Business Environment Analysis Report: McDonald's - HND Level 4

This report provides a comprehensive analysis of McDonald's business environment, examining various aspects crucial to its operations. The report begins with an introduction to the business environment, defining its internal and external factors and their influence on organizational strategies. Task 1 is covered in a PPT. Task 2 delves into the interrelationship between McDonald's organizational functions, such as design and production, human resources, finance, sales and marketing, and administrative functions, and their objectives. Task 3 explores the positive and negative impacts of the macro environment on McDonald's using PESTLE analysis (Political, Economic, Social, Technological, Environmental, and Legal factors). Task 4 focuses on identifying the environment and its influence on business decision-making, including the application of SWOT analysis to assess the company's strengths, weaknesses, opportunities, and threats. The report concludes with a summary of the key findings and a list of references.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT...........................................................................................................................1
TASK 2............................................................................................................................................1
P3. Relationship between organisational functions and objectives............................................1
TASK 3............................................................................................................................................3
P4 Positive and negative impact of macro environment on McDonald operation......................3
TASK 4............................................................................................................................................5
P5 Identification of environment and its influence on business decision making......................5
P6 Interrelationship of SWOT with external factors...................................................................7
CONCLUSION................................................................................................................................8
REFERENCES .............................................................................................................................10

INTRODUCTION
Business environment is made with the combination of two words in which business
defines as the monetary value and the environment states as all such factors which affect any
organisation internally and externally. Every organisation have to use appropriate approaches
which enable them to survive in keen competitive market world. Management have to identify all
such things which influence business and operations (Czinkota, Ronkainen and Moffett, 2011).
After analysing these things appropriate strategies have to be framed out by authority so that
sustainability of an entity tends increase. Decision makers have to use systematic techniques
which provide them strength and they become able to examine their weakness which affect their
business badly. The whole argument of this assignment is about business environment in which
all relevant facts and discussion will be carried out. For this assignment an organisation on which
business report is prepared is MacDonald. This is one of a largest food chain company. In this
assignment, a major reflection is drawn on the various organisations and their working purpose.
This is a helpful tool to distinguish between profit and non profit companies with their size and
scope. Also, there are various number of functions are taken place in a company and every firm
is different in nature as per their structure. For carrying out a perfect research on environment
managers have to conduct a research on internal and external environment.
TASK 1
Covered in PPT
TASK 2
P3. Relationship between organisational functions and objectives
McDonald performs various functions which are very important for earning specified
objectives that are given below-
 Design and production- For attaining the best results, company should design their
products in a unique way so that it can attract potential consumers and can satisfy their
needs in an easy and effective manner (Halbert and Ingulli, 2011). McDonald’s produces
their merchandise as per the culture and taste of target market. There are many factors
which assist in the production process that are given as below-
◦ Labour: Employees and staff members are key essential of every business concern
which are helpful in manufacturing quality based products and services. MacDonald
1

have to recruit such number of personality in an organisation whom have good skills
to deal with any situation as well as have good working relationship.
◦ Capital: For better and effective design and production, every business organisation
require huge fund through which each and every activity took place in an appropriate
manner. MacDonald invest appropriate amount of fund to improve their amenities
which enable them in perform each and every operation effectively.
 Human resource function- It is the most important department in every organisation as
its main task is to recruit, select and train employees so that they can perform according
to the standards set. If McDonald’s will not have employees then it will not be able to
achieve the desired results or objectives. This department also has to follow all rules and
regulations that have to follow by every enterprise. So, this department should be capable
and knowledgeable so that it can assist in attaining the specified objectives.
 Finance- It is very important function because with out having it, firm will not be able to
carry out activities in an effective and efficient manner. It may result that enterprise will
not be able to achieve its objective with in specified period of time. So for carrying out
activities smoothly and effectively, organisation should have proper availability of
financial resources so that production can be carried out with out any disturbance
(Hamilton and Webster, 2015).
 Sales and marketing functions- It is also most important factor because it identifies the
needs and wants of target market that assists in serving to them. If company will properly
served to them then consumers will be satisfied and will become committed towards the
organisation by which it can attain its target easily.
 Administrative functions- It includes various types of task that have to complete by this
department such as e-mail, complaints handling etc. It also prepares various document
related to business like newsletters, forms etc. and also aids in maintaining the
organisation's premises and equipment.
An organisation structure provides support in handling business operations and also
maintains proper coordination among different activities that assists in achieving the desired
result. McDonald's organisation structure aids in managing market which is based on
performance level (Harrison, 2011).
2

