Business and the Business Environment Report

This report analyzes the business environment using McDonald's as a case study. It explores different types of organizations, their purposes, and legal structures, examines the size and scope of public, private, and voluntary sectors, and analyzes the relationship between organizational functions and objectives. It also delves into the impact of macro-environmental factors (PESTLE analysis) on business operations, identifying strengths, weaknesses, opportunities, and threats. The report concludes by interrelating internal and external factors to provide a holistic understanding of the business environment.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
ACTIVITY 1....................................................................................................................................3
P1 – Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structures..........................................................................................................3
P2 –Explain the size and scope of a range of different types of organisations...........................5
P3 –Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.......................................................................................8
Organisational Functions of McDonald's....................................................................................8
P4 positive and negative impacts of macro environment on business operations...................9
P5 - Internal and external analysis to identify strengths and weaknesses................................11
P6 – Strengths and weaknesses interrelation with external macro factors................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business Environment is the sum of all the internal and external factors who influence the
business, these factors are employees, customer, supply and demands etc. Sometimes these
factors affects the company and its working. This report contains the different types of
organisation and their purpose and elaborates the size and scope of the different organisation. It
also shows the positive and negative impact of the macro environment upon the operations of
business. This report also contains the strengths and weakness which is being interrelate to
external factors.
ACTIVITY 1
P1 – Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures
Different types of organisation are
Public sector organisation
They are the organisation that are owned and controlled by the government for providing
the services to its citizens, it includes both public companies and public enterprises, their motive
is not to generate the profit(Hair Jr and et.al. 2015). They raised their fund through various
methods like taxes, fee, financial transfers from other government. Examples of public sectors
are Education, Healthcare, infrastructure, social services etc.
NHS (National Health Service) it is the trust they also funded capital for health care. They are
accountable to the society which includes public, patients etc. that they serve. The organisation is
being funded through the national taxation and the government of the country set ups the
framework.
Main purpose of the organisation
NHS provides the comprehensive services available to all the customers retrospective of
considering the sex, religion, age, gender, etc. They have the duty towards the every individual
as well as to the human rights. In fact they have the wider social duty to promote the equality
through its services. Their main purpose is to improve the life expectancy and provide them the
best health care services.
NHS services are generally free of charge except in some circumstances in which the parliament
is sanctioned.
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They have the highest standards of excellence and professionalism. Their services must be for
the need and preferences of patient and their families.
NHS provides the best value to the taxpayers and use the resources in sustainable way. Public
funds for health care is solely devoted to the benefit of people to whom NHS serves.
Private sector organisation
This organisation is being run by individuals and companies with the intention to earn
profit, and it is not controlled by the state. It is that sectors of national economy which is owned,
controlled and managed by the private individuals. Their involvement in the economy is very
large and having less interference of government. Examples of private sector are sole proprietors,
partnerships, small and medium size industries etc.
McDonald's is an American fast food company, started in 1940. It is the fast food industry
started by Richard and Maurice Mc Donald. They started it with the hamburger stand and later it
turns into one of the largest franchise. At the same time it is one of the world's largest chain
restaurant by revenue. Recently McDonald's is in the 120 countries around the world. They
served burgers, french fries, chicken products, salads, smoothies etc.
Purpose of McDonald's
Their purpose is to serve good food with great taste(Chang, 2016). They always try to add more
fruits and veggies in their menu, and their goal is to reduce trans fat, saturated fat, salt, sugar and
calories from the menu they are serving across the world.
They always conduct their business with high standards with fairness, honesty and integrity.
They also take the responsibility seriously that is being held in the leader.
Their purpose is to give healthy choices from the menu and also having the affordable price of
their meal. They serve high quality products to their customers with different varieties.
Voluntary organisations
They are the organisation in which the group or union is being formed with the common
interest. They are the group of individuals enters into the common agreement and form the body
or union to accomplish a purpose.
Purpose of OXFAM
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Their main purpose is to help and create the ultimate solution for the poverty, empowerment of
people and to make their future secure and make the people poverty free.
The purpose is to eliminate the poverty and gives the better life to women and girls are more
often oppressed by poverty.
They are secular, open minded, and pluralistic and always welcome the belief related to human
rights.
P2 –Explain the size and scope of a range of different types of organisations
Public Sector Organisation
Size and scope of NHS
NHS that stands for National Health Service they are associated with Health and Social care
established in 1948, it is one of the social major reforms. NHS was born out with the idea that
good healthcare must be given to everyone regardless of their wealth and gives free healthcare to
all. NHS net expenditure is being increased to $78.881 billion in 2006-07 to $120.512 billion in
2016-17. In England there are 207 clinics, 135 acute non-specialist trust out of these 84 are
foundation trust, 54 mental health trust including 42 foundation trust. They also have 10
ambulance trust (5 foundation trust), 853 are profit or non profit independent sector doing care
for NHS patients from 7,331 location.
