Business Report

McDonalds Vietnam

Group members:
Yen Nguyen s3652061
Stine Flatland - s3650998
Johann Berg - s3650966
Tormod Flesj - s3650996
Nguyen Duc Anh s3515324
Anh Phi Son - s3536656

Table of Content
1.0 Introduction 3
1.1 Background of McDonalds 3
1.2 McDonalds in Vietnam 3
1.3 Reason of Selection 4
1.4 Outline 4
2.0 Report Body 4
2.1 Competitive Advantages 4
2.2 Communication Challenges
3.0 Recommendations 5
3.1 Cultural of Adjustment of Human Resource Department 6
3.2 Team Building Activities 6
3.3 Management of Cultural Barrier and Communication Gap 7
3.4 Food Delivery Services 7
4.0 Conclusion 8
5.0 References 10
6.0 Appendix 11
6.1 Interview Transcript 11
6.2 Group Member Contribution Statement 12

1.0 Introduction
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 1.1 Background of McDonalds

McDonalds is one of the largest fast-food chain restaurants in the world. Starting up in 1948
by two brothers, they initially wanted to be a barbeque restaurant, but within a decade they
recognized themselves as a hamburger restaurant. In 1955, businessman Ray Kroc bought the
chain from the two brothers to expand it further.

Today, McDonalds is serving 68 million customers every day all around the world, whereas
their services are available in 120 nations worldwide. According to their website (2017), they
have 36.899 outlets and sell mostly hamburgers, fries, chicken products and desserts. Some of
the items on the menus gets replaced over the time, while some products have remained on
the menu as a signature meal, e.g. BigMac.

Their outlets are either run by a franchise or an affiliate or the corporation itself. McDonalds
revenue is totaled by the rent, royalties and fees paid by the said franchises as well as the sales
from their own owned restaurants (Form 10-K, 2017). As of 2012, McDonalds is the second
largest private company in the world, followed by WalMart.

1.2 McDonalds in Vietnam

In 2014, McDonalds opened their first restaurant in Ho Chi Minh City (CNN, 2014). The
owner, Henry Nguyen, was previously a cashier in McDonalds in a foreign country and
always wanted to open one himself in his home country, Vietnam. He is also the son-in-law of
the prime minister in Vietnam. As of today, Ho Chi Minh City has three McDonalds
restaurants located in the city center and in district 7, well known for western expats.

Even though most of the menu at McDonalds is the same all over the world, they tend to
make small adjustment to meet the cultural differences in any given country. In India they
dont serve beef, but have more chicken oriented products. In Vietnam, they have the iconic
Big Mac, but also locally more suitable food and beverages such as McPork or a green tea-
flavored milkshake. McDonalds is not the first western fast-food-chain that enters Vietnam.
Before them, well-known chains such as Burger King, Popeyes and Kentucky Fried Chicken
have already opened establishments in Ho Chi Minh City and Hanoi.

1.3 Reason of Selection

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After a while in search of a person from a Human Resources (HR) Department we ended up
choosing Mr. Robert Pham from McDonalds Vietnam. Mr. Pham is a training specialist that
is located in Ho Chi Minh City. He quickly agreed to be interviewed by us. We mainly came
in contact with Mr. Pham after conducting research on McDonalds Vietnam and finding out
their franchise in Ho Chi Minh City is fairly new and offers a lot of potential in the
Vietnamese market and also contains many interesting International HR regulations.

1.4 Outline

This report will portray the gathering of information we found through research and
interviewing Mr. Pham. Undoubtedly, McDonalds has done a lot of correct moves to get to
the position where they are today, but there is still room for improvement. This report will
therefore contain challenges that McDonalds Vietnam is facing right now [May, 2017] which
mainly will be related to competitive advantages and communication within the staff and their
restaurant location. Further on, the report will contain recommendations for said problems.

2.0 Report Body

2.1 Competitive Advantages

McDonalds is proud of their standardized processes all over the world. Every burger, every
bag of fries and every drink is supposed to taste the same in every country. It does not only
apply to their products but also their internal structures are meant to be alike. McDonalds
wants to achieve a similar environment regardless of where they are located. Even the Human
Resources implement the same principles and methods everywhere. That might be a
competitive advantage towards other HR Departments of other companies. To achieve this,
McDonalds recruits staff according their globally uniform standards. These are mainly:
having a positive attitude, caring for customer service, being a team player and taking
responsibility (Apply McDonalds 2017).

