External Environmental Factors Affecting McDonald's in International Business

This report discusses the impact of external environmental factors on McDonald's in international business, including socio-economic, technological, political, legal, and ecological factors. It highlights how McDonald's adapts to local demands and requirements of people in different countries, sources materials globally, uses technology to enhance customer service, complies with government policies and regulations, and works towards sustainability in its business operations.

International Business

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK .............................................................................................................................................3
Socio-economic cultures affect McDonald's...............................................................................3
Technological developments affect McDonald's........................................................................4
Political environment considerations affect McDonald's............................................................5
Ecological considerations taken by McDonald's affect the international business.....................6
CONCLUSION ...............................................................................................................................6
REFERNCES:..................................................................................................................................8
Books and Journals:....................................................................................................................8

INTRODUCTION
The term international business states the cross-border trade and other transactions
between organisations and governments that has been around for the years. But with the
upgraded technologies, trade barriers diminished and competition rises, the demand for
individuals who understand how to operate in an international market is stronger than ever. The
external business environment consists all external variables that affecting business and which
has no direct control over it. It involves both micro and macro environment of business. The
external environment changes frequently and need consideration when planning and regulating
activities of business (Buccieri, Javalgi and Cavusgil, 2020). It is the main responsibility of
business managers to monitor external factors of environment that can impact the functioning of
business and produce methods for overcoming threats. The report is based on a case study of
McDonald's Company that is a American fast food brand. It is one of the leading restaurant chain
in the whole world. It has speciality in varieties of products such as cheeseburgers, hamburgers
and french fries, chicken products, wraps, milk shakes, soft drinks and many more. It has approx.
37,855 outlets throughout the world (Zalan, 2018). The report is considering external
environmental factors of McDonald's in international business.
TASK
Socio-economic cultures affect McDonald's.
McDonald's business tactics addresses problems in its external business environment
such as found in the pestle analysis of the brand. It helps to realise the existing opportunities of
business and overcoming threats of the business. Socio-economic factors are affected by the
spending patterns of the consumers. McDonald's is highly known for shaping itself as per the
demand of consumers. On a very start of the business, the company bringing the sense of
“American way of life”. It initiate a step to serving to different nations as per the local demands
and requirements of people (Buckley, Enderwick and Cross, 2018). For instances, in India, most
of Indian citizen is against beef, so the company replaced beef with chicken and since most of
the population in India are vegetarians, it introduced veggie burger, Mc veggie and McAloo tikki
in the menu so that population can be delighted with the taste. For Japan, the list in the menu is
completely contrastive. It launches rice burger, green tea ice cream, shrimp burgers, teriyaki
burger keeping in mind the wants and taste of Japanese citizens. In several other countries, it

tweaked its menu to provide local taste to its consumers. The demand for fast food products has
been rising day by day in developing economies with the changing lifestyle of people.
In respect of economic factors, the company operates its business in more 120 countries.
It necessitates to source its materials globally and due to change in the exchange of currency, the
price of materials keeps changing (Tuomisalo and Leppäaho, 2019). Therefore, the brand
constantly plans their tactics about the procurement of materials at minimal prices. The recent
recession in several parts of the globe has declined the demand for the products of company
among the customers. Moreover, the turnover of the employees is also very high as the workers
left the job very frequently and the company has to recruit people constantly (Hamilton and
Webster, 2018). A lot of money and time are wasted to recruit new employees and train them.
There are many forces that majorly impacted the success of McDonald's in the US. One
of the main factors was prevailing the family structure in the country and the trend encouraging
youth-oriented culture. In the late 1960's and 1970's, the brand successfully target the market by
using teenagers and children in the advertisements. Also, the company completely understood
the time favoured factor in US. McDonald's value the time factor in the consumption of meals
and also deliver meals in minimum time. Economics factors are essential in the determination of
customer's ability to buy a product. Therefore, in order to attract a large customer base, the brand
needs to analyse the local market of each country and appreciate the consumption behaviour of
customers.
Cultural factors determines traditions, habits, art, language, religion, education, family
and reference groups. Religion beliefs and traditions are fast pace and could result in conflicts
with the international media contents. In respect of the chosen brand, as mentioned above, the
brand had tried to avoid beef consumption in India and launched “Maharaja Mac” utilizing patty
made from lamb.
Technological developments affect McDonald's.
The development and improvements in technologies have made international
communication and travel more accessible to customers and let to a phase in which fashions and
social trends much faster. Furthermore, the change in the attitudes or lifestyles of the customer in
product demand and the ways through items can be sold to consumers (Treviño and Doh, 2021).
Technological factors consist forces that produce upgraded technologies, developing new goods
and market opportunities. It must be considered that high technologies are needed to make full

