McDonald's Business Environment Analysis

The assignment is about conducting a thorough analysis of McDonald's business environment, including its internal strengths and weaknesses, as well as external opportunities and threats. The report highlights the significance of business environment in shaping economic growth, specifically for companies like McDonald's that are influenced by macro-environment factors such as government regulations. A SWOT analysis is performed to identify areas where McDonald's can improve and capitalize on opportunities for diversification.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types of organisations and their purpose and legal structure.................................1
P2. Size and Scope of Different types of organisations..............................................................3
TASK 2............................................................................................................................................4
P3. Organisational functions and their interrelationship with organisational objectives............4
TASK 3............................................................................................................................................6
P4. The positive and negative impact of Macro environment on Business................................6
TASK 4............................................................................................................................................7
P5. Internal and External analysis of Organisations...................................................................7
P6. Strengths and Weaknesses interrelate with external macro factors......................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business Environment composed of factors as Internal and External that influence a
working of an enterprise. This refers to the factors that forces or affect the firm ability. The
project report will describe various organizations legal and organizational structure. Further the
Report will focus on size and scope in context to organisations of various types.
Furthermore, this assignment will focus over Relationship between different
organisational functions. It will also define the relationship between organizational objectives. It
will shed light on both the positive and negative aspects of Pestle and SWOT analysis. Lastly it
will outline about the strengths, weaknesses with the macro environment factor of the company.
TASK 1
P1 Different types of organisations
Private Organisation - McDonald's
McDonald's is an American fast food company. McDonald's was initially established as barbecue
restaurant in the year 1940. Its founders were two brothers namely, Richard and Maurice
McDonald. Initially the restaurant was situated in San Bernardino, California, United States.
Later the brothers found their potential in the year 1948 as hamburger restaurant. Now in
present, the franchises of McDonald's is spread all over the globe.
Purpose - Purpose of McDonald's is to serve their customers with delicious food items through
their outlets situated all over the globe. Purpose is to satisfy their customer needs by offering
them tasty food so that there customers can say there tag-line which is “ I'm loving it.”
Objectives
 The objectives of McDonald's is to create new strategies for success in order to expand its
business and the market share in all over the world.
 The objective of company 's is to serve their customers by fresh food with simplicity. In
order to gain customer retention.
Organisational Structure – The company has organization structure which comprises of
various division. The divisional organisational structure is further divided into three sub
components namely, Global hierarchy. Performance based divisions and function based groups.
This hierarchy is made to cover all of its operations spread worldwide. Performance Based
structure has three geographic divisions namely, US, Europe, Asia, Middle East and Africa and
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lastly other administrative nations including Latin, Canada and the America. Function based
group of McDonald's includes Human resource department, Marketing, Finance, Production,
Sales, Supply chain and Legal secrecies.
Legal Structure – McDonald's have separate Legal secrecies' department to look after that the
company don't do any legal offences or prohibited any of the legal law. The Legal secrecies
follow up International laws.
Public Organisation – National Health Service
National Health Service (NHS) was established on 5 July 1948, 70 years ago as one of the major
social reforms after the Second World War. National Health Service (NHS) is situated in
England, Scotland. Wales. The founding principals of National Health Service (NHS) were
comprehensive, universal and giving free services at the point of delivery.
Purpose - The purpose is to serve public through providing them health care needs in order to
assist government meet of Samoa.
Objectives
 The objective lays emphasis on identification, analysis and execution of health systems
about government role for economic gains.
 The objective is to encourage the best clinical practice for patients centred care
Organisational structure- National Health Service consists of various department of health
namely Care trusts, Medical Health Trusts, NHS trusts, Ambulance trusts. It follows hierarchical
organisational structure
Legal Structure – The federal department of Health overseas national polices and programs of
National Health service. It supervises the legal application and mandatory health insurances.
Thus, legal structure of the public companies structure by the legal authorities.
Voluntary Organisation- Oxfam
Oxfam is a voluntary organisation consist 20 independent charitable organisation which focusing
on alleviation of global poverty, The Oxfam was founded in the year 1942. Oxfam is a non profit
organisation which has extensive collection of operations in order to serve society. The executive
director of Oxfam is Winnie Byanyima.
Purpose – The purpose of Oxfam is to provide better solutions to the needy people in order to
remove poverty. They are the global movement for change in order to alleviate the poverty from
the world and top empower and secure the society.
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Objectives
 Objective is remove poverty from the lives of the people.
