PEST ANALYSIS OF MCDONALD IN SINGAPORE

INTRODUCTION

McDonald is a U.S. based company which was founded by Richard and Maurice McDonald in 1940. It is the largest chain of hamburger fast food restaurants. Currently McDonald is present in 119 countries and serves more than 68 million customers every day. The number of locations where McDonald is present is more than 34000 worldwide. It is a public company listed on NYSE as MCD. Main products of McDonald are hamburger, chicken, soft drink, French fries, coffee, salads, milkshakes, breakfasts and desserts. It is also present in Singapore at 200 Stadium Boulevard, 71 W Coast Hwy etc (McDonald, 2012). In the report further there would be PEST analysis of McDonald in Singapore to understand the market environment of fast food business in Singapore.PEST ANALYSIS

PEST Analysis is a technique used to analyze the external environment of a business within a particular geographical area. Word PEST stands for Political, Economic, Social and Technological factors of a business. PEST analysis of McDonald is described below:

POLITICAL FACTOR

McDonald started its business in Singapore in 1979. Currently it has 110 restaurants in Singapore and it serves 1.2 million people every week. McDonald operations are highly influenced by the political situations of different states. Changes in the rules and regulations of a country affect the business of McDonald. These changes may include changes in labor laws, taxation, food administration or health related laws.

While considering the political situation of Singapore we find that it is a bureaucratic country and the political power of country is in the hand of government. Government of Singapore believes in communicating its efforts directly to the public rather than gathering opinion from the public. Politics of Singapore is a mixture of democracy and bureaucracy (Lee, J, 2008).Considering the McDonald business we can say that it handles different political situations in its business operations as it is present in more than 119 countries. At many locations the company faces problems like changing rules and regulations because of health implications of the fast food e.g. obesity or cholesterol. Handling political situation of Singapore is not difficult for McDonald as it is required to follow the rules and regulations of the country which it is doing very well.

ECONOMIC

Economy of Singapore is highly attracted by different industries of the world. Heritage Foundation’s Index of Economic Freedom ranked Singapore as second most open economy of the world. Economy of Singapore is highly stable in macroeconomic terms. There is no foreign debt on Singapore; government revenue is high and consistently in surplus. Economy of Singapore has shown its strength during the financial crisis. When in 2007 – 08 world was suffering from economic slowdown and many neighboring countries of Singapore were sliding, Singapore showed economic stability. In fact in 2010 Singapore emerged as the fastest growing economy of the world when most powerful economies of the world like U.S. and Europe were struggling. Area of Singapore is very small as well as it has less natural resources. The key industries which contribute in the development of the economy of Singapore are:

• Exports of electronics items and machinery.
• Tourism.
• Financial Services.
• World’s largest cargo seaport (Guide me Singapore, 2012).Taking fast food business into the mind we can say that economy of Singapore is highly beneficial for the food industry. First of all it is a tourist place and that is why there is a scope of establishing food business for different kind of people. Economy of Singapore is growing at a rate of 4.9 % and has high level of disposable income. GDP of the country is $ 318.9 billion and GDP per capita is $ 62100 according to PPP. With high GDP per capita and continuous growth the country attracts food business. McDonald has established itself in Singapore very well and has covered the small area of the country successfully.

SOCIAL

McDonald is an expert in dealing with the different socio – cultural environment of different countries. The quality of life in Singapore is very high and it has helped McDonald in establishing its business here. It is the smallest country of Southeast Asia but has an excellent quality of life. People from different cultural and social background live here. As I have mentioned above that Singapore is a tourism based company and fast food is consumed by tourist highly. But the tourists come from different places and hence they have different taste and preferences. A fast food business depends on the taste and preferences of the consumers and for McDonald taste and preferences vary time to time and place to place in Singapore (Focus Singapore, 2012).

Culture of Singapore is materialistic and there is a constant pressure on the people. They maintain their life according to 5 C’s: Cash, Car, Credit Card, Condo and Country Club. Despite of the stress Singapore was named as happiest country in Asia in a report of ABC News. People who live in Singapore are come to visit the country are basically from China, India, Malaysia and other parts of the world. McDonald has already established its business in these countries and hence it does not have to face much difficulty in dealing with the social preferences of Singapore (Guide Me Singapore, 2012).TECHNOLOGICAL

Technology plays a big role in the development of a country as well as in business development. Singapore is technologically developed country. This also helps McDonald in its production, distribution and marketing. McDonald mainly uses television commercials for its marketing. Continuously growing internet facilities and subscribers has helped the company in establishing its business. Company invests in its branding activities with the help of social networking websites like facebook and twitter.

Technological improvement in inventory management, vendor management and supply chain management is highly beneficial for the company. With the help of computer technology pricing and billing has become very easier (Jessop, S, K, 2010).

 CONCLUSIONMcDonald is a world level company in fast food business and has established its business in approximately all parts of the world. In Singapore it has developed itself extremely well. PEST analysis of McDonald in Singapore clearly explains that it is a highly recommended country for the fast food business as the economy of the country is continuously growing and people in Singapore have high level of disposable income. It is tourism based country and hence provide ample opportunity for the fast food business as tourists prefer the fast food. Political, Economic, Social and Technological environment of the country are in favor of the fast food business. Success of McDonald clearly explains that it is the first priority of the business establishment but with excellent marketing strategy and business plan so that the new entrant can sustain in front of the fast food giants.

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