Vision and Mission of NHS
Mission of NHS is to give quality of care to every individual every day and have a mission to
improve people health and their well being.
Vision of NHS is to deliver the better health to the community through their various initiatives
and their aim is to maximise health and well being. Give the better care through the help of
modern services. They want to ensure that everyone feels the positive experience of care and
wants to eliminate the illness.
Organisational and legal Structure of NHS
Structure of the NHS come into force on 5th July 1948, it is the brainchild of Labour
Health Security Aneruin Bevan, they have to give free health care to every individual.
McDonald's is American fast food company started in 1940 as a restaurant, but later it turned
into franchise. It provides a service that is selling the food product recently they are in 120
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countries and serve 68 million customer each day. McDonald's have the earnings of US$5.2
billion with an annual revenue US$22.8 billion and having the market capitalisation over
US$134.5 billion.
Private Organisation
Products and services supply by McDonald's
McDonald's sells the hamburgers with the various variety like chicken burger, French fries, soft
drinks, breakfast meals, desserts. In many of the market it also offers salads, vegetarian items
and wraps. Customers can opt their products weather to dine in or take out. They have 200 items
in the US menu. The company has removed artificial preservatives from chicken Mc nuggets. In
Asia some restaurants serves the soup. Mc cafe is also created by the McDonald's which serve
the different types of cappuccino, cookies, smoothies etc. They also introduce the concept of
'Create Your Taste'. They do not allowed customers to smoke in their store.
Vision Mission and Business objectives of McDonald's
Vision of the McDonald's is to become the world's best quick service chain restaurant. They
want to provide the outstanding quality, service, cleanliness and follows the ethical standard and
value so that they make every customer happy.
Mission is to deliver the operational experience to the customers in each restaurant. McDonald's
wants to be the customers favourite place to eat and drink and gives the best quality service to its
customers(Policy, Geipel and Hetherington 2018). Their mission is to make the employees
focused on their higher education as well as provides training within the organisation. They want
to serve the delicious food to more customer each day.
Business objective of McDonald's is to serve the good food with great value in friendly fun
environment and also wants to be a socially responsible company so the shareholders also gets
the good return. McDonald's wants to serve its customers with high quality food and value for
money.
Organisation and Legal Structure of McDonald's
McDonald's has a divisional organisational structure in this structure type the business
organisation is divided into components and gives the responsibility based on operational
requirements. McDonald's organisational structure has following characteristics arranged
according to the food service industry that is Global hierarchy, Performance based divisions,
Function based groups.
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McDonald's follows the following act
The Fair Labour Standard Act
This is for the minimum wages and overtime pays for workers
The Equal Pay Act
Men and Women paid equally for equal jobs
The Americans with Disability Act 1990
This act did not allow the discrimination in hiring, promotion and compensation against people
with disability.
Food Safety Act
Provides the framework for all food legislation. It is for the right of customers
Voluntary Organisation
Scope and Size of OXFAM
OXFAM (Oxford Committee for Famine Relief) founded in the year 1942 in England. They are
non- governmental organisation who covers large area of collection of operations. Their mission
and values is to eradicate the poverty and work primarily for the local accountable organisation.
Their goal is to help the people when their local capacity is insufficient(Kljucnikov and et.al.,
2016). It is voluntary organisation. It is an international confederation of 19 organisation
working together as a partner and local communities in more than 90 countries.
Products and Services of OXFAM
OXFAM is the charity which gives their services to the poor people who don't have sustainable
livelihood, they will give their service for the eradication of the property and provides them basic
human needs and rights.
Vision Mission and Business objectives of OXFAM
Vision of OXFAM is to make the world without poverty, they want to see the world where
people are treated equally and at the same time valued equally. They want to make the citizen
enjoy their right as full citizen and can live their lives like others.
Mission is to resect for human rights that will help in lift up people out of poverty and injustice.
They want the sustainable development and ensure the dignity of every individual.
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Organisation and Legal Structure of OXFAM
Organisation culture is geographical as it works around the world, lot of countries are helping the
less fortunate. The charity is controlled by the women, she is having the charge of number of
trustees who has the authority to make the decisions in the organisation. In short the OXFAM
structure is flat and does not become long.
Charities Act 2011
Charity Law covers the laws and rules relating to the working of the charity.
Intellect property rules
US government has introduced stronger intellectual property rules through the trade agreements
and bilateral pressure.
P3 –Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
Organisational Functions of McDonald's
Human resources
It enables the recruitment, selection, training and development of staff so the McDonald's
gets the best employees. It also has the welfare role which includes looking after the employees
needs. They make the policies that balance the organisational and employees needs.
Sales and Marketing
McDonald's has the team of marketing and research which helps to understand the
customer needs that helps to make the strategies and products according to the customer needs.