After recruitment, teachers from McDonalds Burger University will come to Vietnam and
give trainings to new employees. It is Mr. Phams task to invite and coordinate these teachers
and the courses. Again, it is a method to guarantee that their work ethos is practiced in the

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same manner in every location. By inviting teachers from their headquarters, McDonalds
makes sure that each team in each store is educated identically.

Mr. Pham mentioned that their recruitment is also focused on embracing diversity among
their staff. It is one of McDonalds principles to hire people from various social backgrounds,
ages and educational levels. Due to that, McDonalds staff is extremely heterogeneous and
brings a lot of contrasting personalities together which also means that a large variety of
perspectives, opinions and skills are brought into one team. It certainly is an advantage to
have access to differing personas and make use of their individual talents. But it also bears
difficulties to the HR Department because it has to manage a very complex team and deal
with miscellaneous characters.

2.2 Communication Challenges

McDonalds always tries to recruit people from diverse backgrounds, various ages and
education levels. Mr. Pham told us that this can lead to disadvantages in the communication
between the Vietnamese staff and the staff members, and the other employees. This
disadvantage is a result of linguistic barriers between the persons involved. The employees
must be aware of individual and cultural differences. Communication is essential for internal
integration and external customization (Jacobsen, Thorsvik 2013, 278).

Further, Mr. Pham told us that nonverbal communication plays a big role and poses
difficulties. People from different countries and cultures tend to use different nonverbal
communication gestures. Therefore, it is important to take age, culture, religion, gender, and
emotional state into account when reading body language signals (Robinson et al 2017).
There are many differences among the American and the Vietnamese culture. Nonverbal
communication includes facial expression, gestures, body language and eye behavior
(skillsyouneed 2014). Nonverbal cues can in some cases be even more important than what
we say. Body language has a 55 % impact of a verbal message (Yaffe 2011). An example of a
misunderstanding that can occur at work in McDonald's, is when an employee is making a
circle with his thumb and forefinger. In Western cultures, this means OK. In Japan, however,
it is a sign for money. And in Arabic countries, it is a threat (skillsyouneed 2014). This must
be taken into consideration when it comes to nonverbal language between the Vietnamese and
Non-Vietnamese staff.

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Working as an employee at McDonalds can sometimes be stressful and everybody is busy in
doing their task as fast as they can. Multitasking can lead to lack of focus. When you are
stressed or emotionally overwhelmed, you are more likely to misread other employees or
customers, and send confusing or off-putting nonverbal signals (Robinson et al 2017). When
there is a lot of customers, it is even more important to communicate to give a better service
to the customers and avoid mistakes. Even though McDonalds has standardized processes
and routines on how to do different tasks, it is crucial to keep up the communication to work
more effectively and work together as a team. Communication is important to convey
information, coordinate, learning and to take decisions (Kaufman, Kaufman 2015, 401)

3.0 Recommendations

3.1 Cultural of Adjustment of Human Resource Department

McDonalds emphasizes that standardization is one of their top priorities. This means that
every part of their company applies the same techniques and utilizes the same solutions to
certain issues. At the same time, McDonalds is eager to recruit people from various
backgrounds to join their team. Various countries, cultures in general and differing employee
personas in specific require a more individual treatment. It is difficult to find a homogeneous
method for such a heterogeneous group. Since the HR Department is responsible for the
employees, the special task of managing everything staff-related is put upon them. Our
recommendation therefore is to abandon the standardized structures for the HR Department in
order to be able to adjust HR tactics and methods. In this way, McDonalds is able to avoid
misunderstandings that derive from intercultural differences and also they are able to respond
to each employees personality individually. Their methods need to be aligned to the
employees cultural, educational and social background.

3.2 Team Building Activities

To improve and enhance the relationship between employees as well as their team-working
skills, team-building activities are essential and effective ways. According to Buller P. and
Bell K. (1986), team-building activities are one of the best ways to boost the relationship
between the co-workers, improve the workplace culture and it poses a great opportunity for

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senior positions to observe their employees hidden strengths, weaknesses and abilities. This
method has a great influence on the overall performance and productivity of the organization
in general and the HR Department in specific. For instance, Google and Facebook are well-
known for offering series of team building activities, which help their employees to meet
other coworkers in different departments and also it improves their relationships with those.