 To provide sustainable rights people livelihoods. To create a secure environment for
people.
Organisational Structure – Oxfam organisational structure is geographical as they work and
serve society by their services all over the globe. The foundation is dominated and run by a
chairman who is in-charge of number of trusts who make the main decisions of Oxfam. The
charity structure of Oxfam is level.
Legal Structure – Legal structure drives from corporate governance community which looks
after the trusts that they are not prohibited any of the laws and follow of proper and legal code of
conduct and international polices while serving the society. Thus, legal structure of Oxfam is
relates with the ultimate responsibility in law for charity, its assets and activities. Hence, the
voluntary organisation basically follows three legal structure as unincorporated associations,
trust and company limited by guarantee.
P2. Size and Scope of Different types of organisations.
Private Organisation – McDonald's
Mission -The Mission statement of McDonald's is to be their customized favourite place in way
to consume and drink.
Vision - The company has moved with speed in order to drive the growth of revenue and to
become better enterprise in Serving restaurant. To serve the more customers with their delightful
food all over the globe.
Stakeholders - The McDonald's stakeholders are Employees, Customers, Investors and
communities.
Size – The McDonald's is largest chain of restaurant in world. The McDonald's is spread globally
in 119 countries across 36,538 outlets. The company has 1.9 million workers and 1.5 million
people who work for the concession.
Scope - The scope of McDonald's covers the all over globe as there franchises and outlets are
spread all over worldwide.
Public Organisation -National Health service
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Mission – The Mission of National Health Service is to give the excellence through providing
quality performance to the public.
Vision – The vision of NHS to deliver efficient and effective health care services as per the
stated standards and polices. It must be sustainable, approachable low-priced and equitable.
Stakeholders - The Stakeholders and Partners of National Health Service includes Institution for
Healthcare science, North West Health care field System and Academic Wellness Science
System.
Size – The National Health Service has 1.4 million employees working all over the globe.
Clinical qualified staff include 150,273 million doctors and 40,584 general practitioners and
314,966 nurses.
Scope – The scope of National Health Service stands currently for more than 64.6 million people
in the United kingdom and in England it stands for 54.3 million people alone. The National
Health service England deals by 1 million diligent from 36 hours.
Voluntary Organisation – Oxfam
Mission - The mission of Oxfam is to help the poor people and to provide solution in order to
reduce the injustice of poverty with the people.
Vision – The vision of enterprise to create a world which is free from poverty. The vision is to
treat people equal and to provide their rights of citizens. To make beneficial decisions which
influence positively in their lives.
Stakeholders - The stakeholders of Oxfam including those who are materially affected by the
actions of Oxfam. This includes the people on communities where they work and their partners
which are allies, staff, volunteers, donors, supporters, academic institutions and government.
Size – The Oxfam confederation of 20 independent charitable organisation working in more than
90 countries all over the globe.
Scope – The Oxfam reach more than 22.2 million people all over the globe in order to alleviate
the poverty.
TASK 2
P3. Organisational functions and their interrelationship with organisational objectives.
Human Resource Management – Human resource management function is interlinked
with every department and functions of McDonald's. Every function of McDonald's needs man
power to manage optimal use of human resource whether it is Production, supply chain, finance,
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marketing or sales (Quinlan and et.al, 2019). The human resource management is necessary to
achieve the organisational objective of McDonald's which is efficient and effective utilization of
human resource in order to improvise the quality in food products which they are serving to their
consumers.
Marketing – Marketing function is interlinked with the sales function. Marketing is done
through advertisement and promotion activities of food products of McDonald's. Marketing
helps to increase the sales of McDonald's food items. (Laudon and Traver, 2016) Marketing
function is helpful for achieving the organisational objective McDonald's which is to increase
the sales of food products and leads the McDonald's towards higher profitability.
Production – Production function is interlinked with the Finance function of McDonald's
without it the production function couldn't arrange the raw material for making food products
without having enough funds and can not purchase the machines for making food items of
McDonald's. If the production of food items are done in systematic way it is eventually helpful
for achieving the organisational objective of McDonald's which is to satisfy the customer needs
by making and supply good quality food products in their outlets.
Finance – The finance department is linked with marketing function without enough funds the
marketing function couldn't arrange enough money or fund for the advertisement expense.