Research and development. The marketing department will need to understand the preferences of
consumers and produce the product which will be profitable(Charter, 2017). Sales department is
accountable from the persuading consumer to purchase from the end product.
Research and development
This department plays an important role as it will improve the existing product or make
the product innovative. McDonald's is in food industry and now this industry needs to introduce
the new products in the market from time to time. This will enable the organisation to gain more
profits by attracting the customers. This department needs the portion of budget to do the
research and development.
Interrelation between human resource and marketing
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Branding is very important to see the vision of market research reports, logo of the company and
the positing of the product meetings. People wants to work with the company that has a good
reputation and company who has tongs mission and vision. At the same time HR department will
make sure to hire the talent which completes its requirement.
Interrelation between research and development and marketing
Marketing plays an important role in the growth of any organisations as it enables the product to
goes in the market and attract the customers. At the same time research and development makes
the innovative product for her market.
Interrelation between finance and marketing
Financial condition of the company will show the financial condition and its liquidity in
the market. This department will pass the budget for the marketing team.
P4 positive and negative impacts of macro environment on business operations
Pestle analysis model helps in identifying external factors like political, economical,
social, technological, legal and environmental factors with the support of strategic management.
With the help of this analysis McDonald's corporation can focus on the important strategies
which influence food services through management decisions.
Political factors affecting McDonald's business:
Macro environment of McDonald's business and economy are affected by political
factors such as governmental actions and policies can determine the production rate and
expansion of its business. The most important political factors which can influence the growth on
its industry are as follows:
Positive impact: The only positive impact of pestle analysis on McDonald's fast food
chain is that they have the opportunity to expand their business on multinational level with the
help of international trade agreements enhancing its supply chain on the global level.
Negative impact: Government threats on health and diet can put pressure on McDonald's
and government guidelines have concern on consumer's health. Another factor that threatens the
company is public health policies. Although this two impacts have opportunities also to improve
its products by providing more healthful options to consumers like salads which can help in
improving their status.
Economic factors
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This factors have direct or indirect impact on the business performance. Economic factors
can influence McDonald's industry through the following global, regional and local economies
Positive impact: Stable economic growth of developed countries like US can help
McDonald's to increase stability and grow its food chain business. Company has an opportunity
to expand its business in developing markets such as Asia which can help in growth of its
business.
Negative Impact: As Chinese economy is the important contributor to the McDonald's
revenue and because of its slowdown it is considered as threat in its economy.
Social factors
Sociocultural factors influence McDonald's business by affecting consumer's behaviour
and affect the business revenue are as follows.
Positive impact: Rising disposable incomes is the factors which is creating opportunity
for McDonald's to grow their business through increasing tendency of consumers to buy fast
food instead of cooking food. The other factor which is helping in growth are urban areas due to
engaged lifestyles of consumers as they preferred to eat out rather than cooking at home.
Negative impact: Due to increasing diversity consumers demands and tastes also changes
and inability to fulfil this demand can impact on loss in company's revenue. Healthy lifestyle of
consumers prefer healthy diet. Therefore, McDonald's need to improve its menu with healthy
products which can change the perception of consumers about the company.
Technological factors
This aspect creates impacts of technologies on macro-environment of companies. The
success of McDonald's cooperation depends on the adaptability of technologies which can
enhance their productivity and maximize their profits.
Positive impact: This factor can help the company to use higher level of Research and
Development activity to increase the efficiency and effectiveness as compared to other
competitors. They are providing free internet services like Wi-Fi to satisfy their customers. They
use tech only to increase the productivity and produce food with automation (Ji-fan Ren, and
et.al., 2017). It also helps in increasing sales through channels, mobiles and various social sites
like twitter, Facebook etc.
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Negative impact: With the excess use of technology it will reduce the need of manpower
and results in unemployment. They are not investing in social technology which will give their
competitors an advantage.
Legal factors
The business get affected by this factor in terms of laws and regulations. Business can be
shaped by changing of laws and legal systems by imposing new requirements.
Positive impact: The factor creates an opportunity to attract more customers by
implementing animal welfare policy which will improve the business.
Negative impact: Higher minimum wages is a threat faced by McDonald's which
influence the company's business to higher costs and prices. In 2009, US. Congress has declared
under Fair Labour Standards Act, that minimum hourly payment will be $7.25 for non tipped
employees.
Ecological/Environmental factors
These aspects create impact on natural environment and how this factors can affect the
McDonald's macro-environment. The following are the most important ecological external
factors.
Positive impact: With the help of Corporate Social Responsibility, McDonald's can
improve its environment programs and sustainability to make its business and brand stronger.
McDonald's is trying to adapt recyclable packaging material to maintain the sustainability of
company.
