Evaluation of International Business Practices: McDonald's Case Study

Introduction
Extended relations between two nations relating to the trade and transactions carried out in
the two respective economies with a mutual agreement. International business comprises of all
commercial transactions i.e. private and governmental, sales, investments, logistics and transportation
that takes place between two or more regions beyond their political boundaries(Mitchell, 2009). The
present carried out analysis is based on McDonald’s which is a multinational chain of fast food
restaurants and beverages. The present report is focused on the evaluation of international business
practices and how they are shaped by the economic, socio-cultural and political theories. Further the
barriers related to the international trade and globalisation is explained. Moreover the ways in
globalization and international trade practices, strategies, and management roles interact with each
other.
LO 1
Pest analysis
The mechanism for systematically discovering and quantifying the factors is PEST analysis.
The concept is an acronym for the external factors that are political, economical, social and
technological; these factors commonly effect the business operational activities (Dlabay and Scott,
2010). The below is the detailed explanation of the PEST analysis:-
Figure 1PEST analysis
[Source- PEST analysis, 2016]
Political
This factor is concerned with the governments rules and regulations and legal issues affect
McDonald’s ability to be profitable and successful organization. Issues that must be considered by the
corporation includes tax guidelines, copyright and property law enforcement, political stability, trade
regulations, social and environmental policy, employment law and safety regulations (Hamilton and

Webster, 2015). McDonald’s should also consider their local and federal power structure and discuss
how anticipated shifts in power could affect their business.
 Government regulations regarding employee’s hygiene, health and food regulations, food
standards etc.
 Government policies regarding the restaurant industry and managing he eateries. These may
include licenses, inspections by health and food departments etc.
Economical
This concept evaluates the external economical issues that will play a significant role in the
success path of McDonald’s. The characters to be considered by the organization are economic
growth, exchange, inflation and interest rates, economic stability, anticipated shifts in commodity and
resource costs, unemployment policies and credit availability (Oded, Yadong and Tailan, 2014).
 Interest rates would affect the cost of capital.
 Rate of inflation determines the rate of remuneration for employees and directly affects the
price of McDonald’s products.
Social
This character analyses the demographic and cultural aspects of McDonald’s market. These
factors help the organization in examining the consumer’s needs and also determining the influencing
power which motivates the consumers to buy the product. The factors to be considered by the
corporation are demographics, population growth rate, age distribution, attitude towards work, job
market trends, religious and ethical beliefs, lifestyle changes, educational and environmental issues
and health consciousness.
 Eating habits of the consumers will affect the business environment and certainly will affect
the organizations marketing decisions.
 Ratio of people preferring to eat out regularly (Combs, and Nadkarni, 2005).
Technological
This factor takes into consideration technological issues that affect the procedures and
methods used by McDonald have to deliver the products and services to the market place. The
specific characters to be considered by the business entity are the technological advancements,
government spending on mechanical researches, the role of internet and the impact of potential
information technology changes. In addition the company should also consider generational shifts,
and their related technological expectations which are likely to affect the consumers who will use the
product.
 A goo technical infrastructure will lead to better production, procurement an distribution
logistics resulting in reduced wastage and lower cost of the products.
 Effective technology may be a decisive factor for food technology innovation, better
presentation, more effective business marketing, etc (Kolk, and Tulder, 2004).
International marketing

This concept is the application of marketing principles in more than one country by
companies overseas or across national borders. Global marketing is based on an extension of
company’s local marketing strategy, with special attention paid on marketing identification, targeting,
and decisions internationally. Global marketing is the multinational process of planning and executing
the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges
that satisfy individual and organizational objectives.
International business operations
Design of Goods and Services: McDonald’s goal in this strategic decision area of
operations management is to provide affordable products. As such, the serving sizes and
prices of its products are based on the most popular consumer expectations. However, some
McDonald’s products are minimized in size to make them more affordable (Kumar, and
Kundu, 2004).
Quality Management: The company aims to maximize product quality within
constraints, such as costs and price limits. McDonald’s uses a production line method to
maintain product quality consistency. Consistency satisfies consumers’ expectations about
McDonald’s and its brand in this strategic decision area of operations management.
Layout Design and Strategy: McDonald’s uses practicality for this decision area of
operations management. The strategy involves maximizing space utilization in restaurants
and kiosks, rather than focusing on comfort and spaciousness.
Job Design and Human Resources: McDonald’s human resource strategies involve
training for skills needed in the production line in restaurant kitchens or production areas. For
this decision area of operations management, individual and organizational learning are also
emphasized to support McDonald’s organizational culture (Mitchell, 2009).
Inventory Management: McDonald’s goal for this strategic decision area of operations
management is to minimize inventory costs while supporting restaurant operations. The
company does not directly sell products and ingredients to its restaurants. Instead, local and
regional intermediaries and distributors coordinate with McDonald’s restaurant managers to
manage their inventory.
Scheduling: McDonald’s uses corporate conventions for scheduling, based on local
market conditions and laws, as well as supply chain needs. For example, the company’s
strategy involves regular and seasonal schedules to address fluctuations in local market
demand. Thus, in this decision area of operations management, McDonald’s is flexible and
adapts to local market conditions.
Maintenance: McDonald’s lets restaurant managers or franchisees select maintenance
service providers. However, for kitchen/production equipment, McDonald’s Corporation also
has certified/approved maintenance providers (Dlabay and Scott, 2010). Thus, the company
addresses this strategic decision area of operations management through local and corporate
control.
Supply Chain Management: The firm’s global supply chain supports its various
locations around the world. McDonald’s has a strategy of supply chain diversification for this