Finance function is also interlinked with the human resource function without finance the human
resource or the manpower of McDonald's doesn't get salary and incentives on timely basis
(Hillary, 2017.). The finance function manage the employee data and in accordance with that
they pay remuneration to their employees. This leads to satisfy the employees needs in
McDonald's which is again helpful to achieve organisational objective of McDonald's that is to
grab the employee's retention in the Organisation.
Supply chain – The supply chain is interlinked with the production function. Without supply of
the raw material the production function can not produce the food items of McDonald's. The
supply chain has to take the orders from the production function in order to do inventory
management. Supply of food raw- material on timely basis will be helpful for the McDonald's
for achieving its organisational objective which is to manage their inventory on timely basis in
order to serve the placed orders by their customers even more quickly without making any delay.
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TASK 3
P4. The positive and negative impact of Macro environment on Business.
Political factor – The McDonald's is influence by government regulations which is pertaining to
health and hygiene of the consumers. As there outlets are spread widely all over the globe, some
country's government is pressuring fast food industry to restrict the consumption of Junk food
because its leads towards obesity and cardiovascular difficulties due to high cholesterol
consumption in the fast food.
Positive impact- The positive impact of political factor on McDonald's is that due to government
regulations of health and hygiene the McDonald's is serving fresh food products to their
consumers in their outlets which leads towards the higher customer satisfaction.
Negative impact- The negative impact of political factor is that the government regulations is
restricting McDonald's from opening more food outlets in United states and Russia (Kolk,
2016.). Government regulations controls the McDonald's from doing expansion of their business.
Economic factor - The economic factors influence the decision making of McDonald's that
whether to import raw materials from other countries or not. The exchange rates are keep
fluctuating. The price fluctuations and interest rates are also impacting McDonald's.
Positive impact – The positive impact is that the higher exchange rates is helpful for McDonald's
while exporting their food products in other countries. This leads towards greater profitability.
Negative impact – The negative impact is that while importing the raw materials for making food
products of McDonald's at higher prices the Company has to face loss.
Socio-Cultural factor - The different lifestyles of people in different countries may influence
the sales of McDonald's.
Positive impact- The positive impact of socio-cultural is that the McDonald's has launched rice
hamburger in Asian countries because there people are more found of rice (Oriesek, and
Schwarz, 2016). This leads to increase in sale of hamburgers of McDonald's.
Negative impact- The negative impact is that there is high expenditure is being incurring in
research department of McDonald's in order to know the choice and preferences of consumers
located in different countries.
Technological factor – The technological factor has very little role in fast food industry. It can
help the McDonald's in scheduling, ordering and forecasting sales.
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Positive impact- Technology is helpful for giving online advertisement of food products of
McDonald's.
Negative impact- The negative impact of technology is that there is high expenditure is being
incurring to McDonald's in order to give training to their employees about how to use Property
management system efficiently in an organisation.
Environmental factor – Nowadays, people are more conscious about protecting the
environment.
Positive impact – The positive impact of Environmental factor on McDonald's is that they are
dealing in food products which can easily be decomposed and give less harm to environment.
Negative impact- The negative impact is that the McDonald's is using polystyrene packaging for
their sandwich. This leads to create dis-satisfaction in people mind (Wheelen and et.al., 2017).
Legal factor – The legal factor is the biggest concern for McDonald's in order to follow up the
regulations and laws.
Positive impact- The positive impact is that the McDonald's has standardized organisational
work culture which follows the proper laws and code of conducts. This leads to increase the
brand value in the market.
Negative impact- The negative impact is that the McDonald's is bound by the health and hygiene
laws of the consumers.
TASK 4
P5. Internal and External analysis of Organisations.
Swot analysis
Swot analysis is techniques to find the strength or weakness of the organization and evaluate the
internal strength and weakness, also external opportunity and threats (SWOT analysis. 2017).
That is Provided the help to company to increase their competitive advantage as well as increase
the productivity.
Strengths
Successfully brand image
Company have successful brand image. They provide the variety of product such as Angus
burgers, coffee, smoothies, etc. also increase the range of choices (Schaltegger, Hansen and
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Lüdeke-Freund, 2016). So customer attract to purchase the products. Also, there product value is
strong because no one can copy to their products.
Standardized processes
McDonald's provide the best product to their customer. There product is innovative and taste is
also different to others. That is big reason behind their taste because company use the
standardized process to make the product. They also strictly follow the food safety guidelines.
