using online technology.

                             


People can shop at Tesco wherever they are without having to visit the actual store, this idea changed the customers waiting time to shopping time, as a result,through this campaign 10,287 customers visited the online Tesco using smart pone,the number of new registered number rose by 76% and online sales increased 130%. Currently Home Plus has become NO.1 in online market in korea,its obvious that market penetration indicates that a produce has become established and the company is a market leader.

To increase sales and market share, Tesco relaunched its Clubcard, provides the grocer with detailed information about its shoppers. Which gave it a second boost when it doubled the points awarded to shoppers. 

TNS (A market research firm )said Tesco would get another boost from the loyalty card in the coming weeks as Clubcard vouchers are currently being mailed out, putting "coupons in shoppers' hands in the run-up to Christmas".

The latest data from t TNS shows Tesco's market share rose to 30.7% in the three months to november, from 30% in the same period last year. Tesco's sales growth rate was 4.7%, compared with market grow of 4.4% .

But nothing is always blessing, especially when everybody wants to win market share,a price war may be started if competitors cut prices and others follow. This may result in no profit and a failure to successfully penetrate the market.

For example, in 2009 Walmart marks down the prices of 10 bestsellers to 10 dollars when Amazon matched, Walmart went to 9 dollars. Amazon matched again ,Walmart went to 8.99 dollars. Amazon is not able to match.Though target joins the price war and sets 8.99 dollars as well. And then Walmart dropped the price of the oven from 28 dollars to 17 dollars, later the same day, Amazon cut its price also from 28 dollars to 18 dollars. More products Amazon and Walmart sold more they lost actually.

To summarize, the penetration market has advantages and disadvantages,it may create goodwill among first customers and may create customer referrals. It may also discourage new entrances and increase the market share at the same time.But in another hand,it may cause price war and too aggressive price may effect you bran image.

PESTEL---- Social Cultural

PESTEL stands for six forces in general environment, which can affect business management ,they are Political, Economic, Socio-Cultural, Technological, Environmental and Legal factors. Today I want to talk about the effects of changing consumer preference on cosmetic industry based on PESTEL analysis----socio-cultural factors.

                                       THE BODY SHOP----The original "green shop"

                                                 

In recent years people put more and more emphasis on green issues and animal rights and  charity ,The Body Shop is an roll model in the beauty industry, which has 2,400 stores in 61 countries and has its headquarters in West Sussex,England. They have five theories: protect our planet,against animal testing,support community fair trade,activate self esteem  and defend human rights.

                                 

• protect our planet

They launched the campaign of recycling the empty bottles and plastic bags, to improve the awareness of environmental protection ,The Body Shop also is famous for its 3R policy--Reduce Reuse and Recycle.

• Support community fair trade

There are special groups in the company will teach backward areas farmers to grow crops and buy their raw materials at reasonable prices in order to  maintain their stable income and let their children have the opportunities to go to school.Besides, the body shop protect the rain forests and other natural resources. Supporting Community Fair Trade has been one of their core Values since 1987. As is illustrated in the picture in 2010 TBS totally spent 8.9 million pounds on community fair trade.

• Against animal testing
  
  
  

he Body Shop has always been against animal testing – it was one of their earliest and most ground-breaking campaigns, and led to them being the first international

cosmetics brand ever to be awarded the Humane Cosmetics Standard.

Lets look at those two pictures ,the retail sales are around 1470.5 millions in 2012, and the body shop totally owned 2837 stores around the world. Its really a giant organisation, I am a super fan of The Body shop too,not only because their star products are fantastic but also their enthusiastic star theories. Nowadays The consumers prefer healthier and environmental-friendly products, because according to the  PESTLE analysis,which  is not just a simple theory, like PORTER'S FIVE FORCES it is a tool to help organisations to improve their performance,Social -cultural factors,the consumers are changing their preferences. and The Body Shop noticed this idea and took full advantage of it, thats why this company is so successful and has so many fans.

Stand still?

We all know that the internal environment is crucial  to the organisations, as I analysed in the last three blogs, the structure ,the objective ,the people means a lot to various organisations. But the competitive environment is also of great significance to organisations, and in this blog I will outline the importance of the micro environment,and apply it to the real situation.

when it comes to the competition within the industry, the first point jumps to my mind is the competitors within the competition, Pizza hut V.S. Mc Donal's, Apple V.S. Samsung ,Google V.S. Twitter ,Sainsbury V.S. Co-operative,but ,besides, actually there are four more factors.

Michael porter suggests that the competitiveness of a industry is based on five factors, the intensity of rivalry with the industry, which means the direct competition among the different companies within the industry. the threat of substitute, the new entrance,and the bargaining power of buyers/suppliers. 

