BUSINESS ENVIRONMENTAL ANALYSIS
McDonald’s is a food chain having franchisees in the world that serves millions of people every day. They have a high brand image because of quick service, quality food and experienced management (Aboutmcdonalds.com, 2015). The business environmental analysis is discussed as macro-environment and micro-environmental basis.
The macro-environment is conducted on PESTLE basis that affect the working of the organization.
Political Factors-The business operations are affected by policies of government’s rules and regulations. The political instability of local state affects McDonald’s business. They require a proper license, tax issues, and employee laws to control food business.
Economical Factors– McDonald’s has troubles due to international currency fluctuations. There is ongoing global slowdown due to a different scale of tax and revenue measurement. If the local economy is critical, people are discouraged to spend more.
Social Factors– Research on different cultures, attitudes, lifestyle and demand of people is conducted. The modern or urban societies need the highest level of hospitality and facilities. The food menu must be designed according to the culture of the country (Mcdonalds.com, 2015).
Technological Factors– The modern distribution ensures quick distribution, speedy and easy payment facility, wireless internet facility and customer entertaining equipment in McDonald’s stores affect the environment of the company. The technological innovation meets the customer’s expectations.
Environmental Factors– McDonald’s must show greater interest in the environmental issue as the food pack Styrofoam containers that are discouraged to use. The containers used for serving food and drinks glasses had polystyrene that is non-biodegradable in nature.
Legal Factors- McDonald’s have to comply with rules and procedures in daily operations. The legal process has to be maintained so that society and company both benefit from it. For example, the Arab countries must have Halal food authorization (Vrontis and Pavlou, 2008).
An analysis on internal elements or micro-environmental factors that influence business of McDonald’s are conducted through a SWOT analysis-
Strengths– McDonald’s exists for more than 60 years holding a strong brand image and reputation in the market. The locations chosen for opening up stores are the busiest places such as an airport, railway stations, malls, etc.
Weaknesses- There is a high turnover of employees. The food chain is criticized for serving fast food that is unhealthy in nature. There is less product innovation, and the main target group is children.
Opportunities– McDonald’s can attract more customers by innovating food items. They can offer lesser prices during economic slowdown. The franchisees can include more entertainment activities and promote their business by sponsoring community support.
Threats– There are huge competitors in the similar food business such as Pizza Hut, KFC, Subway, etc having huge amount of customers. The competitors offer food at attractive offer and prices (Yuece, 2012).
The business environmental analysis gives an account for restrictions that are needed to adapt for smooth operations. The opportunities can be utilized to achieve higher levels of future objectives through proper communication and marketing. The customer service needs to be more efficient. The company has a strong competition for which it must aim to have a competitive advantage.
Aboutmcdonalds.com, (2015). McDonald’s – Official Global Corporate Website :: AboutMcDonalds.com. [online] Available at: http://www.aboutmcdonalds.com/mcd.html [Accessed 6 Aug. 2015].
Mcdonalds.com, (2015). Social Responsibility :: McDonalds.com. [online] Available at: http://www.mcdonalds.com/us/en/contact_us/social_responsibility.html [Accessed 6 Aug. 2015].
Vrontis, D. and Pavlou, P. (2008). The external environment and its effect on strategic marketing planning: a case study for McDonald’s. J. for International Business and Entrepreneurship Development, 3(3/4), p.289.
Yuece, I. (2012). SWOT Analysis of McDonald’s and Derivation of Appropriate Strategies. München: GRIN Verlag GmbH.