As a result, after several team-building activities, the communication gap, team work and
having an understanding for the workplace culture among the colleagues may enhance and
increase significantly.

3.3 Management of Cultural Barrier and Communication Gap

As mentioned above, due to McDonalds attempts to recruit people from diverse

backgrounds, various ages and education levels, the communication and culture barrier may
appear between those with different culture and backgrounds. As a result, the communication
and culture barriers may lead to conflicts and resentment between co-workers and the
organization, according to OReilly et al (1991). Therefore, holding cross-cultural and
communication workshops to get co-workers to participate in or creating a staffs forum or
chat room, where they can talk openly and directly with each other are the best options to
enhance the cross-cultural communication in the organization. In conclusion, the above
approaches would allow the organization to embrace the cultural differences in their
workplace, and thus enhance their work discussions with various perspectives and ideas as
well as team-working skills.

3.4 Food Delivery Services

McDonalds stores in Vietnam are placed in inconvenient locations, with low footfall. This is
not a problem that is easy to find a solution to. To solve this problem, we will recommend
McDonalds to offer home delivery of their menu through an online application and phone
calls. By doing so it does not matter where McDonalds is located at, as the customer is able
to order from anywhere at any time. The number of smartphone users in Vietnam is
increasing rapidly as illustrated in the graph. It means that more people will be able to
download food delivery applications like Foody or Vietnammm. Foody is an app that
enables you to order home delivery food online. In the last year, the use of Foody has
increased rapidly. They have 130.000 registered users (Medium.com). If McDonalds were to

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become available on applications like Foody it will become more convenient for people to
obtain their products. They can also make their own application that can be more specialized
to their menu and products.

(statista.com)

4.0 Conclusion

Being one of the biggest multi-national companies in the world, McDonalds is faced with a
range of difficulties regarding cross-cultural management. McDonalds needs to consider
large-scale complications in terms of legal, governmental and regulatory barriers. But there
are also challenges within the company itself and in each location itself. Our task was to talk
to Mr. Robert Pham of Mc Donalds Vietnams Human Resources Department to get to know
the departments structure and their issues. One of the challenges we identified was the
cultural and language barrier between the Non-Vietnamese and Vietnamese staff.
Misunderstandings could diminish the companys work efficiency. Our recommendation to
solve this problem is to generate a communication platform. This can be achieved by internal
chats rooms or forums. Another recommendation is to hold cross-cultural communication
workshops to prepare the employees for their work with an international management as well
as international customers.
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Further, we identified that the processes in McDonalds are highly standardized. This might
be a competitive advantage but it also means that structures are applied in the same way
wherever McDonalds is located. Regarding the Human Resources Department, our
recommendation would be to make adjustments to this specific department. Since
McDonalds is eager to hire very diverse people as their employees, the Human Resources
Department needs to take in consideration that their work needs to be aligned to the specific
countrys cultural mannerisms and their very employee. For this reason, it is important for
McDonalds Vietnam to avoid over-standardizing every aspect of their company and at least
accustom the Human Resources Department to each locations individual cultural
characteristics.

For the specific location of Vietnam, we also recommend McDonalds to participate in the
trend of online delivery service. Since their venues in Ho Chi Minh City are not placed in
favorable locations, a food delivery service would improve their sales. Offering delivery
service would also contribute to the popularity of online food delivery applications among
Vietnamese people. Our recommendation therefore is to either participate in existing
applications like Foody or Vietnammm or create a mobile ordering application
themselves.

Since McDonald Vietnam is still in its beginning phase and also has a rich corporate history
in their background, we are certain that the company will come up with strong solutions with
their challenges. Especially regarding the delivery option, we believe that McDonalds
themselves identified that problem already and tries to come up with a suitable solution to
conquer the Vietnamese market and to keep up with the existing premises.

