McDonald's Business Environment and SWOT Analysis

This report examines the business environment of McDonald's, including its organizational structure, functions, and external factors such as micro and macro factors. The report also conducts a SWOT analysis of McDonald's, identifying its strengths, weaknesses, opportunities, and threats. Additionally, it discusses the company's coping strategies in response to institutional uncertainty and its dynamic capabilities.

BUSINESS AND THE BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
ASSESSMENT................................................................................................................................3
P1.Types, purpose and legal structure of different organisations..........................................3
P2. Size and scope of different organisations.........................................................................3
P3. Inter-relationship between different organisational functions.........................................3
P4. PESTLE ANALYSIS OF MC DONALD'S.....................................................................3
P5. INTERNAL AND EXTERNAL ANALYSIS OF McDonald's.......................................5
P6 strengths and weaknesses in relation with external macro factors....................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business environment refers to the blend of micro and macro environmental factors that
affects and influence the business of different organisations. In the context of business,
environmental factors both internal and external are highly significant which in turn impacts
strategic as well as policy framework of firm. The present report is based on Mc-D which is one
of the leading companies operating in fast food sector. In this, report will provide deeper insight
about external business environment of Mc-D. Further, report also presents strengths,
weaknesses, opportunities and threats associated with the firm. This report also entails how
micro and macro factors are interrelated.
ASSESSMENT
P1.Types, purpose and legal structure of different organisations
Enclosed in PPT.
P2. Size and scope of different organisations
Enclosed in PPT.
P3. Inter-relationship between different organisational functions
Enclosed in PPT.
P4. PESTLE ANALYSIS OF MC DONALD'S
Pestle analysis refers to the effects of micro and macro environment that affects the organisation
and includes different factors like political, economical, social, technological, legal and
economical on the basis of which the analysis is done (Aydiner And et.al., 2019).
Political factors-
political factors include the government legislations and policies like trade barriers,
controlling the licensees, changes in laws etc. these policies and procedures impacts negatively
on McDonald's as government are putting restrictions on opening of fast food franchisee
because of health issues coming in children and the young through consuming the fast food. By
paying taxes on time the company will create healthy relationship with the government impacts
positively on the reputation of the company (Teece, 2018).
Economic factors-
There are various economic components that affects the McDonald's such as employment
rate, currency exchange rate, tax rate and many more. As company trades across the globe it has
to bear with the changes in the currency exchange rates in each country which lowers the profits

of the company. As McDonald's has a worldwide capture so through facilitating more and more
employment opportunities for the people it could positively overcome its economic factors and
strong currency leads to high income of the people which leads to high demand of the product in
the market (McDonald’s PESTEL/PESTLE Analysis & Recommendations, 2019).
Social factors-
Social factors relates with the lifestyle, cultures, custom and traditions that influence the
personality of the individual. Different country has different taste and perspectives that makes
difficult for the McDonald's to cater the needs of each country as it has its presence across the
world and it poses a negative impact for the company (McDonald’s PESTEL/PESTLE Analysis
& Recommendations, 2019).. As people are more moving towards the high standard of living the
demand for the fast food increases and that positively impacts the revenue of the corporate.
Technological factors-
Technological advancements and innovative technology that affects the enterprise comes
under the purview of technological factors (Teece, 2018). If McDonald's does not adopt the latest
technological equipments then it will negatively impact the quick delivery and serving quality of
the company and sometimes the changes in equipment’s creates difficulty for the employees to
handle such changes. McDonald's provide free wi-fi facilities and uses different equipment’s in
food preparation and facilitate transparent food preparation to their customers that impacts
positively on the goodwill of the company.
Environmental factors-
This factor of pestle analysis linked with the natural and ecological environment and how
these factors affects the McDonald's micro and macro environment. Changes in the climatic
conditions is a big hurdle for the company as it deals with food products and the stability and
availability of food very much depends upon the climate as in rainy season the food becomes
soggy which creates a negative impact on the quality of the product (Hansen and et.al., 2018).
This company has made many contributions for the welfare of the society like indulging in
environmental projects and had emphasized on sustainable development of the society that
positively impacts on the success of the enterprise.
Legal factors-
It deals with the legal laws and regulations that influence the stability of the company.
Modification or alteration in laws and legal system will increase the complexity for the

McDonald's like increase in minimum wages and salaries under the wages and salaries act will
increase the labour cost and implementing such change arises extra cost and consumes lot of
time (Adegbite and et.al., 2018). Getting ISO certification enables the company in increasing the
customer base as in today's world people are becoming health conscious and they want quality
food so it is a positive sign for McDonald's.
P5. INTERNAL AND EXTERNAL ANALYSIS OF McDonald's
INTERNAL ANALYSIS:-
STRENGTHS:
 Brand name- McDonald's has a strong brand name across the world and act as a leading
fast food restaurant.
 Global presence- It has its outlets at most of the locations across the world and had
captured the market globally.
 Various products- the company offers wide range of products so that customers can
choose the product as per their taste and preferences (Charter, 2017).
 Combo offers- they serve different combo offers to its customers at slightly lower price
than buying individually to satisfy the customer needs and wants.
 Promotional activities- McDonald's uses effective promotional tactic like free discount
offers, coupon offers etc. so that more and more customers get attracted to buy the
product.
 Huge market share- the company has a large market capture worldwide that creates a
large customer base for the organisation.
 Loyal customers- the youth and the children shows loyalty towards the entity as it has a
consistency in its taste.
 Strong brand name and loyalty
 Wide product portfolio
WEAKNESSES-
 Long queues- during the rush time the customer has to stand in long queues and wait
for the food and because of that company could not be able to serve quick food to
their customers.