It follows divisional structure which has main motive to support autonomy and
organisational flexibility. In this concept, functions are divided on the basis of products or
geographical areas.
This framework is very helpful in monitoring and managing various activities that assists
in attaining the best desired result or vision statement in an effective manner.
TASK 3
P4 Positive and negative impact of macro environment on McDonald operation
Macro environment- It includes uncontrollable factors which creates disturbance in
business activities. Uncontrollable elements are those which can not be controlled by the
company such as political, economical, technological etc. These components affect the firm in
positive as well as in negative manner (Kubasek, Brennan and Browne, 2016). McDonald can
analyse these environment with the help of PESTLE analysis which are given below-
 Political- This element is the most influential factors that affects the business in positive
as well as in negative manner. McDonald will be affected by this factors when-
◦ Rates of tax are increasing continuously.
◦ Import and export duty etc.
McDonald's revenue and growth is largely affected by this factor which includes various
things such as level of bureaucracy, government stability, international trade agreements
3
Illustration 1: Divisional structure of McDonald, 2017

etc. When McDonald wants to enter into new market then this component will affect it. It
can expand their business activities based on international trade, which can enhance
global supply chains.
 Economical- It includes various elements such as GDP, inflation rate, unemployment,
fiscal policy, current exchange rate, cost of labour etc. These factor will affect the
operation of the company for example if in the country, there is inflation situation then
people will not spend more which will influence the growth and revenue of McDonald.
 Social- It is also most influential factor that affects the growth of the company. It includes
changes in taste and preferences of consumers, their attitude, changing lifestyle, cultural
diversity etc. While making any strategic decision, firm should consider it so that it can
attain its target within specific period of time (Moutinho, 2011). McDonald is operating
their business in different countries and every nation have various cultures and religious
barrier. While generating food menu, it should keep in mind the culture of target market
so that it can satisfy the needs of target market.
Also McDonald is known as a socially responsible organisation because it participates more in
the development of the society like they announced backing to the rainforest alliance.
 Technological- If an enterprise wants to get attention from the target market then it
should use latest technology so that it can provide better quality of goods or services.
McDonald mainly promotes their offerings through advertisements and billboards. It also
uses animated depiction for getting attention from children like Hamburglar etc. It also
adopt some other strategy for doing promotion like it hires celebrities who will create
awareness in the market. For serving the consumers, it adopts latest technology so that it
can generate better quality of goods such as it uses infusion of technology.
 Environmental- This component influences the consumers as well as the performance of
the company. Before serving to consumers, McDonald should evaluate the environmental
changes and its impact on business activities so that it can take corrective action and can
attain its vision statement. It is very important element that should be keep in mind by the
company while implementation of strategy. If company will not do so then government
can cancel its license. It should use all that equipment and technology which will assist in
preventing pollution in the society (.Porter and Rivkin, 2012). If organisation will take
4

care of environment then it will get more popularity in the society which will increase its
sales and revenue.
 Legal- There are many rules and regulation that are binding on every company whether it
is in food sector or in any other area. McDonald has to follow following rules such as
health and safety law, equity pay act, Food quality related act, Local health regulations at
workplace, animal welfare regulations etc. These laws have objective to protect the rights
of employer, customers as well as of employer. If firm wants to carry out business
activities smoothly then it should comply all rules and regulations.
By conducting PESTLE analysis, business can explore new opportunities and can identify
advanced warning of threats. It will assist the company in making strategy which will help in
achieving the specified target with in period of time (Pulver, 2012).
TASK 4
P5 Identification of environment and its influence on business decision making
Business is comprised of various number of factors which are involved in that and affect
any concern and their operations. It is a duty of managers to find out the number of series of
such major thing which enable them in taking effective decision. For sustaining in a keen
competitive market, management have to analyse the business environment first and adopt
appropriate steps for that. For this purpose various number of approaches are used. Out of them
SWOT analysis plays an important role. This aid in identifying the internal and external factor of
environment so that beneficial decision can be carried down. The SWOT is used to measure all
strength, weakness, opportunities and threats of a business. It is a major responsibility of
business to conduct this thing in their account because it enable them in formulating appropriate
strategies for their long term. Managers of cited company have to take all such things in their
account before taking any beneficial decision. Hence, this approach influence the decision
making process of a company ( Siewiorek and et. al., 2012). Some of the strategies which
company employ in their strength and weakness process are as follow:
Strength: It is an ability or power of an organisation to withstand in competitive market
world. This is concerned with the stability of a company at market through which their business
can sustain for long term. MacDonald is one of a largest and oldest food chain company all over
the world. Hence, following are some of the strength of an organisation are as follow:
5