Cultural diversity
Cultural diversity in the food. McDonald's are diversified their product based on the different
culture or locations. So customer are satisfied with their taste and they willing to purchase the
product (Teece, 2018).
Weakness
High Turnover
McDonald's provide the training to the employee because they follow the different process. So
company provide best training facility to their employees that increase the labour turnover and
also increase the operational cost of the company.
Lack of concentration on providing organic food
MacDonald's motive is making money, not making health foods. They cannot provide the
healthy foods to their customers. So most of the customer want the organic food because they
more concern about their health. So this is the biggest disadvantage to the company for reduce
their customer base.
Lack of variation in seasonal production
The product is very few. Also, company cannot introduce the new product in the market. They
only provide the specific product in the market. So customer are not much attract to the product
because they cannot provide the seasonal or different product to their customer (Prajogo, 2016.).
Opportunity
Expand their business in new market
McDonald's expand their business in new market for example china or Asia is the great
opportunity to the company for expand their business in those markets. So company open new
restaurant in different location and outside the US. So this is the biggest opportunity to the
company to enhance their business.
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Product diversification
McDonald's take opportunity to diversify their product. Company can increase the variety of
product and develop the new product to enter in the new market. So company have big
opportunity to develop their product and increase their customer.
Online platforms
McDonald's use the online platform to increase their market and increase their sales. Company
provides the product to their customer by the help of online applications. Company launch their
own application so customer easily order the product. So online platform is the biggest
opportunity to the company to expand their business.
Threat
Customer follows Healthy life style
McDonald's have not provided the organic food to their customer. But now these days' customer
is more focus on their diet and health so customer prefer the and want the organic foods. So they
switch the product and change their taste (Erasmus, Strydom and Rudansky-Kloppers, 2016). So
that is the biggest disadvantage to the company to reduce their customer.
Increase competition
McDonald's faces many competitions in the same industry such as Burger king, 11 O clock stock
pick yum brands. That is the biggest competitors of the company.
Analysis of SWOT
SWOT analysis is help to the company for making the decisions. Because in swot they provide
the deep study about the organization there internal strength or weakness and also there external
opportunity and threat. Which is help to company for take a good decision regarding the
expansion of business and increase the competitive advantages also increase the future growth of
the company.
P6. Strengths and Weaknesses interrelate with external macro factors.
The strength is that they are promoting their products through online advertising by
giving their customers timely notifications of discounting offers on various food products of
McDonald's. This leads to increase in sale and eventually higher profitability.
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This leads to weakness of high turnover expenditure in giving training to their employees about
the proper use of Property management system in order to do proper scheduling and timely
delivery of food products which is placed by their customers (Pearson, 2017).
The strength is that they promote the cultural diversity through bringing out different
tastes and preferences in their food products for the consumers located in different countries.
This leads to create customer satisfaction.
The weakness is that they are incurring high expenditure on research department in order to
know the taste and preferences of the consumers located at different countries world-wide.
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CONCLUSION
It is being summarized that Business Environment is essential for economic growth of
any company like McDonald's is the largest fast food supplier firm in the world. Even though it
is the largest fast food supplier, the McDonald's is influenced by the macro environment factors
such as political factor. There is high influence of government regulations on McDonald's about
the health and hygiene in food products. As, McDonald's is the fast food supplier firm it is facing
problems due to occurrence of obesity and high cholesterol levels due to high fast food
consumption by their consumers. The conclusion is being drawn by the SWOT analysis that the
McDonald's has an opportunity of diversification in order to expand its business in different
product line.
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REFERENCES
Books and Journals
Erasmus, B., Strydom, J.W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
management. Oxford University Press Southern Africa.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business.51(1).
pp.23-34.
Laudon, K.C. and Traver, C.G., 2016. E-commerce: business, technology, society.
Oriesek, D.F. and Schwarz, J.O., 2016. Business wargaming: securing corporate value.
Routledge.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics.171.
pp.241-249.
Quinlan, C. and et.al., 2019. Business research methods. South Western Cengage.
Schaltegger, S., Hansen, E.G. and Lüdeke-Freund, F., 2016. Business models for sustainability:
Origins, present research, and future avenues.
Teece, D.J., 2018. Business models and dynamic capabilities. Long Range Planning.
51(1).pp.40-49.
Wheelen, T.L. and et.al., 2017. Strategic management and business policy (p. 55). Boston:
pearson.
Online
SWOT analysis. 2017 [ONLINE] Available through:
<https://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swot-
analysis.html>
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