 Limited options- It offers only few products in vegetarian segment which will be a
weakness for the entity as it cannot cater the needs of the Indian people and can lose
its customers in the Indian market (McDonald's: Strengths, Weaknesses,
Opportunities, Threats, 2019).
 Unhealthy food- some people consider fast food as an unhealthy food and this can act
as a weakness for the McDonald's because the demand for the product will get
reduced and less consumption takes place.
 High fat and high calorie food claimed to be not good for health
conscious people
 McDonalds has often been invovled in lawsuits regarding environment,
animal rights etc
OPPORTUNITIES-
 Expansion- It can focus on expanding vegetarian segment and variety of cuisine so that it
could have a leading position in every country and the old age people could also have
choices to eat.
 speciality products- McDonald's should add speciality in its existing products like
different flavours of fries that forces the young and the children to visit the outlet and
taste the different flavours which will generate more profits for the company (McDonalds
SWOT Analysis, Competitors & USP, 2019).
 Innovative product offerings
THREATS-
 Competitors- It faces a huge competition in the market. The competitors are KFC, burger
king and subway.
 Criticism- many criticisms are made against the McDonald's over its quality so it created
a threat for the company as it affect the image of the company and it can lose its
customers (McDonald's: Strengths, Weaknesses, Opportunities, Threats, 2019).
 Threat from other eating joints/restaurants, which can reduce McDonalds'
market share
EXTERNAL ANALYSIS-:
Porter's five forces model-

11 Rivalry: McDonald's faces a strong competition in the market as it has many competitors
like subway, KFC and burger king which also deals in the fast food restaurant. Customers
has a choice to switch to the other brands as the switching cost is very low and they could
avail quality products at reasonable price (Hair Jr and et.al., and Page, 2015).11 Buyer power: The company need to address the power of the buyer appropriately because
the decision of the buyer affects the functioning and sales of the organisation
(McDonalds Porter’s Five Forces Analysis, 2019). The customer has the power to change
the restaurant as per their preference and have huge choices in fast food restaurant so the
switching cost will not be so high. There are various substitutes available for the buyer in
the market (Porter’sFiveForcesModel,2019)11 Supplier's power: supplier affects the McDonald's in terms of the raw material. The
bargaining power of supplier is weak because the size of the suppliers is large and the
integration is low that is low forward integration and low vertical integration which leads
to weak supplier power.11 Substitute Threat: it is a major concern for McDonald's as there are high number of
substitutes available in the market so it is a threat for the company as customers could
switch easily to its competitors (McDonalds Porter’s Five Forces Analysis, 2019).11 New entrant threat- McDonald's has a high threat against the new entrant because more
and more fast food restaurants are opening and small capital is needed for opening the
restaurant so an average income people can also get it opened easily (Calabrese and et.al.,
2018).
P6 strengths and weaknesses in relation with external macro factors
Strong global presence is the main strength of company that has strong relationship with
political factor. McDonald's need to take care of the government rules and legislations in all the
countries as it has a worldwide reach. The customers are loyal towards the brand because of the
quality products provided by the company and it has a direct link with the social factor as
evolving lifestyle of the customers leads to high demand of the fast food.
Unhealthy product is the major weakness of the company that inter-relates with the
environmental factor as due to change in the climatic condition the quality of the product get
affected (Faghih and Zali, 2018). It uses effective promotional activities which acts as a big
strength for the company in relation to the technological factors as it facilitates free wifi facility

and uses equipments for operations so that quick service and transparency towards its customer
can be achieved that acts as a positive sign for the company in today's changing technology.
CONCLUSION
The above report concludes that business environment influences the business to the greater
extent and different organisations have different objectives and legal structure. All the
organisational functions are inter-related and go together. There are various micro and macro
factors that affect the business positively and negatively and the external and internal factors like
strength, weakness, opportunities and threats and these factors are linked with macro factors.

REFERENCES
Books and journals
Adegbite, O. E. and et.al., 2018. The organisation business environment. In Organisational
Adaptations (pp. 11-26). Springer, Cham.
Hansen, M. W. and et.al., 2018. Coping with the African business environment: enterprise
strategy in response to institutional uncertainty in Tanzania. Journal of African
Business. 19(1). pp.1-26.
Teece, D. J., 2018. Business models and dynamic capabilities. Long Range Planning. 51(1).
pp.40-49.
Ridley-Duff, R. and Bull, M., 2015. Understanding social enterprise: Theory and practice. Sage.
Bryson, J. M., 2018. Strategic planning for public and nonprofit organizations: A guide to
strengthening and sustaining organizational achievement. John Wiley & Sons.
Online
McDonald’s PESTEL/PESTLE Analysis & Recommendations. 2019. [Online]. Available
through: < http://panmore.com/mcdonalds-pestel-pestle-analysis-recommendations>.
McDonalds Porter’s Five Forces Analysis. 2019. [Online]. Available through: <https://research-
methodology.net/mcdonalds-porters-five-forces-analysis/ >.
McDonalds SWOT Analysis, Competitors & USP. 2019. [Online]. Available through: <
https://www.mbaskool.com/brandguide/food-and-beverages/584-mcdonalds.html>.
McDonald's: Strengths, Weaknesses, Opportunities, Threats. 2019. [Online]. Available through:
<https://www.fool.com/investing/general/2010/08/25/mcdonalds-strengths-weaknesses-
opportunities-threa.aspx>.
Porter’s Five Forces Model. 2019. [Online]. Available
throughhttps://www.toolshero.com/strategy/porter-five-forces-model/