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McCain Foods Limited

By:   •  December 3, 2018  •  Case Study  •  1,677 Words (7 Pages)  •  1,189 Views

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The following is a reflective paper on the decision making process, organizational structure and the leadership/motivational styles used by McCain Foods Limited.

Over the period of 50 years McCain Foods Limited has coined the market in frozen food products both internationally and globally. Currently they have 57 manufacturing facilities on six continents worldwide. McCain’s growth and success can partially be credited due to its partnership as a supplier to major fast food corporations like McDonald’s and Kentucky Fried Chicken. With its most recent success in breaking through and establishing themselves in China and India as an international manufacturer, the global business still faces many potential risks in the global business environment in regards to its international expansions. Risks like overcoming challenges regarding different legal and political systems, dealing with different trade agreements and trade barriers, and working with worldwide regional economic alliances can all be demanding on a global corporation.

Hiring global managers who are culturally aware and stay informed on international developments is a very big challenge for an international corporation. These global managers need to be able to deal with worldwide suppliers and distributors, culturally different customers and competitors, and face many other environmental challenges. Global diversity and cultural differences are also challenges that Canadian managers working for McCain could face when leading in other countries such as China. Studies have been done to assist corporations and managers in preparing and planning for these different values and national culturalisms. By assessing nations on power distance, individualism-collectivism, uncertainty avoidance, masculinity-femininity, and time orientation factors, managers can be better prepared to overcome cultural challenges they may have to face in the daily operation of the business.

Although the reward is high, many potential risks exist in expanding a business globally. In the end much of McCain’s global success could directly be tied to its partnership with major fast food clients, but while still using their own brand name McCain also could have used other global strategies in order to penetrate the China market. Globalization strategies like joint ventures or strategic alliances, or even outright acquisitions of foreign subsidiaries are examples of other plans of action that McCain could have used to gain their foothold in countries like China and India.

Potential Global Environmental Risks

Running a business in a foreign country can be very different than running the same business at home. Not only must global managers be ready to deal with a new way of doing business in a host country, but they also must be ready to face very real environmental differences like different legal and political systems, different trade agreements and trade barriers, and working with regional economic alliances.

Legal and Political Systems

The difference in legal and political systems that exists in other countries is a very high risk in international business. One that could lead in the total loss of the business itself or even in managerial control of the local business. Uncontrollable events in foreign countries like terrorism, military conflict, or even a change in government can occur, and although we can't prevent these situations from happening we can at least prepare for them. Conducting political risk analysis studies to help forecast possible negative occurrences could help the business weather the event favourably. As well, the differences in laws between where the business’s home country is as opposed to the location of the international place of operation, must be understood. From contract laws, intellectual property laws, health and safety laws or even environmental regulations, a global company must be ready to comprehend a broad spectrum of information in order to remain successfully competitive in the new global market.

Trade Agreements and Trade Barriers

A global business does have a recourse to get assistance in resolving possible national business problems if it needs it. The World Trade Organization (WTO) is made up of various members from different nations who assist in negotiating and resolving disputes about tariffs and taxes and other international rules of trade. They help international businesses when they feel they are being mistreated in foreign countries or help local businesses when they feel they are being treated unfairly due to other international competition within their own countries.

Regional Economic Alliances

On a regional context, a global business can also have assistance with overcoming regional barriers. Regional economic alliances were developed in order to help stimulate long term economic growth in various countries by partnering together for the greater good. Alliances like the North American Free Trade Agreement (NAFTA), the European Union (EU), the Asia Pacific Economic Cooperation (APEC) to name a few are all organizations that were put together to help promote and protect regional economic alliances. There have been positive and negative arguments resulting from these alliances. Positives were greater cross-border trade, benefits to farming exports, greater productivity of manufacturers, and on the negative side there has been loss of jobs due to the relocation of companies wishing to take advantage of cheaper labour costs in other countries, lowered wages in home countries due to this lower labour cost competition, and lack of protection of some our natural resources.

Dimensions of Global Culture Challenges

Geert Hofstede’s research showed that cultural differences can make or break business relationships. Each culture differs in its mannerisms, signs of respect and disrespect and gestures. One must educate themselves before visiting the host company in order to avoid the cultural shock and be able to enjoy their visit asides from creating a prosperous business relationship. Subtle gestures that one finds harmless can be highly offensive to other cultures. Hofstede classifies four aspects of cultural diversity:

Power Distance

From the text (Management (p.20)) we learn that some cultures have higher opinions of a person based on the age, status and position. Canada differs from this in that efforts have been made to bring in younger people into the workforce. Canadian managers must show formality and leadership when interacting with high power cultures.

Uncertainty Avoidance

Canada shows a low uncertainty avoidance culture in the sense that they are willing to be innovative, and not


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