Threat of substitute:

when it comes to the best way to remember an unforgettable  moment , the answer is definitely the photo album. And the film of Kodak is so famous that nearly everyone used it before. Its hard to believe that such a company has already disappeared forever. They did not realize the raise of the digital camera, they thought people will always focus on the real photo. The ignorance of the advantage of the substitute --people can choose their favorite one stead of developing all the pictures make the giant company go bankrupt finally. And now most of the customers are willing to buy the digital ,because you can make photos more attractive by adding some letters or symbols, the cameras become more joyful than before. If they realized the threat of the substitute , refused standing still, created a brand new killing product like digi-film camera then maybe kodak could launch a powerful campaign within the industry.

Threat of new entrance:

To have a Nokia phone was my dream when I was a junior school student, I even promised to my parents to get good marks in the final examinations in order to  get a Nokia. Nearly everybody on the street use their NOKIA to "connect people"  But Nokia finally had been acquired the Microsoft in 2013. Actually, the reason is obvious, with the development of people's living standard "connecting people" is not the only purpose of using a cell phone, we need the cell pone to make the user's life more colourful---entertainment ,for example,the powerful system of iphone---ios, we have wide range of choice to download any app in the ipod store, free novel and magazine,free game and some apps are even relevant to our daily life:maps,transport  timetable,and even cookbook! Nokia did not realize the powerful effects of smartphone produced by other competitive companies and stood still in the cell phone industry, the legendary NOKIA became history in the end.

The bargaining power of buyers:

According to Porter"Buyer power refers to the ability of customers of the industry to influence the price and terms of purchase." for example, there are only two supermarkets in a small town, at first ,the price of those two supermarkets is similar, but after supermarket A raised the price, most customers choose to go shopping at supermarket B, then supermarket A shift back to the original price. Another example is in China, some bank used to charge customers for using debit card go shopping, so some customers closed their accounts and go to other banks, and now all the banks in China charge nothing for using debit card.From those two examples we can see that customers are able to influence the price and terms of purchase, that's the strong bargaining power of buyers.

The bargaining power of suppliers:

Just imagine only two suppliers can offer the significant material which is necessary for the buyers. In this situation, the strong bargaining power of suppliers is quite obvious ,because those two suppliers can change the price and the quantity they are going to produce and they even can choose the particular suppliers they want to offer this material, which means they can control the whole market if the bargaining power is pretty high.For example,Microsoft -practically dominates the market for personal computer systems, we have limited choices in price and types when we choose the computer systems.

Its easy to tell wether a industry is attractive or not by comparing the five forces when we are going to step in a new field, and when have already in this industry it an help us to  remind ourselves of those possible competitiveness to prevent us from sinking into crisis and use this theory as a tool to keep moving instead of standing still .

Father of scientific management

Last week, Rob mentioned many famous business theories at Monday's lecture, among all of those theories, I was so interested in a theory called Scientific Management or Taylorism, to get some further understanding of this theory, I did some self-study at the weekend. In this blogger I will examine three principles of this theory.

• Efficiency and productivity based.

which means the main objective of Taylorism is improving economic efficiency ,especially labor productivity. When Taylor worked in a Steel actory, he noticed the differences in productivity between works. Because of talent,intelligence,and motivations. Therefore, s,he tried to find the way to increase productivity and update efficiency by providing proper tool for different workers. For example, he found that the power of workers are different so he even prepared more than 10 types of different shovels in the factory to meet the needs of workers.

As it is illustrated in the table, we can see obviously that the efficiency of the total output increased substantially by 350% and the wages of workers grew mildly,but the number of workers decreased dramatically. Taylor was also one of the first advocators of regular breaks in the working period. He found that a ten minute break for every hour worked would increase the productivity and efficiency hugely.

• Selected the best person to do the job---others follow.

Taylor said"The workman who is best suited to handling pig iron is unable to understand the real science if doing this class of work." It is so true because people have different skills, nobody can do all the jobs perfectly, but somebody is bad at accounting may be good at advertising. In my opinion, choose the appropriate person for different task is also a way to improve economic efficiency and productivity.

This principle reminds me of the recruitment of  Google company, the human resource department of Google is looking for very bright recruits who can think quickly, imaginatively and unconventionally to be the leader of the specific group, and training the rest employees to do their jobs efficiently.So this theory still used in current companies---determine the kind of work for which employee is most suited and to assign workers accordingly.Besides, the managers need to Scientifically select,train and develop employees.

• Financial incentives --- assumption that motivation purely based on reward.