utilization of a range of promotional activities, using social media platforms or websites.
Keeping the pace with the rapid changing technologies, the respective brand is frequently
supporting new technologies to enhance the customer service. It has brought setup self-order
kiosks throughout its chain so that consumers do not need to stand in the line at the order
counter. Customers like to add more products to their order when they choose their own instead
ordering at the counter. In 2019, it is researched that the company acquires tech organisation
“Dynamic Yield” to better customized menus (Isaac and et.al., 2019). The electric menu of the
brand represents different items based on the factors like time of the day, weather or regional
preferences. So, customers can order their favourite food items and add-ons and the item served
at their home. Hence, all such adoption of technologies is frequently improving the level of
customer satisfaction.
Political environment considerations affect McDonald's.
This factor relates to the influences of government policies and actions on the remote or
external macro business environment of McDonald's and country has a whole. Government
interventions can shape the path and rate of organisational development. As the McDonald's is
the leading fast food brand in all over the world, it is being hit by the government with the main
concern is the safety of population. Hence, if the brand does not comply with health and safety
regulations, then local governments will shut it doors. Furthermore, the rising concern that their
food consists high sugar and sodium which leads to severe health problems such as hypertension
and diabetes. The company is presently adding healthy choices in its menu. As an international
brand, different countries are less open to western foods and cultures. For instance, Iran has some
hatred with US, so it banned McDonald's in the nation. Also, Bermuda banned the company as it
is not favourable in the consumption of fast food.
The legal aspects pertains to the impact of rules and regulations on organisations. Alter in
the legislations and new laws mould the remote or macro business environment by baronial new
requirements. It is found that in 1993, a law was imposed in Mascow postulating all stores to
have only Russian names or translated into the Cyrillic alphabet. The means that the brand has to
restate its organisational name (Monaghan, Tippmann and Coviello, 2020). This allowed the
respective brand to at least retain the sound of its company's name. It also happened in Japan,
resulted the change in its name called “MaKudonaldo”. Furthermore, the rules in Russia refers

that at least a ¾ majority vote is required to make vital decisions. Hence,the representatives of
the brand and city council must approve the decisions otherwise it could hinder the opportunities.
In India, the company is facing some legal problems with the businessperson Vikram
Bakshi for control of Connaught plaza restaurants. They are venturing their business with 185
outlets in north and east. But after removing the businessman as MD of the venture, Mr. Bakshi
had filed lawsuit against the company for their mismanagement (Parente and et.al., 2019). That
legal lawsuit support the company's competitors to grow in such parts while severely affecting
the brand. In Quebec, the brand was sued for the toy products that is provide with the happy
meals. It included in its promotional activities the toys to woo children but in the country it is not
allowed to promote that type of products to children under 13 years of age.
Ecological considerations taken by McDonald's affect the international business.
The physical retrain and climate of a nation are vital conditions of environment that have
a fundamental impact on the demand and the nature of product made available. Before entering
into new market, the brand needs to consider the climatic and physical retains. Humidity,
temperature and altitude are some of the climatic conditions that can impact the items in
international markets. It states the trends associated to the natural surroundings and environment.
It examines that ecological influences and trends on companies and organizations.
Environmental groups forced the brand to minimize the use of plastic packaging. McDonald's is
working towards the sustainability in all its business functioning on regular basis. The brand has
aimed to have 100% of its packaging material come from recycled and renewable sources and it
will be held in its every outlet by the year of 2025. As of now, the brand is able to do only 50%
sustainability and 10% restaurants are working on recycling basis. Moreover, it also initiate to
serve orange juices in ready to serve container, distributing frozen concentrate supports in
declining the packaging of orange juices by approx. 75% (Polonsky and Waller, 2018). It also
committed to place energy sufficient kitchen appliances and led lightning in all the outlets to
save the energy.
CONCLUSION
From the above case study of McDonald's, it has been concluded that international
business refers to a trade between cross-boundaries. Doing business in international market
involves various factors of business environment. All factors are majorly impact the business. In

this report, various factors such as political, social, legal, ecological, technological and
economical factors are discussed. The impact of each factor is immense and big, so it must be
considered by the company. Political factors deals with rules and regulations of a country, trade
barriers and so on. Legal factors involves laws and legislations that must be imposed by the
company for smooth functioning of business. Social factors deals with customer's purchasing
patterns, beliefs or attitudes that determines their shopping. Economic factors deals with the
taxes, disposable income that decide whether the product should be purchased or not.
Technological factors delivers an ease in the operations and functioning of business.

REFERNCES:
Books and Journals:
Buccieri, D., Javalgi, R. G. and Cavusgil, E., 2020. International new venture performance: Role
of international entrepreneurial culture, ambidextrous innovation, and dynamic
marketing capabilities. International Business Review, 29(2), p.101639.
Buckley, P. J., Enderwick, P. and Cross, A. R. eds., 2018. International business. Oxford
University Press.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Isaac, V. R. and et.al., 2019. From local to global innovation: The role of subsidiaries’ external
relational embeddedness in an emerging market. International Business Review, 28(4),
pp.638-646.
Monaghan, S., Tippmann, E. and Coviello, N., 2020. Born digitals: Thoughts on their
internationalization and a research agenda. Journal of International Business
Studies, 51(1), pp.11-22.
Parente, R. and et.al., 2019. Adapting and sustaining operations in weak institutional
environments: A business ecosystem assessment of a Chinese MNE in Central
Africa. Journal of International Business Studies, 50(2), pp.275-291.
Polonsky, M. J. and Waller, D. S., 2018. Designing and managing a research project: A
business student's guide. Sage publications.
Treviño, L. J. and Doh, J. P., 2021. Internationalization of the firm: A discourse-based
view. Journal of International Business Studies, 52(7), pp.1375-1393.
Tuomisalo, T. and Leppäaho, T., 2019. Learning in international new ventures: A systematic
review. International Business Review, 28(3), pp.463-481.
Zalan, T., 2018. Born global on blockchain. Review of International Business and Strategy.