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5.0 References

Apply McDonalds 2016. Who we are looking for Apply McDonald, viewed 09 May 2017.
<https://apply.mcdonalds.com.au/public/index.cfm?action=showPublicContent&assetCategor
yId=2462>

Buller F. P. and Bell H. C. 1986, Effects of Team Building and Goal Setting on Productivity:
A Field Experiment, Acad Manage, June 1, vol 29, no.2, pp. 305-328

CNN 2014. Vietnams first McDonalds opens in Ho Chi Minh City. Viewed 10 May 2017.
<http://edition.cnn.com/2014/02/10/travel/mcdonalds-opens-in-vietnam/>

FORM 10-K, 2017, UNITED STATES SECURITIES AND EXCHANGE COMMISSON,p.p

1-4
<http://d18rn0p25nwr6d.cloudfront.net/CIK-0000063908/62200c2b-da82-4364- be92-
79ed454e3b88.pdf>

Jacobsen, Dag Ingvar, Thorsvik, Jan. 2013. Hvordan organisasjonen fungerer. 4. Edition.
Bergen: Fagbokforlaget Vigmostad & Bjrke AS.

Kaufman, Geir, Kaufman Astrid 2015. Psykologi i organisasjon og ledelse. 5. Edition.

Bergen: Fagbokforlaget Vigmostad & Bjrke AS.

McDonalds 2017. About us. McDonalds, Viewed 9 May 2017.

<https://www.mcdonalds.com/us/en-us/about-us/our-history.html>

ORailey et al 1986, Cross cultural management in multinational project groups, journal of world
business, vol 38, no2,pp.141-149

Pease, Allan 1990. Body Language: How to Read Others Thoughts by Their Gestures
Sheldon Press London.

Robinson, Lawrence 2017, Effective communication Helpguide 2017 ,

Helpguide, Viewed 10 May 2017.
<https://www.helpguide.org/articles/relationships/effective-communication.htm>

Skillsyouneed 2014, Non-Verbal Communication. Skillsyouneed, viewed 8 May 2017

<https://www.skillsyouneed.com/ips/nonverbal-communication.html>

Yaffe, Philip 2011. The 7% rule: fact, fiction, or misunderstanding. Ubiquity,

Ubiquity, viewed 8 May 2017.
<http://ubiquity.acm.org/article.cfm?id=2043156>

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6.0 Appendix

6.1 Interview Transcript

Q = Question; R = Robert Pham

Q: Hello Mr. Robert Pham. Nice to meet you! Thank you for making time for us.
R: Hello, nice to meet you, too. Dont worry. Im happy to answer your questions.
Q: Thank you, so lets start with the interview. So what is your position in McDonalds?
R: I am the training specialist of McDonalds Vietnam.
Q: What does your job include?
R: I create and implements training programs for McDonald's Vietnam. My job also includes
coordinating programs to enhance the knowledge and skills of an organization's employees.
I also invite teachers from McDonalds Burger University to Vietnam to hold trainings. Our
department is responsible to watch and follow the employees progress, give them feedback on their
work and give them motivation.
Q: Why do think that is an important task for McDonald's?
R: Employees are the organization's most important resource. It is the employees of McDonalds who
are the companys representatives to the customer. It is therefore important that they do their job
properly, are service-minded, motivated, and work targeted. We try very hard to keep the spirit of our
employees and motivate them. Its not always easy but I think we do a good job.
Q: What kind of obstacles do you face regarding motivation?
R: McDonalds always tries to recruit people from diverse backgrounds, various ages and education
levels. Thats one of the reasons it is so difficult to find a general way of motivating such a
heterogeneous staff. We must look at every employee individually and not generalize.
Q: How is the communication structure in your company?
R: We have an internal communications team which distributes information through several channels.
We operate with an intranet and newsletters to communicate with the staff. Our communication
structure is top-down.
Q: How is feedback handled in McDonalds?
R: We will have employee progress conversations twice a year. The impact of negative feedback is
perceived differently from person to person. The relationship between employee and manager can
have a major impact on how employees experience the working day. Thats why we have to do the
feedback and progress conversations very carefully.
Q: What are the difficulties you face regarding communication?
R: I think the most difficult part is not only the language barrier between Vietnamese staff and the
English-speaking employees. But also, nonverbal communication plays a big role and poses
difficulties. There are many differences among the American and the Vietnamese culture so that is

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what we have to bear in mind. For that reason, it is important to have a training management that is
tailored exactly to the culture.

6.2 Group Member Contribution Statement

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