I believed that all employees need to be motivated, especially those who focus on monotonous jobs. Many companies have their own strategic staff reward systems.Because its scaring when people become lazy. For example the employees work in Apple(United States) will be getting pay raise of up to 25% of their previous wages,totally based on performance.And Tim Cook,the current CEO of Apple recently implemented a new discount system that Apple employees receive $ 500 off a Mac or $ 250 off an ipad, which can be used every three years(available to all employees who have worked for the company for at least 90 days)

Buy I do not agree with Taylor that all people are motivated only by money.Nowadays, people also put more emphasis on other aspects than before, such as staff welfare, compensation and appreciation.Besides, I remember Rob have shown a picture about an investigation on why people work out, the first reason is because of challenges. They are motivated by facing the challenges and realizing their self-value. So I think 100 years ago maybe the employees were only motivated by money, but now situations have changed money is just a part of motivation methods.

Reference1:The Principles of Scientific Management (1911)

Reference2 :http://lcweb2.loc.gov:8081/ammem/amrlhtml/intaylor.html

Reference3:http://www.entrepreneur.com/article/75340

Matrix Structures

This week, both of the lecture and seminar are focus on organizational design and structure, and  I was interested in Matrix Structures. At first,I was confused by this concept which I did not know before. After read MULLINS, I understood that matrix is a company structure, in this structure, employees come from different departments work in a same group to achieve a same goal.

As it is illustrated in the chart, we can see a two-way flow of authority and responsibility. The functional units authority and responsibility flow vertically down the line ,and the responsibility of the project manager flow horizontally across the organization.To explain this idea more clearly , I will introduce the matrix structure of a very famous electronic company---Philips.         

 Philips is a dutch electronic company, after the second  world war , it set up both organizations and product divisions. For example, the boss of washing-machine division in Italy, would report to both of the head of philips  in Italy and in Netherlands.In this way,first of all, information flows both vertically and horizontally. Employees are in contact with many people, the information can be shared and the decision process can be speeded quickly. Moreover, employees are expected to do different job and move around in their career instead of sticking with a monotonous job in a single geographical region. Matrix Structure can motivate the employees in Philips.

But the Matrix Structures do have advantages, Firstly,by the 1990s,Philips had decided that structure was no longer working well, for example, when profit and loss occurred , who was to be held responsible for it ? so it can be difficult to determine who is responsible for operating financial results.Secondly,functional groups may tend to neglect their normal duties and responsibilities.

Reference1: http://www.economist.com/node/5380495

Management and Organisation

     This is the third week of my university life, I really learned a lot  from those lectures and seminars. In the  first lecture addressed by MR. Vish, I understood that only remember the definition is not enough, and the most important thing about self-study in university is updating our thinking ability of application, analysis and evaluation. Unfortunately, in China, what I need to do is write down everything the professors asked us to memorize,and they will tell us the key point and perfect answer. So it is hard for me to do that exercise at first, but after I attended Rob's seminar, I just begin to know how to improve my skills and he encouraged me to have confidence in myself,which really helped me a lot. 

In terms of the most important aspects of organization,I think is structure.Because the efficiency of one organization can be updated dramatically if it is in a right structure,which is the main objectives of organizations,no matter it is a economic organization,a political organization or a educational organization.As what I learned from the last lecture, there are three common features in organizations, people structure and objectives. I my opinion, all the people are included in different groups of one structure ,and all of the groups in the structure have same goal. I this way the reasonable structure plays the most important roll in organizations.


When it comes the the most important aspect of management, I think is how to take good advantage of two kinds of resources(tangible resources and intangible resources) For example, the main purpose of human resource department is train and select the right people for the right thing,which helps organisations to take full advantage of tangible resource---people, and create more  value in the same period.

My first homework was two 200-word paper about management and organisation. I did not know how to start my essay ,but after seminar 3 addressed by Rob ,clearly I realized how to deal with some simple analysis and application.Our first presentation was to" choose one of the management setting and find an organisation within that setting."In our four-member group, we prepared a presentation about TESCO , we applied what we have learned in the lecture to a real supermarket case , of course not only remember the definition, we choose different part of our topic ,mission/core products/add value to its resources/organisation structure. We put interesting pictures in the prezi and list the key points of our topic, at first, we worried about five minutes were too long, but finally we found its kind of too short,we want to express more information we investigated. In our group ,we helped each other learned from each other. When we finished the presentation , Rob said well done, two simple words really means a lot to me.As an insightful saying goes"practice makes perfect"although I have a lot of difficulties to overcome, I believe that I definitely can do better in next week.