Negative impact: the major threat to McDonald's is that the climate change in some
regions for example the availability and stability of food supply is determined by climatic
conditions.
P5 - Internal and external analysis to identify strengths and weaknesses.
Internal and external analysis of McDonald's business to identify strengths and
weaknesses through SWOT analysis.
Strengths:
McDonald's is a very famous name and known by its quality of food and service as
compared to the other competitors. The main strength is the logo of McDonald's which is very
popular in amongst children and in various countries. McDonald's focus is on the continuous
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improvement of food quality and providing training to employees and staff to enhance their skills
and to achieve satisfaction of their customers respectively (Jaakkola, and et.al., 2016).
McDonald's have many investors and have huge number of funds which help them to cost low
on products and generate higher profits and balance the competitive advantage.
Weaknesses:
McDonald's is known for its junk food and had a negative impact on press, government
and health consciousness customers and they mostly target the youth and the kids. Due to large
number of franchising sometimes quality of the product becomes low. Because of providing
inorganic food people acquire lots of complaints.
They provide trainings to the employees and spend a lot of money which is high in cost
and decreases their profit and also fire the employees yearly due to high employee turnover.
McDonald's sales mostly depend upon people's disposable income.
Opportunities:
McDonald's can create the opportunity to provide healthy diet and organic food like
salads which can improve the health of their customers. By creating opportunity on discount
deals they can attract more customers which will give competition to other food industries
(Wheelen, and et.al., 2017). By providing extra services like free internet and becoming
environmental friendly by using recyclable packaging material can attract customers worldwide.
They have opportunity to expand their restaurants in the developing countries like Asia which
will help to set their market fast and grow their business with more profitability.
Threats:
Due to tension between government of United States and United Kingdom, McDonald's
is facing loss in revenue and they are mostly dependent on country's economy and creates a huge
impact on sales volume. As their menu does not include organic foods lists due to this they are
having competitive issues and people who are changing their diet to healthy one they won't go
for junk food which will create an adverse effect on their sales revenue.
As the expansion of their business is increasing day by day locally and internationally,
and the threat to cultural diversity will also increase and they need to improve their menu items
on the choices of their customers. With the help of this SWOT analysis of McDonald's it can
provide competitors to analyse the weaknesses and to make their weaknesses into strengths and
creates the opportunities which McDonald's are lacking.
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P6 – Strengths and weaknesses interrelation with external macro factors.
The strengths and weaknesses which is collected by doing SWOT analysis interrelate
with the external factors of pestle analysis in the following ways:
Strength of McDonald's which is the improvement on food quality can be interrelated
with the political factor of pestle analysis. The external factor is that government concerns about
the health and diet of the customers. Therefore, McDonald's need to update its menu with healthy
and organic food for the health conscious people.
Weakness of McDonald's that their most of the sales depend upon the people's disposable
income can interrelate with the social factor of pestle which is rising in people disposable by
increasing their customers to buy fast food instead of cooking food. Another weakness which
firing of employees cab be interrelated with the legal factors which impacts on higher minimum
wages and affect the business by higher employee turnover.
Opportunities like providing free services like internet can interrelate with the
technological factor as McDonald's are using this factor to enhance their productivity and to
satisfy their customer with the free Wi-Fi. Opportunity like to expand their business in the
developing countries like Asia can interrelate with economic factor of pestle as this factors are
enhancing the high market growth.(Virglerová, Dobeš, and Vojtovič, 2016). Opportunities like
becoming environmental friendly can be interrelate with the ecological factor which is the use of
recyclable packaging material to balance the ecological nature by reducing the wastes.
Threats like tension between government of US and UK which is creating bad impact on
economy of the business and creating strained in relationship can be interrelate with the political
factors which is helpful in enhancing global chains with the improved international trade.
Another threat like increasing cultural diversities can be interrelate with the social factor due to
its expansion of business worldwide, varieties of tastes and demand also increasing therefore
they are improving their product on the needs of customers.
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CONCLUSION
From the above report it had been summarized that PESTLE analysis was conducted on well
established and growing business McDonald's had provided the business and the competitors the
brief opportunities and threats which helped them to shape their business according to the
analysis by evaluating external factors like political, economic, social, technological, ecological
and legal factors. Political factors affected the growth of the company through government
actions and policies, economic factor affected the revenue by slowdown of the Chinese
economy, social factor affected it by increasing cultural diversity and legal factors affected it by
health regulations. This report also highlighted the SWOT analysis of McDonald's which helped
the competitors to analyse their weak areas and helped the McDonald's to change strategies to
overcome threats like junk food for health conscious people by updated menu list. McDonald's
and their competitors understood how to handle threats and opportunities with the enhanced
strengths. At last of this report they interrelated the strengths and weaknesses carried out by
SWOT analysis with the external factors of PESTLE analysis and their influence on the business.
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