1. It is an well established firm at the global level which signifies that the trust of a
customers are more on them as compared to others.
2. It has one of well established name then others. Along with that also they have good
market reputation and brand image which support them in their stability.
3. Due to their establishment from last 81 years their symbol is easily recognisable to each
and every group of people.
4. Also, they perform several number of beneficial activity in favour of society which make
them different from others (Welford, 2013).
Weakness: Sometimes it identified that many firms have lack of strength and they are not
able to survive at market for long term. Along with that weakness is refer to as such state in
which operations are not getting done in an effective manner. MacDonald also have weakness on
which they have to work on priority basis otherwise management have to pay more amount.
1. From many years they are working on same products and their variety of goods are less in
number. Many new firms try to experiment with new products according to requirement
of time. But cited firm have lack of variations which is one of a major weakness.
2. Their employees turnover is high due to large number of outlets all over the world. Many
people resign from their post so early due to get feed up and for that organisation have to
hire and recruit many new employees which increase their cost.
3. Less in product development restricts their own development also. Such thing is also not
acceptable at all because expansion of business is must but it only provides strength at
that time when it is completely link with time. Management not leads to bind their
working with time frame and thus it is regards as one of drawback for a company.
Opportunities: Many organisations have a chance to do something new in market. His
chance and field day is define as an opportunity for them which means to grab the chance and
then pull it according to requirement of time. MacDonald have to gain the advantage of time
which means they have to bind their work with time and identify the outcomes which aid them in
making their business more and more successful as compared to present state.
1. Management can attract such group of people who never prefer outside food. For this
they have to manufacture their products according to them.
6

2. As per census of UK, many people prefer external food items and this is termed as one of
an opportunity for an organisation. They have large number of outlets which means that
they have a chance to attract large number of customers (Wetherly and Otter, 2011).
Threats:Actual meaning of threat is about danger or pain of something. MacDonald is
one of a largest food chain and for them one of a major threat is all the new entries which might
take place at market world. Hence, management have to use attractive marketing strategies which
enable them in taking the advantage of keen competitive world.
1. One of a major threat is rivalry in business. The number of competitors are getting
increase as per the days passed.
2. Demographic changes also serve a threat for an organisation.
All these are some essential points which represents that management have to depict such
strategies which aid them in their growth. Like they have to invent new products and deal with
new items which support them in their business. Also, they have to serve new range of products
which attract new customers. Along with that their product have to get manufactured according
to requirement of time and climate (Chavis, Klapper and Love, 2011).
P6 Interrelationship of SWOT with external factors
SWOT analysis enable an organisation to use such strategies which help in their growth.
It leads to enforce the authority to employ such schemes which support in their growth and
business can maximise more and more. Hence, the main purpose if to measure the strength and
weakness of business and management have to link this concept with external factors.
MacDonald have to link their working pattern and SWOT analysis with all their external factors.
This aid them in making and formulating such strategies which support them most on the basis of
of strength and weakness. A perfect analysis of this concept is as follow:
 Strength: According to this term which means the company stability in keen competitive
market, MacDonald have to use this concept while they are dealing with external factors.
As per their strength company have good brand image and name from last many years.
This support them in making and conducting all of their task in an effective manner. As
per this management have to link this concept with external analysis.
1. Political instability affect business very badly because new government formulate
new polices which are not favourable at all. Hence, organisation have to change their
guidelines according to new status and thus their working get affected. MacDonald
7

have to align their working with all new regulation which frame by government so
that brand image can be maintain.
2. Change in technology also affect business concern. With rapid change in technology
it leads to affect business because company have to employ new technology at their
workplace which might get obsolete in recent few years (Commander and Svejnar,
2011). MacDonald is using new and effective technology of production and use
effective promotional campaign as well which are taking place under social media.
This enable them in reaching and promoting products at vast level.
3. All customers have to take in account by cited company and entity have to
manufacture new products according to them. Also taste and preferences of customer
also get changed very rapidly. This is related with environment factor of PESTEL.
 Weakness: Lack of stability can only occur if management do not operate their
strategies properly. This provide in lack of sustainability. Management have to work on
all of their weakness so that they can survive in market for long term (Eckardt, 2012).
1. Legal factor affect business because company turnover is high which means many
employees leave their jobs due to getting inappropriate wages etc. For this legislative
body framed new laws regards in this context and company have to follow them.
Through this all employees get equal wages under the Equal Wages Act 1998.
2. From many years company is dealing with same range of products and do not change
them. This signifies that they are not installing new technology for production and
thus it leads to work as a weakness of a company. Company have to employ new
technology at workplace which support them in getting the advantage of keen
competitive market world. MacDonald have to modify their product range and
introduce few additional eatables which are helpful in enhancing their user
satisfaction.
3. Management have to produce such products which are for each and every group of
society and this promote as a weakness of business. Management is new adopting the
new environment and thus demographic change is one of a drawback hence
management have to work in this context (Eisenberg and Miller, 2012).
8

CONCLUSION
It is concluded from the above report that business environment analysis is compulsory
for each and every business. It helps in taking and formulating such strategies which are
beneficial for an individual proprietorship as well as for society also. Management have to take
appropriate steps in this context which enable them in making and sustaining the whole business
entity. Moreover there are various number of organisation also found in business environment
but all of them have different motive from each other. Some of them have a purpose to provide
quality services to society where as some work just for profit generation. Management have to
link up their organisation strength and weakness with external factors which support them.
9